November 3, 2015

PCTEL Achieves $26.5 Million in Third Quarter Revenue

 

BLOOMINGDALE, Ill.--(BUSINESS WIRE)-- PCTEL, Inc. (NASDAQ:PCTI), a leader in Performance Critical Telecom solutions, announced its 2015 third quarter results.

Quarter Highlights

  • $26.5 million in revenue for the quarter, a decrease of five percent from the same period last year.
  • Gross profit margin of 33 percent in the quarter, compared to 41 percent for the same period last year.
  • GAAP operating margin of negative eight percent for the quarter, compared to operating margin of eight percent for the same period last year.
  • GAAP net loss of $(1.1) million for the quarter, or $(0.06) per diluted share, compared to net income of $2.2 million, or $0.12 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, 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 margin of half a percent in the quarter, compared to 12 percent in the same period last year.
    • Non-GAAP net income of $108,000 or $0.01 per diluted share in the quarter, compared to $2.9 million or $0.16 per diluted share in the same period last year.
  • $34.3 million of cash and short-term investments at September 30, 2015, a decrease of approximately $6.9 million from the preceding quarter. Free cash flow in the quarter was $461,000, comprised of $747,000 in cash flow from operations and $286,000 of capital spending. During the quarter the Company repurchased 1,114,000 shares of its common stock for approximately $6.9 million, and paid a regular quarterly dividend of $911,000.

"We made progress in our antenna and scanning receiver equipment business," said Marty Singer, PCTEL's Chairman and CEO. "At the same time our engineering services operations continue to weather the downturn in carrier spending and we are investing resources into our data analytics software product line. We expect our engineering services to expand with renewed spending during the fourth quarter and our data analytics investment to generate revenue in 2016," 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: 13775112. 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: 13775112.

About PCTEL

PCTEL, a global provider of RF expertise, delivers Performance Critical Telecom solutions to the wireless industry. PCTEL benchmarks and optimizes wireless networks with its data tools, engineering services, and RF products. PCTEL's antennas and site solutions are vital elements for networks serving SCADA, fleet management, health care, public safety, and education.

PCTEL's RF Solutions products and services improve the performance of wireless networks globally. PCTEL's performance critical products include its MXflex®, IBflex®, and EXflex® SeeGull® scanning receivers and related SeeHawk® Touch, SeeHawk® Collect, and SeeWave™ tools. PCTEL's sophisticated engineering services utilize these products as well as the SeeHawk™ Analytics portfolio (Network Analytics, Subscriber Analytics, Map Analytics, and Business Intelligence).

PCTEL Connected Solutions designs and delivers performance critical antennas and site solutions for public and private wireless networks globally. PCTEL's performance critical antenna solutions include high rejection and high performance GPS and GNSS products, the industry leading Yagi portfolio, mobile and indoor LTE, broadband, and LMR antennas and PIM-rated antennas for transit, in-building, and small cell applications. We leverage our design, logistics, and support capabilities to deliver performance critical antenna and site solutions into carrier, railroad, utility applications, oil and gas, and other vertical markets.

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 www.rfsolutions.pctel.com

PCTEL Safe Harbor Statement

This press release and our related comments in our third quarter 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, new products and features, expectations regarding the future growth of our antenna and wireless RF businesses, and demand for engineering services 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 customer demand for these types of products and services generally, PCTEL's ability to successfully grow the wireless products business, and its 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,
      2015     2014
ASSETS            
             
Cash and cash equivalents     $ 12,887       $ 20,432  
Short-term investment securities       21,428         39,577  
Accounts receivable, net of allowance for doubtful accounts            
of $119 and $121 at September 30, 2015 and December 31, 2014, respectively       20,643         23,874  
Inventories, net       17,187         16,358  
Deferred tax assets, net       2,279         2,281  
Prepaid expenses and other assets       2,440         1,757  
Total current assets       76,864         104,279  
             
Property and equipment, net       14,042         14,842  
Goodwill       3,493         161  
Intangible assets, net       12,434         2,637  
Deferred tax assets, net       10,348         9,710  
Other noncurrent assets       36         40  
TOTAL ASSETS     $ 117,217       $ 131,669  
             
LIABILITIES AND STOCKHOLDERS' EQUITY            
             
Accounts payable     $ 5,631       $ 5,495  
Accrued liabilities       6,430         10,211  
Total current liabilities       12,061         15,706  
             
Other long-term liabilities       930         448  
             
Total liabilities       12,991         16,154  
             
Stockholders' equity:            
Common stock, $0.001 par value, 100,000,000 shares            
authorized, 17,815,573 and 18,571,419 shares issued and            
outstanding at September 30, 2015 and December 31, 2014, respectively       18         19  
Additional paid-in capital       137,768         145,462  
Accumulated deficit       (33,619 )       (30,101 )
Accumulated other comprehensive income       59         135  
Total stockholders' equity       104,226         115,515  
             
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY     $ 117,217       $ 131,669  
                     
PCTEL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except per share data)
                       
                       
        Three Months Ended     Nine Months Ended
        September 30,     September 30,
        2015   2014     2015   2014
                       
  REVENUES     $ 26,526     $ 27,932     $ 80,477     $ 77,769
  COST OF REVENUES       17,896       16,538       52,067       45,943
  GROSS PROFIT       8,630       11,394       28,410       31,826
  OPERATING EXPENSES:                    
  Research and development       2,863       2,659       8,506       8,970
  Sales and marketing       3,603       3,054       10,558       9,312
  General and administrative       2,847       3,120       9,513       9,822
  Amortization of intangible assets       1,125       465       2,963       1,503
  Restructuring charges       413       0       852       0
  Total operating expenses       10,851       9,298       32,392       29,607
  OPERATING INCOME (LOSS)       (2,221 )     2,096       (3,982 )     2,219
  Other income, net       534       207       2,783       738
  INCOME (LOSS) BEFORE INCOME TAXES       (1,687 )     2,303       (1,199 )     2,957
  Expense (benefit) for income taxes       (625 )     85       (451 )     340
  NET INCOME (LOSS)       ($1,062 )   $ 2,218       ($748 )   $ 2,617
                       
  Net Income (Loss) per Share:                    
  Basic       ($0.06 )   $ 0.12       ($0.04 )   $ 0.14
  Diluted       ($0.06 )   $ 0.12       ($0.04 )   $ 0.14
                       
  Weighed Average Shares:                    
  Basic       17,626       18,112       18,059       18,155
  Diluted       17,626       18,271       18,059       18,346
                       
  Cash dividend per share     $ 0.05     $ 0.04     $ 0.15     $ 0.12
                                   
PCTEL, INC.
P&L INFORMATION BY SEGMENT (unaudited)
(in thousands)
                                       
                                       
        Three Months Ended September 30, 2015     Nine Months Ended September 30, 2015
        Connected   RF             Connected   RF        
        Solutions   Solutions   Corporate   Total     Solutions   Solutions   Corporate   Total
                                       
  REVENUES     $ 17,450   $ 9,115     ($39 )   $ 26,526       $ 52,903   $ 27,749     ($175 )   $ 80,477  
                                       
  GROSS PROFIT       4,729     3,894     7       8,630         15,588     12,802     20       28,410  
                                       
  OPERATING INCOME (LOSS)     $ 1,160     ($1,058 )   ($2,323 )     ($2,221 )     $ 4,255     ($181 )   ($8,056 )     ($3,982 )
                                       
                                       
        Three Months Ended September 30, 2014     Nine Months Ended September 30, 2014
        Connected   RF             Connected   RF        
        Solutions   Solutions   Corporate   Total     Solutions   Solutions   Corporate   Total
                                       
  REVENUES     $ 18,697   $ 9,283     ($48 )   $ 27,932       $ 52,409   $ 25,578     ($218 )   $ 77,769  
                                       
  GROSS PROFIT       5,803     5,584     7       11,394         16,635     15,171     20       31,826  
                                       
  OPERATING INCOME (LOSS)     $ 2,262   $ 2,492     ($2,658 )   $ 2,096       $ 5,278   $ 5,150     ($8,209 )   $ 2,219  
                                                               

Reconciliation of GAAP to non-GAAP Results (unaudited)

(in thousands except per share information)
                         

Reconciliation of GAAP operating loss to non-GAAP operating income (a)

                         
          Three Months Ended September 30,     Nine Months Ended September 30,
         

2015

 

2014

   

2015

 

2014

                         
    Operating Income (Loss)       ($2,221 )   $ 2,096         ($3,982 )   $ 2,219  
                         
(a)   Add:                    
    Amortization of intangible assets       1,125       465         2,963       1,503  
    Restructuring:                    
    -Cost of Goods Sold       132       0         246       0  
    -Restructuring       413       0         852       0  
    TelWorx investigation:                    
    -General & Administrative       9       188         100       686  
    Legal settlement:                    
    -General & Administrative       0       0         0       75  
    Stock Compensation:                    
    -Cost of Goods Sold       115       112         244       315  
    -Engineering       99       149         244       509  
    -Sales & Marketing       230       155         370       491  
    -General & Administrative       206       315         534       1,263  
            2,329       1,384         5,553       4,842  
                         
    Non-GAAP Operating Income     $ 108     $ 3,480       $ 1,571     $ 7,061  
    % of revenue       0.4 %     12.5 %       2.0 %     9.1 %
                         

Reconciliation of GAAP net loss to non-GAAP net income (b)

                         
          Three Months Ended September 30,     Nine Months Ended September 30,
         

2015

 

2014

   

2015

 

2014

                         
    Net Income (Loss)       ($1,062 )   $ 2,218         ($748 )   $ 2,617  
                         
    Adjustments:                    
(a)   Non-GAAP adjustment to operating income       2,329       1,384         5,553       4,842  
(b)   Other income related to SEC investigation of TelWorx       (10 )     (188 )       (99 )     (660 )
(b)   Legal Settlement - Amendment to Nexgen APA       (500 )     0         (2,660 )     0  
(b)   Legal Settlement - other       0       0         0       (75 )
(b)   Income Taxes       (649 )     (545 )       (738 )     (932 )
            1,170       651         2,056       3,175  
                         
    Non-GAAP Net Income     $ 108     $ 2,869       $ 1,308     $ 5,792  
                         
    Non-GAAP Earning per Share:                    
    Basic     $ 0.01     $ 0.16       $ 0.07     $ 0.32  
    Diluted     $ 0.01     $ 0.16       $ 0.07     $ 0.32  
                         
    Weighed Average Shares:                    
    Basic       17,626       18,112         18,059       18,155  
    Diluted       17,809       18,271         18,428       18,346  
                                         
 

This schedule reconciles the Company's GAAP operating loss and GAAP net loss 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 SEC investigation of TelWorx.

   
 

(b) These adjustments include the items described in footnote (a) as well as other income for insurance claims related to the SEC investigation of TelWorx, legal settlements, and non-cash income tax expense.

 

 

 

Reconciliation of GAAP To non-GAAP SEGMENT INFORMATION (unaudited) (a)

  (in thousands except per share information)
                                       
                                       
        Three Months Ended September 30, 2015     Nine Months Ended September 30, 2015
        Connected   RF             Connected   RF        
        Solutions   Solutions   Corporate   Total     Solutions   Solutions   Corporate   Total
                                       
                                       
  Operating Income (Loss)     $ 1,160       ($1,058 )   ($2,323 )     ($2,221 )     $ 4,255     ($181 )   ($8,056 )     ($3,982 )
                                       
  Add:                                    
  Amortization of intangible assets       195       930     0       1,125         655     2,308     0       2,963  
  TelWorx investigation:                                    
  -General & Administrative       0       0     9       9         0     0     100       100  
  Restructuring:                                    
  -Cost of Goods Sold       132       0     0       132         246     0     0       246  
  -Restructuring charges       113       300     0       413         538     314     0       852  
  Stock Compensation:                                    
  -Cost of Goods Sold       40       75     0       115         54     190     0       244  
  -Engineering       (5 )     104     0       99         55     189     0       244  
  -Sales & Marketing       88       142     0       230         173     197     0       370  
  -General & Administrative       16       44     146       206         6     43     485       534  
          579       1,595     155       2,329         1,727     3,241     585       5,553  
                                       
  Non-GAAP Operating Income (Loss)     $ 1,739     $ 537     ($2,168 )   $ 108       $ 5,982   $ 3,060     ($7,471 )   $ 1,571  
                                       
                                       
        Three Months Ended September 30, 2014     Nine Months Ended September 30, 2014
        Connected   RF             Connected   RF        
        Solutions   Solutions   Corporate   Total     Solutions   Solutions   Corporate   Total
                                       
                                       
  Operating Income (Loss)     $ 2,262     $ 2,492     ($2,658 )   $ 2,096       $ 5,278   $ 5,150     ($8,209 )     2,219  
                                       
  Add:                                    
  Amortization of intangible assets       261       204     0       465         891     612     0       1,503  
  TelWorx investigation:                                    
  -General & Administrative       0       0     188       188         0     0     686       686  
  Legal settlement:                                    
  -General & Administrative       0       0     0       0         0     0     75       75  
  Stock Compensation:                                    
  -Cost of Goods Sold       58       54     0       112         157     158     0       315  
  -Engineering       63       86     0       149         229     280     0       509  
  -Sales & Marketing       122       33     0       155         401     90     0       491  
  -General & Administrative       54       31     230       315         202     98     963       1,263  
          558       408     418       1,384         1,880     1,238     1,724       4,842  
                                       
  Non-GAAP Operating Income (Loss)     $ 2,820     $ 2,900     ($2,240 )   $ 3,480       $ 7,158   $ 6,388     ($6,485 )   $ 7,061  
                                                                 
 

This schedule reconciles the Company's GAAP operating income (loss) by segment to its non-GAAP operating 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 SEC investigation of TelWorx.

 

 

 

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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