Interlink Electronics Reports First Quarter 2024 Results

Rhea-AI Summary

Interlink Electronics, Inc. (Nasdaq: LINK) reported financial results for Q1 2024, with revenue at $3.1 million, down 5% from the prior year due to lower shipments of traditional force-sensor and gas-sensor products. Gross margin decreased to 40.1% from 48.4% in the prior year. Net loss was $741,000 compared to $191,000 last year. The company is focusing on investments to support future growth.

Positive

• None.

Negative

• Revenue for Q1 2024 decreased by 5% compared to the same period last year, primarily due to lower shipments of force-sensor and gas-sensor products, impacting gross margin. The net loss increased to $741,000 from $191,000 due to lower gross profit, increased expenses, and acquisition-related costs.

Insights

Financial Analyst

The disclosed financial performance of Interlink Electronics shows a decline in revenue by 5% and a significant drop in gross margin from 48.4% to 40.1%. This contraction can be attributed to decreased demand for their core sensor products. Despite the acquisition of Calman Technology, which contributed new sales, it wasn't enough to offset the decline from traditional products. Investors should note the rise in net losses, significantly up from the previous year, which indicates that the company is facing challenges in maintaining profitability. On a positive note, the company's liquidity position with $4.4 million in cash and cash equivalents provides some cushioning. However, the management's anticipation of continued lower demand from key force-sensor customers could signal a need for strategic reassessment. With investments being made in human capital and facilities, it remains to be seen whether these will contribute to a turnaround in performance.

Market Research Analyst

Interlink Electronics' reported decline in demand for their traditional sensor products raises concerns about its product positioning and market competitiveness. The evolving landscape of the sensor market, driven by technology shifts and new entrants, means that Interlink needs to innovate rapidly to maintain relevance. The mention of acquisitions and new customers for 2025 indicates an attempt to diversify and pivot. Still, investors should be wary as tangible results from these new ventures are yet to be demonstrated. The company's proactive steps in upgrading their manufacturing capabilities and human capital investment suggest a long-term growth strategy, but the absence of near-term demand rebound could harm investor sentiment. The pressure is on the company to prove that these investments will lead to meaningful revenue growth in the years to come.

Technology Industry Expert

Interlink Electronics is experiencing industry-wide challenges, notably the shift in demand away from certain legacy sensor products. The technology industry, especially within IoT and Human-Machine Interface sectors, is highly dynamic with a constant need for innovation. Interlink's development of new product lines such as membrane keypads and graphic overlays is a step in the right direction. Nonetheless, the reduced gross margin suggests these new products have either lower selling prices or higher costs, which could affect the company's competitive edge. The strategic focus for the company should be on increasing the value proposition of their new product offerings to meet modern market demand and improve profitability. Investors should monitor the company's innovation pipeline closely, as it is important for longer-term growth prospects.

IRVINE, Calif., May 9, 2024 /PRNewswire/ -- Interlink Electronics, Inc. (Nasdaq: LINK), a world-leading provider of sensors and printed electronic solutions that support a wide range of applications including Human-Machine Interface devices and Internet-of-Things solutions, today announced its financial results for the three months ended March 31, 2024.

Revenue for the quarter was approximately $3.1 million, down 5% from the prior year period due to lower shipments of our traditional force-sensor products and gas-sensor products, offset in part by sales of our new membrane keypads, graphic overlays, printed electronics and industrial label products at Calman Technology Limited, acquired in March 2023. The change in our sales and product mix impacted our gross margin, which was 40.1% for the current quarter compared to 48.4% in the prior-year quarter.

The following table sets forth the consolidated financial highlights.

Consolidated Financial Highlights (Amounts in thousands except per share data and percentages)
		Three months ended March 31,
Consolidated Financial Results			2024						2023						$ ∆					% ∆
Revenue				$	3,124			$		3,278						$	(154)				(4.7)		%
Gross profit				$	1,253			$		1,587						$	(334)				(21.0)		%
Gross margin					40.1	%				48.4	%
Income (loss) from operations				$	(751)			$		(173)						$	(578)
Net income (loss)				$	(741)			$		(191)						$	(550)
Net income (loss) applicable to common stockholders				$	(841)			$		(291)						$	(550)
Earnings (loss) per common share – diluted				$	(0.09)			$		(0.03)						$	(0.06)

 

• Revenue in the first quarter of 2024 decreased approximately 5% from the same quarter last year, due primarily to lower shipments of our traditional force-sensor products and gas sensor products, offset in part by sales at Calman. Our revenues for a particular period are impacted by fluctuations in the timing of receipt and fulfilment of customer orders, which varies based on their demand for their order-flow and production cycles.
   
• Gross profit margin in the first quarter was down from 48.4% in the prior-year to 40.1% in the current year, due primarily to the change in the mix of products sold and also in part to the decline in revenue.
   
• Net income/loss was a loss of $741,000 for the quarter compared with loss of $191,000 for the same quarter last year. The increase in the loss was due primarily to lower gross profit on lower revenue, together with increased intangible asset amortization expense and operating costs related to our recent acquisitions, offset by reduced headcount and lower professional services expenses.
   
• We ended the quarter with $4.4 million of cash and cash equivalents.

"We experienced lower demand during the first quarter from certain of our larger force-sensor customers, adversely impacting our revenue and gross margin. We do not expect a significant rebound in order-flow from these customers for the remainder of the year. However, we are seeing traction from several new customers of both our force-sensor and gas-sensor products that we believe have the potential to meaningfully impact revenues in 2025 and beyond," said Steven N. Bronson, Chairman, President, and CEO of Interlink Electronics. "We continue to make the necessary investments in human capital and in upgrading our facilities and global manufacturing capabilities to support the growth strategy of our business."

About Interlink Electronics, Inc.

Interlink Electronics is a world-leading provider of sensors and printed electronic solutions that support a wide range of applications, including Human-Machine Interface ("HMI") devices and Internet-of-Things ("IoT") solutions, utilizing our expertise in materials science, manufacturing, firmware and software to produce in-house system solutions for custom specifications. We have a proven track record of supplying mission-critical technological solutions in diverse markets including medical devices, automotive, gas detection and environmental quality monitoring, oil and gas and general industrial, and consumer electronics, providing standard and custom-designed sensors that provide the flexibility and functionality needed for today's sophisticated applications.

The Company's products and solutions currently focus on three main fields:

• For nearly 40 years, the Company has led the printed electronics industry in commercializing its patented Force Sensing Resistor® technology, which offers pressure and position sensing and rugged capabilities in a very wide range of temperatures. Our piezoelectric film sensors offer strain, bend and vibration sensing and can be used on curved surfaces, while our advanced matrix sensor solutions offer multiple touch capabilities. We supply some of the world's top electronics manufacturers with intuitive sensor and interface technologies for use in advanced applications such as medical robotics and vehicle collision detection.
   
• Our Gas and Environmental Sensors division has over 25 years of experience in cutting-edge design and manufacture of electrochemical gas-sensing technology for industry, community, health and home. We provide advanced sensor solutions, precision sensing instruments, and custom engineering services for detecting gases such as carbon monoxide, ozone, hydrogen, NOX gases and ammonia, for transdermal alcohol detection and for air quality monitoring. Our innovative printed sensor design enables high-sensitivity, low-power and cost-effective solutions for broad adoption in the rapidly growing IoT market.
   
• Our Calman Technology subsidiary brings over 25 years of experience in the design and manufacture of membrane keypads, graphic overlays, printed electronics and industrial label products. We offer IP-rated digital and hybrid printed devices featuring integrated backlighting and shielding and printed electronics with advanced materials ink printing. Calman has customers in fields such as medical devices and defense technologies and gives the Company a base in Europe.

We serve our international customer base from our corporate headquarters in Irvine, California; our Global Product Development and Materials Science Center and distribution and logistics center in Camarillo, California; our advanced printed-electronics manufacturing facilities in Shenzhen, China, and Irvine, Scotland; and our proprietary gas sensor production and product development facility in Silicon Valley, California.

For more information, please visit www.InterlinkElectronics.com.

Forward Looking Statements

This release contains "forward-looking statements" within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be generally identified by phrases such as "thinks," "anticipates," "believes," "estimates," "expects," "intends," "plans," and similar words. Forward-looking statements in this press release include statements about our projected revenues and earnings and our acquisition program and the effects of recent acquisitions, including contributions to our products, manufacturing operations and the markets we serve. 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. Additional factors that could cause actual results to differ materially from those anticipated by our forward-looking statements are under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our most recent Annual Report (Form 10-K) or Quarterly Report (Form 10-Q) filed with the Securities and Exchange Commission. Forward-looking statements are made as of the date of this release, and we expressly disclaim any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Contact:
Interlink Electronics, Inc.
IR@iefsr.com
Steven N. Bronson, CEO
805-623-4184

INTERLINK ELECTRONICS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
		March 31,			December 31,
		2024			2023
		(in thousands)
ASSETS
Current assets
Cash and cash equivalents		$	4,367		$	4,304
Accounts receivable, net			1,772			2,167
Inventories			2,570			2,476
Prepaid expenses and other current assets			368			381
Total current assets			9,077			9,328
Property, plant and equipment, net			289			313
Intangible assets, net			2,437			2,654
Goodwill			2,435			2,461
Right-of-use assets			99			143
Deferred tax assets			82			83
Other assets			79			80
Total assets		$	14,498		$	15,062
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable		$	965		$	464
Accrued liabilities			416			492
Lease liabilities, current			112			126
Accrued income taxes			342			293
Total current liabilities			1,835			1,375
Long-term liabilities
Lease liabilities, long term			2			33
Deferred tax liabilities			581			626
Total long-term liabilities			583			659
Total liabilities			2,418			2,034
Stockholders' equity
Preferred stock			2			2
Common stock			10			10
Additional paid-in-capital			62,279			62,279
Accumulated other comprehensive income			93			200
Accumulated deficit			(50,304)			(49,463)
Total stockholders' equity			12,080			13,028
Total liabilities and stockholders' equity		$	14,498		$	15,062

 

INTERLINK ELECTRONICS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
		Three months ended March 31,
		2024			2023
		(in thousands, except per share data)
Revenue, net		$	3,124		$	3,278
Cost of revenue			1,871			1,691
Gross profit			1,253			1,587
Operating expenses:
Engineering, research and development			576			527
Selling, general and administrative			1,428			1,233
Total operating expenses			2,004			1,760
Loss from operations			(751)			(173)
Other income (expense):
Other income (expense), net			32			64
Loss before income taxes			(719)			(109)
Income tax expense			22			82
Net loss		$	(741)		$	(191)
Net loss applicable to common stockholders		$	(841)		$	(291)
Earnings (loss) per common share – basic and diluted		$	(0.09)		$	(0.03)
Weighted average common shares outstanding – basic and diluted			9,860			9,915

 

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SOURCE Interlink Electronics

FAQ

<p>Why did Interlink Electronics report a revenue decrease in Q1 2024?</p>

Interlink Electronics reported a revenue decrease in Q1 2024 due to lower shipments of traditional force-sensor and gas-sensor products.

<p>What was the gross margin for Interlink Electronics in Q1 2024?</p>

The gross margin for Interlink Electronics in Q1 2024 was 40.1%, down from 48.4% in the prior year.

<p>Who is the CEO of Interlink Electronics?</p>

The CEO of Interlink Electronics is Steven N. Bronson.

<p>What was the net loss for Interlink Electronics in Q1 2024?</p>

The net loss for Interlink Electronics in Q1 2024 was $741,000, compared to $191,000 in the same quarter last year.

<p>How much cash and cash equivalents did Interlink Electronics have at the end of Q1 2024?</p>

Interlink Electronics ended Q1 2024 with $4.4 million of cash and cash equivalents.