Sales of $13.1 Million and Gross Margin of
46%
Airgain, Inc. (NASDAQ: AIRG), a leading provider of advanced
antenna technologies used to enable high performance wireless
networking across a broad range of devices and markets, including
consumer, enterprise, and automotive, today announced sales of
$13.1 million for the third quarter 2019 and GAAP net loss of
$(0.1) million or GAAP diluted earnings per share of $(0.01).
Third Quarter 2019 Financial Highlights
- Sales of $13.1 million
- Gross margin of 46%
- Net loss of $(0.1) million
- GAAP earnings per diluted share of $(0.01)
- Non-GAAP earnings per diluted share of $0.05
- Adjusted EBITDA of $0.6 million
“We are very pleased with our third quarter 2019 results with
GAAP and non-GAAP diluted earnings per share of $(0.01) and $0.05,
respectively, on the high-end of our prior expectations of
$(0.09)-$0.00 on a GAAP basis and $(0.04)-$0.05 on a non-GAAP
basis,” said Airgain’s Chief Executive Officer and President, Jacob
Suen. “Our efforts over the past several quarters around
operational and manufacturing efficiencies culminated in another
strong quarter of gross margins at 46%, above our long-term target
goal of 44% to 45%. Our customers continue to engage us with
next-generation solutions for complex antennas across the Consumer,
Enterprise, and Automotive markets. Additionally on the 5G front,
we are witnessing increased customer engagement at our five global
R&D centers. Over the next several quarters we expect to
benefit from these new engagements and strongly believe that
Airgain will continue to be a leading solution provider for complex
antenna designs.
“Similar to last quarter we continue to witness the impacts of
macro headwinds and customer-specific issues as customers take
longer than expected to ramp their programs. While these have
affected our recent growth, as we enter into 2020, we hope these
issues are resolved favorably.”
Third Quarter 2019 Financial Results
Sales decreased 17% to $13.1 million compared to $15.8 million
in the same year-ago period. The decrease in sales was primarily
driven by a combination of macro headwinds and customer-specific
headwinds that resulted in longer than expected delays in program
ramps.
Gross profit decreased 12% to $6.1 million from $6.9 million in
the same year-ago period. Gross margin as a percentage of sales was
46% in the third quarter of 2019, which increased from 43% in the
same year-ago period, largely due to product mix.
Total operating expenses for the third quarter of 2019 decreased
4% to $6.3 million from $6.6 million in the same year-ago period.
The decrease was primarily due to decreases in personnel and
marketing related expenses.
Net loss totaled $(0.1) million or $(0.01) per diluted share
(based on 9.7 million shares), compared to net income of $0.4
million or $0.04 per diluted share (based on 10.1 million shares)
in the same year-ago period. Non-GAAP net income totaled $0.5
million or $0.05 per diluted share (based on 10.0 million shares),
compared to non-GAAP net income of $0.9 million or $0.09 per
diluted share (based on 10.1 million shares) in the same year-ago
period (see note regarding "Use of Non-GAAP Financial Measures,"
below for further discussion of this non-GAAP measure).
Adjusted EBITDA (earnings before interest, taxes, depreciation,
amortization, other income, and stock-based compensation) decreased
to $0.6 million from Adjusted EBITDA of $1.0 million in the same
year-ago period (see note regarding "Use of Non-GAAP Financial
Measures," below for further discussion of this non-GAAP
measure).
Financial Outlook
The company expects sales in the 2019 fourth quarter to be in
the range of $13.0 million to $13.5 million. The following table
summarizes the reconciliation between the projected GAAP EPS and
non-GAAP EPS for the 2019 fourth quarter:
Reconciliation of projected
GAAP to projected non-GAAP EPS
Low (1)
High (1)
Projected GAAP earnings per diluted
share
$
(0.03
)
$
(0.02
)
Stock-based compensation expense
0.06
0.06
Amortization
0.02
0.02
Other income
(0.01
)
(0.01
)
Projected Non-GAAP earnings per diluted
share
$
0.04
$
0.05
(1)
Amounts are based off of 10.1 million
diluted shares outstanding.
Conference Call
Airgain management will hold a conference call today Thursday,
November 7, 2019 at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time)
to discuss financial results for the third quarter ended September
30, 2019, and to provide an update on business conditions.
Airgain management will host the presentation, followed by a
question and answer period.
Date: Thursday, November 7, 2019 Time: 4:30 p.m. Eastern Time
(1:30 p.m. Pacific Time) U.S. dial-in: 877-703-1550 International
dial-in: 647-689-5628 Conference ID: 4468106
Please call the conference telephone number ten minutes prior to
the start time. An operator will register your name and
organization. If you have any difficulty connecting with the
conference call, please contact Airgain at 1-760-579-0200.
The conference call will be broadcast live and available for
replay in the investor relations section of the company's
website.
A replay of the call will be available after 6:30 p.m. Eastern
Time on the same day through December 7, 2019.
U.S. replay dial-in: 800-585-8367 or 416-621-4642 Replay ID:
4468106
About Airgain, Inc.
Airgain is a leading provider of advanced antenna technologies
used to enable high performance wireless networking across a broad
range of devices and markets, including consumer, enterprise, and
automotive. Combining design-led thinking with testing and
development, Airgain works in partnership with the entire
ecosystem, including carriers, chipset suppliers, OEMs, and ODMs.
Airgain’s antennas are deployed in carrier, fleet, enterprise,
residential, private, government, and public safety wireless
networks and systems, including set-top boxes, access points,
routers, modems, gateways, media adapters, portables, digital
televisions, sensors, fleet, and asset tracking devices. Airgain is
headquartered in San Diego, California, and maintains design and
test centers in the U.S., U.K., and China. For more information,
visit airgain.com, or follow us on LinkedIn and Twitter.
Airgain and the Airgain logo are registered trademarks of
Airgain, Inc.
Forward-Looking Statements
Airgain cautions you that statements in this press release that
are not a description of historical facts are forward-looking
statements. These statements are based on the company's current
beliefs and expectations. These forward-looking statements include
statements regarding potential for macro headwinds and
customer-specific issues to resolve favorably in 2020 and Airgain
returning to historical growth rates, and our fourth quarter
financial outlook. The inclusion of forward-looking statements
should not be regarded as a representation by Airgain that any of
our plans will be achieved. Actual results may differ from those
set forth in this press release due to the risk and uncertainties
inherent in our business, including, without limitation: the market
for our antenna products is developing and may not develop as we
expect; our operating results may fluctuate significantly,
including based on seasonal factors and changing and volatile U.S.,
European, Asian and global economic environments, which makes
future operating results difficult to predict and could cause our
operating results to fall below expectations or guidance; our
products are subject to intense competition, including competition
from the customers to whom we sell, and competitive pressures from
existing and new companies may harm our business, sales, growth
rates and market share; our future success depends on our ability
to develop and successfully introduce new and enhanced products for
the wireless market that meet the needs of our customers; our
ability to identify and consummate strategic acquisitions and
partnerships and risks associated with completed acquisitions and
partnerships adversely affecting our operating results and
financial condition; we sell to customers who are extremely price
conscious, and a few customers represent a significant portion of
our sales, and if we lose any of these customers, our sales could
decrease significantly; we rely on a few contract manufacturers to
produce and ship all of our products, a single or limited number of
suppliers for some components of our products and channel partners
to sell and support our products, and the failure to manage our
relationships with these parties successfully could adversely
affect our ability to market and sell our products; if we cannot
protect our intellectual property rights, our competitive position
could be harmed or we could incur significant expenses to enforce
our rights; and other risks described in our prior press releases
and in our filings with the Securities and Exchange Commission
(SEC), including under the heading "Risk Factors" in our Annual
Report on Form 10-K and any subsequent filings with the SEC. You
are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof, and we
undertake no obligation to revise or update this press release to
reflect events or circumstances after the date hereof. All
forward-looking statements are qualified in their entirety by this
cautionary statement, which is made under the safe harbor
provisions of the Private Securities Litigation Reform Act of
1995.
Note Regarding Use of Non-GAAP Financial Measures
To supplement our condensed financial statements presented in
accordance with U.S. generally accepted accounting principles
(GAAP), this earnings release and the accompanying tables and the
related earnings conference call contain certain non-GAAP financial
measures, including adjusted earnings before interest, taxes,
depreciation, amortization (Adjusted EBITDA), non-GAAP net income
(loss) and non-GAAP earnings per diluted share (non-GAAP EPS). We
believe these financial measures provide useful information to
investors with which to analyze our operating trends and
performance.
In computing Adjusted EBITDA, non-GAAP net income (loss), and
non-GAAP EPS, we also exclude stock-based compensation expense,
which represents non-cash charges for the fair value of stock
options and other non-cash awards granted to employees,
non-recurring expenses, other income, which includes interest
income offset by interest expense, depreciation, amortization, and
provision for income taxes. Because of varying available valuation
methodologies, subjective assumptions, and the variety of equity
instruments that can impact a company's non-cash operating
expenses, we believe that providing non-GAAP financial measures
that exclude non-cash expense allows for meaningful comparisons
between our core business operating results and those of other
companies, as well as providing us with an important tool for
financial and operational decision-making and for evaluating our
own core business operating results over different periods of
time.
Our Adjusted EBITDA, non-GAAP net income (loss), and non-GAAP
EPS measures may not provide information that is directly
comparable to that provided by other companies in our industry, as
other companies in our industry may calculate non-GAAP financial
results differently, particularly related to non-recurring, unusual
items. Our Adjusted EBITDA, non-GAAP Net income (loss), and
non-GAAP EPS are not measurements of financial performance under
GAAP, and should not be considered as an alternative to operating
or net income or as an indication of operating performance or any
other measure of performance derived in accordance with GAAP. We do
not consider these non-GAAP measures to be a substitute for, or
superior to, the information provided by GAAP financial results. A
reconciliation of specific adjustments to GAAP results is provided
in the last two tables at the end of this press release.
Airgain, Inc.
Unaudited Condensed Balance
Sheets
(in thousands, except per
share data)
September 30, 2019
December 31, 2018
Assets
Current assets:
Cash and cash equivalents
$
12,871
$
13,621
Short term investments
21,001
20,169
Trade accounts receivable
8,564
7,013
Inventory
1,265
1,351
Prepaid expenses and other current
assets
1,386
931
Total current assets
45,087
43,085
Property and equipment, net
1,791
1,401
Goodwill
3,700
3,700
Customer relationships, net
3,231
3,593
Intangible assets, net
730
859
Other assets
601
269
Total assets
$
55,140
$
52,907
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable
$
4,447
$
4,137
Accrued bonus
1,402
2,076
Accrued liabilities
1,461
1,217
Current portion of deferred rent
obligation under operating lease
127
81
Total current liabilities
7,437
7,511
Deferred tax liability
38
38
Deferred rent obligation under operating
lease
46
211
Total liabilities
7,521
7,760
Stockholders’ equity:
Common shares, par value $0.0001, 200,000
shares authorized; 10,117 shares issued and 9,697 shares
outstanding at September 30, 2019; and 9,958 shares issued and
9,601 shares outstanding at December 31, 2018.
1
1
Additional paid in capital
95,967
93,583
Treasury stock, at cost: 420 shares and
357 shares at September 30, 2019 and December 31, 2018,
respectively
(4,231
)
(3,432
)
Accumulated other comprehensive income
(loss)
13
(11
)
Accumulated deficit
(44,131
)
(44,994
)
Total stockholders’ equity
47,619
45,147
Commitments and contingencies (note
12)
Total liabilities and stockholders’
equity
$
55,140
$
52,907
Airgain, Inc.
Unaudited Condensed Statements
of Operations
(in thousands, except per
share data)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Sales
$
13,142
$
15,787
$
42,713
$
44,064
Cost of goods sold
7,067
8,922
23,167
24,403
Gross profit
6,075
6,865
19,546
19,661
Operating expenses:
Research and development
2,403
2,475
6,944
7,162
Sales and marketing
1,461
2,161
5,964
9,140
General and administrative
2,416
1,922
6,168
7,864
Total operating expenses
6,280
6,558
19,076
24,166
Income (loss) from operations
(205
)
307
470
(4,505
)
Other expense (income):
Interest income
(183
)
(159
)
(559
)
(398
)
Gain on deferred purchase price
liability
—
—
—
(389
)
Interest expense
—
6
1
30
Total other income
(183
)
(153
)
(558
)
(757
)
Income (loss) before income taxes
(22
)
460
1,028
(3,748
)
Provision for income taxes
113
23
165
110
Net income (loss)
$
(135
)
$
437
$
863
$
(3,858
)
Net income (loss) per share:
Basic
$
(0.01
)
$
0.05
$
0.09
$
(0.41
)
Diluted
$
(0.01
)
$
0.04
$
0.09
$
(0.41
)
Weighted average shares used in
calculating income (loss) per share:
Basic
9,711
9,566
9,678
9,495
Diluted
9,711
10,093
10,083
9,495
Airgain, Inc.
Unaudited Condensed Statements
of Cash Flows
(in thousands)
Nine Months Ended September
30,
2019
2018
Cash flows from operating
activities:
Net income (loss)
$
863
$
(3,858
)
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Depreciation
373
423
Amortization
491
508
Amortization of discounts on investments,
net
(248
)
(94
)
Stock-based compensation
1,605
2,536
Deferred tax liability
—
22
Gain on deferred purchase price
liability
—
(389
)
Changes in operating assets and
liabilities:
Trade accounts receivable
(1,551
)
667
Inventory
86
(476
)
Prepaid expenses and other assets
(500
)
(256
)
Accounts payable
305
36
Accrued bonus
(674
)
154
Accrued liabilities
244
(426
)
Deferred obligation under operating
lease
(119
)
(88
)
Net cash provided by (used in) operating
activities
875
(1,241
)
Cash flows from investing
activities:
Purchases of available-for-sale
securities
(30,080
)
(24,329
)
Maturities of available-for-sale
securities
29,520
26,956
Purchases of property and equipment
(1,045
)
(752
)
Net cash provided by (used in) investing
activities
(1,605
)
1,875
Cash flows from financing
activities:
Repayment of notes payable
—
(1,000
)
Payment on deferred purchase price
liability
—
(375
)
Repurchases of common stock
(799
)
(1,837
)
Proceeds from issuance of common stock
779
617
Net cash used in financing activities
(20
)
(2,595
)
Net decrease in cash and cash
equivalents
(750
)
(1,961
)
Cash and cash equivalents, beginning of
period
13,621
15,026
Cash and cash equivalents, end of
period
$
12,871
$
13,065
Supplemental disclosure of cash flow
information:
Interest paid
$
1
$
34
Taxes paid
$
54
$
26
Supplemental disclosure of non-cash
investing and financing activities:
Accrual of property and equipment
$
4
$
—
Airgain, Inc.
Unaudited Reconciliation of
GAAP to non-GAAP Net Income (Loss)
(in thousands, except per
share data)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Net income (loss)
$
(135
)
$
437
$
863
$
(3,858
)
Stock-based compensation expense
549
408
1,605
2,536
Amortization
163
170
491
508
Non-recurring item (1)
—
—
—
1,956
Other income
(183
)
(153
)
(558
)
(757
)
Provision for income taxes
113
23
165
110
Non-GAAP net income attributable to common
stockholders
$
507
$
885
$
2,566
$
495
Non-GAAP net income per share:
Basic
$
0.05
$
0.09
$
0.27
$
0.05
Diluted
$
0.05
$
0.09
$
0.25
$
0.05
Weighted average shares used in
calculating non-GAAP income per share:
Basic
9,711
9,566
9,678
9,495
Diluted
10,041
10,093
10,083
9,966
Airgain, Inc.
Unaudited Reconciliation of
Net Income (Loss) to Adjusted EBITDA
(in thousands)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Net income (loss)
$
(135
)
$
437
$
863
$
(3,858
)
Stock-based compensation expense
549
408
1,605
2,536
Depreciation and amortization
268
327
864
931
Non-recurring item (1)
—
—
—
1,956
Interest and other income
(183
)
(153
)
(558
)
(757
)
Provision for income taxes
113
23
165
110
Adjusted EBITDA
$
612
$
1,042
$
2,939
$
918
(1)
Non-recurring items include $2.0 million
in executive severance and sales and marketing realignment for the
nine months ended September 30, 2018.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191107006047/en/
Company Contact Anil Doradla, CFO
investors@airgain.com
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