REDMOND, WA – Data I/O Corp. reported first quarter net sales of $4.8 million, down 21.3% year-over-year. The year-over-year decline in sales reflects the cyclical downtrend in the industry, reduced demand resulting from international trade and geopolitical issues, and the onset of the Covid-19 pandemic, which negatively impacted automotive and industrial market production.
Net loss in the first quarter was $554,000, compared with net income of $26,000 for the first quarter of 2019. Included in net income are foreign currency transaction gains of $52,000 for the 2020 period and losses of $104,000 for the first quarter of 2019. An operating loss of $609,000 compares to operating income of $29,000 for the first quarter of 2019.
Orders in the first quarter were $4.3 million, compared to $6.2 million in the same period last year and $6.9 million in the fourth quarter of 2019. Backlog as of Mar. 31 was $2.3 million, compared with $2.9 million at Dec. 31.
Data I/O had cash of $13.8 million as of Mar. 31, compared with $13.9 million at Dec. 31. The company had net working capital of $18.4 million at Mar. 31, a slight reduction from $18.5 million at Dec. 31. The company continues to have no debt.
"The first quarter delivered unprecedented worldwide conditions with the onset of the Covid-19 pandemic, just as our business seemed to be emerging from the cyclical downtrend that commenced nearly two years ago,” said Anthony Ambrose, president and CEO of Data I/O. “Our thoughts and prayers go out to all the communities, businesses and individuals who have been hard hit by the virus. This has been a crisis affecting global businesses and humanity alike, and we at Data I/O are doing our part to contribute toward the comprehensive steps for safety and recovery.
"We are an essential supplier to the medical and aerospace industries, and therefore need to stay open while keeping our employees and our facilities safe. We have required most of our workforce to operate remotely, while maintaining a core group to staff our manufacturing, service and support operations. Our global teams follow recommended best practices in accordance with local government mandates. I would like to personally recognize the efforts of our entire global workforce, who have risen to the occasion and kept our workplaces, their communities and families safe while supporting customers.
"While we entered the crisis in a position of strength, the unprecedented nature of the pandemic creates significant downside risk under certain scenarios, so we are taking precautionary measures. These include reductions and deferrals in compensation for corporate executives and members of our board of directors, and reduced work weeks for certain locations and functions as outlined in our previous SEC filing. We also will evaluate on a case by case basis all government programs worldwide that help preserve our workforce and cash flow at the same time.
"Globally, the automotive manufacturing arena has been materially impacted by plant closures. While China factories have reopened, the US, Mexico and Europe remain largely shut down through April. Guidance from leading customers indicates they will be reopening soon and ramping European and American output later in the second quarter, with expectation of normal production by the fourth quarter of 2020.
"Data I/O has consistently been at the forefront of the industry. The first quarter was no different, as we continued to invest in our leading data programming and secure provisioning platforms. Our innovations in ultra-fast performance and reliability were recognized in the quarter, and we are honored to have received the coveted Service Excellence Award for Device Programming Support for the second year in a row as determined by customer voting.
"These qualities must be resonating with our target customers from around the world. During the first quarter, our global sales channels and world-class products enabled us to win system orders at new automotive customers in Asia, Americas and Europe, as well as being selected by a global ventilator manufacturer to ramp its production. We were particularly excited to rapidly support the ventilator electronics customer with our most advanced Lumen X programming technology. Locations and markets may change, but the reasons we are selected by customers remain the same: outstanding products, great customer support, financial stability and global capability.
"For our other key target market in IoT, the rapid adoption of work-at-home policies amid Covid-19 underscore the importance of security at all ends of the connected electronics ecosystem. Our SentriX Platform, a highly robust and flexible cost-effective security provisioning and data programming deployment system for authentication devices, secure elements and secure microcontrollers, has experienced steady interest despite the recent stress on the overall economy. The low investment SentriX model is becoming even more attractive to companies that require solutions on tight budgets.
"In these very uncertain times, it is our intent to remain agile, improve our processes, follow our product roadmap, protect our superior financial condition, and grow relative to the competitive landscape until the eventual recovery in electronics manufacturing."