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PCTEL Reports First Quarter Financial Results

PCTEL, Inc. (Nasdaq: PCTI) announced its results for the first quarter ended March 31, 2022.

Highlights

  • Revenue of $22.5 million in the first quarter, 27.3% higher compared to the first quarter 2021.
  • Gross profit margin of 41.4% in the first quarter compared to 47.1% in the first quarter 2021. The decline from the first quarter of 2021 is primarily due to a higher mix of antennas and Industrial IoT devices.
  • GAAP net loss per diluted share of $0.09 in the first quarter compared to net loss of $0.04 in the first quarter 2021. Restructuring expenses related to the manufacturing transition in China were $0.05 per share in the first quarter 2022.
  • 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 $0.02 in the first quarter compared to Non-GAAP net income per diluted share of $0.01 in the first quarter 2021.
    • Adjusted EBITDA as a percent of revenue of 4.9% in the first quarter compared to 4.8% in the first quarter 2021.
  • $27.7 million of cash and investments and $0.1 million of debt at March 31, 2022 compared to $30.8 million and $0.1 million of debt at December 31, 2021. Payments for restructuring expenses were $1.4 million in the first quarter 2022.

“We are pleased with our results in Q1 with 27% year-over-year growth in revenue, an increase in non-GAAP earnings per share, and a strong backlog. Our high quality and high-performance wireless products are necessary for critical applications that demand reliable connectivity,” said David Neumann, PCTEL’s CEO. “PCTEL has one of the broadest antenna and test and measurement portfolios to serve public safety, wireless carriers, rail, utility, agriculture and government customers. Our products combined with our engineering focus, strong distribution channels, and excellent customer service drive long term growth for all stakeholders.”

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 (877) 545-0523 (United States/Canada) or (973) 528-0016 (International), access code: 880538. 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), access code: 45313.

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 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 anticipated demand for certain products, including those related to public safety, Industrial IoT, 5G (e.g., the Gflex scanning receiver) 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 impact of the ongoing COVID-19 pandemic, 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; 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)

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

 

 

 

2022

 

 

 

2021

 

ASSETS
Cash and cash equivalents

$

5,107

 

$

8,192

 

Short-term investment securities

 

22,569

 

 

22,562

 

Accounts receivable, net of allowances of $49 and $64 at March 31, 2022 and

December 31, 2021, respectively

 

17,329

 

 

18,905

 

Inventories, net

 

12,852

 

 

13,691

 

Prepaid expenses and other assets

 

1,956

 

 

1,747

 

Total current assets

 

59,813

 

 

65,097

 

 
Property and equipment, net

 

11,490

 

 

11,949

 

Goodwill

 

6,220

 

 

6,334

 

Intangible assets, net

 

1,429

 

 

1,579

 

Other noncurrent assets

 

2,346

 

 

2,438

 

TOTAL ASSETS

$

81,298

 

$

87,397

 

LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable

$

4,013

 

$

5,360

 

Accrued liabilities

 

8,953

 

 

11,117

 

Total current liabilities

 

12,966

 

 

16,477

 

Long-term liabilities

 

3,820

 

 

3,999

 

Total liabilities

 

16,786

 

 

20,476

 

Stockholders’ equity:

Common stock, $0.001 par value, 50,000,000 shares authorized at

March 31, 2022 and December 31, 2021, respectively, and 18,453,698 and 18,238,030

shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively

 

18

 

 

18

 

Additional paid-in capital

 

123,379

 

 

123,998

 

Accumulated deficit

 

(58,299

)

 

(56,735

)

Accumulated other comprehensive loss

 

(586

)

 

(360

)

Total stockholders’ equity

 

64,512

 

 

66,921

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

81,298

 

$

87,397

 

 

PCTEL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31,

 

 

 

2022

 

 

 

2021

 

 
REVENUES

$

22,542

 

$

17,707

 

COST OF REVENUES

 

13,209

 

 

9,369

 

GROSS PROFIT

 

9,333

 

 

8,338

 

OPERATING EXPENSES:
Research and development

 

3,250

 

 

3,194

 

Sales and marketing

 

3,402

 

 

2,763

 

General and administrative

 

3,242

 

 

3,076

 

Amortization of intangible assets

 

71

 

 

0

 

Restructuring expenses

 

935

 

 

0

 

Total operating expenses

 

10,900

 

 

9,033

 

OPERATING LOSS

 

(1,567

)

 

(695

)

Other income, net

 

11

 

 

39

 

LOSS BEFORE INCOME TAXES

 

(1,556

)

 

(656

)

Expense for income taxes

 

8

 

 

6

 

NET LOSS

$

(1,564

)

$

(662

)

 
Net Loss per Share:
Basic

$

(0.09

)

$

(0.04

)

Diluted

$

(0.09

)

$

(0.04

)

 
Weighted Average Shares:
Basic

 

17,972

 

 

18,070

 

Diluted

 

17,972

 

 

18,070

 

 

PCTEL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(in thousands)

 

 

 

 

 

 

 

Three Months Ended March 31,

.

 

 

2022

 

 

 

2021

 

 
Operating Activities:
Net loss

$

(1,564

)

$

(662

)

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

 

781

 

 

742

 

Intangible asset amortization

 

91

 

 

0

 

Stock-based compensation

 

774

 

 

618

 

Loss on disposal of property and equipment

 

0

 

 

3

 

Restructuring costs

 

(368

)

 

(15

)

Bad debt provision

 

(3

)

 

(11

)

Changes in operating assets and liabilities:
Accounts receivable

 

1,530

 

 

1,999

 

Inventories

 

772

 

 

259

 

Prepaid expenses and other assets

 

(145

)

 

215

 

Accounts payable

 

(1,299

)

 

(2,061

)

Income taxes payable

 

41

 

 

6

 

Other accrued liabilities

 

(2,027

)

 

554

 

Deferred revenue

 

87

 

 

7

 

Net cash (used in) provided by operating activities

 

(1,330

)

 

1,654

 

Investing Activities:
Capital expenditures

 

(320

)

 

(354

)

Purchase of short-term investments

 

(8,194

)

 

(5,953

)

Redemptions/maturities of short-term investments

 

8,187

 

 

13,407

 

Net cash (used in) provided by investing activities

 

(327

)

 

7,100

 

Financing Activities:
Proceeds from issuance of common stock

 

0

 

 

8

 

Payment of withholding tax on stock-based compensation

 

(392

)

 

(659

)

Principal payments on finance leases

 

(19

)

 

(16

)

Purchase of common stock from repurchase program

 

0

 

 

(31

)

Cash dividends

 

(1,001

)

 

(1,011

)

Net cash used in financing activities

 

(1,412

)

 

(1,709

)

 
Net (decrease) increase in cash and cash equivalents

 

(3,069

)

 

7,045

 

Effect of exchange rate changes on cash

 

(16

)

 

(10

)

Cash and cash equivalents, beginning of period

 

8,192

 

 

5,761

 

Cash and Cash Equivalents, End of Period

$

5,107

 

$

12,796

 

 

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 March 31, 2022

Antennas and

Industrial IoT

Devices

Test &

Measurement

Products

Corporate

Total

REVENUES

$

17,102

 

$

5,583

 

($143

)

$

22,542

 

 
GROSS PROFIT

$

5,247

 

$

4,162

 

($76

)

$

9,333

 

 
GAAP GROSS PROFIT %

 

30.7

%

 

74.5

%

 

41.4

%

 
Non-GAAP adjustments:
Amortization of intangible assets

 

0.1

%

 

0.0

%

 

0.1

%

Stock compensation expenses

 

0.2

%

 

0.6

%

 

0.3

%

Non-GAAP GROSS PROFIT %

 

31.0

%

 

75.2

%

 

41.8

%

 
Three Months Ended March 31, 2021
 

Antennas and

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

%

 
Non-GAAP adjustments:
Amortization of intangible assets

 

0.0

%

 

0.0

%

 

0.0

%

Stock compensation expenses

 

0.3

%

 

0.6

%

 

0.4

%

Non-GAAP GROSS PROFIT %

 

32.3

%

 

74.5

%

 

47.5

%

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 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 loss to Non-GAAP operating income

 

 

 

 

 

 

 

 

 

Three Months Ended

March 31,

 

 

 

2022

 

2021

Operating Loss

($1,567

)

($695

)

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

20

 

0

 

-Operating expenses

71

 

0

 

Restructuring expenses

935

 

0

 

Stock compensation expenses:
-Cost of revenues

65

 

69

 

-Research and development

136

 

142

 

-Sales & marketing

197

 

160

 

-General & administrative

376

 

247

 

Acquisition related expenses

86

 

183

 

1,886

 

801

 

Non-GAAP Operating Income

$319

 

$106

 

% of revenue

1.4

%

0.6

%

 

Reconciliation of GAAP net loss to Non-GAAP net income

 

Three Months Ended

March 31,

2022

2021

Net Loss

($1,564

)

($662

)

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

1,886

 

801

 

(b) Income Taxes

(18

)

(6

)

1,868

 

795

 

Non-GAAP Net Income

$304

 

$133

 

 
Non-GAAP Income per Share:
Basic

$0.02

 

$0.01

 

Diluted

$0.02

 

$0.01

 

 
Weighed Average Shares:
Basic

17,972

 

18,070

 

Diluted

17,972

 

18,191

 

This schedule reconciles the Company's GAAP operating 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.

To present results consistently, the reconciliation related to the three months ended March 31, 2021 was modified to include the acquisition related expenses.

The adjustments to GAAP operating loss (a) consist of stock compensation expense, amortization of intangible assets, 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 March 31,

 

2022

 

 

2021

 

 
GAAP operating expenses

$

10,900

 

$

9,033

 

Stock compensation expenses

 

(709

)

 

(549

)

Amortization of intangible assets

 

(71

)

 

0

 

Restructuring expenses

 

(935

)

 

0

 

Acquisition related expenses

 

(86

)

 

(183

)

Non-GAAP Operating expenses

$

9,099

 

$

8,301

 

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 loss to adjusted EBITDA (unaudited)
(in thousands)
 
Three Months Ended March 31,

2022

2021

 
Operating Loss

($1,567

)

($695

)

 
Add:
Depreciation and amortization

781

 

742

 

Intangible amortization

91

 

0

 

Restructuring expenses

935

 

0

 

Stock compensation expenses

774

 

618

 

Acquisition related expenses

86

 

183

 

Adjusted EBITDA

$1,100

 

$848

 

% of revenue

4.9

%

4.8

%

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.

To present results consistently, the reconciliation related to the three months ended March 31, 2021 was modified to include the acquisition related expenses.

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.

Contacts

Kevin McGowan

CFO

PCTEL, Inc.

(630) 339-2051

Suzanne Cafferty

Vice President, Product Management & Global Marketing

PCTEL, Inc.

(630) 339-2107

public.relations@pctel.com

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