Data I/O (US:DAIO)2022-11-13 16:00Financial 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].