PCTEL Reports $23.5 Million in Second Quarter Revenue

BLOOMINGDALE, Ill.--()--PCTEL, Inc. (Nasdaq: PCTI) announced its results for the second quarter ended June 30, 2019.

Highlights

  • Revenue of $23.5 million in the quarter, 9% higher compared to the prior year. The second quarter revenue was higher by 82% for the test and measurement product line and lower by 8% for the antenna product line compared to the second quarter 2018.
  • Gross profit margin of 45.5% in the quarter, up 9.4% compared to gross profit margin in the prior year. The increase in the second quarter is a result of higher revenues for test and measurement products and improved profitability for antenna products.
  • GAAP net income per share of $0.05 in the quarter compared to a GAAP loss of $0.07 per share in the second quarter 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 GAAP financial statements is provided later in the press release.
    • Non-GAAP net income per share of $0.13 in the quarter compared to a break-even in the second quarter last year.
    • Adjusted EBITDA margin as a percent of revenue of 13% in the quarter compared to 2% in the second quarter last year.
  • $36.8 million of cash and short-term investments at June 30, 2019 and no debt.
  • The Company will incur restructuring expense in the second half of fiscal year 2019 related to the transition plan for China manufacturing.

“We are pleased with the sequential revenue and gross margin growth driven by 5G scanning receiver demand and significant Industrial IoT antenna project wins and facilitated by the cost reduction and realignment actions we took over the past year,” said David Neumann, PCTEL’s CEO. “We are in the early stages of 5G and the deployment of Industrial IoT systems. PCTEL has the capabilities and resources to grow with these markets and increase value for all stakeholders.”

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: 5497038. 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: 5497038.

About PCTEL

PCTEL, Inc. is a leading global supplier of antennas and wireless network testing solutions. Founded in 1994, we are currently celebrating our 25th anniversary. PCTEL’s 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 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 https://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 antenna solutions and test and measurement businesses, the impact of our transition plan for manufacturing in China and our 2018 cost reduction actions, the anticipated demand for certain products including those related to public safety, the Industrial IoT and the rollout of 5G, the impact of tariffs on certain imports from China, 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 including demand from customers in China, growth and continuity in PCTEL’s defined market segments, 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 is a registered trademark of PCTEL, Inc. © 2019 PCTEL, Inc. All rights reserved.

 

PCTEL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
 
 
June 30, December 31,

2019

2018

ASSETS
Cash and cash equivalents

$

4,066

 

$

4,329

 

Short-term investment securities

 

32,694

 

 

30,870

 

Accounts receivable, net of allowances of $99 and $63 at June 30, 2019 and
December 31, 2018, respectively

 

16,108

 

 

15,864

 

Inventories, net

 

13,140

 

 

12,848

 

Prepaid expenses and other assets

 

1,412

 

 

1,416

 

Total current assets

 

67,420

 

 

65,327

 

 
Property and equipment, net

 

11,536

 

 

12,138

 

Goodwill

 

3,332

 

 

3,332

 

Intangible assets, net

 

574

 

 

1,029

 

Other noncurrent assets

 

1,291

 

 

45

 

TOTAL ASSETS

$

84,153

 

$

81,871

 

LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable

$

5,881

 

$

6,083

 

Accrued liabilities

 

7,384

 

 

5,801

 

Total current liabilities

 

13,265

 

 

11,884

 

Long-term liabilities

 

759

 

 

381

 

Total liabilities

 

14,024

 

 

12,265

 

Stockholders’ equity:
Common stock, $0.001 par value, 100,000,000 shares authorized, 18,417,701 and 18,271,249
shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively

 

18

 

 

18

 

Additional paid-in capital

 

133,753

 

 

133,859

 

Accumulated deficit

 

(63,431

)

 

(64,055

)

Accumulated other comprehensive loss

 

(211

)

 

(216

)

Total stockholders’ equity

 

70,129

 

 

69,606

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

84,153

 

$

81,871

 

 
PCTEL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except per share data)
 
 
Three Months Ended Six Months Ended
June 30, June 30,

2019

2018

2019

2018

 
REVENUES

$

23,499

$

21,582

 

$

44,090

$

43,313

 

COST OF REVENUES

 

12,805

 

13,783

 

 

24,737

 

27,650

 

GROSS PROFIT

 

10,694

 

7,799

 

 

19,353

 

15,663

 

OPERATING EXPENSES:
Research and development

 

3,006

 

3,053

 

 

6,009

 

5,993

 

Sales and marketing

 

3,097

 

3,075

 

 

5,895

 

6,102

 

General and administrative

 

3,914

 

3,149

 

 

7,167

 

6,143

 

Amortization of intangible assets

 

48

 

124

 

 

122

 

248

 

Restructuring expenses

 

0

 

0

 

 

0

 

0

 

Total operating expenses

 

10,065

 

9,401

 

 

19,193

 

18,486

 

OPERATING INCOME (LOSS)

 

629

 

(1,602

)

 

160

 

(2,823

)

Other income, net

 

320

 

209

 

 

481

 

260

 

INCOME (LOSS) BEFORE INCOME TAXES

 

949

 

(1,393

)

 

641

 

(2,563

)

Expense (benefit) for income taxes

 

8

 

(167

)

 

17

 

(479

)

NET INCOME (LOSS)

$

941

$

(1,226

)

$

624

$

(2,084

)

 
Net Income (Loss) per Share:
Basic

$

0.05

$

(0.07

)

$

0.04

$

(0.12

)

Diluted

$

0.05

$

(0.07

)

$

0.03

$

(0.12

)

Weighted Average Shares:
Basic

 

17,828

 

17,142

 

 

17,725

 

17,099

 

Diluted

 

17,934

 

17,142

 

 

17,916

 

17,099

 

 
Cash dividend per share

$

0.055

$

0.055

 

$

0.110

$

0.110

 

PCTEL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
 
 
Six Months Ended June 30,
.

2019

2018

 
Operating Activities:
Net income (loss)

$

624

 

$

(2,084

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and Amortization

 

1,425

 

 

1,381

 

Intangible asset amortization

 

455

 

 

581

 

Stock-based compensation

 

2,328

 

 

1,786

 

Loss on disposal of property and equipment

 

30

 

 

(5

)

Restructuring costs

 

(14

)

 

(20

)

Bad debt provision

 

11

 

 

124

 

Deferred tax provision

 

0

 

 

(390

)

Changes in operating assets and liabilities:
Accounts receivable

 

(234

)

 

473

 

Inventories

 

(268

)

 

(813

)

Prepaid expenses and other assets

 

354

 

 

330

 

Accounts payable

 

(231

)

 

2,743

 

Income taxes payable

 

(46

)

 

(38

)

Other accrued liabilities

 

675

 

 

(2,107

)

Deferred revenue

 

(40

)

 

16

 

Net cash provided by operating activities

 

5,069

 

 

1,977

 

Investing Activities:
Capital expenditures

 

(986

)

 

(1,519

)

Proceeds from disposal of property and equipment

 

0

 

 

14

 

Purchases of investments

 

(26,823

)

 

(22,712

)

Redemptions/maturities of short-term investments

 

24,999

 

 

26,307

 

Net cash (used in) provided by investing activities

 

(2,810

)

 

2,090

 

Financing Activities:
Proceeds from issuance of common stock

 

338

 

 

364

 

Payment of withholding tax on stock-based compensation

 

(743

)

 

(289

)

Principle payments on finance leases

 

(52

)

 

(57

)

Cash dividends

 

(2,029

)

 

(1,999

)

Net cash used in financing activities

 

(2,486

)

 

(1,981

)

 
Net (decrease) increase in cash and cash equivalents

 

(227

)

 

2,086

 

Effect of exchange rate changes on cash

 

(36

)

 

(42

)

Cash and cash equivalents, beginning of period

 

4,329

 

 

5,559

 

Cash and Cash Equivalents, End of Period

$

4,066

 

$

7,603

 

 
 
PCTEL, INC.
REVENUE AND GROSS PROFIT BY PRODUCT LINE (unaudited)
(in thousands)
 
 
 
Three Months Ended June 30, 2019 Six Months Ended June 30, 2019

Antenna
Products

Test &
Measurement
Products

Corporate

Total

Antenna
Products

Test &
Measurement
Products

Corporate

Total

REVENUES

$16,014

$7,526

($41)

$23,499

$31,102

$13,062

($74)

$44,090

 
GROSS PROFIT

$5,569

$5,112

$13

$10,694

$10,430

$8,898

$25

$19,353

 
GROSS PROFIT %

34.8%

67.9%

45.5%

33.5%

68.1%

43.9%

 
Three Months Ended June 30, 2018 Six Months Ended June 30, 2018

Antenna
Products

Test &
Measurement
Products

Corporate

Total

Antenna
Products

Test &
Measurement
Products

Corporate

Total

REVENUES

$17,478

$4,135

($31)

$21,582

$35,243

$8,134

($64)

$43,313

 
GROSS PROFIT

$5,031

$2,755

$13

$7,799

$10,229

$5,426

$8

$15,663

 
GROSS PROFIT %

28.8%

66.6%

36.1%

29.0%

66.7%

36.2%

 
Reconciliation of GAAP to non-GAAP Results (unaudited)
(in thousands except per share information)
 
Reconciliation of GAAP operating loss to non-GAAP operating income (loss)
 
Three Months Ended June 30, Six Months Ended June 30,

2019

2018

2019

2018

 
 
Operating Income (Loss)

$629

($1,602)

$160

($2,823)

 
(a) Add:
Amortization of intangible assets
-Cost of revenues

167

167

333

333

-Operating expenses

48

124

122

248

Restructuring

0

0

0

0

 
Stock Compensation:
-Cost of revenues

102

93

205

181

-Engineering

177

159

350

297

-Sales & marketing

182

157

363

288

-General & administrative

983

710

1,410

1,021

1,659

1,410

2,783

2,368

Non-GAAP Operating Income (Loss)

$2,288

($192)

$2,943

($455)

% of revenue

9.7%

-0.9%

6.7%

-1.1%

 
Reconciliation of GAAP net loss to non-GAAP net income (loss)
 
Three Months Ended June 30, Six Months Ended June 30,

2019

2018

2019

2018

 
Net Income (Loss)

$941

($1,226)

$624

($2,084)

 
Adjustments:
(a) Non-GAAP adjustment to operating income (loss)

1,659

1,410

2,783

2,368

Income Taxes

(201)

(168)

(257)

(463)

1,458

1,242

2,526

1,905

Non-GAAP Net Income (Loss)

$2,399

$16

$3,150

($179)

 
Non-GAAP Income (Loss) per Share:
Basic

$0.13

$0.00

$0.18

($0.01)

Diluted

$0.13

$0.00

$0.18

($0.01)

 
Weighed Average Shares:
Basic

17,828

17,142

17,725

17,099

Diluted

17,934

17,554

17,916

17,099

 
This schedule reconciles the Company's GAAP operating income (loss) to its non-GAAP operating income (loss). 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 income (loss) (a) consist of stock compensation expense and amortization of intangible assets. The adjustments to GAAP net income (loss) include the non-GAAP adjustments to operating income (loss) as well as adjustments for (b) non-cash income tax expense.
 
PCTEL, Inc.
Reconciliation of GAAP operating loss to Adjusted EBITDA
(unaudited, in thousands)
 
 
 
Three Months Ended June 30, Year Ended June 30,

2019

2018

2019

2018

 
Operating Income (Loss)

$629

($1,602)

$160

($2,823)

 
Add:
Depreciation and amortization

713

707

1,425

1,381

Intangible amortization

215

291

455

581

Stock compensation expenses

1,444

1,119

2,328

1,787

Adjusted EBITDA

$3,001

$515

$4,368

$926

% of revenue

12.8%

2.4%

9.9%

2.1%

 
 
This schedule reconciles the Company's GAAP operating income (loss) 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

Kevin McGowan
CFO
PCTEL, Inc.
(630) 372-6800

Michael Rosenberg
Director of Marketing
PCTEL, Inc.
(301) 444-2046
public.relations@pctel.com

Contacts

Kevin McGowan
CFO
PCTEL, Inc.
(630) 372-6800

Michael Rosenberg
Director of Marketing
PCTEL, Inc.
(301) 444-2046
public.relations@pctel.com