PCTI PCTEL Inc

Raises Annual Guidance to $114 Million

PCTEL, Inc. (NASDAQ:PCTI), a leader in simplifying wireless and site solutions for private and public networks, announced its 2014 first quarter results.

First Quarter Highlights

• $23.7 million in revenue for the quarter, a decrease of six percent from the same period last year.
• Gross profit margin of 41 percent in the quarter, compared to 38 percent in the same period last year.
• GAAP operating margin from continuing operations of negative two (2) percent for the quarter, compared to operating margin of negative five (5) percent for the same period last year.
• GAAP net loss from continuing operations of $(146,000) for the quarter, or $(0.01) per diluted share, compared to net income of $2.0 million from continuing operations, or $0.11 per diluted share for the same period last year. Net income for the first quarter last year included a one-time gain from a legal settlement net of expenses of $0.11 per diluted share.
• Non-GAAP operating profit and net income are measures the company uses to reflect the results of its core earnings. The Company’s reporting of Non-GAAP net income excludes expenses for restructuring, gain or loss on sale of assets, stock based compensation, amortization and impairment of intangible assets and goodwill related to the Company’s acquisitions, and non-cash related income tax expense.
  • Non-GAAP operating margin from continuing operations of five percent in the quarter, compared to six percent in the same period last year.
  • Non-GAAP net income from continuing operations of $914,000 or $0.05 per diluted share in the quarter, as compared to $1.2 million or $0.06 per diluted share in the same period last year.

• $56.2 million of cash, short-term investments at March 31, 2014, a decrease of approximately $(1.7) million from the preceding quarter. During the quarter the company used cash to pay $2.4 million in annual accrued expenses from 2013 and $739,000 in dividends.

"Our in-building engineering services and scanning receiver revenue continue to grow as does our Site Solutions product sales,” said Marty Singer, PCTEL’s Chairman and CEO. “Core antenna sales were soft for seasonal reasons but we expect a strong rebound this quarter in that product area. That coupled with new business makes us comfortable with the high end of our previous revenue guidance of $112 - $114 million for our full year 2014. Finally, we had an extremely active quarter with respect to new product releases that will benefit the company this year,” added Singer.

CONFERENCE CALL / WEBCAST

PCTEL’s management team will discuss the Company’s results today at 5:15 PM ET. The call can be accessed by dialing (877) 734-5369 (U.S. / Canada) or (706) 679-6397 (International), conference ID: 28238948. The call will also be webcast at http://investor.pctel.com/events.cfm.

REPLAY: A replay will be available for two weeks after the call on either the website listed above or by calling (855) 859-2056 (U.S./Canada), or International (404) 537-3406, conference ID: 28238948.

About PCTEL

PCTEL, Inc. (NASDAQ: PCTI), develops antenna, scanning receiver, and engineered site solutions and services for public and private networks. PCTEL RF Solutions enables superior utilization of wireless spectrum for cellular and WiFi networks. The RF Solutions services team specializes in the design, testing, and optimization of in-building, small cell, and traditional wireless networks. PCTEL RF Solutions develops and supports specialized network test equipment for LTE FDD, TD-LTE, WCDMA, GSM, CDMA, EV-DO, TD-SCDMA, and WiFi networks. The company's SeeGull® scanning receivers and SeeHawk® visualization tool measure and analyze wireless signals for efficient cellular network planning, deployment, and optimization. Its IBflex™ simplifies in-building wireless network testing and SeeWave™ identifies and locates interference sources that impair network throughput.

PCTEL Connected Solutions™ simplifies network and site deployment for wireless data and communications applications for private and public networks, public safety, and government customers. PCTEL Connected Solutions develops and delivers high-value YAGI, Land Mobile Radio, WiFi, GPS, Subway, and broadband antennas (parabolic and flat panel) through its MAXRAD®, Bluewave™, and Wi-Sys™ product lines. PCTEL also sells specialized towers, enclosures, and cable assemblies for custom engineered site solutions. PCTEL delivers site solutions composed of PCTEL and third party sourced material to allow customers to cost effectively deploy and upgrade networks. The company's vertical markets include SCADA, Health Care, Smart Grid, Positive Train Control, Precision Agriculture, Indoor Wireless, Telemetry, Off-loading, and Wireless Backhaul. PCTEL's products are sold worldwide through direct and indirect channels. For more information, please visit the company's web sites www.pctel.com, www.antenna.com, or www.rfsolutions.pctel.com.

PCTEL Safe Harbor Statement

This press release contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Specifically, the statements regarding the growth of PCTEL’s in-building engineering services and scanning receiver sales, the performance of the Connected Solutions business and the anticipated success of our new antenna and scanning receiver products, 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 ability to successfully grow the wireless products business and the ability to implement new technologies and obtain protection for the related intellectual property. 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, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data)         (unaudited) March 31, December 31, 2014 2013 ASSETS   Cash and cash equivalents $16,475 $21,790 Short-term investment securities 39,694 36,105 Accounts receivable, net of allowance for doubtful accounts of $120 and $130 at March 31, 2014 and December 31, 2013, respectively 17,541 18,603 Inventories, net 15,961 14,535 Deferred tax assets, net 1,629 1,629 Prepaid expenses and other assets 1,664 3,166 Total current assets 92,964 95,828   Property and equipment, net 14,892 14,971 Goodwill 161 161 Intangible assets, net 4,031 4,604 Deferred tax assets, net 11,915 11,827 Other noncurrent assets 39 41 TOTAL ASSETS $124,002 $127,432   LIABILITIES AND STOCKHOLDERS’ EQUITY   Accounts payable $4,244 $4,440 Accrued liabilities 7,248 7,803 Total current liabilities 11,492 12,243   Other long-term liabilities 1,226 3,137     Total liabilities 12,718 15,380   Stockholders’ equity: Common stock, $0.001 par value, 100,000,000 shares authorized, 18,620,085 and 18,566,119 shares issued and outstanding at March 31, 2014 and December 31, 2013, respectively 19 19 Additional paid-in capital 143,742 143,572 Accumulated deficit (32,635) (31,748) Accumulated other comprehensive income 158 209 Total stockholders’ equity of PCTEL, Inc. 111,284 112,052   TOTAL LIABILITIES AND EQUITY $124,002 $127,432           PCTEL, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data)   (unaudited) Three Months Ended March 31, 2014 2013   REVENUES $23,656 $25,073 COST OF REVENUES 14,074 15,475 GROSS PROFIT 9,582 9,598 OPERATING EXPENSES: Research and development 3,242 2,550 Sales and marketing 2,956 3,020 General and administrative 3,232 4,632 Amortization of intangible assets 574 604 Restructuring charges 0 101 Total operating expenses 10,004 10,907 OPERATING LOSS (422) (1,309) Other income, net 197 4,332 INCOME (LOSS) BEFORE INCOME TAXES (225) 3,023 Expense (benefit) for income taxes (79) 1,070 NET INCOME (LOSS) FROM CONTINUING OPERATIONS (146) 1,953 LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX BENEFIT 0 (88) NET INCOME (LOSS) ($146) $1,865   Earnings (Loss) per Share from Continuing Operations: Basic ($0.01) $0.11 Diluted ($0.01) $0.11   Earnings (Loss) per Share from Discontinued Operations: Basic $0.00 ($0.00) Diluted $0.00 ($0.01)   Earnings (Loss) per Share: Basic ($0.01) $0.11 Diluted ($0.01) $0.10   Weighed Average Shares: Basic 18,176 17,684 Diluted 18,176 17,911   Cash dividend per share $0.040 $0.035     PCTEL, INC. P&L INFORMATION BY SEGMENT - Continuing Operations (in thousands)                     Three Months Ended March 31, 2014 Connected Solutions RF Solutions Consolidating Total   REVENUES $15,997 $7,722 ($63) $23,656         GROSS PROFIT 5,116 4,459 7 9,582         OPERATING INCOME (LOSS) $1,170 $1,014 ($2,606) ($422)     Three Months Ended March 31, 2013 Connected Solutions RF Solutions Consolidating Total   REVENUES $19,356 $5,772 ($55) $25,073         GROSS PROFIT 6,011 3,581 6 9,598         OPERATING INCOME (LOSS) $1,687 $1,042 ($4,038) ($1,309)    

Reconciliation GAAP To non-GAAP Results Of Continuing Operations (unaudited)

(in thousands except per share information)      

Reconciliation of GAAP operating income to non-GAAP operating income (a) from Continuing Operations

  Three Months Ended March 31,

2014

2013

  Operating Loss ($422) ($1,309)   (a) Add: Amortization of intangible assets 574 604 TelWorx restructuring: -Restructuring charges 0 101 TelWorx investigation: -General & Administrative 235 1,391 Stock Compensation: -Cost of Goods Sold 86 85 -Engineering 173 145 -Sales & Marketing 147 106 -General & Administrative 345 286 1,560 2,718     Non-GAAP Operating Income $1,138 $1,409 % of revenue 4.8% 5.6%  

Reconciliation of GAAP net income to non-GAAP net income (b) from Continuing Operations

  Three Months Ended March 31,

2014

2013

  Net Income (Loss) from Continuing Operations ($146) $1,953   Adjustments: (a) Non-GAAP adjustment to operating income 1,560 2,718 Other income related to the TelWorx settlement and TelWorx SEC investigation (220) (4,330) (b) Income Taxes (280) 816 1,060 (796)     Non-GAAP Net Income from Continuing Operations $914 $1,157   Non-GAAP Earning per Share: Basic $0.05 $0.07 Diluted $0.05 $0.06   Weighed Average Shares: Basic 18,176 17,684 Diluted 18,379 17,911        

This schedule reconciles the Company's GAAP operating income and GAAP net income to its non-GAAP operating income and non-GAAP net 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.

 

(a) These adjustments reflect stock based compensation expense, amortization of intangible assets, restructuring charges, and general and administrative expenses associated with the TelWorx investigation.

 

(b) These adjustments include the items described in footnote (a) as well as other income for the TelWorx legal settlement and insurance claims related to the TelWorx investigation, and non-cash income tax expense.

 

   

Reconciliation GAAP To non-GAAP SEGMENT INFORMATION (unaudited) (a) - Continuing Operations

(in thousands except per share information)                     Three Months Ended March 31, 2014 Connected Solutions RF Solutions Consolidating Total     Operating Income (Loss) $1,170 $1,014 ($2,606) ($422)   Add: Amortization of intangible assets 370 204 0 574 TelWorx investigation: -General & Administrative 0 0 235 235 Stock Compensation: -Cost of Goods Sold 45 40 0 85 -Engineering 80 93 0 173 -Sales & Marketing 128 19 0 147 -General & Administrative 87 30 229 346 710 386 464 1,560         Non-GAAP Operating Income (Loss) $1,880 $1,400 ($2,142) $1,138     Three Months Ended March 31, 2013 Connected Solutions RF Solutions Consolidating Total     Operating Income (Loss) $1,687 $1,042 ($4,038) ($1,309)   Add: Amortization of intangible assets 394 210 0 604 Restructuring charges 101 0 0 101 TelWorx investigation: -General & Administrative 0 0 1,391 1,391 Stock Compensation: -Cost of Goods Sold 27 58 0 85 -Engineering 55 90 0 145 -Sales & Marketing 78 28 0 106 -General & Administrative 66 15 205 286 721 401 1,596 2,718         Non-GAAP Operating Income (Loss) $2,408 $1,443 ($2,442) $1,409    

This schedule reconciles the Company's GAAP operating income by segment to its non-GAAP operating income and non-GAAP net 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.

 

(a) These adjustments reflect stock based compensation expense, amortization of intangible assets, restructuring charges, and general and administrative expenses associated with the TelWorx investigation.

 

PCTEL, Inc.John SchoenCFO(630) 372-6800orJack SellerPublic Relations(630) 372-6800Jack.seller@pctel.com