INDUSTRY NEWS



TMCNet:  Airgain Reports Third Quarter 2019 Financial Results

[November 07, 2019]

Airgain Reports Third Quarter 2019 Financial Results

Airgain, Inc. (NASDAQ: AIRG), a leading provider of advanced antenna technologies used to enable high performance wireless networking across a broad range of devices and markets, including consumer, enterprise, and automotive, today announced sales of $13.1 million for the third quarter 2019 and GAAP net loss of $(0.1) million or GAAP diluted earnings per share of $(0.01).

Third Quarter 2019 Financial Highlights

  • Sales of $13.1 million
  • Gross margin of 46%
  • Net loss of $(0.1) million
  • GAAP earnings per diluted share of $(0.01)
  • Non-GAAP earnings per diluted share of $0.05
  • Adjusted EBITDA of $0.6 million

"We are very pleased with our third quarter 2019 results with GAAP and non-GAAP diluted earnings per share of $(0.01) and $0.05, respectively, on the high-end of our prior expectations of $(0.09)-$0.00 on a GAAP basis and $(0.04)-$0.05 on a non-GAAP basis," said Airgain's Chief Executive Officer and President, Jacob Suen. "Our efforts over the past several quarters around operational and manufacturing efficiencies culminated in another strong quarter of gross margins at 46%, above our long-term target goal of 44% to 45%. Our customers continue to engage us with next-generation solutions for complex antennas across the Consumer, Enterprise, and Automotive markets. Additionally on the 5G front, we are witnessing increased customer engagement at our five global R&D centers. Over the next several quarters we expect to benefit from these new engagements and strongly believe that Airgain will continue to be a leading solution provider for complex antenna designs.

"Similar to last quarter we continue to witness the impacts of macro headwinds and customer-specific issues as customers take longer than expected to ramp their programs. While these have affected our recent growth, as we enter into 2020, we hope these issues are resolved favorably."

Third Quarter 2019 Financial Results

Sales decreased 17% to $13.1 million compared to $15.8 million in the same year-ago period. The decrease in sales was primarily driven by a combination of macro headwinds and customer-specific headwinds that resulted in longer than expected delays in program ramps.

Gross profit decreased 12% to $6.1 million from $6.9 million in the same year-ago period. Gross margin as a percentage of sales was 46% in the third quarter of 2019, which increased from 43% in the same year-ago period, largely due to product mix.

Total operating expenses for the third quarter of 2019 decreased 4% to $6.3 million from $6.6 million in the same year-ago period. The decrease was primarily due to decreases in personnel and marketing related expenses.

Net loss totaled $(0.1) million or $(0.01) per diluted share (based on 9.7 million shares), compared to net income of $0.4 million or $0.04 per diluted share (based on 10.1 million shares) in the same year-ago period. Non-GAAP net income totaled $0.5 million or $0.05 per diluted share (based on 10.0 million shares), compared to non-GAAP net income of $0.9 million or $0.09 per diluted share (based on 10.1 million shares) in the same year-ago period (see note regarding "Use of Non-GAAP Financial Measures," below for further discussion of this non-GAAP measure).

Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, other income, and stock-based compensation) decreased to $0.6 million from Adjusted EBITDA of $1.0 million in the same year-ago period (see note regarding "Use of Non-GAAP Financial Measures," below for further discussion of this non-GAAP measure).

Financial Outlook

The company expects sales in the 2019 fourth quarter to be in the range of $13.0 million to $13.5 million. The following table summarizes the reconciliation between the projected GAAP EPS and non-GAAP EPS for the 2019 fourth quarter:



Reconciliation of projected GAAP to projected non-GAAP EPS

 

 

Low (1)

 

High (1)

Projected GAAP earnings per diluted share

 

$

(0.03

)

 

$

(0.02

)

Stock-based compensation expense

 

 

0.06

 

 

 

0.06

 

Amortization

 

 

0.02

 

 

 

0.02

 

Other income

 

 

(0.01

)

 

 

(0.01

)

Projected Non-GAAP earnings per diluted share

 

$

0.04

 

 

$

0.05

 

(1)

Amounts are based off of 10.1 million diluted shares outstanding.

Conference Call

Airgain management will hold a conference call today Thursday, November 7, 2019 at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) to discuss financial results for the third quarter ended September 30, 2019, and to provide an update on business conditions.

Airgain management will host the presentation, followed by a question and answer period.

Date: Thursday, November 7, 2019
Time: 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time)
U.S. dial-in: 877-703-1550
International dial-in: 647-689-5628
Conference ID: 4468106

Please call the conference telephone number ten minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Airgain at 1-760-579-0200.

The conference call will be broadcast live and available for replay in the investor relations section of the company's website.

A replay of the call will be available after 6:30 p.m. Eastern Time on the same day through December 7, 2019.

U.S. replay dial-in: 800-585-8367 or 416-621-4642
Replay ID: 4468106

About Airgain, Inc.

Airgain is a leading provider of advanced antenna technologies used to enable high performance wireless networking across a broad range of devices and markets, including consumer, enterprise, and automotive. Combining design-led thinking with testing and development, Airgain works in partnership with the entire ecosystem, including carriers, chipset suppliers, OEMs, and ODMs. Airgain's antennas are deployed in carrier, fleet, enterprise, residential, private, government, and public safety wireless networks and systems, including set-top boxes, access points, routers, modems, gateways, media adapters, portables, digital televisions, sensors, fleet, and asset tracking devices. Airgain is headquartered in San Diego, California, and maintains design and test centers in the U.S., U.K., and China. For more information, visit airgain.com, or follow us on LinkedIn and Twitter.

Airgain and the Airgain logo are registered trademarks of Airgain, Inc.

Forward-Looking Statements

Airgain cautions you that statements in this press release that are not a description of historical facts are forward-looking statements. These statements are based on the company's current beliefs and expectations. These forward-looking statements include statements regarding potential for macro headwinds and customer-specific issues to resolve favorably in 2020 and Airgain returning to historical growth rates, and our fourth quarter financial outlook. The inclusion of forward-looking statements should not be regarded as a representation by Airgain that any of our plans will be achieved. Actual results may differ from those set forth in this press release due to the risk and uncertainties inherent in our business, including, without limitation: the market for our antenna products is developing and may not develop as we expect; our operating results may fluctuate significantly, including based on seasonal factors and changing and volatile U.S., European, Asian and global economic environments, which makes future operating results difficult to predict and could cause our operating results to fall below expectations or guidance; our products are subject to intense competition, including competition from the customers to whom we sell, and competitive pressures from existing and new companies may harm our business, sales, growth rates and market share; our future success depends on our ability to develop and successfully introduce new and enhanced products for the wireless market that meet the needs of our customers; our ability to identify and consummate strategic acquisitions and partnerships and risks associated with completed acquisitions and partnerships adversely affecting our operating results and financial condition; we sell to customers who are extremely price conscious, and a few customers represent a significant portion of our sales, and if we lose any of these customers, our sales could decrease significantly; we rely on a few contract manufacturers to produce and ship all of our products, a single or limited number of suppliers for some components of our products and channel partners to sell and support our products, and the failure to manage our relationships with these parties successfully could adversely affect our ability to market and sell our products; if we cannot protect our intellectual property rights, our competitive position could be harmed or we could incur significant expenses to enforce our rights; and other risks described in our prior press releases and in our filings with the Securities and Exchange Commission (SEC), including under the heading "Risk Factors" in our Annual Report on Form 10-K and any subsequent filings with the SEC. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof, and we undertake no obligation to revise or update this press release to reflect events or circumstances after the date hereof. All forward-looking statements are qualified in their entirety by this cautionary statement, which is made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Note Regarding Use of Non-GAAP Financial Measures

To supplement our condensed financial statements presented in accordance with U.S. generally accepted accounting principles (GAAP), this earnings release and the accompanying tables and the related earnings conference call contain certain non-GAAP financial measures, including adjusted earnings before interest, taxes, depreciation, amortization (Adjusted EBITDA), non-GAAP net income (loss) and non-GAAP earnings per diluted share (non-GAAP EPS). We believe these financial measures provide useful information to investors with which to analyze our operating trends and performance.

In computing Adjusted EBITDA, non-GAAP net income (loss), and non-GAAP EPS, we also exclude stock-based compensation expense, which represents non-cash charges for the fair value of stock options and other non-cash awards granted to employees, non-recurring expenses, other income, which includes interest income offset by interest expense, depreciation, amortization, and provision for income taxes. Because of varying available valuation methodologies, subjective assumptions, and the variety of equity instruments that can impact a company's non-cash operating expenses, we believe that providing non-GAAP financial measures that exclude non-cash expense allows for meaningful comparisons between our core business operating results and those of other companies, as well as providing us with an important tool for financial and operational decision-making and for evaluating our own core business operating results over different periods of time.

Our Adjusted EBITDA, non-GAAP net income (loss), and non-GAAP EPS measures may not provide information that is directly comparable to that provided by other companies in our industry, as other companies in our industry may calculate non-GAAP financial results differently, particularly related to non-recurring, unusual items. Our Adjusted EBITDA, non-GAAP Net income (loss), and non-GAAP EPS are not measurements of financial performance under GAAP, and should not be considered as an alternative to operating or net income or as an indication of operating performance or any other measure of performance derived in accordance with GAAP. We do not consider these non-GAAP measures to be a substitute for, or superior to, the information provided by GAAP financial results. A reconciliation of specific adjustments to GAAP results is provided in the last two tables at the end of this press release.

Airgain, Inc.

Unaudited Condensed Balance Sheets

(in thousands, except per share data)

 

 

 

September 30, 2019

 

December 31, 2018

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

12,871

 

 

$

13,621

 

Short term investments

 

 

21,001

 

 

 

20,169

 

Trade accounts receivable

 

 

8,564

 

 

 

7,013

 

Inventory

 

 

1,265

 

 

 

1,351

 

Prepaid expenses and other current assets

 

 

1,386

 

 

 

931

 

Total current assets

 

 

45,087

 

 

 

43,085

 

Property and equipment, net

 

 

1,791

 

 

 

1,401

 

Goodwill

 

 

3,700

 

 

 

3,700

 

Customer relationships, net

 

 

3,231

 

 

 

3,593

 

Intangible assets, net

 

 

730

 

 

 

859

 

Other assets

 

 

601

 

 

 

269

 

Total assets

 

$

55,140

 

 

$

52,907

 

Liabilities and stockholders' equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

4,447

 

 

$

4,137

 

Accrued bonus

 

 

1,402

 

 

 

2,076

 

Accrued liabilities

 

 

1,461

 

 

 

1,217

 

Current portion of deferred rent obligation under operating lease

 

 

127

 

 

 

81

 

Total current liabilities

 

 

7,437

 

 

 

7,511

 

Deferred tax liability

 

 

38

 

 

 

38

 

Deferred rent obligation under operating lease

 

 

46

 

 

 

211

 

Total liabilities

 

 

7,521

 

 

 

7,760

 

Stockholders' equity:

 

 

 

 

 

 

Common shares, par value $0.0001, 200,000 shares authorized; 10,117 shares issued and 9,697 shares outstanding at September 30, 2019; and 9,958 shares issued and 9,601 shares outstanding at December 31, 2018.

 

 

1

 

 

 

1

 

Additional paid in capital

 

 

95,967

 

 

 

93,583

 

Treasury stock, at cost: 420 shares and 357 shares at September 30, 2019 and December 31, 2018, respectively

 

 

(4,231

)

 

 

(3,432

)

Accumulated other comprehensive income (loss)

 

 

13

 

 

 

(11

)

Accumulated deficit

 

 

(44,131

)

 

 

(44,994

)

Total stockholders' equity

 

 

47,619

 

 

 

45,147

 

Commitments and contingencies (note 12)

 

 

 

 

 

 

Total liabilities and stockholders' equity

 

$

55,140

 

 

$

52,907

 

Airgain, Inc.

Unaudited Condensed Statements of Operations

(in thousands, except per share data)

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

 

2019

 

2018

 

2019

 

2018

 

Sales

 

$

13,142

 

 

$

15,787

 

 

$

42,713

 

 

$

44,064

 

 

Cost of goods sold

 

 

7,067

 

 

 

8,922

 

 

 

23,167

 

 

 

24,403

 

 

Gross profit

 

 

6,075

 

 

 

6,865

 

 

 

19,546

 

 

 

19,661

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

2,403

 

 

 

2,475

 

 

 

6,944

 

 

 

7,162

 

 

Sales and marketing

 

 

1,461

 

 

 

2,161

 

 

 

5,964

 

 

 

9,140

 

 

General and administrative

 

 

2,416

 

 

 

1,922

 

 

 

6,168

 

 

 

7,864

 

 

Total operating expenses

 

 

6,280

 

 

 

6,558

 

 

 

19,076

 

 

 

24,166

 

 

Income (loss) from operations

 

 

(205

)

 

 

307

 

 

 

470

 

 

 

(4,505

)

 

Other expense (income):

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

(183

)

 

 

(159

)

 

 

(559

)

 

 

(398

)

 

Gain on deferred purchase price liability

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(389

)

 

Interest expense

 

 

-

 

 

 

6

 

 

 

1

 

 

 

30

 

 

Total other income

 

 

(183

)

 

 

(153

)

 

 

(558

)

 

 

(757

)

 

Income (loss) before income taxes

 

 

(22

)

 

 

460

 

 

 

1,028

 

 

 

(3,748

)

 

Provision for income taxes

 

 

113

 

 

 

23

 

 

 

165

 

 

 

110

 

 

Net income (loss)

 

$

(135

)

 

$

437

 

 

$

863

 

 

$

(3,858

)

 

Net income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.01

)

 

$

0.05

 

 

$

0.09

 

 

$

(0.41

)

 

Diluted

 

$

(0.01

)

 

$

0.04

 

 

$

0.09

 

 

$

(0.41

)

 

Weighted average shares used in calculating income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

9,711

 

 

 

9,566

 

 

 

9,678

 

 

 

9,495

 

 

Diluted

 

 

9,711

 

 

 

10,093

 

 

 

10,083

 

 

 

9,495

 

 

Airgain, Inc.

Unaudited Condensed Statements of Cash Flows

(in thousands)

 

 

 

Nine Months Ended September 30,

 

 

2019

 

2018

Cash flows from operating activities:

 

 

 

 

 

 

Net income (loss)

 

$

863

 

 

$

(3,858

)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

 

 

 

 

 

 

Depreciation

 

 

373

 

 

 

423

 

Amortization

 

 

491

 

 

 

508

 

Amortization of discounts on investments, net

 

 

(248

)

 

 

(94

)

Stock-based compensation

 

 

1,605

 

 

 

2,536

 

Deferred tax liability

 

 

-

 

 

 

22

 

Gain on deferred purchase price liability

 

 

-

 

 

 

(389

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Trade accounts receivable

 

 

(1,551

)

 

 

667

 

Inventory

 

 

86

 

 

 

(476

)

Prepaid expenses and other assets

 

 

(500

)

 

 

(256

)

Accounts payable

 

 

305

 

 

 

36

 

Accrued bonus

 

 

(674

)

 

 

154

 

Accrued liabilities

 

 

244

 

 

 

(426

)

Deferred obligation under operating lease

 

 

(119

)

 

 

(88

)

Net cash provided by (used in) operating activities

 

 

875

 

 

 

(1,241

)

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of available-for-sale securities

 

 

(30,080

)

 

 

(24,329

)

Maturities of available-for-sale securities

 

 

29,520

 

 

 

26,956

 

Purchases of property and equipment

 

 

(1,045

)

 

 

(752

)

Net cash provided by (used in) investing activities

 

 

(1,605

)

 

 

1,875

 

Cash flows from financing activities:

 

 

 

 

 

 

Repayment of notes payable

 

 

-

 

 

 

(1,000

)

Payment on deferred purchase price liability

 

 

-

 

 

 

(375

)

Repurchases of common stock

 

 

(799

)

 

 

(1,837

)

Proceeds from issuance of common stock

 

 

779

 

 

 

617

 

Net cash used in financing activities

 

 

(20

)

 

 

(2,595

)

Net decrease in cash and cash equivalents

 

 

(750

)

 

 

(1,961

)

Cash and cash equivalents, beginning of period

 

 

13,621

 

 

 

15,026

 

Cash and cash equivalents, end of period

 

$

12,871

 

 

$

13,065

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

Interest paid

 

$

1

 

 

$

34

 

Taxes paid

 

$

54

 

 

$

26

 

Supplemental disclosure of non-cash investing and financing activities:

 

 

 

 

 

 

Accrual of property and equipment

 

$

4

 

 

$

-

 

Airgain, Inc.

Unaudited Reconciliation of GAAP to non-GAAP Net Income (Loss)

(in thousands, except per share data)

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

2019

 

2018

 

2019

 

2018

Net income (loss)

 

$

(135

)

 

$

437

 

 

$

863

 

 

$

(3,858

)

Stock-based compensation expense

 

 

549

 

 

 

408

 

 

 

1,605

 

 

 

2,536

 

Amortization

 

 

163

 

 

 

170

 

 

 

491

 

 

 

508

 

Non-recurring item (1)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,956

 

Other income

 

 

(183

)

 

 

(153

)

 

 

(558

)

 

 

(757

)

Provision for income taxes

 

 

113

 

 

 

23

 

 

 

165

 

 

 

110

 

Non-GAAP net income attributable to common stockholders

 

$

507

 

 

$

885

 

 

$

2,566

 

 

$

495

 

Non-GAAP net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.05

 

 

$

0.09

 

 

$

0.27

 

 

$

0.05

 

Diluted

 

$

0.05

 

 

$

0.09

 

 

$

0.25

 

 

$

0.05

 

Weighted average shares used in calculating non-GAAP income per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

9,711

 

 

 

9,566

 

 

 

9,678

 

 

 

9,495

 

Diluted

 

 

10,041

 

 

 

10,093

 

 

 

10,083

 

 

 

9,966

 

Airgain, Inc.

Unaudited Reconciliation of Net Income (Loss) to Adjusted EBITDA

(in thousands)

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

2019

 

2018

 

2019

 

2018

Net income (loss)

 

$

(135

)

 

$

437

 

 

$

863

 

 

$

(3,858

)

Stock-based compensation expense

 

 

549

 

 

 

408

 

 

 

1,605

 

 

 

2,536

 

Depreciation and amortization

 

 

268

 

 

 

327

 

 

 

864

 

 

 

931

 

Non-recurring item (1)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,956

 

Interest and other income

 

 

(183

)

 

 

(153

)

 

 

(558

)

 

 

(757

)

Provision for income taxes

 

 

113

 

 

 

23

 

 

 

165

 

 

 

110

 

Adjusted EBITDA

 

$

612

 

 

$

1,042

 

 

$

2,939

 

 

$

918

 

(1)

   

Non-recurring items include $2.0 million in executive severance and sales and marketing realignment for the nine months ended September 30, 2018.

 


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