PCTEL, Inc. (NASDAQ: PCTI), a leader in Performance
Critical TELecom solutions, announced its results for
the third quarter and the three quarters ended September 30,
2017.
Highlights From Continuing
Operations
- Revenue of $23.7 million in the
third quarter and $68.1 million year to date, an 13% increase
in the quarter and a 11% increase year to date compared to last
year. Connected Solutions revenue was up 5% in the quarter and 9%
year to date. RF Solutions was up 50% in the quarter and up 16%
year to date.
- Gross profit margin of 42.9% in the
third quarter and 41.9% year to date, up 340 basis points in
the quarter and up 170 basis points year to date compared to last
year.
- Net income per diluted share of
$0.04 in the third quarter and $0.04 year to date, compared to
net income per diluted share of $0.01 per share in the quarter and
a loss of $0.51 year to date last year.
- Non-GAAP net income and adjusted
EBITDA are measures the company uses to reflect the results of its
core earnings. A reconciliation of those non-GAAP measures to
our financial statements is provided later in the press release.
- Non-GAAP net income per diluted
share of $0.09 in the third quarter and $0.19 year to date, up
$0.04 in the quarter and $0.06 year to date compared to last
year.
- Adjusted EBITDA margin as a percent
of revenue of 11% in the third quarter and 9% year to date, up
270 basis points in the quarter and 110 basis points year to date
compared to last year.
- $36.5 million of cash and short-term
investments and no debt at September 30, 2017. The Company
generated free cash flow (cash flow from operations less capital
spending) from continuing operations of approximately $2.1 million
in the quarter and $5.0 million year to date.
“We are pleased to see revenue growth in both segments. Fleet
and utilities markets continue to lead the growth in antennas and
we closed several large scanning receiver deals through our OEM
partners in the quarter.” said David Neumann, PCTEL’s CEO. “PCTEL
is well positioned to take advantage of the long-term growth
opportunities in Industrial IoT, small cells and 5G, which require
both performance critical antenna solutions and RF test
equipment.”
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 (888) 782-2072
(U.S. / Canada) or (706) 679-6397 (International), conference ID:
47850702. 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 (855) 859-2056
(U.S./Canada), or International (404) 537-3406, conference ID:
47850702.
About PCTEL
PCTEL, Inc. provides Performance Critical
TELecom technology solutions. We are a leading global
supplier of antennas and wireless network testing solutions. Our
precision antennas are deployed in small cells, enterprise Wi-Fi
access points, fleet management and transit systems, and in
equipment and devices for the Industrial Internet of Things (IIoT).
We offer in-house design, testing, radio integration, and
manufacturing capabilities for our antenna customers. PCTEL’s test
and measurement tools improve the performance of wireless networks
globally, with a focus on LTE, public safety, and emerging 5G
technologies. Network operators, neutral hosts, and equipment
manufacturers rely on our scanning receivers and testing solutions
to analyze, design, and optimize their networks.
For more information, please visit our website at
http://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 Connected Solutions and RF Solutions businesses, anticipated
demand for certain products (including antennas for small cell,
enterprise WiFi, IoT and FirstNet applications), the impact of
digital automation 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, growth and continuity in PCTEL’s
vertical markets, and PCTEL’s ability to grow its wireless products
business and create, protect and implement new technologies and
solutions. 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)
(unaudited) September 30, December 31,
2017 2016 ASSETS Cash and cash
equivalents $ 6,527 $ 14,855 Short-term investment securities
29,979 18,456 Accounts receivable, net of allowance for doubtful
accounts of $302 and $273 at September 30, 2017 and December 31,
2016, respectively 18,530 19,101 Inventories, net 12,828 14,442
Prepaid expenses and other assets 966 1,498 Current assets held for
sale 0 50 Total current assets 68,830
68,402 Property and equipment, net 12,227 11,833 Goodwill 3,332
3,332 Intangible assets, net 2,403 3,275 Deferred tax assets, net
5,344 4,512 Other noncurrent assets 69 36 Non-current assets held
for sale 0 776
TOTAL ASSETS
$ 92,205 $ 92,166
LIABILITIES AND STOCKHOLDERS’ EQUITY Accounts payable
$ 5,185 $ 6,073 Accrued liabilities 6,734
7,177 Total current liabilities 11,919 13,250 Other
long-term liabilities 430 391 Total liabilities
12,349 13,641 Stockholders’
equity: Common stock, $0.001 par value, 100,000,000 shares
authorized, 17,762,694 and 17,335,122 shares issued and outstanding
at September 30, 2017 and December 31, 2016, respectively 18 17
Additional paid-in capital 134,441 134,480 Accumulated deficit
(54,508 ) (55,590 ) Accumulated other comprehensive loss (95
) (382 ) Total stockholders’ equity 79,856
78,525
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 92,205 $ 92,166
PCTEL, INC. CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (unaudited) (in thousands, except
per share data)
Three Months Ended Nine Months Ended
September 30, September 30, 2017 2016
2017 2016 REVENUES $ 23,665 $ 20,892 $
68,136 $ 61,383
COST OF REVENUES 13,515 12,637
39,570 36,735
GROSS
PROFIT 10,150 8,255 28,566
24,648
OPERATING EXPENSES: Research and
development 2,757 2,451 8,141 7,581 Sales and marketing 3,230 3,116
9,394 9,070 General and administrative 3,146 2,847 10,081 9,031
Amortization of intangible assets 124 124 372 408 Restructuring
expenses 0 17 0 233
Total operating expenses 9,257 8,555
27,988 26,323
OPERATING INCOME
(LOSS) 893 (300 ) 578 (1,675 ) Other income, net 32
35 74 49
INCOME (LOSS)
BEFORE INCOME TAXES 925 (265 ) 652 (1,626 ) (Benefit) expense
for income taxes 206 (354 ) (68 ) 6,603
NET INCOME (LOSS) FROM CONTINUING OPERATIONS 719 89
720 (8,229 )
NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET
OF TAX BENEFIT (EXPENSE) 236 86
(148 ) (4,125 )
NET INCOME (LOSS) $ 955 $ 175
$ 572 $ (12,354 )
Net Income (Loss) per Share From
Continuing Operations: Basic $ 0.04 $ 0.01 $ 0.04 $ (0.51 )
Diluted $ 0.04 $ 0.01 $ 0.04 $ (0.51 )
Net Income (Loss)
per Share From Discontinued Operations: Basic $ 0.01 $ 0.01 $
(0.01 ) $ (0.26 ) Diluted $ 0.01 $ 0.01 $ (0.01 ) $ (0.26 )
Net Income (Loss) per Share: Basic $ 0.06 $ 0.01 $ 0.03 $
(0.77 ) Diluted $ 0.06 $ 0.01 $ 0.03 $ (0.77 )
Weighted
Average Shares: Basic 16,757 16,106 16,526 16,136 Diluted
17,065 16,245 16,830 16,136 Cash dividend per share $ 0.055
$ 0.05 $ 0.155 $ 0.15
PCTEL, INC. CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited, in
thousands) Nine Months Ended September 30,
2017 2016 Operating
Activities: Net income (loss) from continuing operations $ 720
$ (8,229 ) Adjustments to reconcile net loss to net cash provided
by operating activities: Depreciation 1,913 1,994 Intangible asset
amortization 872 908 Stock-based compensation 2,458 3,069 Loss on
disposal/sale of property and equipment 18 4 Restructuring costs
(88 ) 112 Deferred tax provision (282 ) 6,332 Changes in operating
assets and liabilities, net of acquisitions: Accounts receivable
710 2,946 Inventories 1,809 2,793 Prepaid expenses and other assets
509 306 Accounts payable (1,078 ) (1,360 ) Income taxes payable
(154 ) (153 ) Other accrued liabilities (426 ) (857 ) Deferred
revenue 95 12 Net cash provided by
operating activities 7,076 7,877
Investing Activities: Capital expenditures (2,097 ) (1,550 )
Proceeds from disposal of property and equipment 1 1 Purchases of
investments (37,579 ) (47,552 ) Redemptions/maturities of
short-term investments 26,056 54,181
Net cash (used in) provided by investing activities (13,619
) 5,080
Financing Activities: Proceeds
from issuance of common stock 1,375 649 Payments for repurchase of
common stock 0 (4,095 ) Payment of withholding tax on stock-based
compensation (1,190 ) (365 ) Principle payments on capital leases
(64 ) (34 ) Cash dividends (2,730 ) (2,589 ) Net cash
used in financing activities (2,609 ) (6,434 )
Cash flows from discontinued operations: Net cash used in
operating activities (697 ) (321 ) Net cash provided by (used in)
investing activities 1,434 (149 ) Net (decrease) increase in
cash and cash equivalents (8,415 ) 6,053 Effect of exchange rate
changes on cash 87 (3 ) Cash and cash equivalents, beginning of
year 14,855 7,055
Cash and Cash
Equivalents, End of Period $ 6,527 $ 13,105
PCTEL, INC. P&L INFORMATION BY SEGMENT -
Continuing Operations (unaudited) (in thousands)
Three Months
Ended September 30, 2017 Nine Months Ended September 30,
2017 Connected Connected Solutions RF
Solutions Corporate Total Solutions RF
Solutions Corporate Total REVENUES
$17,988 $5,739 ($62) $23,665 $52,125 $16,157 ($146) $68,136
GROSS
PROFIT 6,148 4,006 (4) 10,150 17,283 11,275 8 28,566
OPERATING
(LOSS) INCOME $2,684 $883 ($2,674) $893 $6,775 $2,319 ($8,516)
$578
Three Months Ended September 30, 2016
Nine Months Ended September 30, 2016 Connected
Connected Solutions RF Solutions
Corporate Total Solutions RF Solutions
Corporate Total REVENUES $17,136 $3,814
($58) $20,892 $47,616 $13,931 ($164) $61,383
GROSS PROFIT 5,771 2,497
(13) 8,255 15,035 9,620 (7) 24,648
OPERATING (LOSS) INCOME $2,530
($467) ($2,363) ($300) $5,625 $344 ($7,644) ($1,675)
Reconciliation of
GAAP to non-GAAP Results - Continuing Operations
(unaudited)
(in thousands except per share information)
Reconciliation of
GAAP operating income (loss) to non-GAAP operating income -
Continuing Operations (a)
Three Months
Ended September 30,
Nine Months Ended
September 30,
2017
2016
2017
2016
Operating Income (Loss) $893 ($300 ) $578
($1,675 ) (a)
Add: Amortization of intangible assets
-Cost of revenues 167 167 500 501 -Operating expenses 124 124 372
408 Restructuring 0 17 0 233 TelWorx investigation: -General &
Administrative 0 0 0 4 Stock Compensation: -Cost of revenues 68 78
200 219 -Engineering 128 183 394 525 -Sales & Marketing 116 176
362 477 -General & Administrative 349 541 1,501
1,847 952 1,286 3,329 4,214
Non-GAAP Operating Income $1,845 $986
$3,907 $2,539 % of revenue 7.8 % 4.7 % 5.7 % 4.1 %
Reconciliation of
GAAP net income (loss) to non-GAAP net (loss) income - Continuing
Operations (b)
Three Months
Ended September 30,
Nine Months Ended
September 30,
2017
2016
2017
2016
Net Income (Loss) $719 $89 $720 ($8,229 )
Adjustments: (a) Non-GAAP adjustment to operating income
(loss) 952 1,286 3,329 4,214 (b) Other income related to SEC
investigation of TelWorx 0 0 0 (4 ) (b) Income Taxes (132 ) (538 )
(785 ) 6,138 820 748 2,544 10,348
Non-GAAP Net Income $1,539 $837 $3,264
$2,119
Non-GAAP Earning per Share:
Basic $0.09 $0.05 $0.20 $0.13 Diluted $0.09 $0.05 $0.19 $0.13
Weighed Average Shares: Basic 16,757 16,106 16,526
16,136 Diluted 17,065 16,245 16,830 16,276
This schedule reconciles the Company's GAAP operating income
(loss) and GAAP net income (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, and non-cash income tax expense.
Reconciliation of
GAAP to non-GAAP SEGMENT INFORMATION - Continuing Operations
(unaudited) (a)
(in thousands) Three Months Ended September
30, 2017 Nine Months Ended September 30, 2017
Connected
RF Connected
RF
Solutions
Solutions Corporate Total Solutions
Solutions
Corporate Total Operating Income (Loss)
$2,684 $883 ($2,674 ) $893 $6,775 $2,319 ($8,516 ) $578 Add:
Amortization of intangible assets: -Cost of revenues 0 167 0 167 0
500 0 500 -Operating expenses 39 85 0 124 117 255 0 372 Stock
Compensation: -Cost of revenues 40 28 0 68
121
79 0 200 -Engineering 63 65 0 128 180 214 0 394 -Sales &
Marketing 77 39 0 116 242 120 0 362 -General & Administrative
46 17 286 349 134 49 1,318 1,501
265 401 286 952 794 1,217 1,318 3,329
Non-GAAP Operating (Loss) Income $2,949 $1,284
($2,388 ) $1,845 $7,569 $3,536 ($7,198 ) $3,907
Three Months Ended September 30, 2016 Nine
Months Ended September 30, 2016 Connected
RF
Connected
RF
Solutions
Solutions
Corporate Total Solutions
Solutions
Corporate Total Operating (Loss) Income
$2,530 ($467 ) ($2,363 ) ($300 ) $5,625 $344 ($7,644 ) ($1,675 )
Add: Amortization of intangible assets: -Cost of revenues 0 167 0
167 0 501 0 501 -Operating expenses 39 85 0 124 153 255 0 408
Restructuring expenses 0 17 0 17 44 116 73 233 TelWorx
investigation: -General & Administrative 0 0 0 0 0 0 4 4 Stock
Compensation: -Cost of Goods Sold 51 27 0 78 135 84 0 219
-Engineering 52 131 0 183 124 401 0 525 -Sales & Marketing 138
38 0 176 340 137 0 477 -General & Administrative 66 92
383 541 158 258 1,431 1,847 346 557
383 1,286 954 1,752 1,508 4,214
Non-GAAP Operating (Loss) Income $2,876 $90 ($1,980 )
$986 $6,579 $2,096 ($6,136 ) $2,539
This schedule reconciles the Company's GAAP operating income
(loss) by segment 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.
(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.
Reconciliation of
GAAP operating income (loss) to Adjusted EBITDA - Continuing
Operations (a)
(unaudited, in thousands)
Three Months
Ended September 30,
Nine Months Ended
September 30,
2017
2016
2017
2016
Operating Income (Loss) 893 ($300 ) $578 ($1,675 )
(a)
Add: Depreciation and amortization 652 674 1,914
1,994 Intangible amortization 291 291 872 909 Stock compensation
expenses 661 978 2,457 3,068 Restructuring expense 0 17 0 233
TelWorx investigation- operating expenses 0 0 0
4
Adjusted EBITDA $2,497 $1,660
$5,821 $4,533
% of revenue 10.6 % 7.9 % 8.5 %
7.4 %
This schedule reconciles the Company's GAAP operating 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.
(a) Adjusted EBITDA is defined as net income before interest,
income taxes, depreciation and amortization. These adjustments
reflect depreciation, amortization of intangible assets, stock
compensation expenses, restructuring expenses, and general and
administrative expenses associated with the SEC investigation of
TelWorx.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171108006357/en/
John SchoenCFOPCTEL, Inc.(630) 372-6800orMichael
RosenbergDirector of MarketingPCTEL, Inc.(301)
444-2046public.relations@pctel.com
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