PC-Tel, Inc. CAPEX surged on 80.9% while Revenue dropped on 14.5%
02/25/2021 • About PC-Tel, Inc. (
$PCTI) • By InTwits
PC-Tel, Inc. reported 2020 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: 2020 revenue growth was -14.5%, 5 years revenue CAGR was -3.1%
- EBITDA Margin is quite volatile: 9.2% in 2020, 8.3% in 2019, -2.1% in 2018, 5.6% in 2017, 3.2% in 2016
- PC-Tel, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.2%. At the same time it's in pair with industry average of 3.7%
- CAPEX is quite volatile: $1m in 2020, $1m in 2019, $2m in 2018, $1m in 2017, $0m in 2016
- The company has potentially unprofitable business model: ROIC is 4.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
PC-Tel, Inc.'s Revenue dropped on 14.5%. Annual revenue decline showed slowdown in 20Q4 - revenue decreased on 7.5%. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 0.92 pp from 8.3% to 9.2% in 2020.
Gross Margin increased on 3.2 pp from 45.8% to 49.0% in 2020. SG&A as a % of Revenue showed almost no change in 2020.
Net Income margin showed almost no change in 2020.
Investments (CAPEX, working capital and M&A)
PC-Tel, Inc.'s CAPEX/Revenue was 5.3% in 2020. CAPEX/Revenue increased on 2.4 pp from 2.9% in 2017 to 5.3% in 2020. It's average level of CAPEX/Revenue for the last three years was 3.7%. PC-Tel, Inc. invested a big chunk of EBITDA (57.3%) to CAPEX which didn't stop revenue from falling.
Return on investment
The company operates at low ROIC (4.6%) and ROE (4.7%). ROIC increased slightly on 0.56 pp from 4.0% to 4.6% in 2020. ROE decreased slightly on 0.53 pp from 5.2% to 4.7% in 2020.
Leverage (Debt)
Debt level is -0.2x Net Debt / EBITDA and 0.6x Debt / EBITDA. Debt jumped on 23.6% while cash dropped on 18.8%.
PC-Tel, Inc. has no short term refinancing risk: cash is higher than short term debt (1,709.5%).
Valuation and dividends
PC-Tel, Inc.'s trades at EV/EBITDA 18.8x and P/E 39.6x.
Management team
David A Neumann is a the company's CEO. David A Neumann has spent 4 years with the company. The company's CFO Kevin Mcgowan has spent 2 years with the company.
Financial and operational results
FY ended 12/31/2020
PC-Tel, Inc. ($PCTI) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 85.006 | 91.437 | 82.979 | 90.617 | 77.456 | -14.5% |
| Gross Profit | 34.411 | 38.811 | 31.081 | 41.512 | 37.927 | -8.6% |
| SG&A | 24.621 | 25.740 | 24.438 | 25.706 | 21.912 | -14.8% |
| EBITDA | 2.694 | 5.162 | -1.736 | 7.526 | 7.145 | -5.1% |
| Net Income | -17.681 | 3.822 | -12.889 | 3.750 | 3.417 | -8.9% |
Balance Sheet
|
|---|
| Cash | 14.855 | 5.559 | 4.329 | 7.094 | 5.761 | -18.8% |
| Short Term Debt | 0.000 | 0.000 | 0.000 | 0.359 | 0.337 | -6.1% |
| Long Term Debt | 0.000 | 0.000 | 0.000 | 3.185 | 4.045 | 27.0% |
Cash flow
|
|---|
| Capex | 1.739 | 2.666 | 2.754 | 2.263 | 4.093 | 80.9% |
Ratios
|
|---|
| Revenue growth | -6.1% | 7.6% | -9.3% | 9.2% | -14.5% | |
| EBITDA growth | 330.4% | 91.6% | -133.6% | -533.5% | -5.1% | |
|
|---|
| Gross Margin | 40.5% | 42.4% | 37.5% | 45.8% | 49.0% | 3.2% |
| EBITDA Margin | 3.2% | 5.6% | -2.1% | 8.3% | 9.2% | 0.9% |
| SG&A, % of revenue | 29.0% | 28.2% | 29.5% | 28.4% | 28.3% | -0.1% |
| Net Income Margin | -20.8% | 4.2% | -15.5% | 4.1% | 4.4% | 0.3% |
| CAPEX, % of revenue | 2.0% | 2.9% | 3.3% | 2.5% | 5.3% | 2.8% |
|
|---|
| ROIC | -1.3% | 1.8% | -7.3% | 4.0% | 4.6% | 0.6% |
| ROE | -19.8% | 4.7% | -16.9% | 5.2% | 4.7% | -0.5% |
| Net Debt/EBITDA | -5.5x | -1.1x | | -0.5x | -0.2x | 0.3x |
PC-Tel, Inc. ($PCTI) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 18 | 20 | 19 | 21 | | -15.0% | -15.6% | -19.9% | -7.5% |
| EBITDA | 0 | 2 | 2 | 3 | | -63.1% | 13.7% | -4.7% | -2.8% |
| Net Income | -1 | 1 | 1 | 2 | | - | 26.7% | -21.5% | 4.1% |
Balance Sheet
|
|---|
| Cash | 10 | 6 | 4 | 6 | | 116.9% | 58.8% | -21.6% | -18.8% |
| Short Term Debt | 0 | 0 | 0 | 0 | | -68.9% | -76.7% | -55.6% | -6.1% |
| Long Term Debt | 4 | 4 | 4 | 4 | | 513.4% | 633.0% | 51.4% | 27.0% |
Ratios
|
|---|
| Gross Margin | 46.9% | 48.0% | 50.6% | 50.1% | | 4.9% | 2.5% | 5.5% | -0.2% |
| EBITDA Margin | 1.5% | 10.2% | 10.7% | 13.4% | | -1.9% | 2.6% | 1.7% | 0.6% |
| Net Income Margin | -3.9% | 6.0% | 5.5% | 8.8% | | -2.4% | 2.0% | -0.1% | 1.0% |
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 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Resonant Inc. ($RESN) | - | 116.2% | -19.8% | 40.3% | 329.9% |
| Franklin Wireless Corp ($FKWL) | - | -18.8% | -38.1% | 21.3% | 105.9% |
| Ribbon Communications Inc. ($RBBN) | - | 30.6% | 75.2% | -2.6% | 49.8% |
| Inseego Corp. ($INSG) | - | -10.0% | -7.7% | 8.4% | 43.0% |
| Casa Systems, Inc. ($CASA) | - | 11.2% | -15.5% | -5.0% | 39.3% |
| |
|---|
| Median (35 companies) | 7.5% | 5.1% | 3.5% | 3.7% | 4.4% |
|---|
| PC-Tel, Inc. ($PCTI) | - | 7.6% | -9.3% | 9.2% | -14.5% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| F5 Networks, Inc. ($FFIV) | 83.1% | 83.1% | 83.3% | 84.1% | 82.6% |
| Radware Ltd. ($RDWR) | 81.8% | 81.3% | 82.2% | 82.1% | 82.0% |
| Radcom Ltd. ($RDCM) | 69.6% | 71.8% | 74.0% | 70.0% | 71.4% |
| AudioCodes Ltd. ($AUDC) | 60.7% | 62.4% | 62.8% | 47.4% | 67.9% |
| Arista Networks, Inc. ($ANET) | 64.0% | 64.5% | 63.8% | 64.1% | 63.9% |
| |
|---|
| Median (33 companies) | 43.9% | 41.0% | 41.2% | 43.2% | 44.9% |
|---|
| PC-Tel, Inc. ($PCTI) | 40.5% | 42.4% | 37.5% | 45.8% | 49.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| InterDigital, Inc. ($IDCC) | 73.6% | 67.3% | 41.9% | 37.5% | 39.5% |
| EchoStar Corporation ($SATS) | 40.3% | 38.1% | 37.4% | 36.4% | 35.0% |
| Arista Networks, Inc. ($ANET) | 23.3% | 29.8% | 14.0% | 35.7% | 33.1% |
| Motorola Solutions, Inc. ($MSI) | 22.2% | 25.5% | 22.0% | 26.7% | 25.9% |
| F5 Networks, Inc. ($FFIV) | 30.3% | 29.9% | 30.1% | 26.2% | 22.9% |
| |
|---|
| Median (32 companies) | 5.9% | 6.5% | 5.4% | 3.1% | 8.9% |
|---|
| PC-Tel, Inc. ($PCTI) | 3.2% | 5.6% | -2.1% | 8.3% | 9.2% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Resonant Inc. ($RESN) | 132.5% | 124.8% | 245.2% | 109.7% | 22.3% |
| EchoStar Corporation ($SATS) | 39.9% | 30.9% | 26.5% | 22.2% | 21.7% |
| KVH Industries, Inc. ($KVHI) | 3.2% | 8.0% | 9.3% | 7.9% | 8.9% |
| Harmonic Inc. ($HLIT) | 3.7% | 3.2% | 1.7% | 2.6% | 8.5% |
| Applied Optoelectronics, Inc. ($AAOI) | 19.0% | 17.5% | 26.9% | 15.1% | 6.7% |
| |
|---|
| Median (32 companies) | 1.9% | 1.8% | 1.6% | 2.4% | 2.0% |
|---|
| PC-Tel, Inc. ($PCTI) | 2.0% | 2.9% | 3.3% | 2.5% | 5.3% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Franklin Wireless Corp ($FKWL) | 12.2% | 4.7% | -14.9% | -13.0% | 37.5% |
| Motorola Solutions, Inc. ($MSI) | 26.4% | 39.5% | 35.3% | 34.0% | 26.4% |
| Arista Networks, Inc. ($ANET) | 25.7% | 33.9% | 14.5% | 33.3% | 23.5% |
| AudioCodes Ltd. ($AUDC) | 6.1% | 8.6% | 16.1% | -7.7% | 20.8% |
| F5 Networks, Inc. ($FFIV) | 43.1% | 46.9% | 47.9% | 34.1% | 16.5% |
| |
|---|
| Median (35 companies) | 2.4% | 2.2% | 0.7% | -1.6% | 1.9% |
|---|
| PC-Tel, Inc. ($PCTI) | -1.3% | 1.8% | -7.3% | 4.0% | 4.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Inseego Corp. ($INSG) | - | - | 3.9x | 82.5x | 26.9x |
| CommScope Holding Company, Inc. ($COMM) | 4.3x | 4.6x | 4.4x | 27.0x | 10.5x |
| Harmonic Inc. ($HLIT) | - | - | 3.4x | 1.9x | 6.5x |
| Ribbon Communications Inc. ($RBBN) | -17.2x | - | - | - | 3.5x |
| Casa Systems, Inc. ($CASA) | -0.2x | 0.3x | 0.2x | 32.1x | 3.2x |
| |
|---|
| Median (24 companies) | -0.8x | -0.6x | -0.1x | -0.1x | -0.5x |
|---|
| PC-Tel, Inc. ($PCTI) | -5.5x | -1.1x | - | -0.5x | -0.2x |
