PCTEL Reports Second Quarter Financial Results

BLOOMINGDALE, Ill.–(BUSINESS WIRE)–PCTEL, Inc. (Nasdaq: PCTI) announced its results for the second quarter ended June 30, 2020.

Highlights

  • Revenue of $19.8 million in the quarter, 16% lower compared to the second quarter 2019. Revenue was lower by 19% for the test and measurement product line, and lower by 13% for the antenna product line compared to the second quarter 2019.
  • Gross profit margin of 48.0% in the second quarter, up 2.5% compared to the gross profit margin in the second quarter 2019. The percentage increase in the second quarter is a result of higher gross margin percentages for both test & measurement products and antenna products.
  • GAAP net income per share of $0.07 in the second quarter compared to GAAP net income per share of $0.05 in the second quarter 2019.

    • Non-GAAP net income and adjusted EBITDA are metrics 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 $0.11 in the second quarter compared to Non-GAAP net income per diluted share of $0.13 in the second quarter 2019.
  • Adjusted EBITDA as a percent of revenue of 14.4% in the second quarter compared to 12.8% in the second quarter 2019.
  • $39.6 million of cash and investments and no debt at June 30, 2020 compared to $38.3 million and no debt at March 31, 2020.

“We’re pleased with the sequential growth in revenue, Non-GAAP earnings per share and in overall gross margins in the second quarter, especially given the challenges presented with the COVID pandemic” said David Neumann, PCTEL’s CEO. “We continue to focus on the health and well-being of our employees and to support our customers that rely on us for connectivity solutions. We’re confident in our long-term growth prospects with strong 5G test and measurement demand, success with our industrial IoT products, and a strong balance sheet to support inorganic growth.”

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 (877) 876-9173 (United States/Canada) or (785) 424-1667 (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: 35974.

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, 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)

June 30,

December 31,

2020

2019

ASSETS
Cash and cash equivalents

$

6,458

$

7,094

Short-term investment securities

 

29,356

 

32,556

Accounts receivable, net of allowances of $115 and $104 at June 30, 2020 and December 31, 2019, respectively

 

15,414

 

17,380

Inventories, net

 

11,017

 

11,935

Prepaid expenses and other assets

 

1,320

 

1,842

Total current assets

 

63,565

 

70,807

 
Property and equipment, net

 

12,488

 

11,985

Long-term investment securities

 

3,742

 

0

Goodwill

 

3,332

 

3,332

Intangible assets, net

 

0

 

144

Other noncurrent assets

 

2,579

 

2,969

TOTAL ASSETS

$

85,706

$

89,237

LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable

$

4,242

$

3,190

Accrued liabilities

 

6,336

 

9,382

Total current liabilities

 

10,578

 

12,572

Long-term liabilities

 

4,449

 

3,315

Total liabilities

 

15,027

 

15,887

Stockholders’ equity:
Common stock, $0.001 par value, 50,000,000 and 100,000,000 shares authorized at June 30, 2020 and December 31, 2019, respectively, and 18,640,295 and 18,611,289 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively

 

19

 

19

Additional paid-in capital

 

130,853

 

133,954

Accumulated deficit

 

(59,801)

 

(60,305)

Accumulated other comprehensive loss

 

(392)

 

(318)

Total stockholders’ equity

 

70,679

 

73,350

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

85,706

$

89,237

PCTEL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except per share data)
 
 

Three Months Ended

Six Months Ended

June 30,

June 30,

2020

2019

2020

2019

 
REVENUES

$

19,842

$

23,499

$

37,348

$

44,090

COST OF REVENUES

 

10,321

 

12,805

 

19,612

 

24,737

GROSS PROFIT

 

9,521

 

10,694

 

17,736

 

19,353

OPERATING EXPENSES:
Research and development

 

3,070

 

3,006

 

6,099

 

6,009

Sales and marketing

 

2,397

 

3,097

 

5,539

 

5,895

General and administrative

 

2,945

 

3,914

 

5,747

 

7,167

Amortization of intangible assets

 

0

 

48

 

32

 

122

Restructuring expenses

 

11

 

0

 

99

 

0

Total operating expenses

 

8,423

 

10,065

 

17,516

 

19,193

OPERATING INCOME

 

1,098

 

629

 

220

 

160

Other income, net

 

102

 

320

 

300

 

481

INCOME BEFORE INCOME TAXES

 

1,200

 

949

 

520

 

641

Expense for income taxes

 

8

 

8

 

16

 

17

NET INCOME

$

1,192

$

941

$

504

$

624

 
Net Income per Share:
 
Basic

$

0.07

$

0.05

$

0.03

$

0.04

Diluted

$

0.07

$

0.05

$

0.03

$

0.03

 
Weighted Average Shares:
Basic

 

18,159

 

17,828

 

18,180

 

17,725

Diluted

 

18,214

 

17,934

 

18,352

 

17,916

 
Cash dividend per share

$

0.055

$

0.055

$

0.110

$

0.110

PCTEL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(unaudited, in thousands)
 
 

Six Months Ended June 30,

.

2020

2019

 
Operating Activities:
Net income

$

504

 

$

624

 

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization

 

1,502

 

 

1,425

 

Intangible asset amortization

 

144

 

 

455

 

Stock-based compensation

 

1,563

 

 

2,328

 

Loss on disposal of property and equipment

 

7

 

 

30

 

Restructuring costs

 

(28

)

 

(14

)

Bad debt (recoveries) provision

 

(110

)

 

11

 

Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable

 

2,065

 

 

(234

)

Inventories

 

882

 

 

(268

)

Prepaid expenses and other assets

 

871

 

 

354

 

Accounts payable

 

810

 

 

(231

)

Income taxes payable

 

16

 

 

(46

)

Other accrued liabilities

 

(1,167

)

 

675

 

Deferred revenue

 

19

 

 

(40

)

Net cash provided by operating activities

 

7,078

 

 

5,069

 

Investing Activities:
Capital expenditures

 

(2,418

)

 

(986

)

Purchase of investments

 

(26,323

)

 

(26,823

)

Redemptions/maturities of short-term investments

 

25,781

 

 

24,999

 

Net cash used in investing activities

 

(2,960

)

 

(2,810

)

Financing Activities:
Proceeds from issuance of common stock

 

496

 

 

338

 

Proceeds from Paycheck Protection Program Loan

 

3,500

 

 

0

 

Repayment of Paycheck Protection Program Loan

 

(3,500

)

 

0

 

Payment of withholding tax on stock-based compensation

 

(1,106

)

 

(743

)

Principle payments on finance leases

 

(41

)

 

(52

)

Purchase of common stock from repurchase program

 

(2,000

)

 

0

 

Cash dividends

 

(2,054

)

 

(2,029

)

Net cash used in financing activities

 

(4,705

)

 

(2,486

)

 
Net decrease in cash and cash equivalents

 

(587

)

 

(227

)

Effect of exchange rate changes on cash

 

(49

)

 

(36

)

Cash and cash equivalents, beginning of period

 

7,094

 

 

4,329

 

Cash and Cash Equivalents, End of Period

$

6,458

 

$

4,066

 

PCTEL, INC.
REVENUE AND GROSS PROFIT BY PRODUCT LINE (unaudited)
(in thousands)
 
 
Three Months Ended June 30, 2020 Six Months Ended June 30, 2020
Antenna
Products
Test &
Measurement
Products
Corporate Total Antenna
Products
Test &
Measurement
Products
Corporate Total
REVENUES

$13,910

 

$6,118

 

($186

)

$19,842

 

$25,370

 

$12,201

 

($223

)

$37,348

 

 
GROSS PROFIT

$4,973

 

$4,609

 

($61

)

$9,521

 

$8,892

 

$8,905

 

($61

)

$17,736

 

 
GROSS PROFIT %

35.8

%

75.3

%

48.0

%

35.0

%

73.0

%

47.5

%

 
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

%

Reconciliation of GAAP to non-GAAP Results (unaudited)
(in thousands except per share information)
 
Reconciliation of GAAP operating income to non-GAAP operating income
 

Three Months Ended June 30,

Six Months Ended June 30,

2020

2019

2020

2019

 
 
Operating Income

$1,098

 

$629

 

$220

 

$160

 

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

0

 

167

 

111

 

333

 

-Operating expenses

0

 

48

 

33

 

122

 

Restructuring

11

 

0

 

98

 

0

 

Stock Compensation:
-Cost of revenues

75

 

102

 

147

 

205

 

-Engineering

145

 

177

 

282

 

350

 

-Sales & marketing

165

 

182

 

314

 

363

 

-General & administrative

618

 

983

 

821

 

1,410

 

1,014

 

1,659

 

1,806

 

2,783

 

Non-GAAP Operating Income

$2,112

 

$2,288

 

$2,026

 

$2,943

 

% of revenue

10.6

%

9.7

%

5.4

%

6.7

%

 
Reconciliation of GAAP net income to non-GAAP net income
 

Three Months Ended June 30,

Six Months Ended June 30,

2020

2019

2020

2019

Net Income

$1,192

 

$941

 

$504

 

$624

 

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

1,014

 

1,659

 

1,806

 

2,783

 

Income Taxes

(169

)

(201

)

(170

)

(257

)

845

 

1,458

 

1,636

 

2,526

 

Non-GAAP Net Income

$2,037

 

$2,399

 

$2,140

 

$3,150

 

 
Non-GAAP Income per Share:
Basic

$0.11

 

$0.13

 

$0.12

 

$0.18

 

Diluted

$0.11

 

$0.13

 

$0.12

 

$0.18

 

 
Weighted Average Shares:
Basic

18,159

 

17,828

 

18,180

 

17,725

 

Diluted

18,214

 

17,934

 

18,352

 

17,916

 

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 income to Adjusted EBITDA
(unaudited, in thousands)
 
 
 

Three Months Ended June 30, 

Six Months Ended June 30, 

 2020

 2019

 2020

 2019

 
Operating Income      

$1,098

 

 

$629

 

 

$220

 

 

$160

 

 
Add:                    
Depreciation and amortization

                        754

 

713

 

1,502

 

1,425

 

Intangible amortization      

0

 

 

215

 

 

144

 

 

455

 

Restructuring expenses

                          11

 

0

 

98

 

0

 

Stock compensation expenses

1,003

 

1,444

 

1,564

 

2,328

 

Adjusted EBITDA

$2,866

 

$3,001

 

$3,528

 

$4,368

 

% of revenue

14.4

%

12.8

%

9.4

%

9.9

%

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) 339-2051

Suzanne Cafferty

Vice President, Global Marketing

PCTEL, Inc.

(630) 339-2107

public.relations@pctel.com

error: Content is protected !!