$106.6 Million in 2015 Revenue

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

Fourth Quarter and Annual Highlights

  • $26.1 million in revenue for the quarter, a decrease of 11 percent from the same period last year. $106.6 million in revenue for the year, a decrease of a half percent as compared to 2014.
  • Gross profit margin of 34 percent in the quarter compared to 40 percent for the same period last year. Gross profit margin of 35 percent for the year, compared to 41 percent in 2014.
  • GAAP operating margin of negative seven percent for the quarter compared to operating margin of six percent for the same period last year. Operating margin for the year of negative five percent as compared to four percent in 2014.
  • GAAP net loss of $820,000 for the quarter, or $(0.05) per diluted share compared to net income of $2.0 million, or $0.11 per diluted share for the same period last year. $(1.6) million of net loss for the year, or $(0.09) per diluted share, as compared to net income of $4.6 million, or $0.25 per diluted share in 2014.
  • 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 three percent in the quarter, compared to 12 percent in the same period last year. Non-GAAP operating margin for the year was two percent compared to 10 percent in 2014.
    • Non-GAAP net income of $611,000 or $0.04 per diluted share in the quarter, compared to $3.0 million or $0.16 per diluted share in the same period last year. Non-GAAP net income of $1.9 million or $0.11 per diluted share for the year compared to $8.8 million or $0.48 per diluted share in 2014.
  • $31.8 million of cash and short-term investments at December 31, 2015, a decrease of approximately $2.5 million from the preceding quarter and a decrease of $28.2 million from 2014.
    • 449,000 common shares repurchased in the quarter for $2.4 million. 1.94 million common shares repurchased in the year for $12.1 million.
    • $881,000 dividends paid in the quarter and $3.7 million paid in the year.
    • $869,000 of free cash flow in the quarter. $7.1 million of free cash flow in the year, an increase of $1.7 million from 2014.

“We made significant progress over the previous quarter led by strength in antenna and scanning receiver sales in North America,” said Marty Singer, PCTEL’s Chairman and CEO. “During the fourth quarter we also began to restructure our analytics and services operations, bringing in new leadership and sharpening our product focus on PCTEL’s traditional areas of strength. We believe that these efforts will lead to improved results in the second half of this year,” 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: 55187834. 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: 55187834.

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 MXflex®®, IBflex®®, and EXflex®® SeeGull®® scanning receivers and related SeeHawk®® Touch, SeeHawk®® Collect, and SeeWave®® tools. PCTEL's sophisticated engineering services utilize these products as well as SeeHawk™ Analytics.

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 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 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 third quarter 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, expectations regarding the future growth of our antenna and wireless RF businesses, and demand for 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, 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 (in thousands, except share data)     December 31,   December 31, 2015 2014 ASSETS   Cash and cash equivalents $7,055 $20,432 Short-term investment securities 24,728 39,577 Accounts receivable, net of allowance for doubtful accounts of $314 and $121 at December 31, 2015 and December 31, 2014, respectively 21,001 23,874 Inventories, net 17,596 16,358 Deferred tax assets, net 0 2,281 Prepaid expenses and other assets 1,586 1,757 Total current assets 71,966 104,279   Property and equipment, net 13,839 14,842 Goodwill 3,332 161 Intangible assets, net 11,378 2,637 Deferred tax assets, net 13,155 9,710 Other noncurrent assets 40 40 TOTAL ASSETS $113,710 $131,669   LIABILITIES AND STOCKHOLDERS’ EQUITY   Accounts payable $6,735 $5,495 Accrued liabilities 6,190 10,211 Total current liabilities 12,925 15,706   Other long-term liabilities 388 448     Total liabilities 13,313 16,154   Stockholders’ equity: Common stock, $0.001 par value, 100,000,000 shares authorized, 17,654,236 and 18,571,419 shares issued and outstanding at December 31, 2015 and December 31, 2014, respectively 18 19 Additional paid-in capital 135,714 145,462 Accumulated deficit (35,320) (30,101) Accumulated other comprehensive income (loss) (15) 135 Total stockholders’ equity 100,397 115,515   TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $113,710 $131,669 PCTEL, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (in thousands, except per share data)         Three Months Ended Year Ended December 31, December 31, 2015 2014 2015 2014   REVENUES $26,138 $29,395 $106,615 $107,164 COST OF REVENUES 17,287   17,634 69,354   63,577 GROSS PROFIT 8,851   11,761 37,261   43,587 OPERATING EXPENSES: Research and development 2,699 2,766 11,205 11,736 Sales and marketing 3,639 3,649 14,196 12,961 General and administrative 2,887 2,997 12,399 12,819 Amortization of intangible assets 461 464 3,426 1,967 Impairment of goodwill 161 0 161 0 Restructuring charges 778   0 1,630   0 Total operating expenses 10,625   9,876 43,017   39,483 OPERATING INCOME (LOSS) (1,774 ) 1,885 (5,756 ) 4,104 Other income, net 504   927 3,287   1,666 INCOME (LOSS) BEFORE INCOME TAXES (1,270 ) 2,812 (2,469 ) 5,770 Expense (benefit) for income taxes (450 ) 817 (901 ) 1,158 NET INCOME (LOSS) ($820 ) $1,995 ($1,568 ) $4,612   Net Income (Loss) per Share: Basic ($0.05 ) $0.11 ($0.09 ) $0.25 Diluted ($0.05 ) $0.11 ($0.09 ) $0.25   Weighed Average Shares: Basic 16,820 18,154 17,737 18,159 Diluted 16,820 18,412 17,737 18,389   Cash dividend per share $0.05 $0.04 $0.20 $0.16 PCTEL, INC. P&L INFORMATION BY SEGMENT (unaudited) (in thousands)                   Three Months Ended December 31, 2015 Year Ended December 31, 2015

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Corporate Total   REVENUES $16,675 $9,506 ($43 ) $26,138 $69,579 $37,255 ($219 ) $106,615                 GROSS PROFIT 4,838 4,000 13 8,851 20,426 16,803 32 37,261                 OPERATING INCOME (LOSS) $675 ($8 ) ($2,441 ) ($1,774 ) $5,040 ($298 ) ($10,498 ) ($5,756 )     Three Months Ended December 31, 2014 Year Ended December 31, 2014

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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  

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 December 31, Year Ended December 31, 2015 2014 2015 2014   Operating Income (Loss) ($1,774 ) $1,885 ($5,756 ) $4,104   (a) Add: Amortization of intangible assets -Cost of Goods Sold 595 0 595 0 -Operating expenses 461 464 3,426 1,967 Impairment of goodwill 161 0 161 0 Restructuring: -Cost of Goods Sold 42 0 288 0 -Restructuring 778 0 1,630 0 TelWorx investigation: -General & Administrative 7 580 107 1,266 Legal settlement: -General & Administrative 0 0 0 75 Stock Compensation: -Cost of Goods Sold 125 111 369 426 -Engineering 175 150 419 658 -Sales & Marketing (132 ) 170 238 661 -General & Administrative 304   267   838   1,530   2,516 1,742 8,071 6,583         Non-GAAP Operating Income $742   $3,627   $2,315   $10,687   % of revenue 2.8 % 12.3 % 2.2 % 10.0 %  

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

  Three Months Ended December 31, Year Ended December 31, 2015 2014 2015 2014   Net Income (Loss) ($820 ) $1,995 ($1,568 ) $4,612   Adjustments: (a) Non-GAAP adjustment to operating income 2,516 1,742 8,071 6,583 (b) Other income related to SEC investigation of TelWorx (1 ) (908 ) (102 ) (1,568 ) (b) Legal Settlement - Amendment to Nexgen APA (500 ) 0 (3,160 ) 0 (b) Legal Settlement - other 0 0 0 (75 ) (b) Income Taxes (584 ) 161   (1,322 ) (770 ) 1,431 995 3,487 4,170         Non-GAAP Net Income $611   $2,990   $1,919   $8,782     Non-GAAP Earning per Share: Basic $0.04 $0.16 $0.11 $0.48 Diluted $0.04 $0.16 $0.11 $0.48   Weighed Average Shares: Basic 16,820 18,154 17,737 18,159 Diluted 16,969 18,412 18,257 18,389

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, 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 December 31, 2015     Year Ended December 31, 2015

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  Corporate   Total

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  Corporate   Total     Operating Income (Loss) $675 ($8 ) ($2,441 ) ($1,774 ) $5,040 ($298 ) ($10,498 ) ($5,756 )   Add: Amortization of intangible assets

 

 

 

 

 

 

 

 

-Cost of Goods Sold 39 556 0 595 39 556 0 595 -Operating expenses

156

305

0

461

811

2,615

0

3,426

Impairment of goodwill 0 161 0 161 0 161 0 161 TelWorx investigation: -General & Administrative 0 0 7 7 0 0 107 107 Restructuring: -Cost of Goods Sold 42 0 0 42 288 0 0 288 -Restructuring charges 755 23 0 778 1,293 337 0 1,630 Stock Compensation: -Cost of Goods Sold 28 97 0 125 82 287 0 369 -Engineering 49 126 0 175 104 315 0 419 -Sales & Marketing 88 (220 ) 0 (132 ) 261 (23 ) 0 238 -General & Administrative (18 ) 70   252   304   (12 ) 113   737   838   1,139 1,118 259 2,516 2,866 4,361 844 8,071                 Non-GAAP Operating Income (Loss) $1,814   $1,110   ($2,182 ) $742   $7,906   $4,063   ($9,654 ) $2,315       Three Months Ended December 31, 2014 Year Ended December 31, 2014

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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 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 129 41 0 170 530 131 0 661 -General & Administrative 54   31   182   267   256   129   1,145   1,530   565 415 762 1,742 2,444 1,653 2,486 6,583                 Non-GAAP Operating Income (Loss) $2,643   $2,599   ($1,615 ) $3,627   $9,801   $8,986   ($8,100 ) $10,687  

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, 630-372-6800CFOorJack Seller, 630-372-6800Public RelationsJack.seller@pctel.com

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