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PCTEL, Inc. (PCTI)

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4.1129-0.0371 (-0.89%)
As of 10:09AM EDT. Market open.
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  • C
    Commandor58
    For two quarters now, mgt has beat guidance. This philosophy of "under promise and over perform" has been my speculation mgt would take. If PCTI beats guidance again, momentum money-the biggest money in the market currently-will stampede into the stock. PCTI has a shot as the antenna/Iot business is very strong-could do $19 million in the 2ndQ, with higher margin scanners to do $6.5 million. Mgt guided to higher gross margins as well, so profitability could jump to $.09/share or greater.

    Should this scenario occur, the psychology around PCTI will take a 180 degree turn from bearish/indifference to bullish.
  • S
    Shake n' Bake
    Just wanted to recycle this based on the last 10 years of company performance:

    My own personal forecast for 2022 has the company doing $98M and $0.31 EPS (one analyst covering is at $99.6M @ $0.27 so I guess I am a bit more bullish than they are lol)

    However you look at it, the cost of capturing revenue or return on sales is abysmal. Makes you wonder if all the costs (internal and acquisitive) going into growing Antennas/IoT (or building out such a deep executive team) are seeing the return...or is the company even looking at these sort of metrics?... To me, I do not see it. Test & Measurement is already seeing a decline in US demand, if they fail at growing share in Europe against the much larger incumbent, things could go sideways over the next two years. I mean for the company needing to do $20M in sales to maintain EPS (either vs 2020/2021 depending on whose forecast you use) is the real issue with the company and it comes down to the company's reliance of scanner heavy margin mix and leveraging (or lack of) their fixed costs...especially in inflationary times like we are in now.

    Management, trim the fat!!! that is something you can control.

    Last 5 years old CEO (Year / Revenue / non-GAAP EPS):
    - 2012 / $88.8M / $0.27
    - 2013 / $104.3M / $0.42
    - 2014 / $107.2M / $0.48
    - 2015 / $106.6M / $0.37 (really bad acquisition)
    - 2016 / $96.7M / $0.20 (really bad acquisition - exit)

    Recent 5 years new CEO (Year / Revenue / non-GAAP EPS):
    - 2017 / $91.4M / $0.28
    - 2018 / $83M / -$0.04 or $0.02 excl restructuring / -8.0%
    - 2019 / $90.6M / $0.47
    - 2020 / $77.5M / $0.31 (Covid year, bonus/incentives/management salary favorability. scanner heavy)
    - 2021 / $87.8M / $0.27 (exiting Covid, new acq contribution)

    - 2022 / $98.0M / $0.31 - my own personal forecast
    - 2022 / $99.6M / $0.27 - analyst forecast
  • C
    Commandor58
    2nQ Q guidance is $24-$25 million/$.05-08 non-GAAP.

    Nothing wrong with this company. Sales could be closer to $100 million for the year if all goes well-slowing NA scanner sales will be made up by stronger international as 5G networks go on-line. A weaker DXY, throughout the year, could add earnings of $.02-$.04/share.
  • C
    Commandor58
    Within the LTRX CC, mgt described their business as the "age of Iot". They and DGII both had strong numbers and guidance-even though supply chain issues restricted sales my meaningful amounts.

    This bodes well for PCTI antenna/Iot business for the 1stQ and probably the rest of the year. If SnB's sales numbers are correct for the TEL acquisition, then using the same PSR (2.5), PCTI's antenna/Iot business-which will do $70+ million in 2022 is worth $9.70/share- 70x2.5 then divide by 18 million shares. Add the value of the scanner business and the balance sheet, the summation get to the mid teens.

    Chances are PCTI will never see that valuation because TEL most likely over paid. Still, being conservative, the summation of the various parts of PCTI is in double digits. The catalyst will be how well the scanner business does-Snb is at $24.5 million for 2022, I am at $25-$27 million.
  • C
    Commandor58
    SYNA echos the comments of LTRX and DGII that the Iot space is on fire. Of course, that is not the real issue with PCTI or the rest of the stock market.

    The FED, through monetary aggregates has been "tightening" for close to a year. The monetary base has been flat for 8 months, M2 annualized the last 3 months us up only 6%, the last 6 months up only 7.8%-both less than the CPI. Evidence of the restricted growth of $s can also be found as the DXY continues to make new 20 years highs.

    This "massive" concern about whether the FF goes up by 50 or 75 BPS is misplaced as the prior actions of the monetary aggregates has already told the "tightening" story.

    So that begs the question, when will the FED be forced to capitulate and what will be the clues? First, M2 use to come out weekly with a two day lag, now it comes out monthly with a 3 week lag, so M2 for April will only be known on the last Tuesday of of May. The monetary base use to come out every two weeks, now only monthly and with a three week lag-like M2.

    So those two very important measures, will only be predictive after 2-3 months of a FED policy change. The "daily" predictor will be the DXY-if it starts and continues to move down. Not happening as of 5/6/22.

    The other predictor will be if "main street" starts to get hurt-that data is starting to show up:

    1)Layoffs in mortgage origination firms
    2)"Z" guidance-housing is hitting a brick wall
    3)ISM mfg employment sub-index is barely above 50, Svs ISM was 49.5 or net layoffs
    4)ADP small firm's employment was a job loss of 120,000
    5)Challenger layoff index up two months in a row
    6)Unemployment claims are at 3 month highs

    So, Main Street is starting to be hurt. Is it enough? I doubt it. The FED needs more pain.

    I think the FED will not turn until is gets CPI numbers trending down, confirming the Dallas FED's own measures of inflation-which have started to turn down-April vs March. Or, the monthly Jobs numbers go weak or negative-Main Street has to get "hurt" more.
  • C
    Commandor58
    Beat on top/bottom line, proforma-scanner sales at $5.6. Good start for scanner sales to be $25-$27 million, 2nd-4thQs are usually stronger than the 1st. Just speculating but sales come in the rest of the year at $6.0, $7.0, and $7.0 million, then scanners will do $25.6, antenna/Iot will do $70+ million-total sales can get to the mid to high $90s. Sales/share will be approx. 5.40, net/net is $2.50, so at $4.00 the business is selling for 1.50/5.40=.27 PSR. This is for a business that could easily sell for 2 PSR.
  • S
    Shake n' Bake
    Interesting...

    1/3/2017 share price = $5.46 (new CEO appointed)

    11/12/2018 share price = $4.70 (restructuring announced, promoting Antenna GM to COO, Controller to CFO, and RFS Sales Manager to CSO)

    5/2/22 share price = $4.26 (coming off share buybacks and acquisition in 2021 along with record backlog heading into 2022 awaiting Q1 results and Q2 guidance)

    5 year annual compound return for investors, inclusive of dividend, has been roughly 0% (actually slightly negative)

    3 year compound annual return for investors, inclusive of dividend, has been roughly 2% (this period covers 5G rollouts)

    I wonder if this is deemed acceptable to the Board (in turn the CEO who is also director)?

    Granted the market, and most all public company share prices, are down in 2022, but when comparing performance over 3 or 5 years, most have returned far more than PCTI

    The Company needs a legitimate catalyst, one with solid footing and not based off hopium
  • S
    Shake n' Bake
    Interesting read…appears TE Connectivity acquired Laird’s external antennas business to expand its reach in IoT space. This was/has not been brought up at all in any of the earnings calls by the company or analysts. Seems to be a real risk for the company.

    I wonder what level of risk there is now that Laird has backing of a multi billion dollar company like TEL

    Increasing upcoming competition on the antenna and IoT front with decreasing carrier spend on scanners could prove to be significant headwinds. Probably no better time to consider splitting the businesses up and selling to strategics to maximize the value of the company.

    https://www.rfidjournal.com/te-connectivitys-laird-acquisition-consolidates-iot-antenna-technologies
    The two companies intend to globally broaden their portfolio of wireless modules and antennas as Internet of Things deployments expand into more market sectors.
    The two companies intend to globally broaden their portfolio of wireless modules and antennas as Internet of Things deployments expand into more market sectors.
    www.rfidjournal.com
  • S
    Shake n' Bake
    @Qwerty7 here is a proper more detailed rollforward for common shares under current CEO:

    Common Shares Outstanding at 12/31/2016 = 17,335k
    + Restricted Common Stock Awards, net Cancellations = 1,224k
    + Director Awards = 202k (this is only separated for 2019-2021 so guessing may have been included in another line item for 2017/2018)
    + Shares issued under Short Term Incentive Plan = 302k (this was for 2017 113k & 2020 189k)
    + MIsc Other (ESPP, Exercise Stock Options, less shares for W/H tax) = 334k
    - Share buyback = 1,159k
    Common Shares Outstanding at 12/31/2021 = 18,238k

    Summary:
    - Net +903k shares from 12/31/2016 to 12/31/2021 (or +5% increase)
    - +2,062k excl buybacks (or +12% increase)

    Buybacks are a requirement for the company to reduce the dilution of shareholders since they are printing so many shares for awards. Unfortunately, they are just shifting the ownership from Institution and Retail investors to insiders...given the lower share price, I imagine the # of share awards to increase in 2022 to keep $ equivalency in place. Maybe they will try and get to double digit C-suite executives lol

    This company needs to be taken private. External investor dilution will continue to happen as the Company loves to line its own with shares and in turn cash from dividends at the cost of growth. This will only work so as long as the Test & Measurement business continues to spin off cash - any signs that that business is slowing some private investor will be able to pick this company up for dimes/quarters on the dollars.

    Imagine the return if rather than promoting these knuckleheads back in 2017/2018 if the Board just sold the business at that point and let the new owners put in place their management team?

    Quite the whole we holders need to dig ourselves out of...luckily, I have avg my way down to only about a 5% loss right now, but there are some institutional/retail holders who are probably bag holding decent double-digit losses right now. Extremely frustrating...
  • C
    Commandor58
    Looks like we are getting a little bit of the "grab for liquidity" sell off in world markets as a continuation of Friday's 4/22 action. We will see what Monday 4/25 brings-generally the lows of the day will be from noon to 1:00, just after Europe closes and margin calls are due or positions sold out.

    Gold/Silver are making lower lows vs Friday's intraday lows, so expect those stocks to continue to be sold off. I will mostly continue to add back what I sold, just a week or two ago. I tend to build positions over time, so if I am high and early, it is OK. If you can accumulate G/S positions 2 or 3 times vs double digits, I would wait till gold gets under $1900-there is technical resistance in the $1875-86 area.

    As for PCTI, we will get 2nd Q guidance in a few weeks-as part of 1stQ results. Scanners sales will start their usual rebound as operators have finalized their 2022 budgets in the 1st Q-to start that spend in the 2ndQ. My point with quoting increasing capX budgets is it increasing the odds that scanners will see some of that money vs a backdrop of decreasing capX plans.

    If mgt really wants to help shareholders, they could offer guidance for all off 2022 scanner sales. My guess: the range would be $25-$27 million. By Q, $4 million, $6, $7, and $8 million each Q. That gets my lower end, add $500,000/Q gets the high end.

    The good news about the broader averages selling off, are the asking prices of potential acquisitions will be coming down-maybe we will get another antenna/Iot acreative deal.
  • C
    Commandor58
    Looks like the Jacques Baud interview/article is gaining wider circulation-at least in Europe. So far, I can't tell if they are reprints of his initial commentary of 4/15 or additional interviews where he adds further detail.

    It will be very interesting to see how long it takes to get to the main stream media in the US. In the meantime, the Ruble is at 6 month highs, vs the $, and the MOEX has been up more 5% each day the last couple days. Russia markets getting firmer suggest to me the economic squeeze is shifting from being worse on Russia to being worse on the West-Euro at 5 years lows would be further evidence.
  • L
    Long Term
    The ($0.09) loss won't please anyone in this market - what happened?
  • S
    Shake n' Bake
    New investor presentation released a little earlier this month. A couple takeaways:

    (1) Prior presentation (pre Smarteq acq) showed 2023 Target of $115M-$125M) - this has remained unchanged. So, is the Smarteq acq covering up for lower organic growth? Company in the past has always sold growth as organic, are they now changing to signal that to achieve growth targets it must be done through acquisitive means? What factor of acquisition is included in this target now? Is it still organic? If not, how much is organic vs acquisitive that is built into their targets?

    (2) 2021 proforma basis for revenues were $90M (full year of Smarteq acq). Company is targeting $115-125M in 2 years (2023). This is a 13% CAGR. If you review SEC filings, management's long term incentive plans are based on 100% payout on 8% revenue growth - mind you - they get paid for ANY growth from 1% up. Also, it did not list any profitability long term goals, so theoretically the company could grow revenue at a cost of profitability and managing expenses and that would be acceptable. The company is not a startup. Nice, huh?

    (3) Can someone help calculate a CAGR for me? If the initial year # of 1,210 (PV) is supposed to grow to 1,990 (FV) over 4 years (Per), what is the CAGR? My math may be incorrect, but I get 13.24%. The company gets 10.5%...hopefully this is not the type of math the company is proud to present to savvy investors. The 10.5% is based on a 5 year period, but to use 2020 as your initial year to grow to 2024 is only 4 years (not 5)
  • n
    nick
    I want to take a position here, but what's up with the volume?
  • C
    Commandor58
    Going out later this week, we will have earnings from AT&T and VZ. Of importance to PCTI will be their CapX plans. AT&T should be around $24 billion for this year and 2023, VZ should be around $20-22 billion.

    Obviously, higher numbers would be a net plus as it would increase the odds scanner sales will get some of that spend.
  • S
    Shake n' Bake
    Who is selling? This will be one heckuva earnings call...Q2 guidance (better yet full year guidance - which they won't give) will be key. Despite record backlog heading into 2022, if scanner sales are guided low again for Q2, and record backlog from 12/31 is not followed up with a new record backlog 3/31, the share price is heading below $4.00. Company will be prime for some significant changes this year, albeit through new activist position, sale to private equity, or restructuring. All 3 potential actions seen as positive news.

    What will breathe life into the share price?

    @Commandor58, you savin' up your nickels and dimes to load the truck up if the share price drops below $4? I know I am.
  • C
    Commandor58
    So how long will big lie #4 exist before it is blown out of the water? With the creation of the new Ministry of Truth by the JB administration, I think they can play this "confidence" game till the 2ndH of 2023. This confidence game, or con, will become part of the whole PC/woke/green con.

    Soon, people around the world mind's will start to question-with greater intensity-that the PC/woke/green/lie#4 gambit is the reason why food and energy are going up in price and/or becoming unreliably available. The question becomes, when will the doubters become a critical mass level.

    The PC/woke/green have captivated the 75%ters-those folks that can't process an issue deeper than their initial emotional response. Whereas, lie#4, has consumed 97-99% of the population as large.

    All of it, is wrapped up in a great financial ponzi scheme, that will blow up with in a few months of each other-cultural and financial-no later than the 2ndH of 2023.
  • C
    Commandor58
    Earlier today, 4/14, PCTI traded about 20,000 shares, in a short period of time, not in one block but multiple smaller lots. To me that smacks of a stock broker blowing out his PCTI book. That and bullish 5G comments from the ERIC cc, have me going out on a limb to write the PCTI has seen the low.

    From the ERIC cc, comments along the lines of 5G will have a longer and higher investment cycle than prior generations-which is logical given its capabilities and multiple frequencies. NA sales strong, EZ up 18%, NA C-band rollouts, India ramping up later in the year, private/enterprise deployments to cover a few details. All in all, more networks, more complexity increases the odds that scanner sales will be higher than expected. Of course, the two other scanner end markets-public safety and military/intelligence-should be up in 2022 vs 2021 and higher still in 2023.

    For 20+ years I have been buying/selling PCTI-made money on every share. During that time, $6.00 was the line in the sand-any time you bought below that price, the stock went higher afterwards. The longest I had to wait for gains was appox. 2 years. Sometimes the wait was a few weeks.

    Now with the stock in the $4.30s, it can appreciate close to 40% and still be cheap with upside of 50% from $6.00-to $9.00.

    We will live into the answer!
  • C
    Commandor58
    4/26, I picked some more inventory at $4.23-earnings announcement date came after the close, no warning a slight plus.
  • C
    Commandor58
    Both T and VZ's CapX up y/y for their 1stQs. T was $6.1 billion vs $5.6, VZ was $5.8 vs $4.5-a big just.

    VZ is rolling out their C-band earlier in the year than is T. T's CapX plans for 2022-3 are $24 billion, going down to $20 in 2024 when 5G buildout nearly completed. Basically, T has a long way to go-maybe PCTI gets greater than expected scanner sales, maybe not. However, there is a lot of money sloshing around.

    VZ's 2022 CapX plan is $22.5-$23.5 with $5-$6 billion on C-band-$1.5 was spent in the 1st Q.

    Obviously, the major question to PCTI mgt in the 1st Q CC, is if the rollout of C-band is helpful to scanner sales? Especially if Gflex is the majority of those scanner sales.

    All in all, 5G networks in the US are still being rolled out-CapX spending is heavy. Does the complexity and density of 5G networks vs prior generations require more adjusting/tweaking-necessitating increasing use of scanners to help in those adjustments?

    Answer to that question will determine whether PCTI goes up 50% from the $4.30s or is a double.