Interlink Electronics Reports First Quarter 2018 Results

WESTLAKE VILLAGE, Calif.--()--Interlink Electronics, Inc. (NASDAQ: LINK), a world-leading trusted advisor and technology partner in the advancing world of human-machine interface (HMI) and force-sensing technologies, today announced its financial results for the first quarter 2018. GAAP net income for the quarter was $118 thousand or $0.02 per share, reflecting a decrease of approximately 67% over the prior year’s results.

Consolidated Financial Highlights

(Amounts in thousands except per share data and percentages)

             
Three months ended March 31,
Consolidated Financial Results 2018 2017   $ ∆ % ∆
 
Net revenue $ 2,573 $ 2,884 $ (311 ) (10.8 ) %
Gross profit $ 1,411 $ 1,736 $ (325 ) (18.7 ) %
Gross margin 54.8 % 60.2 %
 
Income from Operations $ 219 $ 531 $ (312 ) (58.8 ) %
 
Net income $ 118 $ 364 $ (246 ) (67.6 ) %
Earnings per share (basic and diluted) $ 0.02 $ 0.05 $ (0.03 )
 

EBITDA1

$ 259 $ 583 $ (324 ) (55.6 ) %

EBITDA margin2

10.1 % 20.2 %
 

TTM EBITDA1

$ 1,981 $ 2,927 $ (946 ) (32.3 ) %
 

1 See attached schedules for reconciliation to GAAP numbers.
2 EBITDA margin is EBITDA divided by net revenue.

  • Revenue in the first quarter of 2018 decreased approximately 11% to $2.6 million from $2.9 million in the same year-ago period, primarily due to the loss of a major customer who implemented a design change to their automotive product. However, revenue increased or remained steady in all other markets.
  • Along with decreased revenues, gross margin decreased to 54.8% in the first quarter of 2018 from 60.2% in the same year-ago period, primarily due to additional costs associated with the abrupt loss of the major customer in the automotive market.
  • In the first quarter of 2018, net income was $118 thousand or $0.02 per basic and diluted share, compared to net income of $364 thousand or $0.05 per basic and diluted share in the same year-ago period.
  • The Company generated $259 thousand of EBITDA for the first quarter of 2018, compared with $583 thousand in the same period in 2017. For the trailing twelve-month period ending March 31, 2018, EBITDA was $2.0 million, down from $2.9 million in the comparable period ending March 31, 2017.
  • At March 31, 2018, the company had $8.0 million in cash and cash equivalents, and no debt.

“I am confident that the investments we are making in our R&D and product expansion will set us for long-term growth,” stated Steven N. Bronson, CEO of Interlink Electronics, Inc. “We knew certain programs were nearing the end of their product cycle and we are aggressively pursuing replacement programs. Unfortunately, the timing of one of these end-of-life events was accelerated due to a major automotive customer making a design change. This has created a lull in our revenue cycle, and our financial performance reflects lower revenue, gross profit, net income and EBITDA. Demand in other markets continues to be strong, and we are prepared to capitalize on them. For example, our recent attainment of ISO 13485 Certification has exciting implications for sensor technology development in the medical device market.”

In December, Interlink’s Board of Directors authorized a new program for the repurchase of up to $1 million of the Company’s outstanding common shares. This program authorization will expire in December 2018. In January 2018, the Company repurchased 34,010 common shares under this program, at a price of $4.75 per share.

Mr. Bronson continued, “We are also actively pursuing acquisitions that broaden our technology offerings and increase our revenues. In addition, strategic, disciplined share repurchases allow us to use multiple approaches in delivering value to our stockholders.”

About Interlink Electronics, Inc.

Interlink Electronics is a world-leading trusted advisor and technology partner in the advancing world of human-machine interface (HMI) and force-sensing technologies. Interlink Electronics has led the printed electronics industry in its commercialization of its patented Force-Sensing Resistor (FSR®) technology, which has enabled rugged and reliable HMI solutions. For over 30 years, Interlink Electronics' solutions have focused on handheld user input, menu navigation, cursor control, and other intuitive interface technologies for the world's top electronics manufacturers. Interlink Electronics has a proven track record of supplying HMI solutions for mission-critical applications in a wide range of markets, including, but not limited to, consumer electronics, automotive, industrial, and medical devices. Interlink Electronics serves a world-class customer-base from its our corporate headquarters in Westlake Village, California (greater Los Angeles area), our global research and development center in Singapore, our printed-electronics manufacturing facility in Shenzhen, China and our global distribution and logistics center in Hong Kong. We also maintain technical and sales offices in Japan and at various locations in the United States. For more information, please see our website at www.interlinkelectronics.com.

Forward Looking Statements

This release contains forward-looking statements made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, the Company’s views on future financial performance and are generally identified by phrases such as “thinks,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” and similar words. Forward-looking statements are not guarantees of future performance and are inherently subject to uncertainties and other factors which could cause actual results to differ materially from the forward-looking statement. These statements are based upon, among other things, assumptions made by, and information currently available to, management, including management’s own knowledge and assessment of the Company’s industry, R&D initiatives, competition and capital requirements. Other factors and uncertainties that could affect the Company’s forward-looking statements include, among other things, the following: our success in predicting new markets and the acceptance of our new products; efficient management of our infrastructure; the pace of technological developments and industry standards evolution and their effect on our target product and market choices; the effect of outsourcing technology development; changes in the ordering patterns of our customers; a decrease in the quality and/or reliability of our products; protection of our proprietary intellectual property; competition by alternative sophisticated as well as generic products; continued availability of raw materials for our products at competitive prices; disruptions in our manufacturing facilities; risks of international sales and operations including fluctuations in exchange rates; compliance with regulatory requirements applicable to our manufacturing operations; and customer concentrations. These and other risks are more fully described in the Company’s filings with the Securities and Exchange Commission, including the Company’s most recently filed Quarterly Report on Form 10-Q and Annual Report on Form 10-K, which should be read in conjunction herewith for a further discussion of important factors that could cause actual results to differ materially from those in the forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Information

A non-GAAP financial measure is a numerical measure of a company’s performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles, or GAAP. Non-GAAP measures are not in accordance with, nor are they a substitute for, GAAP measures. Other companies may use different non-GAAP measures and presentation of results.

In addition to financial results presented in accordance with GAAP, this press release presents EBITDA and EBITDA margin, each of which is a non-GAAP measure. EBITDA is determined by taking net income and adding interest, income taxes, depreciation and amortization, and EBITDA margin is determined by dividing EBITDA by net revenue. Interlink believes that these non-GAAP measure, viewed in addition to and not in lieu of net income and gross margin, provide useful information to investors by providing more focused measures of operating results. These metrics are an integral part of Interlink’s internal reporting to evaluate its operations and the performance of senior management. A reconciliation of EBITDA to net income, the most comparable GAAP measure, is available in the accompanying financial tables below. The non-GAAP measures presented herein may not be comparable to similarly titled measures presented by other companies.

APPENDIX

Consolidated Financial Information and Reconciliations: First Quarter 2018

 
INTERLINK ELECTRONICS, INC.
Condensed Consolidated Balance Sheets
(unaudited)
     
March 31, December 31,
2018 2017
(in thousands, except par value)
ASSETS
Current assets
Cash and cash equivalents $ 7,965 $ 7,772
Restricted Cash 5 5
Accounts receivable, net 1,396 1,374
Inventories 1,068 1,195
Prepaid expenses and other current assets   278     338  
Total current assets 10,712 10,684
Property, plant and equipment, net 639 525
Intangibles, net 84 69
Deferred income taxes 425 493
Other assets   60     59  
Total assets $ 11,920   $ 11,830  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 363 $ 255
Accrued liabilities 302 345
Accrued income taxes   57     103  
Total current liabilities   722     703  
 
Total liabilities   722     703  
 
Commitments and contingencies
 
Stockholders' equity
Preferred stock, $0.01 par value: 1,000 shares authorized, no shares issued or outstanding
Common stock, $0.001 par value: 30,000 shares authorized, 7,342 and 7,328 shares issued and outstanding at December 31, 2017 and December 31, 2016, respectively 7 7
Additional paid-in-capital 60,395 60,527
Accumulated other comprehensive income 126 41
Accumulated deficit   (49,330 )   (49,448 )
Total stockholders' equity   11,198     11,127  
Total liabilities and stockholders' equity $ 11,920   $ 11,830  
 
 
INTERLINK ELECTRONICS, INC.
Condensed Consolidated Statements of Income and Comprehensive Income
(unaudited)
   
Three months ended March 31,
2018 2017
(in thousands, except per share data)
 
Revenue, net $ 2,573 $ 2,884
Cost of revenue   1,162     1,148
Gross profit   1,411   1,736
Operating expenses:
Engineering, research and development 224 178
Selling, general and administrative   968     1,027
Total operating expenses   1,192     1,205
Income from operations 219 531
Other income (expense):
Other income (expense), net   (46 )   19
Income from continuing operations before income tax expense 173 550
Income tax expense   55     186
Net income $ 118   $ 364
 
Earnings per share: basic and diluted $ 0.02   $ 0.05
 
Weighted average common shares outstanding - basic   7,328     7,328
Weighted average common shares outstanding - diluted   7,416     7,412
 
 
INTERLINK ELECTRONICS, INC.
Reconciliation of Consolidated Net Income to Consolidated EBITDA
(unaudited)
       
Three months ended March 31, Twelve months ended March 31,
2018 2017 2018 2017
(in thousands) (in thousands)
 
Net income $ 118 $ 364 $ 1,014 $ 2,651
Adjustments to arrive at earnings before interest, income taxes, depreciation and amortization (EBITDA):
Interest expense (income), net (3 ) (1 )
Income tax expense 55 186 743 154
Depreciation and amortization expense   86   33   227     123  
EBITDA $ 259 $ 583 $ 1,981   $ 2,927  

Contacts

Interlink Electronics, Inc.
Steven N. Bronson, CEO
805-623-4184
IR@iefsr.com

Contacts

Interlink Electronics, Inc.
Steven N. Bronson, CEO
805-623-4184
IR@iefsr.com