PCTI PCTEL Inc

An Increase of 11 Percent from the Same Period Last Year

PCTEL, Inc. (NASDAQ:PCTI), a leader in Performance Critical Telecom solutions, announced its 2015 first quarter results.

First Quarter Highlights

• $26.3 million in revenue for the quarter, an increase of 11 percent from the same period last year. $1.2 million of the increase reflected revenue from our most recent acquisition. Organic growth was six percent.
• Gross profit margin of 39 percent in the quarter, compared to 41 percent for the same period last year.
• GAAP operating margin of just under break even for the quarter, compared to operating margin of negative two percent for the same period last year.
• GAAP net loss of $33,000 for the quarter, or $(0.00) per diluted share, compared to a net loss of $146,000, or $(0.01) per diluted share for the same period last year.
• 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 of four percent in the quarter, compared to five percent in the same period last year. The first quarter 2015 incurred expenses for the Nexgen acquisition totaling three percent of revenue.
  • Non-GAAP net income of $904,000 or $0.05 per diluted share in the quarter, compared to $914,000 or $0.05 per diluted share in the same period last year. The first quarter 2015 incurred expenses for the Nexgen acquisition totaling $0.03 per share.
• $38.9 million of cash and short-term investments at March 31, 2015, a decrease of approximately $21.1 million from the preceding quarter. During the quarter the Company used $20.5 million of cash for the Nexgen acquisition and $929,000 for the regular quarterly dividend, and generated $278,000 of cash and investments from all other sources.

“While pleased with year-over-year-growth, we had anticipated stronger engineering services and continued strength in antenna and mobile tower sales into the oil and gas industry,” said Marty Singer, PCTEL’s Chairman and CEO. “Fortunately, we have seen a rebound in spending on engineering services, positive market reaction to the IBflex® and SeeWave™, and stronger broadband wireless antenna sales to our major OEMs, and the benefit of our recent acquisition. We anticipate a much stronger second quarter,” 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 (877) 734-5369 (U.S. / Canada) or (706) 679-6397 (International), conference ID: 13775110. 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: 13775110.

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™, IB flex®, 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 portfolio (Map IQ, Network IQ, and Subscriber IQ).

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 engineering services, sales of certain RF Solutions products and the benefit of the most recent acquisition 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, 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. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data)     (unaudited) March 31, December 31, 2015 2014 ASSETS   Cash and cash equivalents $7,917 $20,432 Short-term investment securities 30,941 39,577 Accounts receivable, net of allowance for doubtful accounts of $107 and $121 at March 31, 2015 and December 31, 2014, respectively 24,318 23,874 Inventories, net 17,704 16,358 Deferred tax assets, net 2,301 2,281 Prepaid expenses and other assets 2,121 1,757 Total current assets 85,302 104,279   Property and equipment, net 14,655 14,842 Goodwill 5,598 161 Intangible assets, net 13,044 2,637 Deferred tax assets, net 9,710 9,710 Other noncurrent assets 38 40 TOTAL ASSETS $128,347 $131,669   LIABILITIES AND STOCKHOLDERS’ EQUITY   Accounts payable $5,895 $5,495 Accrued liabilities 6,818 10,211 Total current liabilities 12,713 15,706   Other long-term liabilities 437 448     Total liabilities 13,150 16,154   Stockholders’ equity: Common stock, $0.001 par value, 100,000,000 shares authorized, 18,714,202 and 18,571,419 shares issued and outstanding at March 31, 2015 and December 31, 2014, respectively 19 19 Additional paid-in capital 146,110 145,462 Accumulated deficit (31,063) (30,101) Accumulated other comprehensive income 131 135 Total stockholders’ equity 115,197 115,515   TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $128,347 $131,669 PCTEL, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (in thousands, except per share data)       Three Months Ended March 31, 2015 2014   REVENUES $26,326 $23,656 COST OF REVENUES 16,137   14,074   GROSS PROFIT 10,189   9,582   OPERATING EXPENSES: Research and development 2,738 3,242 Sales and marketing 3,530 2,956 General and administrative 3,363 3,232 Amortization of intangible assets 654   574   Total operating expenses 10,285   10,004   OPERATING LOSS (96 ) (422 ) Other income, net 44   197   LOSS BEFORE INCOME TAXES (52 ) (225 ) Benefit for income taxes (19 ) (79 ) NET LOSS ($33 ) ($146 )   Loss per Share: Basic ($0.00 ) ($0.01 ) Diluted ($0.00 ) ($0.01 )   Weighed Average Shares: Basic 18,312 18,176 Diluted 18,312 18,176   Cash dividend per share $0.05 $0.04   PCTEL, INC. P&L INFORMATION BY SEGMENT (unaudited) (in thousands)           Three Months Ended March 31, 2015 Connected RF Solutions Solutions Corporate Total   REVENUES $17,354 $9,051 ($79 ) $26,326         GROSS PROFIT 5,444 4,736 9 10,189         OPERATING INCOME (LOSS) $1,613 $1,210 ($2,919 ) ($96 )     Three Months Ended March 31, 2014 Connected RF Solutions Solutions Corporate Total   REVENUES $15,997 $7,722 ($63 ) $23,656         GROSS PROFIT 5,116 4,459 7 9,582         OPERATING INCOME (LOSS) $1,170 $1,014 ($2,606 ) ($422 )

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 March 31,

2015

2014

  Operating Loss ($96 ) ($422 )   (a) Add: Amortization of intangible assets 654 574 TelWorx investigation: -General & Administrative 38 235 Stock Compensation: -Cost of Goods Sold 73 86 -Engineering 115 173 -Sales & Marketing 158 147 -General & Administrative 155   345   1,193 1,560     Non-GAAP Operating Income $1,097   $1,138   % of revenue 4.2 % 4.8 %  

Reconciliation of GAAP net loss to non-GAAP net income (b)

  Three Months Ended March 31,

2015

2014

  Net Loss ($33 ) ($146 )   Adjustments: (a) Non-GAAP adjustment to operating income 1,193 1,560 Other income related to SEC investigation of TelWorx (38 ) (220 ) (b) Income Taxes (218 ) (280 ) 937 1,060     Non-GAAP Net Income $904   $914     Non-GAAP Earning per Share: Basic $0.05 $0.05 Diluted $0.05 $0.05   Weighed Average Shares: Basic 18,312 18,176 Diluted 18,525 18,379   This schedule reconciles the Company's GAAP operating loss and GAAP net loss 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 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, 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 March 31, 2015 Connected RF Solutions Solutions Corporate Total     Operating Income (Loss) $1,613 $1,210 ($2,919 ) ($96 )   Add: Amortization of intangible assets 230 424 0 654 TelWorx investigation: -General & Administrative 0 0 38 38 Stock Compensation: -Cost of Goods Sold 36 37 0 73 -Engineering 46 69 0 115 -Sales & Marketing 103 55 0 158 -General & Administrative 25 19 111   155   440 604 149 1,193         Non-GAAP Operating Income (Loss) $2,053 $1,814 ($2,770 ) $1,097       Three Months Ended March 31, 2014 Connected RF Solutions Solutions Corporate Total     Operating Income (Loss) $1,170 $1,014 ($2,606 ) ($422 )   Add: Amortization of intangible assets 370 204 0 574 TelWorx investigation: -General & Administrative 0 0 235 235 Stock Compensation: -Cost of Goods Sold 46 40 0 86 -Engineering 80 93 0 173 -Sales & Marketing 128 19 0 147 -General & Administrative 86 30 229   345   710 386 464 1,560         Non-GAAP Operating Income (Loss) $1,880 $1,400 ($2,142 ) $1,138     This schedule reconciles the Company's GAAP operating income (loss) by segment 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.   (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.

PCTEL, Inc.John Schoen, (630) 372-6800CFOorPCTEL, Inc.Jack Seller, (630)372-6800Public RelationsJack.seller@pctel.com