PCTEL increased revenue 16% year-over-year and
achieved gross profit margin of 45.9%
New MultiFin 7-in-1 antenna product and FCC
Certification of the Industrial IoT Radio Module further progress
the Company’s product innovation strategy
PCTEL, Inc. (Nasdaq: PCTI) (“PCTEL” or the “Company”), a leading
global provider of wireless technology solutions, announced its
results for the third quarter ended September 30, 2022.
Recent Highlights
- Revenues increased 16.0% year-over-year to $26.0 million
- GAAP gross profit margin of 45.9%
- GAAP net income of $2.0 million or $0.11 per diluted share
- Non-GAAP net income of $2.6 million or $0.14 per diluted
share
- Adjusted EBITDA increased 41.0% year-over-year to $3.3
million
- New MultiFin 7-in-1 antenna product offering for public safety,
fleet management and intelligent transportation applications
- Received FCC approval for the Company’s Industrial IoT Radio
Module to support the utilities, fleet, manufacturing, automation,
mining and oil and gas end markets
David Neumann, Chief Executive Officer, commented, “We delivered
another strong quarter, and I am very pleased by our team’s
consistent execution of our growth strategy which allowed us to
deliver solid performance in the face of a challenging
macro-economic backdrop. Our results were driven by key elements of
our growth strategy, including launching innovative products,
expanding and leveraging our sales channels globally and increasing
our market share with existing customers by providing integrated
solutions. Some exciting examples of those initiatives include the
FCC certification for our IoT radio modules, preparation for orders
of our SeeHawk Monitor by year end, and strategic investments to
pursue additional long-term growth in Europe. As we close out
fiscal 2022 and prepare to enter 2023, we see potential challenges
but remain committed to executing our growth strategy.”
Third Quarter Financial
Results
- Revenue increased 16.0% to $26.0 million, compared to $22.4
million in the third quarter of 2021.
- Antennas and IIoT Devices revenue was $18.7 million, an
increase of 11.8% year-over-year primarily due to an increase in
revenues related to antennas for agriculture fleet
applications
- Test & Measurement products revenue was $7.7 million, an
increase of 29.8% year-over-year due to higher revenues for 5G
products in the U.S.
- GAAP gross margin was 45.9%, compared to 45.8% in the third
quarter of 2021. Non-GAAP gross margin was 46.2% compared to 46.7%
in the third quarter of 2021 due to lower gross margin for test
& measurement products.
- GAAP operating expenses were $10.6 million compared to $9.6
million in the third quarter of 2021. Non-GAAP operating expenses
were $9.4 million compared to $8.9 million in the third quarter of
2021.
- GAAP net income was $2.0 million or diluted earnings per share
of $0.11 compared to GAAP net income of $0.7 million or $0.04 per
share in the third quarter of 2021. A reversal of allowances
related to deferred income taxes contributed $0.02 per share during
the third quarter 2022.
- Non-GAAP net income was $2.6 million or $0.14 diluted earnings
per share compared to $1.4 million or $0.08 in the third quarter of
2021.
- Adjusted EBITDA increased to $3.3 million compared to $2.3
million in the third quarter of 2021.
- Cash, cash equivalents and investments were $28.0 million, a
decrease of approximately $0.3 million as compared to the second
quarter of 2022. Payment of our quarterly dividend of $1.0 million
was approximately equal to our free cash in the third quarter
2022.
Fourth Quarter 2022
Outlook
The following ranges represent PCTEL’s current expectations for
the fourth quarter 2022 based upon available data and
estimates.
- Revenue: $25.5 million to $26.5 million
- Non-GAAP Gross Margin: 47% to 49%
- Non-GAAP EPS: $0.14 to $0.16
Kevin McGowan, Chief Financial Officer, explained, “Following a
very strong third quarter, we expect fourth quarter revenues to be
consistent sequentially with a higher gross margin primarily due to
the product mix. We continue to see growth opportunities in the
industries we serve, and we have a healthy balance sheet which
provides us flexibility to navigate any short-term macro-economic
challenges that could emerge and to support our long-term growth
initiatives.”
CONFERENCE CALL / WEBCAST
PCTEL’s management team will discuss the Company’s results today
at 4:30 p.m. ET. The call will also be webcast at
https://investor.pctel.com/news-events/webcasts-events. The call
can also be accessed by dialing (877) 545-0523 (United
States/Canada) or (973) 528-0016 (International), access code:
779586.
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: 46771.
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 and Industrial
IoT product line and our test & measurement product line
through execution of our three growth strategies; the ability of
the Company to continue to innovate new products for its product
lines; the impact of development and adoption of wireless solutions
in the public safety, rail, logistics, agriculture, utilities, and
electric vehicle markets on our revenue generation; our ability to
expand our product lines in the European market and through
distribution channels; the anticipated demand for certain products,
including those related to public safety, Industrial IoT, 5G (e.g.,
the Gflex); 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 higher than expected inflation;
an economic recession in the Americas or globally; the impact of
the ongoing or a subsequent pandemic, the disruptions to the
Company’s workforce, operations, supply chain and customer demand
caused by the pandemic and the 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 expand its European presence and benefit from additional
antenna and Industrial IoT product offerings from Smarteq; 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®, Gflex®, and SeeHawk are trademarks or registered
trademarks of PCTEL, Inc. © 2022 PCTEL, Inc. All rights
reserved.
PCTEL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited) (in thousands, except share data)
September 30,
December 31,
2022
2021
ASSETS Cash and cash equivalents
$
5,858
$
8,192
Short-term investment securities
22,147
22,562
Accounts receivable, net of allowances of $143 and $64 at September
30, 2022 and December 31, 2021, respectively
20,553
18,905
Inventories, net
16,730
13,691
Prepaid expenses and other assets
1,374
1,747
Total current assets
66,662
65,097
Property and equipment, net
10,300
11,949
Goodwill
5,778
6,334
Intangible assets, net
1,058
1,579
Other noncurrent assets
2,636
2,438
TOTAL ASSETS
$
86,434
$
87,397
LIABILITIES AND STOCKHOLDERS’ EQUITY Accounts payable
$
6,194
$
5,360
Accrued liabilities
10,618
11,117
Total current liabilities
16,812
16,477
Long-term liabilities
3,533
3,999
Total liabilities
20,345
20,476
Stockholders’ equity: Common stock, $0.001 par value, 50,000,000
shares authorized at September 30, 2022 and December 31, 2021,
respectively, and 18,676,629 and 18,238,030 shares issued and
outstanding at September 30, 2022 and December 31, 2021
19
18
Additional paid-in capital
123,964
123,998
Accumulated deficit
(55,916
)
(56,735
)
Accumulated other comprehensive loss
(1,978
)
(360
)
Total stockholders’ equity
66,089
66,921
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
86,434
$
87,397
PCTEL, INC. CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (unaudited) (in thousands, except per share
data)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2022
2021
2022
2021
REVENUES
$
25,988
$
22,411
$
73,506
$
61,799
COST OF REVENUES
14,052
12,157
40,810
33,266
GROSS PROFIT
11,936
10,254
32,696
28,533
OPERATING EXPENSES: Research and development
3,178
3,338
9,784
9,754
Sales and marketing
3,600
3,347
10,910
9,497
General and administrative
3,705
2,817
10,399
9,228
Amortization of intangible assets
63
80
201
135
Restructuring expenses
57
(1
)
1,309
59
Total operating expenses
10,603
9,581
32,603
28,673
OPERATING INCOME (LOSS)
1,333
673
93
(140
)
Other income (expense), net
205
(4
)
330
(10
)
INCOME (LOSS) BEFORE INCOME TAXES
1,538
669
423
(150
)
(Benefit) Expense for income taxes
(434
)
5
(396
)
17
NET INCOME (LOSS)
$
1,972
$
664
$
819
$
(167
)
Net Income (Loss) per Share: Basic
$
0.11
$
0.04
$
0.05
$
(0.01
)
Diluted
$
0.11
$
0.04
$
0.04
$
(0.01
)
Weighted Average Shares: Basic
18,166
17,945
18,099
18,078
Diluted
18,187
17,962
18,214
18,078
PCTEL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (unaudited) (in thousands)
Nine Months Ended September
30,
2022
2021
Operating Activities: Net income (loss)
$
819
$
(167
)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: Depreciation and amortization
2,231
2,257
Intangible asset amortization
257
171
Stock-based compensation
3,007
2,029
Loss on disposal of property and equipment
0
3
Restructuring costs
(291
)
(15
)
Bad debt provision
70
(39
)
Changes in operating assets and liabilities: Accounts receivable
(2,081
)
2,162
Inventories
(3,402
)
(1,734
)
Prepaid expenses and other assets
574
932
Deferred tax assets
(484
)
0
Accounts payable
974
(700
)
Income taxes payable
15
(15
)
Other accrued liabilities
(174
)
1,405
Deferred revenue
(93
)
82
Net cash provided by operating activities
1,422
6,371
Investing Activities: Capital expenditures
(550
)
(2,006
)
Purchases of investments
(21,971
)
(21,124
)
Redemptions/maturities of short-term investments
22,386
33,666
Cash paid for acquisition, net of cash acquired
0
(6,277
)
Net cash (used in) provided by investing activities
(135
)
4,259
Financing Activities: Proceeds from issuance of common stock
404
418
Payment of withholding tax on stock-based compensation
(396
)
(782
)
Principal payments on finance leases
(49
)
(54
)
Purchase of common stock from repurchase program
0
(3,193
)
Cash dividends
(3,048
)
(3,020
)
Net cash used in financing activities
(3,089
)
(6,631
)
Net (decrease) increase in cash and cash equivalents
(1,802
)
3,999
Effect of exchange rate changes on cash
(532
)
12
Cash and cash equivalents, beginning of period
8,192
5,761
Cash and Cash Equivalents, End of Period
$
5,858
$
9,772
PCTEL, INC. 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 September 30, 2022 Nine Months
Ended September 30, 2022 Antennas andIndustrial
IoTDevices Test &MeasurementProducts
Corporate Total Antennas andIndustrial
IoTDevices Test &MeasurementProducts
Corporate Total REVENUES
$18,653
$7,683
($348
)
$25,988
$53,310
$20,698
($502
)
$73,506
GROSS PROFIT
$6,562
$5,544
($170
)
$11,936
$17,435
$15,466
($205
)
$32,696
GAAP GROSS PROFIT %
35.2
%
72.2
%
45.9
%
32.7
%
74.7
%
44.5
%
Non-GAAP adjustments: Amortization of inventory
step-up
0.0
%
0.0
%
0.0
%
0.0
%
0.0
%
0.0
%
Amortization of intangible assets
0.1
%
0.0
%
0.1
%
0.1
%
0.0
%
0.1
%
Stock compensation expenses
0.2
%
0.2
%
0.2
%
0.2
%
0.2
%
0.2
%
Non-GAAP GROSS PROFIT %
35.5
%
72.4
%
46.2
%
33.0
%
74.9
%
44.8
%
Three Months Ended September 30, 2021 Nine Months
Ended September 30, 2021 Antennas andIndustrial
IoTDevices Test &MeasurementProducts
Corporate Total Antennas andIndustrial
IoTDevices Test &MeasurementProducts
Corporate Total REVENUES
$16,686
$5,921
($196
)
$22,411
$43,971
$18,540
($712
)
$61,799
GROSS PROFIT
$5,655
$4,635
($36
)
$10,254
$14,578
$14,057
($102
)
$28,533
GROSS PROFIT %
33.9
%
78.3
%
45.8
%
33.2
%
75.8
%
46.2
%
Non-GAAP adjustments: Amortization of inventory
step-up
0.8
%
0.0
%
0.5
%
0.9
%
0.0
%
0.7
%
Amortization of intangible assets
0.1
%
0.0
%
0.1
%
0.1
%
0.0
%
0.1
%
Stock compensation expenses
0.1
%
0.5
%
0.3
%
0.2
%
0.5
%
0.3
%
Non-GAAP GROSS PROFIT %
34.9
%
78.8
%
46.7
%
34.4
%
76.3
%
47.2
%
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 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 income (loss) to Non-GAAP operating
income Three Months Ended September 30,
Nine Months Ended September 30,
2022
2021
2022
2021
Operating Income (Loss)
$1,333
$673
$93
($140
)
(a)
Add: Amortization of inventory step-up to fair
value
0
133
0
415
Amortization of intangible assets -Cost of revenues
17
21
56
36
-Operating expenses
63
80
201
135
Restructuring expenses (benefits)
57
(1
)
1,309
59
Stock compensation expenses: -Cost of revenues
61
51
156
185
-Research and development
163
102
472
384
-Sales & marketing
241
73
694
458
-General & administrative
682
146
1,685
1,002
Acquisition related expenses
0
289
86
593
1,284
894
4,659
3,267
Non-GAAP Operating Income
$2,617
$1,567
$4,752
$3,127
% of revenue
10.1
%
7.0
%
6.5
%
5.1
%
Reconciliation of GAAP net loss to
Non-GAAP net income Three Months Ended
September 30, Three Months Ended September 30,
2022
2021
2022
2021
Net Income (Loss)
$1,972
$664
$819
($167
)
Adjustments: (a) Non-GAAP adjustments to operating
loss
1,284
894
4,659
3,267
(b) Income Taxes
(660
)
(120
)
(803
)
(232
)
624
774
3,856
3,035
Non-GAAP Net Income
$2,596
$1,438
$4,675
$2,868
Non-GAAP Income per Share: Basic
$0.14
$0.08
$0.26
$0.16
Diluted
$0.14
$0.08
$0.26
$0.16
Weighed Average Shares: Basic
18,166
17,945
18,099
18,078
Diluted
18,187
17,962
18,214
18,170
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, restructuring expenses, and acquisition related
expenses. The adjustments to GAAP net income (loss) include the
Non-GAAP adjustments to operating income (loss) 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 September 30, Nine Months Ended
September 30,
2022
2021
2022
2021
GAAP operating expenses
$10,603
$9,581
$32,603
$28,673
Stock compensation expenses
(1,086
)
(321
)
(2,851
)
(1,844
)
Amortization of intangible assets
(63
)
(80
)
(201
)
(135
)
Restructuring expenses
(57
)
1
(1,309
)
(59
)
Acquisition related expenses
0
(289
)
(86
)
(593
)
Non-GAAP Operating expenses
$9,397
$8,892
$28,156
$26,042
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 (loss) to
adjusted EBITDA (unaudited) (in thousands)
Three Months Ended September 30, Nine Months Ended
September 30,
2022
2021
2022
2021
Operating income (loss)
$1,333
$673
$93
($140
)
Add: Amortization of inventory step-up to fair value
0
133
0
415
Depreciation and amortization
669
764
2,231
2,257
Intangible amortization
80
101
257
171
Restructuring expenses
57
(1
)
1,309
59
Stock compensation expenses
1,147
372
3,007
2,029
Acquisition related expenses
0
289
86
593
Adjusted EBITDA
$3,286
$2,331
$6,983
$5,384
% of revenue
12.6
%
10.4
%
9.5
%
8.7
%
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, restructuring
expenses, and acquisition related expenses.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221103006103/en/
PCTEL Company Contacts Kevin McGowan CFO PCTEL, Inc.
(630) 339-2051 Suzanne Cafferty Vice President, Global Marketing
PCTEL, Inc. (630) 339-2107 public.relations@pctel.com PCTEL
Investor Relations Contact Lisa Fortuna or Ashley Gruenberg
Alpha IR Group 312-445-2870 PCTI@alpha-ir.com
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