For the 2019 first quarter, gross margin as a percentage of sales was 60.8%, as compared to 57.9% in the first quarter of 2018. The first quarter 2019 level exceeded the higher end of the Company’s anticipated target due to a favorable channel and product mix, and one time variances.
Total operating expenses in the first quarter of 2019 were $3.7 million, down from $4.1 million in the 2018 period. The most significant reduction in expenses on a year-over-year basis pertains to lower variable incentive compensation accrual, as most other expense categories were lower as compared to prior periods. Data I/O continues to actively engage in market development and R&D initiatives while emphasizing ongoing expense management practices.
Operating income was $29,000 for the first quarter of 2019, down from $344,000 for the first quarter of 2018. Net income in the first quarter of 2019 was $26,000, or $0.00 per diluted share, compared with net income of $130,000, or $0.02 per diluted share, in the first quarter of 2018.
Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) was $189,000 in the first quarter of 2019, compared to $397,000 in the first quarter of 2018. Adjusted EBITDA, excluding equity compensation, was $476,000 in the first quarter of 2019, compared to $574,000 in the first quarter of 2018.
Bookings in the first quarter of 2019 were $6.2 million, compared to $6.2 million in the first quarter of 2018 and $6.5 million in the fourth quarter of 2018. Backlog at March 31, 2019 was $2.0 million, as compared with $1.9 million at December 31, 2018.
Data I/O’s financial condition remains strong with cash of $14.8 million at March 31, 2019, down from $18.3 million at December 31, 2018 and $16.8 million at March 31, 2018. Cash was used to fund the inventory buildup, stock buyback, increased receivables and pay year end accrued incentive compensation and 401(k) matching.
The first quarter 2019 balance sheet reflects changes made to accounting for leases (ASC 842) which recognizes a right-of-use asset and a corresponding liability. As a result, a $2.4 million long term asset, $660,000 of short term liability, and $1.70 million long term liability are recognized on the balance sheet. Net working capital of $20.4 million at March 31, 2019 reflects this $660,000 short term liability, resulting in a net decrease to working capital of $648,000 from $21.1 million at December 31, 2018 and $500,000 from $19.9 million at March 31, 2018. The Company continues to have no debt.
Conference Call Information
A conference call discussing the first quarter ended March 31, 2019, financial results will follow this release today at 2 p.m. Pacific Time/5 p.m. Eastern Time. To listen to the conference call, please dial 412-902-6510. A replay will be made available approximately one hour after the conclusion of the call. To access the replay, please dial 412-317-0088, access code 10130524. The conference call will also be simultaneously webcast over the Internet; visit the News and Events section of the Data I/O Corporation website at dataio.com to access the call from the site. This webcast will be recorded and available for replay on the Data I/O Corporation website approximately one hour after the conclusion of the conference call.
About Data I/O Corporation
Since 1972 Data I/O has developed innovative solutions to enable the design and manufacture of electronic products for automotive, Internet-of-Things, medical, wireless, consumer electronics, industrial controls and other markets. Today, our customers manufacture hundreds of millions of products each year using Data I/O programming solutions to reliably, securely, and cost-effectively bring innovative new products to life. These solutions are backed by a global network of Data I/O support and service professionals, assuring success for our customers.
Learn more at dataio.com
Forward Looking Statement and Non-GAAP financial measures
Statements in this news release concerning economic outlook, expected revenue, expected margins, expected savings, expected results, orders, deliveries, backlog and financial positions, as well as any other statement that may be construed as a prediction of future performance or events are forward-looking statements which involve known and unknown risks, uncertainties and other factors which may cause actual results to differ materially from those expressed or implied by such statements. These factors include uncertainties as to the ability to record revenues based upon the timing of product deliveries, installations and acceptance, accrual of expenses, changes in economic conditions and other risks including those described in the Company's filings on Forms 10K and 10Q with the Securities and Exchange Commission (SEC), press releases and other communications.
Non-GAAP financial measures, such as EBITDA and Adjusted EBITDA excluding equity compensation, should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding the Company’s results and facilitate the comparison of results.
- tables follow -
| DATA I/O CORPORATION | ||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
| (in thousands, except per share amounts) | ||||||||
| (UNAUDITED) | ||||||||
|
Three Months Ended
|
||||||||
| 2019 | 2018 | |||||||
| Net Sales | $ | 6,058 | $ | 7,629 | ||||
| Cost of goods sold | 2,373 | 3,213 | ||||||
| Gross margin | 3,685 | 4,416 | ||||||
| Operating expenses: | ||||||||
| Research and development | 1,681 | 1,879 | ||||||
| Selling, general and administrative | 1,975 | 2,193 | ||||||
| Total operating expenses | 3,656 | 4,072 | ||||||
| Operating income | 29 | 344 | ||||||
| Non-operating income (expense): | ||||||||
| Interest income | 12 | 7 | ||||||
| Gain on sale of assets | 60 | - | ||||||
| Foreign currency transaction gain (loss) | (104 | ) | (176 | ) | ||||
| Total non-operating income (expense) | (32 | ) | (169 | ) | ||||
| Income (loss) before income taxes | (3 | ) | 175 | |||||
| Income tax (expense) benefit | 29 | (45 | ) | |||||
| Net income | $ | 26 | $ | 130 | ||||
| Basic earnings per share | $ | 0.00 | $ | 0.02 | ||||
| Diluted earnings per share | $ | 0.00 | $ | 0.02 | ||||
| Weighted-average basic shares | 8,303 | 8,287 | ||||||
| Weighted-average diluted shares | 8,417 | 8,542 | ||||||
| DATA I/O CORPORATION | ||||||
| CONSOLIDATED BALANCE SHEETS | ||||||
| (in thousands, except share data) | ||||||
| (UNAUDITED) | ||||||
|
March 31,
|
December 31,
|
|||||
| ASSETS | ||||||
| CURRENT ASSETS: | ||||||
| Cash and cash equivalents | $ | 14,782 | $ | 18,343 | ||
| Trade accounts receivable, net of allowance for | ||||||
| doubtful accounts of $87 and $75, respectively | 4,663 | 3,771 | ||||
| Inventories | 5,744 | 5,185 | ||||
| Other current assets | 854 | 621 | ||||
| TOTAL CURRENT ASSETS | 26,043 | 27,920 | ||||
| Property, plant and equipment – net | 1,969 | 1,985 | ||||
| Income tax receivable | 640 | 598 | ||||
| Other assets | 2,618 | 220 | ||||
| TOTAL ASSETS | $ | 31,270 | $ | 30,723 | ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
| CURRENT LIABILITIES: | ||||||
| Accounts payable | $ | 1,236 | $ | 1,755 | ||
| Accrued compensation | 1,401 | 2,872 | ||||
| Deferred revenue | 1,436 | 1,392 | ||||
| Other accrued liabilities | 1,508 | 789 | ||||
| Income taxes payable | 44 | 47 | ||||
| TOTAL CURRENT LIABILITIES | 5,625 | 6,855 | ||||
| Long-term other payables | 2,153 | 511 | ||||
| COMMITMENTS | - | - | ||||
| STOCKHOLDERS’ EQUITY | ||||||
| Preferred stock - | ||||||
| Authorized, 5,000,000 shares, including | ||||||
| 200,000 shares of Series A Junior Participating | ||||||
| Issued and outstanding, none | - | - | ||||
| Common stock, at stated value - | ||||||
| Authorized, 30,000,000 shares | ||||||
| Issued and outstanding, 8,287,825 shares as of March 31, | ||||||
| 2019 and 8,338,628 shares as of December 31, 2018 | 19,235 | 19,254 | ||||
| Accumulated earnings | 3,721 | 3,695 | ||||
| Accumulated other comprehensive income | 536 | 408 | ||||
| TOTAL STOCKHOLDERS’ EQUITY | 23,492 | 23,357 | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 31,270 | $ | 30,723 | ||
| DATA I/O CORPORATION | ||||||||
| NON-GAAP FINANCIAL MEASURE RECONCILIATION | ||||||||
|
Three Months Ended
|
||||||||
| 2019 | 2018 | |||||||
| (in thousands) | ||||||||
| Net Income | $ | 26 | $ | 130 | ||||
| Interest (income) | (12 | ) | (7 | ) | ||||
| Taxes | (29 | ) | 45 | |||||
| Depreciation and amortization | 204 | 229 | ||||||
| EBITDA earnings | $ | 189 | $ | 397 | ||||
| Equity compensation | 287 | 177 | ||||||
| Adjusted EBITDA earnings, | ||||||||
| excluding equity compensation | $ | 476 | $ | 574 | ||||
