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PCTEL Achieves $26.7 Million in Second Quarter Revenue
[July 31, 2013]

PCTEL Achieves $26.7 Million in Second Quarter Revenue

BLOOMINGDALE, Ill. --(Business Wire)--

PCTEL, Inc. (NASDAQ: PCTI), a leader in simplifying wireless and site solutions for private and public networks, announced results for the second quarter ended June 30, 2013.

Second Quarter Highlights

  • $26.7 million in revenue for the quarter, an increase of 34 percent from the same period last year. The asset acquisition now included in our Connected Solutions segment accounted for 22 percent growth, with the remaining 12 percent growth from our existing pre-acquisition products and services.
  • Gross profit margin of 40 percent in the quarter, compared to 43 percent in the same period last year. Connected Solutions represents a larger proportion of PCTEL's total revenue than in the past.
  • GAAP operating margin from continuing operations of one percent for the quarter, compared to three percent for the same period last year. This quarter's results include a restructuring charge of $0.4 million, or two percent of revenue, for the consolidation of the Company's North Carolina operations into its Illinois facility.
  • GAAP net income from continuing operations of $187,000 for the quarter, or $0.01 per diluted share, compared to a net income of $445,000, or $0.03 per diluted share for the same period last year.
  • Non-GAAP operating profit and net income are measures the Company uses to reflect the results of its core earnings. The Company's reporting of Non-GAAP net income excludes expenses for restructuring, gain or loss on sale of assets or legal settlements, stock based compensation, amortization and impairment of intangible assets and goodwill related to the Company's acquisitions, and non-cash related income tax expense.
    • Non-GAAP operating profit from continuing operations of nine percent in the quarter, as compared to 11 percent in the same period last year.
    • Non-GAAP net income from continuing operations of $2.0 million or $0.11 per diluted share in the quarter, as compared to $1.8 million or $0.10 per diluted share in the same period last year.
  • GAAP loss from discontinued operations net of tax benefit of $(22,000), compared to a net loss of $(774,000) in the same period last year. The Company disposed of its PCTEL Secure assets in April 2013 and the results of that operation are presented as discontinued operations in the Company's financial statements.
  • $51.5 million of cash and short-term investments at June 30, 2013, a decrease of approximately $500,000 from the preceding quarter. During the quarter the Company used cash of $435,000 to purchase 60,000 common shares under its stock repurchase program at an average price of $7.31, and $643,000 on its regular quarterly dividend.

"We made solid progress on all fronts during the second quarter," said Marty Singer, PCTEL's Chairman and CEO. "We saw revenue increases in Connected Solutions and RF Solutions and a contribution from assets acquired over the past two years. Favorable responses to the EXflex, our new MIMO antennas, and our expanded indoor services should help PCTEL maintain momentum," added Singer.

CONFERENCE CALL / WEBCAST

PCTEL's management team will discuss the Company's results today at 5:15 PM ET. The call can be accessed by dialing (877) 734-5369 (U.S. / Canada) or (706) 679-6397 (International), conference ID: 19875285. The call will also be webcast at http://investor.pctel.com/events.cfm.

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: 19875285.

About PCTEL

PCTEL, Inc. (NASDAQ: PCTI), develops antenna, scanning receiver, and engineered site solutions and services for public and private networks. PCTEL RF Solutions specializes in the design, optimization and testing of today's wireless communication networks. The company's SeeGull® scanning receivers, SeeHawk® visualization tool, and Clarify® system, measure and analyze wireless signals for efficient cellular network planning, deployment, and optimization. PCTEL develops and supports scanning receivers for LTE, TD-LTE, EV-DO, CDMA, WCDMA, TD-SCDMA, GSM, and WiMAX networks.

PCTEL Connected Solutions™ simplifies network deployment for wireless, data and communications applications for private network, public safety, and government customers. PCTEL Connected Solutions develops and delivers high-value YAGI, Land Mobile Radio, WiFi, GPS, In-Tunnel, Subway, and broadband antennas (parabolic and flat panel) through its MAXRAD®, Bluewave™ and Wi-Sys™ product lines. PCTEL also designs specialized towers, enclosures, fiber optic panels, and fiber jumper cables to deliver custom engineered site solutions. The company's vertical markets include SCADA, Health Care, Smart Grid, Positive Train Control, Precision Agriculture, Indoor Wireless, Telemetry, Off-loading, and Wireless Backhaul. PCTEL's products are sold worldwide through direct and indirect channels. For more information, please visit the company's web sites www.pctel.com, www.antenna.com or www.rfsolutions.pctel.com.

PCTEL Safe Harbor Statement

This press release contains "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Specifically, the statements regarding PCTEL's future financial performance and expectations regarding growth and expansion 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 ability to successfully grow the wireless products business and the ability to implement new technologies and obtain protection for the related intellectual property. 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, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
 
(unaudited)
June 30, December 31,
2013 2012
ASSETS
 
Cash and cash equivalents $ 18,330 $ 17,543
Short-term investment securities 33,151 33,596

Accounts receivable, net of allowance for doubtful accounts of $239 and $222 at June 30, 2013 and December 31, 2012, respectively

18,337 18,586
Inventories, net 16,108 17,573
Deferred tax assets, net 1,484 1,484
Prepaid expenses and other assets   1,164     2,160  
Total current assets 88,574 90,942
 
Property and equipment, net 14,671 14,775
Goodwill 161 161
Intangible assets, net 5,795 7,004
Deferred tax assets, net 12,989 14,034
Other noncurrent assets 1,727 1,636
Assets of discontinued operations   0     18  
TOTAL ASSETS $ 123,917   $ 128,570  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Accounts payable $ 5,752 $ 10,557
Accrued liabilities   5,751     5,899  
Total current liabilities 11,503 16,456
 
Contingent consideration 0 1,130
Other long-term liabilities 2,781 2,736
Liabilities of discontinued operations   0     103  
2,781 3,969
   
Total liabilities   14,284     20,425  
 
Stockholders' equity:

Common stock, $0.001 par value, 100,000,000 shares authorized, 18,445,099 and 18,514,809 shares issued and outstanding at June 30, 2013 and December 31, 2012, respectively

18 19
Additional paid-in capital 141,122 140,388
Accumulated deficit (31,675 ) (32,410 )
Accumulated other comprehensive income   168     148  
Total equity   109,633     108,145  
TOTAL LIABILITIES AND EQUITY $ 123,917   $ 128,570  
 
 
 

PCTEL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except per share data)
       
 
Three Months Ended Six Months Ended
June 30, June 30,
2013 2012 2013 2012
 
REVENUES $ 26,746 $ 19,993 $ 51,818 $ 37,154
COST OF REVENUES   15,914     11,323     31,388     21,306  
GROSS PROFIT   10,832     8,670     20,430     15,848  
OPERATING EXPENSES:
Research and development 2,683 2,215 5,233 4,531
Sales and marketing 3,054 2,573 6,075 5,082
General and administrative 3,825 2,656 8,456 5,389
Amortization of intangible assets 604 542 1,209 1,084
Restructuring charges   408     0     509     0  
Total operating expenses   10,574     7,986     21,482     16,086  
OPERATING INCOME (LOSS) 258 684 (1,052 ) (238 )
Other income, net   57     39     4,389     73  
INCOME (LOSS) BEFORE INCOME TAXES 315 723 3,337 (165 )
Expense (benefit) for income taxes   128     278     1,198     (54 )
NET INCOME (LOSS) FROM CONTINUING OPERATIONS   187     445     2,139     (111 )
NET LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX BENEFIT   (22 )   (775 )   (109 )   (1,098 )
NET INCOME (LOSS) $ 165     ($330 ) $ 2,030     ($1,209 )
 
Earnings (Loss) per Share from Continuing Operations:
Basic $ 0.01 $ 0.03 $ 0.12 ($0.01 )
Diluted $ 0.01 $ 0.03 $ 0.12 ($0.01 )
 
Earnings (Loss) per Share from Discontinued Operations:
Basic $ 0.00 ($0.04 ) ($0.01 ) ($0.06 )
Dilute $ 0.00 ($0.04 ) ($0.01 ) ($0.06 )
 
Earnings (Loss) per Share:
Basic $ 0.01 ($0.02 ) $ 0.11 ($0.07 )
Diluted $ 0.01 ($0.02 ) $ 0.11 ($0.07 )
 
Weighed Average Shares:
Basic 17,790 17,404 17,731 17,317
Diluted 18,075 17,404 17,973 17,317
 
Cash dividend per share $ 0.035 $ 0.030 $ 0.070 $ 0.060
 
 
 
PCTEL, INC.
P&L INFORMATION BY SEGMENT - Continuing Operations
(in thousands)
               
Three Months Ended June 30, 2013 Six Months Ended June 30, 2013
Connected Solutions RF Solutions Consolidating Total Connected Solutions RF Solutions Consolidating Total
 
REVENUES $ 19,199 $ 7,602 ($55 ) $ 26,746 $ 38,555 $ 13,374 ($111 ) $ 51,818
               
GROSS PROFIT 5,946 4,876 10 10,832 11,958 8,457 15 20,430
               
OPERATING INCOME (LOSS) $ 1,374 $ 2,072 ($3,188 ) $ 258 $ 3,133 $ 3,042 ($7,227 )   ($1,052 )
 
 
Three Months Ended June 30, 2012 Six Months Ended June 30, 2012
Connected Solutions RF Solutions Consolidating Total Connected Solutions RF Solutions Consolidating Total
 
REVENUES $ 14,821 $ 5,206 ($34 ) $ 19,993 $ 27,988 $ 9,204 ($38 ) $ 37,154
               
GROSS PROFIT 5,104 3,556 10 8,670 9,503 6,318 27 15,848
               
OPERATING INCOME (LOSS) $ 1,954 $ 1,014 ($2,284 ) $ 684 $ 3,172 $ 1,223 ($4,633 )   ($238 )
 
 
 

Reconciliation GAAP To non-GAAP Results Of Continuing Operations (unaudited)

(in thousands except per share information)
       

Reconciliation of GAAP operating income to non-GAAP operating income (a) from Continuing Operations

 
Three Months Ended June 30, Six Months Ended June 30,
2013 2012 2013 2012
 
Operating Income (Loss) $ 258 $ 684 ($1,052 ) ($238 )
 
(a) Add:
Amortization of intangible assets 604 542 1,209 1,084
Restructuring charges 408 0 509 0
TelWorx investigation:
-General & Administrative 100 0 1,491 0
Stock Compensation:
-Cost of Goods Sold 107 99 191 203
-Engineering 178 148 322 287
-Sales & Marketing 154 128 261 257
-General & Administrative   660     567     947     891  
2,211 1,484 4,930 2,722
       
Non-GAAP Operating Income $ 2,469   $ 2,168   $ 3,878   $ 2,484  
% of revenue 9.2 % 10.8 % 7.5 % 6.7 %
 

Reconciliation of GAAP net income to non-GAAP net income (b) from Continuing Operations

 
Three Months Ended June 30, Six Months Ended June 30,
2013 2012 2013 2012
 
Net Income (Loss) from Continuing Operations $ 187 $ 445 $ 2,139 ($111 )
 
Adjustments:
(a) Non-GAAP adjustment to operating income (loss) 2,211 1,484 4,930 2,722
Other income related to the TelWorx legal settlement (49 ) 0 (4,379 ) 0
(b) Income Taxes   (318 )   (119 )   498     (513 )
1,844 1,365 1,049 2,209
       
Non-GAAP Net Income $ 2,031   $ 1,810   $ 3,188   $ 2,098  
 
Non-GAAP Earning per Share:
Basic $ 0.11 $ 0.10 $ 0.18 $ 0.12
Diluted $ 0.11 $ 0.10 $ 0.18 $ 0.12
 
Weighed Average Shares:
Basic 17,790 17,404 17,731 17,317
Diluted 18,075 17,685 17,973 17,705
 

This schedule reconciles the Company's GAAP operating income and GAAP net income to its non-GAAP operating income and non-GAAP net income. 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.

 

(a) These adjustments reflect stock based compensation expense, amortization of intangible assets, restructuring charges, and general and administrative expenses associated with the TelWorx investigation.

 

(b) These adjustments include the items described in footnote (a) as well as the non-cash income tax expense, noncontrolling interest, and other income related to the TelWorx legal settlement.

 

 
 

Reconciliation GAAP To non-GAAP SEGMENT INFORMATION (unaudited) (a) - Continuing Operations

(in thousands except per share information)
               
 
Three Months Ended June 30, 2013 Six Months Ended June 30, 2013
Connected Solutions RF Solutions Consolidating Total Connected Solutions RF Solutions Consolidating Total
 
 
Operating Income (Loss) $ 1,374 $ 2,072 ($3,188 ) $ 258 $ 3,133 $ 3,042 ($7,227 ) ($1,052 )
 
Add:
Amortization of intangible assets 394 210 0 604 790 419 0 1,209
Restructuring charges 408 0 0 408 509 0 0 509
TelWorx investigation:
-General & Administrative 0 0 100 100 0 0 1,491 1,491
Stock Compensation:
-Cost of Goods Sold 39 68 0 107 65 126 0 191
-Engineering 76 102 0 178 131 191 0 322
-Sales & Marketing 122 32 0 154 200 61 0 261
-General & Administrative   89   26 545     660   155   42 750     947  
1,128 438 645 2,211 1,850 839 2,241 4,930
               
Non-GAAP Operating Income (Loss) $ 2,502 $ 2,510 ($2,543 ) $ 2,469 $ 4,983 $ 3,881 ($4,986 ) $ 3,878  
 
 
Three Months Ended June 30, 2012 Six Months Ended June 30, 2012
Connected Solutions RF Solutions Consolidating Total Connected Solutions RF Solutions Consolidating Total
 
 
Operating Income (Loss) $ 1,954 $ 1,014 ($2,284 ) $ 684 $ 3,172 $ 1,223 ($4,633 ) ($238 )
 
Add:
Amortization of intangible assets 321 221 0 542 643 441 0 1,084
Stock Compensation:
-Cost of Goods Sold 39 60 0 99 84 119 0 203
-Engineering 56 92 0 148 110 177 0 287
-Sales & Marketing 80 48 0 128 167 90 0 257
-General & Administrative   41   30 496     567   88   60 743     891  
537 451 496 1,484 1,092 887 743 2,722
               
Non-GAAP Operating Income (Loss) $ 2,491 $ 1,465 ($1,788 ) $ 2,168 $ 4,264 $ 2,110 ($3,890 ) $ 2,484  
 

This schedule reconciles the Company's GAAP operating income by segment to its non-GAAP operating income. non-GAAP net income. 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.

 

(a) These adjustments reflect stock based compensation expense, amortization of intangible assets, restructuring charges, and general and administrative expenses associated with the TelWorx investigation.


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