GlobeNewswire Inc | Feb 11, 2021 04:05PM EST

February 11, 2021

-- Second Quarter Net Revenue Was $16.6 Million, Up 25% from the Prior Year -- GAAP EPS Improved to ($0.05) per Share vs. ($0.06) in the Prior Year -- Non-GAAP EPS Was $0.03 per share -- Demand Was Strong, Leading to Record Backlog Entering Q3

IRVINE, Calif., Feb. 11, 2021 (GLOBE NEWSWIRE) -- Lantronix, Inc. (NASDAQ: LTRX), a global provider of software as a service (SaaS), connectivity services, engineering services, and intelligenthardware solutions forthe Internet of Things (IoT)and Remote Environment Management (REM), today reported results for the second quarter of fiscal 2021 that ended December 31, 2020.

Net revenue totaled $16.6 million, up 25 percent year over year and down 3 percent sequentially.

GAAP EPS improved to ($0.05), compared to ($0.06) in the prior year, and ($0.01) in the prior quarter.

Non-GAAP EPS was $0.03, compared to $0.03 in the prior year, and $0.05 in the prior quarter.

While component delays limited revenue in our second quarter, demand strengthened, and we entered Q3 with a record backlog, stated Paul Pickle, president and CEO of Lantronix. We reacted quickly to increasing lead times to mitigate supply chain disruptions and we look forward to continued growth in our fiscal second half.

Business Outlook

For the full year fiscal 2021, the company expects year over year revenue growth of 15-25 percent, with non-GAAP EPS growth on the order of 75-125 percent.

Conference Call and WebcastLantronix will host an investor conference call and audio webcast today at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) to discuss its results for the second quarter of fiscal 2021 that ended Dec. 31, 2020. To access the live conference call, investors should dial 1-844-802-2442 (US) or 1-412-317-5135 (international) and indicate that they are participating in the Lantronix Q2 FY 2021 call. The webcast will be available simultaneously via the investor relations section of the Companys website at www.lantronix.com.

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 Feb. 18, 2021, by dialing 1-877-344-7529 (US) or 1-412-317-0088 (international) and entering passcode 10149339.

About Lantronix

Lantronix, Inc. is a global provider of software as a service (SaaS), engineering services, and hardware for Edge Computing, the Internet of Things (IoT), and Remote Environment Management (REM). Lantronix enables its customers to provide reliable and secure solutions while accelerating their time to market. Lantronixs products and services dramatically simplify operations through the creation, development, deployment, and management of customer projects at scale while providing quality, reliability and security.

Lantronixs portfolio of services and products address each layer of the IoT Stack including Collect, Connect, Compute, Control and Comprehend, enabling its customers to deploy successful IoT and REM solutions. Lantronixs services and products deliver a holistic approach, addressing its customers needs by integrating a SaaS management platform with custom application development layered on top of external and embedded hardware enabling intelligent edge computing, secure communications (wired, Wi-Fi, and cellular), location and positional tracking, and environmental sensing and reporting.

With three decades of proven experience in creating robust industry and customer specific solutions, Lantronix is an innovator in enabling its customers to build new business models, leverage greater efficiencies and realize the possibilities of the Internet of Things and Remote Environment Management.Lantronixs solutions are deployed inside millions of machines at data centers, offices, and remote sites serving a wide range of industries, including energy, agriculture, medical, security, manufacturing, distribution, transportation, retail, financial, environmental, infrastructure and government.

For more information, visit www.lantronix.com.

Learn more at the Lantronix blog, www.lantronix.com/blog, featuring industry discussion and updates. To follow Lantronix on Twitter, please visit www.twitter.com/Lantronix. View our video library on YouTube at www.youtube.com/user/LantronixInc or connect with us on LinkedIn at www.linkedin.com/company/lantronix

References in this Report to fiscal 2021 refer to the fiscal year ended June 30, 2021 and references to fiscal 2020 refer to the fiscal year ended June 30, 2020.

Discussion of Non-GAAP Financial Measures

Lantronix believes that the presentation of non-GAAP financial information, when presented in conjunction with the corresponding GAAP measures, provides important supplemental information to management and investors regarding financial and business trends relating to the companys financial condition and results of operations. Management uses the aforementioned non-GAAP measures to monitor and evaluate ongoing operating results and trends to gain an understanding of our comparative operating performance. The non-GAAP financial measures disclosed by the company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations of the non-GAAP financial measures to the financial measures calculated in accordance with GAAP should be carefully evaluated. The non-GAAP financial measures used by the company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. The company has provided reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures.

Non-GAAP net income (loss) consists of net income (loss) excluding (i) share-based compensation and the employer portion of withholding taxes on stock grants, (ii) depreciation and amortization, (iii) interest income (expense), (iv) other income (expense), (v) income tax provision (benefit), (vi) severance and restructuring charges, (vii) acquisition related costs, (viii) impairment of long-lived assets, (ix) amortization of purchased intangibles, and (x) amortization of manufacturing profit in acquired inventory.

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.

Guidance on earnings per share growth is provided only on a non-GAAP basis due to the inherent difficulty of forecasting the timing or amount of certain items that have been excluded from the forward-looking non-GAAP measures, and a reconciliation to the comparable GAAP guidance has not been provided because certain factors that are materially significant to Lantronixs ability to estimate the excluded items are not accessible or estimable on a forward-looking basis without unreasonable effort.

Forward-Looking Statements

This news release contains forward-looking statements, including statements concerning our projected operating and financial performance for fiscal 2021, the short- and long-term impact of COVID-19 on our business, our ability to innovate and to enable new business models, leverage greater efficiencies and realize the possibilities of the Internet of Things and Remote Environment Management as well as the benefits that might be derived from the efforts of our team to transform our business. These forward-looking statements are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. We have based our forward-looking statements on our current expectations and projections about trends affecting our business and industry and other future events. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. Forward-looking statements are subject to substantial risks and uncertainties that could cause our results or experiences, or future business, financial condition, results of operations or performance, to differ materially from our historical results or those expressed or implied in any forward-looking statement contained in this news release. Factors which could have a material adverse effect on our operations and future prospects or which could cause actual results to differ materially from our expectations include, but are not limited to: the impact of COVID-19 and the measures to reduce its spread on our employees, supply and distribution chains, the global economy and our financial condition and liquidity; the effects of negative or worsening regional and worldwide economic conditions or market instability on our business, including effects on purchasing decisions by our customers; our ability to continue to generate revenue from products sold into mature markets; our ability to develop, market, and sell new products; our ability to succeed with our new software offerings; fluctuations in our revenue due to the project-based timing of orders from certain customers; unpredictable timing of our revenues due to the lengthy sales cycle for our products and services and potential delays in customer completion of projects; our ability to accurately forecast future demand for our products; delays in qualifying revisions of existing products; constraints or delays in the supply of, or quality control issues with, certain materials or components; difficulties associated with the delivery, quality or cost of our products from our contract manufacturers or suppliers; risks related to the outsourcing of manufacturing and international operations; difficulties associated with our distributors or resellers; intense competition in our industry and resultant downward price pressure; rises in inventory levels and inventory obsolescence; undetected software or hardware errors or defects in our products; cybersecurity risks; our ability to obtain appropriate industry certifications or approvals from governmental regulatory bodies; changes in applicable U.S. and foreign government laws, regulations, and tariffs; our ability to successfully implement our acquisitions strategy or integrate acquired companies; uncertainty as to the future profitability of acquired businesses, and delays in the realization of, or the failure to realize, any accretion from acquisition transactions; acquiring, managing and integrating new operations, businesses or assets, and the associated diversion of management attention or other related costs or difficulties; our ability to protect patents and other proprietary rights and avoid infringement of others proprietary technology rights; the level of our indebtedness, our ability to service our indebtedness and the restrictions in our debt agreements; our ability to attract and retain qualified management; and any additional factors included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2020, filed with the Securities and Exchange Commission (the SEC) on September 11, 2020, including in the section entitled Risk Factors in Item1A of PartI of such report, and in our other public filings with the SEC. In addition, actual results may differ as a result of additional risks and uncertainties of which we are currently unaware or which we do not currently view as material to our business. For these reasons, investors are cautioned not to place undue reliance on any forward-looking statements. The forward-looking statements we make speak only as of the date on which they are made. We expressly disclaim any intent or obligation to update any forward-looking statements after the date hereof to conform such statements to actual results or to changes in our opinions or expectations, except as required by applicable law or the rules of the Nasdaq Stock Market[] LLC. If we do update or correct any forward-looking statements, investors should not conclude that we will make additional updates or corrections.

Lantronix Investor Relations Contact:Jeremy WhitakerChief Financial Officerinvestors@lantronix.com

2021 Lantronix, Inc. All rights reserved. Lantronix and XPort are registered trademarks, and ConsoleFlow is a trademark, of Lantronix, Inc.

LANTRONIX, INC.UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS(In thousands) December 31, June 30, 2020 2020Assets Current assets: Cash and cash equivalents $ 7,621 $ 7,691 Accounts receivable, net 13,298 11,411 Inventories 14,304 13,781 Contract manufacturers' receivables 646 337 Prepaid expenses and other current assets 1,622 1,290 Total current assets 37,491 34,510 Property and equipment, net 1,589 1,587 Goodwill 15,810 15,810 Purchased intangible assets, net 10,688 12,449 Lease right-of-use assets 2,599 3,345 Other assets 244 232 Total assets $ 68,421 $ 67,933 Liabilities and stockholders' equity Current liabilities: Accounts payable $ 7,472 $ 5,331 Accrued payroll and related expenses 2,317 2,658 Short-term debt, net 1,472 1,472 Other current liabilities 6,808 6,308 Total current liabilities 18,069 15,769 Long-term debt, net 2,946 3,682 Other non-current liabilities 1,293 1,962 Total liabilities 22,308 21,413 Commitments and contingencies Stockholders' equity: Common stock 3 3 Additional paid-in capital 247,619 246,265 Accumulated deficit (201,880 ) (200,119 )Accumulated other comprehensive income 371 371 Total stockholders' equity 46,113 46,520 Total liabilities and stockholders' equity $ 68,421 $ 67,933

LANTRONIX, INC.UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share data) Three Months Ended Six Months Ended December 31, September December 31, December 31, 30, 2020 2020 2019 2020 2019 Net revenue $ 16,585 $ 17,146 $ 13,228 $ 33,731 $ 25,969 Cost of revenue 9,589 8,907 6,451 18,496 12,997 Gross profit 6,996 8,239 6,777 15,235 12,972 Operating expenses: Selling, general 4,853 4,899 4,871 9,752 9,344 and administrativeResearch and 2,449 2,572 2,336 5,021 4,957 developmentRestructuring,severance and 137 92 354 229 1,103 related chargesAcquisition-related - - 353 - 996 costsAmortization ofpurchased 879 882 151 1,761 295 intangible assetsTotal operating 8,318 8,445 8,065 16,763 16,695 expensesLoss from (1,322 ) (206 ) (1,288 ) (1,528 ) (3,723 )operationsInterest income (82 ) (85 ) (16 ) (167 ) 40 (expense), netOther income 2 39 (10 ) 41 (53 )(expense), netLoss before income (1,402 ) (252 ) (1,314 ) (1,654 ) (3,736 )taxesProvision for 57 50 37 107 85 income taxesNet loss $ (1,459 ) $ (302 ) $ (1,351 ) $ (1,761 ) $ (3,821 )Net loss per share $ (0.05 ) $ (0.01 ) $ (0.06 ) $ (0.06 ) $ (0.17 )- basic and dilutedWeighted-averagecommon shares - 28,661 28,371 23,145 28,516 23,029 basic and diluted

LANTRONIX, INC.UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENTS(In thousands, except per share data) Three Months Ended Six Months Ended December 31, September December 31, December 31, 30, 2020 2020 2019 2020 2019 GAAP net loss $ (1,459 ) $ (302 ) $ (1,351 ) $ (1,761 ) $ (3,821 )Non-GAAP adjustments:Cost of revenue:Share-based 85 58 48 143 72 compensationEmployerportion ofwithholding - - - - 1 taxes on stockgrantsDepreciationand 181 177 73 358 140 amortizationTotaladjustments to 266 235 121 501 213 cost of revenueSelling,general and administrative:Share-based 671 445 777 1,116 1,236 compensationEmployerportion ofwithholding 6 5 1 11 6 taxes on stockgrantsDepreciationand 37 55 53 92 107 amortizationTotaladjustments toselling, 714 505 831 1,219 1,349 general andadministrativeResearch and development:Share-based 135 100 113 235 208 compensationEmployerportion ofwithholding 2 6 1 8 5 taxes on stockgrantsDepreciationand 50 33 30 83 56 amortizationTotaladjustments to 187 139 144 326 269 research anddevelopmentRestructuring,severance and 137 92 354 229 1,103 related chargesAcquisition - - 353 - 996 related costsAmortization ofpurchased 879 882 151 1,761 295 intangibleassetsAmortization ofmanufacturing - 7 - 7 171 profit in acquiredinventoryTotal non-GAAPadjustments to 1,917 1,625 1,833 3,542 4,183 operatingexpensesInterest(income) 82 85 16 167 (40 )expense, netOther (income) (2 ) (39 ) 10 (41 ) 53 expense, netProvision for 57 50 37 107 85 income taxesTotal non-GAAP 2,320 1,956 2,017 4,276 4,494 adjustmentsNon-GAAP net $ 861 $ 1,654 $ 666 $ 2,515 $ 673 income Non-GAAP netincome per $ 0.03 $ 0.05 $ 0.03 $ 0.08 $ 0.03 share - diluted Denominator forGAAP net income 28,661 28,371 23,145 28,516 23,029 per share -basicNon-GAAP 1,695 1,833 1,848 1,854 1,791 adjustmentDenominator fornon-GAAP net 30,356 30,204 24,993 30,370 24,820 income pershare - diluted GAAP operating $ 8,318 $ 8,445 $ 8,065 $ 16,763 $ 16,695 expensesNon-GAAPadjustments to (1,917 ) (1,625 ) (1,833 ) (3,542 ) (4,183 )operatingexpensesNon-GAAPoperating $ 6,401 $ 6,820 $ 6,232 $ 13,221 $ 12,512 expenses

LANTRONIX, INC.UNAUDITED NET REVENUES BY PRODUCT LINE AND REGION(In thousands) Three Months Ended Six Months Ended December September December December December 31, 2020 30, 2020 31, 2019 31, 2020 31, 2019IoT $ 13,402 $ 14,620 $ 11,180 $ 28,022 $ 21,401REM 3,095 2,402 1,832 5,497 4,133Other 88 124 216 212 435 $ 16,585 $ 17,146 $ 13,228 $ 33,731 $ 25,969 Three Months Ended Six Months Ended December September December December December 31, 2020 30, 2020 31, 2019 31, 2020 31, 2019Americas $ 8,023 $ 10,929 $ 5,840 $ 18,952 $ 11,604EMEA 4,740 2,639 4,362 7,379 8,883AsiaPacific 3,822 3,578 3,026 7,400 5,482Japan $ 16,585 $ 17,146 $ 13,228 $ 33,731 $ 25,969