PC Tel (PCTI) 8-K PCTEL Reports $21.7 Million in First Quarter Revenue

EXHIBIT 99.1

 

PCTEL Reports $21.7 Million in First Quarter Revenue

BLOOMINGDALE, Ill. – May 9, 2018 – PCTEL, Inc. (Nasdaq: PCTI), a leader in Performance Critical TELecom solutions, announced its results for the first quarter ended March 31, 2018.

Highlights from Continuing Operations

• Revenue of $21.7 million in the quarter, in line with guidance, down 5% from the first quarter last year. Connected Solutions segment revenue was up 3%. RF Solutions segment revenue was down 30%, due to deferred carrier capital budget deployment in North America.

• Gross profit margin of 36.2% in the quarter, down 500 basis points compared to last year. The primary reason for the decrease is lower revenue in the RF Solutions segment which has higher margin from its scanner products compared to antenna products. Price erosion in the small cell antenna market also contributed to the decline.

• Net loss per diluted share of $0.05 in the quarter, compared to net income of $0.01 last year.

• Non-GAAP net income and adjusted EBITDA are measures the Company uses to reflect the results of its core earnings. A reconciliation of those non-GAAP measures to our financial statements is provided later in the press release.

• Non-GAAP net loss per diluted share of $0.01, compared to Non-GAAP net income per diluted share of $0.05 in the first quarter last year.

• Adjusted EBITDA margin as a percent of revenue of 2% in the quarter, compared to 7% last year.

• $34.7 million of cash and short-term investments and no debt at March 31, 2018.

“The Company saw revenue growth for its Connected Solutions products in the enterprise Wi-Fi market during the quarter. RF Solutions revenue was down in the North American market, due to the slow release of capital budget by several U.S. carriers,” said David Neumann, PCTEL’s CEO. “PCTEL is well positioned to take advantage of the long-term growth opportunities in Industrial IoT and 5G, which require both performance critical antenna solutions across multiple vertical markets and RF test equipment.”

CONFERENCE CALL / WEBCAST  

PCTEL’s management team will discuss the Company’s results today at 4:30 p.m. ET.The call can be accessed by dialing (888) 782-2072 (U.S. / Canada) or (706) 679-6397 (International), conference ID: 47850722. The call will also be webcast at http://investor.pctel.com/news-events/webcasts-presentations.

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: 47850722.

About PCTEL

PCTEL, Inc. provides Performance Critical TELecom technology solutions. We are a leading global supplier of antennas and wireless network testing solutions. Our precision antennas are deployed in small cells, enterprise Wi-Fi access points, fleet management and transit systems, and in equipment and devices for the Industrial Internet of Things (IIoT). We offer in-house design, testing, radio integration, and manufacturing capabilities for our antenna customers. PCTEL’s test and measurement tools improve the performance of wireless networks globally, with a focus on LTE, public safety, and emerging 5G technologies. Network operators, neutral hosts, and equipment manufacturers rely on our scanning receivers and testing solutions to analyze, design, and optimize their networks.

For more information, please visit our website at http://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 regarding our future financial performance, growth of our Connected Solutions and RF Solutions businesses, anticipated demand for certain products, our expectations regarding capital expenditures by U.S. carriers, and the anticipated growth of public and private wireless systems 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 impact of data densification and IoT on capacity and coverage demand, impact of 5G, customer demand for these types of products and services generally, growth and continuity in PCTEL’s vertical markets, and PCTEL’s ability to grow its wireless products 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.

# # #

For further information contact:

John SchoenMichael Rosenberg

CFODirector of Marketing

PCTEL, Inc.PCTEL, Inc.

(630) 372-6800(301) 444-2046

public.relations@pctel.co

PCTEL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

	(Unaudited)
	March 31,			December 31,
	2018			2017
ASSETS
Cash and cash equivalents	$	12,452		$	5,559
Short-term investment securities		22,285			32,499
Accounts receivable, net of allowances of $66 and $319 at March 31, 2018 and    December 31, 2017, respectively		19,026			18,624
Inventories, net		12,582			12,756
Prepaid expenses and other assets		1,874			1,605
Total current assets		68,219			71,043
Property and equipment, net		12,537			12,369
Goodwill		3,332			3,332
Intangible assets, net		1,823			2,113
Deferred tax assets, net		8,068			7,734
Other noncurrent assets		64			72
TOTAL ASSETS	$	94,043		$	96,663
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable	$	5,226		$	5,471
Accrued liabilities		5,787			7,481
Total current liabilities		11,013			12,952
Long-term liabilities		485			392
Total liabilities		11,498			13,344
Stockholders’ equity:
Common stock, $0.001 par value, 100,000,000 shares authorized, 18,258,643 and 17,806,792    shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively		18			18
Additional paid-in capital		134,253			134,505
Accumulated deficit		(52,024	)		(51,258	)
Accumulated other comprehensive loss		298			54
Total stockholders’ equity		82,545			83,319
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	94,043		$	96,663

PCTEL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(in thousands, except per share data)

	Three Months Ended
	March 31,
	2018			2017
REVENUES	$	21,731		$	22,970
COST OF REVENUES		13,867			13,516
GROSS PROFIT		7,864			9,454
OPERATING EXPENSES:
Research and development		2,940			2,716
Sales and marketing		3,028			3,253
General and administrative		2,993			3,339
Amortization of intangible assets		124			124
Total operating expenses		9,085			9,432
OPERATING (LOSS) INCOME		(1,221	)		22
Other income, net		51			28
(LOSS) INCOME BEFORE INCOME TAXES		(1,170	)		50
Benefit for income taxes		(312	)		(134	)
NET (LOSS) INCOME FROM CONTINUING OPERATIONS		(858	)		184
NET LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX BENEFIT		0			(214	)
NET LOSS	$	(858	)	$	(30	)
Net (Loss) Income per Share from Continuing Operations:
Basic	$	(0.05	)	$	0.01
Diluted	$	(0.05	)	$	0.01
Net Loss per Share from Discontinued Operations:
Basic	$	0.00		$	(0.01	)
Diluted	$	0.00		$	(0.01	)
Net Loss per Share:
Basic	$	(0.05	)	$	(0.00	)
Diluted	$	(0.05	)	$	(0.00	)
Weighted Average Shares:
Basic		17,056			16,340
Diluted		17,056			16,340
Cash dividend per share	$	0.055		$	0.05

PCTEL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

	Three Months Ended March 31,
.	2018			2017
Operating Activities:
Net (loss) income from continuing operations	$	(858	)	$	184
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation		674			628
Intangible asset amortization		290			290
Stock-based compensation		668			708
Loss on disposal of property and equipment		10			0
Restructuring costs		(11	)		(33	)
Bad debt provision		15			(7	)
Deferred tax provision		(236	)		(276	)
Changes in operating assets and liabilities:
Accounts receivable		(350	)		794
Inventories		321			1,790
Prepaid expenses and other assets		(250	)		319
Accounts payable		(64	)		(812	)
Income taxes payable		(3	)		(70	)
Other accrued liabilities		(1,808	)		(1,467	)
Deferred revenue		14			(12	)
Net cash (used in) provided by operating activities		(1,588	)		2,036
Investing Activities:
Capital expenditures		(884	)		(1,052	)
Proceeds from disposal of property and equipment		14			0
Purchases of investments		(7,266	)		(9,743	)
Redemptions/maturities of short-term investments		17,480			10,197
Net cash provided by (used in) investing activities		9,344			(598	)
Financing Activities:
Proceeds from issuance of common stock		364			330
Payment of withholding tax on stock-based compensation		(289	)		(614	)
Principle payments on capital leases		(24	)		(19	)
Cash dividends		(995	)		(865	)
Net cash used in financing activities		(944	)		(1,168	)
Cash flows from discontinued operations:
Net cash used in operating activities		0			(174	)
Net cash used in investing activities		0			(1	)
Net cash flows used in discontinued operations	0				(175	)
Net increase in cash and cash equivalents		6,812			95
Effect of exchange rate changes on cash		81			10
Cash and cash equivalents, beginning of year		5,559			14,855
Cash and Cash Equivalents, End of Period	$	12,452		$	14,960

PCTEL, INC.

P&L INFORMATION BY SEGMENT - Continuing Operations (unaudited)

(in thousands)

	Three Months Ended March 31, 2018
	Connected Solutions		RF Solutions			Corporate			Total
REVENUES	$	17,764	$	3,999		$	(32	)	$	21,731
GROSS PROFIT		5,198		2,670			(4	)		7,864
OPERATING (LOSS) INCOME	$	1,605	$	(328	)	$	(2,498	)	$	(1,221	)
	Three Months Ended March 31, 2017
	Connected Solutions		RF Solutions			Corporate			Total
REVENUES	$	17,271	$	5,756		$	(57	)	$	22,970
GROSS PROFIT		5,403		4,045			6			9,454
OPERATING INCOME (LOSS)	$	1,744	$	1,024		$	(2,746	)	$	22

Reconciliation of GAAP to non-GAAP Results - Continuing Operations (unaudited)
(in thousands except per share information)
Reconciliation of GAAP operating (loss) income to non-GAAP operating (loss) income - Continuing Operations
		Three Months Ended March 31,
		2018			2017
	Operating (Loss) Income	$	(1,221	)	$	22
(a)	Add:
	Amortization of intangible assets
	-Cost of revenues		167			167
	-Operating expenses		124			124
	Stock Compensation:
	-Cost of revenues		88			61
	-Engineering		138			146
	-Sales & marketing		131			119
	-General & administrative		311			382
			959			999
	Non-GAAP Operating (Loss) Income	$	(262	)	$	1,021
	% of revenue		-1.2	%		4.4	%
Reconciliation of GAAP net (loss) income to non-GAAP net (loss) income - Continuing Operations
		Three Months Ended March 31,
		2018			2017
	Net (Loss) Income	$	(858	)	$	184
	Adjustments:
(a)	Non-GAAP adjustment to operating (loss) income		959			999
	Income Taxes		(295	)		(323	)
			664			676
	Non-GAAP Net (Loss) Income	$	(194	)	$	860
	Non-GAAP (Loss) Income per Share:
	Basic	$	(0.01	)	$	0.05
	Diluted	$	(0.01	)	$	0.05
	Weighed Average Shares:
	Basic		17,056			16,340
	Diluted		17,056			16,340

This schedule reconciles the Company's GAAP operating (loss) income 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.

The adjustments to GAAP operating (loss) income (a) consist of stock compensation expense and amortization of intangible assets.  The adjustments to GAAP net (loss) income include the non-GAAP adjustments to operating (loss) income as well as adjustments for (b) non-cash income tax expense.

Reconciliation of GAAP to non-GAAP SEGMENT INFORMATION - Continuing Operations (unaudited)
	(in thousands)
		Three Months Ended March 31, 2018
		Connected Solutions		RF Solutions			Corporate			Total
	Operating (Loss) Income	$	1,605	$	(328	)	$	(2,498	)	$	(1,221	)
	Add:
	Amortization of intangible assets:
	-Cost of revenues		0		167			0			167
	-Operating expenses		39		85			0			124
	Stock Compensation:
	-Cost of revenues		46		42			0			88
	-Engineering		74		64			0			138
	-Sales & marketing		82		49			0			131
	-General & administrative		60		23			228			311
			301		430			228			959
	Non-GAAP Operating (Loss) Income	$	1,906	$	102		$	(2,270	)	$	(262	)
		Three Months Ended March 31, 2017
		Connected Solutions		RF Solutions			Corporate			Total
	Operating (Loss) Income	$	1,744	$	1,024		$	(2,746	)	$	22
	Add:
	Amortization of intangible assets:
	-Cost of revenues		0		167			0			167
	-Operating expenses		39		85			0			124
	Stock Compensation:
	-Cost of revenues		39		22			0			61
	-Engineering		55		91			0			146
	-Sales & marketing		85		34			0			119
	-General & administrative		43		14			325			382
			261		413			325			999
	Non-GAAP Operating Income (Loss)	$	2,005	$	1,437		$	(2,421	)	$	1,021

This schedule reconciles the Company's GAAP operating (loss) income 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.

The adjustments to GAAP operating (loss) income consist of stock compensation expense and amortization of intangible assets.

PCTEL, Inc.

Reconciliation of GAAP operating income (loss) to Adjusted EBITDA - Continuing Operations

(unaudited, in thousands)

	Three Months Ended March 31,
	2018			2017
Operating (Loss) Income	$	(1,221	)	$	22
Add:
Depreciation and amortization		674			628
Intangible amortization		291			291
Stock compensation expenses		668			708
Adjusted EBITDA	$	412		$	1,649
% of revenue		1.9	%		7.2	%

This schedule reconciles the Company's GAAP operating (loss) income 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.  The adjustments on this schedule consist of depreciation, amortization of intangible assets, and stock compensation expenses.