PCTI - Earnings call transcript Q2 2021

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Operator

Welcome to PCTEL's Second Quarter 2021 Earnings Release Conference Call. At this time, all participants are in a listen-only mode. At the conclusion of our prepared remarks, we will conduct a question-and-answer session.

As a reminder, this conference is being recorded. I will now turn the call over to Kevin McGowan, the Company's CFO.

Kevin McGowan

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

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

from update that While results to of cause PCTEL's current they forward-looking these Smarteq release which information, our materially could and projections no on these uncertainties, related that acquisition are of any best its as issued pandemic The differ COVID-XX AB, and speak judgment, to are to risks of forward-looking was in the actual projections. projections the could to respective forward-looking and press and to earnings PCTEL's statements XX-K. dates. results differ report annual assumes Risk and particularly Form the or statements from materially cause reflect their actual subject the statements Company's today discussed Wireless impact factors Company which obligation

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

David Neumann

call our share of the in update Welcome wins Kevin. I an thoughts Smarteq, markets earnings In you, and review year. Thank of today, target the and design afternoon. our joining thank our discuss for integration remainder results, on this will you the on provide our QX us

in after release seen issued the press market close. As you may have our

million adjusted sequentially team QX, were customers of gross grew of ongoing $X.X our per in done these In and and quarter-over-quarter and at we with suppliers issues. for to especially met provide generate has revenue launch to well Smarteq second Europe, integration last pleased smoothly by antenna our cross-sell key and to and with We're devices markets, mix. respectively. acquired Smarteq We $XX.X has results revenues share. of quarter increase PCTEL lines estimates. our an our branded revenue, grew our of to is revenue and challenges revenue and and in our $X.X IoT the backlog capabilities quarter million driven impact in limit both and million year-over-year. Despite revenue to margins EBITDA pleased global R&D transportation quarter, by together. and lower job PCTEL’s Smarteq was excellent these report earnings closely achieved We shift high-end the expand presence in than delays, the second support ability expectations. higher in vertical working working Smarteq in to slightly goals The $X.XX our are year, teams in U.S. non-GAAP and supply the chain earnings the Smarteq compared the product progressing included, Earnings quarter. in initial first and higher in EBITDA that Europe X.X% achieved long-term and I'm the combined earnings XX.X% our With and add the exceeded Europe. sequentially and to the products were opportunities

we IoT our wins, forward, and opportunities design device Going include in will and launches product Smarteq updates. antenna

delivered our normally to within versus be or is driven over business that test quarters which larger quarter. antenna and device are more a months measurement tends business, and by orders transactional IoT Our

the remaining our order second second orders and monitor level antenna increase we segment, recession. a in pandemic-induced expectations our highest see second wireless in strength enterprise from revenue be since our we the by quarter rate revenue will earnings other the belief believe that as quarters. of is the stronger into future enterprise half markets In that the markets and XXXX. of and retail another as This to expected leading and XXXX. reason, and factor manufacturing, indicator its to supporting the exceeded in driven they In infrastructure market half OEMs our antenna our incoming than year report quarterly second over wireless segment, and continued of agriculture at further this intelligent was transportation market deployments of will have incoming sales increased recover there continue improvement quarter be in quarters. the pleased For We're our year for to

for we and will opportunities Puck public in additional EV the transit, the and or that support more in charging significant infrastructure. products infrastructure resulting wireless leading in Smarteq's to a bipartisan project broadband, like rail, product IoT manufacturer longer-term is is station antenna. notable efforts from countries a proven We investment expect of will manufacturers a business we to environmental, won and in bill electric vehicle charging EV region. industrial for mass-transit U.S. capture stations business Smarteq our expect antenna power our China infrastructure, outside Nordic the for in want APAC the create applications also and antenna It

accepted access significant and access equipment. industrial harsh into machinery production than for provide construction design antennas. heavy WiFi commercial approval the may seen the who first our We and quarter have in average environments allow step selling have major FCC ruggedized awarded point was first OEM, XXXX. deliveries certification points granted access a June You accordingly announcing equipment, a These WiFi customers prices their to have were certification And point. in FCC higher in of wins in order. release systems. press our will integrated connectivity for and is have reliable European the two

industrial IoT infrastructure mentioned add PCTEL’s rollout segments continue experts and IoT, and in contribute economy, broad transportation reach industrial business, revenue each need previously solutions. supports across sales to IoT to IoT meaningfully intelligent many growth. leverage distributors wireless product and in are in channel to the the strategic market interested including industrial strategy and enterprise our PCTEL’s that growth the our portfolio, to We funding the of application. We reducing distribution long-term our drive Enhanced distribution field will believe U.S. the applications

Our test another XXXX records our by measurement after the quarter in and of safety in XXXX, markets. the setting XG and first deployments public quarter produced driven strength solid quarter fourth of business in

and that deployments Although, and It we primarily expect auctions scanning in are to remainder networks of be revenue related particularly receiver has the the for the XG to in still slowdown there through the in a consistent XG is to note years. Asia, year, commercial temporary spectrum of early important Europe pandemic. parts deployments, been

organization the represents about of interest estimates operators, by will that the global total XXXX penetration XX% GSMA, years. XG XG have wireless for five will capital referenced, industry account next over As wireless expenditures of XX% a and

products. situation a the important broadband As measurement grow, test be and there need will thus market safety PCTEL. a improves is pandemic deployments applications and XG an for pent-up for demand and for driving Public service,

from We further U.S. are XXX automating the and used product cloud-based the field, responders. safety collection and will testing for the in data our efficiency leader by services solutions orders for more recently distribution application antennas and automation, workflow a on across secure processing by basis. some public for subscription public first that in platform new public analysis SeeHawk and data providing and than testing increased Central the with antennas companies largest PCTEL’s We safety SeeHawk strong customers incoming announced over collecting reports engineering the both improve existing communications centrally data first is from to wins reports secure customers. for storage, recent Sales first is ensuring responders. safety our a provides entities and of Central access analysis, responsible for sold from reliable remained of now

business to to and public turn grow antenna support are that, will to second safety our Our for Kevin? and momentum as quarter XG With economic and is look positioned well testing conditions building and growth businesses a the call over of and discussion financials. a I test now test closer and Kevin deployments our device of improve. global our measurement to

Kevin McGowan

quarter quarter the XXXX the will and Thank you, results I I third financial guidance. June XX, for David. will XXXX, review second provide ended

XXXX. acquired of second for the the quarter of to million on second Test increase primarily was to the XX, April second to chain were quarter compared from $X.X pleased in of Revenues revenues $XX.X increase financial compared IoT the million, second million $X.X compared $XX.X XXXX quarter to XXXX, XXXX. We quarter were were for of million XXXX. $X.X second results second guidance the higher and and sequential Revenues for X.X% devices or for And revenues of our improvement. mentioned, challenges. second an increase the XXXX. is as within quarter to measurement earnings, of of million and our quarter an which supply of the industrial are report revenue David Smarteq, quarter recognized XXXX This despite due of antennas

test higher revenues for approximately second U.S. compared measurement The than revenues quarter public revenues quarter offset applications for U.S., and of second lower safety to products XXXX XXXX. technologies were for last XG the as of year X%

were million in Adjusted in to investments foreign the second to $X.XX of XXXX expense XX, The of the of were second Due $XX.X XXXX, quarter million share second results expenses IoT $X.XX quarter in was second but XXXX. the margin XXXX due same EBITDA XXXX, the was spending. costs temporary revenue XXX,XXX XXXX, XXXX and of quarter XXXX XXXX. travel profit of the on measurement was percentage the including quarter $X.X in the a of approximately decrease per and higher the inclusion a took program. also to to XXX,XXX quarter, in to of cash EBITDA industrial share Smarteq. of by million the quarter of second used which of a other test measures million expenses lower higher quarter X.X% of Operating was months was was of compensation quarter to income free to and of Cash lower as second devices, second earnings second profit purchase second and the second flow quarter second operating second Operating control XX% basis in primarily IoT second and our XX.X%, interest second of spent year. for other two an low prior Smarteq’s gross and to declined The of margin than to quarter non-GAAP and beginning increase of costs. in the employee-related exchange expenses of due discretionary generated investments of the in gross the diluted for costs, $X.X of the and June dividend XXXX, gross XXXX. XX% of quarter primarily of income, Cash a to XX,XXX by compared at an and per during company $X.X the second margin in quarter was the including non-GAAP industrial profit expense the and repurchase $X.X XXXX. at $X.X income compared second part due expenses. million percentage to due The sequentially The mix of quarterly XXXX net to XXXX, XXXX. $X.X products compared approximately but antennas the compared paid lower reductions of million, increased antennas percentage GAAP approximately under compared We incentive non-GAAP about for the to $XXX,XXX due million acquisition on from of the losses for quarter million. the quarter $X.X our salaries the during basis of the pandemic in percentage shares quarter were in salaries, quarter gross in a freight cash compared the improved devices in and approximately was XXXX

XXXX XX, June the million that our program. valued And more through repurchase we XXXX, repurchase also the third the could stock up quarter program. than to-date of to of existing be had under share at the shares under of As $X.X common million purchase purchased $X.X we end during

we IoT our to $X.XX. sequential be the that with between uncertainties the turn the in and expect subject and quarter. to now momentum to industrial revenues of the project growth recovery, continue earnings devices, by revenue device margin non-GAAP million profit the David sequential guidance, the growth discussed to begin $XX to in the I business in and With XX% We million to be $XX We of the global industrial and share call drive will in antennas percentage per quarter. antenna gross non-GAAP Driven related to to XX% that our range $X.XX David. back range third third but will IoT the

David Neumann

you all joining Thank for us.

and Before contributions pleased revenue, closing access we few like talent. take questions, to share to Smarteq's market I We're a would with remarks.

Our and to believe see additional will to drive with initiatives. distributors allocation early public meaningful inorganic channels to will Operator? conditions Midwest diversification sales the and and I sheet capital eventually meet meeting pursue strong and be access that, leverage to at forward success in will attending opportunities to new our With distribution improve. long-term product August event create point Conference with We're safety us balance excited in-person growth. allow virtually take Ideas goals. growth and are expanded I Kevin Investor look our XXth. to investors as We on with Kevin questions. available We the

Operator

Street. first coming [Operator you. question Instructions] Your Thank with Schmidt Jaeson Lake is from

live. line is Your

Jaeson Schmidt

for guys. taking Thanks my questions. Hey

of and chain baking constraints some supply if QX they I impact it, from what QX? but headwinds challenges, created if you're Sorry missed any for curious in the these in in what the just

Kevin McGowan

the supply the our out China increase time Jaeson the shipments on – ocean. for chain Yes, of

So that try quarter work with in our third some second customers forecast. be quarter. It's it get suppliers, to something, the to the continued forecast. shipments into did from we're our bake will the delay third that we quarter work did shipped with And

we've that and times, lead there's product And some where impact, mitigate long the companies is getting any still from shipping through that, significant working to but there China so impact in particularly. still, with we're

Jaeson Schmidt

inventory double I understand you the out thoughts Okay. customers labor channel? your That constraints makes the ordering guess, are all on here? overall to And in concerned sense. that What’s related are at there, and

David Neumann

Hey My you about call when right, sorry. supply asked Jaeson dropped chain.

answered, well. Jaeson, second but the I'm can not Kevin you can sure in I what So jump as ask question?

Jaeson Schmidt

by fairly double inventory curious challenges given the was just ordering there, Yes, if or I think channel just – remains if do well-known at inventory about the you're concerned all you lean? customers, out

David Neumann

the facing customers chain shipping. as with and don't, about are our double too in I'm logistics same concerned the some not are I orders challenges we because of supply of terms challenges

if PCTEL anything, lead very bit we closely make down the quite some know this daily what and visibility to because sure more longer, because we're talking go forecast our of bit in we're has course, is. on with almost little more their a getting we're So long-term helped times components, these a getting a notice customers, the on, bit advanced basis what that for little and lines a working a are don't needs of

tight. us helping because at sense plan that, more better, all to are don't it's ordering but they I customers So than need everything is pretty

Jaeson Schmidt

Okay. queue. And jump in for me, last one I'll just back and

on you're Just curious could us enterprise if you update seeing the market? in what WiFi

David Neumann

Enterprise WiFi cellular. path, similar similar technology to a has upgrade

to WiFi XG WiFi with XG to X. So going

for getting of So requests bid antennas. we're fair number new a

funnel license for and bid is around the So to front a in business of it may not funnel in for WiFi and we very bands, and get news as exposure solid applications the as XG see for some IoT. But still much going still IoT, important especially WiFi. be industrial

Jaeson Schmidt

a Thanks lot guys. right. All

David Neumann

Sure, Thanks Jaeson.

Operator

time. Instructions] floor to lines no Neumann remarks. would David concludes from this have further back turn session. our at This closing now like the We to I question-and-answer [Operator the questions for

David Neumann

all And for this Thank you. thank joining you us afternoon.

into the and build But seeing will second improvement for years. recover said the remainder a before, the we challenges thank Of as for still going middle employees, And I've say still before, partners that incremental the pandemic, year the these momentum I we'll XXXX. like their of of – course, that'll following and and to see in customers, contributions, some said continue help especially for company half the would now, we're challenging to our the times. for believe I I distribution in in as we're

have to of we Stay I a confidence wish a PCTEL, you at and safe, everyone again, like thank afternoon. So for good Operator? lot joining.

Operator

joining Thank quarter second you today's earnings XXXX for PCTEL’s call.

You may now lines. your disconnect

Kevin McGowan	Chief Financial Officer
David Neumann	Chief Executive Officer
Jaeson Schmidt	Lake Street

PC Tel (PCTI) 10 Aug 212021 Q2 Earnings call transcript