Data I/O (US:DAIO)2021-02-28 07:09Financial Data and Key Metrics Changes - In Q4 2020, net sales were $4.9 million, down from $5.9 million in the prior quarter and $5.9 million in Q4 2019 [25] - Total revenues for 2020 were $20.3 million, down from $21.6 million in 2019 [26] - Gross margin for Q4 2020 was 47%, compared to 55.1% in Q3 2020 and 55.9% in Q4 2019 [28] - The net loss for Q4 2020 was $1.6 million or $0.20 per share, compared to a net loss of $496,000 or $0.06 per share in Q4 2019 [33] Business Line Data and Key Metrics Changes - In Q4 2020, capital equipment sales accounted for 52% of revenues, adapters for 33%, and software services for 15% [27] - For the year 2020, capital equipment sales were 56% of revenues, with adapters at 28% and software services at 16% [27] Market Data and Key Metrics Changes - International sales represented approximately 90% of total net sales in Q4 2020, down from 94% in the same period of 2019 [27] - Backlog at December 31, 2020, was $3.9 million, up from $2.8 million at September 30, 2020 [35] Company Strategy and Development Direction - The company is focused on the automotive electronics market, which is expected to grow at a compounded annual growth rate of 10% to 15% over the next decade [21] - The introduction of the second-generation SentriX product aims to simplify customer engagement and improve operational efficiency [40][46] - The company plans to maintain gross margins in the mid- to high-50% range while controlling production costs [23] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery of bookings and backlog, indicating a positive trend moving into 2021 [12][47] - The company is monitoring short-term factors such as chip shortages in the automotive sector but has not seen a significant impact on its consumables business [12] - Management highlighted the importance of electrification in the automotive industry as a growth catalyst [51][52] Other Important Information - The company took a substantial noncash impairment charge in Q4 2020 related to obsolete systems and prepaid royalties [19] - Cash balance increased to $14.2 million at December 31, 2020, up from $13 million at September 30, 2020 [37] Q&A Session Summary Question: What prompted the move to the second-generation SentriX product? - The decision was driven by both customer requests for simplification and the need to scale operations more effectively [40][46] Question: How does backlog flow to the P&L? - The backlog generated from Q4 bookings will primarily ship in Q1 [47] Question: What are the expectations for cash going forward? - The focus will be on working capital to finance receivables as the economy ramps back up [48] Question: How does the electronic vehicle revolution impact growth plans? - Electrification is expected to be a significant growth area, with opportunities in programming semiconductor content for electric and hybrid vehicles [51][52] Question: What is the company's share of the automotive electronics market? - Approximately 53% of the company's business was automotive, translating to over $10 million [55] Question: What margin opportunities exist in the automotive electronics market? - Margin opportunities are expected to be at least as good as the corporate average [62] Question: Why do consumables revenues not grow exponentially with the installed base? - Growth in consumables is influenced by the utilization of the installed base, not just the number of units [75]