PCTEL Reports First Quarter Financial Results

BLOOMINGDALE, Ill.--(BUSINESS WIRE)--May 7, 2020-- PCTEL, Inc. (Nasdaq: PCTI) announced its results for the first quarter ended March 31, 2020.

Highlights

• Revenue of $17.5 million in the quarter, 15% lower compared to the first quarter 2019. Revenue was higher by 10% for the test and measurement product line, but lower by 24% in the higher volume antenna product line compared to the first quarter 2019.
• Gross profit margin of 46.9% in the first quarter, up 4.9% compared to the gross profit margin in the first quarter 2019. The percentage increase in the first quarter is a result of higher revenues for test and measurement products and an increase in the gross margin percentage for antenna products.
• GAAP net loss per share of $0.04 in the first quarter compared to a GAAP net loss per share of $0.02 in the first quarter 2019.
• Non-GAAP net income and adjusted EBITDA are measures the Company uses to measure 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 diluted share of $0.01 in the first quarter compared to Non-GAAP net income per diluted share of $0.04 in the first quarter 2019.
  • Adjusted EBITDA as a percent of revenue of 3.8% in the first quarter compared to 6.6% in the first quarter 2019.
• $38.3 million of cash and short-term investments and no debt at March 31, 2020 compared to $39.7 million and no debt at December 31, 2019. During the first quarter 2020, the Company repurchased shares valued at $2.0 million pursuant to a share repurchase program that has been terminated.

“Our priorities during this COVID-19 pandemic are to keep our employees safe and to serve our customers in critical infrastructure markets,” said David Neumann, PCTEL’s CEO. “While first quarter revenue didn’t meet our financial plan, we are pleased with our record-setting scanning receiver revenue in the quarter. This result reinforces our belief that 5G will be a growth driver for several years. We are well-positioned for the long-term with our cost structure and competitive products that enable wireless connectivity for mission critical applications.”

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 (844) 407-9500 (United States/Canada) or (862) 298-0850 (International). 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 (877) 481-4010 (United States /Canada), or (919) 882-2331 (International), PIN number: 34239.

About PCTEL

PCTEL is a leading global provider of wireless technology, including purpose-built Industrial IoT devices, antenna systems, and test and measurement solutions. Trusted by our customers for over 25 years, we solve complex wireless challenges to help organizations stay connected, transform, and grow.

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 about the Company’s expectations regarding the impact of the COVID-19 pandemic; our future financial performance; growth of our antenna solutions and test and measurement businesses; the impact of our transition plan for manufacturing inside and outside China; the anticipated demand for certain products including those related to public safety, the Industrial IoT, 5G and intelligent transportation; 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 disruptions to the Company’s workforce, operations, supply chain and customer demand caused by the COVID-19 pandemic and impact of the pandemic on the Company’s results of operations, financial condition and stock price; the impact of data densification and IoT on capacity and coverage demand; the 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. © 2020 PCTEL, Inc. All rights reserved.

PCTEL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands, except share data)
		(unaudited)
		March 31,				December 31,
		2020				2019
ASSETS
Cash and cash equivalents		$	9,662			$	7,094
Short-term investment securities			28,608				32,556
Accounts receivable, net of allowances of $117 and $104 at March 31, 2020 and December 31, 2019, respectively			13,918				17,380
Inventories, net			11,133				11,935
Prepaid expenses and other assets			1,568				1,842
Total current assets			64,889				70,807
Property and equipment, net			12,130				11,985
Goodwill			3,332				3,332
Intangible assets, net			0				144
Other noncurrent assets			2,748				2,969
TOTAL ASSETS		$	83,099			$	89,237
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable		$	3,984			$	3,190
Accrued liabilities			5,770				9,382
Total current liabilities			9,754				12,572
Long-term liabilities			4,289				3,315
Total liabilities			14,043				15,887
Stockholders’ equity:
Common stock, $0.001 par value, 100,000,000 shares authorized, 18,456,149 and 18,611,289 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively			18				19
Additional paid-in capital			130,438				133,954
Accumulated deficit			(60,993	)			(60,305	)
Accumulated other comprehensive loss			(407	)			(318	)
Total stockholders’ equity			69,056				73,350
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	83,099			$	89,237

PCTEL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except per share data)
		Three Months Ended
		March 31,
		2020				2019
REVENUES		$	17,506			$	20,590
COST OF REVENUES			9,291				11,932
GROSS PROFIT			8,215				8,658
OPERATING EXPENSES:
Research and development			3,029				3,003
Sales and marketing			3,142				2,798
General and administrative			2,802				3,253
Amortization of intangible assets			33				73
Restructuring expenses			87				0
Total operating expenses			9,093				9,127
OPERATING INCOME (LOSS)			(878	)			(469	)
Other income, net			198				162
INCOME (LOSS) BEFORE INCOME TAXES			(680	)			(307	)
Expense (benefit) for income taxes			8				10
NET INCOME (LOSS)		$	(688	)		$	(317	)
Net Income (Loss) per Share:
Basic		$	(0.04	)		$	(0.02	)
Diluted		$	(0.04	)		$	(0.02	)
Weighted Average Shares:
Basic			18,207				17,617
Diluted			18,207				17,617
Cash dividend per share		$	0.055			$	0.055

PCTEL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(unaudited, in thousands)
		Year Ended March 31,
.		2020				2019
Operating Activities:
Net income (loss) from continuing operations		$	(688	)		$	(317	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation			748				711
Intangible asset amortization			144				240
Stock-based compensation			562				882
Loss on disposal/sale of property and equipment			7				0
Restructuring costs			63				(3	)
Bad debt provision			18				7
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable			3,432				(512	)
Inventories			760				38
Prepaid expenses and other assets			470				23
Accounts payable			737				554
Income taxes payable			8				(22	)
Other accrued liabilities			(2,011	)			(39	)
Deferred revenue			39				(23	)
Net cash provided by operating activities			4,289				1,539
Investing Activities:
Capital expenditures			(1,516	)			(311	)
Purchase of investments			(9,918	)			(13,893	)
Redemptions/maturities of short-term investments			13,866				14,177
Net cash used in finance activities			2,432				(27	)
Financing Activities:
Proceeds from issuance of common stock			59				338
Payment of withholding tax on stock-based compensation			(1,106	)			(743	)
Principle payments on finance leases			(20	)			(26	)
Purchase of common stock from repurchase program			(2,000	)			-
Cash dividends			(1,032	)			(1,016	)
Net cash used in financing activities			(4,099	)			(1,447	)
Net increase (decrease) in cash and cash equivalents			2,622				65
Effect of exchange rate changes on cash			(54	)			61
Cash and cash equivalents, beginning of period			7,094				4,329
Cash and Cash Equivalents, End of Period		$	9,662			$	4,455

PCTEL, INC.
REVENUE AND GROSS PROFIT BY PRODUCT LINE (unaudited)
(in thousands)
		Three Months Ended March 31, 2020
		Antenna Products			Test & Measurement Products			Corporate			Total
REVENUES		$11,460			$6,083			($37	)		$17,506
GROSS PROFIT		$3,918			$4,297			$0			$8,215
GROSS PROFIT %		34.2	%		70.6	%					46.9	%
		Three Months Ended March 31, 2019
		Antenna Products			Test & Measurement Products			Corporate			Total
REVENUES		$15,088			$5,535			($33	)		$20,590
GROSS PROFIT		$4,861			$3,785			$12			$8,658
GROSS PROFIT %		32.2	%		68.4	%					42.0	%

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 March 31,
			2020			2019
	Operating Income (Loss)		($878	)		($469	)
(a)	Add:
	Amortization of intangible assets
	-Cost of revenues		111			167
	-Operating expenses		33			73
	Restructuring		87			0
	Stock Compensation:
	-Cost of revenues		72			103
	-Engineering		137			172
	-Sales & marketing		150			180
	-General & administrative		203			427
			793			1,122
	Non-GAAP Operating Income (Loss)		($85	)		$653
	% of revenue		-0.5	%		3.2	%
Reconciliation of GAAP net loss to non-GAAP net income (loss)
			Three Months Ended March 31,
			2020			2019
	Net Income (Loss)		($688	)		($317	)
	Adjustments:
(a)	Non-GAAP adjustment to operating income (loss)		793			1,122
	Income Taxes		(1	)		(55	)
			792			1,067
	Non-GAAP Net Income (Loss)		$104			$750
	Non-GAAP Income (Loss) per Share:
	Basic		$0.01			$0.04
	Diluted		$0.01			$0.04
	Weighed Average Shares:
	Basic		18,207			17,617
	Diluted		18,343			17,660

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 March 31,
					2020			2019
	Operating Income (Loss)				($878	)		($469	)
	Add:
	Depreciation and amortization				748			711
	Intangible amortization				144			240
	Restructuring expenses				87			0
	Stock compensation expenses				562			882
	Adjusted EBITDA				$663			$1,364
	% of revenue				3.8	%		6.6	%

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

View source version on businesswire.com: https://www.businesswire.com/news/home/20200507005775/en/

Kevin McGowan
CFO
PCTEL, Inc.
(630) 339-2051

Suzanne Cafferty
Vice President, Global Marketing
PCTEL, Inc.
(630) 339-2105
public.relations@pctel.com

Source: PCTEL, Inc.