Airgain, Inc. (NASDAQ: AIRG), a leading provider of advanced
antenna technologies used to enable high performance wireless
networking across a broad range of devices and markets, including
consumer, enterprise, and automotive, today announced GAAP net
income of $0.1 million and GAAP diluted EPS of $0.01 for the three
months ended December 31, 2019 (2019 Q4). The 2019 Q4 net income
increased $0.2 million from the net loss of $(0.1) million for the
three months ended September 30, 2019 (2019 Q3).
“I am pleased that we exceeded our expectations for earnings
despite recent revenue headwinds. Our Q4 2019 GAAP and non-GAAP
diluted earnings per share of $0.01 and $0.07, respectively,
exceeded our prior expected ranges of $(0.03) to $(0.02) on a GAAP
basis and $0.04 to $0.05 on a non-GAAP basis,” said Airgain’s Chief
Executive Officer and President, Jacob Suen. “More importantly, the
ramp in recent design activity we are seeing in our growth markets
gives me confidence that we are on the cusp of hitting a real
growth curve that will begin to play out in the second half of this
year with more significant growth in 2021 and beyond.”
2019 Q4 Financial Highlights
- Sales of $13.0 million
- Gross margin of 44%
- Net income of $0.1 million
- GAAP earnings per diluted share of $0.01
- Non-GAAP earnings per diluted share of $0.07
- Adjusted EBITDA of $0.8 million
2019 Q4 Financial Results
Sales decreased 21% to $13.0 million compared to $16.6 million
in the same year-ago period. The lower sales was primarily driven
by our product cycle transitions. Compared to 2019 Q3 our sales
decreased $0.1 million from $13.1 million.
Gross profit decreased 16% to $5.8 million from $6.9 million in
the same year-ago period. Gross margin was 44% in 2019 Q4, which
increased from 41% in the same year-ago period, largely due to a
change in the product mix. 2019 Q4 gross margin decreased from 46%
in 2019 Q3 due to an unfavorable change in the product mix.
Total operating expenses of $5.9 million for 2019 Q4 increased
$0.1 million compared to the same year-ago period but decreased
$0.4 million as compared to $6.3 million in 2019 Q3 primarily due
to changes in personnel expenses.
Net income totaled $0.1 million or $0.01 per share (based on
10.0 million diluted shares), compared to net income of $1.3
million or $0.13 per share (based on 10.0 million diluted shares)
in the same year-ago period. Net income increased $0.2 million as
compared to the 2019 Q3 net loss of $0.1 million or $(0.01) per
share (based on 9.7 million basic shares). Non-GAAP net income
totaled $0.7 million or $0.07 per share (based on 10.0 million
diluted shares), compared to non-GAAP net income of $1.7 million or
$0.17 per share (based on 10.0 million diluted shares) in the same
year-ago period. Non-GAAP net income in 2019 Q3 was $0.5 million or
$0.05 per share (based on 10.0 million diluted shares) (see note
regarding "Use of Non-GAAP Financial Measures," below for further
discussion of this non-GAAP measure).
Adjusted EBITDA (earnings before interest, taxes, depreciation,
amortization, other income, non-recurring items, and stock-based
compensation) decreased to $0.8 million in 2019 Q4 compared to
Adjusted EBITDA of $1.8 million in the same year-ago period. The
2019 Q3 Adjusted EBITDA was $0.6 million (see note regarding "Use
of Non-GAAP Financial Measures," below for further discussion of
this non-GAAP measure).
Full Year 2019 Financial Highlights
- Sales of $55.7 million
- Gross margin of 45%
- Net income of $0.9 million
- GAAP earnings per diluted share of $0.09
- Non-GAAP earnings per diluted share of $0.32
- Adjusted EBITDA of $3.7 million
Full Year 2019 Financial Results
Sales decreased 8% to $55.7 million compared to $60.6 million in
the same year-ago period. The decrease in sales was primarily
driven by product cycle transition for several large volume
embedded antenna products.
Gross profit decreased $1.2 million to $25.3 million for the
year from $26.5 million for the same year-ago period. Gross margin
as a percentage of sales was 45% for the year, compared to a gross
margin of 44% in the same year-ago period.
Total operating expenses for the year decreased 17% to $25.0
million from $29.9 million in the same year-ago period. The
decrease was primarily due to higher nonrecurring expenses in 2018
including $2.0 million associated with the realignment of sales and
marketing initiatives combined with executive severance and
additional stock-based compensation expense of $1.2 million due to
the accelerated vesting of options to former executives, as well as
a decrease in personnel expenses compared to the same year-ago
period.
Net income totaled $0.9 million or $0.09 per share (based on
10.1 million diluted shares), compared to net loss of $2.6 million
or $(0.27) per share (based on 9.5 million basic shares) in the
same year-ago period. Non-GAAP net income totaled $3.2 million or
$0.32 per share (based on 10.1 million diluted shares), compared to
non-GAAP net income of $2.2 million or $0.22 per share (based on
10.4 million diluted shares) in the same year-ago period (see note
regarding "Use of Non-GAAP Financial Measures," below for further
discussion of this non-GAAP measure).
Adjusted EBITDA increased to $3.7 million from $2.7 million in
the same year-ago period (see note regarding "Use of Non-GAAP
Financial Measures," below for further discussion of this non-GAAP
measure).
Total shares of 108,000 were repurchased during the year at an
average price of $11.41 for a total amount of $1.2 million.
Financial Outlook
The company expects sales in the first quarter of 2020 to be in
the range of $10.0 million to $12.0 million. The following table
summarizes the reconciliation between the projected GAAP EPS and
non-GAAP EPS for the first quarter of 2020:
Low (1)
High (1)
Reconciliation of projected GAAP to
projected non-GAAP EPS
Projected GAAP earnings per diluted
share
$
(0.21
)
$
(0.14
)
Stock-based compensation expense
0.07
0.07
Amortization
0.01
0.01
Other income
(0.01
)
(0.01
)
Projected non-GAAP earnings per diluted
share
$
(0.14
)
$
(0.07
)
(1)
Amounts are based off of 9.7 million basic
shares outstanding.
Conference Call
Airgain management will hold a conference call today Thursday,
February 20, 2020, at 4:30 p.m. Eastern Time (1:30 p.m. Pacific
Time) to discuss financial results for the fourth quarter ended and
year ended December 31, 2019, and to provide an update on business
conditions.
Airgain management will host the presentation, followed by a
question and answer period.
Date: Thursday, February 20, 2020 Time: 4:30 p.m. Eastern Time
(1:30 p.m. Pacific Time) U.S. dial-in: 1-877-703-1550 International
dial-in: 1-647-689-5628 Conference ID: 3097195
Please call the conference telephone number 5-10 minutes prior
to the start time. An operator will register your name and
organization. If you have any difficulty connecting with the
conference call, please contact the company at 1-760-579-0200.
The conference call will be broadcast live and available for
replay in the investor relations section of the company's
website.
A replay of the call will be available after 7:30 p.m. Eastern
Time on the same day through March 20, 2020.
U.S. replay dial-in: 1-800-585-8367 or 1-416-621-4642 Replay ID:
3097195
About Airgain, Inc.
Airgain is a leading provider of advanced antenna technologies
used to enable high performance wireless networking across a broad
range of devices and markets, including consumer, enterprise, and
automotive. Combining design-led thinking with testing and
development, Airgain works in partnership with the entire
ecosystem, including carriers, chipset suppliers, OEMs, and ODMs.
Airgain’s antennas are deployed in carrier, fleet, enterprise,
residential, private, government, and public safety wireless
networks and systems, including set-top boxes, access points,
routers, modems, gateways, media adapters, portables, digital
televisions, sensors, fleet, and asset tracking devices. Airgain is
headquartered in San Diego, California, and maintains design and
test centers in the U.S., U.K., and China. For more information,
visit airgain.com, or follow us on LinkedIn and Twitter.
Airgain and the Airgain logo are registered trademarks of
Airgain, Inc.
Forward-Looking Statements
Airgain cautions you that statements in this press release that
are not a description of historical facts are forward-looking
statements. These statements are based on the company's current
beliefs and expectations. These forward-looking statements include
statements regarding the growth opportunities within our markets
and the timing thereof, as well as our 2020 financial outlook. The
inclusion of forward-looking statements should not be regarded as a
representation by Airgain that any of our plans will be achieved.
Actual results may differ from those set forth in this press
release due to the risk and uncertainties inherent in our business,
including, without limitation: the market for our antenna products
is developing and may not develop as we expect; our operating
results may fluctuate significantly, including based on seasonal
factors, which makes future operating results difficult to predict
and could cause our operating results to fall below expectations or
guidance; risks and uncertainties related to management and key
personnel changes; our products are subject to intense competition,
including competition from the customers to whom we sell, and
competitive pressures from existing and new companies may harm our
business, sales, growth rates, and market share; our future success
depends on our ability to develop and successfully introduce new
and enhanced products for the wireless market that meet the needs
of our customers; our ability to identify and consummate strategic
acquisitions and partnerships, and risks associated with completed
acquisitions and partnerships adversely affecting our operating
results and financial condition; we sell to customers who are
extremely price conscious, and a few customers represent a
significant portion of our sales, and if we lose any of these
customers, our sales could decrease significantly; we rely on a few
contract manufacturers to produce and ship all of our products, a
single or limited number of suppliers for some components of our
products and channel partners to sell and support our products, and
the failure to manage our relationships with these parties
successfully could adversely affect our ability to market and sell
our products; the coronavirus outbreak disrupting or otherwise
adversely affecting our customers, contract manufacturers, and the
overall supply chain that our antennas are used in and, ultimately,
our sales and operating results; if we cannot protect our
intellectual property rights, our competitive position could be
harmed or we could incur significant expenses to enforce our
rights; and other risks described in our prior press releases and
in our filings with the Securities and Exchange Commission (SEC),
including under the heading "Risk Factors" in our Annual Report on
Form 10-K and any subsequent filings with the SEC. You are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof, and we
undertake no obligation to revise or update this press release to
reflect events or circumstances after the date hereof. All
forward-looking statements are qualified in their entirety by this
cautionary statement, which is made under the safe harbor
provisions of the Private Securities Litigation Reform Act of
1995.
Note Regarding Use of Non-GAAP Financial Measures
To supplement our condensed financial statements presented in
accordance with U.S. generally accepted accounting principles
(GAAP), this earnings release and the accompanying tables and the
related earnings conference call contain certain non-GAAP financial
measures, including adjusted earnings before interest, taxes,
depreciation, amortization (Adjusted EBITDA), non-GAAP net income
attributable to common stockholders (non-GAAP net income), and
non-GAAP earnings per diluted share (non-GAAP EPS). We believe
these financial measures provide useful information to investors
with which to analyze our operating trends and performance.
In computing Adjusted EBITDA, non-GAAP net income (loss), and
non-GAAP EPS, we also exclude stock-based compensation expense,
which represents non-cash charges for the fair value of stock
awards; non-recurring expenses, which include realignment of sales
and marketing initiatives and severance payments; other income,
which includes interest income and gain on deferred purchase price
liability offset by interest expense; depreciation and
amortization; and provision for income taxes. Because of varying
available valuation methodologies, subjective assumptions and the
variety of equity instruments that can impact a company's non-cash
operating expenses, we believe that providing non-GAAP financial
measures that exclude non-cash expense allows for meaningful
comparisons between our core business operating results and those
of other companies, as well as providing us with an important tool
for financial and operational decision making and for evaluating
our own core business operating results over different periods of
time. Management considers these types of expenses and adjustments,
to a great extent, to be unpredictable and dependent on a
significant number of factors that are outside of our control and
are not necessarily reflective of operational performance during a
period.
Our Adjusted EBITDA, non-GAAP net income (loss), and non-GAAP
EPS measures may not provide information that is directly
comparable to that provided by other companies in our industry, as
other companies in our industry may calculate non-GAAP financial
results differently, particularly related to non-recurring, unusual
items. Our Adjusted EBITDA, non-GAAP net income (loss), and
non-GAAP EPS are not measurements of financial performance under
GAAP, and should not be considered as an alternative to operating
or net income or as an indication of operating performance or any
other measure of performance derived in accordance with GAAP. We do
not consider these non-GAAP measures to be a substitute for, or
superior to, the information provided by GAAP financial results. A
reconciliation of specific adjustments to GAAP results is provided
in the last two tables at the end of this release.
Airgain, Inc.
Unaudited Condensed Balance
Sheets
(in thousands, except per
share data)
December 31
2019
2018
Assets
Current assets:
Cash and cash equivalents
$
13,197
$
13,621
Short-term investments
21,686
20,169
Trade accounts receivable
7,656
7,013
Inventory
1,193
1,351
Prepaid expenses and other current
assets
1,379
931
Total current assets
45,111
43,085
Property and equipment, net
2,108
1,401
Goodwill
3,700
3,700
Customer relationships, net
3,110
3,593
Intangible assets, net
687
859
Other assets
10
269
Total assets
$
54,726
$
52,907
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable
$
3,838
$
4,137
Accrued bonus
1,385
2,076
Accrued liabilities
1,451
1,217
Current portion of deferred rent
obligation under operating lease
85
81
Total current liabilities
6,759
7,511
Deferred tax liability
52
38
Deferred rent obligation under operating
lease
11
211
Total liabilities
6,822
7,760
Stockholders’ equity:
Common stock, par value $0.0001, 200,000
shares authorized; 10,146 shares issued and 9,681 shares
outstanding at December 31, 2019; and 9,958 shares issued and 9,601
shares outstanding at December 31, 2018.
1
1
Additional paid in capital
96,622
93,583
Treasury stock, at cost: 465 shares and
357 shares at December 31, 2019 and 2018, respectively
(4,659
)
(3,432
)
Accumulated other comprehensive income
(loss)
8
(11
)
Accumulated deficit
(44,068
)
(44,994
)
Total stockholders’ equity
47,904
45,147
Total liabilities and stockholders’
equity
$
54,726
$
52,907
Airgain, Inc.
Unaudited Condensed Statements
of Operations
(in thousands, except per
share data)
Three months ended
December 31
September 30,
December 31
Year ended December
31,
2019
2018
2019
2018
Sales
$
13,026
$
13,142
$
16,561
$
55,739
$
60,625
Cost of goods sold
7,248
7,067
9,711
30,415
34,114
Gross profit
5,778
6,075
6,850
25,324
26,511
Operating expenses:
Research and development
2,045
2,403
2,157
8,989
9,319
Sales and marketing
1,072
1,461
1,892
7,036
11,033
General and administrative
2,751
2,416
1,681
8,919
9,545
Total operating expenses
5,868
6,280
5,730
24,944
29,897
Income (loss) from operations
(90
)
(205
)
1,120
380
(3,386
)
Other (income) expense:
Interest income
(155
)
(183
)
(187
)
(714
)
(584
)
Interest expense
4
—
2
5
31
Gain on deferred purchase price
liability
—
—
—
—
(389
)
Loss on disposal of fixed assets
—
—
39
—
39
Total other income
(151
)
(183
)
(146
)
(709
)
(903
)
Income (loss) before income taxes
61
(22
)
1,266
1,089
(2,483
)
Provision for income taxes
(2
)
113
(9
)
163
101
Net income (loss)
$
63
$
(135
)
$
1,275
$
926
$
(2,584
)
Net income (loss) per share:
Basic
$
0.01
$
(0.01
)
$
0.13
$
0.10
$
(0.27
)
Diluted
$
0.01
$
(0.01
)
$
0.13
$
0.09
$
(0.27
)
Weighted average shares used in
calculating income (loss) per share
Basic
9,697
9,711
9,597
9,684
9,521
Diluted
10,025
9,711
9,980
10,097
9,521
Airgain, Inc.
Unaudited Condensed Statements
of Cash Flows
(in thousands)
For the year ended December
31
2019
2018
Cash flows from operating
activities:
Net income (loss)
$
926
$
(2,584
)
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Depreciation
493
587
Amortization
655
677
Amortization of discounts on investments,
net
(312
)
(202
)
Stock-based compensation
2,204
2,910
Deferred tax liability
14
30
Loss on disposal of fixed assets
—
39
Gain on deferred purchase price
liability
—
(389
)
Changes in operating assets and
liabilities:
Trade accounts receivable
(643
)
1,043
Inventory
158
(610
)
Prepaid expenses and other assets
(189
)
(241
)
Accounts payable
(303
)
294
Accrued bonus
(691
)
416
Accrued liabilities
234
(470
)
Deferred obligation under operating
lease
(196
)
(123
)
Net cash provided by operating
activities
2,350
1,377
Cash flows from investing
activities:
Purchases of available-for-sale
securities
(36,456
)
(29,666
)
Maturities of available-for-sale
securities
35,270
30,992
Purchases of property and equipment
(1,196
)
(990
)
Net cash provided by (used in) investing
activities
(2,382
)
336
Cash flows from financing
activities:
Repayment of notes payable
—
(1,333
)
Payment on deferred purchase price
liability
—
(375
)
Repurchase of common stock
(1,227
)
(2,174
)
Proceeds from issuance of common stock
835
765
Net cash used in financing activities
(392
)
(3,117
)
Net decrease in cash and cash
equivalents
(424
)
(1,404
)
Cash and cash equivalents, beginning of
period
13,621
15,025
Cash and cash equivalents, end of
period
$
13,197
$
13,621
Supplemental disclosure of cash flow
information
Interest paid
$
1
$
37
Taxes paid
$
71
$
46
Supplemental disclosure of non-cash
investing and financing activities:
Accrual of property and equipment
$
4
$
—
Airgain, Inc.
Unaudited Reconciliation of
GAAP to non-GAAP Net Income (Loss)
(in thousands, except per
share data)
Three months ended
December 31
September 30
December 31
Year ended December
31,
2019
2018
2019
2018
Net income (loss)
$
63
$
(135
)
$
1,275
$
926
$
(2,584
)
Stock-based compensation expense
599
549
374
2,204
2,910
Amortization
164
163
168
655
676
Non-recurring items (1)
—
—
—
—
1,956
Other income
(151
)
(183
)
(146
)
(709
)
(903
)
Provision for income taxes
(2
)
113
(9
)
163
101
Non-GAAP net income attributable to common
stockholders
$
673
$
507
$
1,662
$
3,239
$
2,156
Non-GAAP net income per share:
Basic
$
0.07
$
0.05
$
0.17
$
0.33
$
0.23
Diluted
$
0.07
$
0.05
$
0.17
$
0.32
$
0.22
Weighted average shares used in
calculating non-GAAP income per share:
Basic
9,697
9,711
9,597
9,684
9,521
Diluted
10,025
10,041
9,980
10,097
10,359
Airgain, Inc.
Unaudited Reconciliation of
Net Income (Loss) to Adjusted EBITDA
(in thousands)
Three months ended
December 31
September 30
December 31
Year ended December
31,
2019
2018
2019
2018
Net income (loss)
$
63
$
(135
)
$
1,275
$
926
$
(2,584
)
Stock-based compensation expense
599
549
374
2,204
2,910
Depreciation and amortization
284
268
333
1,148
1,263
Non-recurring items (1)
—
—
—
—
1,956
Other income
(151
)
(183
)
(146
)
(709
)
(903
)
Provision for income taxes
(2
)
113
(9
)
163
101
Adjusted EBITDA
$
793
$
612
$
1,827
$
3,732
$
2,743
(1)
Non-recurring items include $2.0 million
in executive severance and sales and marketing realignment for the
year ended December 31, 2018.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200220005913/en/
Company Contact David Lyle, Chief Financial Officer
investors@airgain.com
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