PCTEL Reports $21.7 Million in First Quarter Revenue

BLOOMINGDALE, Ill.--()--PCTEL, Inc. (Nasdaq: PCTI), a leader in Performance Critical TELecom solutions, announced its results for the first quarter ended March 31, 2018.

Highlights from Continuing Operations

  • Revenue of $21.7 million in the quarter, in line with guidance, down 5% from the first quarter last year. Connected Solutions segment revenue was up 3%. RF Solutions segment revenue was down 30%, due to deferred carrier capital budget deployment in North America.
  • Gross profit margin of 36.2% in the quarter, down 500 basis points compared to last year. The primary reason for the decrease is lower revenue in the RF Solutions segment which has higher margin from its scanner products compared to antenna products. Price erosion in the small cell antenna market also contributed to the decline.
  • Net loss per diluted share of $0.05 in the quarter, compared to net income of $0.01 last year.
  • Non-GAAP net income and adjusted EBITDA are measures the Company uses to reflect the results of its core earnings. A reconciliation of those non-GAAP measures to our financial statements is provided later in the press release.
    • Non-GAAP net loss per diluted share of $0.01, compared to Non-GAAP net income per diluted share of $0.05 in the first quarter last year.
    • Adjusted EBITDA margin as a percent of revenue of 2% in the quarter, compared to 7% last year.
  • $34.7 million of cash and short-term investments and no debt at March 31, 2018.

“The Company saw revenue growth for its Connected Solutions products in the enterprise Wi-Fi market during the quarter. RF Solutions revenue was down in the North American market, due to the slow release of capital budget by several U.S. carriers,” said David Neumann, PCTEL’s CEO. “PCTEL is well positioned to take advantage of the long-term growth opportunities in Industrial IoT and 5G, which require both performance critical antenna solutions across multiple vertical markets and RF test equipment.”

CONFERENCE CALL / WEBCAST

PCTEL’s management team will discuss the Company’s results today at 4:30 p.m. ET. The call can be accessed by dialing (888) 782-2072 (U.S. / Canada) or (706) 679-6397 (International), conference ID: 47850722. The call will also be webcast at http://investor.pctel.com/news-events/webcasts-presentations.

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: 47850722.

About PCTEL

PCTEL, Inc. provides Performance Critical TELecom technology solutions. We are a leading global supplier of antennas and wireless network testing solutions. Our precision antennas are deployed in small cells, enterprise Wi-Fi access points, fleet management and transit systems, and in equipment and devices for the Industrial Internet of Things (IIoT). We offer in-house design, testing, radio integration, and manufacturing capabilities for our antenna customers. PCTEL’s test and measurement tools improve the performance of wireless networks globally, with a focus on LTE, public safety, and emerging 5G technologies. Network operators, neutral hosts, and equipment manufacturers rely on our scanning receivers and testing solutions to analyze, design, and optimize their networks.

For more information, please visit our website at http://www.pctel.com/.

PCTEL Safe Harbor Statement

This press release and our related comments in our 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, growth of our Connected Solutions and RF Solutions businesses, anticipated demand for certain products, our expectations regarding capital expenditures by U.S. carriers, and the anticipated growth of public and private wireless systems 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 impact of data densification and IoT on capacity and coverage demand, impact of 5G, customer demand for these types of products and services generally, growth and continuity in PCTEL’s vertical markets, and PCTEL’s ability to grow its wireless products business and create, protect and implement new technologies and solutions. 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.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
 
(Unaudited)
March 31, December 31,
2018 2017
ASSETS
 
Cash and cash equivalents $ 12,452 $ 5,559
Short-term investment securities 22,285 32,499
Accounts receivable, net of allowances of $66 and $319 at March 31, 2018 and

December 31, 2017, respectively

19,026 18,624
Inventories, net 12,582 12,756
Prepaid expenses and other assets   1,874     1,605  
Total current assets 68,219 71,043
Property and equipment, net 12,537 12,369
Goodwill 3,332 3,332
Intangible assets, net 1,823 2,113
Deferred tax assets, net 8,068 7,734
Other noncurrent assets   64     72  
TOTAL ASSETS $ 94,043   $ 96,663  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
Accounts payable $ 5,226 $ 5,471
Accrued liabilities   5,787     7,481  
Total current liabilities 11,013 12,952
 
Long-term liabilities 485 392
   
Total liabilities   11,498     13,344  
 
Stockholders’ equity:
Common stock, $0.001 par value, 100,000,000 shares authorized, 18,258,643 and 17,806,792

shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively

18 18
Additional paid-in capital 134,253 134,505
Accumulated deficit (52,024 ) (51,258 )
Accumulated other comprehensive loss   298     54  
Total stockholders’ equity   82,545     83,319  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 94,043   $ 96,663  
 
PCTEL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except per share data)
 
 
Three Months Ended
March 31,
2018 2017
 
REVENUES $ 21,731 $ 22,970
COST OF REVENUES   13,867     13,516  
GROSS PROFIT   7,864     9,454  
OPERATING EXPENSES:
Research and development 2,940 2,716
Sales and marketing 3,028 3,253
General and administrative 2,993 3,339
Amortization of intangible assets   124     124  
Total operating expenses   9,085     9,432  
OPERATING (LOSS) INCOME (1,221 ) 22
Other income, net   51     28  
(LOSS) INCOME BEFORE INCOME TAXES (1,170 ) 50
Benefit for income taxes   (312 )   (134 )
NET (LOSS) INCOME FROM CONTINUING OPERATIONS (858 ) 184
NET LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX BENEFIT   0     (214 )
NET LOSS $ (858 ) $ (30 )
 
Net (Loss) Income per Share from Continuing Operations:
Basic $ (0.05 ) $ 0.01
Diluted $ (0.05 ) $ 0.01
 
Net Loss per Share from Discontinued Operations:
Basic $ 0.00 $ (0.01 )
Diluted $ 0.00 $ (0.01 )
 
Net Loss per Share:
Basic $ (0.05 ) $ (0.00 )
Diluted $ (0.05 ) $ (0.00 )
 
Weighted Average Shares:
Basic 17,056 16,340
Diluted 17,056 16,340
 
Cash dividend per share $ 0.055 $ 0.05
 
PCTEL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
   
 
Three Months Ended March 31,
. 2018 2017
 
Operating Activities:
Net (loss) income from continuing operations $ (858 ) $ 184
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation 674 628
Intangible asset amortization 290 290
Stock-based compensation 668 708
Loss on disposal of property and equipment 10 0
Restructuring costs (11 ) (33 )
Bad debt provision 15 (7 )
Deferred tax provision (236 ) (276 )
Changes in operating assets and liabilities:
Accounts receivable (350 ) 794
Inventories 321 1,790
Prepaid expenses and other assets (250 ) 319
Accounts payable (64 ) (812 )
Income taxes payable (3 ) (70 )
Other accrued liabilities (1,808 ) (1,467 )
Deferred revenue   14     (12 )
Net cash (used in) provided by operating activities   (1,588 )   2,036  
Investing Activities:
Capital expenditures (884 ) (1,052 )
Proceeds from disposal of property and equipment 14 0
Purchases of investments (7,266 ) (9,743 )
Redemptions/maturities of short-term investments   17,480     10,197  
Net cash provided by (used in) investing activities   9,344     (598 )
Financing Activities:
Proceeds from issuance of common stock 364 330
Payment of withholding tax on stock-based compensation (289 ) (614 )
Principle payments on capital leases (24 ) (19 )
Cash dividends   (995 )   (865 )
Net cash used in financing activities   (944 )   (1,168 )
Cash flows from discontinued operations:
Net cash used in operating activities 0 (174 )
Net cash used in investing activities   0     (1 )
Net cash flows used in discontinued operations   0     (175 )
 
Net increase in cash and cash equivalents 6,812 95
Effect of exchange rate changes on cash 81 10
Cash and cash equivalents, beginning of year   5,559     14,855  
Cash and Cash Equivalents, End of Period $ 12,452   $ 14,960  
 
       
PCTEL, INC.
P&L INFORMATION BY SEGMENT - Continuing Operations (unaudited)
(in thousands)
 
Three Months Ended March 31, 2018
Connected
Solutions RF Solutions Corporate Total
 
REVENUES $ 17,764 $ 3,999 ($32 ) $ 21,731
       
GROSS PROFIT 5,198 2,670 (4 ) 7,864
       
OPERATING (LOSS) INCOME $ 1,605   ($328 ) ($2,498 )   ($1,221 )
 
 
Three Months Ended March 31, 2017
Connected
Solutions RF Solutions Corporate Total
 
REVENUES $ 17,271 $ 5,756 ($57 ) $ 22,970
       
GROSS PROFIT 5,403 4,045 6 9,454
       
OPERATING INCOME (LOSS) $ 1,744 $ 1,024   ($2,746 ) $ 22  
 

Reconciliation of GAAP to non-GAAP Results - Continuing Operations (unaudited)

(in thousands except per share information)
     

Reconciliation of GAAP operating (loss) income to non-GAAP operating (loss) income - Continuing Operations

 
Three Months Ended March 31,
2018     2017  
 
 
Operating (Loss) Income ($1,221 ) $ 22
 
(a) Add:
Amortization of intangible assets
-Cost of revenues 167 167
-Operating expenses 124 124
Stock Compensation:
-Cost of revenues 88 61
-Engineering 138 146
-Sales & marketing 131 119
-General & administrative 311     382  
959     999  
Non-GAAP Operating (Loss) Income ($262 ) $ 1,021  
% of revenue -1.2 % 4.4 %
 

Reconciliation of GAAP net (loss) income to non-GAAP net (loss) income - Continuing Operations

 
Three Months Ended March 31,
2018     2017  
 
Net (Loss) Income ($858 ) $ 184
 
Adjustments:
(a) Non-GAAP adjustment to operating (loss) income 959 999
Income Taxes (295 )   (323 )
664     676  
Non-GAAP Net (Loss) Income ($194 ) $ 860  
 
Non-GAAP (Loss) Income per Share:
Basic ($0.01 ) $ 0.05
Diluted ($0.01 ) $ 0.05
 
Weighed Average Shares:
Basic 17,056 16,340
Diluted 17,056 16,340
This schedule reconciles the Company's GAAP operating (loss) income to its non-GAAP operating (loss) 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.
 

The adjustments to GAAP operating (loss) income (a) consist of stock compensation expense and amortization of intangible assets. The adjustments to GAAP net (loss) income include the non-GAAP adjustments to operating (loss) income as well as adjustments for (b) non-cash income tax expense.

       

Reconciliation of GAAP to non-GAAP SEGMENT INFORMATION - Continuing Operations (unaudited)

(in thousands)
 
 
Three Months Ended March 31, 2018
Connected RF
Solutions Solutions Corporate Total
 
Operating (Loss) Income $1,605 ($328) ($2,498) ($1,221)
Add:
Amortization of intangible assets:
-Cost of revenues 0 167 0 167
-Operating expenses 39 85 0 124
Stock Compensation:
-Cost of revenues 46 42 0 88
-Engineering 74 64 0 138
-Sales & marketing 82 49 0 131
-General & administrative 60 23 228 311
301 430 228 959
Non-GAAP Operating (Loss) Income $1,906 $102 ($2,270) ($262)
 
 
Three Months Ended March 31, 2017
Connected RF
Solutions Solutions Corporate Total
 
Operating (Loss) Income $1,744 $1,024 ($2,746) $22
Add:
Amortization of intangible assets:
-Cost of revenues 0 167 0 167
-Operating expenses 39 85 0 124
Stock Compensation:
-Cost of revenues 39 22 0 61
-Engineering 55 91 0 146
-Sales & marketing 85 34 0 119
-General & administrative 43 14 325 382
261 413 325 999
Non-GAAP Operating Income (Loss) $2,005 $1,437 ($2,421) $1,021
This schedule reconciles the Company's GAAP operating (loss) income by segment to its non-GAAP operating (loss) 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.
 

The adjustments to GAAP operating (loss) income consist of stock compensation expense and amortization of intangible assets.

   

PCTEL, Inc.

Reconciliation of GAAP operating income (loss) to Adjusted EBITDA - Continuing Operations

(unaudited, in thousands)
 
 
 
Three Months Ended March 31,
2018 2017
 
Operating (Loss) Income ($1,221 ) $ 22
 
Add:
Depreciation and amortization 674 628
Intangible amortization 291 291
Stock compensation expenses   668     708  
Adjusted EBITDA $ 412   $ 1,649  
% of revenue 1.9 % 7.2 %
This schedule reconciles the Company's GAAP operating (loss) income to Adjusted EBITDA. The Company believes that 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 Adjusted EBITDA when evaluating its financial results as well as for internal planning and forecasting purposes. Adjusted EBITDA should not be viewed as a substitute for the Company's GAAP results.
 
Adjusted EBITDA is defined as net income before interest, income taxes, depreciation and amortization. The adjustments on this schedule consist of depreciation, amortization of intangible assets, and stock compensation expenses
 

Contacts

John Schoen
CFO
PCTEL, Inc.
(630) 372-6800
or
Michael Rosenberg
Director of Marketing
PCTEL, Inc.
(301) 444-2046
public.relations@pctel.co

Contacts

John Schoen
CFO
PCTEL, Inc.
(630) 372-6800
or
Michael Rosenberg
Director of Marketing
PCTEL, Inc.
(301) 444-2046
public.relations@pctel.co