PCTEL Reports Third Quarter Financial Results

noviembre 03, 2022

PCTEL increased revenue 16% year-over-year and achieved gross profit margin of 45.9%

New MultiFin 7-in-1 antenna product and FCC Certification of the Industrial IoT Radio Module further progress the Company’s product innovation strategy

BLOOMINGDALE, Ill.--(BUSINESS WIRE)--Nov. 3, 2022-- PCTEL, Inc. (Nasdaq: PCTI) (“PCTEL” or the “Company”), a leading global provider of wireless technology solutions, announced its results for the third quarter ended September 30, 2022.

Recent Highlights

  • Revenues increased 16.0% year-over-year to $26.0 million
  • GAAP gross profit margin of 45.9%
  • GAAP net income of $2.0 million or $0.11 per diluted share
  • Non-GAAP net income of $2.6 million or $0.14 per diluted share
  • Adjusted EBITDA increased 41.0% year-over-year to $3.3 million
  • New MultiFin 7-in-1 antenna product offering for public safety, fleet management and intelligent transportation applications
  • Received FCC approval for the Company’s Industrial IoT Radio Module to support the utilities, fleet, manufacturing, automation, mining and oil and gas end markets

David Neumann, Chief Executive Officer, commented, “We delivered another strong quarter, and I am very pleased by our team’s consistent execution of our growth strategy which allowed us to deliver solid performance in the face of a challenging macro-economic backdrop. Our results were driven by key elements of our growth strategy, including launching innovative products, expanding and leveraging our sales channels globally and increasing our market share with existing customers by providing integrated solutions. Some exciting examples of those initiatives include the FCC certification for our IoT radio modules, preparation for orders of our SeeHawk Monitor by year end, and strategic investments to pursue additional long-term growth in Europe. As we close out fiscal 2022 and prepare to enter 2023, we see potential challenges but remain committed to executing our growth strategy.”

Third Quarter Financial Results

  • Revenue increased 16.0% to $26.0 million, compared to $22.4 million in the third quarter of 2021.
    • Antennas and IIoT Devices revenue was $18.7 million, an increase of 11.8% year-over-year primarily due to an increase in revenues related to antennas for agriculture fleet applications
    • Test & Measurement products revenue was $7.7 million, an increase of 29.8% year-over-year due to higher revenues for 5G products in the U.S.
  • GAAP gross margin was 45.9%, compared to 45.8% in the third quarter of 2021. Non-GAAP gross margin was 46.2% compared to 46.7% in the third quarter of 2021 due to lower gross margin for test & measurement products.
  • GAAP operating expenses were $10.6 million compared to $9.6 million in the third quarter of 2021. Non-GAAP operating expenses were $9.4 million compared to $8.9 million in the third quarter of 2021.
  • GAAP net income was $2.0 million or diluted earnings per share of $0.11 compared to GAAP net income of $0.7 million or $0.04 per share in the third quarter of 2021. A reversal of allowances related to deferred income taxes contributed $0.02 per share during the third quarter 2022.
  • Non-GAAP net income was $2.6 million or $0.14 diluted earnings per share compared to $1.4 million or $0.08 in the third quarter of 2021.
  • Adjusted EBITDA increased to $3.3 million compared to $2.3 million in the third quarter of 2021.
  • Cash, cash equivalents and investments were $28.0 million, a decrease of approximately $0.3 million as compared to the second quarter of 2022. Payment of our quarterly dividend of $1.0 million was approximately equal to our free cash in the third quarter 2022.

Fourth Quarter 2022 Outlook

The following ranges represent PCTEL’s current expectations for the fourth quarter 2022 based upon available data and estimates.

  • Revenue: $25.5 million to $26.5 million
  • Non-GAAP Gross Margin: 47% to 49%
  • Non-GAAP EPS: $0.14 to $0.16

Kevin McGowan, Chief Financial Officer, explained, “Following a very strong third quarter, we expect fourth quarter revenues to be consistent sequentially with a higher gross margin primarily due to the product mix. We continue to see growth opportunities in the industries we serve, and we have a healthy balance sheet which provides us flexibility to navigate any short-term macro-economic challenges that could emerge and to support our long-term growth initiatives.”

CONFERENCE CALL / WEBCAST

PCTEL’s management team will discuss the Company’s results today at 4:30 p.m. ET. The call will also be webcast at https://investor.pctel.com/news-events/webcasts-events. The call can also be accessed by dialing (877) 545-0523 (United States/Canada) or (973) 528-0016 (International), access code: 779586.

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), access code: 46771.

About PCTEL

PCTEL is a leading global provider of wireless technology solutions, including purpose-built Industrial IoT devices, antenna systems, and test and measurement products. 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 our future financial performance; growth of our antenna and Industrial IoT product line and our test & measurement product line through execution of our three growth strategies; the ability of the Company to continue to innovate new products for its product lines; the impact of development and adoption of wireless solutions in the public safety, rail, logistics, agriculture, utilities, and electric vehicle markets on our revenue generation; our ability to expand our product lines in the European market and through distribution channels; the anticipated demand for certain products, including those related to public safety, Industrial IoT, 5G (e.g., the Gflex); 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 higher than expected inflation; an economic recession in the Americas or globally; the impact of the ongoing or a subsequent pandemic, the disruptions to the Company’s workforce, operations, supply chain and customer demand caused by the pandemic and the impact of the pandemic and ensuing supply chain disruption 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; the Company’s ability to access the government market and create demand for its products; the Company’s ability to expand its European presence and benefit from additional antenna and Industrial IoT product offerings from Smarteq; 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®, Gflex®, and SeeHawk are trademarks or registered trademarks of PCTEL, Inc. © 2022 PCTEL, Inc. All rights reserved.

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

September 30,

 

December 31,

2022

 

2021

ASSETS
Cash and cash equivalents

$

5,858

 

$

8,192

 

Short-term investment securities

 

22,147

 

 

22,562

 

Accounts receivable, net of allowances of $143 and $64 at September 30, 2022 and December 31, 2021, respectively

 

20,553

 

 

18,905

 

Inventories, net

 

16,730

 

 

13,691

 

Prepaid expenses and other assets

 

1,374

 

 

1,747

 

Total current assets

 

66,662

 

 

65,097

 

 
Property and equipment, net

 

10,300

 

 

11,949

 

Goodwill

 

5,778

 

 

6,334

 

Intangible assets, net

 

1,058

 

 

1,579

 

Other noncurrent assets

 

2,636

 

 

2,438

 

TOTAL ASSETS

$

86,434

 

$

87,397

 

LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable

$

6,194

 

$

5,360

 

Accrued liabilities

 

10,618

 

 

11,117

 

Total current liabilities

 

16,812

 

 

16,477

 

Long-term liabilities

 

3,533

 

 

3,999

 

Total liabilities

 

20,345

 

 

20,476

 

Stockholders’ equity:
Common stock, $0.001 par value, 50,000,000 shares authorized at
September 30, 2022 and December 31, 2021, respectively, and 18,676,629 and 18,238,030
shares issued and outstanding at September 30, 2022 and December 31, 2021

 

19

 

 

18

 

Additional paid-in capital

 

123,964

 

 

123,998

 

Accumulated deficit

 

(55,916

)

 

(56,735

)

Accumulated other comprehensive loss

 

(1,978

)

 

(360

)

Total stockholders’ equity

 

66,089

 

 

66,921

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

86,434

 

$

87,397

 

PCTEL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except per share data)
 

Three Months Ended

 

Nine Months Ended

September 30,

 

September 30,

2022

 

2021

 

2022

 

2021

 
REVENUES

$

25,988

 

$

22,411

 

$

73,506

 

$

61,799

 

COST OF REVENUES

 

14,052

 

 

12,157

 

 

40,810

 

 

33,266

 

GROSS PROFIT

 

11,936

 

 

10,254

 

 

32,696

 

 

28,533

 

OPERATING EXPENSES:
Research and development

 

3,178

 

 

3,338

 

 

9,784

 

 

9,754

 

Sales and marketing

 

3,600

 

 

3,347

 

 

10,910

 

 

9,497

 

General and administrative

 

3,705

 

 

2,817

 

 

10,399

 

 

9,228

 

Amortization of intangible assets

 

63

 

 

80

 

 

201

 

 

135

 

Restructuring expenses

 

57

 

 

(1

)

 

1,309

 

 

59

 

Total operating expenses

 

10,603

 

 

9,581

 

 

32,603

 

 

28,673

 

OPERATING INCOME (LOSS)

 

1,333

 

 

673

 

 

93

 

 

(140

)

Other income (expense), net

 

205

 

 

(4

)

 

330

 

 

(10

)

INCOME (LOSS) BEFORE INCOME TAXES

 

1,538

 

 

669

 

 

423

 

 

(150

)

(Benefit) Expense for income taxes

 

(434

)

 

5

 

 

(396

)

 

17

 

NET INCOME (LOSS)

$

1,972

 

$

664

 

$

819

 

$

(167

)

 
Net Income (Loss) per Share:
Basic

$

0.11

 

$

0.04

 

$

0.05

 

$

(0.01

)

Diluted

$

0.11

 

$

0.04

 

$

0.04

 

$

(0.01

)

Weighted Average Shares:
Basic

 

18,166

 

 

17,945

 

 

18,099

 

 

18,078

 

Diluted

 

18,187

 

 

17,962

 

 

18,214

 

 

18,078

 

PCTEL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(in thousands)
 

Nine Months Ended September 30,

2022

 

2021

Operating Activities:
Net income (loss)

$

819

 

$

(167

)

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

 

2,231

 

 

2,257

 

Intangible asset amortization

 

257

 

 

171

 

Stock-based compensation

 

3,007

 

 

2,029

 

Loss on disposal of property and equipment

 

0

 

 

3

 

Restructuring costs

 

(291

)

 

(15

)

Bad debt provision

 

70

 

 

(39

)

Changes in operating assets and liabilities:
Accounts receivable

 

(2,081

)

 

2,162

 

Inventories

 

(3,402

)

 

(1,734

)

Prepaid expenses and other assets

 

574

 

 

932

 

Deferred tax assets

 

(484

)

 

0

 

Accounts payable

 

974

 

 

(700

)

Income taxes payable

 

15

 

 

(15

)

Other accrued liabilities

 

(174

)

 

1,405

 

Deferred revenue

 

(93

)

 

82

 

Net cash provided by operating activities

 

1,422

 

 

6,371

 

Investing Activities:
Capital expenditures

 

(550

)

 

(2,006

)

Purchases of investments

 

(21,971

)

 

(21,124

)

Redemptions/maturities of short-term investments

 

22,386

 

 

33,666

 

Cash paid for acquisition, net of cash acquired

 

0

 

 

(6,277

)

Net cash (used in) provided by investing activities

 

(135

)

 

4,259

 

Financing Activities:
Proceeds from issuance of common stock

 

404

 

 

418

 

Payment of withholding tax on stock-based compensation

 

(396

)

 

(782

)

Principal payments on finance leases

 

(49

)

 

(54

)

Purchase of common stock from repurchase program

 

0

 

 

(3,193

)

Cash dividends

 

(3,048

)

 

(3,020

)

Net cash used in financing activities

 

(3,089

)

 

(6,631

)

 
Net (decrease) increase in cash and cash equivalents

 

(1,802

)

 

3,999

 

Effect of exchange rate changes on cash

 

(532

)

 

12

 

Cash and cash equivalents, beginning of period

 

8,192

 

 

5,761

 

Cash and Cash Equivalents, End of Period

$

5,858

 

$

9,772

 

PCTEL, INC.
REVENUE AND GROSS PROFIT BY PRODUCT LINE (unaudited)
Reconciliation of GAAP Gross Profit percentage to Non-GAAP Gross Profit percentage
(in thousands)
 
Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022
Antennas and
Industrial IoT
Devices
Test &
Measurement
Products
Corporate Total Antennas and
Industrial IoT
Devices
Test &
Measurement
Products
Corporate Total
REVENUES

$18,653

 

$7,683

 

($348

)

$25,988

 

$53,310

 

$20,698

 

($502

)

$73,506

 

 
GROSS PROFIT

$6,562

 

$5,544

 

($170

)

$11,936

 

$17,435

 

$15,466

 

($205

)

$32,696

 

 
GAAP GROSS PROFIT %

35.2

%

72.2

%

45.9

%

32.7

%

74.7

%

44.5

%

 
Non-GAAP adjustments:
Amortization of inventory step-up

0.0

%

0.0

%

0.0

%

0.0

%

0.0

%

0.0

%

Amortization of intangible assets

0.1

%

0.0

%

0.1

%

0.1

%

0.0

%

0.1

%

Stock compensation expenses

0.2

%

0.2

%

0.2

%

0.2

%

0.2

%

0.2

%

Non-GAAP GROSS PROFIT %

35.5

%

72.4

%

46.2

%

33.0

%

74.9

%

44.8

%

 
Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021
 
Antennas and
Industrial IoT
Devices
Test &
Measurement
Products
Corporate Total Antennas and
Industrial IoT
Devices
Test &
Measurement
Products
Corporate Total
REVENUES

$16,686

 

$5,921

 

($196

)

$22,411

 

$43,971

 

$18,540

 

($712

)

$61,799

 

 
GROSS PROFIT

$5,655

 

$4,635

 

($36

)

$10,254

 

$14,578

 

$14,057

 

($102

)

$28,533

 

 
GROSS PROFIT %

33.9

%

78.3

%

45.8

%

33.2

%

75.8

%

46.2

%

 
Non-GAAP adjustments:
Amortization of inventory step-up

0.8

%

0.0

%

0.5

%

0.9

%

0.0

%

0.7

%

Amortization of intangible assets

0.1

%

0.0

%

0.1

%

0.1

%

0.0

%

0.1

%

Stock compensation expenses

0.1

%

0.5

%

0.3

%

0.2

%

0.5

%

0.3

%

Non-GAAP GROSS PROFIT %

34.9

%

78.8

%

46.7

%

34.4

%

76.3

%

47.2

%

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

 

This schedule reconciles the Company's GAAP gross profit percentage to its Non-GAAP gross profit percentage. 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 adjustments on this schedule consist of amortization of intangible assets and stock compensation expenses.

Reconciliation of GAAP to Non-GAAP results (unaudited)
(in thousands except per share information)
 
Reconciliation of GAAP operating income (loss) to Non-GAAP operating income
 
Three Months Ended September 30, Nine Months Ended September 30,

2022

 

2021

 

2022

 

2021

 

Operating Income (Loss)

$1,333

 

$673

 

$93

 

($140

)

 
(a) Add:
Amortization of inventory step-up to fair value

0

 

133

 

0

 

415

 

Amortization of intangible assets
-Cost of revenues

17

 

21

 

56

 

36

 

-Operating expenses

63

 

80

 

201

 

135

 

Restructuring expenses (benefits)

57

 

(1

)

1,309

 

59

 

Stock compensation expenses:
-Cost of revenues

61

 

51

 

156

 

185

 

-Research and development

163

 

102

 

472

 

384

 

-Sales & marketing

241

 

73

 

694

 

458

 

-General & administrative

682

 

146

 

1,685

 

1,002

 

Acquisition related expenses

0

 

289

 

86

 

593

 

1,284

 

894

 

4,659

 

3,267

 

Non-GAAP Operating Income

$2,617

 

$1,567

 

$4,752

 

$3,127

 

% of revenue

10.1

%

7.0

%

6.5

%

5.1

%

 
Reconciliation of GAAP net loss to Non-GAAP net income
 
Three Months Ended September 30, Three Months Ended September 30,

2022

 

2021

 

2022

 

2021

 

Net Income (Loss)

$1,972

 

$664

 

$819

 

($167

)

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

1,284

 

894

 

4,659

 

3,267

 

(b) Income Taxes

(660

)

(120

)

(803

)

(232

)

624

 

774

 

3,856

 

3,035

 

Non-GAAP Net Income

$2,596

 

$1,438

 

$4,675

 

$2,868

 

 
Non-GAAP Income per Share:
Basic

$0.14

 

$0.08

 

$0.26

 

$0.16

 

Diluted

$0.14

 

$0.08

 

$0.26

 

$0.16

 

 
Weighed Average Shares:
Basic

18,166

 

17,945

 

18,099

 

18,078

 

Diluted

18,187

 

17,962

 

18,214

 

18,170

 

This schedule reconciles the Company's GAAP operating income (loss) to its Non-GAAP operating 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.
 
The adjustments to GAAP operating income (loss) (a) consist of stock compensation expense, amortization of intangible assets, restructuring expenses, and acquisition related expenses. 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 expenses to Non-GAAP operating expenses (unaudited)
(in thousands)
 
Three Months Ended September 30, Nine Months Ended September 30,

2022

 

2021

 

2022

 

2021

 

GAAP operating expenses

$10,603

 

$9,581

 

$32,603

 

$28,673

 

Stock compensation expenses

(1,086

)

(321

)

(2,851

)

(1,844

)

Amortization of intangible assets

(63

)

(80

)

(201

)

(135

)

Restructuring expenses

(57

)

1

 

(1,309

)

(59

)

Acquisition related expenses

0

 

(289

)

(86

)

(593

)

Non-GAAP Operating expenses

$9,397

 

$8,892

 

$28,156

 

$26,042

 

This schedule reconciles the Company's GAAP operating expenses to its Non-GAAP operating expenses. 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 adjustments on this schedule consist of amortization of intangible assets, stock compensation expenses, restructuring expenses, and acquisition related expenses.

PCTEL, Inc.
Reconciliation of GAAP operating income (loss) to adjusted EBITDA (unaudited)
(in thousands)
 
Three Months Ended September 30, Nine Months Ended September 30,

2022

 

2021

 

2022

 

2021

 

 
Operating income (loss)

$1,333

 

$673

 

$93

 

($140

)

 
Add:
Amortization of inventory step-up to fair value

0

 

133

 

0

 

415

 

Depreciation and amortization

669

 

764

 

2,231

 

2,257

 

Intangible amortization

80

 

101

 

257

 

171

 

Restructuring expenses

57

 

(1

)

1,309

 

59

 

Stock compensation expenses

1,147

 

372

 

3,007

 

2,029

 

Acquisition related expenses

0

 

289

 

86

 

593

 

Adjusted EBITDA

$3,286

 

$2,331

 

$6,983

 

$5,384

 

% of revenue

12.6

%

10.4

%

9.5

%

8.7

%

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 and extraordinary expenses. The adjustments on this schedule consist of depreciation, amortization of intangible assets, stock compensation expenses, restructuring expenses, and acquisition related expenses.

 

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

Suzanne Cafferty
Vice President, Global Marketing
PCTEL, Inc.
(630) 339-2107
public.relations@pctel.com

PCTEL Investor Relations Contact
Lisa Fortuna or Ashley Gruenberg
Alpha IR Group
312-445-2870
PCTI@alpha-ir.com

Source: PCTEL, Inc.

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