Data I/O Corporation

Good afternoon and welcome to the Data I.O. Corporation first quarter 2020 financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded I would now like to turn the conference over to Jordan Darrow. Please go ahead.

Thank you, Grant, and welcome, everyone, to the Data I.O. Corporation first quarter 2020 financial results conference call. With me today are Anthony Ambrose, president and CEO of Data I.O. Corporation, and Joel Hatland, chief operating officer and chief financial officer of Data I.O. Before we begin, I'd like to remind you that statements made in this conference call concerning COVID-19, future revenues, results from operations, financial position, of the U.S. Department of Commerce and the U.S. Department of Commerce. These factors include uncertainties as to the impact from the COVID-19 pandemic, along with expected reopening and recovery efforts within the supply chain and among our customer base, levels of orders, ability to record revenues based upon the timing of product deliveries and installations, market acceptance of new products, changes in economic conditions and market demand, pricing and other activities by competitors, and other risks, including those described from time to time in the company's filings on Form 10-K, and Tanque with the Securities and Exchange Commission, press releases and other communications. The accuracy and completeness of forward-looking statements should not be unduly relied upon. Data I.O. is under no duty to update any of these forward-looking statements. Beyond today's conference call, our next interaction with shareholders will be at our annual meeting to be held on May 18 at 10 a.m. Pacific time at our corporate headquarters in Redmond, Washington. Here's the event. Since our proxy agent was unable to handle mailing of documents to certain shareholders due to COVID-19 challenges, we have made our information available via internet delivery as needed. We have provided ample time for all shareholders to cast their votes, and we hope you do. Shareholders need not come to our offices, but instead may avoid social gathering risk by listening to our annual meeting via conference call. Participation details are available on our website in the investor relations section. Now, I would like to turn over the call to Anthony Ambrose, President and CEO of DataIO.

Thank you very much, Jordan. I'd like to comment on 2020 Q1 and our recent developments, and I'll turn it over to Joel Hatlin for more detail on specific numbers. I'll start by first addressing the COVID-19 situation. For DataIO, the coronavirus pandemic has impacted our customers, suppliers, and our facilities. We've developed plans for each of these while focusing on our three priorities. Number one is keeping our people and their families safe. Number two is keeping our facilities safe and secure. And three is serving our customers. As an essential supplier to the medical and aerospace industries, Data I.O. remained open for business. We've been vigilant in keeping our employees and our facilities safe. We've required most of our workforce to operate remotely while maintaining a core onsite group to staff our manufacturing, service, and support operations. Our global teams follow recommended best practices in accordance with and often in advance of local government mandates. Local health authorities are reporting steady progress in each of our operating locations. And I'd like to take this time to recognize the efforts of our entire global workforce who've risen to the occasion and kept our workplaces, their communities, and families safe while continuing to support our customers. We believe our business and operational strategies have proven helpful as we manage the effects of COVID-19. We remain globally diversified, which provides competitive advantages as well as an inherent hedge to location risk. This diversification spans manufacturing for a multi-source supply chain, engineering, as well as in our customer base, vertical markets, and customer support. From a financial perspective, we entered the crisis in a position of strength. Data I.O. is the largest company in our industry, and we have the strongest balance sheet. We are debt free. At the end of the first quarter, we had $13.8 million in cash, or about $1.68 per share of cash. We believe we're better prepared than anyone else in our industry to ride out whatever may come forward and are taking proactive steps to keep it that way. Beginning in Q1 and early in the second quarter, we implemented cash conservation and expense management initiatives, including reductions and deferrals in executive and board-level compensation. We also reduced work weeks for certain locations and functions. We'll continue to evaluate on a case-by-case basis all government programs worldwide that help us preserve our workforce and cash flow at the same time. At this time, however, we do not plan to accept funding from the SBA PPP program in the United States. Meanwhile, we remain committed to our long-term business objectives. Unlike other industries, we believe the long-term electronics industry will recover and require secure, high-quality device programming as it recovers. Data I.O. has consistently been at the forefront of the industry. First quarter was no different as we continued to invest in our leading data programming and security provisioning platforms. Our innovations in ultra-fast performance and reliability were recognized in the quarter. In addition, we are honored to have received the coveted Service Excellence Award for device programming support for the second consecutive year. Our engineering innovations and comprehensive customer support seem to be resonating with customers around the world. During the first quarter, our global sales channels and world-class products enabled us to win systems orders at new automotive customer locations in Asia, North America, and Europe, as well as being selected by a global ventilator electronics manufacturer to ramp up their production of very important ventilators to fight COVID-19. We're very proud to be supporting the medical manufacturers and their EMS partners and announce the targeted program to provide our fastest support to customers building COVID-19 related products. Economic times 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. Overall worldwide, the automotive electronics market from which we've generated about half of our revenue for the past several years has been materially impacted by plant closures. We've seen China factories reopening, although the U.S., Mexico, and Europe remain shut down. Guidance from leading customers indicate Europe and American locations will be reopening soon and ramping output later in the second quarter with the expectation of normal production by the fourth quarter of this year. Within automotive electronics, we continue to believe that the sector tracks to a substantial multi-year increase in content per vehicle and complexity in design and programming requirements, including the transition from EMMC to UFS flash storage. You'll recall that UFS is the next generation flash memory used in the latest automotive designs to support their projected growth in programmable content and performance. While we're still in a very fluid situation with short-term sales funnel, puts and takes, our conviction remains that the industry will need to reinvest. When that happens, whether or not we're the last one standing, DataIO will be in a position to gain market share with the most robust programming innovations. For our other key target markets and Internet of Things, the rapid adoption of work-at-home policies amid COVID-19 underscores the importance of security at all ends of the connected electronics ecosystem. You've seen reports of hacking incidents are way up not just with home workers but with the associated IOT devices as well. Our Centrix 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 capital investment Centrix model is becoming even more attractive to companies who require solutions on tight budgets. Our marketing mix is shifting as well in response to COVID-19. While some of our key conferences have been canceled, we'll continue to look for ways to expand our market in other venues and through other channels besides trade shows with enhancements in our digital marketing platform. Our strategy for Centrix is to continue to expand its presence and simplify and scale the overall platform in 2020. Our strong cash position maintained by rapid actions combined with our long-term view of the markets gives us the financial flexibility and a launching pad for growth as conditions improve. These uncertain times, it's our intent to remain agile, improve our processes, follow our product roadmaps, protect our superior financial condition, and grow relative to the competition. With that, I'll turn it over to Joel Hatlin, our Chief Operating Officer and Chief Financial Officer, to provide more details on the quarter. Joel?