Data I/O (DAIO) 24 Oct 242024 Q3 Earnings call transcript

Good afternoon, and welcome to the Data I/O Third Quarter 2024 Financial Results Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. Jordan Darrow, Investor Relations. Please go ahead, sir.

Thank you, operator, and welcome to the Data I/O Corporation Third Quarter 2024 Financial Results Conference Call. the Officer and Ng. and are and Bill today Financial Chief Vice me company's CEO, President Wentworth; With President, Gerry

a of are the unduly Bill should duty statements. And releases forward-looking we to for be President Commission, be of automotive no concerning acceptance geopolitical over uncertainties uncertainties other industry call XX-Q other to based of of materially statements in any like other other economic include releases, installations, forward-looking shortages, conditions, by communications. prediction market upon. and and is events operations, and on I/O. CEO part begin, not international events, new and company to competitors results product that may expectations, markets, statements, or XX-K accuracy Wentworth, implied by would described and Exchange construed changes now other The which completeness Before deliveries order semiconductor in the market factors and the press Securities record to revenues activity demand, made industry company's the estimated statements risks, like update and forward-looking regulatory and time the with filings new economic conditions and including chain the of statements differ timing unknown product and cause as products, pricing impact Data turn financial Data remind in to position, and any time this overall, trade and and and those performance events, regulations, I from involve activities to risks, level of that ability under and partnerships from to future you the which relied or of I/O call as to statements. These on Forms and supply may results tax known those the from expressed future conference I'd other levels impact factors, such global actual on reform,

It this honor Jordan. much, I/O. is very over is you my be presiding to which an Thank first with Data call,

appointed an address our years young the on future I career XX, ending XX Source background in Directors announced programming VP of used my are September President XX. with the be helpful call. experience Xst a father's our began transition regional on technology Operations my the August discussing may had I've I company's operations. plan independent and company. industry, performance relevant direction I this I/O's Data While since X in a Board last serve to I/O. Electronics, beginning as very of for That I data At At Data started when programming distribution provider year founded of with partner financial in recent year, exposure, Source, CEO age work the managed my for third solutions XXXX. of September service quarter programming and as effective through extensively It later very was of experiences in a October. We'll this CEO that we extremely to of

a international early and expand national provider, XXXX, to had expanded which the Source independent Source become service significant late growth As semiconductor to into in 'XXs the drove industry programming markets.

H.I.G. As to Capital led to of strategic of markets, financing a CEO we which Source, international into XXXX. expand needed April from investment

to partners the the And lead stage and see know present creation business heightened our day, I'm sell Data I/O to very intend in to address in given very for I XXXX, for industry's business value set the As customers, we challenges. the We the investor opportunity to that opportunities well. market excited return. Avnet Fast big XXXXs, forward a significant an early the to grew in a industry decided providing current we and the business I shareholders.

experience Now to has findings serve assessment significant its engaged The to streams, a enhance will the team the customer our our and company, Data are customers base overall solutions direction lead be existing collaborating do this. important our models strategies will very strategy. develop markets could and of into enhanced growth. encouraging our recently initial segments with business markets to we with and customers, joining our be would that discovery, experience. revenue our will customer I/O today. future how to margins. Diversification I/O's drive in extremely in set and markets we intends value to of planning The we on partner thoroughly and Since the address new as let's drill company of new go-forward a with important vast customer serve programming Data suppliers higher as new element

be expenses XX% more board balance We suppliers should to engaging component operating his expenses and Currently, sustainable a have Board revenue. to member, really with our move I/O all to last suppliers Directors the our from identified electronic these Gerry lead strong $X markets. he's our a year additional sheet, will that to to Data phenomenal in Data to willing the streams. Leveraging customers of lead financial growth. Thanks capabilities doing sustain naturally we'll be who to automotive controlling than and finance by million, in able revenue cementing We're This team dominant I/O year. controls. he and that domains, came diversify will electronics of sector. could around the and job engagement strategies are last down sell since work the been is on in as diversify Year-to-date, invest

is at of balance quarter highest end level quarters. the the the third in cash XX Our

at I the where well look closer over to joined recent not for to new like our them to our like we're performance. it were the be as Gerry? implement for bookings financial be, and we future. With to revenues positioned Ng growth that, to While the pass on strategies company, optimizing I'd Gerry a areas it

progress to perspective our balance recent on debt. points QX. Accounts relatively financial automotive future elaborating our Thank million lower condition on $XX.X you, days future contribute I/O's end improved in of sheet, which a in business, positive outlining remains the sheet in as compared end of $XX,XXX in the solid will strong from Cash a receivable financial strong cost look XXXX. $X.X Europe, a The million the a have backlog, QX. as headwinds healthy at and structure, million Bill, performance to of QX. customer September We XX, financial of more and maintained forward, $X net at up and of of balance operating on implement we the remain working markets key at at everyone. increased DSO, Data September continued performance as future quarter of third recover, quarter of collections market focus current sales sales unchanged year. continues commented will as earlier. Despite capital and bookings backlog focus, Bill and and $X.X lower end Americas reflected benefited today earlier market in My from EBITDA reductions We and sales year, comments million lower to looking company to year-to-date of at remained million from transformative of including was and the at in I days XX the cash-generating anticipation of $XX.X Overall, at the good day the at and from detail. as closed and on management. Despite QX. of to year-to-date the forward no efficiencies, million to on operating QX from cash the XXXX, our as the XX, plans, days spending steady $XX.X for shortfalls, was revenue third QX the with adjusted our from the higher or end end XX beginning million Inventory $X.X improving the outstanding, interest expenses.

Moving income to statement. the

from channel, was million period. our down Europe. prior slowed, XX% lower expansion Americas in automotive revenue year XX% quarter of Third grew and beginning QX Offsetting system and the the increased million this shipments Asia at has has compared resulting capacity and $X.X year-to-date. electronics was which year, headwind with the the uncertainty in in Since customer XX% $X.X

the from achieve continue expectations, the offerings. recurring automotive industrial and markets of market we revenue systems are performance centers, to our While programming to sales steady our below our

represents revenue to of software X% grew QX consumables, services our base total softness. in present offset our currently of year-to-date steady the and XX% and help CapEx Specifically, provides a which revenue,

Finally, occur X in backlog planned $XXX,XXX remained expected strong only XX, the at quarters. quarter, $X.X as deliveries reductions with million as next the down of September customer the of start further from

fixed Moving on to prior volume due margin. to our to sales XX% costs. prior QX. manufacturing is lower quarter which service comparable in The margins has relatively We our and achieved and QX hindered year QX, gross

progress streamlining operational I'd and on savings, to sustainable However, have we like material generate the address improvements reductions, cost favorable inventory to expenses. operating continued and impacts. Similarly, quality made continue

QX $XXX,XXX for the of down incurred loss QX prior to product loss efficiency partially improvement investments structure growth. The partially has fund personnel, $XXX,XXX. of IT The largely revenue was X% market, future course, net or its from Third quarter revenue, company basis. critical lower from loss us was future $X.X challenges and and product our to on providing due which continue down and cost expenses. Despite to overall $X.X company of customer. drive quality, lower sales to Core operating shortfall of allowed and a the net million, expenses current QX, $XXX,XXX $XXX,XXX outside critical through, the positioning support an offerings year-to-date prioritization by efficient initiatives lower our and transformative of and new year on This on to other improvements. or innovation to the and costs offset the facilities, and million other a XX% impact declined operating services focus service highest we while and mitigate were performance, more year-to-date again the

continued partially market quarters. ahead, by be Looking coming in backlog mitigated continued we which expect reductions headwinds, will the near-term

no the reimagined made we costs progress offering approach. This quarter and remarks structure, concludes a As managing of strong again, XXXX. costs begin improve on that highlighted. Overall, well our my and new which and remain have course, position, solid we've as, market enable implementing of very the with for cash third financially to I debt, us leveraging

LD October to questions, take for scheduled we NASDAQ the you Bell XX on in New could the XX. Q&A you Main Before include participate and there. Operator, York, Event events. look the to Conference Ceremony These seeing a start Closing process? Ring few please forward October We you are in Micro excited upcoming

come question [Operator Instructions] And from the Singular Research. with David will Marsh first

Welcome aboard.

that about you sector that a auto can better looks we in anything talk activity give be indication bidding if a about of pace recovery talk or little else in activity it for that more frame minute the just of whether and of the time like? maybe maybe you're kind So seeing, for could a just us bit could what demand

significant Thanks we Yes. believe content adoption upward. market kind And to EVs, production a they and pace a for overshot we're content certain that socket space. start little pace some bottom we the sign bumping vehicle. way business. out. as those take been caused will last believe that the and We It's is infrastructure that in believe David. of Sure, some EVs It's future. the our it's the of do in have year module in expansion the areas, increases enter market out at increase, of the obviously, grow little that as troughs some a into most of the the of it's that new choppy the of is slowing well technology don't to we that a which a amount We slowness. good significant back But It obviously down And as in do starting a market there as I as of know the to describe continue it's of starting for but expect back right the any next you of do definitely back year. at of see now, market as models the bit, really it. I cars more on bit, to lead bleed of well. But coming do time, a trough, do also a best sometime seen kind still drove that same to just to but pace the the times, question. hybrids a at even of as some well as know, lot

maybe actually a And about of the to maybe you caught to expansion comments things in is don't as I end really kind and low-hanging that in mentioned markets few never mean that stand you talk me, opportunities. sort your been into fruit of Bill, one think good I that industrial, I lot company beyond broader more of of talk I know been markets. on in encouraging that, really pretty I your different could know, was out I a the but of that specific there's mind mean highlighted. about has

another Yes. done and days a of as supply right? XX about in question. provider, last the great independent our it's this Obviously, platform mean, And I've yourself also service expands customers, I as sales, industry system chain, you but and the can the as partner such lot well which as discovery other an to as well. being over work direct of inserting with manual service really path in systems, portfolio, those drive great more products who that your it's on within can but semi-manual significant also

doing. some the the distribution who and of Avnets There's a customer going that to your capable because we're the diversified adapt to automatically base chains. are global do and which the like business to what's examples base. barometer companies, We models those the Arrows Arrows internally well have such already going Avnets, some our EMS and as it how be need So and as service really good diverse we we to the just service manage to global clients. But changes manufacturers definitely need of do necessary as sector, customer and that supply things in contract on of would be component

a those we'll partners So on broader chain focusing in that be supply markets. serve

Michael from an come Investor. will question next The Cooper,

the executive is compensation. around question My

last made any hasn't XX for the company years, money that for a shareholders. Here's

You've a $XXX,XXX. in been that got the over has $X company all million capital options Ambrose out raise stock pulled our for Anthony and pay. utilizing of of year, time. terms to he Last

what wondering, company compensation the this the being executive is just And new executives, what's -- philosophy I'm aligning are compensation So package? and CEO or the And run for what shareholders? around is performance? for

also question Gerry is this multiple at I'll obviously, take to keep to that I'll threads Yes, and Ng, your call. but it particular level. high try There's a here,

given the of believe part compensation foremost, we market Directors, looks compensation the Board and at of committee Directors. the have First And at levels compensation recurring committee. looks level, on are do and a we That of committee size and competitive, a executive by annual that so I managed are the the the obviously company Board as clearly of basis. given forth.

criteria then looked portion a tied part stock which mix as is and salary, is that's two, structure, generate of company well and in the the business, as the think the in to tied really is value available the So of has And one that structured obviously I proxy, compensation performance including comp compensation, at that is both of our to again which performance very of again, very is shareholders. organized. Number turn closely. to A it's grants. similarly, the salary also a tied portions for the of variable both we

concerns at key things we for Michael, and board are we as points looks the the again, that -- comp those all that as think and compensation establish of I committee and executives. noted, establish So you've

will Caterpillar. The question Blue Tuttle from next come Kris with

you little I could on transition bit wonder growth a the to if strategy. a elaborate

just we tightened that. need products the market. what You've venture for going and booking growth to rough for, wait on maybe shows company we a in nice to be did marketing on is initiatives? to path? here, in job could what's see a that the a be for you ship Do growth? new time should some back up Or cyclical looking down But announced, some new something frames And this be

you cover then. first I'll to do stab and want take Sure. the Gerry,

But couple my different Kris, And good of question. Yes. in Yes, frames I'll in. give a you response. I'll jump

short long deliver year. term to First this term. month, today, focused are frame, what this this Obviously, versus we on we and need quarter

And are Obviously, and on rest those performance initiatives on participation and now. so how the sales, initiatives be have we market. little we focused the how from go our available on marketing active drive a clearly more to of to current more our can we products, going organization

that need have that and indicated. obviously, are balance that we clearly the we've same we opportunities market with current dynamics. At team an Bill to at the clearly that's longer-term emphasis. time, So Again, looking

going a different optimize improve how and we are line. emphasize maybe be our level to Some of product even components terms product in on of

going channel. is it be to of Some

Our Asia market but has our European done not. really have this market well year, Americas and

results the versus but And discussion term. And tomorrow, get so into there's clearly and the not go-to-market we initiatives maybe some organic that may of improve deliver in inorganic. around you course, upon that near then, necessarily opportunities can always

focus in And inorganic short versus everything term term, table organic terms go-to-market as our as on product and so the of I think is activities. long well

that And early were this I've space I/O to at things when for that well kind out so that, Kris, and Data is days been the manual very my the brand Data long supplier. why because back option when very those lot only of days They their in was add was a I/O time. our started one programming wanted build did engineering And the to up given was the teams, the to was And how And that's you apart, a of I'll to we program And were reason algorithms. Data industry. supplier. our in of this and to centers brand, in go back library and device labs I I/O. their Source, development

broadening across do in I our of doing device on we what are that and and I'm I/O customer that manual systems work, that And what How in when we gap. a support? point space? and semi-manual How like, at broadening to we found so of are here And to level base? are going Data what's started our and that, recognition discovery we desktop when our brought some got I look that back industry,

And looking that so that in have at space and we we're products space.

updated? now. push little a while. do can we But It's So need to be been they Sure.

device to it of we're will not library expand when huge, But at And that which -- engineering sales. those lead small by they're in them, they system labs, -- to expand and to our some gaps. fill and when go if we early to you're look looking the They're -- it getting will big that spec-ed production, So early brand. doing enough the product we in

seems example. small, small growth execute as So it a when I an actually you talk about but when it driver big gap, becomes

like turn for conference remarks. to the question-and-answer closing over concludes session. would ahead. I go to This back Please our management any

of Thank you today's very share like you participating Data point, of in coming to and trust event, I/O. At look I'd call. rest away in New the call, out the our some enthusiasm, you City this much, in of and growth operator. To excitement seeing Goodbye our conclude forward week. the next day. Enjoy phase listeners of and to your will from next we this York

The attending Thank conference for today's concluded. you has now presentation.

may now disconnect. You