PCTI - Earnings call transcript Q1 2020

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Operator

Good day, ladies and gentlemen and welcome to the PCTEL First Quarter 2020 Earnings Release Conference Call. At this time, all participants are in a listen-only mode. And at the conclusion of our prepared remarks, we’ll conduct a question-and-answer session.

As a reminder, this conference is being recorded.

I will now turn the floor over to Kevin McGowan, the company's CFO. yours. is floor the Sir,

Kevin McGowan

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

and you begin, we call forward-looking current let remind projections Before that upon based me may this contain circumstances. statements

these current including which speak differ could first uncertainties, to statements these this obligation most the particularly, periodic PCTEL's forward-looking best or reflect unprecedented XX-K forward-looking to materially cause The subject factors report are of press COVID-XX release, cause and filings its projections Form information, statements and which today they Form While XXXX. that actual their materially projections no dates. in recently report to for results XX-Q to of from was the statements era in quarter Risk company could on the filed projections. update company's the assumes PCTEL's judgment, risks on from and forward-looking discussed differ and are respective earnings that subsequent results as any actual issued and

earlier our EBITDA. our earnings facilitate believe of Additionally, include the adjusted to non-GAAP these quarterly that non-GAAP measures to A today. GAAP issued will these is earnings over and in share press non-GAAP measures reference measures, measures different results included comparability per reconciliation of following periods. commentary We full was non-GAAP our release

now it's my turn call that, With Neumann. to to the over pleasure David

David Neumann

with response the our continue of start this that the I Welcome to you, our and would thank us team's ability essential like and for to to pleased saying I'm address Kevin. services by critical afternoon. crisis provide to needs you infrastructure. joining for customers COVID-XX that Thank our

protect highest equipment. and radio for make are customers', our and production and keep and to capabilities priorities test safe, measurement investments solutions assets needs our continue employees antennas to to as corporate such meet cash our My customers'

call results are for connectivity our COVID-XX our global quarter environment. today, recently reported business actions In then navigate three to opportunities as period in our and we risks and with new cover taking our first based topics: more the the for share mitigate Kevin I long-term through products will our in guidance our XXXX, of detail expanded financials our the we on need cover disruption. sustained will this associated

caused second half test disruption of first during The through by today. that challenges through set XXXX measurement efforts our deployments. record QX dedication the receiver COVID-XX the presented for scanning global sales XXXX team, quarter continue the of a and driven by unprecedented Nevertheless, and XG

that results within Overall, guidance despite QX than finished by but our XXXX the the revenue caused quarter virus. and I'm planned, revenue encouraged and we lower disruptions earnings earnings were significant the

release we our share of have seen As the $XX.X non-GAAP in revenue and market achieved press $X.XX. in close, you may million after issued earnings per

gross achieved last also approximately margin of X% We XX%, year. over up

both for The to chains workplace most our lines, to potential the employees are are and risk safe stay-at-home ability short-term in a ensure while orders with to product disruptions significant in for place. deal business our to our supply

business critical to open such wireless, markets and are permitted we fleet infrastructure supplier a As an safety, to public providers as utilities, XG, as enterprise rail, essential periods. these in remain stay-at-home during

March operating been February facility in XX early Tianjin, and and last has it at in then. then our manufacturing fully China partially reported I capacity since full reopened that our On call, on

COVID-XX impact any contract Tianjin on diversify cost facility localized product production lines future continue manufacturing to and from recurrences. through diversification our and of diminish We transition of Taiwan. This China our in the will manufacturers selective to reduce the

from home. global customer IT been support, marketing, including, and working finance, Beginning sales office have staff in engineering, productively mid-March, our corporate,

staffed a by are Our U.S. voluntary and basis. production facilities employees remained March on we open through

other measures areas, by meeting gloves facilities increased entering masks implemented sanitation, we use have of begun We and we the access, protective of CDC. of facility. and temperatures including restricted closing requirements, recommended made mandatory and measures employees taking our distancing have the then masks at Since

been second April, we possible our production enough early given time, this to closures. location. unforeseen capacity there customers' at operational Since U.S. assuming are needs our each facilities circumstances we operating in have when At believe future no the have meet the quarter

customers jointly and are projects sales doing and organizations prioritize product communications so customer excellent our support we maintaining an job Our with manufacturing. that

disruptions ultimately purchase some our their timely our of our have and which their processes recognition. COVID-XX-related by the experienced revenue However, may delay orders, ordering of receipt customers negatively impacted

similar We vendors. our a with across and are prioritizing facilities discussing regularly managing in needs supply by our material manner chains raw

or The depth speed reliable the XG, recession has will need infrastructure be the this highlighted we global of they WiFi of and determine but recovery, length networks. and communications, wireless importance COVID-XX-induced connectivity enterprise whether critical the XG of believe crisis the for for the

than to infrastructure connectivity products a growth result balance position as of for are many test networks provide markets provide we our critical for solid our strong, products believe stronger a engineered The opportunities business. that and and and competitors, our remain to We in our enable ability long-term markets. of sheet our hardware RF

customer industrial produce and our to markets, wins. In our R&D continue design and intelligent engagements transportation IoT investments

electronic see in applications. to grid antennas and For for public integrated for used smart example, solutions we momentum utilities continue

multimode quarter, cities first for rail won smart have additional complex a the applications. and business for intelligent we antenna for designed system In transportation

industrial seeing are communications orders health our an asset the antenna and solutions in also We industry. tracking in improve for that increase IoT care

integrates announced for police for that be installed for specifically designed, without to cellular PCTEL. be antenna antenna is to vehicles support roofline on Public and using a ridged compromising our networks. XG, performance. our This safety systems and fleet We recently intelligent markets tracking with transportation XG continued multiband new precision important FirstNet

precision the military a missiles. for has selling for for our of aircraft equipment history radio and to PCTEL and long antennas systems guidance communications

high used unique where mitigation incorporate that antennas rejection capabilities is communications military navigation in high-performance Our are critical. interference

demand issue. of impact rollout COVID-XX uneven global this demand certain the of short-term see a in believe the based with We to we areas, Europe. is in upon weaker XG, respect With

with still to early in years limited coverage, strong deployment for stages expect demand is XG scanning of we three remain two, that deployment. Given next over products the our overall

bands, HBflex to recently XG test. networks frequencies the increase XG during receiver Sprint gigahertz millimeter the T-Mobile demand simultaneously U.S., our and tools sub-X a In merger and should deploys that this both significant to and operators at for the To operator XG use upgrade both test measurement address one we gigahertz will scanning test and of that allow major legacy as bands frequency bands. third sub-X millimeter in launched both

operators cost testing. amount and time considerable a saves of This during

also a We TETRA. safety public will announce and to TETRA and receiver solution class antenna our deployed globally and safety also to that is that to are public testing pleased solutions P-XX networks ability provide world our now tests broader DMR increase industry-leading our market. supports scanning

and IoT Enabling rate Looking antenna expect applications remote systems important connectivity faster revenue a forward, infrastructure are is critical during as testing and these radio for we XG the these for strong monitoring test growth at especially drive through year throughout will revenue times. IoT implemented. controlling measurement and XXXX. to remain Industrial

our quarter the turn at our call I will Kevin? discussion of look a that, and a now over financials. Kevin first With closer for to

Kevin McGowan

discuss David. quarter taking quarter second first financial I steps also and you, ended will XXXX March results provide I XXXX will the maintain position. its Thank I the will Company address guidance. strong to financial the for the is

the Revenues were XXXX. million lower XX% the in $XX.X XXXX, to compared first quarter quarter first

to product & strong a mentioned, sales public quarter this David of measurement XG sales add an increase in of test receivers, and was first revenues, upgrades increase historically safety scanning applications. for technology, by an As driven in XG

$X.X year, and Revenues quarter products test with measurement first million. XX% for compared increased last to

compared to revenues $XX.X XX% declined quarter to antenna million. first year product the However, last

of of delayed larger customers Some taking products. our antenna run-rate inventory

to purchase addition, chain timing COVID-XX quarter also and orders first In impacted due revenues. of the pandemic the supply customer disruptions

The gross measurement mix first as XXXX the by profit profit more year. due our product X.X% mix in prior and last percentage test operations. the China profit quarter in as XX.X% products of reductions gross margin and antenna cost quarter as line to a antenna improved first products the for compared profitable basis compared margin The to well X.X% line on a year GAAP favorable a gross margin first to product higher to to quarter XXXX higher was due

line. lower earnings share XXXX, first Non-GAAP the first earnings the XXXX EBITDA for quarter due the in the Adjusted first million to compared XXXX. Adjusted compared first in compared per from quarter $X.X quarter X% gross X% XXXX. in percentage to quarter diluted XXXX contribution per $X.XX in to approximately as margin decline non-GAAP of primarily to the the product first revenue quarter XXXX. antenna a $X.XX was the for quarter XXXX margin quarter The was first first in XXX,XXX EBITDA share was was the

and at for million, because $X.X investments end XXXX. stock-based We we of of repurchase used from million quarterly of operations accounts XXX,XXX In dividend. for the $X.X Cash million withholding taxes cash cash XXXX, million shares, $X.X declined and first declined quarter to the receivable generated approximately of $X.X the primarily million. million compensation, $XX.X million $X.X by for to March $X.X

remains sheet debt. strong significant no very investments and balance its PCTEL’s with and cash

expect in sequential growth also earnings. We and revenues

and and we proactively and operations, to financial uncertainties are potential demand, working capital. our However, our costs impact managing in a pandemic related COVID-XX the of the due disruptions result chain, our as to supply customer

At cash. $X.X we reductions million reduced to several conserve discretionary the and expenses took second through We fees, director share remaining the quarter, our terminated program. operating in conserve and outset to steps our of salaries, we the the repurchase expenses and reduce program in spending

We non-essential our also position. proactive strengthen being financial We protect will that reduced believe expenditures. solid and capital

challenges give the David of quarter continue today. information. financial want our to expectations investors results. mentioned, unprecedented second challenges based difficult our upon make through has for Nevertheless, it we current that to presented These forecast accurately some COVID-XX As indication

project forecasting non-GAAP quarter. we $X.XX. for will to the of per be revenues share be $XX.X are we million. gross to margin XX% specifically, profit More between higher XX% quarter to in and percentage GAAP expect and we earnings second be earnings $XX.X the to $X.XX revenues the the in Further, range our of and our range Generally,

are driven which revenues. upon Again, The current sequential making these increase higher in based projections and revenue antenna is primarily by we could change. information product circumstances

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

David Neumann

for joining all you us. Thank

Before we a would share questions, few take to closing I thoughts. like

depth by unknown length priorities the crisis are Our top short in the the potential recession. term COVID-XX and three driven crisis-induced the of the of

employment. measures have and to loyal workforce maintain do best take protect to from our we we will full First, them continue to a and talented the and virus

strong expenses position, steps on additional the Second, taken financial have we we reduce and to burden we to capital, alleviate are a in have access to cash.

to continue R&D we have ensure will we are the have we investments, we make in competitive our Third, downturns, very need. to customers markets and products in previous as and want

all infrastructure managing our connectivity and reliable for demand our for cash well continue Protecting employees, will past investments position this stakeholders. R&D benefits crisis. solutions The critical prioritizing

long-term inorganically is stabilize. Our to to company the strategy growth position when conditions organically and accelerate

With Operator? questions. and are take that, to available Kevin I

Operator

floor Thank comes first for is questions. ahead. Yes. Riley. Instructions] B. Mark from Go you. The now from our [Operator question Weisenberger And open

Aman Gulani

actually Hey for my question is in Aman jumping for guys, thanks taking Mark. and this

you I changes wanted the in Specifically, April about March and talk to any of beginning what and May? customers if you're from you trends question in to XG seeing could rollouts ask of both terms First about domestically relative from can internationally? talk

David Neumann

it I XG question. XG. and Well, would earlier the adjusted plans. Verizon Japan, came The out thanks us South robust think Aman I joining rollout all their -- deployment say have is to still asking CapEx Korea, this pretty for increase even And China, year, aggressive. address still to U.S., and

those equipment in it's and still a and for and markets, need we're the test scanning relatively So, measurement still providing there's strong the receivers.

where mind that areas typically capacity. it's of in some too it's deployed, It's keep deployed need there's where in not ubiquitous. a in markets for the Now officially

markets a it's the get take year really to in full two bit network. ahead the going game, even coverage fully or the deploy are I a the that So to to of would say

networks historical and to still a at XG, XX And life span typically of years have if look seven anywhere in early from they XG, you XG. very we're

equipment will rest would that previously, then some of that XG the I network. point Sprint I And for think U.S. year. need is DISH well. mentioned So, the going will T-Mobile at as enter I and the be And their anticipate to merger picture the of the drive as they'll and relatively strong for

in Asia and XG. in is be new we in there mostly think is they're expensive more strong a versus making going putting bit Europe a to XG slowdown additional now, investments because of

the of put XG But we bit citing pretty strong we're a to new and think it's of the get think in some and general, year. in bullish should from in the to it and taking And given work rest test general, we systems. just home measurement and municipality the closures the longer for be equipment on

Aman Gulani

Okay. shifting helpful. And gears then, Thank a you. That's bit. little

completed the the of and think merger, the can to going how you then them of from PCTEL? for were trends merger? seeing implications spending about Now you that Sprit you And have and that's forward phase change T-Mobile some final going talk the to going

David Neumann

Yes.

for really and T-Mobile is driven the measurement So, test Sprint, equipment. this by mostly and

also to using the scanning T-Mobile large They're and receiver parallel, basically and XG. out In merger customer merger, their before test most rolling even for on XG. the a was the measurement early ours equipment. our relatively before of upgraded is equipment So, Sprint of

what's legacy they've interesting to is a PCTEL wave could Sprint's for number system was also T-Mobile -- in spectrum, a deploying typically is of spectrum, Sprint's sub-X. upgraded sub-X gone units via case, XG they gigahertz that had and the software. Now, millimeter But it's be

And with rollout. the we continue So, those to XG. now to upgraded we support upgrade to postmerger, tools them support

Aman Gulani

you. Thank it. Got

governments Just could time potential the all that? of for do if local for wonder stuff. are of permitting last talk and sort some and in sort customers? to that's CapEx of about question impacts access like on time approvals you state thinking that How impact think site you going of your regulatory about lines of How me, like I COVID-XX lines terms you of for and

David Neumann

Yes.

a So, question. number many With great one, is still unknowns. there COVID-XX, that's

there's points business So could customers on today, there making the with our we government, your we're say planning initiative. you're And our still what and making work-from-home but widespread additional then along changes. general, fairly projections, lines I not would know governments just be in the it's the a of

taking getting in processed, of So POs it's process just the orders general it's longer.

to the our mobile DMR operators. that And make municipalities technology biggest X.X scanning for buildings talk impact those systems they confidence we're with we receiver really area run new public have that first scanners the on closed, is ago the responders developed when we the the PXX, systems public that go be The or historically with communication so communicate. we safety. fully receivers to scanning buildings the sure some into about that see about public About so when are to functional, talking able years they'll

has been doing So, well. very that PCTEL product line for

And access the can't now is with biggest challenge COVID-XX, testers the get to the buildings.

people we're long-term slowed of not keep external just and demand any So, And some -- like receivers allowing of PCTEL, bit. vendors been for in But safety that down scanning it's XG the think testing our having WiFi. inhibiting if and to need buildings. anything public for have market, IoT for the control working that's safe for these and remotely COVID-XX well wireless with very the and XG communications and things, to having monitor remotely, plays to the things I people for plays need well very a it

term, in PCTEL just very a a there's with and meet But to is I manage we still to those -- strong day-by-day. so COVID-XX, think position it have needs. it's of lot And long unpredictability

Aman Gulani

you. right. it I'll All pass Thank on.

Operator

remarks. there [Operator for over no closing to Instructions] turn questions. like appear any David to further to the Neumann And back call I'd be now

David Neumann

Thank us afternoon. you, joining this for you and thank all

sometimes them thank to next extraordinary. as again. stressful our I thanks contributions, Have look during We well Our flexibility want updating to and team extremely a their and patience afternoon you is forward great these call. on for times.

Operator

for today's conclude you We participation. Thank you. This your does conference. thank

day. this time disconnect have at a may You wonderful and your lines

Kevin McGowan	Chief Financial Officer
David Neumann	Chief Executive Officer
Aman Gulani	B. Riley

PC Tel (PCTI) 9 May 202020 Q1 Earnings call transcript