- Kevin McGowan
- Thank you for joining us on today's conference call to discuss PCTEL's second
- quarter 2023 financial results. With me today is David Neumann, the Company's
- CEO.
- Please note that a webcast replay of this call will be available on our website.
- Before we begin, let me remind you that this call may contain forward-looking
- statements and projections based upon current circumstances. While these
- forward-lookingstatements and projections reflect PCTEL's best current
- judgment, they are subject to risks and uncertainties, particularly related to global
- supply chain and logistics challenges; global political and economic
- circumstances (including inflation and a potential recession); ability to generate
- sales of our innovative new products; success of our expansion efforts in Europe;
- and ability to leverage our distribution channels, that could cause actual results to
- differ materially from these forward-looking statements and projections. Risk
- factors that could cause PCTEL's actual results to differ materially from its
- projections are discussed in the earnings press release which was issued today
- and the Company's annual report on Form 10-K. The Company assumes no
- obligation to update any forward-looking statements or information, which speak
- as of their respective dates.
20
- Additionally, our commentary will include reference to the following non-GAAP
- measures: non-GAAP gross margin percentage, non-GAAP operating expense,
1
- non-GAAPearnings per share, and adjusted EBITDA. We believe these non-
- GAAP measures facilitate comparability of results over different periods. A full
- reconciliation of these non-GAAP measures to GAAP is included in our quarterly
- earnings press release that was issued earlier today.
27
- I am now pleased to turn the call over to David Neumann.
- David Neumann
- Thank you, Kevin.
32
- Good afternoon all, and thank you for joining us today for our second quarter
- 2023 conference call. Today we will discuss market conditions, review our
- second quarter performance and share our outlook for the third quarter of 2023.
- Kevin will then review our financial results in greater detail.
37
- Incoming orders improved in the quarter, driven, in part, by a large OEM
- customer increasing purchases as their higher than normal inventory levels
- began to decline. We are pleased to report that customer supply chain issues
- are improving, which also contributed to the increase in orders.
42
- At a high level, we delivered second-quarter revenues of $20.6 million, a
- decrease of $4.4 million year-over-year, but we achieved strong non-GAAP gross
- margins of 49.5%, up 3.5% from the prior year period. Top line performance was
- in line with our expectations, and the decline both on a sequential and year-over-
2
- year basis was due to lower revenues in both product lines. Although revenue
- decreased in our antenna business, incoming orders increased in the quarter,
- which will contribute to revenues in the second half of the year and into 2024.
- Scanning receiver incoming orders also increased and the revenue comparison
- is to a stronger than expected first quarter, as Kevin will highlight soon.
52
- As always, I would like to thank our PCTEL team for their continued dedication
- and contribution to our business and growth. Through their diligence, we have
- been able to continue to successfully navigate today's challenging operating
- environment. Our supply chain relationships remain strong, our on-time delivery
- metrics remain high, and our inventory is in a good position for the remainder of
- the year.
59
- Later in today's call I will discuss our three core growth strategies in greater
- detail. We continue to make important progress with our industry leading product
- launches, customer and distribution expansion, and work to provide more
- components of our customers' systems, which continue to serve as the
- foundation of our operational success.
65
- I would now like to turn the call over to Kevin for a review of our second quarter
- 2023 results. Kevin.
68
69 Kevin McGowan
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70 Thank you, David.
71
- Total revenues were $20.6 million, essentially the mid-point of our guidance
- range and 17.6% lower compared to the prior year period. Revenues for
- antennas and Industrial IoT devices were $14.4 million in the period, a decrease
- of roughly $3.2 million compared to the second quarter 2022, with lower antenna
- revenues for enterprise and public safety applications due to customer inventory
- levels, as well as customer supply chain challenges with other system
- components. It is worth noting that these issues are starting to abate but still
- impacted performance during the quarter. Test & Measurement revenues were
- $6.2 million for the second quarter of 2023, $1.2 million lower compared to the
- second quarter of 2022 primarily due to lower OEM sales, which declined
- following a particularly strong first quarter. In addition, performance in the
- second quarter last year was very strong, impacting the comparison to that
- period. We expect the rest of the year to follow the typical cyclical pattern.
85
- Second quarter 2023 gross profit margin percentage on a non-GAAP basis was
- 49.5%, above our expectations, and a 3.5% increase from the year ago period.
- The increase in gross profit margin percentage was primarily due to a stronger
- gross profit margin percentage for Antennas and Industrial IoT devices. Non-
- GAAP gross profit margin percentage for antennas and Industrial IoT devices in
- the second quarter 2023 improved by 6.5% compared to the second quarter
- 2022, due to continued improvement in logistical and operating costs relative to
4
- last year coupled with a favorable shift in product and customer mix. The non-
- GAAP gross profit margin percentage for Test & Measurement products was
- lower by 4.2% in the second quarter of 2023 compared to the second quarter of
- 2022 due to higher component costs.
97
- Operating expenses on a non-GAAP basis were $9.0 million in the second
- quarter 2023, a decrease of $0.7 million compared to the second quarter 2022.
- The year-over-year decrease was primarily due to lower expenses in sales and
- marketing related to commissions and marketing programs, as well as lower
- expense accruals for incentive compensation.
103
- Other income was $0.3 million in the second quarter 2023 compared to $0.1
- million in the prior year period. The year-over-year increase was primarily due to
- higher average interest rates.
107
- Adjusted EBITDA decreased by approximately 33% to $1.7 million in the second
- quarter of 2023 compared to $2.6 million in the year ago period. Adjusted
- EBITDA as a percentage of revenue was 8.5% in the second quarter of 2023
- compared to 10.4% in the second quarter of 2022, and non-GAAP diluted
- earnings per share was $0.07 in the second quarter 2023, exceeding our
- expectations of between $0.02 to $0.04, but was lower by $0.03 compared to the
- second quarter 2022. The decrease in earnings per share and adjusted EBITDA
- can be attributed to the lower sales volumes.
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PC-Tel Inc. published this content on 08 August 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 08 August 2023 22:24:58 UTC.