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PCTEL Reports First Quarter Financial Results

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PCTEL, Inc. (NASDAQ:PCTI) announced its results for the first quarter ended March 31, 2021.

Highlights

  • Revenue of $17.7 million in the first quarter, 1.1% higher compared to the first quarter 2020.
  • Gross profit margin of 47.1% in the first quarter, up 0.2% compared to the gross profit margin in the first quarter 2020. The gross profit percentage in the first quarter reflects a higher gross profit margin for test and measurement products, offsetting a lower gross margin percentage for antennas and Industrial IoT devices.
  • GAAP net loss per diluted share of $0.04 in the first quarter which was the same as first quarter 2020.
  • Non-GAAP net income and adjusted EBITDA are metrics 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 ($0.00) in the first quarter compared to Non-GAAP net income per diluted share of $0.01 in the first quarter 2020.
    • Adjusted EBITDA as a percent of revenue of 3.8% in the first quarter which was the same as first quarter 2020.
  • $40.6 million of cash and investments (including long-term investments) and no debt at March 31, 2020 compared to $41.0 million and no debt at December 31, 2020.

"Our antenna business was stable and the test and measurement products continue to perform very well as we address 5G deployments and emerging public safety opportunities," said David Neumann, PCTEL's CEO. "As we announced on May 3rd, we're excited about our recent acquisition of Smarteq Wireless AB, a leading European supplier of antennas for vehicular, energy and Industrial IoT applications ("Smarteq"). Smarteq's product wins for Industrial IoT, EV charging stations and vehicles complement our recent antenna design wins in utilities, 5G and metering. "We expect market conditions and the demand for our antenna, IoT device and scanner products to improve through the year as global economies recover."

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) 506-0062 (United States/Canada) or (973) 528-0011 (International), PIN number: 988748. The call will also be webcast at https://investor.pctel.com/news-events/webcasts-events.

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: 40774.

About PCTEL

PCTEL is a leading global provider of wireless technology, including purpose-built Industrial IoT devices, antenna systems, 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 about the Company's expectations regarding the impact of the COVID-19 pandemic; our future financial performance; growth of our antenna solutions and Industrial IoT and test and measurement businesses; the impact of the acquisition of Smarteq on the Company's ability to offer additional products, expand in the European market, and generate revenue; the impact of our transition plan for manufacturing inside and outside China; the anticipated demand for certain products including those related to public safety, Industrial IoT, 5G and intelligent transportation; and the anticipated growth of public and private wireless systems are forward-looking statements. 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 disruptions to the Company's workforce, operations, supply chain and customer demand caused by the COVID-19 pandemic and impact of the pandemic on the Company's results of operations, financial condition and stock price; the impact of data densification and IoT on capacity and coverage demand; the impact of 5G; customer demand and growth generally in the Company's defined market segments, including demand from customers in China; the Company's ability to integrate Smarteq, expand its European presence and benefit from additional antenna and Industrial IoT product offerings; the impact of the uncertainty regarding renewal of our lease of our Tianjin, China manufacturing premises; the impact of tariffs on certain imports from China; and the Company's ability to grow its 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 is a registered trademark of PCTEL, Inc. © 2021 PCTEL, Inc. All rights reserved.

PCTEL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands, except share data)
 

March 31,

 

December 31,

2021

 

2020

ASSETS
Cash and cash equivalents

$

12,796

 

$

5,761

 

Short-term investment securities

 

24,805

 

 

30,582

 

Accounts receivable, net of allowances of $90 and $113 at March 31, 2021 and
December 31, 2020, respectively

 

14,610

 

 

16,601

 

Inventories, net

 

9,719

 

 

9,984

 

Prepaid expenses and other assets

 

1,543

 

 

1,685

 

Total current assets

 

63,473

 

 

64,613

 

 
Property and equipment, net

 

12,056

 

 

12,505

 

Long-term investment securities

 

2,963

 

 

4,640

 

Goodwill

 

3,332

 

 

3,332

 

Other noncurrent assets

 

2,425

 

 

2,441

 

TOTAL ASSETS

$

84,249

 

$

87,531

 

LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable

$

2,297

 

$

4,430

 

Accrued liabilities

 

8,045

 

 

7,316

 

Total current liabilities

 

10,342

 

 

11,746

 

Long-term liabilities

 

4,262

 

 

4,387

 

Total liabilities

 

14,604

 

 

16,133

 

Stockholders' equity:
Common stock, $0.001 par value, 50,000,000 shares authorized at
March 31, 2021 and December 31, 2020, respectively, and 18,518,515 and 18,429,350
shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively

 

19

 

 

18

 

Additional paid-in capital

 

127,174

 

 

128,250

 

Accumulated deficit

 

(57,550

)

 

(56,888

)

Accumulated other comprehensive income

 

2

 

 

18

 

Total stockholders' equity

 

69,645

 

 

71,398

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

84,249

 

$

87,531

 

PCTEL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31,

 

 

2021

 

2020

 
REVENUES

$

17,707

 

$

17,506

 

COST OF REVENUES

 

9,369

 

 

9,291

 

GROSS PROFIT

 

8,338

 

 

8,215

 

OPERATING EXPENSES:
Research and development

 

3,194

 

 

3,029

 

Sales and marketing

 

2,763

 

 

3,142

 

General and administrative

 

3,076

 

 

2,802

 

Amortization of intangible assets

 

0

 

 

33

 

Restructuring expenses

 

0

 

 

87

 

Total operating expenses

 

9,033

 

 

9,093

 

OPERATING LOSS

 

(695

)

 

(878

)

Other income, net

 

39

 

 

198

 

LOSS BEFORE INCOME TAXES

 

(656

)

 

(680

)

Expense for income taxes

 

6

 

 

8

 

NET LOSS

$

(662

)

$

(688

)

 
Net Loss per Share:
 
Basic

$

(0.04

)

$

(0.04

)

Diluted

$

(0.04

)

$

(0.04

)

 
Weighted Average Shares:
Basic

 

18,070

 

 

18,207

 

Diluted

 

18,070

 

 

18,207

 

 
Cash dividend per share

$

0.055

 

$

0.055

 

PCTEL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

 

 

 

 

 

 

 

Three Months Ended March 31,

.

 

2021

 

2020

Operating Activities:
Net loss

$

(662

)

$

(688

)

Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization

 

742

 

 

748

 

Intangible asset amortization

 

0

 

 

144

 

Stock-based compensation

 

618

 

 

562

 

Loss on disposal of property and equipment

 

3

 

 

7

 

Restructuring costs

 

(15

)

 

63

 

Bad debt provision

 

(11

)

 

18

 

Changes in operating assets and liabilities:
Accounts receivable

 

1,999

 

 

3,432

 

Inventories

 

259

 

 

760

 

Prepaid expenses and other assets

 

215

 

 

470

 

Accounts payable

 

(2,061

)

 

737

 

Income taxes payable

 

6

 

 

8

 

Other accrued liabilities

 

554

 

 

(2,011

)

Deferred revenue

 

7

 

 

39

 

Net cash provided by operating activities

 

1,654

 

 

4,289

 

Investing Activities:
Capital expenditures

 

(354

)

 

(1,516

)

Purchase of investments

 

(5,953

)

 

(9,918

)

Redemptions/maturities of short-term investments

 

13,407

 

 

13,866

 

Net cash provided in investing activities

 

7,100

 

 

2,432

 

Financing Activities:
Proceeds from issuance of common stock

 

8

 

 

59

 

Payment of withholding tax on stock-based compensation

 

(659

)

 

(1,106

)

Principle payments on finance leases

 

(16

)

 

(20

)

Purchase of common stock from repurchase program

 

(31

)

 

(2,000

)

Cash dividends

 

(1,011

)

 

(1,032

)

Net cash used in financing activities

 

(1,709

)

 

(4,099

)

Net increase in cash and cash equivalents

 

7,045

 

 

2,622

 

Effect of exchange rate changes on cash

 

(10

)

 

(54

)

Cash and cash equivalents, beginning of period

 

5,761

 

 

7,094

 

Cash and Cash Equivalents, End of Period

$

12,796

 

$

9,662

 

PCTEL, INC.
REVENUE AND GROSS PROFIT BY PRODUCT LINE (unaudited)
(in thousands)
 
Three Months Ended March 31, 2021

Antennas &

Industrial IoT

Devices

 

Test &

Measurement

Products

 

Corporate

 

Total

REVENUES

$11,723

$6,205

($221)

$17,707

 
GROSS PROFIT

$3,747

$4,588

$3

$8,338

 
GROSS PROFIT %

32.0%

73.9%

47.1%

 

Three Months Ended March 31, 2020

Antennas &

Industrial IoT

Devices

 

Test &

Measurement

Products

 

Corporate

 

Total

REVENUES

$11,460

$6,083

($37)

$17,506

 
GROSS PROFIT

$3,918

$4,297

$0

$8,215

 
GROSS PROFIT %

34.2%

70.6%

46.9%

The Corporate column includes the elimination of intercompany revenues between Antennas and Industrial IoT Devices and Test & Measurement Products and other licensing revenues.

Reconciliation of GAAP to non-GAAP Results (unaudited)
(in thousands except per share information)
 
Reconciliation of GAAP operating loss to non-GAAP operating loss
 

Three Months Ended March 31,

2021

 

2020

 

 

 

 
Operating Loss

($695

)

($878

)

 
(a) Add:
Amortization of intangible assets
-Cost of revenues

0

 

111

 

-Operating expenses

0

 

33

 

Restructuring

0

 

87

 

Stock Compensation:
-Cost of revenues

69

 

72

 

-Engineering

142

 

137

 

-Sales & marketing

160

 

150

 

-General & administrative

247

 

203

 

618

 

793

 

Non-GAAP Operating Loss

($77

)

($85

)

% of revenue

-0.4

%

-0.5

%

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

Three Months Ended March 31,

2021

 

2020

Net Loss

($662

)

($688

)

 
Adjustments:
(a) Non-GAAP adjustments to operating loss

618

 

793

 

Income Taxes

9

 

(1

)

627

 

792

 

Non-GAAP Net (Loss) Income

($35

)

$104

 

 
Non-GAAP (Loss) Income per Share:
Basic

($0.00

)

$0.01

 

Diluted

($0.00

)

$0.01

 

 
Weighted Average Shares:
Basic

18,070

 

18,207

 

Diluted

18,070

 

18,207

 

This schedule reconciles the Company's GAAP operating income to its non-GAAP operating 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 loss (a) consist of stock compensation expense and amortization of intangible assets. The adjustments to GAAP net loss include the non-GAAP adjustments to operating 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 March 31,

2021

 

2020

Operating Loss

($695

)

($878

)

Add:
Depreciation and amortization

742

 

748

 

Intangible amortization

0

 

144

 

Restructuring expenses

0

 

87

 

Stock compensation expenses

618

 

562

 

Adjusted EBITDA

$665

 

$663

 

% of revenue

3.8

%

3.8

%

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.

 

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

 

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