BLOOMINGDALE, Ill.--(BUSINESS WIRE)--PCTEL, Inc. (NASDAQ:PCTI), a leader in Performance Critical Telecom solutions, announced its 2016 second quarter results.
Quarter Highlights
$24.2 million in revenue for the quarter, a decrease of 12 percent from the same period last year. The Company saw a 15 percent sequential quarterly increase in revenue from the first quarter.
GAAP gross profit margin of 38 percent in the quarter compared to 34 percent for the same period last year.
GAAP operating margin of negative 22 percent for the quarter compared to operating margin of negative six percent for the same period last year. During the quarter the company recorded a non-cash impairment of its acquired intangible assets related to its engineering services of $4.7 million, or 19 percent of revenue.
GAAP net loss of $11.1 million for the quarter, or $(0.69) per diluted share compared to net income of $347,000, or $0.02 per diluted share for the same period last year. In addition to the $4.7 million impairment of intangible assets, the Company recorded expense for the establishment of a $7.6 million valuation allowance on the Company’s U.S. based deferred tax assets to address a growing shift in the Company’s income outside of the United States that began this quarter. The after tax impact of the charges aggregate to $0.66 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 gross margin of 39 percent in the quarter, compared to 34 percent for the same period last year.
Non-GAAP operating margin of six percent in the quarter, compared to one percent for the same period last year.
Non-GAAP net income of $1.3 million, or $0.08 per diluted share in the quarter, compared to $295,000 or $0.02 per diluted share in the same period last year.
$29.3 million of cash and short-term investments at June 30, 2016, an increase of approximately $1.4 million from the preceding quarter. During the quarter the Company generated free cash flow of approximately $2.4 million and paid a dividend of $853,000.
“Scanning receiver sales, engineering and staffing services, and core antenna products all posted sequential quarterly gains this past quarter,” said Marty Singer, PCTEL’s Chairman and CEO. “This growth, combined with our success in reducing operating expenses to 2013 levels, resulted in an eleven cent improvement in non-GAAP earnings compared to our first quarter. We also made strong progress in reducing our inventory across both businesses and launching new products, including our new SeeHawk Engage™ product. We look forward to a strong second half,” 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 (888) 782-7027 (U.S. / Canada) or (706) 679-6397 (International), conference ID: 47815074. 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: 47815074.
About PCTEL
PCTEL, a global provider of RF expertise, delivers Performance Critical Telecom solutions to the wireless industry. PCTEL benchmarks and optimizes wireless networks with its data tools, engineering services, and RF products. PCTEL's antennas and site solutions are vital elements for networks serving SCADA, fleet management, health care, public safety, and education.
PCTEL's RF Solutions products and services improve the performance of wireless networks globally. PCTEL's performance critical products include its SeeGull MXflex®, IBflex®, and EXflex® scanning receivers. PCTEL tools also include CW transmitters, signal analyzers, and the SeeWave® interference locating system. PCTEL's SeeHawk® software portfolio includes SeeHawk® Touch, SeeHawk® Collect, SeeHawk Engage™, SeeHawk Engage+™, SeeHawk Engage™ Lite, SeeHawk™ Studio, and SeeHawk™ Analytics. PCTEL provides specialized staffing, interference management and performance critical RF engineering services for wireless networks.
PCTEL Connected Solutions designs and delivers performance critical antennas and site solutions for public and private wireless networks globally. PCTEL's performance critical antenna solutions include high rejection and high performance GNSS products and innovative broadband LTE and Wi-Fi solutions for fixed and mobile applications, including transit, in-building, and small cell networks. In addition, PCTEL provides a broad portfolio of LMR and Yagi antennas. We leverage our design, logistics, and support capabilities to deliver performance critical antenna and site solutions into carrier, railroad, utility applications, oil and gas, and other vertical markets.
PCTEL's products are sold worldwide through direct and indirect channels. For more information, please visit the company's web sites: pctel.com, antenna.com, or rfsolutions.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 regarding our future financial performance, new products and features, growth of our Connected Solutions and RF Solutions businesses, and anticipated demand for our network analytics, subject matter expert staffing and in-building engineering services 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 customer demand for these types of products and services generally, growth and continuity in the utilities, fleet, and public safety markets and small cell deployments, PCTEL’s ability to successfully grow Engage and its wireless products business generally, and its 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) | ||||||||||
June 30, | December 31, | |||||||||
2016 | 2015 | |||||||||
ASSETS | ||||||||||
Cash and cash equivalents | $ | 7,305 | $ | 7,055 | ||||||
Short-term investment securities | 21,973 | 24,728 | ||||||||
Accounts receivable, net of allowance for doubtful accounts of $264
and $314 at
June 30, 2016 and December 31, 2015, respectively |
18,191 | 21,001 | ||||||||
Inventories, net | 15,190 | 17,596 | ||||||||
Prepaid expenses and other assets | 1,448 | 1,586 | ||||||||
Total current assets | 64,107 | 71,966 | ||||||||
Property and equipment, net | 13,615 | 13,839 | ||||||||
Goodwill | 3,332 | 3,332 | ||||||||
Intangible assets, net | 5,141 | 11,378 | ||||||||
Deferred tax assets, net | 8,949 | 13,155 | ||||||||
Other noncurrent assets | 38 | 40 | ||||||||
TOTAL ASSETS | $ | 95,182 | $ | 113,710 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
Accounts payable | $ | 4,719 | $ | 6,735 | ||||||
Accrued liabilities | 5,792 | 6,190 | ||||||||
Total current liabilities | 10,511 | 12,925 | ||||||||
Other long-term liabilities | 473 | 388 | ||||||||
Total liabilities | 10,984 | 13,313 | ||||||||
Stockholders’ equity: | ||||||||||
Common stock, $0.001 par value, 100,000,000 shares authorized,
17,324,506 and
17,654,236 shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively |
17 | 18 | ||||||||
Additional paid-in capital | 133,880 | 135,714 | ||||||||
Accumulated deficit | (49,572 | ) | (35,320 | ) | ||||||
Accumulated other comprehensive loss | (127 | ) | (15 | ) | ||||||
Total stockholders’ equity | 84,198 | 100,397 | ||||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 95,182 | $ | 113,710 | ||||||
PCTEL, INC. | ||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) | ||||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||
June 30, | June 30, | |||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||
REVENUES | $ | 24,243 | $ | 27,625 | $ | 45,317 | $ | 53,951 | ||||||||||
COST OF REVENUES | 15,006 | 18,276 | 29,029 | 34,432 | ||||||||||||||
GROSS PROFIT | 9,237 | 9,349 | 16,288 | 19,519 | ||||||||||||||
OPERATING EXPENSES: | ||||||||||||||||||
Research and development | 2,523 | 2,904 | 5,130 | 5,642 | ||||||||||||||
Sales and marketing | 3,414 | 3,425 | 6,529 | 6,955 | ||||||||||||||
General and administrative | 3,305 | 3,302 | 6,267 | 6,665 | ||||||||||||||
Amortization of intangible assets | 577 | 943 | 1,180 | 1,578 | ||||||||||||||
Impairment of intangible assets | 4,724 | 0 | 4,724 | 0 | ||||||||||||||
Restructuring expenses | 24 | 440 | 541 | 440 | ||||||||||||||
Total operating expenses | 14,567 | 11,014 | 24,371 | 21,280 | ||||||||||||||
OPERATING LOSS | (5,330 | ) | (1,665 | ) | (8,083 | ) | (1,761 | ) | ||||||||||
Other income, net | 8 | 2,205 | 14 | 2,249 | ||||||||||||||
(LOSS) INCOME BEFORE INCOME TAXES | (5,322 | ) | 540 | (8,069 | ) | 488 | ||||||||||||
Expense for income taxes | 5,751 | 193 | 4,460 | 174 | ||||||||||||||
NET (LOSS) INCOME | $ | (11,073 | ) | $ | 347 | $ | (12,529 | ) | $ | 314 | ||||||||
Net (Loss) Income per Share: | ||||||||||||||||||
Basic | $ | (0.69 | ) | $ | 0.02 | $ | (0.78 | ) | $ | 0.02 | ||||||||
Diluted | $ | (0.69 | ) | $ | 0.02 | $ | (0.78 | ) | $ | 0.02 | ||||||||
Weighted Average Shares: | ||||||||||||||||||
Basic | 15,979 | 18,257 | 16,149 | 18,284 | ||||||||||||||
Diluted | 15,979 | 18,408 | 16,149 | 18,498 | ||||||||||||||
Cash dividend per share | $ | 0.05 | $ | 0.05 | $ | 0.10 | $ | 0.10 | ||||||||||
PCTEL, INC. | ||||||||||||||||||||||||||||||
P&L INFORMATION BY SEGMENT (unaudited) | ||||||||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||
Three Months Ended June 30, 2016 | Six Months Ended June 30, 2016 | |||||||||||||||||||||||||||||
Connected | Connected | |||||||||||||||||||||||||||||
Solutions | RF Solutions | Corporate | Total | Solutions | RF Solutions | Corporate | Total | |||||||||||||||||||||||
REVENUES | $ | 15,781 | $ | 8,507 | ($45 | ) | $ | 24,243 | $ | 30,480 | $ | 14,942 | ($105 | ) | $ | 45,317 | ||||||||||||||
GROSS PROFIT | 4,941 | 4,286 | 10 | 9,237 | 9,265 | 7,016 | 7 | 16,288 | ||||||||||||||||||||||
OPERATING (LOSS) INCOME | $ | 1,792 | ($4,372 | ) | ($2,750 | ) | ($5,330 | ) | $ | 3,099 | ($5,901 | ) | ($5,281 | ) | ($8,083 | ) | ||||||||||||||
Three Months Ended June 30, 2015 | Six Months Ended June 30, 2015 | |||||||||||||||||||||||||||||
Connected | Connected | |||||||||||||||||||||||||||||
Solutions | RF Solutions | Corporate | Total | Solutions | RF Solutions | Corporate | Total | |||||||||||||||||||||||
REVENUES | $ | 18,100 | $ | 9,583 | ($58 | ) | $ | 27,625 | $ | 35,454 | $ | 18,634 | ($137 | ) | $ | 53,951 | ||||||||||||||
GROSS PROFIT | 5,417 | 3,931 | 1 | 9,349 | 10,861 | 8,647 | 11 | 19,519 | ||||||||||||||||||||||
OPERATING (LOSS) INCOME | $ | 1,498 | ($347 | ) | ($2,816 | ) | ($1,665 | ) | $ | 3,187 | $ | 786 | ($5,734 | ) | ($1,761 | ) | ||||||||||||||
Reconciliation of GAAP to non-GAAP Results (unaudited) |
||||||||||||||||||||
(in thousands except per share information) | ||||||||||||||||||||
Reconciliation of GAAP operating loss to non-GAAP operating income (a) |
||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||
2016 |
2015 |
2016 |
2015 |
|||||||||||||||||
Operating Loss | ($5,330 | ) | ($1,665 | ) | ($8,083 | ) | ($1,761 | ) | ||||||||||||
(a) | Add: | |||||||||||||||||||
Amortization of intangible assets | ||||||||||||||||||||
-Cost of revenues | 167 | 242 | 333 | 261 | ||||||||||||||||
-Operating expenses | 577 | 943 | 1,180 | 1,578 | ||||||||||||||||
Impairment of intangible assets | 4,724 | 0 | 4,724 | 0 | ||||||||||||||||
Restructuring: | ||||||||||||||||||||
-Cost of revenues | 0 | 114 | 0 | 114 | ||||||||||||||||
-Operating expenses | 24 | 440 | 541 | 440 | ||||||||||||||||
TelWorx investigation: | ||||||||||||||||||||
-General & Administrative | (1 | ) | 54 | 5 | 91 | |||||||||||||||
Stock Compensation: | ||||||||||||||||||||
-Cost of revenues | 133 | 56 | 264 | 129 | ||||||||||||||||
-Engineering | 175 | 30 | 342 | 145 | ||||||||||||||||
-Sales & Marketing | 183 | (18 | ) | 328 | 140 | |||||||||||||||
-General & Administrative | 893 | 173 | 1,309 | 328 | ||||||||||||||||
6,875 | 2,034 | 9,026 | 3,226 | |||||||||||||||||
Non-GAAP Operating Income | $ | 1,545 | $ | 369 | $ | 943 | $ | 1,465 | ||||||||||||
% of revenue | 6.4 | % | 1.3 | % | 2.1 | % | 2.7 | % | ||||||||||||
Reconciliation of GAAP net loss to non-GAAP net (loss) income (b) |
||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||
2016 |
2015 |
2016 |
2015 |
|||||||||||||||||
Net Loss (Income) | ($11,073 | ) | $ | 347 | ($12,529 | ) | $ | 314 | ||||||||||||
Adjustments: | ||||||||||||||||||||
(a) | Non-GAAP adjustment to operating (loss) income | 6,875 | 2,034 | 9,026 | 3,226 | |||||||||||||||
(b) | Other income related to SEC investigation of TelWorx | 1 | (54 | ) | (5 | ) | (90 | ) | ||||||||||||
(b) | Legal Settlement - Amendment to Nexgen APA | 0 | (2,160 | ) | 0 | (2,160 | ) | |||||||||||||
(b) | Income Taxes | 5,471 | 128 | 4,289 | (90 | ) | ||||||||||||||
12,347 | (52 | ) | 13,310 | 886 | ||||||||||||||||
Non-GAAP Net Income | $ | 1,274 | $ | 295 | $ | 781 | $ | 1,200 | ||||||||||||
Non-GAAP Earning per Share: | ||||||||||||||||||||
Basic | $ | 0.08 | $ | 0.02 | $ | 0.05 | $ | 0.07 | ||||||||||||
Diluted | $ | 0.08 | $ | 0.02 | $ | 0.05 | $ | 0.06 | ||||||||||||
Weighed Average Shares: | ||||||||||||||||||||
Basic | 15,979 | 18,257 | 16,149 | 18,284 | ||||||||||||||||
Diluted | 15,979 | 18,408 | 16,312 | 18,498 | ||||||||||||||||
This schedule reconciles the Company's GAAP operating loss and GAAP net loss to its non-GAAP operating (loss) income and non-GAAP net (loss) 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 SEC investigation of TelWorx. |
(b) These adjustments include the items described in footnote (a) as well as other income for insurance claims related to the SEC investigation of TelWorx, legal settlements, and non-cash income tax expense. |
|
Reconciliation of GAAP to non-GAAP SEGMENT INFORMATION (unaudited) (a) |
||||||||||||||||||||||||||||||||
(in thousands except per share information) | ||||||||||||||||||||||||||||||||
Three Months Ended June 30, 2016 | Six Months Ended June 30, 2016 | |||||||||||||||||||||||||||||||
Connected | RF | Connected | RF | |||||||||||||||||||||||||||||
Solutions | Solutions | Corporate | Total | Solutions | Solutions | Corporate | Total | |||||||||||||||||||||||||
Operating (Loss) Income | $ | 1,792 | ($4,372 | ) | ($2,750 | ) | ($5,330 | ) | $ | 3,099 | ($5,901 | ) | ($5,281 | ) | ($8,083 | ) | ||||||||||||||||
Add: | ||||||||||||||||||||||||||||||||
Amortization of intangible assets: | ||||||||||||||||||||||||||||||||
-Cost of revenues | 0 | 167 | 0 | 167 | 0 | 333 | 0 | 333 | ||||||||||||||||||||||||
-Operating expenses | 44 | 533 | 0 | 577 | 114 | 1,066 | 0 | 1,180 | ||||||||||||||||||||||||
Impairment of intangible assets | 0 | 4,724 | 0 | 4,724 | 0 | 4,724 | 0 | 4,724 | ||||||||||||||||||||||||
Restructuring expenses | 0 | 7 | 17 | 24 | 44 | 424 | 73 | 541 | ||||||||||||||||||||||||
TelWorx investigation: | ||||||||||||||||||||||||||||||||
-General & Administrative | 0 | 0 | (1 | ) | (1 | ) | 0 | 0 | 5 | 5 | ||||||||||||||||||||||
Stock Compensation: | ||||||||||||||||||||||||||||||||
-Cost of revenues | 43 | 90 | 0 | 133 | 84 | 180 | 0 | 264 | ||||||||||||||||||||||||
-Engineering | 30 | 145 | 0 | 175 | 72 | 270 | 0 | 342 | ||||||||||||||||||||||||
-Sales & Marketing | 113 | 70 | 0 | 183 | 200 | 128 | 0 | 328 | ||||||||||||||||||||||||
-General & Administrative | 52 | 96 | 745 | 893 | 92 | 168 | 1,049 | 1,309 | ||||||||||||||||||||||||
282 | 5,832 | 761 | 6,875 | 606 | 7,293 | 1,127 | 9,026 | |||||||||||||||||||||||||
Non-GAAP Operating (Loss) Income | $ | 2,074 | $ | 1,460 | ($1,989 | ) | $ | 1,545 | $ | 3,705 | $ | 1,392 | ($4,154 | ) | $ | 943 | ||||||||||||||||
Three Months Ended June 30, 2015 | Six Months Ended June 30, 2015 | |||||||||||||||||||||||||||||||
Connected | RF | Connected | RF | |||||||||||||||||||||||||||||
Solutions | Solutions | Corporate |
Total |
Solutions | Solutions | Corporate | Total | |||||||||||||||||||||||||
Operating (Loss) Income | $ | 1,498 | ($347 | ) | ($2,816 | ) | ($1,665 | ) | $ | 3,187 | $ | 786 | ($5,734 | ) | ($1,761 | ) | ||||||||||||||||
Add: | ||||||||||||||||||||||||||||||||
Amortization of intangible assets: | ||||||||||||||||||||||||||||||||
-Cost of revenues | 20 | 222 | 0 | 242 | 39 | 222 | 0 | 261 | ||||||||||||||||||||||||
-Operating expenses | 230 | 713 | 0 | 943 | 460 | 1,118 | 0 | 1,578 | ||||||||||||||||||||||||
Restructuring expenses | ||||||||||||||||||||||||||||||||
-Cost of revenues | 114 | 0 | 0 | 114 | 114 | 0 | 0 | 114 | ||||||||||||||||||||||||
-Restructuring charges | 426 | 14 | 0 | 440 | 426 | 14 | 0 | 440 | ||||||||||||||||||||||||
TelWorx investigation: | ||||||||||||||||||||||||||||||||
-General & Administrative | 0 | 0 | 54 | 54 | 0 | 0 | 91 | 91 | ||||||||||||||||||||||||
Stock Compensation: | ||||||||||||||||||||||||||||||||
-Cost of Goods Sold | (22 | ) | 78 | 0 | 56 | 14 | 115 | 0 | 129 | |||||||||||||||||||||||
-Engineering | 14 | 16 | 0 | 30 | 60 | 85 | 0 | 145 | ||||||||||||||||||||||||
-Sales & Marketing | (18 | ) | 0 | 0 | (18 | ) | 85 | 55 | 0 | 140 | ||||||||||||||||||||||
-General & Administrative | (35 | ) | (21 | ) | 229 | 173 | (10 | ) | (1 | ) | 339 | 328 | ||||||||||||||||||||
729 | 1,022 | 283 | 2,034 | 1,188 | 1,608 | 430 | 3,226 | |||||||||||||||||||||||||
Non-GAAP Operating (Loss) Income | $ | 2,227 | $ | 675 | ($2,533 | ) | $ | 369 | $ | 4,375 | $ | 2,394 | ($5,304 | ) | $ | 1,465 | ||||||||||||||||
This schedule reconciles the Company's GAAP operating income (loss) by segment to its non-GAAP operating (loss) 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 SEC investigation of TelWorx. |
|