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
connected home, enterprise, automotive and Internet of Things
(IoT), today announced record second quarter 2018 sales and
announced an extension to its existing share repurchase program for
an additional twelve months.
“We are very pleased with our second quarter results. In the
second quarter, we delivered record sales for the second
consecutive quarter and returned to non-GAAP earnings
profitability. The strength of our second quarter results reflects
our strong product offering combined with the continued need for
superior antenna designs,” said Airgain’s Interim Chief Executive
Officer Jim Sims. “We are witnessing a healthy demand from our
customer deployments, particularly as it relates to the 802.11ac
and DOCSIS upgrades. We expect to build up on our current design
win momentum across the Connected Home, Enterprise, IoT, and
automotive markets with continued focus on returning to sustainable
profitable growth, both on a GAAP and non-GAAP basis.”
Second Quarter 2018 Financial Highlights
- Sales of $15.0 million
- Gross margin of 44%
- GAAP earnings per diluted share of
$(0.34)
- Non-GAAP earnings per diluted share of
$0.02
- Adjusted EBITDA of $0.4 million
Second Quarter 2018 Financial Results
Sales totaled $15.0 million compared to $13.0 million in the
same year-ago period.
Gross profit increased 8% to $6.6 million from $6.1 million in
Q2 of last year. Gross margin as a percentage of sales was 44% in
the second quarter of 2018, which is slightly below gross margins
of 47% in the same year-ago period.
Total operating expenses for the second quarter of 2018
increased 64% to $10.3 million from $6.2 million in Q2 of last
year. The increase was primarily due to $1.2 million in additional
stock compensation expense due to the acceleration of options for
former executives and $2.0 million in non-recurring items
associated with the realignment of sales and marketing initiatives
combined with executive severance. The remaining increase is due to
an increase in expenses to support the company’s strategic
initiatives.
Net loss totaled $3.2 million or $(0.34) per diluted share
(based on 9.4 million shares), compared to net loss of $0.1 million
or $(0.01) per diluted share (based on 9.5 million shares) in the
same year-ago period. During the quarter, the impact of
non-recurring items to our GAAP earnings was $0.21 which included
realignment of sales and marketing combined with executive
severance.
Non-GAAP net income totaled $0.2 million or $0.02 per diluted
share (based on 9.9 million shares), compared to non-GAAP net
income of $1.1 million or $0.10 per diluted share (based on 10.2
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, acquisition expenses, other income, non-recurring
items and share-based compensation) decreased to net income of $0.4
million from income of $1.2 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).
Total shares repurchased for the second quarter 2018 were 64,360
shares at an average price of $8.44, for a total amount of $0.5
million. On August 7, 2018, Airgain’s board of directors approved
an extension to its existing share repurchase program for an
additional twelve month period ending August 14, 2019.
Six Months 2018 Financial Highlights
- Sales of $28.3 million
- Gross margin of 45%
- GAAP earnings per diluted share of
$(0.45)
- Non-GAAP earnings per diluted share of
$(0.04)
- Adjusted EBITDA loss of $0.1
million
Six Months 2018 Financial Results
Sales totaled $28.3 million compared to $24.3 million in the
same year-ago period.
Gross profit grew 12% to $12.8 million from $11.4 million for
the first six months of last year. Gross margin as a percentage of
sales was 45% in the first six months of 2018, which was slightly
below gross margins of 47% in the same year-ago period.
Total operating expenses for the first six months of 2018 grew
58% to $17.6 million from $11.1 million in the first six months of
last year. The increase was primarily due to $1.2 million in
additional stock compensation expense due to the acceleration of
options for former executives and $2.0 million in non-recurring
items associated with the realignment of sales and marketing
initiatives combined with executive severance. The remaining
increase is due to an increase in expenses to support the company’s
strategic initiatives.
Net loss totaled $4.3 million or $(0.45) per diluted share
(based on 9.5 million shares), compared to net income of $0.3
million or $0.03 per diluted share (based on 10.1 million shares)
in the same year-ago period. During the six months 2018, the impact
of non-recurring items to our GAAP earnings was $0.21 which
included realignment of sales and marketing combined with executive
severance.
Non-GAAP net loss totaled $0.4 million or $(0.04) per diluted
share (based on 9.5 million shares), compared to non-GAAP net
income of $1.7 million or $0.16 per diluted share (based on 10.3
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, acquisition expenses, other income, non-recurring
items and share-based compensation) decreased to a loss of $0.1
million from income of $1.9 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).
Total shares repurchased for the first six months of 2018 were
150,528 shares at an average price of $8.79 for a total amount of
$1.3 million.
Financial Outlook
The company expects sales in the third quarter 2018 to be in the
range of $15.6 million to $15.8 million. On a GAAP EPS basis, the
company expects EPS to break even and on a non-GAAP basis, the
company expects EPS to be in the range of $0.03 to $0.05, for the
third quarter 2018.
The following table summarizes the reconciliation between the
projected GAAP EPS and non-GAAP EPS for third quarter 2018:
Low (1) High (1) Reconciliation of
projected GAAP to projected non-GAAP EPS Projected GAAP
earnings per diluted share $ (0.00 ) $ 0.00 Stock-based
compensation expense 0.02 0.04 Amortization 0.02 0.02 Other income
(0.01 ) (0.01 ) Projected Non-GAAP earnings per
diluted share $ 0.03 $ 0.05
(1) Amounts are based off of 9.4 million
diluted shares outstanding.
For fiscal year 2018, the company projects sales outlook of at
least 20% growth over fiscal year 2017.
Conference Call
Airgain management will hold a conference call today Thursday,
August 9, 2018 at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time)
to discuss financial results for the second quarter ended June 30,
2018, and to provide an update on business conditions.
Airgain management will host the presentation, followed by a
question and answer period.
Date: Thursday, August 9, 2018Time: 4:30 p.m. Eastern Time (1:30
p.m. Pacific Time)U.S. dial-in: 1-877-451-6152International
dial-in: 1-201-389-0879
Please call the conference telephone number 5-10 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 the company’s Director of
Marketing, Jules Cassano, 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 7:30 p.m. Eastern
Time on the same day through September 9, 2018.
U.S. replay dial-in: 1-844-512-2921International replay dial-in:
1-412-317-6671Replay ID: 13681347
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 connected
home, enterprise, automotive and Internet of Things (IoT).
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 our strong product offering and the continued
need for superior antenna designs, our ability to expand our
current design win momentum, our continued focus on returning to
sustainable profitable growth, both on a GAAP and non-GAAP basis,
and our third quarter and 2018 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, which makes future operating results difficult to predict
and could cause our operating results to fall below expectations or
guidance; risks and uncertainties related to management and key
personnel changes; 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; risks that we may not fully realize the benefits
associated with the partnerships we have entered into, or that
certain existing partnerships may be terminated by either party;
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 and amortization (Adjusted EBITDA), non-GAAP net
income attributable to common stockholders (non-GAAP Net income),
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, 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, acquisition related
expenses, which include due diligence, legal, integration, and
regulatory expenses, non-recurring expenses, which include
realignment of sales and marketing initiatives and severance
payments, other income, which includes interest income and gain on
deferred purchase price liability offset by interest expense,
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. In addition, our recent acquisition related activities
resulted in operating expenses that would not have otherwise been
incurred. Management considers these types of expenses and
adjustments, to a great extent, to be unpredictable and dependent
on a significant number of factors that are outside of our control
and are not necessarily reflective of operational performance
during a period. Furthermore, we believe the consideration of
measures that exclude such acquisition related expenses can assist
in the comparison of operational performance in different periods
which may or may not include such expenses.
Our Adjusted EBITDA, non-GAAP Net income, 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, 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 release.
Airgain, Inc. Unaudited Condensed Balance Sheets
June 30, December 31,
2018 2017 Assets Current
assets: Cash and cash equivalents $ 13,259,357 $ 15,026,068 Short
term investments 18,817,655 21,287,064 Trade accounts receivable,
net 6,854,651 8,418,132 Inventory 793,874 741,557 Prepaid expenses
and other current assets 638,823 609,786
Total current assets 40,364,360 46,082,607 Property and
equipment, net 1,423,211 1,036,860 Goodwill 3,700,447 3,700,447
Customer relationships, net 3,834,418 4,075,918 Intangible assets,
net 955,141 1,052,333 Other assets 338,121
349,743 Total assets $ 50,615,698 $ 56,297,908
Liabilities and stockholders’ equity Current liabilities:
Accounts payable $ 3,975,266 $ 3,969,083 Accrued bonus 1,498,455
2,224,517 Accrued liabilities 1,043,324 1,121,833 Deferred purchase
price — 1,000,000 Notes payable 666,667 1,333,333 Current portion
of deferred rent obligation under operating lease 81,332
81,332 Total current liabilities 7,265,044
9,730,098 Deferred tax liability 27,263 7,971 Deferred rent
obligation under operating lease 282,923
334,860 Total liabilities 7,575,230 10,072,929 Stockholders’
equity: Common shares, par value $0.0001, 200,000,000 shares
authorized at June 30, 2018 and December 31, 2017; 9,753,086 and
9,616,992 shares issued at June 30, 2018 and December 31, 2017,
respectively; 9,467,558 and 9,481,992 shares outstanding at June
30, 2018 and December 31, 2017, respectively 975 961 Additional
paid in capital 92,335,565 89,907,766 Treasury stock, at cost:
285,528 and 135,000 shares at June 30, 2018 and December 31, 2017,
respectively (2,580,273 ) (1,257,100 ) Accumulated other
comprehensive loss, net deferred taxes (9,920 ) (16,907 )
Accumulated deficit (46,705,879 ) (42,409,741 ) Total
stockholders’ equity 43,040,468 46,224,979 Commitments and
contingencies Total liabilities and stockholders’
equity $ 50,615,698 $ 56,297,908
Airgain,
Inc. Unaudited Condensed Statements of Operations
For the Three Months Ended
For the Six Months Ended June 30, June 30,
2018 2017
2018 2017 Sales $ 14,971,681 $
13,013,143 $ 28,276,779 $ 24,265,560 Cost of goods sold
8,370,160 6,891,619 15,481,087
12,855,577 Gross profit 6,601,521
6,121,524 12,795,692 11,409,983
Operating expenses: Research and development 2,418,325
1,819,288 4,687,439 3,416,087 Sales and marketing 4,094,828
1,792,010 6,979,213 3,420,151 General and administrative
3,737,654 2,637,380 5,941,994
4,275,419 Total operating expenses 10,250,807
6,248,678 17,608,646
11,111,657 Income (loss) from operations (3,649,286 )
(127,154 ) (4,812,954 ) 298,326 Other expense (income): Interest
income (128,781 ) (53,965 ) (239,212 ) (91,166 ) Gain on deferred
purchase price liability (388,733 ) — (388,733 ) — Interest expense
9,846 26,713 23,750
57,477 Total other income (507,668 ) (27,252 )
(604,195 ) (33,689 ) Income (loss) before income taxes (3,141,618 )
(99,902 ) (4,208,759 ) 332,015 Provision (benefit) for income taxes
48,729 (29,781 ) 87,379
17,045 Net income (loss) $ (3,190,347 ) $ (70,121 ) $
(4,296,138 ) $ 314,970 Net income (loss) per share: Basic $
(0.34 ) $ (0.01 ) $ (0.45 ) $ 0.03 Diluted $ (0.34 ) $ (0.01
) $ (0.45 ) $ 0.03 Weighted average shares used in
calculating income (loss) per share: Basic 9,439,025
9,520,285 9,459,272 9,440,368
Diluted 9,439,025 9,520,285
9,459,272 10,120,998
Airgain,
Inc. Unaudited Condensed Statements of Cash Flows
Six Months Ended June 30, 2018
2017 Cash flows from operating
activities: Net income (loss) $ (4,296,138 ) $ 314,970
Adjustments to reconcile net income (loss) to net cash used in
operating activities: Depreciation 266,455 222,459 Amortization
338,692 321,804 Amortization of discounts on investments, net
(53,273 ) — Stock-based compensation 2,127,858 249,888 Deferred tax
liability 19,292 21,331 Gain on deferred purchase price liability
(388,733 ) — Changes in operating assets and liabilities: Trade
accounts receivable 1,201,412 (2,358,425 ) Inventory (52,317 )
(29,655 ) Prepaid expenses and other assets (17,415 ) (163,428 )
Accounts payable 131,985 82,616 Accrued bonus (726,062 ) (549,601 )
Accrued liabilities (78,509 ) 174,188 Deferred obligation under
operating lease (51,937 ) (61,477 ) Net cash used in
operating activities (1,578,690 ) (1,775,330 )
Cash flows from
investing activities: Cash paid for acquisition — (6,348,730 )
Purchases of available-for-sale securities (12,650,298 ) —
Maturities of available-for-sale securities 15,179,967 — Purchases
of property and equipment (652,806 ) (169,931 ) Net
cash provided by (used in) investing activities 1,876,863
(6,518,661 )
Cash flows from financing activities: Repayment
of notes payable (666,666 ) (721,896 ) Payments on acquisition
related deferred purchase price (375,000 ) — Reversal of costs
related to initial public offering — 781 Common stock repurchases
(1,323,173 ) — Proceeds from exercise of stock options
299,955 436,695 Net cash used in financing
activities (2,064,884 ) (284,420 ) Net decrease in cash and cash
equivalents (1,766,711 ) (8,578,411 ) Cash and cash equivalents,
beginning of period 15,026,068 45,161,403
Cash and cash equivalents, end of period $ 13,259,357
$ 36,582,992
Supplemental disclosure of cash flow
information Interest paid $ 26,713 $ 60,934 Taxes paid $ 18,213
$ —
Airgain, Inc. Unaudited Reconciliation of GAAP
to non-GAAP Net Income (Loss)
For the Three Months Ended For the Six Months Ended
June 30, June 30, 2018
2017 2018 2017
Reconciliation of GAAP to non-GAAP Net Income (Loss)
Net income (loss) $ (3,190,347 ) $ (70,121 ) $ (4,296,138 ) $
314,970 Stock-based compensation expense 1,768,962 176,414
2,127,858 249,888 Amortization 169,346 224,458 338,692 321,804
Acquisition expenses — 795,469 — 795,469 Non-recurring items (1)
1,956,489 — 1,956,489 — Other income (507,668 ) (27,252 ) (604,195
) (33,689 ) Provision (benefit) for income taxes 48,729
(29,781 ) 87,379 17,045
Non-GAAP net income (loss) $ 245,511 $ 1,069,187 $
(389,915 ) $ 1,665,487 Non-GAAP net income (loss) per share:
Basic $ 0.03 $ 0.11 $ (0.04 ) $ 0.18 Diluted $
0.02 $ 0.10 $ (0.04 ) $ 0.16 Weighted average
shares used in calculating non-GAAP income per share: Basic
9,439,026 9,520,285 9,459,272
9,440,368 Diluted 9,900,437
10,196,497 9,459,272 10,279,096
Airgain, Inc. Unaudited Reconciliation of Net
Income (Loss) to Adjusted EBITDA
For the Three Months Ended For the Six Months
Ended June 30, June 30, 2018
2017 2018
2017 Reconciliation of Net Income (Loss) to
Adjusted EBITDA Net income (loss) $ (3,190,347 ) $ (70,121 ) $
(4,296,138 ) $ 314,970 Stock-based compensation expense 1,768,962
176,414 2,127,858 249,888 Depreciation and amortization 314,384
331,470 605,147 544,263 Acquisition expenses — 795,469 — 795,469
Non-recurring items (1) 1,956,489 — 1,956,489 — Other income
(507,668 ) (27,252 ) (604,195 ) (33,689 ) Provision (benefit) for
income taxes 48,729 (29,781 ) 87,379
17,045 Adjusted EBITDA $ 390,549 $
1,176,199 $ (123,460 ) $ 1,887,946 (1)
Non-recurring items include $2.0 million in executive severance and
sales and marketing realignment for the three and six months ended
June 30, 2018.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180809005678/en/
Jules Cassano, Director of MarketingAirgain,
Inc.Investors@airgian.com
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