Press release

PCTEL Reports $20.6 Million in First Quarter Revenue

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PCTEL, Inc. (Nasdaq: PCTI) announced its results for the first quarter
ended March 31, 2019.

Highlights

  • Revenue of $20.6 million in the quarter, 5% lower compared to
    the prior year. Compared to the first quarter 2018, the first quarter
    revenue was higher by 38% for the test and measurement product line
    and lower by 15% for the antenna product line.
  • Gross profit margin of 42.0% in the quarter, up 5.8% compared
    to gross profit margin in the prior year. The increase in the quarter
    is a result of improved profitability for scanning receivers and
    antennas.
  • GAAP net loss per share of $0.02 in the quarter compared to a
    GAAP loss of $0.05 per share in the quarter 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 income per share of $0.04 in the quarter compared
    to a net loss of $0.01 in the first quarter last year.
  • Adjusted EBITDA margin as a percent of revenue of 7% in the quarter compared
    to 2% in the prior year.
  • $35.0 million of cash and short-term investments at March 31, 2019
    and no debt.

“We are pleased that early demand for 5G test and measurement tools
continues to drive revenue growth and profitability for scanning
receivers. We expect this to continue as wireless operators deploy 5G
networks in the US, Europe and Asia,” said David Neumann, PCTEL’s CEO.
“In addition, 5G and enterprise Wi-Fi networks require engineered
antenna and radio systems to enable industrial IoT for both public and
private applications. We are positioned well to provide our antenna
solutions for these applications in enterprise wireless, intelligent
transportation and industrial IoT markets.”

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: 1689797.
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: 1689797.

About PCTEL

PCTEL, Inc. is a leading global supplier of antennas and wireless
network testing solutions. Founded in 1994, we are currently celebrating
our 25th anniversary. PCTEL’s 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, the impact of our
redefined market segments and our 2018 cost reduction actions, the
anticipated demand for certain products including those related to
antennas, the industrial IoT and the rollout of 5G, 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 defined market segments, 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.

PCTEL is a registered trademark of PCTEL, Inc. © 2019 PCTEL, Inc. All
rights reserved.

   
PCTEL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
 
March 31, December 31,
2019 2018
ASSETS
Cash and cash equivalents $ 4,455 $ 4,329
Short-term investment securities 30,586 30,870
Accounts receivable, net of allowances of $86 and $63 at March 31,
2019 and
December 31, 2018, respectively 16,427 15,864
Inventories, net 12,919 12,848
Prepaid expenses and other assets   1,541     1,416  
Total current assets 65,928 65,327
 
Property and equipment, net 11,740 12,138
Goodwill 3,332 3,332
Intangible assets, net 789 1,029
Other noncurrent assets   1,531     45  
TOTAL ASSETS $ 83,320   $ 81,871  
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable $ 6,881 $ 6,083
Accrued liabilities   6,668     5,801  
Total current liabilities 13,549 11,884
Long-term liabilities   868     381  
Total liabilities   14,417     12,265  
Stockholders’ equity:
Common stock, $0.001 par value, 100,000,000 shares authorized,
18,417,701 and 18,271,249
shares issued and outstanding at March 31, 2019 and December 31,
2018, respectively 		18 18
Additional paid-in capital 133,320 133,859
Accumulated deficit (64,372 ) (64,055 )
Accumulated other comprehensive loss   (63 )   (216 )
Total stockholders’ equity   68,903     69,606  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 83,320   $ 81,871  
 
 
PCTEL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except per share data)
   
Three Months Ended
March 31,
  2019     2018  
 
REVENUES $ 20,590 $ 21,731
COST OF REVENUES   11,932     13,867  
GROSS PROFIT   8,658     7,864  
OPERATING EXPENSES:
Research and development 3,003 2,940
Sales and marketing 2,798 3,028
General and administrative 3,253 2,993
Amortization of intangible assets   73     124  
Total operating expenses   9,127     9,085  
OPERATING LOSS (469 ) (1,221 )
Other income, net   162     51  
LOSS BEFORE INCOME TAXES (307 ) (1,170 )
Expense (benefit) for income taxes   10     (312 )
NET LOSS $ (317 ) $ (858 )
 
Net Loss per Share:
Basic $ (0.02 ) $ (0.05 )
Diluted $ (0.02 ) $ (0.05 )
Weighted Average Shares:
Basic 17,617 17,056
Diluted 17,617 17,056
 
Cash dividend per share $ 0.055 $ 0.055
 
 
PCTEL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
   
Three Months Ended March 31,
. 2019 2018
 
Operating Activities:
Net loss $ (317 ) $ (858 )
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
Depreciation 711 674
Intangible asset amortization 240 290
Stock-based compensation 882 668
Loss on disposal of property and equipment 0 10
Restructuring costs (3 ) (11 )
Bad debt provision 7 15
Deferred tax provision 0 (236 )
Changes in operating assets and liabilities:
Accounts receivable (512 ) (350 )
Inventories 38 321
Prepaid expenses and other assets 23 (250 )
Accounts payable 554 (64 )
Income taxes payable (22 ) (3 )
Other accrued liabilities (39 ) (1,808 )
Deferred revenue   (23 )   14  
Net cash provided by (used in) operating activities   1,539     (1,588 )
Investing Activities:
Capital expenditures (311 ) (884 )
Proceeds from disposal of property and equipment 0 14
Purchases of investments (13,893 ) (7,266 )
Redemptions/maturities of short-term investments   14,177     17,480  
Net cash (used in) provided by investing activities   (27 )   9,344  
Financing Activities:
Proceeds from issuance of common stock 338 364
Payment of withholding tax on stock-based compensation (743 ) (289 )
Principle payments on capital leases (26 ) (24 )
Cash dividends   (1,016 )   (995 )
Net cash used in financing activities   (1,447 )   (944 )
 
Net increase in cash and cash equivalents 65 6,812
Effect of exchange rate changes on cash 61 81
Cash and cash equivalents, beginning of period   4,329     5,559  
Cash and Cash Equivalents, End of Period $ 4,455   $ 12,452  
 
 
PCTEL, INC.
REVENUE AND GROSS PROFIT BY PRODUCT LINE (unaudited)
(in thousands)
       
 
Three Months Ended March 31, 2019
Test &
Antenna Measurement
Products Products Corporate Total
REVENUES $15,088 $5,535 ($33 ) $20,590
 
GROSS PROFIT $4,861 $3,785 $12 $8,658
 
GROSS PROFIT % 32.2 % 68.4 % 42.0 %
 
Three Months Ended March 31, 2018
Test &
Antenna Measurement
Products Products Corporate Total
REVENUES $17,764 $3,999 ($32 ) $21,731
 
GROSS PROFIT $5,198 $2,670 ($4 ) $7,864
 
GROSS PROFIT % 29.3 % 66.8 % 36.2 %
 
 

Reconciliation of GAAP to non-GAAP
Results (unaudited)

(in thousands except per share information)
     

Reconciliation of GAAP operating loss to
non-GAAP operating income (loss)

 
Three Months Ended March 31,
2019 2018
 
 
Operating Loss ($469 ) ($1,221 )
 
(a) Add:
Amortization of intangible assets
-Cost of revenues 167 167
-Operating expenses 73 124
Stock Compensation:
-Cost of revenues 103 88
-Engineering 172 138
-Sales & marketing 180 131
-General & administrative 427   311  
1,122   959  
Non-GAAP Operating Income (Loss) $654   ($262 )
% of revenue 3.2 % -1.2 %
 

Reconciliation of GAAP net loss to
non-GAAP net income (loss)

 
Three Months Ended March 31,
2019 2018
 
Net Loss ($317 ) ($858 )
 
Adjustments:
(a) Non-GAAP adjustment to operating loss 1,122 959
Income Taxes (56 ) (295 )
1,067   664  
Non-GAAP Net (Loss) Income $750   ($194 )
 
Non-GAAP (Loss) Income per Share:
Basic $0.04 ($0.01 )
Diluted $0.04 ($0.01 )
 
Weighed Average Shares:
Basic 17,617 17,056
Diluted 17,660 17,056
  This schedule reconciles the Company’s GAAP operating loss to its
non-GAAP operating income (loss). 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

(unaudited, in thousands)
     
Three Months Ended March 31,
2019 2018
 
Operating Loss ($469) ($1,221)
 
Add:
Depreciation and amortization 711 674
Intangible amortization 240 291
Stock compensation expenses 882 668
Adjusted EBITDA $1,365 $412
% of revenue 6.6% 1.9%
  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