PCTI PCTEL Inc

$107.2 Million in 2014 Revenue

PCTEL, Inc. (NASDAQ:PCTI), a leader in Performance Critical Telecom solutions, announced its 2014 fourth quarter and annual results.

Fourth Quarter and Annual Highlights

• $29.4 million in revenue for the quarter, an increase of 13 percent from the same period last year. $107.2 million in revenue for the year, an increase of three percent over 2013.
• Gross profit margin of 40 percent in the quarter, compared to 42 percent for the same period last year. Gross profit margin of 41 percent for the year, compared to 40 percent in 2013.
• GAAP operating margin from continuing operations of six percent for the quarter, compared to operating margin of two percent for the same period last year. Operating margin for the year of four percent as compared to break even in 2013.
• GAAP net income from continuing operations of $2.0 million for the quarter, or $0.11 per diluted share, compared to net income of $453,000, or $0.02 per diluted share for the same period last year. $4.6 million of net income from continuing operations for the year, or $0.25 per diluted share, as compared to net income of $3.3 million, or $0.18 per diluted share in 2013.
• 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 12 percent in the quarter, compared to 10 percent in the same period last year. Non-GAAP operating margin for the year was 10 percent as compared to nine percent in 2013.
  • Non-GAAP net income from continuing operations of $3.0 million or $0.16 per diluted share in the quarter, as compared to $2.1 million or $0.12 per diluted share in the same period last year. Non-GAAP net income from continuing operations of $8.8 million or $0.48 per diluted share for the year, as compared to $7.6 million or $0.42 per diluted share in 2013. The 2014 Non-GAAP earnings represent a 4X increase over the last five years.
• $60.0 million of cash and short-term investments at December 31, 2014, an increase of approximately $1.1 million from the preceding quarter. This quarterly change includes approximately $2.6 million of cash flow from operations and approximately $700,000 of capital expenditures.

“Continued demand for in-building and small cell solutions drove our revenue growth, generating demand for our engineering services, scanning receivers, in-building antenna solutions, and our site solutions,” said Marty Singer, PCTEL’s Chairman and CEO. “We believe that we are off to a good start to 2015 with our recent announcement of an industry-leading five year warranty and our innovative VenU™ product line. We are preparing for the release of additional products during the Mobile World Congress this week,” added Singer.

CONFERENCE CALL / WEBCAST

PCTEL’s management team will discuss the Company’s results today at 8:30 AM ET. The call can be accessed by dialing (877) 734-5369 (U.S. / Canada) or (706) 679-6397 (International), conference ID: 13775109. 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: 13775109.

About PCTEL

PCTEL delivers Performance Critical Telecom solutions. The industry relies upon PCTEL to benchmark network performance, analyze trends, and optimize wireless networks. PCTEL’s antennas and site solutions are vital elements for SCADA, oil and gas, utilities, fleet management, health care, public safety, education, small cell, and network timing.

PCTEL’s RF Solutions products and services improve the performance of wireless networks globally. PCTEL’s performance critical products include its MXflex™, IBflex™, and EXflex® SeeGull® scanning receivers and related SeeHawk® and SeeWave™ tools. PCTEL’s sophisticated engineering services utilize these products as well as the Meridian™ network analytics tool.

PCTEL Connected Solutions™ designs and delivers performance critical antennas and site solutions for wireless networks globally. PCTEL’s performance critical MAXRAD® and Bluewave™ antenna solutions include high rejection and high performance GPS and GNSS products, the industry leading Yagi portfolio, mobile and indoor LTE, broadband, and LMR antennas and PIM-rated antennas for transit, in-building, and small cell applications. We provide performance critical mobile towers for demanding emergency and oil and gas network applications and leverage our design, logistics, and support capabilities to deliver performance critical site solutions into carrier, railroad, and utility applications.

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 demand for in-building and small cell solutions generating growth in PCTEL’s in-building engineering services and scanning receiver sales, the impact of the five-year warranty, and the anticipated success of the Company’s new VenU™ and other 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 customer demand for in-building and small cell solutions, PCTEL’s ability to successfully grow the wireless products business 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. CONSOLIDATED BALANCE SHEETS (unaudited) (in thousands, except share data)         December 31, December 31, 2014 2013 ASSETS   Cash and cash equivalents $20,432 $21,790 Short-term investment securities 39,577 36,105 Accounts receivable, net of allowance for doubtful accounts of $121 and $130 at December 31, 2014 and December 31, 2013, respectively 23,874 18,603 Inventories, net 16,358 14,535 Deferred tax assets, net 2,281 1,629 Prepaid expenses and other assets 1,757 3,166 Total current assets 104,279 95,828   Property and equipment, net 14,842 14,971 Goodwill 161 161 Intangible assets, net 2,637 4,604 Deferred tax assets, net 9,710 11,827 Other noncurrent assets 40 41 TOTAL ASSETS $131,669 $127,432   LIABILITIES AND STOCKHOLDERS’ EQUITY   Accounts payable $5,495 $4,440 Accrued liabilities 10,211 7,803 Total current liabilities 15,706 12,243   Other long-term liabilities 448 3,137     Total liabilities 16,154 15,380   Stockholders’ equity: Common stock, $0.001 par value, 100,000,000 shares authorized, 18,571,419 and 18,566,119 shares issued and outstanding at December 31, 2014 and December 31, 2013, respectively 19 19 Additional paid-in capital 145,462 143,572 Accumulated deficit (30,101) (31,748) Accumulated other comprehensive income 135 209 Total stockholders’ equity 115,515 112,052   TOTAL LIABILITIES AND EQUITY $131,669 $127,432   PCTEL, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (in thousands, except per share data)       Three Months Ended     Year Ended December 31, December 31, 2014   2013 2014   2013   REVENUES $29,395 $25,963 $107,164 $104,253 COST OF REVENUES 17,634 15,120 63,577 62,493 GROSS PROFIT 11,761 10,843 43,587 41,760 OPERATING EXPENSES: Research and development 2,766 3,102 11,736 11,064 Sales and marketing 3,649 3,134 12,961 12,121 General and administrative 2,997 3,589 12,819 15,623 Amortization of intangible assets 464 596 1,967 2,400 Restructuring charges 0 2 0 256 Total operating expenses 9,876 10,423 39,483 41,464 OPERATING INCOME 1,885 420 4,104 296 Other income, net 927 600 1,666 5,378 INCOME BEFORE INCOME TAXES 2,812 1,020 5,770 5,674 Expense for income taxes 817 567 1,158 2,332 NET INCOME FROM CONTINUING OPERATIONS 1,995 453 4,612 3,342 INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX EXPENSE (BENEFIT) 0 17 0 (91) NET INCOME $1,995 $470 $4,612 $3,251   Earnings per Share from Continuing Operations: Basic $0.11 $0.03 $0.25 $0.19 Diluted $0.11 $0.03 $0.25 $0.18   Earnings (Loss) per Share from Discontinued Operations: Basic $0.00 $0.00 $0.00 ($0.01) Diluted $0.00 $0.00 $0.00 $0.00   Earnings per Share: Basic $0.11 $0.03 $0.25 $0.18 Diluted $0.11 $0.03 $0.25 $0.18   Weighed Average Shares: Basic 18,154 17,916 18,159 17,797 Diluted 18,412 18,508 18,389 18,184   Cash dividend per share $0.040 $0.035 $0.160 $0.140   PCTEL, INC. P&L INFORMATION BY SEGMENT (unaudited) (in thousands)                     Three Months Ended December 31, 2014 Year Ended December 31, 2014 Connected Connected Solutions RF Solutions Corporate Total Solutions RF Solutions Corporate Total   REVENUES $19,924 $9,535 ($64) $29,395 $72,333 $35,113 ($282) $107,164                 GROSS PROFIT 6,183 5,572 6 11,761 22,818 20,743 26 43,587                 OPERATING INCOME (LOSS) $2,078 $2,184 ($2,377) $1,885 $7,357 $7,333 ($10,586) $4,104     Three Months Ended December 31, 2013 Year Ended December 30, 2013 Connected Connected Solutions RF Solutions Corporate Total Solutions RF Solutions Corporate Total   REVENUES $17,349 $8,693 ($79) $25,963 $74,223 $30,310 ($280) $104,253                 GROSS PROFIT 5,368 5,471 4 10,843 22,720 19,018 22 41,760                 OPERATING INCOME (LOSS) $1,140 $2,109 ($2,829) $420 $6,012 $7,248 ($12,964) $296  

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 December 31, Year Ended December 31,

2014

2013

2014

2013

  Operating Income $1,885 $420 $4,104 $296   (a) Add: Amortization of intangible assets 464 596 1,967 2,400 TelWorx restructuring: -Restructuring charges 0 2 0 256 -Cost of Goods Sold 0 0 0 284 TelWorx investigation: -General & Administrative 580 747 1,266 2,626 Legal settlement -General & Administrative 0 0 75 0 Stock Compensation: -Cost of Goods Sold 111 95 426 390 -Engineering 150 185 658 689 -Sales & Marketing 170 140 661 575 -General & Administrative 267 402 1,530 1,786 1,742 2,167 6,583 9,006         Non-GAAP Operating Income $3,627 $2,587 $10,687 $9,302 % of revenue 12.3% 10.0% 10.0% 8.9%  

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

  Three Months Ended December 31,   Year Ended December 31,

2014

2013

2014

2013

  Net Income from Continuing Operations $1,995 $453 $4,612 $3,342   Adjustments: (a) Non-GAAP adjustment to operating income 1,742 2,167 6,583 9,006 Other income related to the TelWorx settlement and TelWorx SEC investigation (908) (586) (1,568) (5,353) Other legal settlements 0 0 (75) 0 (b) Income Taxes 161 99 (770) 653 995 1,680 4,170 4,306         Non-GAAP Net Income from Continuing Operations $2,990 $2,133 $8,782 $7,648   Non-GAAP Earning per Share: Basic $0.16 $0.12 $0.48 $0.43 Diluted $0.16 $0.12 $0.48 $0.42   Weighed Average Shares: Basic 18,154 17,916 18,159 17,797 Diluted 18,412 18,508 18,389 18,184    

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 December 31, 2014 Year Ended December 31, 2014 Connected Connected Solutions RF Solutions Corporate Total Solutions RF Solutions Corporate Total     Operating Income (Loss) $2,078 $2,184 ($2,377) $1,885 $7,357 $7,333 ($10,586) $4,104   Add: Amortization of intangible assets 260 204 0 464 1,151 816 0 1,967 TelWorx restructuring: -Restructuring charges 0 0 0 0 0 0 0 0 -Cost of Goods Sold 0 0 0 0 0 0 0 0 TelWorx investigation: -General & Administrative 0 0 580 580 0 0 1,266 1,266 Legal settlement -General & Administrative 0 0 0 0 0 0 75 75 Stock Compensation: -Cost of Goods Sold 58 53 0 111 215 211 0 426 -Engineering 64 86 0 150 292 366 0 658 -Sales & Marketing 133 37 0 170 534 127 0 661 -General & Administrative 54 31 182 267 256 129 1,145 1,530 569 411 762 1,742 2,448 1,649 2,486 6,583                 Non-GAAP Operating Income (Loss) $2,647 $2,595 ($1,615) $3,627 $9,805 $8,982 ($8,100) $10,687     Three Months Ended December 31, 2013 Year Ended December 30, 2013 Connected Connected Solutions RF Solutions Corporate Total Solutions RF Solutions Corporate Total     Operating Income (Loss) $1,140 $2,109 ($2,829) $420 $6,012 $7,248 ($12,964) $296   Add: Amortization of intangible assets 392 204 0 596 1,573 827 0 2,400 TelWorx restructuring: -Restructuring charges 2 0 0 2 256 0 0 256 -Cost of Goods Sold 0 0 0 0 284 0 0 284 TelWorx investigation: -General & Administrative 0 0 747 747 0 0 2,626 2,626 Stock Compensation: -Cost of Goods Sold 44 51 0 95 153 237 0 390 -Engineering 78 107 0 185 285 404 0 689 -Sales & Marketing 122 18 0 140 450 125 0 575 -General & Administrative 91 33 278 402 341 109 1,336 1,786 729 413 1,025 2,167 3,342 1,702 3,962 9,006                 Non-GAAP Operating Income (Loss) $1,869 $2,522 ($1,804) $2,587 $9,354 $8,950 ($9,002) $9,302   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