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|Echelon Reports First Quarter 2018 Results|
"The first quarter saw increased momentum across our Industrial IoT product line and continued interest in our smart city and smart enterprise intelligent lighting solutions," said
GAAP gross margin in the first quarter was 55.9% compared with 57.3% a year ago. The year-over-year decline is the result of higher indirect costs in the first quarter.
GAAP operating expenses for the quarter were
GAAP net loss for the quarter was
Included in both GAAP and non-GAAP results for the first quarter of 2018 were foreign currency translation losses of
The Company ended the quarter with
Connected Lighting Solutions Highlights
Inquiries for connected lighting solutions continued to grow in the first quarter as more customers became interested in the benefits of Echelon's differentiated solutions, and market interest in smart city and smart enterprise applications accelerated. We continue to see strengthening in the market, however sales cycles are expected to remain unpredictable and implementations of these complex systems can take many months, resulting in lumpy revenue in this product line.
Connected lighting projects previously highlighted, including a major city in
During the quarter, a Federal military base selected Echelon as part of their LED base-wide streetlight project. The military base is deploying Echelon intelligent lighting controls not only for energy savings, but also for remote control of beacon lights to alert emergency paths for base activities. The base chose Echelon control solutions due to the proven reliability of the solution.
Echelon recently announced a global value-added reseller agreement with Allied Telesis (ATI) whereby ATI will incorporate Echelon's intelligent lighting solutions into its smart city and smart campus projects. Using Echelon's next generation intelligent lighting solutions, ATI can turn otherwise ordinary LED streetlight retrofits into 21st century smart city networks capable of fine-tuned control and forming the backbone for future smart city applications.
LonWorks®-enabled Embedded IoT Platform Highlights
During the quarter the company continued to promote the value of its 'embrace, extend and enhance' Industrial IoT strategy. This strategy leverages existing control infrastructure such as that built on LonWorks and other protocols ('embrace') and allows customers to extend these networks with emerging technologies such as Bluetooth, WiFi and Zigbee ('extend'). These networks can then easily be connected to emerging cloud-based analytics applications to collect and analyze data to optimize operations ('enhance').
At the center of this strategy is the new SmartServer IoT, announced during the quarter, a next-generation open and programmable edge server that will incorporate the most common industrial device protocols as well as Internet connectivity. The edge server delivers the value of the industrial IoT to traditional control systems such as LonWorks, BACnet or Modbus, releasing the data locked in those systems by bringing the worlds of operational technology, information technology, and cloud services together in a single system.
SmartServer IoT is an open, programmable and extensible platform where OEM's and integrators can ease and accelerate the process of collecting data for valuable analysis. Users will benefit from a significant improvement in performance, faster development times, flexible deployment options and easy customization, all without having to rip and replace legacy devices. This new SmartServer is up to ten times faster and has more than 50 times the memory of its predecessor. With built-in support for the common industrial device protocols, developers can create solutions in days or weeks instead of months or years, saving untold hours of development time.
A report by IHS on the Industrial IoT Segment finds that greater than 80% of the billions of connectable industrial devices are non-IP based, highlighting the market potential for a multi-protocol edge server for capturing and making the data consumable from cloud analytics and AI services.
Echelon also announced the latest upgrade to its LON commissioning tool. This software allows customers to easily and securely deploy, configure, program, and operate large-scale networks of a wide range of devices from a Windows laptop. The new upgrade is a key component of Echelon's embrace, extend and enhance strategy to make embedded device networks easily and securely accessible to the cloud, and demonstrates Echelon's ongoing leadership in innovation for the Industrial IoT.
Under the reseller agreement described above, ATI will be leveraging Echelon's embrace, extend and enhance strategy to help more customers rapidly see the benefits of industrial IoT technologies.
Sales & Marketing Highlights
Echelon recently conducted its first Net Promotor Score (NPS) survey and found its brand loyalty at the same level as some well-known, highly-recognized companies such as
Echelon recently presented at the 2018 AHR Expo in
Echelon's guidance for the second quarter of 2018 is as follows:
For 30 years Echelon (NASDAQ: ELON) has pioneered the development of open-standard networking platforms for connecting, monitoring and controlling devices in commercial and industrial applications. With more than 140 million connected devices installed worldwide, Echelon's solutions host a range of applications enabling customers to reduce energy and operational costs, improve safety and comfort, and create efficiencies through optimizing physical systems. Echelon is focusing today on two IoT (
Echelon, Echelon logo, LON, LonWorks and SmartServer are trademarks of
Use of Non-GAAP Financial Measures
To supplement our consolidated financial statements, which are prepared and presented in accordance with U.S. generally accepted accounting principles, or GAAP, we have provided in this press release certain measures that have not been prepared in accordance with GAAP. These non-GAAP financial measures consist of (i) non-GAAP net income, which is defined as net income less stock-based compensation expense, adjustments to contingent consideration, restructuring, goodwill impairment, lease termination charges, and income tax effect of reconciling items, and (ii) non-GAAP net income per share, which is defined as non-GAAP net income divided by the fully diluted weighted-average number of shares outstanding.
We use these non-GAAP financial measures internally to analyze our financial results and trends, prepare and approve our annual budget, and develop short- and long-term operating plans. We believe these non-GAAP financial measures are useful to investors as an additional tool to evaluate ongoing operating results and trends. However, it is important to note that these non-GAAP financial measures are not based on any standardized methodology and are not necessarily comparable to similar measures used by other companies. In addition, stock-based compensation expense and other excluded items may have a material impact on our reported financial results. As a result, these non-GAAP financial measures should not be considered in isolation or as a substitute for comparable financial information prepared in accordance with GAAP and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. A reconciliation of our non-GAAP financial measures to their most directly comparable GAAP financial measures has been provided in the financial statement tables included in this press release, and investors are encouraged to review the reconciliation.
Risk Factors Regarding Forward-Looking Statements
This press release contains "forward-looking" statements within the meaning of Section 21A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and is subject to the safe harbor created thereby. Forward looking statements include, without limitation, statements regarding our future financial and operating performance, including our guidance for the second quarter of 2018, opportunities for future growth, the size of prospective markets, and our business strategy, plans and objectives. Actual results could differ materially from those projected in our forward-looking statements as a result of a number of risks and uncertainties, including, but not limited to, risks associated with the continued development and growth of markets for Echelon's products; failure to achieve revenue estimates or maintain expense controls; anticipated product performance and value; circumstances that may delay the time frame for achieving our business outlook; our ability to attract and retain talent; the risk of competition that may arise as the market develops or through consolidations in the industry; the timely development of our products and services and the ability of those products and services to perform as designed and meet customer expectations; the deployment and success of the pilot programs and proof of concepts, including the extent to which they result in follow-on orders; the risk that we do not meet expected or required shipment, delivery or acceptance schedules for our products, which could cause us to incur penalties or additional expenses or delay revenue recognition as a result; and other risks identified in the reports we file with the
The financial information presented in this release reflects estimates based on information that is available to us at this time. We undertake no obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.
The condensed consolidated financial statements that follow should be read in conjunction with the notes set forth in our Annual Report on Form 10-K when filed with the
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