EX-99.2
5
lantronix_ex9902.htm
ACQUISITION PRESENTATION JULY 2019
Exhibit 99.2
Mobility & Wireless Solutions Acquisition Presentation July 2019 Copyright © Lantronix 2018. All rights reserved. COMPANY CONFIDENTIAL. DO NOT DISTRIBUTE
Forward - Looking Statements COMPANY CONFIDENTIAL. DO NOT DISTRIBUTE This presentation contains forward - looking statements, including statements concerning our business and product development plans and strategies, the perceived benefits of our products, and our future growth and financial performance. Any statement relating to our plans, goals, expectations or any future event should be considered a forward - looking statement. While we have based our forward - looking statements on our current assumptions and expectations, forward - looking statements are not guarantees of future performance and are subject to substantial risks and uncertainties. As a result, our actual results could differ materially from those indicated in our forward - looking statements, and you should not rely on any of these forward - looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward - looking statements include the risks and uncertainties described in "Risk Factors" in our Annual Report on Form 10 - K filed with the Securities and Exchange Commission, or SEC, as well as in our other filings with the SEC. In addition, new risks emerge from time - to - time and we cannot predict all future risks or assess the impact of all risks to our business. Our forward - looking statements are based on our view as of the date they are made. Except as required by law, we expressly disclaim any intent or obligation to update any forward - looking statements after the date hereof because of new information, future events or otherwise. This presentation references certain non - GAAP financial measures, including non - GAAP net income (loss). A reconciliation of the non - GAAP financial measures to the corresponding GAAP financial measures, along with important information regarding our disclosure of the non - GAAP financials, is provided in Appendix A .
OUR MISSION CREATING SECURE DATA ACCESS & MANAGEMENT SOLUTIONS FOR IoT Our mission is to be the leading supplier of IoT solutions that enable companies to dramatically simplify the creation, deployment, and management of IoT projects while providing secure access to data for applications and people. COMPANY CONFIDENTIAL. DO NOT DISTRIBUTE
Lantronix Secure Solutions for the Internet of Things • Global provider of secure data access and management solutions for IoT • Connectivity solutions that are easy to deploy and accelerate time to market • Growing Market with m illions of devices connected w orldwide • Strong Blue Chip customer base • Significant financial momentum and operating leverage IoT Market Growth Opportunity Strong Global Revenue Base Experienced Leadership Team COMPANY CONFIDENTIAL. DO NOT DISTRIBUTE Growth and Improvement in Operating Model
PROVEN LEADERSHIP TEAM Paul Pickle CEO Michael A. Fink VP, Operations Fathi Hakam VP, Engineering Jon Shipman VP, Strategy David Goren VP, Business Affairs, Legal Tom Morton VP, Human Resources Kevin Yoder VP, WW Sales & Marketing COMPANY CONFIDENTIAL. DO NOT DISTRIBUTE Jeremy Whitaker CFO
COMPANY CONFIDENTIAL. DO NOT DISTRIBUTE OUR GROWTH STRATEGY Organic Growth through cloud based software solutions Organic Growth through innovation and leading - edge hardware products Targeted Acquisitions Expand the Lantronix application capability
STRENGTHENING FINANCIALS $- $10,000 $20,000 $30,000 $40,000 $50,000 FY15 FY16 FY17 FY18 Net Revenue by Product Line IoT ITM Other 47.3% 47.7% 52.7% 55.7% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% $(4,000) $(3,000) $(2,000) $(1,000) $- $1,000 $2,000 $3,000 $4,000 FY15 FY16 FY17 FY18 Gross Margin and Profitability GAAP Income Non-GAAP Income GPM % COMPANY CONFIDENTIAL. DO NOT DISTRIBUTE * Refer to Appendix A for reconciliation of Non - GAAP financial measures $7,889 $9,061 $10,391 $13,544 $24,407 $25,545 $26,809 $4,989 $5,962 $8,073 $9,568 $18,925 $19,367 $18,212 $- $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 FY15 FY16 FY17 FY18 Q1 FY19 Q2 FY19 Q3 FY19 Liquidity Working Capital Cash
LANTRONIX Acquires asset tracking solutions, IoT Cellular Gateway, and LoRa /LPWAN capability Strategically Compelling COMPANY CONFIDENTIAL. DO NOT DISTRIBUTE Significant Value Creation Focused End Markets and Complimentary Customer Base Cloud Management Solution
IoT 74% ITM 24% Other 2% Mobility & Wireless Solutions PRODUCT TECHNOLOGY MIX COMPANY CONFIDENTIAL. DO NOT DISTRIBUTE Based on LTM Revenues as Reported IoT 62% Mobility Soln 16% ITM 21% Other 1%
KEY MARKET POSITIONING COMPANY CONFIDENTIAL. DO NOT DISTRIBUTE IoT INDUSTRIAL AUTOMATION ENERGY / UTILITIES HEALTHCARE TRACKING & FLEET MANAGEMENT Mobility & Wireless Solutions
COMPANY CONFIDENTIAL. DO NOT DISTRIBUTE OUR GROWTH OPPORTUNITY S ou r c e: B e r g I n s i gh t, Oct obe r 201 8 $0. 8B $2B Million uni t s N u m be r of C onnec t e d D e v i c es, L PWA N S ou r c e: I o T A na lytics, A ugu st 201 8 $7B $0. 7B Cellular IoT Gateway LP W A N I o T C onnec t i v i t y
COMPANY CONFIDENTIAL. DO NOT DISTRIBUTE SUMMARY ▪ Expands Lantronix's HW capability in IoT to take advantage of high growth applications specifically in Cellular and LPWAN. ▪ Adds asset tracking software to the portfolio ▪ Significant cross sell opportunity into a complimentary customer set ▪ Transaction expected to be accretive to non - GAAP earnings within short period of time as significant synergies are implemented ▪ Targeting >15% growth in Revenue from FY19 to FY20 ▪ Targeting > 30% growth in non - GAAP EPS from FY19 to FY20
investors@lantronix.com COMPANY CONFIDENTIAL. DO NOT DISTRIBUTE
(In thousands) Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 Q3 FY19 FY16 FY17 FY18 GAAP Net Income (Loss) $ 344 $ 752 $ (83) $ 277 $ 857 $ (1,962) $ (277) $ 680 Non - GAAP Adjustments: Share - based Compensation 295 292 478 451 331 870 912 1,169 Depreciation and Amortization 110 106 105 114 122 759 594 442 Interest Expense (Income), Net 5 4 4 (60) (91) 32 23 18 Other (Income) Expense, Net 1 9 10 (8) 12 (61) 3 8 Withholding Taxes on Stock Grants 4 4 6 2 4 4 12 14 Severance and Restructuring Costs (21) - 323 - - 533 246 506 Provision (Benefit) for Income Taxes 29 6 40 14 60 63 68 98 Total Non - GAAP Adjustments 423 421 966 513 438 2,200 1,858 2,255 Non - GAAP Net Income (Loss) $ 767 $ 1,173 $ 883 $ 790 $ 1,295 $ 238 $ 1,581 $2,935 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 Company's financ ial condition and results of operations. The non - GAAP financial measures disclosed by the Company should not be considered a substitute for, or superior to, financial me asures 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 differ ently from, and therefore may not be comparable to, similarly titled measures used by other companies. The Company has provided reconciliations of the non - GAAP fi nancial measures to the most directly comparable GAAP financial measures. Management believes that non - GAAP net income (loss) is an important measure of the Company's business. Management uses this financial measure to monitor and evaluate ongoing operating results and trends to gain an understanding of our comp ara tive operating performance. APPENDIX A: Reconciliation of Non - GAAP Financial Measures COMPANY CONFIDENTIAL. DO NOT DISTRIBUTE
(In thousands) Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 Q3 FY19 FY16 FY17 FY18 Net Revenue $ 11,601 $ 12,037 $ 12,279 $ 12,114 $ 12,334 $ 40,592 $ 44,730 $ 45,580 Gross Profit $ 6,584 $ 6,876 $ 6,741 $ 6,661 $ 7,090 $ 19,378 $ 23,580 $ 25,368 % of Net Revenue 56.8% 57.1% 54.9% 55.0% 57.4% 47.7% 52.7% 55.7% GAAP Net Income (Loss) $ 344 $ 752 $ (83) $ 277 $ 857 $ (1,962) $ (277) $ 680 Non - GAAP Net Income (Loss) $ 767 $ 1,173 $ 883 $ 790 $ 1,295 $ 238 $ 1,581 $2,935 ▪ Maintained gross profit % at mid - 50s despite tariff impact ▪ Continued GAAP profitability ▪ 13th consecutive quarter of non - GAAP net income Q3 FY 2019 HIGHLIGHTS: SELECTED INCOME STATEMENT INFORMATION ▪ 2 nd year of sequential revenue growth ▪ 300 BP improvement in gross profit% ▪ Nearly doubled non - GAAP net income FY 2018 HIGHLIGHTS: COMPANY CONFIDENTIAL. DO NOT DISTRIBUTE * Refer to Appendix A for reconciliation of Non - GAAP financial measures

EX - 99 . 2 5 lantronix _ ex9902 . htm ACQUISITION PRESENTATION JULY 2019 Exhibit 99 . 2 Mobility & Wireless Solutions Acquisition Presentation July 2019 Copyright © Lantronix 2018 . All rights reserved . COMPANY CONFIDENTIAL . DO NOT DISTRIBUTE Forward - Looking Statements COMPANY CONFIDENTIAL . DO NOT DISTRIBUTE This presentation contains forward - looking statements , including statements concerning our business and product development plans and strategies , the perceived benefits of our products , and our future growth and financial performance . Any statement relating to our plans , goals , expectations or any future event should be considered a forward - looking statement . While we have based our forward - looking statements on our current assumptions and expectations , forward - looking statements are not guarantees of future performance and are subject to substantial risks and uncertainties . As a result , our actual results could differ materially from those indicated in our forward - looking statements , and you should not rely on any of these forward - looking statements . Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward - looking statements include the risks and uncertainties described in " Risk Factors " in our Annual Report on Form 10 - K filed with the Securities and Exchange Commission , or SEC , as well as in our other filings with the SEC . In addition , new risks emerge from time - to - time and we can not predict all future risks or assess the impact of all risks to our business . Our forward - looking statements are based on our view as of the date they are made . Except as required by law , we expressly disclaim any intent or obligation to update any forward - looking statements after the date hereof because of new information , future events or otherwise . This presentation references certain non - GAAP financial measures , including non - GAAP net income ( loss ) . A reconciliation of the non - GAAP financial measures to the corresponding GAAP financial measures , along with important information regarding our disclosure of the non - GAAP financials , is provided in Appendix A . OUR MISSION CREATING SECURE DATA ACCESS & MANAGEMENT SOLUTIONS FOR IoT Our mission is to be the leading supplier of IoT solutions that enable companies to dramatically simplify the creation , deployment , and management of IoT projects while providing secure access to data for applications and people . COMPANY CONFIDENTIAL . DO NOT DISTRIBUTE Lantronix Secure Solutions for the Internet of Things • Global provider of secure data access and management solutions for IoT • Connectivity solutions that are easy to deploy and accelerate time to market • Growing Market with m illions of devices connected w orldwide • Strong Blue Chip customer base • Significant financial momentum and operating leverage IoT Market Growth Opportunity Strong Global Revenue Base Experienced Leadership Team COMPANY CONFIDENTIAL . DO NOT DISTRIBUTE Growth and Improvement in Operating Model PROVEN LEADERSHIP TEAM Paul Pickle CEO Michael A . Fink VP , Operations Fathi Hakam VP , Engineering Jon Shipman VP , Strategy David Goren VP , Business Affairs , Legal Tom Morton VP , Human Resources Kevin Yoder VP , WW Sales & Marketing COMPANY CONFIDENTIAL . DO NOT DISTRIBUTE Jeremy Whitaker CFO COMPANY CONFIDENTIAL . DO NOT DISTRIBUTE OUR GROWTH STRATEGY Organic Growth through cloud based software solutions Organic Growth through innovation and leading - edge hardware products Targeted Acquisitions Expand the Lantronix application capability STRENGTHENING FINANCIALS $ - $ 10,000 $ 20,000 $ 30,000 $ 40,000 $ 50,000 FY15 FY16 FY17 FY18 Net Revenue by Product Line IoT ITM Other 47 . 3 % 47 . 7 % 52 . 7 % 55 . 7 % 0 . 0 % 10 . 0 % 20 . 0 % 30 . 0 % 40 . 0 % 50 . 0 % 60 . 0 % $ ( 4,000 ) $ ( 3,000 ) $ ( 2,000 ) $ ( 1,000 ) $ - $ 1,000 $ 2,000 $ 3,000 $ 4,000 FY15 FY16 FY17 FY18 Gross Margin and Profitability GAAP Income Non - GAAP Income GPM % COMPANY CONFIDENTIAL . DO NOT DISTRIBUTE * Refer to Appendix A for reconciliation of Non - GAAP financial measures $ 7,889 $ 9,061 $ 10,391 $ 13,544 $ 24,407 $ 25,545 $ 26,809 $ 4,989 $ 5,962 $ 8,073 $ 9,568 $ 18,925 $ 19,367 $ 18,212 $ - $ 5,000 $ 10,000 $ 15,000 $ 20,000 $ 25,000 $ 30,000 FY15 FY16 FY17 FY18 Q1 FY19 Q2 FY19 Q3 FY19 Liquidity Working Capital Cash LANTRONIX Acquires asset tracking solutions , IoT Cellular Gateway , and LoRa / LPWAN capability Strategically Compelling COMPANY CONFIDENTIAL . DO NOT DISTRIBUTE Significant Value Creation Focused End Markets and Complimentary Customer Base Cloud Management Solution IoT 74 % ITM 24 % Other 2 % Mobility & Wireless Solutions PRODUCT TECHNOLOGY MIX COMPANY CONFIDENTIAL . DO NOT DISTRIBUTE Based on LTM Revenues as Reported IoT 62 % Mobility Soln 16 % ITM 21 % Other 1 % KEY MARKET POSITIONING COMPANY CONFIDENTIAL . DO NOT DISTRIBUTE IoT INDUSTRIAL AUTOMATION ENERGY / UTILITIES HEALTHCARE TRACKING & FLEET MANAGEMENT Mobility & Wireless Solutions COMPANY CONFIDENTIAL . DO NOT DISTRIBUTE OUR GROWTH OPPORTUNITY S ou r c e : B e r g I n s i gh t , Oct obe r 201 8 $ 0 . 8B $ 2B Million uni t s N u m be r of C onnec t e d D e v i c es , L PWA N S ou r c e : I o T A na lytics , A ugu st 201 8 $ 7B $ 0 . 7B Cellular IoT Gateway LP W A N I o T C onnec t i v i t y COMPANY CONFIDENTIAL . DO NOT DISTRIBUTE SUMMARY ▪ Expands Lantronix 's HW capability in IoT to take advantage of high growth applications specifically in Cellular and LPWAN . ▪ Adds asset tracking software to the portfolio ▪ Significant cross sell opportunity into a complimentary customer set ▪ Transaction expected to be accretive to non - GAAP earnings within short period of time as significant synergies are implemented ▪ Targeting > 15 % growth in Revenue from FY19 to FY20 ▪ Targeting > 30 % growth in non - GAAP EPS from FY19 to FY20 investors@lantronix.com COMPANY CONFIDENTIAL . DO NOT DISTRIBUTE ( In thousands ) Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 Q3 FY19 FY16 FY17 FY18 GAAP Net Income ( Loss ) $ 344 $ 752 $ ( 83 ) $ 277 $ 857 $ ( 1,962 ) $ ( 277 ) $ 680 Non - GAAP Adjustments : Share - based Compensation 295 292 478 451 331 870 912 1,169 Depreciation and Amortization 110 106 105 114 122 759 594 442 Interest Expense ( Income ) , Net 5 4 4 ( 60 ) ( 91 ) 32 23 18 Other ( Income ) Expense , Net 1 9 10 ( 8 ) 12 ( 61 ) 3 8 Withholding Taxes on Stock Grants 4 4 6 2 4 4 12 14 Severance and Restructuring Costs ( 21 ) - 323 - - 533 246 506 Provision ( Benefit ) for Income Taxes 29 6 40 14 60 63 68 98 Total Non - GAAP Adjustments 423 421 966 513 438 2,200 1,858 2,255 Non - GAAP Net Income ( Loss ) $ 767 $ 1,173 $ 883 $ 790 $ 1,295 $ 238 $ 1,581 $ 2,935 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 Company 's financ ial condition and results of operations . The non - GAAP financial measures disclosed by the Company should not be considered a substitute for , or superior to , financial me asures 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 differ ently from , and therefore may not be comparable to , similarly titled measures used by other companies . The Company has provided reconciliations of the non - GAAP fi nancial measures to the most directly comparable GAAP financial measures . Management believes that non - GAAP net income ( loss ) is an important measure of the Company 's business . Management uses this financial measure to monitor and evaluate ongoing operating results and trends to gain an understanding of our comp ara tive operating performance . APPENDIX A : Reconciliation of Non - GAAP Financial Measures COMPANY CONFIDENTIAL . DO NOT DISTRIBUTE ( In thousands ) Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 Q3 FY19 FY16 FY17 FY18 Net Revenue $ 11,601 $ 12,037 $ 12,279 $ 12,114 $ 12,334 $ 40,592 $ 44,730 $ 45,580 Gross Profit $ 6,584 $ 6,876 $ 6,741 $ 6,661 $ 7,090 $ 19,378 $ 23,580 $ 25,368 % of Net Revenue 56 . 8 % 57 . 1 % 54 . 9 % 55 . 0 % 57 . 4 % 47 . 7 % 52 . 7 % 55 . 7 % GAAP Net Income ( Loss ) $ 344 $ 752 $ ( 83 ) $ 277 $ 857 $ ( 1,962 ) $ ( 277 ) $ 680 Non - GAAP Net Income ( Loss ) $ 767 $ 1,173 $ 883 $ 790 $ 1,295 $ 238 $ 1,581 $ 2,935 ▪ Maintained gross profit % at mid - 50s despite tariff impact ▪ Continued GAAP profitability ▪ 13th consecutive quarter of non - GAAP net income Q3 FY 2019 HIGHLIGHTS : SELECTED INCOME STATEMENT INFORMATION ▪ 2 nd year of sequential revenue growth ▪ 300 BP improvement in gross profit % ▪ Nearly doubled non - GAAP net income FY 2018 HIGHLIGHTS : COMPANY CONFIDENTIAL . DO NOT DISTRIBUTE * Refer to Appendix A for reconciliation of Non - GAAP financial measures