PC-Tel, Inc. reports 134% EBITDA decline in 2018 and 9.3% Revenue decline
03/14/2019 • About PC-Tel, Inc. (
$PCTI) • By InTwits
PC-Tel, Inc. reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- PC-Tel, Inc. is a company in decline: 2018 revenue growth was -9.3%, 5 years revenue CAGR was -4.5%
- EBITDA Margin is quite volatile: -2.1% in 2018, 5.6% in 2017, 3.2% in 2016, 0.7% in 2015, 8.3% in 2014
- PC-Tel, Inc. has medium CAPEX intensity: 5 year average CAPEX/Revenue was 7.0%. At the same time it's in pair with industry average of 7.4%
- CAPEX is quite volatile: $3m in 2018, $3m in 2017, $2m in 2016, $22m in 2015, $3m in 2014
- The company has unprofitable business model: ROIC is -7.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue decreased on 9.3%. Annual revenue decline showed slowdown in 18Q4 - revenue decreased on 8.8%. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 7.7 pp from 5.6% to -2.1% in 2018.
Gross Margin decreased on 5.0 pp from 42.4% to 37.5% in 2018. SG&A as a % of Revenue increased slightly on 1.3 pp from 28.2% to 29.5% in 2018.
Net Income margin dropped on 19.7 pp from 4.2% to -15.5% in 2018.
Investments (CAPEX, working capital and M&A)
In 2018 PC-Tel, Inc. had CAPEX/Revenue of 3.3%. CAPEX/Revenue dropped on 21.1 pp from 24.4% in 2015 to 3.3% in 2018. It's average level of CAPEX/Revenue for the last three years was 2.8%.
Return on investment
The company operates at negative ROIC (-7.3%) and ROE (-16.9%). ROIC decreased on 9.1 pp from 1.8% to -7.3% in 2018. ROE dropped on 21.6 pp from 4.7% to -16.9% in 2018.
Leverage (Debt)
The company has no debt. Cash dropped on 22.1%.
Management team
The company's CEO is David A Neumann. David A Neumann is a founder and has 2 years tenure with the company. PC-Tel, Inc.'s CFO Kevin Mcgowan has spent 0 years with the company.
Financial and operational results
FY ended 12/31/2018
PC-Tel, Inc. ($PCTI) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 107.2 | 90.5 | 85.0 | 91.4 | 83.0 | -9.3% |
| Gross Profit | 43.6 | 35.1 | 34.4 | 38.8 | 31.1 | -19.9% |
| SG&A | 25.8 | 24.9 | 24.6 | 25.7 | 24.4 | -5.1% |
| EBITDA | 8.9 | 0.6 | 2.7 | 5.2 | -1.7 | -133.6% |
| Net Income | 4.6 | -1.6 | -17.7 | 3.8 | -12.9 | -437.2% |
Balance Sheet
|
|---|
| Cash | 20.4 | 7.1 | 14.9 | 5.6 | 4.3 | -22.1% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 2.5 | 22.1 | 1.7 | 2.7 | 2.8 | 3.3% |
Ratios
|
|---|
| Revenue growth | 2.8% | -15.5% | -6.1% | 7.6% | -9.3% | |
| EBITDA growth | 66.0% | -93.0% | 330.4% | 91.6% | -133.6% | |
|
|---|
| Gross Margin | 40.7% | 38.8% | 40.5% | 42.4% | 37.5% | -5.0% |
| EBITDA Margin | 8.3% | 0.7% | 3.2% | 5.6% | -2.1% | -7.7% |
| SG&A, % of revenue | 24.1% | 27.5% | 29.0% | 28.2% | 29.5% | 1.3% |
| Net Income Margin | 4.3% | -1.7% | -20.8% | 4.2% | -15.5% | -19.7% |
| CAPEX, % of revenue | 2.4% | 24.4% | 2.0% | 2.9% | 3.3% | 0.4% |
|
|---|
| ROIC | 4.0% | -4.7% | -1.3% | 1.8% | -7.3% | -9.1% |
| ROE | 4.1% | -1.5% | -19.8% | 4.7% | -16.9% | -21.6% |
| Net Debt/EBITDA | -2.3x | -11.3x | -5.5x | -1.1x | |
PC-Tel, Inc. ($PCTI) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 22 | 22 | 18 | 21 | | -5.4% | 0.4% | -22.1% | -8.8% |
| EBITDA | -0 | -1 | -1 | 1 | | -127.3% | -225.8% | -177.3% | -69.8% |
| Net Income | -1 | -1 | -2 | -9 | | | | -274.9% | -381.1% |
Balance Sheet
|
|---|
| Cash | 12 | 8 | 5 | 4 | | -16.8% | -36.0% | -17.6% | -22.1% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | -100.0% | |
Ratios
|
|---|
| Gross Margin | 36.2% | 36.1% | 36.5% | 40.9% | | -5.0% | -5.5% | -6.4% | -3.0% |
| EBITDA Margin | -1.2% | -2.8% | -7.7% | 2.6% | | -5.3% | -5.0% | -15.5% | -5.2% |
| Net Income Margin | -3.9% | -5.7% | -9.1% | -43.0% | | -3.8% | -4.0% | -13.1% | -57.0% |
Peers in Communications Equipment
Below we provide PC-Tel, Inc. benchmarking against other companies in Communications Equipment industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Ribbon Communications Inc. ($RBBN) | | | | 30.6% | 75.2% |
| Extreme Networks, Inc. ($EXTR) | | 6.4% | -4.4% | 13.2% | 64.4% |
| Optical Cable Corporation ($OCC) | | -11.3% | -12.2% | -0.8% | 37.0% |
| ParkerVision Inc ($PRKR) | | | 37,601.2% | -97.5% | 35.0% |
| Network-1 Technologies, Inc. ($NTIP) | | 34.6% | 292.9% | -74.7% | 34.4% |
| |
|---|
| Median (66 companies) | | 0.7% | 7.6% | 5.1% | 3.5% |
|---|
| PC-Tel, Inc. ($PCTI) | | -15.5% | -6.1% | 7.6% | -9.3% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| F5 Networks, Inc. ($FFIV) | 82.1% | 82.7% | 83.1% | 83.1% | 83.3% |
| Radware Ltd. ($RDWR) | 82.1% | 82.4% | 81.8% | 81.3% | 82.2% |
| Radcom Ltd. ($RDCM) | 63.2% | 76.8% | 69.6% | 71.8% | 74.0% |
| Casa Systems, Inc. ($CASA) | | 70.8% | 69.1% | 73.4% | 73.4% |
| NetScout Systems, Inc. ($NTCT) | 78.7% | 79.2% | 65.6% | 70.2% | 72.4% |
| |
|---|
| Median (67 companies) | 42.4% | 44.0% | 43.9% | 41.0% | 41.2% |
|---|
| PC-Tel, Inc. ($PCTI) | 40.7% | 38.8% | 40.5% | 42.4% | 37.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Network-1 Technologies, Inc. ($NTIP) | 35.5% | 33.7% | 50.6% | 37.8% | 42.8% |
| InterDigital, Inc. ($IDCC) | 50.8% | 58.1% | 73.6% | 67.3% | 41.9% |
| EchoStar Corporation ($SATS) | 25.7% | 39.7% | 40.3% | 38.1% | 37.4% |
| Ubiquiti Networks, Inc. ($UBNT) | 34.7% | 25.5% | 37.3% | 34.3% | 32.8% |
| Ituran Location and Control Ltd. ($ITRN) | 32.4% | 30.5% | 29.9% | 29.9% | 30.4% |
| |
|---|
| Median (65 companies) | 5.3% | 6.1% | 5.9% | 6.5% | 5.4% |
|---|
| PC-Tel, Inc. ($PCTI) | 8.3% | 0.7% | 3.2% | 5.6% | -2.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Resonant Inc. ($RESN) | | | 132.5% | 124.8% | 245.2% |
| ViaSat, Inc. ($VSAT) | 22.8% | 26.5% | 26.7% | 33.0% | 32.1% |
| Applied Optoelectronics, Inc. ($AAOI) | 31.5% | 30.1% | 19.0% | 17.5% | 26.9% |
| EchoStar Corporation ($SATS) | 19.7% | 43.8% | 39.9% | 30.9% | 26.5% |
| Finisar Corporation ($FNSR) | 11.3% | 11.9% | 9.4% | 9.7% | 16.8% |
| |
|---|
| Median (65 companies) | 2.2% | 2.2% | 1.9% | 1.8% | 1.6% |
|---|
| PC-Tel, Inc. ($PCTI) | 2.4% | 24.4% | 2.0% | 2.9% | 3.3% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| F5 Networks, Inc. ($FFIV) | 33.9% | 40.8% | 43.1% | 46.9% | 47.9% |
| Ubiquiti Networks, Inc. ($UBNT) | 61.4% | 31.5% | 41.5% | 38.5% | 39.1% |
| Motorola Solutions, Inc. ($MSI) | -16.1% | 18.9% | 26.4% | 39.5% | 35.3% |
| Ituran Location and Control Ltd. ($ITRN) | 50.9% | 46.8% | 50.1% | 48.5% | 35.1% |
| Casa Systems, Inc. ($CASA) | | | 43.2% | 39.7% | 21.9% |
| |
|---|
| Median (70 companies) | 1.2% | 2.3% | 2.4% | 2.2% | 0.7% |
|---|
| PC-Tel, Inc. ($PCTI) | 4.0% | -4.7% | -1.3% | 1.8% | -7.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Extreme Networks, Inc. ($EXTR) | | | -2.2x | -1.5x | 7.1x |
| ViaSat, Inc. ($VSAT) | 3.4x | 2.5x | 3.2x | 2.5x | 5.8x |
| CommScope Holding Company, Inc. ($COMM) | 2.3x | 9.6x | 4.3x | 4.6x | 4.4x |
| Inseego Corp. ($INSG) | | | | | 3.9x |
| Finisar Corporation ($FNSR) | -0.3x | 0.2x | -0.5x | 1.6x | 3.8x |
| |
|---|
| Median (46 companies) | -0.7x | -0.6x | -0.8x | -0.6x | -0.1x |
|---|
