Good afternoon and welcome to the Lantronix Fourth Quarter and Fiscal Year 2016 Results Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to E.E. Wang, Director of Corporate Marketing and Investor Relations. Please go ahead.

Thank you, Amy. Good afternoon everyone and thank you for joining the Lantronix fourth quarter and fiscal 2016 conference call. Joining us on the call today are Jeff Benck, Lantronix's President and Chief Executive Officer and Jeremy Whitaker, Lantronix's Chief Financial Officer. A live and archived webcast of today's call will be available on the Company's website at www.lantronix.com. In addition, a phone replay will be available starting at 08:00 PM Eastern, 05:00 PM Pacific today through August 30, by dialing 877-344-7529 in the United States or for international callers, 412-317-0888 and entering pass code 10091231. During this call, management may make forward-looking statements, which involve risks and uncertainties that could cause Lantronix's results to differ materially from management's current expectations. We encourage you to review the cautionary statements and risk factors contained in our 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 10-Q. Lantronix undertakes no obligation to revise or update publicly any forward-looking statements to reflect future events or circumstances. Also please note that during this 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 use. I'll now turn the call over to Jeff Benck, President and CEO of Lantronix.

Thank you E.E. And welcome to everyone joining us for this afternoon's call. During the fourth quarter of fiscal 2016, we continue to make progress on the initiatives we launched shortly after I joined the company in December. First, driving operational excellence in our organization. Second, completing rationalization of our product roadmap, and third launching a new strategic direction and starting the investment required to position our company for growth. Our results for the June quarter reflect continued progress as we achieved both year-over-year and sequential revenue growth and recorded our second consecutive quarter of non-GAAP profitability. Our particular bright spot IT management products grew 27% sequentially and 34% year-over-year in the fourth quarter driven by the growth in sales of our SLC 8000 advanced console manager. In addition we experienced modest sequential and year-over-year growth in our quarterly IoT product sales driven primarily by increased contribution from our xPico and our xPico Wi-Fi IoT products. Bottom line, we are making solid progress but we still have much left to do. It will take time and continued execution for us to achieve sustainable growth. However, I believe we are on the right path and as a team we’ve demonstrated that we’re not waiting to take action or afraid to make changes. While some of our initiatives will take time to have an impact, I’m starting to see a genuine shift in the culture of this team and the belief that we can win in the markets we participated. Before I provide some additional color on our results during the fourth quarter and our plans for fiscal 2017, I'm going to turn the call over to Jeremy to discuss our financial results.

Thank you, Jeff. Please refer to today's new release and the financial information in the Investor Relations section of our website for additional details that will supplement my financial commentary. I would like to point out that an alignment with our new strategy and the rationalization of our products roadmap, we have reorganized our product lines into categories that reflect the markets we are primarily focused on. IoT which represents our IoT gateways and building blocks includes products such as the XPort, UDS, xPico, PremierWave and EDS product family. And IT management which represents our IT infrastructure and management solutions includes product such as the SLC 8000, SLB and Spider products family. In addition, we will be reporting results for non-focused and end of life products as other revenue. Today’s news release provides details on our performance in both the old and new reporting format. Now I'd like to take a few minutes to go over our results for the fourth quarter of fiscal 2016. Net revenue was $10.5 million for the fourth quarter of fiscal 2016 compared with $10.2 million for the fourth quarter of fiscal 2015 and $10 million for the third quarter of fiscal 2016. The year-over-year increase in net revenue was primarily due to growth in our IoT and IT management products and new product sales of greater than 50%. This growth was primarily due to increased contribution from our SLC 8000 and to a lesser extent our xPico Wi-Fi which both grew by more than 200% over the same period last year. Gross profit as a percentage of net revenue was 47% for the fourth quarter of fiscal 2016 compared with 47.1% for the fourth quarter of fiscal 2015 and 48% for the third quarter of fiscal 2016. Selling, general and administrative expenses for the…

Thank you, Jeremy. As I mentioned at the start of today's call, our short term plan was centered on three key objectives. First, driving operational excellence across the business. Since kicking off our plan in late December 2015, our team has been focused on this initiative across our entire operations, we took the hard look at the business and identified what areas needed to be restructured, consolidated or improved. We also evaluated some of our processes and quite frankly threw some of them out and started over. I have asked my team to challenge ourselves with why we do things the way that we do and the brainstorm about better ways to approach our business. During the June quarter, we continued to execute in some areas that are not yet visible to the outside world but also in areas we can share such as rationalized product line and marketing spending, further reduction of inventories helped by improved forecasting and implementing a number of new processes to drive extra discipline throughout the organization. During the quarter, the new excitement and focus in our sales team translated into improved sequential results from all regions. We continue to invest in our sales force initiatives and we’ve recruited a number of new talented people to support our worldwide business. While it will take time for new sales resources to have an impact on results, I believe that we are off to a good start. On the marketing front, we launched several new outbound campaigns that have already helped to contribute to increase demand for our SLC 8000 product line. Combined with our sales efforts, SLC 8000 revenues grew more than 200% over the fourth quarter of fiscal 2015, and we're up approximately 60% from the first half of fiscal year 2016. On the development…

[Operator Instructions] The first question is from Jaeson Schmidt at Lake Street Capital Markets.

Hi guys, thanks for taking my questions and congrats on the really strong results. Just wanted to start with the quarter, wondering obviously the SLC 8000 performs really well, wondering if there were any other product lines or geographies that outperformed your original expectations?

Yes, we saw a good performance in all the geographies, so it's nice to do, it was kind of broad based not just specific to one particular region. We also saw a pretty good performance in some of our new wireless products that we brought to market. We just started shipping our PremierWave 2050 product and had some new some new design-wins ramping with that. And our xPico product line I think we mentioned in the actual script also had a pretty good quarter. So, some of those new wireless products certainly contributed beyond the SLC family which did really well for us.

Okay, that's helpful. And then Jeff if you could talk about how you feel about your overall visibility the rest of the year, and I guess more specifically what you're seeing from an inventory standpoint at the distributors?

Okay. Yes, I mean visibility it's a little tough in our business because in some cases we sell through two-tiered channels to end users and then also in the OEM business we don't always get perfect visibility to their demand. But from a channel standpoint, we didn’t see - I mean I think we felt like things were operating pretty normally and don’t feel like there was necessarily any channel build going on. We pay attention to what goes in and what goes out and everything looked pretty consistent there, I don’t think we saw really much shift in channel inventories. When you look at the business now, coming from where we've been earlier in the fiscal year '16, we're kind of taking at one quarter at a time, we're obviously just starting the first quarter. So, I guess I’ll have a better sense of what the fiscal year looks like when we get a little further into it but from a channel standpoint we didn’t see any unique behavior there.

Yes, I’d like to add something also on the channel inventories. If you recall Jaeson about 60% of our revenue is recognized on sell-through, so the fluctuation of inventory in the channel isn’t always inductive of a build and an impact on future revenues for that reason.

Fair point.

Okay, that’s helpful. And then with the new partner program that you guys have just established, does that change your target gross margin or the gross margin range that I think it was originally kind of that 49% to 51% longer term?

Yes, I'll comment and I'll let Jeremy add a little more to it. The partner program for us was really about extending the reach for our products and getting a few more partners engaged in the portfolio. We frankly I think the company had not put as much emphasis on the channel in the most of last few years and we recently hired a new resource to manage a channel for us, and we’ve been putting so more marketing emphasis on the channel and we had number of partners come to us and say, they’d really like to participate with us particularly on selling our leadership product there. So, we’re excited about the prospects of that, that that could potentially represent for growth of - continued growth and share gain there; a lot of what we have done was with not - without this new program in place from that standpoint. The other thing we did do a little bit of adjustment looking at price in the competition and looking at the MSRP for our product as well, so we did some adjustment there also in consideration of what we might do with the channel program. So, we don't see a material change there but I’ll let Jeremy comment a little bit on margins as we think about fiscal year '17.

Yes, so for fiscal year '16 we reported margins for the year about 47.7% and looking forward for fiscal '17 we expect the margins to remain relatively stable. I think as it relates to the VAR program and the products IT management products, those are some of our higher margin products, so to the extent that we're successful in that program, there is the ability to benefit from that from a mix standpoint.

Okay, perfect. Thanks a lot guys. I’ll jump back in the queue.

[Operator Instructions] This concludes our question-and-answer session. I would like to turn the conference back over Jeff Benck for any closing remarks.

Thank you, Operator. I'd like to thank you for your participation in our call today. We look forward to updating you on our progress, achievements and actions when we report on our first quarter results in late October. Thanks again for attending the call. And this concludes the call for today.