PCTEL achieves second quarter revenues of $20.6
million and gross profit margin of 49.1%
PCTEL, Inc. (Nasdaq: PCTI) (“PCTEL” or the “Company”), a leading
global provider of wireless technology solutions, today reported
results for the second quarter ended June 30, 2023.
Second Quarter 2023
Highlights
- Revenues of $20.6 million, down from $25.0 million in the prior
year period
- GAAP gross profit margin of 49.1%
- GAAP net income of $1.0 million or $0.05 per diluted share
- Non-GAAP net income of $1.4 million or $0.07 per diluted
share
- Adjusted EBITDA of $1.7 million, down from $2.6 million in the
prior year period
- Announced new 4G LTE and 5G network monitoring capabilities for
the SeeHawk™ Monitor system for cellular and government
applications.
- Subsequent to quarter end, the Company announced its new Edge™
Sensor platform, an all-in-one, ruggedized, flexible antenna plus
sensor solution focused on reliable and improved edge connectivity
and sensing for Industrial IoT applications in harsh
environments.
David Neumann, Chief Executive Officer, commented, “We continue
to execute our three strategies for growth and are encouraged to
see improvements in overall customer demand in the second quarter.
We are addressing industry headwinds that include excessive
inventory at some OEMs and customer supply chain constraints that
impact the short-term need for some of our antenna products. We
expect that market conditions will improve through the second half
of the year as OEM customers work to decrease their higher than
normal inventories and supply chains continue to improve. PCTEL is
well positioned in our target markets to grow as market conditions
improve, and we look forward to driving growth for years to
come.”
Second Quarter 2023 Financial
Summary
Summary Financials
Q2’23
Q2’22
Change
Revenue (000’s)
$20,578
$24,976
(18%)
Gross Profit Margin %
49.1%
45.8%
330bps
Adjusted EBITDA (000’s)
$1,742
$2,598
(33%)
GAAP Diluted EPS
$0.05
$0.02
$0.03
Non-GAAP Diluted EPS
$0.07
$0.10
($0.03)
Second quarter 2023 revenues were $20.6 million, a decrease of
17.6% from the year ago period. Second quarter 2023 antennas and
Industrial IoT device revenue was $14.4 million, a decrease of
18.2% year-over-year, primarily due to customers’ supply chain
challenges which continued to delay previously planned projects.
Second quarter 2023 test & measurement revenue was $6.2
million, a decrease of 16.2% year-over-year due to a sector
slowdown following a particularly strong first quarter and notable
strength in the year ago period.
Second quarter 2023 GAAP gross profit margin was 49.1%, compared
to 45.8% in the second quarter of 2022. The higher gross profit
margin was due to stronger gross margins within antennas and
Industrial IoT devices as a result of positive mix shift and
improving supply chain conditions.
Adjusted EBITDA in the second quarter decreased to $1.7 million
compared to $2.6 million in the second quarter of 2022.
Second quarter 2023 GAAP net income was $1.0 million or diluted
earnings per share of $0.05 compared to GAAP net income of $0.4
million or $0.02 per share in the second quarter of 2022. Non-GAAP
net income was $1.4 million, or $0.07 diluted earnings per share,
compared to $1.8 million or $0.10 per share in the second quarter
of 2022.
Cash, cash equivalents and investments were $33.6 million as of
June 30, 2023, an increase of approximately $3.4 million as
compared to March 31, 2023. Reductions in inventories and accounts
receivable contributed to the increase in cash and investments
during the second quarter.
Third Quarter 2023
Outlook
The following ranges represent PCTEL’s current expectations for
the third quarter 2023 based upon available data and estimates.
- Revenue: $20.0 million to $21.0 million
- Non-GAAP Gross Margin: 48% to 49%
- Non-GAAP EPS: $0.06 to $0.07
Kevin McGowan, Chief Financial Officer, explained, “We are
pleased with the profitable performance of the business over the
first half of 2023. For the third quarter of 2023, we anticipate
revenues to be in the range of $20.0 million to $21.0 million, with
similar performance for both test & measurement and antennas
and Industrial IoT devices as in the second quarter. Additionally,
we expect non-GAPP gross profit margin to be in the range of 48% to
49%, and our non-GAAP earnings per share to be in the range of
$0.06 to $0.07. PCTEL remains well positioned to deliver for our
customers and shareholders.”
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 877-704-4453 or 201-389-0920.
Replay: A replay will be available for two weeks after the call
on either the website listed above or by calling 844-512-2921 or
412-317-6671 and using access ID: 13739477.
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 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®, Edge, and SeeHawk are trademarks or registered
trademarks of PCTEL, Inc. © 2023 PCTEL, Inc. All rights
reserved.
PCTEL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited) (in thousands, except share data)
June 30
December 31,
2023
2022
ASSETS Cash and cash equivalents
$
7,057
$
7,736
Short-term investment securities
26,586
22,254
Accounts receivable, net of allowances of $122 and $132 at June 30,
2023 and December 31, 2022, respectively
12,856
18,853
Inventories, net
16,357
18,918
Prepaid expenses and other assets
1,372
1,861
Total current assets
64,228
69,622
Property and equipment, net
9,788
10,004
Goodwill
5,848
5,935
Intangible assets, net
853
1,045
Other noncurrent assets
2,802
3,269
TOTAL ASSETS
$
83,519
$
89,875
LIABILITIES AND STOCKHOLDERS’ EQUITY Accounts payable
$
3,618
$
4,648
Accrued liabilities
7,634
12,605
Total current liabilities
11,252
17,253
Long-term liabilities
3,279
3,624
Total liabilities
14,531
20,877
Stockholders’ equity: Common stock, $0.001 par value, 50,000,000
shares authorized at June 30, 2023 and December 31, 2022,
respectively, and 19,263,534 and 18,748,529 shares issued and
outstanding at June 30, 2023 and December 31, 2022, respectively
19
19
Additional paid-in capital
128,533
128,370
Accumulated deficit
(57,698
)
(57,941
)
Accumulated other comprehensive loss
(1,866
)
(1,450
)
Total stockholders’ equity
68,988
68,998
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
83,519
$
89,875
PCTEL, INC. CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (unaudited) (in thousands, except per share
data)
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
REVENUES
$
20,578
$
24,976
$
43,551
$
47,518
COST OF REVENUES
10,483
13,549
21,924
26,758
GROSS PROFIT
10,095
11,427
21,627
20,760
OPERATING EXPENSES: Research and development
3,130
3,356
6,114
6,605
Sales and marketing
3,220
3,908
6,781
7,310
General and administrative
2,854
3,451
6,460
6,694
Amortization of intangible assets
63
67
126
138
Restructuring expenses
0
317
0
1,252
Total operating expenses
9,267
11,099
19,481
21,999
OPERATING INCOME (LOSS)
828
328
2,146
(1,239
)
Other income, net
346
114
566
125
INCOME (LOSS) BEFORE INCOME TAXES
1,174
442
2,712
(1,114
)
Expense for income taxes
175
31
389
39
NET INCOME (LOSS)
$
999
$
411
$
2,323
$
(1,153
)
Net Income (Loss) per Share: Basic
$
0.05
$
0.02
$
0.13
$
(0.06
)
Diluted
$
0.05
$
0.02
$
0.12
$
(0.06
)
Weighted Average Shares: Basic
18,741
18,157
18,555
18,065
Diluted
18,821
18,157
18,630
18,065
PCTEL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (Unaudited) (in thousands)
Six Months Ended June
30,
2023
2022
Operating Activities: Net income (loss)
$
2,323
$
(1,153
)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: Depreciation and amortization
1,082
1,562
Intangible asset amortization
161
177
Stock-based compensation
512
1,860
Loss on disposal of property and equipment
37
7
Restructuring costs
0
(328
)
Bad debt provision
10
17
Changes in operating assets and liabilities: Accounts receivable
5,932
(614
)
Inventories
2,517
(715
)
Prepaid expenses and other assets
674
100
Deferred tax assets
217
0
Accounts payable
(975
)
435
Income taxes payable
(287
)
(1
)
Other accrued liabilities
(5,025
)
(900
)
Deferred revenue
64
(126
)
Net cash provided by operating activities
7,242
321
Investing Activities: Capital expenditures
(901
)
(420
)
Purchase of short-term investments
(18,422
)
(15,587
)
Redemptions/maturities of short-term investments
14,090
15,623
Net cash used in investing activities
(5,233
)
(384
)
Financing Activities: Proceeds from issuance of common stock
362
404
Payment of withholding tax on stock-based compensation
(711
)
(396
)
Principal payments on finance leases
(28
)
(37
)
Cash dividends
(2,080
)
(2,021
)
Net cash used in financing activities
(2,457
)
(2,050
)
Net decrease in cash and cash equivalents
(448
)
(2,113
)
Effect of exchange rate changes on cash
(231
)
(282
)
Cash and cash equivalents, beginning of period
7,736
8,192
Cash and Cash Equivalents, End of Period
$
7,057
$
5,797
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 June 30, 2023 Six Months Ended
June 30, 2023
Antennas and
Industrial IoT
Devices
Test &
Measurement
Products
Corporate
Total
Antennas and
Industrial IoT
Devices
Test &
Measurement
Products
Corporate
Total
REVENUES
$14,359
$6,230
($11)
$20,578
$29,973
$13,657
($79)
$43,551
GROSS PROFIT
$5,548
$4,503
$44
$10,095
$11,668
$9,886
$73
$21,627
GAAP GROSS PROFIT %
38.6%
72.3%
49.1%
38.9%
72.4%
49.7%
Non-GAAP adjustments: Amortization of intangible
assets
0.1%
0.0%
0.1%
0.1%
0.0%
0.1%
Stock compensation expenses
0.1%
0.8%
0.3%
0.1%
0.5%
0.2%
Non-GAAP GROSS PROFIT %
38.9%
73.1%
49.5%
39.1%
72.9%
50.0%
Three Months Ended June 30,
2022
Six Months Ended June 30,
2022
Antennas and
Industrial IoT
Devices
Test &
Measurement
Products
Corporate
Total
Antennas and
Industrial IoT
Devices
Test &
Measurement
Products
Corporate
Total
REVENUES
$17,555
$7,431
($10)
$24,976
$34,657
$13,014
($153)
$47,518
GROSS PROFIT
$5,626
$5,759
$42
$11,427
$10,873
$9,921
($34)
$20,760
GROSS PROFIT %
32.0%
77.5%
45.8%
31.4%
76.2%
43.7%
Non-GAAP adjustments: Amortization of intangible
assets
0.1%
0.0%
0.1%
0.1%
0.0%
0.1%
Stock compensation expenses
0.3%
-0.2%
0.1%
0.2%
0.2%
0.2%
Non-GAAP GROSS PROFIT %
32.4%
77.3%
46.0%
31.7%
76.4%
44.0%
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 June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Operating Income (Loss)
$828
$328
$2,146
($1,239)
(a)
Add: Amortization of intangible assets: -Cost of revenues
17
19
35
39
-Operating expenses
63
67
126
138
Restructuring expenses
0
317
0
1,252
Stock compensation expenses: -Cost of revenues
66
31
94
96
-Research and development
35
172
93
308
-Sales & marketing
64
255
107
452
-General & administrative
70
628
218
1,004
Transaction expenses related to strategic alternatives
64
0
627
86
379
1,489
1,300
3,375
Non-GAAP Operating Income
$1,207
$1,817
$3,446
$2,136
% of revenue
5.9%
7.3%
7.9%
4.5%
Reconciliation of GAAP net income
(loss) to Non-GAAP net income Three Months
Ended June 30, Six Months Ended June 30,
2023
2022
2023
2022
Net Income (Loss)
$999
$411
$2,323
($1,153)
Adjustments:
(a)
Non-GAAP adjustments to operating income (loss)
379
1,489
1,300
3,375
(b)
Income Taxes
(27)
(123)
(133)
(142)
352
1,366
1,167
3,233
Non-GAAP Net Income
$1,351
$1,777
$3,490
$2,080
Non-GAAP Income per Share: Basic
$0.07
$0.10
$0.19
$0.12
Diluted
$0.07
$0.10
$0.19
$0.11
Weighed Average Shares: Basic
18,741
18,157
18,555
18,065
Diluted
18,821
18,157
18,630
18,122
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) includes 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 income (loss) to
adjusted EBITDA (unaudited) (in thousands)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Operating income (loss)
$828
$328
$2,146
($1,239)
Add: Depreciation and amortization
535
781
1,083
1,562
Intangible amortization
80
86
161
177
Restructuring expenses
0
317
0
1,252
Stock compensation expenses
235
1,086
512
1,860
Transaction expenses related to strategic alternatives
64
0
627
86
Adjusted EBITDA
$1,742
$2,598
$4,529
$3,698
% of revenue
8.5%
10.4%
10.4%
7.8%
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.
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,
2023
2022
2023
2022
GAAP operating expenses
$9,267
$11,099
$19,481
$21,999
Stock compensation expenses
(169)
(1,055)
(418)
(1,764)
Amortization of intangible assets
(63)
(67)
(126)
(138)
Restructuring expenses
0
(317)
0
(1,252)
Transaction expenses related to strategic alternatives
(64)
0
(627)
(86)
Non-GAAP Operating expenses
$8,971
$9,660
$18,310
$18,759
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230808074264/en/
PCTEL Company Contacts Kevin McGowan CFO PCTEL, Inc.
(630) 339-2051
PCTEL Investor Relations Contact Lisa Fortuna or Ashley
Gruenberg Alpha IR Group 312-445-2870 PCTI@alpha-ir.com
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