March 7, 2016

PCTEL Achieves $26.1 Million in Fourth Quarter Revenue

 

$106.6 Million in 2015 Revenue

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

Fourth Quarter and Annual Highlights

  • $26.1 million in revenue for the quarter, a decrease of 11 percent from the same period last year. $106.6 million in revenue for the year, a decrease of a half percent as compared to 2014.
  • Gross profit margin of 34 percent in the quarter compared to 40 percent for the same period last year. Gross profit margin of 35 percent for the year, compared to 41 percent in 2014.
  • GAAP operating margin of negative seven percent for the quarter compared to operating margin of six percent for the same period last year. Operating margin for the year of negative five percent as compared to four percent in 2014.
  • GAAP net loss of $820,000 for the quarter, or $(0.05) per diluted share compared to net income of $2.0 million, or $0.11 per diluted share for the same period last year. $(1.6) million of net loss for the year, or $(0.09) per diluted share, as compared to net income of $4.6 million, or $0.25 per diluted share in 2014.
  • 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 three percent in the quarter, compared to 12 percent in the same period last year. Non-GAAP operating margin for the year was two percent compared to 10 percent in 2014.
    • Non-GAAP net income of $611,000 or $0.04 per diluted share in the quarter, compared to $3.0 million or $0.16 per diluted share in the same period last year. Non-GAAP net income of $1.9 million or $0.11 per diluted share for the year compared to $8.8 million or $0.48 per diluted share in 2014.
  • $31.8 million of cash and short-term investments at December 31, 2015, a decrease of approximately $2.5 million from the preceding quarter and a decrease of $28.2 million from 2014.
    • 449,000 common shares repurchased in the quarter for $2.4 million. 1.94 million common shares repurchased in the year for $12.1 million.
    • $881,000 dividends paid in the quarter and $3.7 million paid in the year.
    • $869,000 of free cash flow in the quarter. $7.1 million of free cash flow in the year, an increase of $1.7 million from 2014.

"We made significant progress over the previous quarter led by strength in antenna and scanning receiver sales in North America," said Marty Singer, PCTEL's Chairman and CEO. "During the fourth quarter we also began to restructure our analytics and services operations, bringing in new leadership and sharpening our product focus on PCTEL's traditional areas of strength. We believe that these efforts will lead to improved results in the second half of this year," 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: 55187834. 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: 55187834.

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 SeeHawk™ Analytics.

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: pctel.com, antenna.com, or 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.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
 
    December 31,   December 31,
    2015   2014
ASSETS        
         
Cash and cash equivalents   $7,055   $20,432
Short-term investment securities   24,728   39,577
Accounts receivable, net of allowance for doubtful accounts        
of $314 and $121 at December 31, 2015 and December 31, 2014, respectively   21,001   23,874
Inventories, net   17,596   16,358
Deferred tax assets, net   0   2,281
Prepaid expenses and other assets   1,586   1,757
Total current assets   71,966   104,279
         
Property and equipment, net   13,839   14,842
Goodwill   3,332   161
Intangible assets, net   11,378   2,637
Deferred tax assets, net   13,155   9,710
Other noncurrent assets   40   40
TOTAL ASSETS   $113,710   $131,669
         
LIABILITIES AND STOCKHOLDERS' EQUITY        
         
Accounts payable   $6,735   $5,495
Accrued liabilities   6,190   10,211
Total current liabilities   12,925   15,706
         
Other long-term liabilities   388   448
         
Total liabilities   13,313   16,154
         
Stockholders' equity:        
Common stock, $0.001 par value, 100,000,000 shares        
authorized, 17,654,236 and 18,571,419 shares issued and        
outstanding at December 31, 2015 and December 31, 2014, respectively   18   19
Additional paid-in capital   135,714   145,462
Accumulated deficit   (35,320)   (30,101)
Accumulated other comprehensive income (loss)   (15)   135
Total stockholders' equity   100,397   115,515
         
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $113,710   $131,669
PCTEL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except per share data)
                 
    Three Months Ended   Year Ended
    December 31,   December 31,
    2015   2014   2015   2014
                 
REVENUES   $26,138     $29,395   $106,615     $107,164
COST OF REVENUES   17,287     17,634   69,354     63,577
GROSS PROFIT   8,851     11,761   37,261     43,587
OPERATING EXPENSES:                
Research and development   2,699     2,766   11,205     11,736
Sales and marketing   3,639     3,649   14,196     12,961
General and administrative   2,887     2,997   12,399     12,819
Amortization of intangible assets   461     464   3,426     1,967
Impairment of goodwill   161     0   161     0
Restructuring charges   778     0   1,630     0
Total operating expenses   10,625     9,876   43,017     39,483
OPERATING INCOME (LOSS)   (1,774 )   1,885   (5,756 )   4,104
Other income, net   504     927   3,287     1,666
INCOME (LOSS) BEFORE INCOME TAXES   (1,270 )   2,812   (2,469 )   5,770
Expense (benefit) for income taxes   (450 )   817   (901 )   1,158
NET INCOME (LOSS)   ($820 )   $1,995   ($1,568 )   $4,612
                 
Net Income (Loss) per Share:                
Basic   ($0.05 )   $0.11   ($0.09 )   $0.25
Diluted   ($0.05 )   $0.11   ($0.09 )   $0.25
                 
Weighed Average Shares:                
Basic   16,820     18,154   17,737     18,159
Diluted   16,820     18,412   17,737     18,389
                 
Cash dividend per share   $0.05     $0.04   $0.20     $0.16
PCTEL, INC.  
P&L INFORMATION BY SEGMENT (unaudited)  
(in thousands)  
                                     
    Three Months Ended December 31, 2015     Year Ended December 31, 2015  
   

Connected

Solutions

 

RF

Solutions

  Corporate   Total    

Connected

Solutions

 

RF

Solutions

  Corporate   Total  
                                     
REVENUES   $16,675   $9,506     ($43 )   $26,138       $69,579   $37,255     ($219 )   $106,615    
                                     
GROSS PROFIT   4,838   4,000     13     8,851       20,426   16,803     32     37,261    
                                     
OPERATING INCOME (LOSS)   $675   ($8 )   ($2,441 )   ($1,774 )     $5,040   ($298 )   ($10,498 )   ($5,756 )  
                                     
                                     
    Three Months Ended December 31, 2014     Year Ended December 31, 2014  
   

Connected

Solutions

 

RF

Solutions

  Corporate   Total    

Connected

Solutions

 

RF

Solutions

  Corporate   Total  
                                     
REVENUES   $19,924   $9,535     ($64 )   $29,395       $72,333   $35,113     ($282 )   $107,164    
                                     
GROSS PROFIT   6,183   5,572     6     11,761       22,818   20,743     26     43,587    
                                     
OPERATING INCOME (LOSS)   $2,078   $2,184     ($2,377 )   $1,885       $7,357   $7,333     ($10,586 )   $4,104    

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 December 31,     Year Ended December 31,
        2015   2014     2015   2014
                       
    Operating Income (Loss)   ($1,774 )   $1,885       ($5,756 )   $4,104  
                       
(a)   Add:                  
    Amortization of intangible assets                  
    -Cost of Goods Sold   595     0       595     0  
    -Operating expenses   461     464       3,426     1,967  
    Impairment of goodwill   161     0       161     0  
    Restructuring:                  
    -Cost of Goods Sold   42     0       288     0  
    -Restructuring   778     0       1,630     0  
    TelWorx investigation:                  
    -General & Administrative   7     580       107     1,266  
    Legal settlement:                  
    -General & Administrative   0     0       0     75  
    Stock Compensation:                  
    -Cost of Goods Sold   125     111       369     426  
    -Engineering   175     150       419     658  
    -Sales & Marketing   (132 )   170       238     661  
    -General & Administrative   304     267       838     1,530  
        2,516     1,742       8,071     6,583  
                       
    Non-GAAP Operating Income   $742     $3,627       $2,315     $10,687  
    % of revenue   2.8 %   12.3 %     2.2 %   10.0 %
                       

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

                       
        Three Months Ended December 31,     Year Ended December 31,
        2015   2014     2015   2014
                       
    Net Income (Loss)   ($820 )   $1,995       ($1,568 )   $4,612  
                       
    Adjustments:                  
(a)   Non-GAAP adjustment to operating income   2,516     1,742       8,071     6,583  
(b)   Other income related to SEC investigation of TelWorx   (1 )   (908 )     (102 )   (1,568 )
(b)   Legal Settlement - Amendment to Nexgen APA   (500 )   0       (3,160 )   0  
(b)   Legal Settlement - other   0     0       0     (75 )
(b)   Income Taxes   (584 )   161       (1,322 )   (770 )
        1,431     995       3,487     4,170  
                       
    Non-GAAP Net Income   $611     $2,990       $1,919     $8,782  
                       
    Non-GAAP Earning per Share:                  
    Basic   $0.04     $0.16       $0.11     $0.48  
    Diluted   $0.04     $0.16       $0.11     $0.48  
                       
    Weighed Average Shares:                  
    Basic   16,820     18,154       17,737     18,159  
    Diluted   16,969     18,412       18,257     18,389  

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 December 31, 2015     Year Ended December 31, 2015  
   

Connected

Solutions

 

RF

Solutions

  Corporate   Total    

Connected

Solutions

 

RF

Solutions

  Corporate   Total  
                                     
                                     
Operating Income (Loss)   $675     ($8 )   ($2,441 )   ($1,774 )     $5,040     ($298 )   ($10,498 )   ($5,756 )  
                                     
Add:                                    
Amortization of intangible assets  

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 
-Cost of Goods Sold   39     556     0     595       39     556     0     595    
-Operating expenses  

156

   

305

   

0

   

461

     

811

   

2,615

   

0

   

3,426

   
Impairment of goodwill   0     161     0     161       0     161     0     161    
TelWorx investigation:                                    
-General & Administrative   0     0     7     7       0     0     107     107    
Restructuring:                                    
-Cost of Goods Sold   42     0     0     42       288     0     0     288    
-Restructuring charges   755     23     0     778       1,293     337     0     1,630    
Stock Compensation:                                    
-Cost of Goods Sold   28     97     0     125       82     287     0     369    
-Engineering   49     126     0     175       104     315     0     419    
-Sales & Marketing   88     (220 )   0     (132 )     261     (23 )   0     238    
-General & Administrative   (18 )   70     252     304       (12 )   113     737     838    
    1,139     1,118     259     2,516       2,866     4,361     844     8,071    
                                     
Non-GAAP Operating Income (Loss)   $1,814     $1,110     ($2,182 )   $742       $7,906     $4,063     ($9,654 )   $2,315    
                                     
                                     
    Three Months Ended December 31, 2014     Year Ended December 31, 2014  
   

Connected

Solutions

 

RF

Solutions

  Corporate   Total    

Connected

Solutions

 

RF

Solutions

  Corporate   Total  
                                     
                                     
Operating Income (Loss)   $2,078     $2,184     ($2,377 )   $1,885       $7,357     $7,333     ($10,586 )   $4,104    
                                     
Add:                                    
Amortization of intangible assets   260     204     0     464       1,151     816     0     1,967    
TelWorx investigation:                                    
-General & Administrative   0     0     580     580       0     0     1,266     1,266    
Legal settlement:                                    
-General & Administrative   0     0     0     0       0     0     75     75    
Stock Compensation:                                    
-Cost of Goods Sold   58     53     0     111       215     211     0     426    
-Engineering   64     86     0     150       292     366     0     658    
-Sales & Marketing   129     41     0     170       530     131     0     661    
-General & Administrative   54     31     182     267       256     129     1,145     1,530    
    565     415     762     1,742       2,444     1,653     2,486     6,583    
                                     
Non-GAAP Operating Income (Loss)   $2,643     $2,599     ($1,615 )   $3,627       $9,801     $8,986     ($8,100 )   $10,687    

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, 630-372-6800
CFO
or
Jack Seller, 630-372-6800
Public Relations
Jack.seller@pctel.com

Source: PCTEL, Inc.

 

 

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