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PCTEL Reports Fourth Quarter and Full Year Financial Results

·12 mins read

PCTEL, Inc. (Nasdaq: PCTI) announced its results for the fourth quarter ended December 31, 2019.

Highlights

  • Revenue of $22.9 million in the quarter and $90.6 million for the year, 8% higher in the quarter and 9% higher for the year compared to 2018. For the fourth quarter, revenue was higher by 55% for the test and measurement product line and lower by 7% for the antenna product line compared to 2018. For the year, revenue was higher by 68% for the test and measurement product line and lower by 5% for the antenna product line.

  • Gross profit margin of 50.3% in the quarter and 45.8% for the year, up 9.4% in the quarter and 8.3% for the year compared to the gross profit margin in 2018. The increase in the both the fourth quarter and the year is a result of higher revenues for test and measurement products and a favorable mix within antenna products.

  • GAAP net income per share of $0.10 in the quarter and $0.21 for the year compared to a GAAP loss of $0.53 per share in the quarter and a GAAP loss of $0.75 for the year in 2018. The 2019 GAAP results include a restructuring charge of approximately $0.01 per share in the quarter and $0.03 per share for the year related to the transition plan for China manufacturing. In 2018, approximately $0.51 per share of the GAAP net loss in the quarter and $0.54 of the GAAP net loss for the year were attributable to non-cash income tax expense related to the Company’s valuation allowance for deferred tax assets.

  • Non-GAAP net income and adjusted EBITDA are measures 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 $0.16 in the quarter and $0.47 for the year compared to Non-GAAP net income per diluted share of $0.03 in the quarter and negative $0.04 for the year in 2018.

    • Adjusted EBITDA as a percent of revenue of 16.3% in the quarter and 12.4% for the year compared to 5.8% in the quarter and 1.8% for the year in 2018.

  • $39.7 million of cash and short-term investments and no debt at December 31, 2019 compared to $35.2 million and no debt at December 31, 2018.

"We are pleased with our performance in 2019 and year over year growth driven mainly by the success of our 5G testing solutions," said David Neumann, PCTEL’s CEO. "Antennas and radio solutions in our intelligent transportation and industrial IoT market segments are expected to drive growth over the long term as customers demand ultra-reliable connectivity for their IoT business critical systems."

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 (844) 407-9500 (United States/Canada) or (862) 298-0850 (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: 33268.

About PCTEL

PCTEL is a leading global provider of wireless technology, including purpose-built antenna systems, Industrial IoT devices, 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 regarding 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, the 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 impact of data densification and IoT on capacity and coverage demand, 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. In addition, there is uncertainty about the spread of the COVID19 virus and the impact it will have on PCTEL’s operations, the demand for PCTEL’s products, global supply chains and economic activity in general. 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)

December 31,

December 31,

2019

2018

ASSETS

Cash and cash equivalents

$

7,094

$

4,329

Short-term investment securities

32,556

30,870

Accounts receivable, net of allowances of $104 and $63 at December 31, 2019 and
December 31, 2018, respectively

17,380

15,864

Inventories, net

11,935

12,848

Prepaid expenses and other assets

1,842

1,416

Total current assets

70,807

65,327

Property and equipment, net

11,985

12,138

Goodwill

3,332

3,332

Intangible assets, net

144

1,029

Other noncurrent assets

2,969

45

TOTAL ASSETS

$

89,237

$

81,871

LIABILITIES AND STOCKHOLDERS’ EQUITY

Accounts payable

$

3,190

$

6,083

Accrued liabilities

9,382

5,801

Total current liabilities

12,572

11,884

Long-term liabilities

3,315

381

Total liabilities

15,887

12,265

Stockholders’ equity:

Common stock, $0.001 par value, 100,000,000 shares authorized, 18,611,289 and 18,271,249
shares issued and outstanding at December 31, 2019 and December 31, 2018, respectively

19

18

Additional paid-in capital

133,954

133,859

Accumulated deficit

(60,305

)

(64,055

)

Accumulated other comprehensive loss

(318

)

(216

)

Total stockholders’ equity

73,350

69,606

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

89,237

$

81,871

PCTEL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(in thousands, except per share data)

Three Months Ended

Year Ended

December 31,

December 31,

2019

2018

2019

2018

REVENUES

$

22,897

$

21,241

$

90,617

$

82,979

COST OF REVENUES

11,385

12,543

49,105

51,898

GROSS PROFIT

11,512

8,698

41,512

31,081

OPERATING EXPENSES:

Research and development

3,048

2,830

12,272

11,851

Sales and marketing

3,424

3,024

12,254

12,083

General and administrative

3,071

3,184

13,452

12,355

Amortization of intangible assets

49

85

219

418

Restructuring expenses

213

0

507

0

Total operating expenses

9,805

9,123

38,704

36,707

OPERATING INCOME (LOSS)

1,707

(425

)

2,808

(5,626

)

Other income, net

108

78

982

564

INCOME (LOSS) BEFORE INCOME TAXES

1,815

(347

)

3,790

(5,062

)

Expense (benefit) for income taxes

17

8,788

40

7,827

NET INCOME (LOSS)

$

1,798

$

(9,135

)

$

3,750

$

(12,889

)

Net Income (Loss) per Share:

Basic

$

0.10

$

(0.53

)

$

0.21

$

(0.75

)

Diluted

$

0.10

$

(0.53

)

$

0.21

$

(0.75

)

Weighted Average Shares:

Basic

18,034

17,361

17,853

17,186

Diluted

18,461

17,361

18,159

17,186

Cash dividend per share

$

0.055

$

0.055

$

0.220

$

0.220

PCTEL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(unaudited, in thousands)

Year Ended December 31,

.

2019

2018

Operating Activities:

Net income (loss) from continuing operations

$

3,750

$

(12,889

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation

2,870

2,806

Intangible asset amortization

885

1,084

Stock-based compensation

4,133

3,261

Loss on disposal/sale of property and equipment

97

19

Restructuring costs

(33

)

(39

)

Bad debt provision

(2

)

265

Deferred tax provision

0

7,817

Changes in operating assets and liabilities, net of acquisitions:

Accounts receivable

(1,532

)

2,362

Inventories

873

(336

)

Prepaid expenses and other assets

385

198

Accounts payable

(2,841

)

1,095

Income taxes payable

(22

)

(3

)

Other accrued liabilities

2,263

(1,657

)

Deferred revenue

92

(40

)

Net cash provided by operating activities

10,918

3,943

Investing Activities:

Capital expenditures

(2,263

)

(2,754

)

Proceeds from disposal of property and equipment

0

15

Purchase of investments

(48,245

)

(44,591

)

Redemptions/maturities of short-term investments

46,559

46,220

Net cash used in finance activities

(3,949

)

(1,110

)

Financing Activities:

Proceeds from issuance of common stock

1,183

686

Payment of withholding tax on stock-based compensation

(1,152

)

(578

)

Principle payments on finance leases

(99

)

(125

)

Cash dividends

(4,068

)

(4,015

)

Net cash used in financing activities

(4,136

)

(4,032

)

Net increase (decrease) in cash and cash equivalents

2,833

(1,199

)

Effect of exchange rate changes on cash

(68

)

(31

)

Cash and cash equivalents, beginning of period

4,329

5,559

Cash and Cash Equivalents, End of Period

$

7,094

$

4,329

PCTEL, INC.

REVENUE AND GROSS PROFIT BY PRODUCT LINE (unaudited)

(in thousands)

Three Months Ended December 31, 2019

Year Ended December 31, 2019

Antenna

Products

Test &

Measurement

Products

Corporate

Total

Antenna

Products

Test &

Measurement

Products

Corporate

Total

REVENUES

$15,143

$7,814

($60)

$22,897

$62,708

$28,115

($206)

$90,617

GROSS PROFIT

$5,699

$5,806

$7

$11,512

$21,841

$19,640

$31

$41,512

GROSS PROFIT %

37.6%

74.3%

50.3%

34.8%

69.9%

45.8%

Three Months Ended December 31, 2018

Year Ended December 31, 2018

Antenna

Products

Test &

Measurement

Products

Corporate

Total

Antenna

Products

Test &

Measurement

Products

Corporate

Total

REVENUES

$16,209

$5,042

($10)

$21,241

$66,328

$16,733

($82)

$82,979

GROSS PROFIT

$5,423

$3,257

$18

$8,698

$20,157

$10,883

$41

$31,081

GROSS PROFIT %

33.5%

64.6%

40.9%

30.4%

65.0%

37.5%

Reconciliation of GAAP to non-GAAP Results (unaudited)

(in thousands except per share information)

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

Three Months Ended December 31,

Year Ended December 31,

2019

2018

2019

2018

Operating Income (Loss)

$

1,707

($425

)

$

2,808

($5,626

)

(a)

Add:

Amortization of intangible assets

-Cost of revenues

167

167

666

666

-Operating expenses

49

85

219

418

Restructuring

213

0

507

0

Stock Compensation:

-Cost of revenues

116

93

408

224

-Engineering

145

158

652

620

-Sales & marketing

151

114

673

576

-General & administrative

475

324

2,401

1,841

1,316

941

5,526

4,345

Non-GAAP Operating Income (Loss)

$

3,023

$516

$

8,334

($1,281

)

% of revenue

13.2

%

2.4

%

9.2

%

-1.5

%

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

Three Months Ended December 31,

Year Ended December 31,

2019

2018

2019

2018

Net Income (Loss)

$

1,798

($9,135

)

$

3,750

($12,889

)

Adjustments:

(a)

Non-GAAP adjustment to operating income (loss)

1,316

941

5,526

4,345

Income Taxes

(233

)

8,740

(705

)

7,884

1,083

9,681

4,821

12,229

Non-GAAP Net Income (Loss)

$

2,881

$546

$

8,571

($660

)

Non-GAAP Income (Loss) per Share:

Basic

$

0.16

$0.03

$

0.48

($0.04

)

Diluted

$

0.16

$0.03

$

0.47

($0.04

)

Weighed Average Shares:

Basic

18,034

17,361

17,853

17,186

Diluted

18,461

17,361

18,159

17,186

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 loss to Adjusted EBITDA

(unaudited, in thousands)

Three Months Ended December 31,

Year Ended December 31,

2019

2018

2019

2018

Operating Income (Loss)

$

1,707

($425

)

$

2,808

($5,626

)

Add:

Depreciation and amortization

719

718

2,870

2,806

Intangible amortization

216

252

885

1,084

Restructuring expenses

213

0

507

0

Stock compensation expenses

887

689

4,134

3,261

Adjusted EBITDA

$

3,742

$1,234

$

11,204

$1,525

% of revenue

16.3

%

5.8

%

12.4

%

1.8

%

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

View source version on businesswire.com: https://www.businesswire.com/news/home/20200305005805/en/

Contacts

Kevin McGowan
CFO
PCTEL, Inc.
(630) 339-2051

Suzanne Cafferty
Senior Director, Corporate Marketing
PCTEL, Inc.
(301) 339-2105
public.relations@pctel.com