PCTel PCTel

PCTEL Reports Fourth Quarter and Full Year Financial Results

February 25, 2021

BLOOMINGDALE, Ill.--(BUSINESS WIRE)--Feb. 25, 2021-- PCTEL, Inc. (Nasdaq: PCTI) announced its results for the fourth quarter and full year ended December 31, 2020.

Highlights

  • Revenue of $21.2 million in the quarter and $77.5 million for the year, 7.5% lower compared to the fourth quarter 2019 and 14.5% lower in the year compared to 2019. Revenue was higher by 9.5% for the test and measurement product line, and lower by 15.2% for the antenna product line compared to the fourth quarter 2019. For the year, revenue was lower by 2.0% for the test and measurement product line and lower by 19.4% for the antenna product line.
  • Gross profit margin of 50.1% in the fourth quarter and 49.0% for the year, down 0.2% compared to the gross profit margin in the fourth quarter 2019 and up 3.2% in the year compared to 2019. The gross profit percentage in the fourth quarter reflects a higher mix of higher margin test and measurement products, offsetting lower gross margin percentages for both test and measurement products and antenna products.
  • GAAP net income per diluted share of $0.10 in the fourth quarter and $0.18 in the year compared to GAAP net income per share of $0.10 in the fourth quarter 2019 and $0.21 for the year in 2019.
  • 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 $0.12 in the fourth quarter and $0.31 for the year compared to Non-GAAP net income per diluted share of $0.16 in the fourth quarter 2019 and $0.47 for the year in 2019.
    • Adjusted EBITDA as a percent of revenue of 15.1% in the fourth quarter and 11.7% in the year compared to 16.3% in the fourth quarter and 12.4% for the year in 2019.

  • $41.0 million of cash and investments (including long-term investments) and no debt at December 31, 2020 compared to $41.3 million and no debt at September 30, 2020.

“We’re pleased with the strong performance for both our antenna and scanning receiver product lines in the fourth quarter. We saw improvements in revenue and earnings in the second half of the year and incoming orders were at the highest level since the second quarter of 2019,” said David Neumann, PCTEL’s CEO. “We expect demand to increase for our antennas, IoT devices and 5G solutions through the year as market conditions improve.”

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: 528059. 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: 40038.

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 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, Industrial IoT, 5G and intelligent transportation; 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 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 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)
 
(unaudited)
December 31, 2020 December 31, 2019
ASSETS
Cash and cash equivalents

$

5,761

 

$

7,094

 

Short-term investment securities

 

30,582

 

 

32,556

 

Accounts receivable, net of allowances of $113 and $104 at December 31, 2020 and December 31, 2019, respectively

 

16,601

 

 

17,380

 

Inventories, net

 

9,984

 

 

11,935

 

Prepaid expenses and other assets

 

1,685

 

 

1,842

 

Total current assets

 

64,613

 

 

70,807

 

 
Property and equipment, net

 

12,505

 

 

11,985

 

Long-term investment securities

 

4,640

 

 

0

 

Goodwill

 

3,332

 

 

3,332

 

Intangible assets, net

 

0

 

 

144

 

Other noncurrent assets

 

2,441

 

 

2,969

 

TOTAL ASSETS

$

87,531

 

$

89,237

 

LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable

$

4,430

 

$

3,190

 

Accrued liabilities

 

7,316

 

 

9,382

 

Total current liabilities

 

11,746

 

 

12,572

 

Long-term liabilities

 

4,387

 

 

3,315

 

Total liabilities

 

16,133

 

 

15,887

 

Stockholders’ equity:
Common stock, $0.001 par value, 50,000,000 and 100,000,000 shares authorized at
December 31, 2020 and December 31, 2019, respectively, and 18,429,350 and 18,611,289
shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively

 

18

 

 

19

 

Additional paid-in capital

 

128,269

 

 

133,954

 

Accumulated deficit

 

(56,907

)

 

(60,305

)

Accumulated other comprehensive income (loss)

 

18

 

 

(318

)

Total stockholders’ equity

 

71,398

 

 

73,350

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

87,531

 

$

89,237

 

PCTEL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except per share data)
 
 
Three Months Ended
December 31,
Years Ended
December 31,

2020

2019

2020

2019

 
REVENUES

$

21,185

 

$

22,898

$

77,456

$

90,617

COST OF REVENUES

 

10,569

 

 

11,385

 

39,529

 

49,105

GROSS PROFIT

 

10,616

 

 

11,513

 

37,927

 

41,512

OPERATING EXPENSES:
Research and development

 

3,204

 

 

3,048

 

12,519

 

12,272

Sales and marketing

 

2,924

 

 

3,424

 

11,103

 

12,254

General and administrative

 

2,522

 

 

3,072

 

10,828

 

13,452

Amortization of intangible assets

 

0

 

 

49

 

32

 

219

Restructuring expenses

 

0

 

 

213

 

124

 

507

Total operating expenses

 

8,650

 

 

9,806

 

34,606

 

38,704

OPERATING INCOME

 

1,966

 

 

1,707

 

3,321

 

2,808

Other (expense) income, net

 

(110

)

 

107

 

106

 

982

INCOME BEFORE INCOME TAXES

 

1,856

 

 

1,814

 

3,427

 

3,790

Expense for income taxes

 

4

 

 

16

 

29

 

40

NET INCOME

$

1,852

 

$

1,798

$

3,398

$

3,750

 
Net Income per Share:
 
Basic

$

0.10

 

$

0.10

$

0.19

$

0.21

Diluted

$

0.10

 

$

0.10

$

0.18

$

0.21

 
Weighted Average Shares:
Basic

 

18,149

 

 

18,034

 

18,207

 

17,853

Diluted

 

18,297

 

 

18,461

 

18,399

 

18,159

 
Cash dividend per share

$

0.055

 

$

0.055

$

0.220

$

0.220

PCTEL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(unaudited, in thousands)
 
 
Years Ended December 31,

2020

2019

 
Operating Activities:
Net income

$

3,398

 

$

3,750

 

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

 

3,019

 

 

2,870

 

Intangible asset amortization

 

144

 

 

885

 

Stock-based compensation

 

2,479

 

 

4,133

 

Loss on disposal of property and equipment

 

21

 

 

97

 

Restructuring costs

 

(29

)

 

(33

)

Bad debt recovery

 

(151

)

 

(2

)

Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable

 

960

 

 

(1,532

)

Inventories

 

2,076

 

 

873

 

Prepaid expenses and other assets

 

638

 

 

385

 

Accounts payable

 

1,086

 

 

(2,841

)

Income taxes payable

 

(10

)

 

(22

)

Other accrued liabilities

 

(231

)

 

2,263

 

Deferred revenue

 

1

 

 

92

 

Net cash provided by operating activities

 

13,401

 

 

10,918

 

Investing Activities:
Capital expenditures

 

(4,093

)

 

(2,263

)

Purchase of investments

 

(49,701

)

 

(48,245

)

Redemptions/maturities of short-term investments

 

47,035

 

 

46,559

 

Net cash used in investing activities

 

(6,759

)

 

(3,949

)

Financing Activities:
Proceeds from issuance of common stock

 

870

 

 

1,183

 

Proceeds from Paycheck Protection Program Loan

 

3,500

 

 

0

 

Repayment of Paycheck Protection Program Loan

 

(3,500

)

 

0

 

Payment of withholding tax on stock-based compensation

 

(1,119

)

 

(1,152

)

Principle payments on finance leases

 

(78

)

 

(99

)

Purchase of common stock from repurchase program

 

(3,808

)

 

0

 

Cash dividends

 

(4,108

)

 

(4,068

)

Net cash used in financing activities

 

(8,243

)

 

(4,136

)

 
Net (decrease) increase in cash and cash equivalents

 

(1,601

)

 

2,833

 

Effect of exchange rate changes on cash

 

268

 

 

(68

)

Cash and cash equivalents, beginning of period

 

7,094

 

 

4,329

 

Cash and Cash Equivalents, End of Period

$

5,761

 

$

7,094

 

PCTEL, INC.
REVENUE AND GROSS PROFIT BY PRODUCT LINE (unaudited)
(in thousands)
 
Three Months Ended December 31, 2020 Year Ended December 31, 2020
Antenna
Products
Test &
Measurement
Products
Corporate Total Antenna
Products
Test &
Measurement
Products
Corporate Total
REVENUES

$12,844

 

$8,554

 

($213

)

$21,185

 

$50,540

 

$27,565

 

($649

)

$77,456

 

 
GROSS PROFIT

$4,437

 

$6,135

 

$44

 

$10,616

 

$17,665

 

$20,244

 

$18

 

$37,927

 

 
GROSS PROFIT %

34.5

%

71.7

%

50.1

%

35.0

%

73.4

%

49.0

%

 
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

$15,144

 

$7,814

 

($60

)

$22,898

 

$62,708

 

$28,115

 

($206

)

$90,617

 

 
GROSS PROFIT

$5,700

 

$5,806

 

$7

 

$11,513

 

$21,841

 

$19,640

 

$31

 

$41,512

 

 
GROSS PROFIT %

37.6

%

74.3

%

50.3

%

34.8

%

69.9

%

45.8

%

 
Reconciliation of GAAP to non-GAAP Results (unaudited)
(in thousands except per share information)
 
Reconciliation of GAAP operating income to non-GAAP operating income
 
Three Months Ended December 31, Year Ended December 31,

2020

2019

2020

2019

 
 
Operating Income

$

1,966

 

$

1,707

 

$

3,321

 

$

2,808

 

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

 

0

 

 

167

 

 

111

 

 

666

 

-Operating expenses

 

0

 

 

49

 

 

32

 

 

219

 

Restructuring

 

0

 

 

213

 

 

124

 

 

507

 

Stock Compensation:
-Cost of revenues

 

65

 

 

116

 

 

272

 

 

408

 

-Engineering

 

128

 

 

145

 

 

530

 

 

652

 

-Sales & marketing

 

130

 

 

151

 

 

559

 

 

673

 

-General & administrative

 

161

 

 

475

 

 

1,119

 

 

2,401

 

 

484

 

 

1,316

 

 

2,747

 

 

5,526

 

Non-GAAP Operating Income

$

2,450

 

$

3,023

 

$

6,068

 

$

8,334

 

% of revenue

 

11.6

%

 

13.2

%

 

7.8

%

 

9.2

%

 
Reconciliation of GAAP net income to non-GAAP net income
 
Three Months Ended December 31, Year Ended December 31,

2020

2019

2020

2019

Net Income

$

1,852

 

$

1,798

 

$

3,398

 

$

3,750

 

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

 

484

 

 

1,316

 

 

2,747

 

 

5,526

 

Income Taxes

 

(183

)

 

(233

)

 

(465

)

 

(705

)

 

301

 

 

1,083

 

 

2,282

 

 

4,821

 

Non-GAAP Net Income

$

2,153

 

$

2,881

 

$

5,680

 

$

8,571

 

 
Non-GAAP Income per Share:
Basic

$

0.12

 

$

0.16

 

$

0.31

 

$

0.48

 

Diluted

$

0.12

 

$

0.16

 

$

0.31

 

$

0.47

 

 
Weighted Average Shares:
Basic

 

18,149

 

 

18,034

 

 

18,207

 

 

17,853

 

Diluted

 

18,297

 

 

18,461

 

 

18,399

 

 

18,159

 

This schedule reconciles the Company's GAAP operating income 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 (a) consist of stock compensation expense and amortization of intangible assets. The adjustments to GAAP net income include the non-GAAP adjustments to operating income as well as adjustments for (b) non-cash income tax expense.

PCTEL, Inc.
Reconciliation of GAAP operating income to Adjusted EBITDA
(unaudited, in thousands)
 
Three Months Ended December 31, Year Ended December 31,

 

2020

 

 

 

2019

 

 

 

2020

 

 

 

2019

 

 
Operating Income

$

1,966

 

$

1,707

 

$

3,321

 

$

2,808

 

 
Add:
Depreciation and amortization

 

759

 

 

719

 

 

3,019

 

 

2,870

 

Intangible amortization

 

0

 

 

216

 

 

143

 

 

885

 

Restructuring expenses

 

0

 

 

213

 

 

124

 

 

507

 

Stock compensation expenses

 

484

 

 

887

 

 

2,480

 

 

4,134

 

Adjusted EBITDA

$

3,209

 

$

3,742

 

$

9,087

 

$

11,204

 

% of revenue

 

15.1

%

 

16.3

%

 

11.7

%

 

12.4

%

This schedule reconciles the Company's GAAP operating income 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.

 

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

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

Source: PCTEL, Inc.

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