PCTEL Achieves $26.0 Million in Fourth Quarter Revenue

By: PCTEL, Inc. via Business Wire News Releases

March 04, 2014 at 07:00 AM EST

PCTEL, Inc. (NASDAQ:PCTI), a leader in simplifying wireless and site solutions for private and public networks, announced its 2013 fourth quarter and annual results.

Fourth Quarter and Annual Highlights

$26.0 million in revenue for the quarter, unchanged from the same period last year. $104.3 million in revenue for the year, an increase of 17 percent over 2012.
Gross profit margin of 42 percent in the quarter, compared to 38 percent in the same period last year. Gross profit margin of 40 percent for the year, unchanged from 2012.
GAAP operating margin from continuing operations of two percent for the quarter, compared to operating margin of negative (46) percent for the same period last year. Operating margin for the year of just above breakeven as compared to negative (12) percent in 2012. The fourth quarter of 2012 contained a $12.6 million impairment of goodwill related to its TelWorx acquisition. Without the impairment, 2012 operating margin in the quarter and the year were three percent and two percent, respectively.
GAAP net income from continuing operations of $453,000 for the quarter, or $0.02 per diluted share, compared to a net loss of $(7.3) million from continuing operations, or $(0.41) per diluted share for the same period last year. $3.3 million net income from continuing operations for the year, or $0.18 per diluted share, as compared to net loss from continuing operations of $(6.7) million or $(0.38) per diluted share in 2012. The goodwill and intangible asset impairment in the fourth quarter 2012 accounted for a net loss of approximately $(0.44) per diluted share in the quarter and 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, 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 margin from continuing operations of 10 percent in the quarter, compared to seven percent in the same period last year. Non-GAAP operating margin for the year was nine percent as compared to eight percent in 2012.
- Non-GAAP net income from continuing operations of $2.1 million or $0.12 per diluted share in the quarter, as compared to $1.5 million or $0.08 per diluted share in the same period last year. Non-GAAP net income from continuing operations of $7.7 million or $0.42 per diluted share for the year, as compared to $6.0 million or $0.34 per diluted share in 2012.
$57.9 million of cash, short-term investments at December 31, 2013, an increase of approximately $3.0 million from the preceding quarter. This change reflects approximately $4.2 million of cash flow from operations less approximately $1.0 million in capital expenditures.

"Growth in our in-building engineering services and strong scanning receiver sales made strong contributions to our quarter and the year,” said Marty Singer, PCTEL’s Chairman and CEO. “We were pleased with the steady performance of our Connected Solutions business and with the reaction to our new antenna and scanning receiver products at the Mobile World Congress (MWC) and Healthcare Information and Management Systems Society (HIMSS) industry events,” added Singer.

CONFERENCE CALL / WEBCAST

PCTEL’s management team will discuss the Company’s results today at 8:30 AM ET. The call can be accessed by dialing (877) 734-5369 (U.S. / Canada) or (706) 679-6397 (International), conference ID: 83290470. 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: 83290470.

About PCTEL

PCTEL, Inc. (NASDAQ: PCTI), develops antenna, scanning receiver, and engineered site solutions and services for public and private networks. PCTEL RF Solutions enables superior utilization of wireless spectrum for cellular and WiFi networks. The RF Solutions services team specializes in the design, testing, and optimization of in-building, small cell, and traditional wireless networks. PCTEL RF Solutions develops and supports specialized network test equipment for LTE FDD, TD-LTE, WCDMA, GSM, CDMA, EV-DO, TD-SCDMA, and WiFi networks. The company's SeeGull® scanning receivers and SeeHawk® visualization tool measure and analyze wireless signals for efficient cellular network planning, deployment, and optimization. Its IBflex™ simplifies in-building wireless network testing and SeeWave™ identifies and locates interference sources that impair network throughput.

PCTEL Connected Solutions™ simplifies network and site 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, and specialized kits 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 the growth of PCTEL’s in-building engineering services and scanning receiver sales, the performance of the Connected Solutions business and the anticipated success of our new antenna and scanning receiver products, 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.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)


	December 31,		December 31,
	2013		2012
ASSETS

Cash and cash equivalents	$	21,790	$	17,543
Short-term investment securities		36,105		33,596
Accounts receivable, net of allowance for doubtful accounts of $130 and $222 at December 31, 2013 and December 31, 2012, respectively		18,603		18,586
Inventories, net		14,535		17,573
Deferred tax assets, net		1,629		1,484
Prepaid expenses and other assets		3,166		2,160
Total current assets		95,828		90,942

Property and equipment, net		14,971		14,775
Goodwill		161		161
Intangible assets, net		4,604		7,004
Deferred tax assets, net		11,827		14,034
Other noncurrent assets		41		1,636
Assets of discontinued operations		0		18
TOTAL ASSETS	$	127,432	$	128,570

LIABILITIES AND STOCKHOLDERS’ EQUITY

Accounts payable	$	4,440	$	10,557
Accrued liabilities		7,803		5,899
Total current liabilities		12,243		16,456

Contingent consideration		0		1,130
Other long-term liabilities		3,137		2,736
Liabilities of discontinued operations		0		103
		3,137		3,969

Total liabilities		15,380		20,425

Stockholders’ equity:
Common stock, $0.001 par value, 100,000,000 shares authorized, 18,566,119 and 18,514,809 shares issued and outstanding at December 31, 2013 and December 31, 2012, respectively		19		19
Additional paid-in capital		143,572		140,388
Accumulated deficit		(31,748)		(32,410)
Accumulated other comprehensive income		209		148
Total equity		112,052		108,145
TOTAL LIABILITIES AND EQUITY	$	127,432	$	128,570


PCTEL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except per share data)


	Three Months Ended				Year Ended
	December 31,				December 31,
	2013		2012		2013		2012

REVENUES	$	25,963	$	25,842	$	104,253	$	88,849
COST OF REVENUES		15,120		15,911		62,493		53,029
GROSS PROFIT		10,843		9,931		41,760		35,820
OPERATING EXPENSES:
Research and development		3,102		2,412		11,064		9,290
Sales and marketing		3,134		3,450		12,121		11,343
General and administrative		3,589		2,946		15,623		10,982
Amortization of intangible assets		596		357		2,400		2,359
Impairment of intangible assets		0		12,550		0		12,550
Restructuring charges		2		1		256		157
Total operating expenses		10,423		21,716		41,464		46,681
OPERATING INCOME (LOSS)		420		(11,785)		296		(10,861)
Other income, net		600		16		5,378		100
INCOME (LOSS) BEFORE INCOME TAXES		1,020		(11,769)		5,674		(10,761)
Expense (benefit) for income taxes		567		(4,519)		2,332		(4,089)
NET INCOME (LOSS) FROM CONTINUING OPERATIONS		453		(7,250)		3,342		(6,672)
NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX BENEFIT		17		(1,073)		(91)		(2,587)
NET INCOME (LOSS)	$	470		($8,323)	$	3,251		($9,259)

Earnings (Loss) per Share from Continuing Operations:
Basic	$	0.03		($0.41)	$	0.19		($0.38)
Diluted	$	0.02		($0.41)	$	0.18		($0.38)

Earnings (Loss) per Share from Discontinued Operations:
Basic	$	0.00		($0.07)		($0.01)		($0.15)
Diluted	$	0.00		($0.07)	$	0.00		($0.15)

Earnings (Loss) per Share:
Basic	$	0.03		($0.48)	$	0.18		($0.53)
Diluted	$	0.02		($0.48)	$	0.18		($0.53)

Weighed Average Shares:
Basic		17,916		17,501		17,797		17,402
Diluted		18,508		17,501		18,184		17,402

Cash dividend per share	$	0.035	$	0.030	$	0.140	$	0.120


PCTEL, INC.
P&L INFORMATION BY SEGMENT - Continuing Operations
(in thousands)


	Three Months Ended December 31, 2013							Year Ended December 31, 2013
	Connected							Connected
	Solutions		RF Solutions		Consolidating	Total		Solutions		RF Solutions		Consolidating	Total

REVENUES	$	17,349	$	8,693	($79)	$	25,963	$	74,223	$	30,310	($280)	$	104,253

GROSS PROFIT		5,368		5,471	4		10,843		22,720		19,018	22		41,760

OPERATING INCOME (LOSS)	$	1,140	$	2,109	($2,829)	$	420	$	6,012	$	7,248	($12,964)	$	296


	Three Months Ended December 31, 2012							Year Ended December 31, 2012
	Connected							Connected
	Solutions		RF Solutions		Consolidating	Total		Solutions		RF Solutions		Consolidating	Total

REVENUES	$	19,861	$	6,045	($64)	$	25,842	$	67,511	$	21,469	($131)	$	88,849

GROSS PROFIT		5,850		4,077	4		9,931		21,037		14,744	39		35,820

OPERATING INCOME (LOSS)		($10,602)	$	1,223	($2,406)		($11,785)		($6,062)	$	4,246	($9,045)		($10,861)


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 December 31,				Year Ended December 31,
		2013		2012		2013		2012

	Operating Income (Loss)	$	420		($11,785)	$	296		($10,861)

(a)	Add:
	Amortization of intangible assets		596		357		2,400		2,359
	Impairment of goodwill and intangible assets		0		12,550		0		12,550
	TelWorx restructuring:
	-Restructuring charges		2		1		256		157
	-Cost of Goods Sold		0		0		284		0
	TelWorx investigation:
	-General & Administrative		747		0		2,626		0
	Stock Compensation:
	-Cost of Goods Sold		95		77		390		378
	-Engineering		185		147		689		585
	-Sales & Marketing		140		146		575		543
	-General & Administrative		402		286		1,786		1,479
			2,167		13,564		9,006		18,051

	Non-GAAP Operating Income	$	2,587	$	1,779	$	9,302	$	7,190
	% of revenue		10.0%		6.9%		8.9%		8.1%

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

		Three Months Ended December 31,				Year Ended December 31,
		2013		2012		2013		2012

	Net Income (Loss) from Continuing Operations	$	453		($7,250)	$	3,342		($6,672)

	Adjustments:
(a)	Non-GAAP adjustment to operating income		2,167		13,564		9,006		18,051
(b)	Other income related to the TelWorx legal settlement		(586)		0		(5,353)		0
(b)	Income Taxes		99		(4,842)		653		(5,401)
			1,680		8,722		4,306		12,650

	Non-GAAP Net Income from Continuing Operations	$	2,133	$	1,472	$	7,648	$	5,978

	Non-GAAP Earning per Share:
	Basic	$	0.12	$	0.08	$	0.43	$	0.34
	Diluted	$	0.12	$	0.08	$	0.42	$	0.34

	Weighed Average Shares:
	Basic		17,916		17,501		17,797		17,402
	Diluted		18,508		17,501		18,184		17,402

	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 other income for the TelWorx legal settlement and insurance claims related to the TelWorx investigation, and non-cash income tax expense.


Reconciliation GAAP To non-GAAP SEGMENT INFORMATION (unaudited) (a) - Continuing Operations
(in thousands except per share information)


	Three Months Ended December 31, 2013							Year Ended December 31, 2013
	Connected							Connected
	Solutions		RF Solutions		Consolidating	Total		Solutions		RF Solutions		Consolidating	Total


Operating Income (Loss)	$	1,140	$	2,109	($2,829)	$	420	$	6,012	$	7,248	($12,964)	$	296

Add:
Amortization of intangible assets		392		204	0		596		1,573		827	0		2,400
TelWorx restructuring:
-Restructuring charges		2		0	0		2		256		0	0		256
-Cost of Goods Sold		0		0	0		0		284		0	0		284
TelWorx investigation:
-General & Administrative		0		0	747		747		0		0	2,626		2,626
Stock Compensation:
-Cost of Goods Sold		44		51	0		95		153		237	0		390
-Engineering		78		107	0		185		285		404	0		689
-Sales & Marketing		122		18	0		140		450		125	0		575
-General & Administrative		91		33	278		402		341		109	1,336		1,786
		729		413	1,025		2,167		3,342		1,702	3,962		9,006

Non-GAAP Operating Income (Loss)	$	1,869	$	2,522	($1,804)	$	2,587	$	9,354	$	8,950	($9,002)	$	9,302


	Three Months Ended December 31, 2012							Year Ended December 31, 2012
	Connected							Connected
	Solutions		RF Solutions		Consolidating	Total		Solutions		RF Solutions		Consolidating	Total


Operating Income (Loss)		($10,602)	$	1,223	($2,406)		($11,785)		($6,062)	$	4,246	($9,045)		($10,861)

Add:
Amortization of intangible assets		139		218	0		357		1,478		881	0		2,359
Impairment of intangible assets		12,550					12,550		12,550					12,550
Restructuring charges		1		0	0		1		157		0	0		157
Stock Compensation:
-Cost of Goods Sold		9		68	0		77		132		246	0		378
-Engineering		57		90	0		147		223		362	0		585
-Sales & Marketing		97		49	0		146		356		187	0		543
-General & Administrative		37		30	219		286		175		120	1,184		1,479
		12,890		455	219		13,564		15,071		1,796	1,184		18,051

Non-GAAP Operating Income (Loss)	$	2,288	$	1,678	($2,187)	$	1,779	$	9,009	$	6,042	($7,861)	$	7,190


This schedule reconciles the Company's GAAP operating income by segment 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.

Contacts:

For further information contact:
PCTEL, Inc.
John Schoen
CFO
(630) 372-6800
or
PCTEL, Inc.
Jack Seller
Public Relations
(630)372-6800
Jack.seller@pctel.com