Lantronix, Inc.

Good day and welcome to the Lantronics third quarter results conference call. All participants will be in a 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 a 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 Rob Adams.

Please go ahead. Thank you. Good afternoon, everyone, and thank you for joining for the third quarter fiscal 2023 conference call. Joining us today are Paul Pickle, our President and Chief Executive Officer, and Jeremy Whitaker, our Chief Financial Officer. A live and archived webcast of today's call will be available on the company's website. You can find the call-in details for the phone replay in today's earnings release. During this call, management may make forward-looking statements which involve risks and uncertainties that could cause our results to differ materially from management's current expectations. We encourage you to review the cautionary statements and risk factors contained in the earnings release, which was furnished to the SEC today and is available on our website and in the company's SEC filings, such as its 10-K and its 10-Qs. Landtronics undertakes no obligation to revise or update publicly any forward-looking statements to reflect future events or circumstances. Please refer to the news release and the financial information in the investor relations section of our website for additional details that will supplement management's commentary. Furthermore, during the call, the company will discuss some non-GAAP financial measures. Today's earnings release, which is posted in the investor relations section of our website, describes the differences between our non-GAAP and GAAP reporting and presents reconciliations for the non-GAAP financial measures that we will use. With that, I'll now turn the call over to Jeremy Whitaker, Lantronics Chief Financial Officer. Jeremy?

Thank you, Rob, and welcome to everyone joining us for this afternoon's call. I'm going to provide the financial results as well as some of the business highlights for our third quarter of fiscal 2023 before I hand it over to Paul for his commentary. For the third quarter of fiscal 2023, we reported revenue of $33 million, up 5 percent sequentially and up 2 percent from the year-ago period. GAAP gross margin improved to 44.4 percent for the third quarter of fiscal 2023, compared to 43.8 percent in the prior quarter and 42.1 percent in the year-ago quarter. Selling general administrative expenses for the third quarter of fiscal 2023 were $9.9 million, compared with $8.3 million for the third quarter of fiscal 2022 and $9.8 million for the second quarter of fiscal 2023. Research and development expenses for the third quarter of fiscal 2023 were $5.1 million, compared with $4.5 million for the third quarter of fiscal 2022 and $5.1 million for the second quarter of fiscal 2023. The year-on-year increases in SG&A and R&D were largely driven by headcount we assumed in the September 2022 acquisition of Uplogix. Gap net loss was $3.1 million or $0.08 per share during the third quarter of fiscal 2023, compared to a gap net loss of $3.2 million or $0.09 per share during the third quarter of fiscal 2022. Non-gap net income was $2.1 million or $0.06 per share during the third quarter of fiscal 2023, compared to non-GAAP net income of $2.8 million, or $0.08 per share, during the third quarter of fiscal 2022. Now, turning to the balance sheet, we ended the March 2023 quarter with cash and cash equivalents of $12.8 million, as compared to $6.8 million in the prior quarter. Working capital was $49.9 million as of March 31, 2023, as compared with $50.6 million as of December 31, 2022. Net inventories were $51.7 million as of March 31, 2023, compared with $49.2 million as of December 31, 2022. The increase in inventories over the last several quarters was primarily due to the purchase of long lead time components to support the ramp of our supply arrangement with Gridspertise, an inventory assumed in the September acquisition of Oblogix. Now turning to our outlook. For the fourth quarter of fiscal 2023, we are targeting revenue of $33 to $36 million in non-GAAP EPS in a range of $0.06 to $0.08 per share. For fiscal 2024, we are targeting revenue of $175 to $185 million in non-GAAP EPS in a range of $0.50 to $0.60 per share. I'll now turn the call over to Paul. Thank you, Jeremy.