PCTEL Achieves $26.1 Million in Fourth Quarter Revenue

$106.6 Million in 2015 Revenue

BLOOMINGDALE, Ill.--()--PCTEL, Inc. (NASDAQ:PCTI), a leader in Performance Critical Telecom solutions, announced its 2015 fourth quarter and annual results.

Fourth Quarter and Annual Highlights

  • $26.1 million in revenue for the quarter, a decrease of 11 percent from the same period last year. $106.6 million in revenue for the year, a decrease of a half percent as compared to 2014.
  • Gross profit margin of 34 percent in the quarter compared to 40 percent for the same period last year. Gross profit margin of 35 percent for the year, compared to 41 percent in 2014.
  • GAAP operating margin of negative seven percent for the quarter compared to operating margin of six percent for the same period last year. Operating margin for the year of negative five percent as compared to four percent in 2014.
  • GAAP net loss of $820,000 for the quarter, or $(0.05) per diluted share compared to net income of $2.0 million, or $0.11 per diluted share for the same period last year. $(1.6) million of net loss for the year, or $(0.09) per diluted share, as compared to net income of $4.6 million, or $0.25 per diluted share in 2014.
  • Non-GAAP operating profit and net income are measures the company uses to reflect the results of its core earnings. The Company’s reporting of Non-GAAP net income excludes expenses for restructuring, gain or loss on sale of assets, stock based compensation, amortization and impairment of intangible assets and goodwill related to the Company’s acquisitions, and non-cash related income tax expense.
    • Non-GAAP operating margin of three percent in the quarter, compared to 12 percent in the same period last year. Non-GAAP operating margin for the year was two percent compared to 10 percent in 2014.
    • Non-GAAP net income of $611,000 or $0.04 per diluted share in the quarter, compared to $3.0 million or $0.16 per diluted share in the same period last year. Non-GAAP net income of $1.9 million or $0.11 per diluted share for the year compared to $8.8 million or $0.48 per diluted share in 2014.
  • $31.8 million of cash and short-term investments at December 31, 2015, a decrease of approximately $2.5 million from the preceding quarter and a decrease of $28.2 million from 2014.
    • 449,000 common shares repurchased in the quarter for $2.4 million. 1.94 million common shares repurchased in the year for $12.1 million.
    • $881,000 dividends paid in the quarter and $3.7 million paid in the year.
    • $869,000 of free cash flow in the quarter. $7.1 million of free cash flow in the year, an increase of $1.7 million from 2014.

“We made significant progress over the previous quarter led by strength in antenna and scanning receiver sales in North America,” said Marty Singer, PCTEL’s Chairman and CEO. “During the fourth quarter we also began to restructure our analytics and services operations, bringing in new leadership and sharpening our product focus on PCTEL’s traditional areas of strength. We believe that these efforts will lead to improved results in the second half of this year,” added Singer.

CONFERENCE CALL / WEBCAST

PCTEL’s management team will discuss the Company’s results today at 5:15 PM ET. The call can be accessed by dialing (877) 734-5369 (U.S. / Canada) or (706) 679-6397 (International), conference ID: 55187834. The call will also be webcast at http://investor.pctel.com/events.cfm.

REPLAY: A replay will be available for two weeks after the call on either the website listed above or by calling (855) 859-2056 (U.S./Canada), or International (404) 537-3406, conference ID: 55187834.

About PCTEL

PCTEL, a global provider of RF expertise, delivers Performance Critical Telecom solutions to the wireless industry. PCTEL benchmarks and optimizes wireless networks with its data tools, engineering services, and RF products. PCTEL's antennas and site solutions are vital elements for networks serving SCADA, fleet management, health care, public safety, and education.

PCTEL's RF Solutions products and services improve the performance of wireless networks globally. PCTEL's performance critical products include its MXflex®®, IBflex®®, and EXflex®® SeeGull®® scanning receivers and related SeeHawk®® Touch, SeeHawk®® Collect, and SeeWave®® tools. PCTEL's sophisticated engineering services utilize these products as well as SeeHawk™ Analytics.

PCTEL Connected Solutions designs and delivers performance critical antennas and site solutions for public and private wireless networks globally. PCTEL's performance critical antenna solutions include high rejection and high performance GPS and GNSS products, the industry leading Yagi portfolio, mobile and indoor LTE, broadband, and LMR antennas and PIM-rated antennas for transit, in-building, and small cell applications. We leverage our design, logistics, and support capabilities to deliver performance critical antenna and site solutions into carrier, railroad, utility applications, oil and gas, and other vertical markets.

PCTEL's products are sold worldwide through direct and indirect channels. For more information, please visit the company's web sites: pctel.com, antenna.com, or rfsolutions.pctel.com

PCTEL Safe Harbor Statement

This press release and our related comments in our third quarter earnings conference call contain “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Specifically, the statements regarding our future financial performance, new products and features, expectations regarding the future growth of our antenna and wireless RF businesses, and demand for engineering services are forward-looking statements within the meaning of the safe harbor. These statements are based on management’s current expectations and actual results may differ materially from those projected as a result of certain risks and uncertainties, including the customer demand for these types of products and services generally, PCTEL’s ability to successfully grow the wireless products business, and its ability to implement new technologies and obtain protection for the related intellectual property. These and other risks and uncertainties are detailed in PCTEL's Securities and Exchange Commission filings. These forward-looking statements are made only as of the date hereof, and PCTEL disclaims any obligation to update or revise the information contained in any forward-looking statement, whether as a result of new information, future events or otherwise.

PCTEL, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
 
  December 31,   December 31,
2015 2014
ASSETS
 
Cash and cash equivalents $7,055 $20,432
Short-term investment securities 24,728 39,577
Accounts receivable, net of allowance for doubtful accounts
of $314 and $121 at December 31, 2015 and December 31, 2014, respectively 21,001 23,874
Inventories, net 17,596 16,358
Deferred tax assets, net 0 2,281
Prepaid expenses and other assets 1,586 1,757
Total current assets 71,966 104,279
 
Property and equipment, net 13,839 14,842
Goodwill 3,332 161
Intangible assets, net 11,378 2,637
Deferred tax assets, net 13,155 9,710
Other noncurrent assets 40 40
TOTAL ASSETS $113,710 $131,669
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
Accounts payable $6,735 $5,495
Accrued liabilities 6,190 10,211
Total current liabilities 12,925 15,706
 
Other long-term liabilities 388 448
   
Total liabilities 13,313 16,154
 
Stockholders’ equity:
Common stock, $0.001 par value, 100,000,000 shares
authorized, 17,654,236 and 18,571,419 shares issued and
outstanding at December 31, 2015 and December 31, 2014, respectively 18 19
Additional paid-in capital 135,714 145,462
Accumulated deficit (35,320) (30,101)
Accumulated other comprehensive income (loss) (15) 135
Total stockholders’ equity 100,397 115,515
 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $113,710 $131,669
PCTEL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except per share data)
       
Three Months Ended Year Ended
December 31, December 31,
2015 2014 2015 2014
 
REVENUES $26,138 $29,395 $106,615 $107,164
COST OF REVENUES 17,287   17,634 69,354   63,577
GROSS PROFIT 8,851   11,761 37,261   43,587
OPERATING EXPENSES:
Research and development 2,699 2,766 11,205 11,736
Sales and marketing 3,639 3,649 14,196 12,961
General and administrative 2,887 2,997 12,399 12,819
Amortization of intangible assets 461 464 3,426 1,967
Impairment of goodwill 161 0 161 0
Restructuring charges 778   0 1,630   0
Total operating expenses 10,625   9,876 43,017   39,483
OPERATING INCOME (LOSS) (1,774 ) 1,885 (5,756 ) 4,104
Other income, net 504   927 3,287   1,666
INCOME (LOSS) BEFORE INCOME TAXES (1,270 ) 2,812 (2,469 ) 5,770
Expense (benefit) for income taxes (450 ) 817 (901 ) 1,158
NET INCOME (LOSS) ($820 ) $1,995 ($1,568 ) $4,612
 
Net Income (Loss) per Share:
Basic ($0.05 ) $0.11 ($0.09 ) $0.25
Diluted ($0.05 ) $0.11 ($0.09 ) $0.25
 
Weighed Average Shares:
Basic 16,820 18,154 17,737 18,159
Diluted 16,820 18,412 17,737 18,389
 
Cash dividend per share $0.05 $0.04 $0.20 $0.16
PCTEL, INC.
P&L INFORMATION BY SEGMENT (unaudited)
(in thousands)
                 
Three Months Ended December 31, 2015 Year Ended December 31, 2015

Connected

Solutions

RF

Solutions

Corporate Total

Connected

Solutions

RF

Solutions

Corporate Total
 
REVENUES $16,675 $9,506 ($43 ) $26,138 $69,579 $37,255 ($219 ) $106,615
               
GROSS PROFIT 4,838 4,000 13 8,851 20,426 16,803 32 37,261
               
OPERATING INCOME (LOSS) $675 ($8 ) ($2,441 ) ($1,774 ) $5,040 ($298 ) ($10,498 ) ($5,756 )
 
 
Three Months Ended December 31, 2014 Year Ended December 31, 2014

Connected

Solutions

RF

Solutions

Corporate Total

Connected

Solutions

RF

Solutions

Corporate Total
 
REVENUES $19,924 $9,535 ($64 ) $29,395 $72,333 $35,113 ($282 ) $107,164
               
GROSS PROFIT 6,183 5,572 6 11,761 22,818 20,743 26 43,587
               
OPERATING INCOME (LOSS) $2,078 $2,184   ($2,377 ) $1,885   $7,357 $7,333   ($10,586 ) $4,104  

Reconciliation of GAAP to non-GAAP Results (unaudited)

(in thousands except per share information)
           

Reconciliation of GAAP operating loss to non-GAAP operating income (a)

 
Three Months Ended December 31, Year Ended December 31,
2015 2014 2015 2014
 
Operating Income (Loss) ($1,774 ) $1,885 ($5,756 ) $4,104
 
(a) Add:
Amortization of intangible assets
-Cost of Goods Sold 595 0 595 0
-Operating expenses 461 464 3,426 1,967
Impairment of goodwill 161 0 161 0
Restructuring:
-Cost of Goods Sold 42 0 288 0
-Restructuring 778 0 1,630 0
TelWorx investigation:
-General & Administrative 7 580 107 1,266
Legal settlement:
-General & Administrative 0 0 0 75
Stock Compensation:
-Cost of Goods Sold 125 111 369 426
-Engineering 175 150 419 658
-Sales & Marketing (132 ) 170 238 661
-General & Administrative 304   267   838   1,530  
2,516 1,742 8,071 6,583
       
Non-GAAP Operating Income $742   $3,627   $2,315   $10,687  
% of revenue 2.8 % 12.3 % 2.2 % 10.0 %
 

Reconciliation of GAAP net loss to non-GAAP net income (b)

 
Three Months Ended December 31, Year Ended December 31,
2015 2014 2015 2014
 
Net Income (Loss) ($820 ) $1,995 ($1,568 ) $4,612
 
Adjustments:
(a) Non-GAAP adjustment to operating income 2,516 1,742 8,071 6,583
(b) Other income related to SEC investigation of TelWorx (1 ) (908 ) (102 ) (1,568 )
(b) Legal Settlement - Amendment to Nexgen APA (500 ) 0 (3,160 ) 0
(b) Legal Settlement - other 0 0 0 (75 )
(b) Income Taxes (584 ) 161   (1,322 ) (770 )
1,431 995 3,487 4,170
       
Non-GAAP Net Income $611   $2,990   $1,919   $8,782  
 
Non-GAAP Earning per Share:
Basic $0.04 $0.16 $0.11 $0.48
Diluted $0.04 $0.16 $0.11 $0.48
 
Weighed Average Shares:
Basic 16,820 18,154 17,737 18,159
Diluted 16,969 18,412 18,257 18,389

This schedule reconciles the Company's GAAP operating loss and GAAP net loss to its non-GAAP operating income and non-GAAP net income. The Company believes that presentation of this schedule provides meaningful supplemental information to both management and investors that is indicative of the Company's core operating results and facilitates comparison of operating results across reporting periods. The Company uses these non-GAAP measures when evaluating its financial results as well as for internal planning and forecasting purposes. These non-GAAP measures should not be viewed as a substitute for the Company's GAAP results.

 

(a) These adjustments reflect stock based compensation expense, amortization of intangible assets, restructuring charges, and general and administrative expenses associated with the SEC investigation of TelWorx.

 

(b) These adjustments include the items described in footnote (a) as well as other income for insurance claims related to the SEC investigation of TelWorx, legal settlements, and non-cash income tax expense.

Reconciliation of GAAP To non-GAAP SEGMENT INFORMATION (unaudited) (a)

(in thousands except per share information)
 
  Three Months Ended December 31, 2015     Year Ended December 31, 2015

Connected

Solutions

 

RF

Solutions

  Corporate   Total

Connected

Solutions

 

RF

Solutions

  Corporate   Total
 
 
Operating Income (Loss) $675 ($8 ) ($2,441 ) ($1,774 ) $5,040 ($298 ) ($10,498 ) ($5,756 )
 
Add:
Amortization of intangible assets

 

 

 

 

 

 

 

 

-Cost of Goods Sold 39 556 0 595 39 556 0 595
-Operating expenses

156

305

0

461

811

2,615

0

3,426

Impairment of goodwill 0 161 0 161 0 161 0 161
TelWorx investigation:
-General & Administrative 0 0 7 7 0 0 107 107
Restructuring:
-Cost of Goods Sold 42 0 0 42 288 0 0 288
-Restructuring charges 755 23 0 778 1,293 337 0 1,630
Stock Compensation:
-Cost of Goods Sold 28 97 0 125 82 287 0 369
-Engineering 49 126 0 175 104 315 0 419
-Sales & Marketing 88 (220 ) 0 (132 ) 261 (23 ) 0 238
-General & Administrative (18 ) 70   252   304   (12 ) 113   737   838  
1,139 1,118 259 2,516 2,866 4,361 844 8,071
               
Non-GAAP Operating Income (Loss) $1,814   $1,110   ($2,182 ) $742   $7,906   $4,063   ($9,654 ) $2,315  
 
 
Three Months Ended December 31, 2014 Year Ended December 31, 2014

Connected

Solutions

RF

Solutions

Corporate Total

Connected

Solutions

RF

Solutions

Corporate Total
 
 
Operating Income (Loss) $2,078 $2,184 ($2,377 ) $1,885 $7,357 $7,333 ($10,586 ) $4,104
 
Add:
Amortization of intangible assets 260 204 0 464 1,151 816 0 1,967
TelWorx investigation:
-General & Administrative 0 0 580 580 0 0 1,266 1,266
Legal settlement:
-General & Administrative 0 0 0 0 0 0 75 75
Stock Compensation:
-Cost of Goods Sold 58 53 0 111 215 211 0 426
-Engineering 64 86 0 150 292 366 0 658
-Sales & Marketing 129 41 0 170 530 131 0 661
-General & Administrative 54   31   182   267   256   129   1,145   1,530  
565 415 762 1,742 2,444 1,653 2,486 6,583
               
Non-GAAP Operating Income (Loss) $2,643   $2,599   ($1,615 ) $3,627   $9,801   $8,986   ($8,100 ) $10,687  

This schedule reconciles the Company's GAAP operating income (loss) by segment to its non-GAAP operating income. The Company believes that presentation of this schedule provides meaningful supplemental information to both management and investors that is indicative of the Company's core operating results and facilitates comparison of operating results across reporting periods. The Company uses these non-GAAP measures when evaluating its financial results as well as for internal planning and forecasting purposes. These non-GAAP measures should not be viewed as a substitute for the Company's GAAP results.

 

(a) These adjustments reflect stock based compensation expense, amortization of intangible assets, restructuring charges, and general and administrative expenses associated with the SEC investigation of TelWorx.

Contacts

PCTEL, Inc.
John Schoen, 630-372-6800
CFO
or
Jack Seller, 630-372-6800
Public Relations
Jack.seller@pctel.com

Contacts

PCTEL, Inc.
John Schoen, 630-372-6800
CFO
or
Jack Seller, 630-372-6800
Public Relations
Jack.seller@pctel.com