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PCTEL Reports Second Quarter Financial Results

PCTEL, Inc. (Nasdaq: PCTI) announced its results for the second quarter ended June 30, 2021.

Highlights

  • Revenue of $21.7 million in the second quarter, 9.3% higher compared to the second quarter 2020 and $4.0 million higher compared to the first quarter 2021.
  • Gross profit margin of 45.9% in the second quarter, down 2.1% compared to the gross profit margin in the second quarter 2020. The gross profit percentage decline in the second quarter is primarily due to a higher mix of antennas and Industrial IoT devices.
  • GAAP net income per diluted share of ($0.01) in the second quarter compared to $0.07 in the second 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 $0.07 in the second quarter compared to Non-GAAP net income per diluted share of $0.11 in the second quarter 2020.
    • Adjusted EBITDA as a percent of revenue of 10.2% in the second quarter compared to 14.4% in the second quarter 2020.
  • $33.4 million of cash and investments and $0.1 million of debt at June 30, 2021 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. “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 design 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: 592274. 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: 42253.

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; 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)
 
June 30, December 31,

2021

2020

ASSETS
Cash and cash equivalents

$

8,425

 

 

$

5,761

 

Short-term investment securities

 

25,002

 

 

 

30,582

 

Accounts receivable, net of allowances of $80 and $113 at June 30, 2021 and December 31, 2020, respectively

 

16,786

 

 

 

16,601

 

Inventories, net

 

12,391

 

 

 

9,984

 

Prepaid expenses and other assets

 

1,583

 

 

 

1,685

 

Total current assets

 

64,187

 

 

 

64,613

 

 

 

 

Property and equipment, net

 

12,390

 

 

 

12,505

 

Long-term investment securities

 

0

 

 

 

4,640

 

Goodwill

 

6,522

 

 

 

3,332

 

Intangible assets, net

 

1,873

 

 

 

0

 

Other noncurrent assets

 

2,573

 

 

 

2,441

 

TOTAL ASSETS

$

87,545

 

 

$

87,531

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Accounts payable

$

4,723

 

 

$

4,430

 

Accrued liabilities

 

9,454

 

 

 

7,316

 

Total current liabilities

 

14,177

 

 

 

11,746

 

Long-term liabilities

 

4,345

 

 

 

4,387

 

Total liabilities

 

18,522

 

 

 

16,133

 

Stockholders’ equity:

 

 

 

Common stock, $0.001 par value, 50,000,000 shares authorized at June 30, 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

 

126,791

 

 

 

128,250

 

Accumulated deficit

 

(57,719

)

 

 

(56,888

)

Accumulated other comprehensive income

 

(68

)

 

 

18

 

Total stockholders’ equity

 

69,023

 

 

 

71,398

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

87,545

 

 

$

87,531

 

PCTEL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except per share data)
 
Three Months Ended Six Months Ended
June 30, June 30,

2021

2020

2021

2020

 
REVENUES

$

21,681

 

 

$

19,842

 

$

39,388

 

 

$

37,348

COST OF REVENUES

 

11,739

 

 

 

10,321

 

 

21,108

 

 

 

19,612

GROSS PROFIT

 

9,942

 

 

 

9,521

 

 

18,280

 

 

 

17,736

OPERATING EXPENSES:

 

 

 

 

 

 

 

Research and development

 

3,221

 

 

 

3,070

 

 

6,416

 

 

 

6,099

Sales and marketing

 

3,388

 

 

 

2,397

 

 

6,151

 

 

 

5,539

General and administrative

 

3,335

 

 

 

2,945

 

 

6,411

 

 

 

5,747

Amortization of intangible assets

 

55

 

 

 

0

 

 

55

 

 

 

33

Restructuring expenses

 

60

 

 

 

11

 

 

60

 

 

 

98

Total operating expenses

 

10,059

 

 

 

8,423

 

 

19,093

 

 

 

17,516

OPERATING (LOSS) INCOME

 

(117

)

 

 

1,098

 

 

(813

)

 

 

220

Other (expense) income, net

 

(45

)

 

 

102

 

 

(6

)

 

 

300

(LOSS) INCOME BEFORE INCOME TAXES

 

(162

)

 

 

1,200

 

 

(819

)

 

 

520

Expense for income taxes

 

7

 

 

 

8

 

 

12

 

 

 

16

NET (LOSS) INCOME

$

(169

)

 

$

1,192

 

$

(831

)

 

$

504

 

 

 

 

 

 

 

Net (Loss) Income per Share:

 

 

 

 

 

 

 

Basic

$

(0.01

)

 

$

0.07

 

$

(0.05

)

 

$

0.03

Diluted

$

(0.01

)

 

$

0.07

 

$

(0.05

)

 

$

0.03

 

 

 

 

 

 

 

Weighted Average Shares:

 

 

 

 

 

 

 

Basic

 

18,241

 

 

 

18,159

 

 

18,158

 

 

 

18,180

Diluted

 

18,241

 

 

 

18,214

 

 

18,158

 

 

 

18,352

 

 

 

 

 

 

 

Cash dividend per share

$

0.055

 

 

$

0.055

 

$

0.110

 

 

$

0.110

PCTEL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
 
Six Months Ended June 30,
.

2021

2020

 
Operating Activities:
Net (loss) income

$

(831

)

 

$

504

 

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

 

 

 

Depreciation and amortization

 

1,493

 

 

 

1,502

 

Intangible asset amortization

 

70

 

 

 

144

 

Stock-based compensation

 

1,657

 

 

 

1,563

 

Loss on disposal of property and equipment

 

3

 

 

 

7

 

Restructuring costs

 

45

 

 

 

(28

)

Bad debt provision

 

(34

)

 

 

(110

)

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

 

1,260

 

 

 

2,065

 

Inventories

 

(1,121

)

 

 

882

 

Prepaid expenses and other assets

 

532

 

 

 

871

 

Accounts payable

 

(630

)

 

 

810

 

Income taxes payable

 

(18

)

 

 

16

 

Other accrued liabilities

 

624

 

 

 

(1,167

)

Deferred revenue

 

63

 

 

 

19

 

Net cash provided by operating activities

 

3,113

 

 

 

7,078

 

Investing Activities:

 

 

 

Capital expenditures

 

(1,266

)

 

 

(2,418

)

Purchase of investments

 

(16,058

)

 

 

(26,323

)

Redemptions/maturities of short-term investments

 

26,278

 

 

 

25,781

 

Cash paid for acquisition, net of cash acquired

 

(6,277

)

 

 

0

 

Net cash provided by (used in) investing activities

 

2,677

 

 

 

(2,960

)

Financing Activities:

 

 

 

Proceeds from issuance of common stock

 

418

 

 

 

496

 

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

 

(782

)

 

 

(1,106

)

Principle payments on finance leases

 

(35

)

 

 

(41

)

Purchase of common stock from repurchase program

 

(733

)

 

 

(2,000

)

Cash dividends

 

(2,018

)

 

 

(2,054

)

Net cash used in financing activities

 

(3,150

)

 

 

(4,705

)

 

 

 

Net increase (decrease) in cash and cash equivalents

 

2,640

 

 

 

(587

)

Effect of exchange rate changes on cash

 

24

 

 

 

(49

)

Cash and cash equivalents, beginning of period

 

5,761

 

 

 

7,094

 

Cash and Cash Equivalents, End of Period

$

8,425

 

 

$

6,458

 

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 June 30, 2021 Six Months Ended June 30, 2021
Antennas and

Industrial IoT

Devices
Test &

Measurement

Products
Corporate Total Antennas and

Industrial IoT

Devices
Test &

Measurement

Products
Corporate Total
REVENUES

$15,562

 

$6,414

 

($295)

 

$21,681

 

$27,285

 

$12,619

 

($516)

 

$39,388

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GROSS PROFIT

$5,175

 

$4,834

 

($67)

 

$9,942

 

$8,922

 

$9,422

 

($64)

 

$18,280

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP GROSS PROFIT %

33.3%

 

75.4%

 

 

 

45.9%

 

32.7%

 

74.7%

 

 

 

46.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of inventory step-up

1.8%

 

0.0%

 

 

 

1.3%

 

0.0%

 

0.0%

 

 

 

0.7%

Amortization of intangible assets

0.1%

 

0.0%

 

 

 

0.1%

 

0.0%

 

0.0%

 

 

 

0.0%

Stock compensation expenses

0.2%

 

0.5%

 

 

 

0.3%

 

0.2%

 

0.5%

 

 

 

0.3%

Non-GAAP GROSS PROFIT %

35.4%

 

75.9%

 

 

 

47.5%

 

32.9%

 

75.2%

 

 

 

47.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2020

 

Six Months Ended June 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Antennas and

Industrial IoT

Devices

 

Test &

Measurement

Products

 

Corporate

 

Total

 

Antennas and

Industrial IoT

Devices

 

Test &

Measurement

Products

 

Corporate

 

Total
REVENUES

$13,910

 

$6,118

 

($186)

 

$19,842

 

$25,370

 

$12,201

 

($223)

 

$37,348

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GROSS PROFIT

$4,973

 

$4,609

 

($61)

 

$9,521

 

$8,892

 

$8,905

 

($61)

 

$17,736

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GROSS PROFIT %

35.8%

 

75.3%

 

 

 

48.0%

 

35.0%

 

73.0%

 

 

 

47.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

0.0%

 

0.0%

 

 

 

0.0%

 

0.0%

 

0.9%

 

 

 

0.3%

Stock compensation expenses

0.3%

 

0.6%

 

 

 

0.4%

 

0.3%

 

0.6%

 

 

 

0.4%

Non-GAAP GROSS PROFIT %

36.0%

 

76.0%

 

 

 

48.4%

 

35.3%

 

74.5%

 

 

 

48.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 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 amortizaion 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 (loss) to non-GAAP operating loss
 
Three Months Ended June 30, Six Months Ended June 30,

2021

 

2020

 

2021

 

2020

 

Operating Income (Loss)

($117

)

$1,098

 

($813

)

$220

 

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

283

 

0

 

283

 

0

 

Amortization of intangible assets:
-Cost of revenues

15

 

0

 

15

 

111

 

-Operating expenses

55

 

0

 

55

 

33

 

Restructuring

60

 

11

 

60

 

98

 

Stock compensation expenses:
-Cost of revenues

65

 

74

 

134

 

146

 

-Research and development

140

 

145

 

282

 

282

 

-Sales & marketing

226

 

164

 

386

 

314

 

-General & administrative

608

 

618

 

855

 

821

 

Acquisition related expenses

121

 

0

 

304

 

0

 

1,573

 

1,012

 

2,374

 

1,805

 

Non-GAAP Operating Income

$1,456

 

$2,110

 

$1,561

 

$2,025

 

% of revenue

6.7

%

10.6

%

4.0

%

5.4

%

 
Reconciliation of GAAP net loss to non-GAAP net (loss) income
 
Three Months Ended June 30, Six Months Ended June 30,

2021

 

2020

 

2021

 

2020

 

Net Income (Loss)

($169

)

$1,192

 

($831

)

$504

 

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

1,573

 

1,012

 

2,374

 

1,805

 

(b) Income Taxes

(106

)

(169

)

(112

)

(170

)

1,467

 

843

 

2,262

 

1,635

 

Non-GAAP Net Income

$1,298

 

$2,035

 

$1,431

 

$2,139

 

 
Non-GAAP Income per Share:
Basic

$0.07

 

$0.11

 

$0.08

 

$0.12

 

Diluted

$0.07

 

$0.11

 

$0.08

 

$0.12

 

 
Weighed Average Shares:
Basic

18,241

 

18,159

 

18,158

 

18,180

 

Diluted

18,241

 

18,214

 

18,158

 

18,352

 

 

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, amortization of the step-up to fair value of the inventory for Smarteq, and acquisition related expenses. The adjustments to GAAP Net Income (Loss) include the non-GAAP adjustments to operating income (loss) 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 June 30, Six Months Ended June 30,

2021

 

2020

 

2021

 

2020

 

 
GAAP Operating expenses

10,059

 

8,423

 

19,093

 

17,516

 

Stock compensation expenses

(974

)

(927

)

(1,523

)

(1,417

)

Amortization of intangible assets

(55

)

0

 

(55

)

(33

)

Restructuring expenses

(60

)

(11

)

(60

)

(98

)

Acquisition related expenses

(121

)

0

 

(304

)

0

 

Non-GAAP Operating expenses

8,849

 

7,485

 

17,151

 

15,968

 

 
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) income to Adjusted EBITDA
(unaudited, in thousands)
 

Three Months Ended June 30,

Six Months Ended June 30,

2021

 

2020

 

2021

 

2020

 

 
Operating (Loss) Income

($117

)

$1,098

 

($813

)

$220

 

 
Add:
Amortization of inventory step-up to fair value

283

 

0

 

283

 

0

 

Depreciation and amortization

751

 

754

 

1,493

 

1,502

 

Intangible amortization

70

 

0

 

70

 

144

 

Restructuring expenses

60

 

11

 

60

 

98

 

Stock compensation expenses

1,039

 

1,001

 

1,657

 

1,563

 

Acquisition related expenses

121

 

0

 

304

 

0

 

Adjusted EBITDA

$2,207

 

$2,864

 

$3,054

 

$3,527

 

% of revenue

10.2

%

14.4

%

7.8

%

9.4

%

 
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, the amortization of inventory step up to fair value, restructuring and acquisition related expenses.

 

Contacts

Kevin McGowan

CFO

PCTEL, Inc.

(630) 339-2051

Suzanne Cafferty

Vice President, Global Marketing

PCTEL, Inc.

(630) 339-2107

public.relations@pctel.com

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