Digi International Inc. (DGII, Financial) filed Quarterly Report for the period ended 2012-06-30.
Digi International Inc. has a market cap of $240.8 million; its shares were traded at around $9.34 with a P/E ratio of 32.2 and P/S ratio of 1.2.
Our non-embedded net sales decreased by $5.8 million, or 20.5%, for the three months ended June 30, 2012 compared to the three months ended June 30, 2011. The decrease was primarily driven by decreases in net sales of $3.3 million for serial servers, $1.6 million for cellular products, $0.7 million for wireless communication adaptors and $0.7 million for USB connected products, partially offset by an increase of $0.5 million in net sales of serial cards. For the nine months ended June 30, 2012 compared to the nine months ended June 30, 2011, our non-embedded net sales decreased by $11.8 million, or 14.2%. The decrease primarily was driven by decreases in net sales of $4.7 million for serial servers, $2.9 million for wireless communication adaptors, $2.9 million for cellular products and $1.3 million for serial cards and USB connected devices. Non-embedded products that are mature include serial cards, serial servers and USB connected products. We expect the net sales of these mature products to continue to decline.
Net sales in North America decreased by $4.7 million and $5.3 million for the three and nine months ended June 30, 2012 compared to the same periods ended June 30, 2011, respectively. The decrease was due primarily to large revenue opportunities with new customers that have been slower to develop than expected and lower than expected sales in our Rabbit product line. Net sales in Europe, Middle East & Africa (“EMEA”) decreased by $1.1 million and $2.0 million for the three and nine months ended June 30, 2012 compared to the same periods ended June 30, 2011, respectively. The decrease was primarily due to general economic weakness in Europe as well as lower than expected sales from cellular products. Asia countries net sales decreased by $0.5 million and $1.5 million for the three and nine months ended June 30, 2012 compared to the same periods ended June 30, 2011, respectively, primarily due to delay of significant projects from customers. Net sales in Latin America decreased by $0.6 million and $0.1 million for the three and nine months ended June 30, 2012 compared to the same periods ended June 30, 2011, respectively, primarily due to the delay of projects from certain customers.
Gross margins were 53.1% and 52.7% for the three and nine months ended June 30, 2012, respectively. This compares to gross margins of 53.0% and 51.9% for the three and nine months ended June 30, 2011, respectively. The increase in the gross margin for both the three and nine months ended June 30, 2012 as compared to the same periods a year ago primarily was due to a reduction of purchased and core technology amortization of 0.3 percentage points and 0.5 percentage points, respectively. This is because certain intangible assets related to these technologies are now fully amortized. Manufacturing expenses for the three months ended June 30, 2012 compared to the three months ended June 30, 2011, were approximately the same, which increased as a percentage of net sales due to lower revenue in the third quarter of fiscal 2012. This was partially offset by product cost
Net cash provided by operating activities was $9.0 million for the nine months ended June 30, 2012 as compared to $16.2 million for the nine months ended June 30, 2011, a net decrease of $7.2 million. This decrease primarily was due to a decrease in net earnings of $3.0 million, a reduction of non-cash expenses for depreciation and amortization of $1.1 million, a decrease in operating assets and liabilities of $4.0 million and a decrease in the change of deferred income tax benefit of $0.9 million. It was partially offset by net increases in non-cash expenses for restructuring charges of $1.3 million, and $0.5 million in bad debt provision. The decrease in operating assets and liabilities of $4.0 million is due primarily to an outflow of $3.8 million due to increased inventory balances, a decrease of $3.3 million in accrued expenses mostly related to accrued compensation and a $0.6 million decrease in accounts payable. This partially was offset by an increase of $3.8 million in accounts receivable for the nine months ended June 30, 2011.
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Digi International Inc. has a market cap of $240.8 million; its shares were traded at around $9.34 with a P/E ratio of 32.2 and P/S ratio of 1.2.
Highlight of Business Operations:
Net sales decreased by $6.7 million, or 12.2%, for the three months ended June 30, 2012 compared to the three months ended June 30, 2011. Net sales decreased by $9.0 million, or 5.9%, for the nine months ended June 30, 2012 compared to the nine months ended June 30, 2011. Pricing was not a significant factor in changes in net sales during the three and nine month periods ended June 30, 2012.Our non-embedded net sales decreased by $5.8 million, or 20.5%, for the three months ended June 30, 2012 compared to the three months ended June 30, 2011. The decrease was primarily driven by decreases in net sales of $3.3 million for serial servers, $1.6 million for cellular products, $0.7 million for wireless communication adaptors and $0.7 million for USB connected products, partially offset by an increase of $0.5 million in net sales of serial cards. For the nine months ended June 30, 2012 compared to the nine months ended June 30, 2011, our non-embedded net sales decreased by $11.8 million, or 14.2%. The decrease primarily was driven by decreases in net sales of $4.7 million for serial servers, $2.9 million for wireless communication adaptors, $2.9 million for cellular products and $1.3 million for serial cards and USB connected devices. Non-embedded products that are mature include serial cards, serial servers and USB connected products. We expect the net sales of these mature products to continue to decline.
Net sales in North America decreased by $4.7 million and $5.3 million for the three and nine months ended June 30, 2012 compared to the same periods ended June 30, 2011, respectively. The decrease was due primarily to large revenue opportunities with new customers that have been slower to develop than expected and lower than expected sales in our Rabbit product line. Net sales in Europe, Middle East & Africa (“EMEA”) decreased by $1.1 million and $2.0 million for the three and nine months ended June 30, 2012 compared to the same periods ended June 30, 2011, respectively. The decrease was primarily due to general economic weakness in Europe as well as lower than expected sales from cellular products. Asia countries net sales decreased by $0.5 million and $1.5 million for the three and nine months ended June 30, 2012 compared to the same periods ended June 30, 2011, respectively, primarily due to delay of significant projects from customers. Net sales in Latin America decreased by $0.6 million and $0.1 million for the three and nine months ended June 30, 2012 compared to the same periods ended June 30, 2011, respectively, primarily due to the delay of projects from certain customers.
Gross margins were 53.1% and 52.7% for the three and nine months ended June 30, 2012, respectively. This compares to gross margins of 53.0% and 51.9% for the three and nine months ended June 30, 2011, respectively. The increase in the gross margin for both the three and nine months ended June 30, 2012 as compared to the same periods a year ago primarily was due to a reduction of purchased and core technology amortization of 0.3 percentage points and 0.5 percentage points, respectively. This is because certain intangible assets related to these technologies are now fully amortized. Manufacturing expenses for the three months ended June 30, 2012 compared to the three months ended June 30, 2011, were approximately the same, which increased as a percentage of net sales due to lower revenue in the third quarter of fiscal 2012. This was partially offset by product cost
Net cash provided by operating activities was $9.0 million for the nine months ended June 30, 2012 as compared to $16.2 million for the nine months ended June 30, 2011, a net decrease of $7.2 million. This decrease primarily was due to a decrease in net earnings of $3.0 million, a reduction of non-cash expenses for depreciation and amortization of $1.1 million, a decrease in operating assets and liabilities of $4.0 million and a decrease in the change of deferred income tax benefit of $0.9 million. It was partially offset by net increases in non-cash expenses for restructuring charges of $1.3 million, and $0.5 million in bad debt provision. The decrease in operating assets and liabilities of $4.0 million is due primarily to an outflow of $3.8 million due to increased inventory balances, a decrease of $3.3 million in accrued expenses mostly related to accrued compensation and a $0.6 million decrease in accounts payable. This partially was offset by an increase of $3.8 million in accounts receivable for the nine months ended June 30, 2011.
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