IRVINE, Calif., May 3, 2007 (PRIME NEWSWIRE) -- Lantronix, Inc. (Nasdaq:LTRX), a leader in device networking and data center management technologies, today announced financial results for the third fiscal quarter ended March 31, 2007.
Lantronix reported net revenues of $13.3 million for the third fiscal quarter ended March 31, 2007, compared with $13.1 million for the same period last year. The Company reported a net loss for the third fiscal quarter ended March 31, 2007 of $1.1 million or $(0.02) per basic and diluted share, compared with net income of $399,000, or $0.01 per basic and diluted share, for the same period last year. Net income for the third fiscal quarter of 2006 included $1.4 million of income from the recovery of legal settlement expenses.
Device Enablement revenues for the third fiscal quarter ended March 31, 2007 increased 14% to $9.9 million, or 74% of total net revenues, compared to $8.7 million, or 66% of total net revenues, for the same period last year.
Device Management revenues for the third fiscal quarter ended March 31, 2007 decreased 10% to $1.7 million, or 13% of total net revenues, compared to $1.9 million or 15% of total net revenues, for the same period last year.
Non-core revenues for the third fiscal quarter ended March 31, 2007 decreased 32% to $1.7 million, or 13% of total net revenues, compared to $2.5 million, or 19% of total net revenues, for the same period last year.
Gross profit margin increased to 51.8% for the third fiscal quarter ended March 31, 2007, compared with 50.3% for the same period last year.
Total operating expenses were $7.9 million for the third fiscal quarter ended March 31, 2007, compared to $6.2 million for the third fiscal quarter ended March 31, 2006. Operating expenses for the third fiscal quarter ended March 31, 2006 included $1.4 million of income from the recovery of legal settlement expenses. Selling, general and administrative expense in the third fiscal quarter ended March 31, 2007 was $6.0 million compared to $6.0 million for the same period last year. Research and development expense increased to $1.9 million from $1.6 million for the same period last year, in line with the Company's planned increase in R&D investment to support new product development initiatives.
On March 31, 2007, Lantronix had cash, cash equivalents and marketable securities of $7.6 million.
On January 10, 2007, the settlement of the Company's securities litigation became final and effective; accordingly, the Company reduced its accrued settlement liability and settlement recovery by $13.9 million in connection with this settlement. As of March 31, 2007, the Company had a remaining accrued settlement liability of $1.1 million. The Company expects to issue warrants to purchase Lantronix common stock with a fair value of $1.1 million to the class plaintiffs as final consideration for the remaining settlement liability.
Marc Nussbaum, President and Chief Executive Officer of Lantronix, stated, "In the fiscal third quarter Lantronix delivered its tenth consecutive quarter of year-over-year revenue growth in the combined core business lines of device enablement and device management, which contributed 87% of total third quarter revenues. The typical seasonal slow-down for the period was exaggerated by a steep falloff in non-core sales of 32% and general weakness in the data center equipment management market.
"Revenue growth from our combined core product categories of device enablement and device management continues to trend upward, increasing 13% for the 12-month period ended March 31, 2007 compared to an increase of 11% in the same period a year earlier and 10% in the prior 12-month period. Based on an upturn in orders for device management products in April, we expect sequential and year-over-year increases in this category in fiscal Q4.
"The machine-to-machine (M2M) market has not yet reached the high growth levels forecasted by industry market analysts. Lantronix has responded with aggressive moves to drive market adoption by making device networking easier and more cost effective, while simultaneously adding products to our portfolio to address entirely new applications and industry verticals. We are continuing to invest in bringing innovative products to market, and we anticipate that our new products will contribute to revenues in fiscal 2008."
Recent New Product Highlights
Significant achievements and new products recently announced include:
-- IntelliBox(R)-I/O 2100 with EventTrak technology, a fully
programmable external device server that automates the task of
managing remote equipment and associated reporting. With
IntelliBox, Lantronix addresses a new class of device
applications.
-- SecureLinx Spider(tm), the industry's first IP-based "Distributed
KVM" (keyboard, video and mouse) remote server management
solution small enough to be held in one hand. The SecureLinx
Spider delivers next generation non-blocking, remote management
for servers in regional branch offices, small-medium businesses,
test laboratories and campus environments.
-- MatchPort(tm) b/g, the Company's third generation, full-featured,
secure, embedded wireless (802.11 b/g) networking device server
module, available for under $60 in volume. MatchPort b/g is
suited for a variety of vertical applications including
telematics/transportation, security access control,
building/industrial automation, medical, retail/POS and
power/utilities metering.
-- XPort Direct, the industry's first embedded Ethernet Gateway,
capable of establishing a true machine-to-machine connection at
the breakthrough price point of less than $20 in volume. This
innovation opens device networking to a much broader audience of
potential higher volume applications.
-- ManageLinx, the first offering in a new hardware and software
product line that makes creating scalable and secure end-to-end
device networking systems easier than ever. This offering is
targeted to the newly emerging application of Remote Product
Services (RPS) in a broad variety of vertical product sectors
such as industrial automation, medical and energy. The Lantronix
developed Device Networking Architecture (DNA) at the heart of
ManageLinx bridges remotely located devices to an enterprise
management business system. The platform provides a
device-centric suite of services for system integrators to build
upon and includes advanced device discovery, secure remote subnet
access, security, remote configuration and update, monitoring and
third party application hosting.
Outlook
Nussbaum continued, "Our fourth fiscal quarter outlook is for year-over-year revenue growth in the range of 15% to 23% for the combined core business of device enablement and device management. For the fourth fiscal quarter of 2007 we expect total revenues in the range of $14.6 million to $15.4 million, which equates to a fiscal 2007 revenue outlook of approximately $55.0 million to $56.0 million. For the fourth fiscal quarter of 2007, we expect earnings to range from break-even to a net loss of $(0.01). Our cash balance may decline by up to $500,000 from the balance as of March 31, 2007 to fund working capital requirements.
"Although industry market analysts expect the M2M market to eventually reach a point of sharp acceleration, we are not waiting. Our internal plan assumes a conservative increase in M2M adoption over the next year. With this growth combined with our product expansion into new wireless applications, industrial applications, distributed KVM, and the remote product services equipment market, we expect substantial progress in fiscal 2008 toward achieving our ultimate goal of sustained annual core revenue growth greater than 20% and solid profitability."
Conference Call and Webcast
Management will conduct a conference call with simultaneous webcast today at 5:00 p.m. Eastern time. President and Chief Executive Officer Marc Nussbaum and Chief Financial Officer Reagan Sakai will be on the call to discuss third quarter fiscal 2007 results and answer questions.
Interested parties may participate in the conference call by dialing 866-383-8119 (International dial-in 617-597-5344) and entering passcode 24707458. The live webcast of the conference call may be accessed by visiting About Us: Investor Relations: Presentations at the Lantronix web site at http://www.lantronix.com.
A telephonic replay of the conference call will be available through May 17, 2007 by dialing 888-286-8010 (international dial-in 617-801-6888) and entering passcode 55181035. The webcast will be archived on the Company's web site for twelve months.
About Lantronix
Lantronix, Inc. (Nasdaq:LTRX) develops hardware and software solutions to help businesses and government agencies remotely access and manage network infrastructure equipment and rapidly network-enable their physical electronic devices. With nearly two decades of networking experience, the company is a leader in secure, remote device and data center management. With a family of products ranging from embedded device servers, to external box device servers to data center management, Lantronix is a one-stop shop for technologists who design, manage and configure servers, electronic devices and network infrastructure equipment. The company's worldwide headquarters are located in Irvine, Calif. For more information, visit www.lantronix.com.
The Lantronix company logo is available at http://www.primezone.com/newsroom/prs/?pkgid=1735
Lantronix is a registered trademark of Lantronix, Inc. All other trademarks are properties of their respective owners.
This news release contains forward-looking statements, including statements concerning our issuance of a warrant in connection with the settlement of class action litigation, the potential growth of the M2M market, our ability to penetrate that market through new products and increase our revenues from the M2M market, the overall revenue of Lantronix in future periods, future cash balances and potential future profitability. These forward-looking statements are based on current management expectations and are subject to risks and uncertainties that could cause actual reported results and outcomes to differ materially from those expressed in the forward-looking statements, including but not limited to: final accounting adjustments and results; quarterly fluctuations in operating results; its ability to identify and profitably develop new products that will be attractive to its target markets, including the M2M market and the timing and success of new product introductions; changing market conditions and competitive landscape; government and industry standards; market acceptance of the Company's products, by its customers; pricing trends; actions by competitors; future revenues and margins; changes in the cost or availability of critical components; unusual or unexpected expenses; and cash usage including cash used for product development or strategic transactions; and other factors that may affect financial performance. For a more detailed discussion of these and other risks and uncertainties, see the Company's recent SEC filings, including its Form 10-K for the fiscal year ended June 30, 2006, and its subsequent reports on Form 10-Q and Form 8-K. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof, and the Company undertakes no obligation to update these forward-looking statements to reflect subsequent events or circumstances.
CONSOLIDATED CONDENSED UNAUDITED BALANCE SHEETS
March 31, June 30,
2007 2006
--------- --------
(In thousands)
ASSETS
Current Assets:
Cash and cash equivalents $ 7,483 $ 7,729
Marketable securities 98 88
Accounts receivable, net 2,755 3,087
Inventories, net 9,834 8,113
Contract manufacturers' receivable 1,354 1,049
Settlements recovery - 15,325
Prepaid expenses and other
current assets 532 577
-------- --------
Total current assets 22,056 35,968
Property and equipment, net 1,851 1,589
Goodwill 9,488 9,488
Purchased intangible assets, net 545 610
Officer loans 127 122
Other assets 36 38
-------- --------
Total assets $ 34,103 $ 47,815
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 10,268 $ 7,865
Accrued payroll and related expenses 1,764 1,596
Warranty reserve 445 693
Accrued settlements 1,132 16,767
Other current liabilities 3,145 3,675
-------- --------
Total current liabilities 16,754 30,596
Long-term liabilities 261 230
Long-term capital lease obligations 118 211
Commitments and contingencies
Stockholders' equity:
Common stock 6 6
Additional paid-in capital 184,613 182,857
Accumulated deficit (168,084) (166,450)
Accumulated other comprehensive income 435 365
-------- --------
Total stockholders' equity 16,970 16,778
-------- --------
Total liabilities and stockholders'
equity $ 34,103 $ 47,815
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CONSOLIDATED CONDENSED UNAUDITED STATEMENTS OF OPERATIONS
Three Months Ended Nine Months Ended
March 31, March 31,
------------------- -------------------
2007 2006 2007 2006
-------- -------- -------- --------
(In thousands, except per share data)
Net revenues (1) $ 13,253 $ 13,063 $ 40,596 $ 38,258
Cost of revenues (2) 6,387 6,491 19,723 18,968
-------- -------- -------- --------
Gross profit 6,866 6,572 20,873 19,290
Operating expenses:
Selling, general and
administrative 6,001 6,046 17,556 18,336
Research and
development 1,898 1,572 5,498 4,285
Litigation settlement
costs (recovery) - (1,385) 90 1,215
Amortization of
purchased intangible
assets 18 - 54 2
Restructuring
recovery - - - (29)
-------- -------- -------- --------
Total operating
expenses 7,917 6,233 23,198 23,809
-------- -------- -------- --------
(Loss) income from
operations (1,051) 339 (2,325) (4,519)
Interest income
(expense), net (11) 16 (4) 37
Other income
(expense), net 6 57 733 (2)
-------- -------- -------- --------
(Loss) income before
income taxes (1,056) 412 (1,596) (4,484)
Provision for income
taxes 14 13 38 29
-------- -------- -------- --------
Net (loss) income $ (1,070) $ 399 $ (1,634) $ (4,513)
======== ======== ======== ========
Basic - net (loss)
income per share $ (0.02) $ 0.01 $ (0.03) $ (0.08)
======== ======== ======== ========
Diluted - net (loss)
income per share $ (0.02) $ 0.01 $ (0.03) $ (0.08)
======== ======== ======== ========
Basic - weighted
average shares 59,709 58,758 59,511 58,643
======== ======== ======== ========
Diluted - weighted
average shares 59,709 60,289 59,511 58,643
======== ======== ======== ========
(1) Includes net
revenues from
related party $ 209 $ 430 $ 790 $ 1,036
======== ======== ======== ========
(2) Includes
amortization of
purchased
intangible
assets $ 5 $ 31 $ 11 $ 551
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