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Impressive Q from DAIO ($3.50) w/ EPS of .08 on highest revenue in 5 yrs. Backlog way up, cash level on the balance sheet continue to rise. Hweb2 brought this one to board after their .06 last Q.

REDMOND, WA--(Marketwired - October 27, 2016) - Data I/O Corporation (DAIO), the leading global provider of advanced data and security programming and IP management solutions for flash-memory, flash based microcontrollers and other intelligent devices, today announced financial results for the third quarter ended September 30, 2016.

Third Quarter 2016 Highlights (on year-over-year basis unless noted)

Net sales of $6.6 million, a 5-year high
Shipped 100th PSV system in third quarter, marking the fastest ramping automated product in Company history
Total bookings of $7.9 million, an 8-year high
Gross margin as a percentage of sales of 55.3% up from 51.5% in 3Q15 and 53.2% in 2Q16
Net income increases 42% to $625,000, or $.08 diluted earnings per share
Adjusted EBITDA*, excluding equity compensation, of $865,000, up from $645,000
Orders from the Automotive electronics industry represented nearly two thirds of Q3 bookings
Orders from Programming Centers through the third quarter reached their highest level in 10 years
Backlog of $3.1 million at end of quarter, up from $2.0 million at June 30, 2016
Cash and securities of $9.7 million at end of quarter, up 10% from $8.8 million at June 30, 2016

Management Comments
"We had an outstanding third quarter of 2016 borne out of our investments to develop industry leading programming technologies and successful transition into higher growth sectors while benefiting from the leverage in our model," said Anthony Ambrose, President and CEO of Data I/O Corporation.

"Revenues in the third quarter of $6.6 million reached a 5-year high. Consistent with the first half of the year, the primary driver of our revenue growth was demand for our automotive electronics solutions. We continue to experience significant interest in our automotive products from original equipment manufacturer customers as well as major programming centers. Third quarter orders include initial procurement relating to the 5-year supply agreement we were awarded by Bosch Car Multimedia.

"Automotive electronics orders represented nearly two thirds of our total bookings through the third quarter, with the balance for products addressing the burgeoning Internet-of-Things (IoT) market and other vertical market requirements. Total bookings in the third quarter reached the highest level in 8 years at $7.9 million.

"Automotive and IoT remain our top growth engines, which we see as more than making up for our more mature product positioning that brought us to this point. While harvesting the cash flow generated from our legacy business activities, over the past few years we invested in research and development for new platforms which require more processing power, higher volume production, automation and security. This approach will continue as we see massive opportunities ahead. The Company's R&D expense in the third quarter, while similar to the second quarter at approximately 20% of sales, was increased with our higher revenue base to nearly $1.4 million. This includes increases in intellectual property patent protection and engineering recruiting expenses. The increased spending underscores our commitment to next generation products, particularly for managed and secure programming platforms which are important to extend our lead in automotive electronics and to enable the next phase of growth with billions of smart connected devices working within the global cloud ecosystem.

"With our strategic imperatives to grow revenues and invest in product development, we have not lost sight of our other operational objectives. In the third quarter, our financial performance was aided by continued management focus and the leverage in our business. Our gross profit increased 15% as we achieved a nearly 4 percentage point increase in gross margin as a percentage of sales, aided by a favorable product mix. Reflecting measures taken to reduce expenses, a higher volume of business and the leverage impact, third quarter net income increased 42% from the respective prior year period. Finally, improvements in our balance sheet are evidenced by the 10% increase in cash and 5% increase in shareholders' equity at the end of the third quarter 2016 from three months earlier."

Financial Results
Net sales in the third quarter of 2016 were $6.6 million, compared with $6.2 million in the third quarter of 2015. The year-over-year increase in sales was primarily a result of strong bookings in the second and third quarters of 2016, particularly for automotive electronics equipment to end customers and programming centers. During the third quarter, the Company shipped and recorded revenue for its 100th PSV system, marking the fastest ramping automated product in Data I/O history. Net sales for the first nine months of 2016 and 2015 were $17.0 million.

For the 2016 third quarter, gross margin as a percentage of sales was 55.3%, compared to 51.5% in the third quarter of 2015 and 53.2% in the second quarter of 2016. The improvement in gross margin as a percentage of sales compared to the same period in 2015 was primarily due to sales mix and higher order volume. For the first nine months of 2016, gross margin was 54.5% compared to 51.4% in the same period last year.

Net income in the third quarter of 2016 was $625,000, or $0.08 per diluted share, compared with net income of $439,000, or $0.05 per diluted share, in the third quarter of 2015. Year-to-date, net income was $901,000, or $0.11 per diluted share, compared to $589,000, or $0.07 per diluted share for the same period last year.

Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") was a $755,000 in the third quarter of 2016, compared to $552,000 in the third quarter of 2015. Adjusted EBITDA, excluding equity compensation, was $865,000 in the third quarter of 2016, compared to $645,000 in the third quarter of 2015. Year-to-date, EBITDA was $1.3 million, compared to $925,000 for the same period last year, while Adjusted EBITDA excluding equity compensation was $1.7 million in 2016 compared to $1.3 million for the same period last year.

Bookings in the third quarter of 2016 reached the highest level in eight years at $7.9 million, compared to $5.9 million in the third quarter of 2015, and $5.7 million in the second quarter of 2016. Backlog at September 30, 2016 was uncharacteristically high at $3.1 million as compared to $700,000 at December 31, 2015, and $2.0 million at June 30, 2016. Approximately $1 million of the September backlog is for systems that are not scheduled to be recognized as revenue until early 2017. Deferred revenue was $1.3 million at September 30, 2016, compared with $1.0 million at December 31, 2015 and $1.1 million at June 30, 2016.

During the third quarter of 2016, the Company purchased 6,500 shares under its stock buyback program. Year to date, a total of 80,345 shares were repurchased at an average price per share of $2.38.

Conference Call Information
A conference call discussing the third quarter ended September 30, 2016 financial results will follow this release today at 2 p.m. Pacific time/5 p.m. Eastern Time. To listen to the conference call, please dial [phone], passcode: DAIO. A replay will be made available approximately one hour after the conclusion of the call. To access the replay, please dial [phone], access code: 404839. The conference call will also be simultaneously webcast over the Internet; visit the News and Events section of the Data I/O Corporation website at http://www.dataio.com to access the call from the site. This webcast will be recorded and available for replay on the Data I/O Corporation website approximately one hour after the conclusion of the conference call.