Airgain Reports First Quarter 2017 Financial Results

Airgain Reports First Quarter 2017 Financial Results

SAN DIEGO, CA - Airgain, Inc. (NASDAQ: AIRG), a leading provider of embedded antenna technologies used to enable high performance wireless networking, today reported unaudited results for the first quarter ended March 31, 2017.

First Quarter 2017 Financial Highlights

  • Revenue up 32% to $11.3 million
  • Record gross margin of 47.0%
  • Earnings per diluted share of $0.04
  • Adjusted EBITDA increased 101% to $712 thousand

First Quarter 2017 Financial Results
Sales increased 32% to $11.3 million from $8.5 million in the same year-ago period. The increase was primarily driven by an increase in product sales.

Gross profit for the first quarter of 2017 grew 44% to $5.3 million from $3.7 million in Q1 of last year. Gross margin as a percentage of sales increased to 47.0% in Q1-17 compared to 43.2% in the first quarter of 2016. Total operating expenses for the first quarter grew 37% to $4.9 million from $3.6 million in Q1 of last year.

Net income attributable to common stockholders totaled $385 thousand or $0.04 per diluted share (based on 10.2 million shares), an improvement from a net loss attributable to common stockholders of $(465) thousand or $(0.82) per diluted share (based on 0.7 million shares) in the same year-ago period.

Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, fair market value for adjustments of warrants, and share-based compensation) increased 101% to $712 thousand from $354 thousand in the same year-ago period (see note regarding "Use of Non-GAAP Financial Measures," below for further discussion of this non-GAAP measure).

First Quarter 2017 Key Performance Indicators (compared to same year-ago period)

  • Total customer devices increased 23% or 2.4 million devices to 12.9 million devices
  • The average number of antennas per device increased 5% to 3.12
  • The average selling price per device increased 8% to $0.86

Management Commentary
"Riding our strong momentum of 2016, we continued to expand our core connected home market, while adding to our sales funnel in new markets like enterprise and automotive," said Airgain's President and Chief Executive Officer, Charles Myers. "Sales grew organically by 32% year-over-year, while our margins showed expansion. This led to another strong quarter of profitability and adjusted EBITDA, more than doubling from the same period a year ago.

"Complementing our healthy financial performance were several achievements on the operational front, we began shipping new connected home devices which join a growing number of design wins based on the 802.11ac standard. Additionally, we started shipping an environmentally hardened outdoor Wi-Fi access point for a major Tier One OEM.

"We acquired the assets of Antenna Plus on April 27, 2017 for $6.4 million in cash. In 2016, Antenna Plus had unaudited revenues of $7.5 million and gross margins greater than 60%, and positive EBITDA. We expect this transaction to be EBITDA accretive within 2017.

"Looking ahead, we will take advantage of our enhanced cash position to opportunistically evaluate attractive technologies and businesses, like Antenna Plus, that can accelerate our future growth. We will continue to invest in our Sales, Marketing, and R&D initiatives to drive our strong organic growth.

Conference Call
Airgain management will hold a conference call today, May 3, 2017 at 4:30 p.m. Eastern Standard Time (1:30 p.m. Pacific Standard Time) to discuss these results and provide an update on business conditions.

Airgain management will host the presentation, where they will also discuss additional details of the Antenna Plus acquisition, followed by a question and answer period.

Date: Wednesday, May 3, 2017
Time: 4:30 p.m. Eastern Standard Time (1:30 p.m. Pacific Standard Time)
U.S. dial-in number: 1-877-451-6152
International dial-in number: 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 Liolios Group at 1-949-574-3860.

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 conference call will be available after 7:30 p.m. Eastern Standard Time through June 3, 2017.

Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 13658903

About Airgain, Inc.
Airgain is a leading provider of embedded antenna technologies used to enable high performance wireless networking across a broad range of home, enterprise, and industrial devices. Our innovative antenna systems open up exciting new possibilities in wireless services requiring high speed throughput, broad coverage footprint, and carrier grade quality. Our antennas are found in devices deployed in carrier, enterprise, and residential wireless networks and systems, including set-top boxes, access points, routers, gateways, media adapters, digital televisions, and Internet of Things (IoT) devices. Airgain partners with and supplies the largest blue chip brands in the world, including original equipment and design manufacturers, chipset makers, and global operators. Airgain is headquartered in San Diego, California, and maintains design and test centers in San Diego, Cambridge, United Kingdom, and Suzhou and Shenzhen, China. For more information, visit airgain.com.

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 the acquisition of the Antenna Plus assets being EBITDA accretive within 2017, our investment in sales, marketing and R&D initiatives, our expansion into new markets and potential technology and business acquisitions and future organic growth. 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: adjustments to the unaudited financial results reported for the first quarter ended March 31, 2017 in connection with the completion of the company's final closing process and procedures, final adjustments, and other developments that may arise during the preparation of our Quarterly Report on Form 10-Q; 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; 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; the Antenna Plus acquisition may negatively affect our operating results, financial condition or cash flows, including as a result of the assumption of known and unknown liabilities; risks associated with integrating the Antenna Plus business into our current business; 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 Airgain's 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). We believe Adjusted EBITDA provides useful information to investors with which to analyze our operating trends and performance. In computing Adjusted EBITDA, 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, as well as the fair market value adjustments for warrants. 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 a non-GAAP financial measure that excludes 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 measure 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 is not a measurement of financial performance under GAAP, and should not be considered as an alternative to operating income or as an indication of operating performance or any other measure of performance derived in accordance with GAAP. We do not consider Adjusted EBITDA 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 table at the end of this release.

   
   
Airgain, Inc.  
Unaduited Condensed Balance Sheets  
          
          
      
   March 31, 2017   December 31, 2016  
Assets           
Current assets:           
 Cash and cash equivalents  $41,859,298   $45,161,403  
 Trade accounts receivable, net   7,512,937    5,154,996  
 Inventory   108,321    146,815  
 Prepaid expenses and other current assets   318,937    349,550  
Total current assets   49,799,493    50,812,764  
Property and equipment, net   812,005    807,086  
Goodwill   1,249,956    1,249,956  
Customer relationships, net   2,744,168    2,822,918  
Intangible assets, net   268,123    286,719  
Other assets   189,876    84,060  
Total assets  $55,063,621   $56,063,503  
Liabilities and stockholders' equity           
Current liabilities:           
 Accounts payable  $3,992,976   $3,949,005  
 Accrued bonus   599,475    1,748,551  
 Accrued liabilities   803,936    1,072,242  
 Deferred purchase price   1,000,000    1,000,000  
 Current portion of long-term notes payable   1,333,333    1,388,563  
 Current portion of deferred rent obligation under operating lease   81,332    81,332  
Total current liabilities   7,811,052    9,239,693  
Long-term notes payable   1,000,000    1,333,333  
Deferred tax liability   16,000    6,166  
Deferred rent obligation under operating lease   421,170    451,909  
Total liabilities   9,248,222    11,031,101  
Stockholders' equity:           
Common shares, par value $0.0001, 200,000,000 shares authorized at March 31, 2017 and December 31, 2016; 9,488,057 and 9,275,062 shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively   949    928  
Additional paid in capital   88,980,356    88,582,470  
 Accumulated deficit   (43,165,906 )  (43,550,996 )
Total stockholders' equity   45,815,399    45,032,402  
Commitments and contingencies           
Total liabilities and stockholders' equity  $55,063,621   $56,063,503  
   
   
Airgain, Inc.  
Unaudited Condensed Statements of Operations  
          
          
   For the Three Months Ended March 31,  
   2017   2016  
Sales  $11,252,417   $8,512,305  
Cost of goods sold   5,963,959    4,834,681  
 Gross profit   5,288,458    3,677,624  
Operating expenses:           
 Research and development   1,596,799    1,321,686  
 Sales and marketing   1,628,141    1,241,104  
 General and administrative   1,638,039    998,040  
Total operating expenses   4,862,979    3,560,830  
Income from operations   425,479    116,794  
Other expense (income):           
 Interest income   (37,201 )  -  
 Interest expense   30,764    52,475  
 Fair market value adjustment - warrants   -    (78,834 )
Total other income   (6,437 )  (26,359 )
Income before income taxes   431,916    143,153  
Provision for income taxes   46,826    4,000  
Net income   385,090    139,153  
Accretion of dividends on preferred convertible stock   -    (604,069 )
Net income (loss) attributable to common stockholders  $385,090   $(464,916 )
Net income (loss) per share:           
  Basic  $0.04   $(0.70 )
  Diluted  $0.04   $(0.82 )
Weighted average shares used in calculating income (loss) per share:           
  Basic   9,359,562    665,842  
  Diluted   10,201,606    665,842  
 
 
Airgain, Inc.
Unaudited Condensed St

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