PC Tel (PCTI) 8-K PCTEL Reports $18.4 Million in Third Quarter Revenue

EXHIBIT 99.1

 

PCTEL Reports $18.4 Million in Third Quarter Revenue

BLOOMINGDALE, Illinois – November 8, 2018 – PCTEL, Inc. (Nasdaq: PCTI), a leader in Performance Critical TELecom solutions, announced its results for the third quarter ended September 30, 2018.

Highlights from Continuing Operations

• Revenue of $18.4 million in the quarter and $61.7 million year to date, 22% lower in the quarter and 9% lower year-to-date compared to last year. Revenue was lower in both the antenna and test & measurement product lines in the quarter and year to date.

• Gross profit margin of 36.5% in the quarter and 36.3% year to date, down 6.4% in the quarter and 5.6% year-to-date compared to last year. The two primary reasons for the decrease in both the quarter and year-to-date are lower test & measurement product revenue which has higher margin compared to antenna products, and price erosion in the small cell antenna market.

• Net loss per share of $0.10 in the quarter and $0.22 year to date, compared to net income of $0.04 per share in the quarter and year-to-date 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 share of $0.06 in the quarter and a net loss of $0.07 year to date compared to net income of $0.09 in the quarter and $0.20 year-to-date last year. The third quarter of this year included $0.04 non-GAAP restructuring charges related to the Company’s recent reorganization.

• Adjusted EBITDA margin as a percent of revenue of negative 3% in the quarter and positive 1% year to date compared to 11% in the quarter and 9% year-to-date last year.

• $37.1 million of cash and short-term investments at September 30, 2018 and no debt.

“Our small cell revenue has stabilized with wins in China, North American and Europe, and we are encouraged with the early 5G deployment activity,” said David Neumann, PCTEL’s CEO. “However, carrier spending was down on legacy networks and several antenna projects were completed in Q2, which negatively affected the quarter and 2018 year to date results. We believe that improving market conditions and our recent reorganization to improve business development will position PCTEL to take advantage of the long-term growth opportunities in 5G, antennas, and industrial IoT.”

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: 1369318. 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: 1369318.

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 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 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 regarding our future financial performance, growth of our antenna solutions and test and measurement businesses, anticipated demand for certain products including those related to antennas, the industrial IoT and the rollout of 5G, our expectations regarding increasing capital expenditures in 2019 by wireless operators, the impact of tariffs on certain imports from China, 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 including demand from customers in China, 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.com

PCTEL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

	(Unaudited)
	September 30,			December 31,
	2018			2017
ASSETS
Cash and cash equivalents	$	5,377		$	5,559
Short-term investment securities		31,770			32,499
Accounts receivable, net of allowances of $278 and $319 at September 30, 2018 and    December 31, 2017, respectively		13,261			18,624
Inventories, net		12,691			12,756
Prepaid expenses and other assets		1,185			1,605
Total current assets		64,284			71,043
Property and equipment, net		12,491			12,369
Goodwill		3,332			3,332
Intangible assets, net		1,280			2,113
Deferred tax assets, net		8,685			7,734
Other noncurrent assets		52			72
TOTAL ASSETS	$	90,124		$	96,663
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable	$	5,392		$	5,471
Accrued liabilities		5,069			7,481
Total current liabilities		10,461			12,952
Long-term liabilities		383			392
Total liabilities		10,844			13,344
Stockholders’ equity:
Common stock, $0.001 par value, 100,000,000 shares authorized, 18,318,141 and 17,806,792    shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively		18			18
Additional paid-in capital		134,455			134,505
Accumulated deficit		(54,920	)		(51,258	)
Accumulated other comprehensive (loss) income		(273	)		54
Total stockholders’ equity		79,280			83,319
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	90,124		$	96,663

PCTEL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(in thousands, except per share data)

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2018			2017		2018			2017
REVENUES	$	18,426		$	23,665	$	61,739		$	68,136
COST OF REVENUES		11,705			13,515		39,355			39,570
GROSS PROFIT		6,721			10,150		22,384			28,566
OPERATING EXPENSES:
Research and development		3,028			2,757		9,021			8,141
Sales and marketing		2,957			3,230		9,059			9,394
General and administrative		3,029			3,146		9,172			10,081
Amortization of intangible assets		85			124		333			372
Total operating expenses		9,099			9,257		27,585			27,988
OPERATING (LOSS) INCOME		(2,378	)		893		(5,201	)		578
Other income, net		226			32		486			74
(LOSS) INCOME BEFORE INCOME TAXES		(2,152	)		925		(4,715	)		652
(Benefit) expense for income taxes		(482	)		206		(961	)		(68	)
(LOSS) INCOME FROM CONTINUING OPERATIONS		(1,670	)		719		(3,754	)		720
NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX BENEFIT		0			236		0			(148	)
NET (LOSS) INCOME	$	(1,670	)	$	955	$	(3,754	)	$	572
Net (Loss) Income per Share from Continuing Operations:
Basic	$	(0.10	)	$	0.04	$	(0.22	)	$	0.04
Diluted	$	(0.10	)	$	0.04	$	(0.22	)	$	0.04
Net Income (Loss) per Share from Discontinued Operations:
Basic	$	0.00		$	0.01	$	0.00		$	(0.01	)
Diluted	$	0.00		$	0.01	$	0.00		$	(0.01	)
Net (Loss) Income per Share:
Basic	$	(0.10	)	$	0.06	$	(0.22	)	$	0.03
Diluted	$	(0.10	)	$	0.06	$	(0.22	)	$	0.03
Weighted Average Shares:
Basic		17,234			16,757		17,145			16,526
Diluted		17,234			17,065		17,145			16,830
Cash dividend per share	$	0.055		$	0.055	$	0.155		$	0.155

PCTEL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

	Nine Months Ended September 30,
.	2018			2017
Operating Activities:
Net (loss) income from continuing operations	$	(3,754	)	$	720
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation		2,088			1,913
Intangible asset amortization		833			872
Stock-based compensation		2,572			2,458
Loss on disposal of property and equipment		11			18
Restructuring costs		(28	)		(88	)
Bad debt provision		248			38
Deferred tax provision		(868	)		(282	)
Changes in operating assets and liabilities:
Accounts receivable		4,968			672
Inventories		(173	)		1,809
Prepaid expenses and other assets		425			509
Accounts payable		255			(1,078	)
Income taxes payable		(39	)		(154	)
Other accrued liabilities		(2,395	)		(426	)
Deferred revenue		(43	)		95
Net cash provided by operating activities		4,100			7,076
Investing Activities:
Capital expenditures		(2,205	)		(2,097	)
Proceeds from disposal of property and equipment		14			1
Purchases of investments		(33,978	)		(37,579	)
Redemptions/maturities of short-term investments		34,707			26,056
Net cash used in investing activities		(1,462	)		(13,619	)
Financing Activities:
Proceeds from issuance of common stock		686			1,375
Payment of withholding tax on stock-based compensation		(301	)		(1,190	)
Principle payments on capital leases		(91	)		(64	)
Cash dividends		(3,007	)		(2,730	)
Net cash used in financing activities		(2,713	)		(2,609	)
Cash flows from discontinued operations:
Net cash used in operating activities		0			(697	)
Net cash provided by investing activities		0			1,434
Net cash flows provided by discontinued operations	0				737
Net decrease in cash and cash equivalents		(75	)		(8,415	)
Effect of exchange rate changes on cash		(107	)		87
Cash and cash equivalents, beginning of period		5,559			14,855
Cash and Cash Equivalents, End of Period	$	5,377		$	6,527

PCTEL, INC.

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

(in thousands)

	Three Months Ended September 30, 2018												Nine Months Ended September 30, 2018
	Antenna Products			Test & Measurement Products			Corporate			Total			Antenna Products			Test & Measurement Products			Corporate			Total
REVENUES	$	14,877		$	3,556		$	(7	)	$	18,426		$	50,120		$	11,691		$	(72	)	$	61,739
GROSS PROFIT	$	4,504		$	2,201		$	16		$	6,721		$	14,734		$	7,627		$	23		$	22,384
GROSS PROFIT %		30.3	%		61.9	%					36.5	%		29.4	%		65.2	%					36.3	%
	Three Months Ended September 30, 2017												Nine Months Ended September 30, 2017
	Antenna Products			Test & Measurement Products			Corporate			Total			Antenna Products			Test & Measurement Products			Corporate			Total
REVENUES	$	17,988		$	5,739		$	(62	)	$	23,665		$	52,125		$	16,157		$	(146	)	$	68,136
GROSS PROFIT	$	6,148		$	4,006		$	(4	)	$	10,150		$	17,283		$	11,275		$	8		$	28,566
GROSS PROFIT %		34.2	%		69.8	%					42.9	%		33.2	%		69.8	%					41.9	%

Reconciliation of GAAP to non-GAAP Results - Continuing Operations (unaudited)
(in thousands except per share information)
Reconciliation of GAAP operating loss to non-GAAP operating (loss) income - Continuing Operations
		Three Months Ended September 30,						Nine Months Ended September 30,
		2018			2017			2018			2017
	Operating (Loss) Income	$	(2,378	)	$	893		$	(5,201	)	$	578
(a)	Add:
	Amortization of intangible assets
	-Cost of revenues		167			167			500			500
	-Operating expenses		85			124			333			372
	Stock Compensation:
	-Cost of revenues		(50	)		68			131			200
	-Engineering		165			128			462			394
	-Sales & marketing		174			116			462			362
	-General & administrative		496			349			1,517			1,501
			1,037			952			3,405			3,329
	Non-GAAP Operating (Loss) Income	$	(1,341	)	$	1,845		$	(1,796	)	$	3,907
	% of revenue		-7.3	%		7.8	%		-2.9	%		5.7	%
Reconciliation of GAAP net loss to non-GAAP net (loss) income - Continuing Operations
		Three Months Ended September 30,						Nine Months Ended September 30,
		2018			2017			2018			2017
	Net (Loss) Income	$	(1,670	)	$	719		$	(3,754	)	$	720
	Adjustments:
(a)	Non-GAAP adjustment to operating loss		1,037			952			3,405			3,329
	Income Taxes		(393	)		(132	)		(856	)		(785	)
			644			820			2,549			2,544
	Non-GAAP Net (Loss) Income	$	(1,026	)	$	1,539		$	(1,205	)	$	3,264
	Non-GAAP (Loss) Income per Share:
	Basic	$	(0.06	)	$	0.09		$	(0.07	)	$	0.20
	Diluted	$	(0.06	)	$	0.09		$	(0.07	)	$	0.19
	Weighed Average Shares:
	Basic		17,234			16,757			17,145			16,526
	Diluted		17,234			17,065			17,145			16,830

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

PCTEL, Inc.

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

(unaudited, in thousands)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Operating (Loss) Income	$	(2,378	)	$	893		$	(5,201	)	$	578
Add:
Depreciation and amortization		708			652			2,088			1,913
Intangible amortization		252			291			833			872
Stock compensation expenses		785			661			2,572			2,458
Adjusted EBITDA	$	(633	)	$	2,497		$	292		$	5,821
% of revenue		-3.4	%		10.6	%		0.5	%		8.5	%

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