PCTEL Reports First Quarter Financial Results

PCTEL achieved first quarter revenues of $23.0 million and gross profit margin of 50%

Advancement on key growth strategies

PCTEL, Inc. (Nasdaq: PCTI) (“PCTEL” or the “Company”), a leading global provider of wireless technology solutions, today reported results for the first quarter ended March 31, 2023.

First Quarter 2023 Highlights

  • Revenues of $23.0 million
  • GAAP gross profit margin of 50.2%
  • GAAP net income of $1.3 million or $0.07 per diluted share
  • Non-GAAP net income of $2.1 million or $0.12 per diluted share
  • Adjusted EBITDA increased 153% year-over-year to $2.8 million
  • Announced new VerStack antenna platform for smarter rail communication and Industrial IoT applications
  • Announced the industry’s first automated uplink drive or walk testing system for public safety radio networks

David Neumann, Chief Executive Officer, commented, “I am pleased with the Company’s strong start in 2023. Our team has remained focused on our three core growth strategies, including geographic expansion, product innovation, and market penetration in high growth industries. During the quarter, we furthered our relationship with a European Electric Vehicle manufacturer, which selected Smarteq antennas for two new vehicle models. Additionally, we experienced strong 5G scanning receiver sales to global service and rental customers. On the innovation side, we made exciting progress, having announced the release of our new VerStack antenna platform and our new, industry first automated uplink drive or walk testing system for public safety radio networks. I look forward to further expansion of our customer relationships and product portfolio as we progress through 2023.”

First Quarter 2023 Financial Summary

Summary Financials

Q1’23

Q1’22

Change

Revenue (000’s)

$22,973

$22,542

2%

Gross Profit Margin %

50.2%

41.4%

880bps

Adjusted EBITDA (000’s)

$2,788

$1,100

153%

GAAP Diluted EPS

$0.07

($0.09)

$0.16

Non-GAAP Diluted EPS

$0.12

$0.02

$0.10

First quarter 2023 revenues were $23.0 million, an increase of 2% from the year ago period. First quarter 2023 antennas and industrial IoT device revenue was $15.6 million, a decrease of 8.7% year-over-year, partially due to customers’ supply chain challenges which delayed previously planned projects. First quarter 2023 Test & Measurement revenue was $7.4 million, an increase of 33.0% year-over-year due to U.S. sales of 5G scanning receivers and sales to our global 5G rental market customers.

First quarter 2023 GAAP gross profit margin was 50.2%, compared to 41.4% in the first quarter of 2022. The higher gross profit margin was primarily due to higher Test and Measurement sales and stronger gross margins within Antennas and IoT devices.

Adjusted EBITDA in the first quarter increased to $2.8 million compared to $1.1 million in the first quarter of 2022. First quarter 2023 GAAP net income was $1.3 million or diluted earnings per share of $0.07 compared to GAAP net income of ($1.6) million or ($0.09) per share in the first quarter of 2022. Non-GAAP net income was $2.1 million, or $0.12 diluted earnings per share, compared to $0.3 million or $0.02 per share in the first quarter of 2022.

Cash, cash equivalents and investments were $30.3 million as of March 31, 2023, an increase of approximately $0.3 million as compared to December 31, 2022.

Second Quarter 2023 Outlook

The following ranges represent PCTEL’s current expectations for the second quarter 2023 based upon available data and estimates.

  • Revenue: $20.0 million to $21.0 million
  • Non-GAAP Gross Margin: 47% to 48%
  • Non-GAAP EPS: $0.02 to $0.04

Kevin McGowan, Chief Financial Officer, explained, “The first quarter exemplified the strength of our underlying business and the demand for our suite of products, but we anticipate lower sequential revenues and earnings in the second quarter of 2023 due to customer and project delays, the impact of economic slowdown in certain areas, and the completion of Test & Measurement projects for OEM customers. Our balance sheet remains strong and provides us with necessary flexibility to execute our growth strategy and deliver strong shareholder returns.”

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 (888) 506-0062 (United States/Canada) or (973) 528-0011 (International), access code: 426385.

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: 48180.

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 29 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 and Gflex® are registered trademarks of PCTEL, Inc. © 2023 PCTEL, Inc. All rights reserved.

PCTEL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands, except share data)
 
 

March 31,

 

December 31,

2023

 

2022

ASSETS
Cash and cash equivalents

$

8,717

 

$

7,736

 

Short-term investment securities

 

21,570

 

 

22,254

 

Accounts receivable, net of allowances of $135 and $132 at March 31, 2023 and December 31, 2022, respectively

 

15,531

 

 

18,853

 

Inventories, net

 

17,626

 

 

18,918

 

Prepaid expenses and other assets

 

1,594

 

 

1,861

 

Total current assets

 

65,038

 

 

69,622

 

 
Property and equipment, net

 

9,819

 

 

10,004

 

Goodwill

 

5,946

 

 

5,935

 

Intangible assets, net

 

968

 

 

1,045

 

Other noncurrent assets

 

3,085

 

 

3,269

 

TOTAL ASSETS

$

84,856

 

$

89,875

 

LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable

$

3,520

 

$

4,648

 

Accrued liabilities

 

9,002

 

 

12,605

 

Total current liabilities

 

12,522

 

 

17,253

 

Long-term liabilities

 

3,431

 

 

3,624

 

Total liabilities

 

15,953

 

 

20,877

 

Stockholders’ equity:
Common stock, $0.001 par value, 50,000,000 shares authorized at March 31, 2023 and December 31, 2022, respectively, and 18,982,847 and 18,748,529 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively

 

19

 

 

19

 

Additional paid-in capital

 

127,938

 

 

128,370

 

Accumulated deficit

 

(57,647

)

 

(57,941

)

Accumulated other comprehensive loss

 

(1,407

)

 

(1,450

)

Total stockholders’ equity

 

68,903

 

 

68,998

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

84,856

 

$

89,875

 

PCTEL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except per share data)

Three Months Ended

March 31,

2023

 

2022

REVENUES

$

22,973

$

22,542

 

COST OF REVENUES

 

11,441

 

13,209

 

GROSS PROFIT

 

11,532

 

9,333

 

OPERATING EXPENSES:
Research and development

 

2,984

 

3,250

 

Sales and marketing

 

3,562

 

3,402

 

General and administrative

 

3,605

 

3,242

 

Amortization of intangible assets

 

63

 

71

 

Restructuring expenses

 

0

 

935

 

Total operating expenses

 

10,214

 

10,900

 

OPERATING INCOME (LOSS)

 

1,318

 

(1,567

)

Other income, net

 

220

 

11

 

INCOME (LOSS) BEFORE INCOME TAXES

 

1,538

 

(1,556

)

Expense for income taxes

 

214

 

8

 

NET INCOME (LOSS)

$

1,324

$

(1,564

)

 
Net Loss per Share:
Basic

$

0.07

$

(0.09

)

Diluted

$

0.07

$

(0.09

)

 
Weighted Average Shares:
Basic

 

18,367

 

17,972

 

Diluted

 

18,428

 

17,972

 

PCTEL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in thousands)
 

Three Months Ended March 31,

2023

 

2022

Operating Activities:
Net income (loss)

$

1,324

 

$

(1,564

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization

 

548

 

 

781

 

Intangible asset amortization

 

81

 

 

91

 

Stock-based compensation

 

278

 

 

774

 

Loss on disposal of property and equipment

 

26

 

 

0

 

Restructuring costs

 

0

 

 

(368

)

Bad debt provision

 

14

 

 

(3

)

Changes in operating assets and liabilities:
Accounts receivable

 

3,315

 

 

1,530

 

Inventories

 

1,297

 

 

772

 

Prepaid expenses and other assets

 

361

 

 

(145

)

Deferred tax assets

 

80

 

 

-

 

Accounts payable

 

(1,117

)

 

(1,299

)

Income taxes payable

 

134

 

 

41

 

Other accrued liabilities

 

(3,940

)

 

(2,027

)

Deferred revenue

 

18

 

 

87

 

Net cash provided by (used in) operating activities

 

2,419

 

 

(1,330

)

Investing Activities:
Capital expenditures

 

(389

)

 

(320

)

Purchase of short-term investments

 

(6,660

)

 

(8,194

)

Redemptions/maturities of short-term investments

 

7,344

 

 

8,187

 

Net cash provided by (used in) investing activities

 

295

 

 

(327

)

Financing Activities:
Payment of withholding tax on stock-based compensation

 

(710

)

 

(392

)

Principal payments on finance leases

 

(14

)

 

(19

)

Cash dividends

 

(1,030

)

 

(1,001

)

Net cash used in financing activities

 

(1,754

)

 

(1,412

)

 
Net increase (decrease) in cash and cash equivalents

 

960

 

 

(3,069

)

Effect of exchange rate changes on cash

 

21

 

 

(16

)

Cash and cash equivalents, beginning of period

 

7,736

 

 

8,192

 

Cash and Cash Equivalents, End of Period

$

8,717

 

$

5,107

 

 
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 March 31, 2023

Antennas and

Industrial IoT

Devices

 

Test &

Measurement

Products

 

Corporate

 

Total

REVENUES

$15,614

 

$7,427

 

($68

)

$22,973

 

 
GROSS PROFIT

$6,120

 

$5,383

 

$29

 

$11,532

 

 
GAAP GROSS PROFIT %

39.2

%

72.5

%

50.2

%

 
Non-GAAP adjustments:
Amortization of intangible assets

0.1

%

0.0

%

0.1

%

Stock compensation expenses

0.1

%

20.0

%

0.3

%

Non-GAAP GROSS PROFIT %

39.4

%

72.7

%

50.4

%

 

Three Months Ended March 31, 2022

 

 

 

 

 

 

 

Antennas and

Industrial IoT

Devices

 

Test &

Measurement

Products

 

Corporate

 

Total

REVENUES

$17,102

 

$5,583

 

($143

)

$22,542

 

 
GROSS PROFIT

$5,247

 

$4,162

 

($76

)

$9,333

 

 
GROSS PROFIT %

30.7

%

74.5

%

41.4

%

 
Non-GAAP adjustments:
Amortization of intangible assets

0.1

%

0.0

%

0.1

%

Stock compensation expenses

0.2

%

0.6

%

0.3

%

Non-GAAP GROSS PROFIT %

31.0

%

75.2

%

41.8

%

 
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 March 31,

2023

 

2022

 

Operating Income (Loss)

$1,318

 

($1,567

)

 
(a) Add:
Amortization of intangible assets:
-Cost of revenues

18

 

20

 

-Operating expenses

63

 

71

 

Restructuring expenses

0

 

935

 

Stock compensation expenses:
-Cost of revenues

29

 

65

 

-Research and development

58

 

136

 

-Sales & marketing

43

 

197

 

-General & administrative

148

 

376

 

Transaction expenses related to strategic alternatives

563

 

86

 

922

 

1,886

 

Non-GAAP Operating Income

$2,240

 

$319

 

% of revenue

9.8

%

1.4

%

 
Reconciliation of GAAP net income (loss) to Non-GAAP net income
 
Three Months Ended March 31,

2023

 

2022

 

Net Income (Loss)

$1,324

 

($1,564

)

 
Adjustments:
(a) Non-GAAP adjustments to operating income (loss)

922

 

1,886

 

(b) Income Taxes

(106

)

(18

)

816

 

1,868

 

Non-GAAP Net Income

$2,140

 

$304

 

 
Non-GAAP Income per Share:
Basic

$0.12

 

$0.02

 

Diluted

$0.12

 

$0.02

 

 
Weighed Average Shares:
Basic

18,367

 

17,972

 

Diluted

18,428

 

17,972

 

 
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 March 31,

2023

 

2022

 

 
Operating income (loss)

$1,318

 

($1,567

)

 
Add:
Depreciation and amortization

548

 

781

 

Intangible amortization

81

 

91

 

Restructuring expenses

0

 

935

 

Stock compensation expenses

278

 

774

 

Transaction expenses related to strategic alternatives

563

 

86

 

Adjusted EBITDA

$2,788

 

$1,100

 

% of revenue

12.1

%

4.9

%

 
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 March 31,

2023

 

2022

 

GAAP operating expenses

$10,214

 

$10,900

 

Stock compensation expenses

(249

)

(709

)

Amortization of intangible assets

(63

)

(71

)

Restructuring expenses

0

 

(935

)

Transaction expenses related to strategic alternatives

(563

)

(86

)

Non-GAAP Operating expenses

$9,339

 

$9,099

 

 
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.

 

Contacts

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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