May 5, 2016

PCTEL Achieves $21.1 Million in First Quarter Revenue

BLOOMINGDALE, Ill.--(BUSINESS WIRE)-- PCTEL, Inc. (NASDAQ:PCTI), a leader in Performance Critical Telecom solutions, announced its 2016 first quarter results.

Quarter Highlights

$21.1 million in revenue for the quarter, a decrease of 20 percent from the same period last year.

Gross profit margin of 33.5 percent in the quarter compared to 38.7 percent for the same period last year.

GAAP operating margin of negative 13 percent for the quarter compared to operating margin of just under break even for the same period last year.

GAAP net loss of $1.5 million for the quarter, or $(0.09) per diluted share compared to just under break even 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 negative three percent in the quarter, compared to four percent in the same period last year.

Non-GAAP net loss of $494,000 or $(0.03) per diluted share in the quarter, compared to $904,000 or $0.05 per diluted share in the same period last year.

$27.9 million of cash and short-term investments at March 31, 2016, a decrease of approximately $3.9 million from the preceding quarter.

783,000 common shares repurchased in the quarter for $4.1 million.

$870,000 dividends paid in the quarter.

$700,000 of free cash flow in the quarter.

"Over the past 15 months, we took several actions to align the business with significant changes in the industry," said Marty Singer, PCTEL's Chairman and CEO. "These changes include carrier spending declines which impacted our small cell kitting and engineering services revenue. We are confident, though, that our investments in direct sales to infrastructure vendors and in crowd-based, cloud-based network test and measurement will result in revenue growth and profit for the remainder of 2016 and in 2017. We are particularly well-positioned to participate in the growth associated with FirstNet, utilities, fleet, and network performance engineering," 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 (888) 782-2072 (U.S. / Canada) or (706) 679-6397 (International), conference ID: 91470562. 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: 91470562.

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 SeeGull® MXflex®, IBflex®, and EXflex® scanning receivers. PCTEL tools also include CW transmitters, signal analyzers, and the SeeWave interference locating system. PCTEL's SeeHawk® software portfolio includes SeeHawk™ Touch, SeeHawk® Collect, SeeHawk Engage™, SeeHawk Engage+™, SeeHawk Engage™ Lite, SeeHawk™ Studio, and SeeHawk™ Analytics. PCTEL provides specialized staffing, interference management and performance critical RF engineering services for wireless networks.

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 GNSS products and innovative broadband LTE and Wi-Fi solutions for fixed and mobile applications, including transit, in-building, and small cell networks. In addition, PCTEL provides a broad portfolio of LMR and Yagi antennas. 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 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, growth of our Connected Solutions and RF Solutions businesses, and anticipated demand for our network analytics, subject matter expert staffing and in-building 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, growth and continuity in the utilities, fleet, and public safety markets and small cell deployments, 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)  
March 31, December 31,
2016 2015
ASSETS
 
Cash and cash equivalents $ 4,451 $ 7,055
Short-term investment securities 23,431 24,728
Accounts receivable, net of allowance for doubtful accounts of $263 and $314 at

March 31, 2016 and December 31, 2015, respectively

16,158 21,001
Inventories, net 17,479 17,596
Prepaid expenses and other assets   1,726   1,586
Total current assets 63,245 71,966
 
Property and equipment, net 13,659 13,839
Goodwill 3,332 3,332
Intangible assets, net 10,609 11,378
Deferred tax assets, net 14,566 13,155
Other noncurrent assets   39   40
TOTAL ASSETS $ 105,450 $ 113,710
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Accounts payable $ 4,729 $ 6,735
Accrued liabilities   5,283   6,190
Total current liabilities 10,012 12,925
 
Other long-term liabilities 415 388
   
Total liabilities   10,427   13,313
 
Stockholders' equity:
Common stock, $0.001 par value, 100,000,000 shares authorized, 17,249,586 and

17,654,236 shares issued and outstanding at March 31, 2016 and December 31, 2015,

respectively

17 18
Additional paid-in capital 132,643 135,714
Accumulated deficit (37,646) (35,320)
Accumulated other comprehensive income (loss)   9   (15)
Total stockholders' equity   95,023   100,397
 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 105,450 $ 113,710
PCTEL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except per share data)
   
Three Months Ended
March 31,
2016 2015
 
REVENUES $ 21,074 $ 26,326
COST OF REVENUES   14,023     16,137  
GROSS PROFIT   7,051     10,189  
OPERATING EXPENSES:
Research and development 2,607 2,738
Sales and marketing 3,115 3,530
General and administrative 2,962 3,363
Amortization of intangible assets 603 654
Restructuring expenses   517     0  
Total operating expenses   9,804     10,285  
OPERATING LOSS (2,753 ) (96 )
Other income, net   6     44  
LOSS BEFORE INCOME TAXES (2,747 ) (52 )
Benefit for income taxes   (1,291 )   (19 )
NET LOSS $ (1,456 ) $ (33 )
 
Net Loss per Share:
Basic $ (0.09 ) $ (0.00 )
Diluted $ (0.09 ) $ (0.00 )
 
Weighted Average Shares:
Basic 16,324 18,312
Diluted 16,324 18,312
 
Cash dividend per share $ 0.05 $ 0.05
PCTEL, INC.
P&L INFORMATION BY SEGMENT (unaudited)
(in thousands)
       
Three Months Ended March 31, 2016

Connected

Solutions

RF Solutions

Corporate Total
 
REVENUES $14,699 $6,435 ($60 ) $21,074
       
GROSS PROFIT 4,324 2,730 (3 ) 7,051
       
OPERATING (LOSS) INCOME $1,305 ($1,527 ) ($2,531 ) ($2,753 )
 
Three Months Ended March 31, 2015

Connected

Solutions

RF Solutions Corporate Total
 
REVENUES $17,354 $9,051 ($79 ) $26,326
       
GROSS PROFIT 5,444 4,736 9 10,189
       
OPERATING (LOSS) INCOME $1,613 $1,210   ($2,919 ) ($96 )

Reconciliation of GAAP to non-GAAP Results (unaudited)

(in thousands except per share information)
 

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

     
Three Months Ended March 31,
2016 2015
 
Operating Loss ($2,753 ) ($96 )
 
(a) Add:
Amortization of intangible assets
-Cost of revenues 166 0
-Operating expenses 603 654
Restructuring expenses 517 0
TelWorx investigation:
-General & Administrative 5 38
Stock Compensation:
-Cost of revenues 131 73
-Engineering 167 115
-Sales & Marketing 145 158
-General & Administrative 416   155  
2,150 1,193
   
Non-GAAP Operating (Loss) Income ($603 ) $1,097  
% of revenue -2.9 % 4.2 %
 

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

 
Three Months Ended March 31,
2016   2015  
 
Net Loss ($1,456 ) ($33 )
 
Adjustments:
(a) Non-GAAP adjustment to operating (loss) income 2,150 1,193
(b) Other income related to SEC investigation of TelWorx (5 ) (38 )
(b) Income Taxes (1,183 ) (218 )
962 937
   
Non-GAAP Net (Loss) Income ($494 ) $904  
 
Non-GAAP (Loss) Earning per Share:
Basic ($0.03 ) $0.05
Diluted ($0.03 ) $0.05
 
Weighed Average Shares:
Basic 16,324 18,312
Diluted 16,324 18,525

This schedule reconciles the Company's GAAP operating loss and GAAP net loss to its non-GAAP operating (loss) income and non-GAAP net (loss) 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 March 31, 2016

Connected

Solutions

RF Solutions Corporate Total
 
Operating (Loss) Income $1,305 ($1,527 ) ($2,531 ) ($2,753 )
 
Add:
Amortization of intangible assets
-Cost of revenues 0 166 0 166
-Operating expenses 70 533 0 603
Restructuring expenses 44 417 56 517
TelWorx investigation:
-General & Administrative 0 0 5 5
Stock Compensation:
-Cost of revenues 41 90 0 131
-Engineering 42 125 0 167
-Sales & Marketing 87 58 0 145
-General & Administrative 40 72   304   416  
324 1,461 365 2,150
       
Non-GAAP Operating (Loss) Income $1,629 ($66 ) ($2,166 ) ($603 )
 
 
Three Months Ended March 31, 2015

Connected

Solutions

RF Solutions Corporate Total
 
Operating (Loss) Income $1,613 $1,210 ($2,919 ) ($96 )
 
Add:
Amortization of intangible assets 230 424 0 654
TelWorx investigation:
-General & Administrative 0 0 38 38
Stock Compensation:
-Cost of Goods Sold 36 37 0 73
-Engineering 46 69 0 115
-Sales & Marketing 103 55 0 158
-General & Administrative 25 19   111   155  
440 604 149 1,193
       
Non-GAAP Operating (Loss) Income $2,053 $1,814   ($2,770 ) $1,097  
This schedule reconciles the Company's GAAP operating income (loss) by segment to its non-GAAP operating (loss) 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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