PCTI - Earnings call transcript Q2 2018

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the PCTEL Second Quarter 2018 Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded for replay purposes. I will now turn the call over to John Schoen, Chief Financial Officer.

John Schoen

Thank you for joining us on today's conference call to discuss PCTEL's second quarter financial results. With me today is David Neumann, the company's CEO.

me that let contain call begin, statements. forward-looking we remind this you may Before

which statements best cause reflect issued are forward-looking our cause its forward-looking these on our While in PCTEL's that most factors risks differ from could uncertainties projections. to annual report Risk differ subject actual current results discussed the and that and results could actual PCTEL's materially these to they to from materially on earnings today, in XX-K, are both of Form are website. projections release, available which was recent judgment,

measures commentary reference measures reconciliation flow. will We Additionally, different comparability following our cash adjusted of non-GAAP these over include full facilitate non-GAAP EPS; measures: A non-GAAP believe free of the and EBITDA; results to call periods. our included now Neumann. press to basis today. non-GAAP earnings quarter issued the to it's With that that, our turn over these release to measures in was my David pleasure earlier is GAAP

David Neumann

welcome capital we I'll discuss our our and to will In last our Good for call. results. revenue John wireless few preparation for call, required risk systems operators legacy earnings make This comments our and XG business our impacted in deployments. America. their reduction expenditures capital reducing test related the then financial spending afternoon, in to mentioned about measurement expenditures business, a North on in

deploying meet Connected down We the in created the provide up half. but challenges will the infrastructure. demand, believe provide test opportunities Solutions confident segment in to RFS, XX% was and the will earnings measurement affect XG of weakness slowdown of This capital negatively revenue segment's guidance Solutions expectations. Connected the equipment not of for our segment measurement begin nature in Solutions half, Revenue uneven with macro long-term as and in later. to the small in RF the expenditures, the wireless and and XXXX. we deployment for for John business remain was did in cells result, together updated a Connected incrementally remainder In XG operators, for the our As revenue the quarter. RF project-driven in reduction they test Solutions Solutions the

a tools, while band. PCTEL IoT another revenue capabilities, unlicensed the or a second our networks benchmarking and antenna that customers' licensed recently first a gigahertz for into WiFi network X fact, and and scanning licensed software-defined the scanning drive in across driven protecting project HBflex data be to LAA. LTE commercially scanning - grew test bands. believe receivers are capturing Like the sub-X new or upgrade a our millimeter Connected for or deploying large capacity tool We in U.S. solution. access, unlicensed that for for In is by are a higher-margin with operators quarter. our increases spectrum our Asia legacy investment is radio-based recently multiple To combining deliveries narrowband licensed for measurements the wave one and This technologies, receivers. receiver software XG upgrade gigabit assisted scanning our support scanning LAA or IBflex example OEMs The testing HBflex delivered channels revenue major WiFi in LTE speed gigabyte more speeds and increases in spectrum. LAA the ideal in Southeast in WiFi is XG, this receivers their receivers we used mobile and existing troubleshooting and of complexity and for gigahertz RF integration stream. HBflex are technology released for LTE XG systems. U.S. enterprise available bands as legacy and Solutions, and will quarter, applications the by mesh In

the current in XXX.XXac important expected future WiFi growing recently more attention to antenna. XXXX to more radio carried solutions half ac actively note using is the panel press, released by gets long-term than of deployments by our Internet such its and begin be market, PCTEL for XG indoor antennas is as that macro indoor it for and antenna We traffic and of is Although start versions. developing to outdoor is and the ax VenU remain indoors. usage the in sites shift significant believe We indoor cells, from is small XG to small wireless applications. shipping antenna cell cells which most global embedded throughout We growth of confident given remainder the for will year. small

small made demand manufacturers equipment their for largest As many for antennas XG our know, remainder you cell sales are network Recently, the year. our world. one reduced small customers throughout the cell antenna the of of to large of

components. our to foresee increases Our of recent more if annual limited the teams to impacted We from antenna account a reduction We to risk on China-based issues is related in trade GPS to China, source this related certain apply into multi-band to with the we revenue antennas our offset don't XX% customers price the imports and non-U.S. are tariffs. the but longer-term revenue which closely instituted number our a the reduction, by our determine of manufacturers. for XXX in guidance this from customer Approximately XXXX. there's decide deliveries impact China, working of taken have of specifics but tariffs lowering to in

disappointed XXXX, leadership committed in revenue and acceptable guidance for year-to-date to results we margin to levels. reduced we're and and technology Although are PCTEL returning our

low-volume attending our skill sets intellectual For efficiency to human next-generation performance-critical property vertical and plan business SKUs for low-margin are resources margin wireless positive with markets, we're the deemphasizing the flow to kitting Investor return IDEAS August fully call profile to We investments to second demands and of solutions. of forward third Conference over IoT antenna - John? Schoen improve board to guidance. look our example, is I overall John quarter XXXX and our that with committed note the and of to a that, align to We now will XG, Midwest dividend. closer our the to conference. the on Chicago. the prepare quarter industrial restructuring annual operations. important enterprise completed as We XX target the our targeted our cash it's a John for investors will WiFi and at maintaining well as at generating generation, to turn be for meeting in With look and and I

John Schoen

basis EBITDA was period XXX year. the the year. Adjusted margin results compared for Revenue quarter loss X% XXXX, $X.XX Thanks, a comparing was from the in Non-GAAP the year. last in last half periods down was half, same and last will the compared year. was last the and revenue compared $X.XX the points the half X% quarter the be and the in a the quarter the half. to in million profit half of to and in in and David. percent quarter the quarter in I the half to and XX.X% the operations in EPS quarter for half $XX.X same quarter second of of $XX.X first to and quarter continuing addressing them basis in and points down $X.XX million breakeven as of unchanged in XXX in the Gross X% the margin income the in half, in XX.X% the

each for review segment. will I the Now results

significant in the basis and points quarter both Connected in Solutions XXX the was half. compared half, growth X% and revenue XX% the segment, the the million WiFi half year. last the in in the half, points million $XX.X quarter in quarter Gross in saw enterprise half. X% in $XX.X For down a the applications profit was quarter in and and quarter segment up revenue the in the the basis XXX and in to margin The

However, by pricing small those we offset cells, gross which revenue margins. gains impacted experienced were pressure in profit also largely

million the in half, the points the the in in revenue For points XX% down quarter down the in in XX% Gross quarter the XX.X% half. basis the and Solutions in RF and profit $X.X and segment, was in half, and basis half. quarter XXX million the XX.X% was XXX quarter in the $X.X

of David discussed North lower generated revenue. margin on the as earlier, costs lower As revenue. leveraging fixed a market less lower Gross result American was of

guidance. for first half the revenue segments, believe earlier. in Now We will for pressure as discussed and both XXXX XXXX the The experiencing remainder continue of let's equipment. into company segments is to of XXXX this David turn test both for

approximately cost negative to XXXX $XX revising expect $X.XX. million the and $XX and to We manufacturing operating The force. third guidance and and a and to fixed company do is expect force. quarter RF per costs through to revenue reduction million. is be $X.X the million $XX $XX reduction million, between not to for We as XXXX with associated annualized million of impact in the for million XX% company in response, gross between same XXXX $XX for the reduced savings is in savings of Solutions. cost million, share the Solutions $XX $XX The about approximately $XX non-GAAP revenue Connected a In cost the its annual its remainder earnings cost million $XXX,XXX July onetime savings because million will margin these XX%

$X.XX these force, be the loss year the to earnings per of revenue will cost we positively of in share. new full effect full the $X.XX the anticipate to will a and However, effect reduction XXXX. savings Giving of guidance cost non-GAAP impact between

would like to turn make call David a remarks. over I Before to the we questions, few take to closing

David Neumann

radios solve and reduction long-term provide Thank are antennas, RF and that earnings in issues, to complex and believe fully problems. we John. you, short-term We measurement testing systems strategy revenue our to committed the remain

I'd are team critical expected is margin to and PCTEL for In our are staff to return focus our revenue dedication, performance and available and Operator? like answer a effort contributions. addition questions. thank PCTEL improving to their This to effort, levels. investing With John and I and global in we that, operations our solutions, to

Operator

of first may [Operator from Riley you comes Instructions] Marc question the B. ask from Wiesenberger line question. Mr. Sir, your FBR. Our

Marc Wiesenberger

it purchaser. And You of a Has still that what primarily spread Or small it offset talked that? earlier kind of are to was you doing the a pricing large about in cell one And from calls, customers? is group pressure. larger customer? from to of some

David Neumann

we've small trying of same that, offset a customer So group talked to to to And so organization that pressure. of and lower we restructuring we're that focus. relieve into the XXXX, this. the answer question, ahead customers. To we'll within the it's be things some about we think, We're bit to get going first changing part the or cost done, the improve to some of of able

Marc Wiesenberger

To growth, seeing the some are any domestically offset tuck-in acquisition growth? help of or might opportunities, internationally, slowing you either accelerate kind that some of interesting

David Neumann

acquisition an Both that We're but and for doing looking not radio a So are in capabilities to we antenna segments our interested we're revenue, expertise. the targets distribution have an Europe, bolt-on gap. specific active improving interested our fill building program of in necessarily for M&A. in would just around

this program. have that We anything spend So talk yes, on time we can we about but it's active call, definitely have on. something an we don't

Marc Wiesenberger

that about and in talk is come have your it's the planned how potentially you impacting future? in will Can war affecting you are for that the Asia? -- And that rhetoric had investments in, trade and that orders come

David Neumann

for It's customer so in region. important not affecting our to the invest continue continually investments. China we - is very a PCTEL,

a As war that. commentary, by to We do cover were the increase affected trade to price did far as the we have tariffs.

it this don't are reduce to Longer necessarily And we on PCTEL. term, have to who companies may affect the But we've about it's concerns. short talked government business, Chinese calls. start happening term. this past we would an non-U.S. it see manufacturers any customer. companies. think the In the reduce suggest if the with in being work effect really that passed I didn't In up, serious any local case, ratchet So the that's that Chinese in near term, does but our - don't that

Marc Wiesenberger

furthering Understood. final with any me. talk you for Then competitive Can Akron one the and one how team in developments the about it's position?

David Neumann

in our Our April time Akron They well. team frame. doing moved office the in, in is

there. and WiFi the earlier of that call we're couple in new efforts some mentioned technologies Akron some I've coming - And of the from around a technologies, office. that's As developing coming just the are including the those IP from

helping and So quite team, space our general. in they're in a WiFi engineering contributing bit, though, enterprise the with

Operator

now call to Instructions] Neumann turn your no for [Operator to to are David would back this questions There remarks. I closing time. the at over Mr. further like

David Neumann

and call, So day. additional to no are questions, have the everyone like I'd thank there joining Thank great a for you.

Operator

call. today's Thank for attending. you This concludes conference

now may You disconnect.

PC Tel (PCTI) 11 Aug 182018 Q2 Earnings call transcript