PCTEL Reports Fourth Quarter and Full Year Financial Results

February 24, 2022

BLOOMINGDALE, Ill.--(BUSINESS WIRE)--Feb. 24, 2022-- PCTEL, Inc. (Nasdaq: PCTI) announced its results for the fourth quarter and full year ended December 31, 2021.

Highlights

  • Revenue of $26.0 million in the fourth quarter and $87.8 million for the year, 22.8% higher compared to the fourth quarter 2020 and 13.4% higher for the full year compared to 2020. Revenue was 24.7% higher in 2021 for antennas and Industrial IoT devices and 6.8% lower in 2021 for the test and measurement products compared to 2020.
  • Gross profit margin of 45.9% in the fourth quarter and 46.1% for the year, compared to 50.1% in the fourth quarter 2020 and 49.0% for the full year 2020. The decline in the gross margin percentages in 2021 compared to 2020 is primarily due to a higher mix of antennas and Industrial IoT devices.
  • GAAP net income per diluted share of $0.02 in the fourth quarter and $0.01 for the year, compared to $0.10 in the fourth quarter 2020 and $0.19 for the full year 2020. The Company recorded restructuring expenses of $0.8 million during the fourth quarter 2021 related to the transition to contract manufacturers in China and related to eliminating headcount positions in Beijing.
  • Non-GAAP net income and adjusted EBITDA are metrics the Company uses to measure its core earnings.
    • Non-GAAP net income per diluted share of $0.12 in the fourth quarter and $0.27 for the year, compared to Non-GAAP net income per diluted share of $0.12 in the fourth quarter 2020 and $0.31 for the full year 2020.
    • Adjusted EBITDA as a percent of revenue of 11.8% in the fourth quarter and 9.6% for the year, compared to 15.2% in the fourth quarter 2020 and 11.8% for the full year 2020.
  • $30.8 million of cash and investments and $0.1 million of debt at December 31, 2021 compared to $41.0 million and no debt at December 31, 2020. During 2021, the Company used $6.3 million net of cash acquired for the acquisition of Smarteq, $4.0 million for dividends, and $3.2 million for share repurchases.

“We live in an increasingly wireless world. PCTEL’s high-performance products are critical components that ensure reliable wireless connectivity across a wide range of applications,” said David Neumann, PCTEL’s CEO. “We’re pleased with our strong performance in the fourth quarter with record orders and backlog, most of which will convert to revenue in the first half of 2022. Our strategies to expand in Europe through acquisitions, to increase our use of channel partners and to invest in new products such as industrial IoT devices and advanced scanning receivers contributed to our success in 2021 and will generate growth for years to come.”

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: 546427. 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: 44649.

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 our future financial performance; growth of our antenna solutions and Industrial IoT business and our test and measurement business; 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 impact of the COVID-19 pandemic and the ensuing supply chain disruptions; and the anticipated demand for certain products, including those related to public safety, Industrial IoT, 5G (e.g., the Gflex scanning receiver) and intelligent transportation, 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 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 integrate Smarteq, expand its European presence and benefit from additional antenna and Industrial IoT product offerings; 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. © 2022 PCTEL, Inc. All rights reserved.

 
 
 
 

PCTEL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

(in thousands, except share data)

 

 

 

 

 

 

 

December 31,

 

December 31,

 

 

2021

 

2020

ASSETS
Cash and cash equivalents

$

8,192

 

$

5,761

 

Short-term investment securities

 

22,562

 

 

30,582

 

Accounts receivable, net of allowances of $64 and $113 at December 31, 2021 and December 31, 2020, respectively

 

18,905

 

 

16,601

 

Inventories, net

 

13,691

 

 

9,984

 

Prepaid expenses and other assets

 

1,747

 

 

1,685

 

Total current assets

 

65,097

 

 

64,613

 

 
Property and equipment, net

 

11,949

 

 

12,505

 

Long-term investment securities

 

0

 

 

4,640

 

Goodwill

 

6,334

 

 

3,332

 

Intangible assets, net

 

1,579

 

 

0

 

Other noncurrent assets

 

2,438

 

 

2,441

 

TOTAL ASSETS

$

87,397

 

$

87,531

 

LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable

$

5,360

 

$

4,430

 

Accrued liabilities

 

11,117

 

 

7,316

 

Total current liabilities

 

16,477

 

 

11,746

 

Long-term liabilities

 

3,999

 

 

4,387

 

Total liabilities

 

20,476

 

 

16,133

 

Stockholders’ equity:
Common stock, $0.001 par value, 50,000,000 shares authorized at December 31, 2021 and December 31, 2020, respectively, and 18,238,030 and 18,429,350 shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively 18 18
Additional paid-in capital

 

123,998

 

 

128,250

 

Accumulated deficit

 

(56,735

)

 

(56,888

)

Accumulated other comprehensive income

 

(360

)

 

18

 

Total stockholders’ equity

 

66,921

 

 

71,398

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

87,397

 

$

87,531

 

   
   
   
   
   

PCTEL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(in thousands, except per share data)

 

 

 

 

Three Months Ended

 

Year Ended

 

 

December 31,

 

December 31,

 

 

2021

 

2020

 

2021

 

2020

   
REVENUES

 $

           26,008

 

 $

           21,185

 

 $

           87,807

 

 $

           77,456

 
COST OF REVENUES

 

              14,063

 

 

              10,569

 

 

              47,329

 

 

              39,529

 
GROSS PROFIT

 

              11,945

 

 

              10,616

 

 

              40,478

 

 

              37,927

 
OPERATING EXPENSES:  
Research and development

 

                3,604

 

 

                3,204

 

 

              13,358

 

 

              12,519

 
Sales and marketing

 

                3,829

 

 

                2,924

 

 

              13,327

 

 

              11,104

 
General and administrative

 

                3,216

 

 

                2,503

 

 

              12,444

 

 

              10,808

 
Amortization of intangible assets

 

                     76

 

 

                       0

 

 

                   210

 

 

                     32

 
Restructuring benefits (expenses)

 

841

 

 

0

 

 

900

 

 

124

 
Total operating expenses

 

              11,566

 

 

                8,631

 

 

              40,239

 

 

              34,587

 
OPERATING INCOME

 

                   379

 

 

 

                1,985

 

 

 

                   239

 

 

 

                3,340

 
Other (expense) income, net

 

                   (37

)

 

                 (110

)

 

                   (47

)

 

                   106

 
INCOME BEFORE INCOME TAXES

 

                   342

 

 

 

                1,875

 

 

 

                   192

 

 

 

                3,446

 
Expense for income taxes

 

                     22

 

 

                       4

 

 

                     39

 

 

                     29

 
NET INCOME

 $

                320

 

 

 $

             1,871

 

 

 $

                153

 

 

 $

             3,417

 
   
 Net Income per Share:   
Basic

 $

               0.02

 

 $

               0.10

 

 $

               0.01

 

 $

               0.19

 
Diluted

 $

               0.02

 

 $

               0.10

 

 $

               0.01

 

 $

               0.19

 
   
Weighted Average Shares:  
Basic

 

              17,899

 

 

              18,149

 

 

              18,017

 

 

              18,207

 
Diluted

 

              17,930

 

 

              18,297

 

 

              18,122

 

 

              18,399

 
   
Cash dividend per share

 $

             0.055

 

 $

             0.055

 

 $

             0.220

 

 $

             0.220

 
 
 
 
 
 

PCTEL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

 

 

 

 

 

 

 

Years Ended December 31,

.

 

2021

 

2020

Operating Activities:
Net income

$

153

 

$

3,417

 

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

 

3,027

 

 

3,019

 

Intangible asset amortization

 

267

 

 

144

 

Stock-based compensation

 

2,921

 

 

2,479

 

Loss on disposal of property and equipment

 

113

 

 

21

 

Restructuring costs

 

353

 

 

(29

)

Bad debt provision

 

(44

)

 

(151

)

Changes in operating assets and liabilities:
Accounts receivable

 

(896

)

 

960

 

Inventories

 

(2,481

)

 

2,076

 

Prepaid expenses and other assets

 

531

 

 

638

 

Accounts payable

 

14

 

 

1,086

 

Income taxes payable

 

3

 

 

(10

)

Other accrued liabilities

 

1,417

 

 

(231

)

Deferred revenue

 

295

 

 

1

 

Net cash provided by operating activities

 

5,673

 

 

13,420

 

Investing Activities:
Capital expenditures

 

(2,330

)

 

(4,093

)

Purchase of investments

 

(25,928

)

 

(49,701

)

Redemptions/maturities of short-term investments

 

38,588

 

 

47,035

 

Cash paid for acquisition, net of cash acquired

 

(6,277

)

 

0

 

Net cash provided by (used in) investing activities

 

4,053

 

 

(6,759

)

Financing Activities:
Proceeds from issuance of common stock

 

840

 

 

870

 

Proceeds from Paycheck Protection Program Loan

 

0

 

 

3,500

 

Repayment of Paycheck Protection Program Loan

 

0

 

 

(3,500

)

Payment of withholding tax on stock-based compensation

 

(786

)

 

(1,138

)

Principle payments on finance leases

 

(73

)

 

(78

)

Purchase of common stock from repurchase program

 

(3,193

)

 

(3,808

)

Cash dividends

 

(4,034

)

 

(4,108

)

Net cash used in financing activities

 

(7,246

)

 

(8,262

)

Net increase (decrease) in cash and cash equivalents

 

2,480

 

 

(1,601

)

Effect of exchange rate changes on cash

 

(49

)

 

268

 

Cash and cash equivalents, beginning of period

 

5,761

 

 

7,094

 

Cash and Cash Equivalents, End of Period

$

8,192

 

$

5,761

 

 
 
 
 

PCTEL, INC.

REVENUE AND GROSS PROFIT BY PRODUCT LINE (unaudited)

Reconciliation of GAAP Gross Margin percentage to Non-GAAP Gross Margin Percentage

($'s in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31, 2021

 

Year Ended December 31, 2021

 

 

Antennas and

Industrial IoT

Devices

 

Test &

Measurement

Products

 

Corporate

 

Total

 

Antennas and

Industrial IoT

Devices

 

Test &

Measurement

Products

 

Corporate

 

Total

REVENUES

$19,054

$7,164

($210)

$26,008

$63,025

$25,704

($922)

$87,807

 
GROSS PROFIT

$6,454

$5,535

($44)

$11,945

$21,031

$19,592

($145)

$40,478

 
GAAP GROSS PROFIT %

33.9%

77.3%

45.9%

33.4%

76.2%

46.1%

 
Non-GAAP adjustments:
Amortization of inventory step-up

0.4%

0.0%

0.3%

0.8%

0.0%

0.6%

Amortization of intangible assets

0.1%

0.0%

0.1%

0.1%

0.0%

0.1%

Stock compensation expenses

0.2%

0.6%

0.3%

0.0%

0.5%

0.3%

Non-GAAP GROSS PROFIT %

34.6%

77.9%

46.6%

34.2%

76.8%

47.0%

 
 

Three Months Ended December 31, 2020

 

Year Ended December 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Antennas and

Industrial IoT

Devices

 

Test &

Measurement

Products

 

Corporate

 

Total

 

Antennas and

Industrial IoT

Devices

 

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%

 
Non-GAAP adjustments:
Amortization of intangible assets

0.0%

0.0%

0.0%

0.0%

0.4%

0.1%

Stock compensation expenses

0.2%

0.4%

0.3%

0.3%

0.5%

0.4%

Non-GAAP GROSS PROFIT %

34.8%

72.1%

50.4%

35.2%

74.4%

49.5%

 

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 margin percentage to its Non-GAAP gross margin 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, stock compensation expenses, and the amortization of the inventory step-up to fair value related to the acquisition of Smarteq.

 
 
 
 
 

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,

 

 

 

2021

 

2020

 

2021

 

2020

Operating Income

$379

 

$1,985

 

$239

 

$3,340

 

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

78

 

0

 

493

 

0

 

Amortization of intangible assets:
-Cost of revenues

21

 

0

 

57

 

111

 

-Operating expenses

76

 

0

 

210

 

33

 

Restructuring expenses

841

 

0

 

900

 

124

 

Stock compensation expenses:
-Cost of revenues

82

 

65

 

268

 

272

 

-Research and development

159

 

128

 

543

 

530

 

-Sales & marketing

199

 

130

 

658

 

559

 

-General & administrative

451

 

161

 

1,452

 

1,118

 

Acquisition related expenses

18

 

0

 

611

 

0

 

1,925

 

484

 

5,192

 

2,747

 

Non-GAAP Operating Income

$2,304

 

$2,469

 

$5,431

 

$6,087

 

% of revenue

8.9

%

11.7

%

6.2

%

7.9

%

 

Reconciliation of GAAP net income to non-GAAP net income

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

Year Ended December 31,

 

 

 

2021

 

2020

 

2021

 

2020

Net Income

$320

 

$1,871

 

$153

 

$3,417

 

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

1,925

 

484

 

5,192

 

2,747

 

(b) Income Taxes

(159

)

(185

)

(392

)

(466

)

1,766

 

299

 

4,800

 

2,281

 

Non-GAAP Net Income

$2,086

 

$2,170

 

$4,953

 

$5,698

 

 
Non-GAAP Income per Share:
Basic

$0.12

 

$0.12

 

$0.27

 

$0.31

 

Diluted

$0.12

 

$0.12

 

$0.27

 

$0.31

 

 
Weighed Average Shares:
Basic

17,899

 

18,149

 

18,017

 

18,207

 

Diluted

17,930

 

18,297

 

18,170

 

18,399

 

 

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, amortization of intangible assets, amortization of the step-up to fair value of the inventory for Smarteq, restructuring expenses, and acquisition related expenses. 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 Expenses to Non-GAAP Operating expenses (unaudited)

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

Year Ended December 31,

 

 

2021

 

2020

 

2021

 

2020

GAAP Operating expenses

$11,566

 

$8,631

 

$40,239

 

$34,587

 

Stock compensation expenses

(809

)

(419

)

(2,653

)

(2,207

)

Amortization of intangible assets

(76

)

0

 

(210

)

(32

)

Restructuring benefits (expenses)

(841

)

0

 

(900

)

(124

)

Acquisition related expenses

(18

)

0

 

(611

)

0

 

Non-GAAP Operating expenses

$9,822

 

$8,212

 

$35,865

 

$32,224

 

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 to Adjusted EBITDA

(unaudited, in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

Year Ended December 31,

 

 

 

2021

 

2020

 

2021

 

2020

 
Operating Income

$379

 

$1,985

 

$239

 

$3,340

 

 
Add:
Amortization of inventory step-up to fair value

78

 

0

 

493

 

0

 

Depreciation and amortization

770

 

759

 

3,027

 

3,019

 

Intangible amortization

97

 

0

 

267

 

144

 

Restructuring benefits (expenses)

841

 

0

 

900

 

124

 

Stock compensation expenses

891

 

484

 

2,921

 

2,479

 

Acquisition related expenses

18

 

0

 

611

 

0

 

Adjusted EBITDA

$3,074

 

$3,228

 

$8,458

 

$9,106

 

% of revenue

11.8

%

15.2

%

9.6

%

11.8

%

 

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 and extraordinary expenses. The adjustments on this schedule consist of depreciation, amortization of intangible assets, stock compensation expenses, the amortization of inventory step up to fair value, restructuring expenses, and acquisition related 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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