Earnings call transcript Q4 2022

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Operator

Welcome to the PCTEL Fourth Quarter and Full Year 2022 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

I will now turn the call over to Kevin McGowan, the Company's CFO.

Kevin McGowan

Thank you for joining us on today's conference call to discuss PCTEL's Fourth Quarter and Fiscal Year 2022 financial results. With me today is David Neumann, the company's CEO. webcast website. this a available will that our on note replay call of be Please

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

are chain statements including and a economic particularly PCTEL's judgment, and While these challenges subject the global global our projections risks of supply results forward-looking efforts innovative new to to of to circumstances, ability channels logistics best success potential reflect current distribution recession, they expansion and and from to related and these actual sales uncertainties, products, in forward-looking projections. our that Europe statements generate ability materially cause our leverage and to could differ political

are discussed the release, that as today the update was of their assumes press could in information, in issued dates. PCTEL's statements which to obligation speak factors company annual any XX-K. to The cause forward-looking Form projections or report differ no on company's results earnings Risk its actual materially respective from which

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

call the turn David Neumann. to to over pleased now I'm

David Neumann

XXXX. In quarter share will of today's Thank you, and we us. and the XXXX Kevin. our Good year performance for our first call, joining thank afternoon, a for fiscal summary and provide outlook you quarter of fourth

consistent growth XXXX fiscal and discuss also highlight with our on will We priorities strategy. key views three-pronged our year our

in discuss highlights, Kevin will greater a and with our few begin detail. I'll then financials

and by the in which driven pleased were company's This our strong maintained in for Measurement market a Test and $XX.X delivered we by also The our for the year Overall, financial XX% antenna supported million success is products. XX.X% in for was revenue growth company gross demand strong continued margins year-over-year. European XXXX our as discipline. increase customer year, improving execution performance we & with of business conditions,

year, particularly of service. commitments our they navigate delivered from of high which customers team eased our customer am supply continue environment, both I level and a on today's PCTEL Throughout have of proud to including the as to operating while chain challenging inflationary pressures peak levels. our disruptions, successfully providing

have We extremely these diligent been challenges. in mitigating

in parts chain near see pre-pandemic to in the on-time While levels. suppliers started We there and provide environment, of customers to contact to rebound our broader our of our and we headwinds with our assure we throughout time the in close and delivery products with a availability frames transportation shippers products continues supply customers. the and to to have world, returning be macro logistics remain to

year, quarter growth fourth was progress by our the and executing strategies. Throughout driven on our three core

these innovative leveraging systems. wireless launching by and distribution providing components overall share reminder, a channels and As include market our increasing the more of products, expanding

channels, all We today's launches, new will which our penetration in distribution of market leveraging product made end have call. and through global I strides later detail new exciting

turn I'll the at that, fiscal Kevin? results. and to closer a Kevin fourth our With look quarter call over XXXX for

Kevin McGowan

David. you, Thank

exposure. in the This During improvement line. our significant XXXX, line and many diversified double-digit developed products we further top and new end-market to growth bottom led

our we're of quarter many fourth the Our and the performance and in our XXXX year. I with industry for now headwinds and results. to has pleased faced, would detail teams quarter like company's are executing well, fiscal mitigating the the

impacted and Revenues For the flat million devices essentially negatively compared decrease quarter to XX% industrial year-over-year were the of a by higher Despite decline, segment. roughly fourth the we levels. period, million revenues in organic our and total $X.X with guidance or expect antenna XXXX. fourth inventory antennas to $XX.X of quarter growth of customer line were fourth XXXX, the IoT in in XXXX, million, the for range the compared $XX.X quarter

Test of a XX.X% primarily the backlog products XXXX of for and to due compared was an We quarter Test XXXX. the stronger delivered for record XG to revenue XXXX, ended Measurement Measurement million all-time the quarter fourth fourth for higher for revenue & strong sales our XXXX, $X.X U.S. quarter business fiscal in & with

our profit of profit XXXX Measurement over the increase margin represents & XXX an the on basis to The fiscal in the compared mix quarter gross the the a -- XXXX. due to period. margin quarter exceeded gross was in was quarter of XX.X%, year-ago Test larger of margin basis gross non-GAAP expectations points Fourth which and fourth increase products

short-term profit Non-GAAP Test was costs. XX.X% increases XX.X%, decline products of a impact a in in period. prior from percentage the of Measurement high for comparable the decline component OEM customers was margin gross primarily and from to mix in margin year The & due revenues gross

costs. and basis XXXX for by profit of in Non-GAAP of antennas XX.X%, points quarter lower IoT margin because fourth primarily freight industrial the improved gross XXX devices to

were lower compensation offsetting Operating to of year-over-year increase The quarter of expenses severance million, non-GAAP of a XXXX. result non-GAAP development was in basis increase expenses for product programs, fourth expenses $XX an the expenses expenses. on a and higher operating incentive compared approximately employee $XXX,XXX

model into quarter XXXX have outpaced a the of XXXX. inflationary increased in quarter leverage quarter primarily due our XX.X% adjusted expenses the of challenges. million fourth the compared is to business in by to XX.X% to EBITDA These revenue operating Adjusted the despite profits. continued revenues overall improvement fourth in period. our gross operating of XXXX in million higher percentage XX.X% demonstrate the year-ago was $X.X as EBITDA compared The EBITDA fourth built to results Adjusted in $X.X as

by quarter in per earnings the $X.XX diluted XXXX. the of higher fourth compared Non-GAAP share to XXXX, fourth was of $X.XX quarter

to XX.X% record revenues $XX.X by our million $XX.X Test fiscal achieved compared for infrastructure, industrial period, total market in the million XX.X% compared devices to We're compared XX.X% to revenues of in pleased Revenue roughly due results. for and turn IoT an were that Measurement fiscal increase segments. let's to the primarily of fiscal an XXXX. persistent Now million, was driven for fiscal stronger of OEM We increase XXXX report $XX.X XXXX antennas to to customers. $XX.X strength XG XXXX, million & higher sales to agriculture fiscal automotive in products XXXX, our and

decrease fiscal the and Fiscal basis XXXX primarily basis margin gross profit fiscal favorable customer fiscal within antennas product and The lines. basis non-GAAP IoT non-GAAP product was from due point devices XXXX. in on gross industrial in a 'XX was to margin XXXX decline XX XX less point gross for mix a XX.X%, profit profit margin Non-GAAP XXXX. was fiscal XX.X%, decrease a from

compared decrease and revenues fiscal Non-GAAP in XXXX. of component percentage increases from a Test high profit margin customers decline for a due short-term year was the The for OEM gross gross mix Measurement XXX basis was margin XX.X%, to the also in of & to point primarily impact costs.

million, Smarteq severance expenses Non-GAAP expenses operating expenses million development higher to lower XXXX. fiscal fiscal was XXXX of as to programs, an expenses, $XX.X for expenses. of due increase The increase for well a product offsetting and employee were year-over-year compensation compared travel expenses for as incentive year $X.X full

XXXX. fiscal by million in adjusted to from as the compared increased of compared Higher XX.X% to Adjusted fiscal in operating EBITDA contributed period. higher EBITDA year-ago XX.X% XXXX to $X.X percentage to million EBITDA. revenue Adjusted revenues fiscal X.X% improvement the in income in a $XX.X XXXX was in

in earnings share diluted Non-GAAP $X.XX in $X.XX XXXX fiscal per was versus fiscal XXXX.

XXXX. December approximately and XX, decrease million a investments were $XX of December as $X.X compared of Cash million to XX, XXXX,

we While our strong lines, paid inventories we generated EBITDA quarterly for product XXXX, dividend. used we and working in capital in both

our well on-time the to for We positioned hampered to constraints continue levels necessary deliveries monitor our closely we are customers. are and not inventory taking are ensure and chain supply by actions that

decided normalization particularly we've experiencing have we levels. make that us Although the to in logistics, higher-than-normal quarters, the to expect may investments we chains, inventory normalization maintain coming in to and inventory in modest our to ease allow a continue been which levels, supply

quarter our share $X.XX. to mix, to per million gross of range our range anticipated we we XXXX million. percentage first to outlook, expect earnings expect product the in $XX $XX we achieve our XX%, in profit be and Based expect $X.XX the Turning in be to the to of on to range of non-GAAP to our margin revenues non-GAAP XX%

to about our opportunities excited and see for in progress significant markets we continue our are market our We serve products presence. European in growing the

generated confident by accretive Although we're the there our is and cash in in uncertainty we to shareholders. around the offerings global in ensure our business operating ways our the use product for value-enhancing and grow environment XXXX, ability

turn will to With call now the that, David. back I

David Neumann

Thank you, Kevin.

share market wireless Now providing to and PCTEL's have which our and success, overall leveraging channels increasing distribution systems. on like provide strategies, the an been components for more cornerstone the innovative update growth expanding products, launching I'd of by

launching our innovative of products. with begin will I first strategy

used product of wireless suite equipment and antennas IoT devices, including includes across measurement LoRa Our presently a XE, others. and RF PXX, WiFi variety wireless XG, and technologies, test

Over exciting and many we out the offerings. launched portfolio course products further our to XXXX, diversify of build our

deployment receivers scanning for early wireless this The were announced quantity XXXX XG September demand has in the Gflex XXXX. to our in support notably, due of been networks. its in product Most delivered for beginning strong

like high or millimeter wave bands applications future bands. scale XXXX, XG scanning XG receivers all we federal of network iterations XG safety used one testing for portability, best-in-class from receivers ability received These government and validation These to and our advanced unit capable June to features and in frequency receivers for are measure only and data medium will require public using cellular, low, and across customers collection. scanning In benchmarking. orders scanning multimillion-dollar required be and level licensed baseband OEM rollouts, major measuring networks that

in pleased product coverage the and and spectrum interference, August critical for Its of This continuous invent offering public modes safety in radio to expand time test SeeHawk uplink signal Monitor product in-building noise analysis networks. and the PXX release testing We were detailed automatic or spectrum for measurement replay of other communication monitors XXXX. spectrum monitoring testing. our include automatically the during capabilities real also of

portfolio, applications. and ensuring hazardous identify they tracks, supports CMTA antenna on within vehicles enables This rail June rail launched connectivity antenna for designed the line product networks XX-in-X their that For support is the our are stay XXXX the for track. in where portfolio necessary rail antenna designated configurations to for multi-band of environments

And applications. new shark performance our multi-fin design. and IoT X-in-X for and in also XG incentive, platform offers low September, fin Medallion launched the industrial robust a which the We flexibility launched we antenna profile low-profile

industrial Also industry-leading in for regulatory certification IoT efficiency increase received FCC with an reliability. rugged radio module and we to a XXXX, performance

busy in XXXX were lines. the and commitment product In innovation our showcasing of with new evolution we both product summary, our to very launches,

the concluded Measurement mentioned, our of & just Kevin quarter strongest success. line our the in with first XXXX As scanning to sales year entered receivable Test product the full with revenue Gflex previously for for fourth date. we great backlog enjoyed record and We

Monitor which SeeHawk gained Central, cloud-based product and underway and is to a trials network. momentum PXX in fixed mentioned, for store our our to scanner data traction management The our as in public data first an building SeeHawk which is the enjoy safety operator with Canada. product, notable entire caution also manage, from product has cloud-based report continues platform numerous previously standard order

the With in agriculture, momentum respect to market antennas, segments. vehicular logistics we utilities, and have continued witnessed rail,

cellular made our for great devices communications. transitioning XG networks. support and to rail in and off-road critical progress XG to thus networks wireless for networks have need and Railways We applications IoT ruggedized providing are antenna

support test will rail and be providing and upcoming antennas we system-wide this their customers upgrade. critical to our such, As measurement products on application

We traction sold worldwide presence electric with for and have a charging PCTEL's antennas applications stations European of vehicle-specific seen notable antennas EV in strong markets. EV vehicles, also with

of execute our prepared exciting channels. on well to the strong are support antenna opportunities our We distribution with

our second strategy, see in Moving our sales global continue growth to we expansion channels. to

strong mentioned the electric foundation we markets. earlier, Europe automotive have As a vehicle in and with

it to gaining as vehicles charging industry supply antennas the both opportunity themselves. are traction in for We view and stations exciting and this an

strategy European European streamline of Also, as increasing our by sales us customers new solutions. to integrated first This market secured core distributor and third existing share quarter, sales stocking have into providing with efforts. we our discussed and our distribution leader last growth leads drive a large added

see machinery critical sensor, applications communication IoT across to continue agriculture, mining. opportunities We heavy unique radio and various industrial end antenna markets and for as such

three in We to today foundation ruggedized for supporting to continue and PCTEL's strategies these connections multiple trials service reviewed growth environments. and wireless in we are that These markets expansion. growth have reliable harsh support

for operator a questions, turn I to the Before today's make call few remarks. will I closing

for XXXX is strategic Our growth. priority

through and and new selected We share distributors reach have products the and market continue antenna IoT of leverage of the on and investments in focusing one industry. to in the strongest to device critical grow make measurement communications. sales test a and our globally organically We'll portfolios greater capture resellers

evaluate to inorganic expand also the as sheet in our strategic we supports balance presence and growth strong Our Europe. U.S. acquisitions

our our in on service drive products to best-in-class exciting XXXX. strategies, execute shareholder We growth and we remain customer as and value an confident ability core three-pronged progress delivering into

to prepared to well environment economic and are succeed even a We in for PCTEL. continuing look challenging growth forward

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

Operator

question First from Lake Street. Instructions] comes [Operator Schmidt Jaeson with

Jaeson Schmidt

Are strong your I comments to well? a the and I mentioned year. of easing with seeing also sourcing finish to on supply know an component you logistics Congrats on want the the you start dynamics easing. chain. some and trade as

David Neumann

Yes.

us customers. So and impacts supply chain

of our the some done this in we've we to customers. We've So specifically I good -- high sure make stock trying ahead talking building runners have and products to job on done I'm antennas. get get job a think to safety a good to and

think, same well the they couple of make bit years, customers I over at that built of have sure the a to last stock time, And had little our as product.

components I in getting think the we're and getting customers, to good PCTEL pretty shape. So them for products

the of larger chips a challenge antennas for the still half see system. And the there part second that The is customers. are end or I of -- with components our challenge we constraints other and are guess,

until Gray them, to seen those we and in gets systems. of some been And customer market though those antennas, request their of have delay build delayed. of even of we've components deliveries getting expensive, the their can the some delivery more And shift some ship rest systems them some for is cases.

we on So working throughout the One able get to second a have work rest is we're also because I the we'll of are inventories in and there's is year. a the the with components. think year. getting down to on our areas year, antenna half are of be more the customers. improving. probably patient our on the Logistics But be weighted I bit think same revenue Typically, this going the to will year, end to side it

a But a as shift. So I Kevin expect we of comments, a year-over-year his see bit do growth. in think, see we to mentioned

Jaeson Schmidt

you significant really do is past the over just that's of course that that. of quarters? I chain helpful up business couple mean, color think No, on on we've normal been to are through? inventory Or it following Okay. then given backdrop supply they antenna customers the kind work of and with need sitting just that dealing

David Neumann

it's infer customers by think they across others, order customers. a we And I visibility they historical maybe have just than more mix more that with than some so can their should inventory we rates. have

I to all worked think of bit but there is it's across that not do see inventory a be we So through, has that customers.

Jaeson Schmidt

great And traction charging seen the and in Okay. guys market. EV station have EV you

should I or a expect those we applications just outpace most think growth you that share being to but taking if I momentum curious guys the growth? antenna driven from base, is coming there? that Just of space, of by from it's overall smaller guess, you are know relatedly, revenue

David Neumann

the with or the Nordic know, But EV -- far does don't even I and job stations space space did into pretty we have is vehicles, EVM, -- EV a as as the electric antenna They the years. charging that great did EV go acquisition the getting two I in gone wouldn't on Smarteq almost charging I think team cars large. countries.

the developing of there. those an countries for same for So those developing that they are established systems market. have vendors Nordic are Europe Many and vendors U.S. market of the the are for them some

working an sell the over the through would bit that EV spent and the from quite PCTEL vice Smarteq products and we on space in the that antennas last sell portfolios very versa Smarteq could that Europe year definitely we can time product we And applicable team so, a be So or exciting area. U.S. of in is

that, introduction with any before to through go end at has But it like market. it the see product, trials you

sure strong public in and outpace space, it be contributor think drivers. don't a very other to space. now, will top strong the be very a I in in the one safety. it's antenna agriculture, areas. it some think of the key going of necessarily think could for But I I growth We're

Jaeson Schmidt

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

Sort end feel what this market you last at here? what look off of about? largest market you year, presents end going when duress most that do And comment, confident the

David Neumann

That's a good question, Jaeson.

the I been think most feel last years. probably the agriculture. market we in that space that of comfortable for is we've in strong Historically, couple

this IoT year as antenna That's got think, trials that interesting us the will some the for early have market going front. forecasts couple of for on not the some wins. should a be the also just strong. of I on only but an IoT antennas are devices, And interesting. We've emerging space, produced

public we Another area We've a exciting a But the Central, test the years now public reports. that the providing SaaS the the collecting been in product And which have side and is launched couple then of find just our is our that product for SaaS building doing on for and for system cloud-based measurement safety. very space SeeHawk safety. now. we've collection -- for data monitor

So number products a and of spot public we're portfolio definitely for the now we there. one safety, have

challenging, most That say, is seems more the competitive. that's in to be I enterprise area The space. would probably

OEMs are role I in there that playing think the bigger a in market.

think I be challenge, that a had we if So would it.

Jaeson Schmidt

Got Really it. appreciate the Okay. all color.

David Neumann

Thanks, Jaeson.

Kevin McGowan

Thanks, Jaeson.

Operator

in to for We to appear further to queue. no now any I'd over the turn closing back [Operator management remarks. question like have Instructions] call

David Neumann

growing your to you thank support I place, to your for like look us dedicated you afternoon. have you and challenging for We operator, this time our thank business for been our Thanks. this in has of grateful thank supporting team through joining customers these you, And would PCTEL. XXXX. we for all environments. Thank forward also through afternoon. the which We're

Operator

joining Thank today XXXX Year you Call. Fourth Earnings Fiscal PCTEL's Quarter for us and for

may You now your lines. disconnect

PC Tel (PCTI) 7 Mar 232022 Q4 Earnings call transcript