Interlink Electronics Reports Fourth Quarter and Full Year 2016 Results

Net Income increased approximately 78% and 67% for the Fourth Quarter and Twelve Months ended December 31, 2016

WESTLAKE VILLAGE, Calif.--()--Interlink Electronics, Inc. (NASDAQ: LINK), a global leader in human-machine interface (HMI) and sensor technologies, today announced its financial results for the three and twelve months ended December 31, 2016.

“Our margins continue to improve, and we have been able to leverage our cost structure, essentially keeping our expenses in line while supporting strong increases in revenue.”

Consolidated Financial Highlights

(Amounts in thousands except per share data and percentages)

             
Three months ended December 31, Year ended December 31,
Consolidated Financial Results 2016   2015   % ∆     2016 2015   % ∆  
 
Net revenue $ 2,781 $ 2,770 0.4 % $ 11,886 $ 10,514 13.0 %
Gross profit $ 1,542 $ 1,539 0.2 % $ 7,006 $ 5,645 24.1 %
Gross margin 55.4 % 55.6 % 58.9 % 53.7 %
 
Income from Operations $ 378 $ 504 (25.0 ) % $ 2,847 $ 1,682 69.3 %
 
Net income $ 924 $ 518 78.4 % $ 2,893 $ 1,731 67.1 %
Earnings per share (basic and diluted) $ 0.12 $ 0.07 $ 0.39 $ 0.23
 

EBITDA1

$ 416 $ 535 (22.2 ) % $ 3,001 $ 1,814 65.4 %

EBITDA margin2

15.0 % 19.3 % 25.2 % 17.3 %
 

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

  • In the fourth quarter of 2016, net income totaled $924 thousand or $0.12 per basic and diluted share, compared to net income of $518 thousand or $0.07 per basic and diluted share in the same year-ago period. For the full year, net income was $2.9 million or $0.39 per basic and diluted share compared to net income of $1.7 million or $0.23 per basic and diluted share in the comparable period.
  • Revenue in the fourth quarter of 2016 was comparable to the same period in 2015. For the full year, revenue increased 13.0% to $11.9 million from $10.5 million in 2015.
  • Gross margin increased to 55.4% in the fourth quarter of 2016 from 44.4% in the same year-ago period. For the full year, gross margin improved to 58.9% from 53.7% in the comparable period.
  • The Company generated $3.0 million of EBITDA for the year ended December 31, 2016, compared with $1.8 million in 2015.
  • At December 31, 2016, the company had $6.0 million in cash and cash equivalents, and no debt.

“We are extremely pleased with our financial performance in 2016, which reflects solid growth in revenue, gross profit, net income and EBITDA,” stated Steven N. Bronson, CEO of Interlink Electronics, Inc. “Our margins continue to improve, and we have been able to leverage our cost structure, essentially keeping our expenses in line while supporting strong increases in revenue.”

Mr. Bronson continued, “We remain focused on cost management, earnings growth and strategic acquisitions, as well as significant commitments to drive organic growth by investing in a larger R&D footprint in order to expand our intellectual property portfolio. We are also escalating the geographic reach and technical capabilities of our sales organization to capture revenues from this innovation strategy.”

About Interlink Electronics, Inc.

Interlink Electronics is a world-leading trusted advisor and technology partner in the advancing world of human-machine interface 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 human-machine interface (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 human-machine interface 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 innovation and its bolt-on acquisition strategy, 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 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: Fourth Quarter and Full Year 2016

 
INTERLINK ELECTRONICS, INC.
Condensed Consolidated Balance Sheets
(unaudited)
   
December 31, December 31,
2016 2015
(in thousands, except par value)
ASSETS
Current assets
Cash and cash equivalents $ 6,009 $ 4,430
Restricted Cash 5 5
Accounts receivable, net 1,726 1,599
Inventories 1,268 1,015
Prepaid expenses and other current assets   377     298  
Total current assets 9,385 7,347
Property, plant and equipment, net 310 176
Intangibles, net 44 13
Deferred income taxes 675 -
Other assets   57     26  
Total assets $ 10,471   $ 7,562  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 324 $ 484
Accrued liabilities 334 304
Accrued income taxes 104
Deferred revenue, current   111     71  
Total current liabilities   873     859  
Deferred revenue, long term       40  
Total liabilities   873     899  
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, 7,328 and 7,326 shares issued and outstanding at December 31, 2016 and December 31, 2015, respectively 7 7
Additional paid-in-capital 60,370 60,251
Accumulated other comprehensive (loss) income (71 ) 6
Accumulated deficit   (50,708 )   (53,601 )
Total stockholders' equity   9,598     6,663  
Total liabilities and stockholders' equity $ 10,471   $ 7,562  

 
INTERLINK ELECTRONICS, INC.
Condensed Consolidated Statements of Income
(unaudited)
         
Three months ended December 31, Year ended December 31,
2016 2015 2016 2015
(in thousands, except per share data) (in thousands, except per share data)
 
Revenue, net $ 2,781 $ 2,770 $ 11,886 $ 10,514
Cost of revenue   1,239   1,231   4,880   4,869
Gross profit   1,542 1,539   7,006   5,645
Operating expenses:
Engineering, research and development 125 204 623 841
Selling, general and administrative   1,039   831   3,536   3,122
Total operating expenses   1,164   1,035   4,159   3,963
Income from operations 378 504 2,847 1,682
Other income (expense):
Other income (expense), net   5   6   40   38
Income from continuing operations before income tax expense (benefit) 383 510 2,887 1,720
Income tax (expense) benefit   541   8   6   11
Net income $ 924 $ 518 $ 2,893 $ 1,731
 
Earnings per share: basic and diluted $ 0.12 $ 0.07 $ 0.39 $ 0.23
 
Weighted average common shares outstanding - basic   7,328   7,325   7,327   7,325
Weighted average common shares outstanding - diluted   7,411   7,331   7,407   7,380
 
 
INTERLINK ELECTRONICS, INC.
Reconciliation of Consolidated Net Income to Consolidated EBITDA
(unaudited)
       
Three months ended December 31, Year ended December 31,
2016 2015 2016 2015
(in thousands) (in thousands)
 
Net income $ 924 $ 518 $ 2,893 $ 1,731
Adjustments to arrive at earnings before interest, income taxes, depreciation and amortization (EBITDA):

 

Interest expense (income), net (1 ) (1 )
Income tax expense (benefit) (541 ) (8 ) (6 ) (11 )
Depreciation and amortization expense   33     25     115     95  
EBITDA $ 416   $ 535   $ 3,001   $ 1,814  

Contacts

Interlink Electronics, Inc.
Steven N. Bronson, CEO
805-416-7004
IR@iefsr.com

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