Data I/O Reports Third Quarter 2017 Results

REDMOND, WA--(Marketwired - October 26, 2017) - Data I/O Corporation (NASDAQ: DAIO), a leading global provider of advanced data programming and security provisioning solutions for flash-memory, flash based microcontrollers and Secure Elements, today announced financial results for the third quarter ended September 30, 2017.

Third Quarter 2017 Highlights (on year-over-year basis unless noted)

  • Net sales of $9.6 million, a 17-year high, up 46% from $6.6 million in 3Q16
  • Total bookings of $8.2 million, a 10-year high for the third quarter
  • Gross margin as a percentage of sales of 62.1%, up from 55.3% in 3Q16
  • Net income of $1.7 million or $0.20 diluted earnings per share, up from $625,000 or $0.08 diluted earnings per share in 3Q16
  • Key win at European customer with multiple automated systems ordered at a location previously supported by Data I/O's competitors
  • Momentum for SentriX™ Security Provisioning Platform

Management Comments

"We achieved multi-year highs in key financial performance metrics in the third quarter of 2017," said Anthony Ambrose, President and CEO of Data I/O Corporation. "Simply put, we have been 'running on all cylinders' with excellent performance in operations, service, sales and engineering. Data I/O has delivered continued increases in revenues and profitability while investing in future growth initiatives in the automotive electronics and IoT markets.

"Total revenues of $9.6 million increased by 46% from the prior third quarter, reaching the highest level of quarterly revenue in 17 years. Bookings for the quarter were $8.2 million, with over 51% of these orders year-to-date coming from OEMs in the automotive sector. Sales of the PSV7000 product line, our most advanced automated programming system for high capacity applications and offering the industry's lowest total cost of ownership, grew by 137% in the third quarter with strong demand from Europe and the Americas.

"In addition to the strong current performance driven by the automotive electronics market, we are very pleased in the deployment of our first SentriX Security Provisioning System. This system was placed with a leading European programming center. After the quarter ended, we also announced our collaboration with Maxim Integrated to support personalized, secure provisioning of Maxim's DS28C36 and DS2476 DeepCover ICs on the SentriX Platform. Semiconductor companies can expand their addressable markets and better support customers with personalized, secure authentication when they collaborate with Data I/O and the SentriX platform."

Investors and customers will have an opportunity to see Data I/O's latest products at the upcoming Productronica Show in Munich, Germany, from November 14-18, prominently located in Hall 2, Booth 205.

Financial Results

Net sales in the third quarter of 2017 were $9.6 million, compared with $6.6 million in the third quarter of 2016 and $9.1 million in the second quarter of 2017.

For the 2017 third quarter, gross margin as a percentage of sales was 62.1%, compared to 55.3% in the third quarter of 2016 and 56.9% in the second quarter of 2017. The improvement in gross margin as a percentage of sales compared to earlier periods was primarily due to higher order volume and favorable product mix, particularly from demand for the PSV family of products by automotive electronics and programming center customers, and improved factory utilization.

Net income in the third quarter of 2017 was $1.7 million, or $0.20 per diluted share, compared with net income of $625,000, or $0.08 per diluted share, in the third quarter of 2016.

Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") was $2.1 million in the third quarter of 2017, compared to $755,000 in the third quarter of 2016. Adjusted EBITDA, excluding equity compensation, was $2.3 million in the third quarter of 2017, compared to $865,000 in the third quarter of 2016.

Bookings in the third quarter of 2017 were $8.2 million, compared to $7.9 million in the third quarter of 2016. Backlog at September 30, 2017 was $4.6 million, compared to $4.7 million at June 30, 2017 and $3.2 million at December 31, 2016. Deferred revenue was $1.6 million at September 30, 2017, down from $2.8 million at June 30, 2017 and $1.9 million at December 31, 2016.

Spending in the third quarter was up approximately $1.1 million from the same period of 2016. Approximately $655,000 of the increase was selling, general and administrative variable costs related to the increased level of business activity. Approximately $456,000 of the increase reflects additional spending on research and development to support new product development for the SentriX platform, LumenX™ programmer capabilities and features, ConneX™ software, and enhancements to other products. The majority of this was personnel related, including additional headcount in engineering. The Company continues to invest to support automotive demands in the near term and security opportunities in future years.

Data I/O's financial condition remains strong with an increase in its cash position to $15.2 million at September 30, 2017 from $12.0 million at June 30, 2017 and working capital of $18.4 million at September 30, 2017. The Company continues to have no debt.

Conference Call Information

A conference call discussing the third quarter ended September 30, 2017 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 (612) 234-9959, passcode: DAIO. A replay will be made available approximately one hour after the conclusion of the call. To access the replay, please dial (320) 365-3844, access code: 431940. 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 http://www.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, industrial/Internet-of-Things, wireless, consumer electronics, medical and military/aerospace markets. Today, our customers manufacture tens of millions of products each year using Data I/O programming solutions to reliably, securely, and cost-effectively deliver their Intellectual Property into programmable devices. Our expertise in programmable integrated circuits, global supply chain processes, and IP management and protection helps bring innovative new products to life. These solutions are backed by a global network of Data I/O support and service providers, assuring success for our customers.

Learn more at www.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.

                                                                            
                            DATA I/O CORPORATION                            
                   CONSOLIDATED STATEMENTS OF OPERATIONS                    
                  (in  thousands,  except  per  share  amounts)                                    
                                                                (UNAUDITED)                                                                  
                                                                                                                                                        
                                                                Three  Months  Ended              Nine  Months  Ended    
                                                                      September  30,                      September  30,        
                                                            -  ---------------------    ----------------------
                                                                  2017                2016                2017                2016      
                                                            ----------    ----------    ----------    ----------
                                                                                                                                                        
Net  Sales                                          $        9,596    $        6,588    $      25,955    $      17,002
Cost  of  goods  sold                                  3,639              2,945            10,629              7,743
                                                            ----------    ----------    ----------    ----------
    Gross  margin                                          5,957              3,643            15,326              9,259
Operating  expenses:                                                                                                                  
    Research  and  development                  1,814              1,358              5,130              3,655
    Selling,  general  and                                                                                                            
      administrative                                    2,319              1,664              6,300              4,766
                                                            ----------    ----------    ----------    ----------
        Total  operating  expenses              4,133              3,022            11,430              8,421
                                                            ----------    ----------    ----------    ----------
        Operating  income                              1,824                  621              3,896                  838
Non-operating  income                                                                                                                
  (expense):                                                                                                                                  
    Interest  income                                            6                    11                    19                    34
    Gain  on  sale  of  assets                            72                      -                  363                      -
    Foreign  currency  transaction                                                                                            
      gain  (loss)                                            (66)                  (3)              (158)                    41
                                                            ----------    ----------    ----------    ----------
    Total  non-operating  income                    12                      8                  224                    75
                                                            ----------    ----------    ----------    ----------
Income  before  income  taxes                  1,836                  629              4,120                  913
Income  tax  (expense)                              (108)                  (4)              (207)                (12)
                                                            ----------    ----------    ----------    ----------
Net  income                                        $        1,728    $            625    $        3,913    $            901
                                                            ==========    ==========    ==========    ==========
                                                                                                                                                        
                                                                                                                                                        
    Basic  earnings  per  share        $          0.21    $          0.08    $          0.48    $          0.11
    Diluted  earnings  per  share    $          0.20    $          0.08    $          0.47    $          0.11
    Weighted-average  basic                                                                                                        
      shares                                                    8,201              7,977              8,112              7,955
    Weighted-average  diluted                                                                                                    
      shares                                                    8,467              8,183              8,400              8,083
                                                                                                                                                        
 
 
                                                                                                                                                        
                                                        DATA  I/O  CORPORATION                                                        
                                                CONSOLIDATED  BALANCE  SHEETS                                                  
                                          (in  thousands,  except  share  data)                                            
                                                                (UNAUDITED)                                                                  
                                                                                                                                                        
                                                                                                September  30,      December  31,
                                                                                                          2017                      2016        
                                                                                                -------------    -------------
                                                                                                                                                        
ASSETS                                                                                                                                            
CURRENT  ASSETS:                                                                                                                          
    Cash  and  cash  equivalents                                          $            15,164    $            11,571
    Trade  accounts  receivable,  net  of  allowance                                                              
      for                                                                                                                                            
        doubtful  accounts  of  $104  and  $96,                                                                            
          respectively                                                                              5,233                    4,725
Inventories                                                                                          4,950                    4,059
Other  current  assets                                                                            537                        483
                                                                                                -------------    -------------
        TOTAL  CURRENT  ASSETS                                                              25,884                  20,838
                                                                                                                                                        
Property,  plant  and  equipment  -  net                                          2,158                    1,875
Other  assets                                                                                              45                          63
                                                                                                -------------    -------------
        TOTAL  ASSETS                                                                $            28,087    $            22,776
                                                                                                =============    =============
                                                                                                                                                        
LIABILITIES  AND  STOCKHOLDERS'  EQUITY                                                                                
CURRENT  LIABILITIES:                                                                                                                
    Accounts  payable                                                            $              1,598    $              1,428
    Accrued  compensation                                                                    3,273                    2,208
    Deferred  revenue                                                                            1,570                    1,926
    Other  accrued  liabilities                                                              869                        667
    Income  taxes  payable                                                                        160                          36
                                                                                                -------------    -------------
        TOTAL  CURRENT  LIABILITIES                                                      7,470                    6,265
                                                                                                                                                        
Long-term  other  payables                                                                    438                        479
                                                                                                                                                        
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,  8,240,711  shares  as                                                          
          of  September  30,                                                                                                              
        2017  and  8,015,746  shares  as  of  December  31,                                                        
          2016                                                                                            18,836                  19,204
Accumulated  earnings  (deficit)                                                        553                (3,360)
Accumulated  other  comprehensive  income                                        790                        188
                                                                                                -------------    -------------
        TOTAL  STOCKHOLDERS'  EQUITY                                                  20,179                  16,032
                                                                                                -------------    -------------
        TOTAL  LIABILITIES  AND  STOCKHOLDERS'  EQUITY    $            28,087    $            22,776
                                                                                                =============    =============
                                                                                                                                                        
 
 
                                                                                                                                                        
NON-GAAP  FINANCIAL  MEASURE  RECONCILIATION                                                                      
                                                                                                                                                        
                                                                      Three  Months  Ended          Nine  Months  Ended  
                                                                            September  30,                  September  30,      
                                                                    --------------------    --------------------
                                                                          2017              2016              2017              2016    
                                                                    ---------    ---------    ---------    ---------
(in  thousands)                                                                                                                            
Net  Income                                                $      1,728    $          625    $      3,913    $          901
    Interest  (income)                                          (6)              (11)              (19)              (34)
    Taxes                                                                  108                    4                207                  12
    Depreciation  and  amortization                  306                137                634                409
                                                                    ---------    ---------    ---------    ---------
EBITDA  earnings                                      $      2,136    $          755    $      4,735    $      1,288
                                                                                                                                                        
    Equity  compensation                                      173                110                540                409
                                                                    ---------    ---------    ---------    ---------
Adjusted  EBITDA  earnings,                                                                                                      
    excluding  equity  compensation      $      2,309    $          865    $      5,275    $      1,697
                                                                    =========    =========    =========    =========
                                                                                                                                                        
 

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