Lantronix Reports First Quarter Fiscal 2020 Results - Lantronix (NASDAQ:LTRX)

First Quarter Net Revenue was $12.7 Million, Up 4% from the Prior Year and Up 25% Sequentially
GAAP EPS, Inclusive of Acquisition and Restructuring Expenses was ($0.11) per share
Non-GAAP EPS was $0.00 per share
Closed the Acquisition of Maestro Wireless, Adding Mobile Connectivity and Asset Tracking to Product Portfolio
Announced the Definitive Agreement to Acquire Intrinsyc Technologies Corporation, Which is Expected to Close Early 2020

IRVINE, Calif., Nov. 13, 2019 (GLOBE NEWSWIRE) -- Lantronix, Inc. (NASDAQ:LTRX), a global provider of secure data access and management solutions for the industrial Internet of Things (IoT) today reported results for the first quarter of fiscal 2020 that ended September 30, 2019.

Net revenue totaled $12.7 million, up 4% year over year and 25% sequentially, reflecting the acquisition of Maestro Wireless (Maestro).

GAAP gross margin for the first quarter of fiscal 2020 was 48.6%, including the contribution from Maestro and a non-cash charge of $0.2 million for amortization of manufacturing profit in acquired inventory.

GAAP EPS was ($0.11), compared to ($0.00) in the year-ago quarter and ($0.06) in the prior quarter and reflecting expenses related to the acquisition of Maestro. Non-GAAP EPS was $0.00, down from $0.04 in the year-ago first quarter and $0.03 in the prior fiscal quarter.

Business Outlook
Lantronix expects net revenue in the second quarter of fiscal 2020 between $12.5 million and $13.5 million and non-GAAP EPS between $0.02 and $0.06.

For Fiscal 2020, Lantronix continues to expect revenue growth of 15% and non-GAAP EPS growth of 30% for its current business as compared to Fiscal 2019. Assuming that the recently announced acquisition of Intrinsyc Technologies is closed by January of 2020, Lantronix expects fiscal 2020 revenue growth on the order of 25% and non-GAAP EPS growth of 35% as compared to Fiscal 2019.

"Our first quarter was one of change and progress," said Paul Pickle, president and CEO of Lantronix. "As we look to the remainder of the fiscal year we are steadfastly focused on organic growth, the closure and integration of recently announced acquisitions, and the realization of synergies equating to strong earnings growth for the benefit of shareholders."

Investors can access a replay of the conference call starting at approximately 5:00 p.m. Pacific Time today at www.lantronix.com. A telephonic replay will also be available through December 13, 2019, by dialing 1-877-344-7529 (US) or 1-412-317-0088 (international) and entering passcode 10136685.

About Lantronix
Lantronix, Inc. is a global provider of secure data access and management solutions for the Internet of Things (IoT) assets. Our mission is to be the leading supplier of IoT solutions that enable companies to dramatically simplify the creation, deployment, and management of IoT projects while providing secure access to data for applications and people.

With more than two decades of experience in creating robust machine to machine (M2M) technologies, Lantronix is an innovator in enabling our customers to build new business models and realize the possibilities of the Internet of Things. Our connectivity solutions are deployed inside millions of machines serving a wide range of industries, including industrial, medical, security, transportation, retail, financial, environmental and government.

Discussion of Non-GAAP Financial Measures

Non-GAAP net income (loss) per share is calculated by dividing non-GAAP net income (loss) by non-GAAP weighted-average shares outstanding (diluted). For purposes of calculating non-GAAP net income (loss) per share, the calculation of GAAP weighted-average shares outstanding (diluted) is adjusted to exclude share-based compensation, which for GAAP purposes is treated as proceeds assumed to be used to repurchase shares under the GAAP treasury stock method.

Forward-Looking Statements

Lantronix Investor Relations Contact:
Jeremy Whitaker
Chief Financial Officer
[email protected]

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LANTRONIX, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

	September 30,			June 30,
		2019			2019
Assets
Current assets:
Cash and cash equivalents	$	12,028		$	18,282
Accounts receivable, net		7,845			7,388
Inventories, net		12,423			10,509
Contract manufacturers' receivable		419			1,324
Prepaid expenses and other current assets		1,274			687
Total current assets		33,989			38,190
Property and equipment, net		1,351			1,199
Goodwill		12,458			9,488
Intangible assets, net		1,768			-
Other assets		1,188			67
Total assets	$	50,754		$	48,944

Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	5,986		$	4,716
Accrued payroll and related expenses		2,588			2,060
Warranty reserve		108			116
Other current liabilities		6,296			4,580
Total current liabilities		14,978			11,472
Other non-current liabilities		384			206
Total liabilities		15,362			11,678

Commitments and contingencies

Stockholders' equity:
Common stock		2			2
Additional paid-in capital		226,870			226,274
Accumulated deficit		(191,851	)		(189,381	)
Accumulated other comprehensive income		371			371
Total stockholders' equity		35,392			37,266
Total liabilities and stockholders' equity	$	50,754		$	48,944

LANTRONIX, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)


	Three Months Ended
	September 30,		June 30,		September 30,
	2019		2019		2018
Net revenue	$	12,741	$	10,153	$	12,279
Cost of revenue	6,546		4,411		5,499
Gross profit	6,195		5,742		6,780
Operating expenses:
Selling, general and administrative	4,473		3,554		4,271
Research and development	2,621		2,200		2,215
Restructuring, severance and related charges	749		823		323
Acquisition-related costs	643		410		-
Impairment of long-lived asset	-		275		-
Amortization of purchased intangible assets	144		-		-
Total operating expenses	8,630		7,262		6,809
Loss from operations	(2,435)		(1,520)		(29)
Interest income (expense), net	56		89		(4)
Other income (expense), net	(43)		(1)		(10)
Loss before income taxes	(2,422)		(1,432)		(43)
Provision for income taxes	48		27		40
Net loss	$	(2,470)	$	(1,459)	$	(83)
Net loss per share - basic and diluted	$	(0.11)	$	(0.06)	$	(0.00)
Weighted-average common shares - basic and diluted	22,913		22,621		19,323

LANTRONIX, INC.
UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENTS
(In thousands, except per share data )

	Three Months Ended
	September 30,			June 30,			September 30,
	2019			2019			2018

GAAP net loss	$	(2,470	)	$	(1,459	)	$	(83	)
Non-GAAP adjustments:
Cost of revenue:
Share-based compensation		24			23			17
Employer portion of withholding taxes on stock grants		1			-			-
Depreciation and amortization		67			53			48
Total adjustments to cost of revenue		92			76			65
Selling, general and administrative:
Share-based compensation		459			491			400
Employer portion of withholding taxes on stock grants		5			-			6
Depreciation and amortization		54			48			46
Total adjustments to selling, general and administrative		518			539			452
Research and development:
Share-based compensation		95			97			61
Employer portion of withholding taxes on stock grants		4			-			-
Depreciation and amortization		26			22			11
Total adjustments to research and development		125			119			72
Restructuring, severance and related charges		749			823			323
Acquisition related costs		643			410			-
Impairment of long-lived asset		-			275			-
Amortization of purchased intangible assets		144			-			-
Amortization of manufacturing profit in acquired inventory		171			-			-
Total non-GAAP adjustments to operating expenses		2,350			2,166			847
Interest (income) expense, net		(56	)		(89	)		4
Other expense, net		43			1			10
Provision for income taxes		48			27			40
Total non-GAAP adjustments		2,477			2,181			966
Non-GAAP net income	$	7		$	722		$	883


Non-GAAP net income per share - diluted	$	0.00		$	0.03		$	0.04

Denominator for GAAP net loss per share - diluted	$	22,913		$	22,621		$	19,323
Non-GAAP adjustment		1,834			1,909			2,472
Denominator for non-GAAP net income per share - diluted	$	24,747		$	24,530		$	21,795

GAAP operating expenses	$	8,630		$	7,262		$	6,809
Non-GAAP adjustments to operating expenses		(2,350	)		(2,166	)		(847	)
Non-GAAP operating expenses	$	6,280		$	5,096		$	5,962

LANTRONIX, INC.
UNAUDITED NET REVENUES BY PRODUCT LINE AND REGION
(In thousands)

	Three Months Ended
	September 30, 2019		June 30, 2019		September 30, 2018
IoT	$	10,221	$	8,327	$	8,967
IT Management		2,301		1,646		3,101
Other		219		180		211
	$	12,741	$	10,153	$	12,279


	Three Months Ended
	September 30, 2019		June 30, 2019		September 30, 2018
Americas	$	5,764	$	5,217	$	6,914
EMEA		4,521		3,229		3,520
Asia Pacific Japan		2,456		1,707		1,845
	$	12,741	$	10,153	$	12,279

LANTRONIX, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

	September 30,			June 30,
		2019			2019
Assets
Current assets:
Cash and cash equivalents	$	12,028		$	18,282
Accounts receivable, net		7,845			7,388
Inventories, net		12,423			10,509
Contract manufacturers' receivable		419			1,324
Prepaid expenses and other current assets		1,274			687
Total current assets		33,989			38,190
Property and equipment, net		1,351			1,199
Goodwill		12,458			9,488
Intangible assets, net		1,768			-
Other assets		1,188			67
Total assets	$	50,754		$	48,944

Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	5,986		$	4,716
Accrued payroll and related expenses		2,588			2,060
Warranty reserve		108			116
Other current liabilities		6,296			4,580
Total current liabilities		14,978			11,472
Other non-current liabilities		384			206
Total liabilities		15,362			11,678

Commitments and contingencies

Stockholders' equity:
Common stock		2			2
Additional paid-in capital		226,870			226,274
Accumulated deficit		(191,851	)		(189,381	)
Accumulated other comprehensive income		371			371
Total stockholders' equity		35,392			37,266
Total liabilities and stockholders' equity	$	50,754		$	48,944