October 30, 2013

PCTEL Achieves $26.5 Million in Third Quarter Revenue

BLOOMINGDALE, Ill.--(BUSINESS WIRE)-- PCTEL, Inc. (NASDAQ: PCTI), a leader in simplifying wireless and site solutions for private and public networks, announced results for the third quarter ended September 30, 2013.

Third Quarter Highlights

  • $26.5 million in revenue for the quarter, an increase of two percent from the same period last year.
  • Gross profit margin of 41 percent in the quarter, compared to 39 percent in the same period last year.
  • GAAP operating margin from continuing operations of four percent for the quarter, unchanged from the same period last year.
  • GAAP net income from continuing operations of $751,000 for the quarter, or $0.04 per diluted share, compared to a net income of $688,000, or $0.04 per diluted share for the same period last year.
  • 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, legal settlements and related expenses, 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 profit from continuing operations of 11 percent in the quarter, unchanged from the same period last year.
    • Non-GAAP net income from continuing operations of $2.3 million or $0.13 per diluted share in the quarter, as compared to $2.4 million or $0.14 per diluted share in the same period last year. The $0.01 share difference is attributable to the increase in diluted share count from including "in the money" options due to this year's appreciation in share price.
  • $54.9 million of cash and short-term investments at September 30, 2013, an increase of approximately $3.5 million from the preceding quarter.

"We are pleased with our introduction of new antenna and test and measurement products," said Marty Singer, PCTEL's Chairman and CEO. "Our focus on in-building continues to generate service and product opportunity and we are gaining traction in M2M, Fleet Management, SCADA, and the expanded LTE market," 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: 83713332. 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: 83713332.

About PCTEL

PCTEL, Inc. (NASDAQ: PCTI), develops antenna, scanning receiver, and engineered site solutions and services for public and private networks. PCTEL RF Solutions specializes in the design, optimization, and testing of today's wireless communication networks. The company's SeeGull® scanning receivers, SeeHawk® visualization tool, and Clarify® system measure and analyze wireless signals for efficient cellular network planning, deployment, and optimization. PCTEL develops and supports scanning receivers for LTE, TD-LTE, EV-DO, CDMA, WCDMA, TD-SCDMA, GSM, and WiMAX networks.

PCTEL Connected Solutions™ simplifies network deployment for wireless, data, and communications applications for private network, public safety, and government customers. PCTEL Connected Solutions develops and delivers high-value Yagi, land mobile radio, WiFi, GPS, in-tunnel, subway, and broadband antennas (parabolic and flat panel) through its MAXRAD®, Bluewave™ and Wi-Sys™ product lines. PCTEL also designs specialized towers, enclosures, fiber optic panels, and fiber jumper cables to deliver custom engineered site solutions. The company's vertical markets include SCADA, health care, smart grid, positive train control, precision agriculture, indoor wireless, telemetry, offloading, and wireless backhaul. PCTEL's products are sold worldwide through direct and indirect channels. For more information, please visit the company's web sites www.pctel.com, www.antenna.com, or rfsolutions.pctel.com.

PCTEL Safe Harbor Statement

This press release contains "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Specifically, the statements regarding PCTEL's new products and focus on service and other product opportunities and expectations regarding growth and expansion 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 ability to successfully grow the wireless products business and the 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.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
       
(unaudited)
September 30, December 31,
2013 2012
ASSETS
 
Cash and cash equivalents $17,420 $17,543
Short-term investment securities 37,516 33,596
Accounts receivable, net of allowance for doubtful accounts
of $233 and $222 at September 30, 2013 and December 31, 2012, respectively 17,275 18,586
Inventories, net 15,238 17,573
Deferred tax assets, net 1,484 1,484
Prepaid expenses and other assets 1,304   2,160  
Total current assets 90,237 90,942
 
Property and equipment, net 14,619 14,775
Goodwill 161 161
Intangible assets, net 5,199 7,004
Deferred tax assets, net 12,441 14,034
Other noncurrent assets 1,796 1,636
Assets of discontinued operations 0   18  
TOTAL ASSETS $124,453   $128,570  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Accounts payable $3,842 $10,557
Accrued liabilities 6,577   5,899  
Total current liabilities 10,419 16,456
 
Contingent consideration 0 1,130
Other long-term liabilities 2,905 2,736
Liabilities of discontinued operations 0   103  
2,905 3,969
   
Total liabilities 13,324   20,425  
 
Stockholders' equity:
Common stock, $0.001 par value, 100,000,000 shares
authorized, 18,530,551 and 18,514,809 shares issued and
outstanding at September 30, 2013 and December 31, 2012, respectively 19 19
Additional paid-in capital 142,496 140,388
Accumulated deficit (31,570 ) (32,410 )
Accumulated other comprehensive income 184   148  
Total equity 111,129   108,145  
TOTAL LIABILITIES AND EQUITY $124,453   $128,570  
 
 
PCTEL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except per share data)
           
 
Three Months Ended Nine Months Ended
September 30, September 30,
2013 2012 2013 2012
 
REVENUES $26,471 $25,853 $78,290 $63,007
COST OF REVENUES 15,695 15,815   47,373   37,119  
GROSS PROFIT 10,776 10,038   30,917   25,888  
OPERATING EXPENSES:
Research and development 2,735 2,348 7,963 6,879
Sales and marketing 2,912 2,811 8,986 7,893
General and administrative 3,576 2,647 12,034 8,036
Amortization of intangible assets 596 917 1,804 2,002
Restructuring charges 29 156   254   156  
Total operating expenses 9,848 8,879   31,041   24,966  
OPERATING INCOME (LOSS) 928 1,159 (124 ) 922
Other income, net 389 12   4,778   85  
INCOME BEFORE INCOME TAXES 1,317 1,171 4,654 1,007
Expense for income taxes 566 483   1,764   430  
NET INCOME FROM CONTINUING OPERATIONS 751 688   2,890   577  
NET LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX BENEFIT 0 (416 ) (109 ) (1,514 )
NET INCOME (LOSS) $751 $272   $2,781   ($937 )
 
Earnings per Share from Continuing Operations:
Basic $0.04 $0.04 $0.16 $0.03
Diluted $0.04 $0.04 $0.16 $0.03
 
Earnings (Loss) per Share from Discontinued Operations:
Basic $0.00 ($0.02 ) ($0.01 ) ($0.09 )
Dilute $0.00 ($0.02 ) ($0.01 ) ($0.09 )
 
Earnings (Loss) per Share:
Basic $0.04 $0.02 $0.16 ($0.05 )
Diluted $0.04 $0.02 $0.15 ($0.05 )
 
Weighed Average Shares:
Basic 17,841 17,493 17,766 17,368
Diluted 18,354 17,779 18,093 17,368
 
Cash dividend per share $0.035 $0.030 $0.105 $0.090
 
                   
PCTEL, INC.
P&L INFORMATION BY SEGMENT - Continuing Operations
(in thousands)
 
 
 
Three Months Ended September 30, 2013 Nine Months Ended September 30, 2013

Connected
Solutions

RF Solutions Consolidating Total

Connected
Solutions

RF Solutions Consolidating Total
 
REVENUES $18,318 $8,243 ($90 ) $26,471 $56,874 $21,617 ($201 ) $78,290
               
GROSS PROFIT 5,684 5,090 2 10,776 17,352 13,547 18 30,917
               
OPERATING INCOME (LOSS) $1,738 $2,098 ($2,908 ) $928 $4,872 $5,139 ($10,135 ) ($124 )
 
 
Three Months Ended September 30, 2012 Nine Months Ended September 30, 2012

Connected
Solutions

RF Solutions Consolidating Total

Connected
Solutions

RF Solutions Consolidating Total
 
REVENUES $19,714 $6,182 ($43 ) $25,853 $47,687 $15,387 ($67 ) $63,007
               
GROSS PROFIT 5,684 4,348 6 10,038 15,186 10,667 35 25,888
               
OPERATING INCOME (LOSS) $1,287 $1,879 ($2,007 ) $1,159 $4,471 $3,090 ($6,639 ) $922  
 
     

Reconciliation GAAP To non-GAAP Results Of Continuing Operations (unaudited)

(in thousands except per share information)
   

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

 
Three Months Ended September 30, Nine Months Ended September 30,
2013 2012 2013 2012
 
Operating Income (Loss) $928 $1,159 ($124 ) $922
 
(a) Add:
Amortization of intangible assets 596 917 1,804 2,002
TelWorx restructuring:
-Restructuring charges 29 156 254 156
-Cost of Goods Sold 0 0 284 0
TelWorx investigation:
-General & Administrative 389 0 1,880 0
Stock Compensation:
-Cost of Goods Sold 104 99 295 302
-Engineering 182 151 505 438
-Sales & Marketing 174 141 435 398
-General & Administrative 438   302   1,384   1,193  
1,912 1,766 6,841 4,489
       
Non-GAAP Operating Income $2,840   $2,925   $6,717   $5,411  
% of revenue 10.7 % 11.3 % 8.6 % 8.6 %
 

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

 
Three Months Ended September 30, Nine Months Ended September 30,
2013 2012 2013 2012
 
Net Income from Continuing Operations 751 $688 $2,890 $577
 
Adjustments:
(a) Non-GAAP adjustment to operating income 1,912 1,766 6,841 4,489
Other income related to the TelWorx legal settlement (389 ) 0 (4,768 ) 0
(b) Income Taxes 55   (46 ) 553   (559 )
1,578 1,720 2,626 3,930
       
Non-GAAP Net Income from Continuing Operations 2,329   $2,408   $5,516   $4,507  
 
Non-GAAP Earning per Share:
Basic $0.13 $0.14 $0.31 $0.26
Diluted $0.13 $0.14 $0.30 $0.26
 
Weighed Average Shares:
Basic 17,841 17,493 17,766 17,368
Diluted 18,354 17,779 18,093 17,368
 

This schedule reconciles the Company's GAAP operating income and GAAP net income 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 TelWorx investigation.

 

(b) These adjustments include the items described in footnote (a) as well as the non-cash income tax expense, noncontrolling interest, and other income related to the TelWorx legal settlement.

 

                 

Reconciliation GAAP To non-GAAP SEGMENT INFORMATION (unaudited) (a) - Continuing Operations

(in thousands except per share information)
 
 
Three Months Ended September 30, 2013 Nine Months Ended September 30, 2013

Connected
Solutions

RF Solutions Consolidating Total

Connected
Solutions

RF Solutions Consolidating Total
 
 
Operating Income (Loss) $1,738 $2,098 ($2,908 ) $928 $4,872 $5,139 ($10,135 ) ($124 )
 
Add:
Amortization of intangible assets 392 204 0 596 1,181 623 0 1,804
TelWorx restructuring:
-Restructuring charges 29 0 0 29 254 0 0 254
-Cost of Goods Sold 0 0 0 0 284 0 0 284
TelWorx investigation:
-General & Administrative 0 0 389 389 0 0 1,880 1,880
Stock Compensation:
-Cost of Goods Sold 44 60 0 104 109 186 0 295
-Engineering 76 106 0 182 207 298 0 505
-Sales & Marketing 127 47 0 174 328 107 0 435
-General & Administrative 95 34 309   438 249 76 1,059   1,384  
763 451 698 1,912 2,612 1,290 2,939 6,841
               
Non-GAAP Operating Income (Loss) $2,501 $2,549 ($2,210 ) $2,840 $7,484 $6,429 ($7,196 ) $6,717  
 
 
Three Months Ended September 30, 2012 Nine Months Ended September 30, 2012

Connected
Solutions

RF Solutions Consolidating Total

Connected
Solutions

RF Solutions Consolidating Total
 
 
Operating Income (Loss) $1,287 $1,879 ($2,007 ) $1,159 $4,471 $3,090 ($6,639 ) $922
 
Add:
Amortization of intangible assets 696 221 0 917 1,340 662 0 2,002
Restructuring charges 156 0 0 156 156 0 0 156
Stock Compensation:
-Cost of Goods Sold 40 59 0 99 124 178 0 302
-Engineering 56 95 0 151 166 272 0 438
-Sales & Marketing 92 49 0 141 259 139 0 398
-General & Administrative 51 30 221   302 138 90 965   1,193  
1,091 454 221 1,766 2,183 1,341 965 4,489
               
Non-GAAP Operating Income (Loss) $2,378 $2,333 ($1,786 ) $2,925 $6,654 $4,431 ($5,674 ) $5,411  

 

 

This schedule reconciles the Company's GAAP operating income by segment 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 TelWorx investigation.

 

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

Source: PCTEL, Inc.

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