Data I/O Corporation (DAIO) Q4 2022 Earnings Conference Call February 23, 2023 5:00 PM ET Company Participants Jordan Darrow - Investor Relations Anthony Ambrose - President and Chief Executive Officer Joel Hatlen - Chief Operating Officer and Chief Financial Officer Conference Call Participants David Kanen - Kanen Wealth Management David Marsh - Singular Research Matt Winthrop - Equitable Chris Wachowski - Private Investor Operator Good afternoon and welcome to the Data I/O Fourth Quarter 2022 Financial Re ...

Bringing Devices to Life Data j2 Nasdaq: DAIO Anthony Ambrose November 2022 Safe Harbor Statements in this presentation concerning economic outlook, expected revenue, expected margins, expected savings, expected results, orders, deliveries, backlog and financial positions, semiconductor chip shortages, supply chain expectations, 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, uncertaint ...

Financial Performance - Net sales for Q3 2022 were $7.2 million, a 7% increase from $6.7 million in Q3 2021, driven by higher demand for equipment and adapter sales[95]. - Recurring and consumable revenues accounted for $3.2 million or 44% of total revenues in Q3 2022, up from $2.7 million or 39% in Q3 2021[95]. - International sales represented approximately 91% of total net sales in Q3 2022, compared to 86% in the prior year[96]. - Bookings in Q3 2022 were $7.1 million, an increase from $5.0 million in Q3 2021, influenced by recovery from the Covid-19 related Shanghai shutdown[97]. - Gross margin for Q3 2022 was 57.0%, down from 60.7% in Q3 2021, primarily due to the strength of the US dollar[99]. - Net income for September 30, 2022, was a loss of $1,630,000 compared to a loss of $350,000 for September 30, 2021[114]. - Adjusted EBITDA for September 30, 2022, was $435,000, down from $1,334,000 for September 30, 2021, representing a decrease of approximately 67.4%[114]. - EBITDA earnings for September 30, 2022, were a loss of $500,000, compared to earnings of $374,000 for September 30, 2021[114]. - The company reported taxes of $700,000 for September 30, 2022, compared to $219,000 for September 30, 2021, indicating a significant increase[114]. - Depreciation and amortization expenses were $441,000 for September 30, 2022, down from $516,000 for September 30, 2021[114]. Operational Challenges - The company is facing challenges due to semiconductor chip shortages, which have caused automotive plant interruptions and increased demand for consumable adapters[71]. - Future results are uncertain due to various factors, including the impact of COVID-19, geopolitical issues, and semiconductor shortages, which may affect revenue projections[65]. - The company continues to focus on research and development in strategic growth markets, including automotive electronics and IoT programming technologies, with an emphasis on secure supply chain solutions[69]. - The Shanghai facility, which was impacted by COVID-19 lockdowns, is now operational and has contributed to a resilient supply chain with dual production capabilities[72]. - The company is managing costs carefully and executing strategies for cash preservation amid ongoing inflation impacts and supply chain issues[68]. Financial Position - The company maintains a strong cash position and balance sheet, allowing for long-term investments in market expansion and new technologies[67]. - Working capital at September 30, 2022, was $16.5 million, a decrease of approximately $2.0 million from December 31, 2021[107]. - As of September 30, 2022, the unamortized future equity compensation expense is $2,371,000 with a remaining weighted average amortization period of 2.64 years[64]. Cost Management - Warranty accruals are based on expected material and labor costs, and an increase in warranty claims could adversely affect gross margins[88]. - Selling, general and administrative expenses in Q3 2022 were $2.0 million, down 11.2% from $2.2 million in Q3 2021[101]. - Research and development expenses in Q3 2022 were $1.4 million, a decrease of 17.2% from $1.7 million in Q3 2021[100]. - The company plans to manage capital expenditures carefully, focusing on internally developed products and equipment[108]. Compliance and Controls - The company evaluated its disclosure controls and procedures and concluded they were effective as of the evaluation date[117]. - There were no changes in internal controls that materially affected financial reporting during the reporting period[120]. - As of September 30, 2022, the company was not involved in any material pending legal proceedings[121]. Tax and Equity Compensation - The company is committed to maintaining tax valuation allowances due to the uncertain economic outlook and loss history, limiting the recognition of net deferred tax assets[89]. - Equity compensation increased to $935,000 for the year ending September 30, 2022, from $960,000 for the same period in 2021[114].

Data I/O Corporation (DAIO) Q3 2022 Earnings Conference Call October 27, 2022 5:00 PM ET Company Participants Jordan Darrow - Investor Relations Anthony Ambrose - President and Chief Executive Officer Joel Hatlen - Chief Operating Officer and Chief Financial Officer Conference Call Participants Brendan McCarthy - Singular Research Avi Fisher - Long Cast Advisers Operator Good afternoon, and welcome to the Data I/O Third Quarter 2022 Financial Results Conference Call. All participants will be in a listen-onl ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________ to ________________ Commission file number: 0-10394 DATA I/O CORPORATION (Exact name of registrant as specified in its charter) Washington (St ...

Data I/O Corporation (DAIO) Q2 2022 Earnings Conference Call July 28, 2022 5:00 PM ET Company Participants Jordan Darrow - IR Anthony Ambrose - President and CEO Joel Hatlen - COO and CFO Conference Call Participants David Wright - Henry Investment Trust Operator Good afternoon and welcome to the Data I/O Second Quarter 2022 Financial Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Op ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________ to ________________ Commission file number: 0-10394 DATA I/O CORPORATION (Exact name of registrant as specified in its charter) Washington 91 ...

Financial Data and Key Metrics Changes - Cash decreased to $12.3 million as of March 31, 2022, down from $14.2 million at the end of the previous year and $13.6 million at the end of Q1 2021 [21] - Revenue for Q1 2022 was $5 million, a 17% decrease from $6 million in Q1 2021, primarily due to approximately $1 million in potential revenue lost from COVID-19 lockdowns in Shanghai [24][25] - Gross margin for Q1 2022 was 46.4%, down nine points from 55.5% in Q1 2021, attributed to sales volume and mix [29] Business Line Data and Key Metrics Changes - Automotive electronics accounted for approximately 63% of orders in Q1 2022, continuing to be the primary market [9][26] - Consumables increased to 33% of revenue sequentially, up from 30% in 2021 and 27% in 2020 [26] - Software and services revenues rose to 15% of revenue in Q1 2022, up from 12% in the prior year [26] Market Data and Key Metrics Changes - International sales represented approximately 94.2% of revenue in Q1 2022, compared to 95.3% in the same period last year [26] - Bookings for Q1 2022 were $6.2 million, equal to Q4 2021, and up 16% from $5.4 million in Q1 2021 [27][28] Company Strategy and Development Direction - The company is focusing on expanding sales opportunities, particularly in the $25 billion to $30 billion microcontroller industry, emphasizing security provisioning [15] - Acknowledgment of the importance of a resilient supply chain strategy, especially in light of recent geopolitical and pandemic-related challenges [52][56] - Plans to celebrate its 50th anniversary with a series of fireside chats to engage with the investment community [18] Management's Comments on Operating Environment and Future Outlook - Management adjusted short-term growth expectations due to economic challenges, with a resumption of growth contingent upon reopening in China and stabilization of supply chains [19] - Confidence in the company's industry-leading automotive presence and secure programming technology platform to capitalize on future demand [20][34] Other Important Information - The company has been awarded over 20 U.S. and international patents related to SentriX and security [16] - A significant backlog of $4.1 million as of March 31, 2022, compared to $2.9 million at the end of Q4 2021, reflecting stronger bookings and lockdown impacts [31] Q&A Session Summary Question: Has the fallout from the Russian invasion of Ukraine helped your security business? - Management noted increased awareness of cybersecurity threats, particularly for IoT devices, highlighting the need for robust security strategies [36] Question: Can you review some of the cash used in the quarter for annual expenses? - The cash change was primarily due to one-time seasonal payments, including a dividend withholding tax and planned disbursements for annual compensation [37] Question: What are the capital expenditures for the year? - Expected capital expenditures are in the range of $600,000 to $700,000, with about half allocated for sales demo systems [38] Question: How do you think about projected cash flow going forward? - Cash flow is expected to align with adjusted EBITDA, with a strong balance sheet and no debt, allowing for fluctuations based on working capital [40] Question: Can you talk about the opportunities to penetrate new markets via SentriX? - SentriX has applicability in both automotive and industrial IoT markets, with a growing customer base in industrial applications [60] Question: What skills are the new Board members bringing to the company? - New Board members bring experience in manufacturing and software, which is expected to enhance the company's strategic direction [69]

Sales Performance - Data I/O's programming solutions generated 58% of total sales in 2021, up from 56% in 2020, driven by capacity, process improvement, and technology advancements [12]. - Adapter sales accounted for 30% of total sales in 2021, increasing from 28% in 2020, reflecting capacity utilization and new customer products [14]. - Software and maintenance sales represented 12% of total sales in 2021, down from 16% in 2020, influenced by the installed base and added capabilities [14]. - Net sales for 2021 were $25,835,000, an increase of 27.3% compared to $20,328,000 in 2020 [108]. - Net sales in the U.S. for 2021 were $2.6 million, an increase from $1.5 million in 2020 [21]. - International sales represented approximately 90% of net sales in 2021, totaling $23.2 million, up from $18.8 million in 2020 [22]. - Equipment sales rose to $14,989,000 in 2021, up from $11,480,000 in 2020, marking an increase of about 30.5% [129]. - U.S. net sales increased to $2.607 million in 2021 from $1.516 million in 2020, representing a growth of 72% [164]. Financial Performance - Gross margin for 2021 was $14,720,000, representing a gross margin percentage of 57.1%, up from $10,822,000 in 2020 [108]. - Net loss for 2021 was $555,000, a significant improvement from a net loss of $3,964,000 in 2020 [108]. - Adjusted EBITDA for 2021 was $1,451,000, compared to an adjusted EBITDA of $(366,000) in 2020 [95]. - Operating income improved to a loss of $273,000 in 2021 from a loss of $3.078 million in 2020, indicating a significant reduction in losses [164]. - The total income tax expense for 2021 was $112,000, a decrease from $387,000 in 2020, reflecting improved tax management [160]. Research and Development - Research and development expenditures were $6.6 million in 2021, representing 26% of net sales [28]. - Research and development expenses for 2021 were $6,635,000, slightly higher than $6,357,000 in 2020 [108]. - The company has approximately 20 U.S. and international awarded patents related to its SentriX platform [29]. Market Trends and Demand - The company experienced a resurgence of orders in Q2 2021, attributed to increased vaccinations and customer business resumption [9]. - Demand slowed in Q3 2021 due to semiconductor supply shortages impacting customer capacity expansion plans [9]. - Data I/O's solutions target high-growth markets, particularly automotive electronics and IoT systems, which are expected to drive future sales growth [15]. - Industry analysts project strong growth in automotive electronics over the next decade, indicating a favorable market outlook for Data I/O [9]. Supply Chain and Operations - The company has maintained a resilient supply chain model, ensuring operational continuity despite COVID-19 related challenges [9]. - The company faced a slowdown in demand in Q3 2021 due to semiconductor supply chain issues, impacting production plans [141]. - The company has implemented additional supplier monitoring and increased inventory stock levels of key parts to enhance supply chain resilience [141]. Assets and Liabilities - Total current assets increased to $25,273,000 in 2021 from $23,250,000 in 2020, reflecting a growth of 8.7% [104]. - Total assets rose to $29,057,000 in 2021, up from $25,592,000 in 2020, marking an increase of 13.5% [104]. - Total stockholders' equity increased to $19,853,000 in 2021 from $19,639,000 in 2020, reflecting a growth of 1.1% [105]. - Total accrued liabilities rose to $1,413,000 in 2021, compared to $1,307,000 in 2020, marking an 8.1% increase [146]. Employee and Compensation - The company employs 95 individuals, with 46 located outside the U.S. [30]. - Share-based compensation for the year ended December 31, 2021, was $1,238,000, compared to $1,467,000 in 2020 [114]. - The Employee Stock Purchase Plan saw 4,484 shares purchased in 2021 at an average price of $5.38 per share, compared to 7,814 shares at $3.71 in 2020 [153]. Miscellaneous - The company has not experienced difficulties related to export regulations and does not require export licenses for its products [22]. - The company has a diverse Board of Directors and is committed to ESG initiatives, including a conflict mineral policy [32]. - The company did not engage in any share repurchase programs in 2021 [158]. - No impairment or impairment-related charges were recorded in 2021, contrasting with $943,000 in impairments recognized in the fourth quarter of 2020 [165].

Financial Data and Key Metrics Changes - The company reported a strong annual revenue growth of 27% in 2021, with net sales in Q4 2021 reaching $6.4 million, up 29% from $4.9 million in Q4 2020 [8][29] - Gross margin increased to 54.4% in Q4 2021 from 47% in the prior year, and for the full year, gross margin was 57% compared to 53.2% in 2020 [35][26] - The net loss for Q4 2021 was $205,000 or $0.02 per share, significantly improved from a net loss of $1.6 million or $0.20 per share in Q4 2020 [39] Business Line Data and Key Metrics Changes - The SentriX Security Provisioning Platform saw a doubling of sales in 2021, contributing to the overall revenue growth [8] - Recurring and consumable revenues represented $2.9 million or 46% of total revenues in Q4 2021, up from $2.4 million in Q4 2020 [32] - Automotive sales accounted for 58% of total sales, consistent with strong growth in the automotive electronics market [25][21] Market Data and Key Metrics Changes - International sales represented approximately 85.3% of net sales for Q4 2021, showing a slight decrease from 89.9% in 2020 [33] - The company anticipates that 6 million electric vehicles will be shipped in 2022, up from 4 million in 2021, indicating a significant growth opportunity in the EV segment [9][10] Company Strategy and Development Direction - The company aims for double-digit bookings growth in 2022, with a target of doubling SentriX bookings [24][26] - Long-term goals include achieving 50% of consolidated revenue from recurring sales, which includes software, services, and consumables [27][70] - The company is focused on enhancing marketing and support capabilities to target new customers, both directly and through channel partners [22][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the underlying demand for automotive electronics, despite challenges from silicon shortages and geopolitical events [45][48] - The company plans to implement further price increases in response to inflation and rising costs [15][31] - Management highlighted the importance of environmental, social, and governance (ESG) issues, indicating a commitment to sustainable business practices [17] Other Important Information - The company appointed two new board members, enhancing governance and expertise in automotive and security sectors [18][19] - The company celebrated its 50th year in business in 2022, positioning itself to capitalize on high-growth trends in the industry [25] Q&A Session Summary Question: What are the order patterns seen in Q1 and confidence in bookings outlook for 2022? - Management noted a good start to Q1, with underlying demand in the automotive sector expected to improve as silicon shortages lessen [44][45] Question: Clarification on gross margin outlook for 2022? - The gross margin outlook is for the full year, with potential volatility on a quarterly basis due to sales mix and currency fluctuations [49][50] Question: Impact of supply chain issues and customer response to price increases? - Most customers understand the price increases due to similar pressures they face, and the company has proactively managed its supply chain to mitigate impacts [51][52] Question: Are there specific bottlenecks in the supply chain? - Management indicated that supply chain issues vary daily, but the company has a resilient supply chain strategy to manage these challenges [58][60] Question: Commentary on recurring revenue and bookings growth? - The long-term goal is for recurring revenue to reach 50% of consolidated revenue, with bookings growth expected to exceed 10% in 2022 [69][70] Question: Operating expenses outlook? - Operating expenses are expected to remain relatively flat, with potential increases tied to inflation and sales volume [81][82]