Search
× Search

Thursday, November 9, 2017

Wireless Telecom Group Announces Third Quarter 2017 Financial Results

November 9, 2017

2017 3rd Quarter Earnings Release Conference Call

Highlights for the quarter ended September 30, 2017:

  • Net revenues of $12,560,000
    • A year over year increase of $4,216,000, or 50.5%
    • Includes a year over year increase of $1,064,000, or 37.5%, in our Test & Measurement segment
    • Includes a year over year increase of $921,000, or 16.7%, in our Network Solutions segment
    • Includes $2,231,000 of Embedded Solutions revenue
  • Gross Margin of $6,113,000, or 48.7%
  • Net Income of $653,000
  • Non-GAAP Adjusted EBITDA of $1,458,000
    • A year over year increase of $806,000, or 124%
  • New customer orders of $15,430,000
    • A year over year increase of $4,284,000, or 38%
    • Includes $4,930,000 from Embedded Solutions
  • September 30, 2017 customer order backlog of $9,950,000
    • A year over year increase of $3,821,000, or 62%
    • Includes $3,684,000 of Embedded Solutions

Parsippany, New Jersey – Wireless Telecom Group, Inc. (NYSE American: WTT) (the “Company”) announced today results for the third quarter ended September 30, 2017.

For the quarter ended September 30, 2017, the Company reported consolidated net revenues of $12,560,000, compared to $8,344,000 for the same period in 2016, an increase of 50.5%.  Net revenues in the Network Solutions segment were $6,428,000, compared to $5,507,000 for the same period in 2016, an increase of 16.7%.  Net revenues in the Test & Measurement segment were $3,901,000, compared to $2,837,000 for the same period in 2016, an increase of 37.5%.  Net revenues in the Embedded Solutions segment were $2,231,000, our second full quarter of results since its acquisition on February 17, 2017.  

The Company also reported consolidated gross profit of $6,113,000, or 48.7% of revenue, for the quarter ended September 30, 2017, compared to $3,823,000, or 45.8% of revenue, for the same period in 2016. 

For the quarter ended September 30, 2017, gross profit in the Network Solutions segment was $2,981,000, or 46.4%, compared to $2,513,000, or 45.6%, for the same period in 2016.  Gross profit in the Test & Measurement segment was $2,166,000, or 55.5%, for the quarter ended September 30, 2017, compared to $1,310,000 or 46.2%, for the same period in 2016.  Gross profit in the Embedded Solutions segment was $966,000, or 43.3% for the quarter ended September 30, 2017.

For the quarter ended September 30, 2017, the Company reported consolidated operating expenses of $5,331,000, compared to $3,555,000 for the same period in 2016, an increase of $1,777,000.  Included in 2017 consolidated operating expenses are the operating expenses of our new Embedded Solutions segment of $925,000, $199,000 of depreciation and amortization, $224,000 of stock compensation expense and $158,000 of integration expenses relating to our acquisition of CommAgility on February 17, 2017.

The Company reported operating profit of $782,000 for the three months ending September 30, 2017 compared to operating profit of $268,000 for the same period in 2016.  The Company also reported cash flow provided by operations of $450,000 for the nine months ending September 30, 2017 compared to cash used by operations of ($742,000) for the same period 2016. The Company reported net income of $653,000 for the quarter ended September 30, 2017, compared to net income of $122,000 for the same period in 2016.   

Non-GAAP Adjusted EBITDA for the quarter ended September 30, 2017 was $1,458,000, compared to non-GAAP Adjusted EBITDA of $652,000 for the same period in 2016. The increase in non-GAAP Adjusted EBITDA from 2016 is attributable to improving revenues and gross margins.  

The Company defines EBITDA as its net earnings before interest expense, provisions for taxes, depreciation expense and amortization expense.  “Adjusted EBITDA” is EBITDA excluding our stock compensation expense, acquisition expenses, integration expenses, non-cash inventory impairment charges, restructuring charges, and other non-recurring costs. A reconciliation of net income / (loss) to non-GAAP Adjusted EBITDA is included as an attachment to this press release.

The Company reported customer orders of $15,430,000 during the quarter ending September 30, 2017, compared to $11,146,000 of customer orders for the same period in 2016.  Included in the September 30, 2017 quarter are $4,930,000 of customer orders in the Embedded Solutions segment.  The consolidated backlog of firm orders to be shipped in the next twelve months was approximately $9,950,000 at September 30, 2017, a year over year increase of $3,821,000 over the same period in 2016 and a sequential increase of $2,980,000 compared to approximately $6,970,000 at June 30, 2017. 

During the three months ended September 30, 2017 the Company also recorded measurement period adjustments related to the accounting for the CommAgility acquisition and the completion of the valuation of intangible assets, contingent consideration and contingent asset associated with the equity claw back provisions and deferred taxes. The Company estimates that the CommAgility 2017 EBITDA target, as defined in the purchase agreement for the full equity component of the purchase price to be paid, will not be met.  This will result in the estimated forfeiture of 2,092,516 shares in accordance with the equity claw back provisions of the CommAgility purchase agreement.

Tim Whelan, CEO of Wireless Telecom Group, Inc., commented, “We are very pleased with the revenue and profitable growth in the quarter which were at the high end of our expectations resulting in non-GAAP Adjusted EBITDA of $1,458,000.  This has been our best quarter in over three years and reflects successful execution and progress in each of our three segments.”  Whelan continued, “Our strong bookings in the quarter are a driver for continued revenue growth and highlight the value of our high-quality innovative solutions to our customers.  We are particularly encouraged by $4.9 million of customer orders in our Embedded Solutions segment in the quarter which underscores our investment thesis in the long-term trend of LTE private network deployments.  We are excited about the growth opportunity in this segment, the transformational value of their solution set and engineering expertise in the CommAgility operations.  We expect to continue to invest across our three segments aligning our product roadmaps, go-to-market execution and strategic planning to the growth expectations from network densification, small cell deployment and private LTE network deployment in the foreseeable future.” 

The Company expects the following consolidated results for the quarter ended December 31, 2017:

  • Revenue between $11.5 million and $12.0 million (resulting in an expectation for full year revenue between $45.5 million and $46 million). 
  • Gross margins between 46-47%
  • Non-GAAP operating expenses between $4.8 and $5.0 million (specifically, the Company’s GAAP operating expenses, excluding depreciation expense, amortization expense, stock compensation expense, restructuring charges, purchase accounting adjustments in accordance with US GAAP, and non-recurring CommAgility acquisition and integration expenses, which cannot be itemized for reconciliation to the comparable GAAP measure at this time).

Contact: Mike Kandell
(973) 386-9696

Use of Non-GAAP Financial Measures

The Company reports its financial results in accordance with generally accepted accounting principles (“GAAP”). Management believes, however, that certain non‐GAAP financial measures used in managing the Company’s business may provide users of this financial information with additional meaningful comparisons between current results and prior reported results. Certain of the information set forth herein constitutes non‐GAAP financial measures within the meaning of Regulation G adopted by the Securities and Exchange Commission. We have presented herein a reconciliation of these measures to the most directly comparable GAAP financial measure. The non‐GAAP measures presented herein may not be comparable to similarly titled measures presented by other companies. The foregoing measures do not serve as a substitute and should not be construed as a substitute for GAAP performance, but provide supplemental information concerning our performance that our investors and we find useful.

The Company views Adjusted EBITDA as an important indicator of performance, consistent with the manner in which management measures and forecasts the Company’s performance.  We believe Adjusted EBITDA is an important performance metric because it facilitates the analysis of our results, exclusive of certain non‐cash items, including items which do not directly correlate to our business operations.

The Company believes that Adjusted EBITDA metrics provide qualitative insight into our current performance; we use these measures to evaluate our results, the performance of our management team and our management’s entitlement to incentive compensation; and we believe that making this information available to investors enables them to view our performance the way that we view our performance and thereby gain a meaningful understanding of our core operating results, in general, and from period to period.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In some cases, such forward-looking statements may be identified by terms such as believe, expect, seek, may, will, intend, project, anticipate, plan, estimate, guidance or similar words. Forward-looking statements include, among others, statements regarding revenue, gross margins, non-GAAP operating expenses and the expectation that the Company will continue to invest across all three segments for the quarter ending December 31, 2017. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties that could materially affect actual results, including, among others, the Company’s ability to successfully integrate acquired businesses the ability of management to successfully implement the Company’s business plan and strategy, product demand and development of competitive technologies in the Company’s market sector, the impact of competitive products and pricing, the loss of any significant customers of the Company, and other risks and uncertainties set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. These forward-looking statements speak only as of the date of this release and the Company does not undertake any obligation to update or revise any forward-looking information to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise, as except as required by law.

About Wireless Telecom Group, Inc.

Wireless Telecom Group, Inc., comprised of Boonton Electronics, CommAgility, Microlab and Noisecom, is a global designer and manufacturer of advanced RF and microwave components, modules, systems and instruments.  Serving the wireless, telecommunication, satellite, military, aerospace, semiconductor and medical industries, Wireless Telecom Group products enable innovation across a wide range of traditional and emerging wireless technologies. With a unique set of high-performance products including peak power meters, signal analyzers, signal processing modules, LTE PHY and stack software, power splitters and combiners, GPS repeaters, public safety monitors, noise sources, and programmable noise generators, Wireless Telecom Group supports the development, testing, and deployment of wireless technologies around the globe. Wireless Telecom Group is headquartered in Parsippany, New Jersey, in the New York City metropolitan area, and maintains a global network of Sales and Service offices for excellent product service and support. Wireless Telecom Group’s website address is http://www.wtcom.com.

 

Wireless Telecom Group,INC.

25 Eastmans Road Parsippany, NJ 07054

Tel. (973) 386-9696    Fax (973) 386-9191

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME/(LOSS)

(unaudited)

 

Three Months Ended

 

Nine Months Ended

 

September 30

 

September 30

 

 

 

 

 

2017

2016

 

2017

2016

NET SALES

 $          12,560,298

 $          8,344,301

 

 $          34,042,230

 $          22,322,820

 

 

 

 

   

COST OF SALES

                6,446,992

             4,521,302

 

             20,252,254

             12,440,817

 

 

 

 

   

GROSS PROFIT

                6,113,306

             3,822,999

 

             13,789,976

                9,882,003

 

 

 

 

   

Operating Expenses

 

 

 

   

Research and Development

                1,051,233

                 948,654

 

                3,267,955

                3,042,916

Sales and Marketing

                1,946,443

             1,216,265

 

                5,161,181

                3,703,522

General and Administrative

                2,333,795

             1,389,996

 

                8,567,102

                4,141,520

Total Operating Expenses

                5,331,471

             3,554,915

 

             16,996,238

             10,887,958

 

 

 

 

   

Other income/(expense)

                      (1,033)

                 (27,090)

 

                      (4,253)

                   (78,675)

Interest Expense

                   (70,607)

                       (178)

 

                 (229,453)

                         (463)

 

 

 

 

   

Income/(loss) before taxes

                   710,195

                 240,816

 

             (3,439,968)

             (1,085,093)

 

 

 

 

   

Tax Provision/(Benefit)

                      56,799

                 118,980

 

             (1,493,789)

                 (412,409)

 

 

 

 

   

Net Income/(Loss)

                   653,396

                 121,836

 

             (1,946,179)

                 (672,684)

 

 

 

 

   

Other Comprehensive Income/(Loss):

 

 

 

   

Foreign currency translation adjustments

                   547,160

                              -

 

                1,123,494

                                 -

Comprehensive Income/(Loss)

 $            1,200,556

 $             121,836

 

 $              (822,685)

 $              (672,684)

 

 

 

 

   
 

 

 

 

   

Net Income/(Loss) per common share:

 

 

 

   

Basic

 $                       0.03

 $                    0.01

 

 $                     (0.10)

 $                     (0.04)

Diluted

 $                       0.03

 $                    0.01

 

 $                     (0.10)

 $                     (0.04)

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

Basic

             20,235,876

           18,721,346

 

             19,799,219

             18,650,274

Diluted

             22,938,188

           19,358,968

 

             19,799,219

             18,650,274

 

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

         

September 30

December 31

         

2017

2016

             

 

 

 

 

(unaudited)

 

CURRENT ASSETS

         

Cash & cash equivalents

     

 $      2,266,532

 $      9,350,803

Accounts receivable - net of reserves of $23,026 and $10,740, respectively

8,107,931

5,183,869

Inventories - net of reserves of $2,067,103 and $1,549,089, respectively

 

6,485,796

8,452,751

Prepaid expenses and other current assets

   

4,789,567

866,036

             

TOTAL CURRENT ASSETS

     

       21,649,826

       23,853,459

             

PROPERTY PLANT AND EQUIPMENT - NET

   

2,428,245

2,166,566

             

OTHER ASSETS

         

Goodwill

       

10,113,158

1,351,392

Acquired Intangible Assets, net

     

4,756,386

                         -  

Deferred income taxes

     

8,822,687

7,403,600

Other

       

794,058

660,118

             

TOTAL OTHER ASSETS

     

       24,486,289

         9,415,110

             

 

 

 

 

 

 

 

TOTAL ASSETS

       

 $    48,564,360

 $    35,435,135

             

 

 

 

 

 

 

CURRENT LIABILITIES

         

Short term debt

     

1,423,927

                         -  

Accounts payable

     

         2,416,202

         2,986,797

Accrued expenses and other current liabilities

   

         3,290,598

673,067

Deferred Revenue

     

             573,477

                         -  

             

TOTAL CURRENT LIABILITIES

     

         7,704,204

         3,659,864

             

LONG TERM LIABILITIES

         

Long term debt

     

             532,000

                         -   

Other long term liabilities

     

         1,810,990

69,058

Deferred Tax Liability

     

             789,263

                         -  

TOTAL LONG TERM LIABILITIES

     

         3,132,253

69,058

             

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES

       
             

SHAREHOLDERS' EQUITY

         

Preferred stock, $.01 par value, 2,000,000 shares authorized, none issued

 

                           -

                           -

Common stock, $.01 par value, 75,000,000 shares authorized, 33,886,752

     

and 29,786,224 shares issued, 22,790,667 and 18,751,346 shares outstanding

             338,867

             297,862

Additional paid in capital

     

       47,453,286

       40,563,002

Retained earnings

     

         9,722,650

       11,668,829

Treasury stock at cost, - 11,096,085 and  11,034,878 shares, respectively

 

     (20,910,394)

     (20,823,480)

Accumulated Other Comprehensive Income

   

         1,123,494

                           -

             

TOTAL SHAREHOLDERS' EQUITY

     

       37,727,903

       31,706,213

         

 

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

   

 $    48,564,360

 $    35,435,135

 

 

 

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(unaudited)

 

 

 

   

For the Nine Months

   

Ended September 30

   

2017

 

 2016

         

CASH FLOWS PROVIDED/(USED) BY OPERATING ACTIVITIES

       

Net income (loss)

 

 $    (1,946,179)

 

 $           (672,684)

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

   

Depreciation and amortization

 

         1,345,806

 

                 363,634

Amortization of debt issuance fees

 

               48,503

 

                              -

Share-based compensation expense

 

             507,791

 

                 432,612

Deferred rent

 

               18,277

 

                   27,454

Deferred income taxes

 

       (1,419,087)

 

              (434,333)

Provision for doubtful accounts

 

               12,286

 

                   (8,788)

Inventory reserves

 

         1,314,528

 

                 221,369

Changes in assets and liabilities, net of acquisition:

       

Accounts receivable

 

           (529,198)

 

              (176,019)

Inventories

 

         1,820,249

 

           (1,603,381)

Prepaid expenses and other assets

 

             238,351

 

                 (14,162)

Accounts payable

 

       (1,776,291)

 

             1,091,071

Accrued expenses and other liabilities

 

             814,989

 

                   30,818

Net cash provided/(used) by operating activities

 

             450,025

 

              (742,409)

CASH FLOWS (USED) BY INVESTING ACTIVITIES

       

Capital expenditures

 

           (588,180)

 

              (715,128)

Proceeds from asset disposal

 

                  7,397

 

                              -

Acquisition of business net of cash acquired

 

       (9,137,534)

 

                              -

Net cash (used by) investing activities

 

       (9,718,317)

 

              (715,128)

         

CASH FLOWS PROVIDED/(USED) BY FINANCING ACTIVITIES

       

Revolver borrowings

 

       25,281,935

 

                              -

Revolver repayments

 

     (24,010,007)

 

                              -

Term loan borrowings

 

             760,000

 

                              -

Term loan repayments

 

             (76,000)

 

                              -

Debt issuance fees

 

           (215,358)

 

                              -

Proceeds from exercise of stock options

 

             424,950

 

                              -

Repayments of equipment lease payable

 

                           -

 

              (101,296)

Repurchase of stock

 

                           (86,914)

 

                 (65,468)

Net cash provided/(used by) financing activities

 

         2,078,606

 

              (166,764)

Effect of exchange rate changes on cash and cash equivalents

 

             105,415

 

                   -

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

       (7,084,271)

 

           (1,624,301)

         

Cash and cash equivalents, at beginning of period

 

         9,350,803

 

             9,726,007

         

CASH AND CASH EQUIVALENTS, AT END OF PERIOD

 

 $      2,266,532

 

 $          8,101,706

         

 

SUPPLEMENTAL INFORMATION:

       

Cash paid during the period for interest

 

 $            90,084

 

 $                           -

Cash paid during the period for income taxes

 

 $            58,454

 

 $                67,438

         

 

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND

       

FINANCING ACTIVITIES:

       

Capital expenditures

 

 $                     -  

 

 $             (41,904)

Equipment lease payable

 

 $                     -  

 

 $                41,904

             

 

 

NET REVENUES AND GROSS PROFIT BY SEGMENT

(unaudited)

 

 

               
   

Three months ended September 30

 

 

Revenue

% of Revenue

Change

   

2017

2016

2017

2016

Amount

Pct.

Network solutions

 

 $       6,427,646

 $     5,507,065

51.2%

66.0%

 $        920,581

16.7%

Test and measurement

 

         3,901,486

        2,837,236

31.0%

34.0%

        1,064,250

37.5%

Embedded solutions

 

         2,231,166

                     -

17.8%

0.0%

        2,231,166

-   

Total net revenues

 

 $     12,560,298

 $     8,344,301

100.0%

100.0%

 $     4,215,997

50.5%

 

 

 

 

   

Three months ended September 30,

   

Gross Profit

Gross Margin %

Change

   

2017

2016

2017

2016

Amount

Pct.

Network solutions

 

 $       2,981,120

 $     2,512,910

46.4%

45.6%

 $        468,210

18.6%

Test and measurement

 

         2,165,830

        1,310,089

55.5%

46.2%

          855,741

65.3%

Embedded solutions

 

            966,356

                     -

43.3%

0.0%

          966,356

-   

Total gross profit

 

 $       6,113,306

 $     3,822,999

48.7%

45.8%

 $     2,290,307

59.9%

 

 

 

 

 

 

 

Nine months ended September 30

 

Revenue

% of Revenue

Change

 

2017

2016

2017

2016

Amount

Pct.

Network solutions

 $     17,560,210

 $     15,196,800

51.6%

68.1%

 $       2,363,410

15.6%

Test and measurement

        10,253,863

         7,126,020

30.1%

31.9%

         3,127,843

43.9%

Embedded solutions

         6,228,157

                       -

18.3%

0.0%

         6,228,157

-   

Total net revenues

 $     34,042,230

 $     22,322,820

100.0%

100.0%

 $     11,719,410

52.5%

 

 

 

 

 

Nine months ended September 30

 

Gross Profit

Gross Margin %

Change

 

2017

2016

2017

2016

Amount

Pct.

Network solutions

 $       6,623,630

 $       6,799,036

37.7%

44.7%

 $        (175,406)

-2.6%

Test and measurement

         4,332,165

         3,082,967

42.2%

43.3%

         1,249,198

40.5%

Embedded solutions

         2,834,181

                       -

45.5%

0.0%

         2,834,181

-   

Total gross profit

 $     13,789,976

 $       9,882,003

40.5%

44.3%

 $       3,907,973

39.5%

 

 

 

RECONCILIATION OF NET INCOME TO NON-GAAP EBITDA AND NON-GAAP ADJUSTED EBITDA

(unaudited)

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

September 30

 

September 30

 

(Unaudited)

 

(Unaudited)

 

2017

2016

 

2017

2016

Reconciliation of Net Income to Non-GAAP

         

EBITDA and Non-GAAP Adjusted EBITDA:

         
           

GAAP Net Income

 $            653,396

 $            121,836

 

 $   (1,946,179)

 $                  (672,684)

Tax Provision/(Benefit)

                56,799

              118,980

 

     (1,493,789)

                     (412,409)

Depreciation And Amortization Expense

              286,452

              130,938

 

      1,345,806

                      363,634

Interest Expense

                70,607

                    178

 

         229,453

                           463

Non-GAAP EBITDA

            1,067,254

              371,932

 

     (1,864,709)

                     (720,996)

Stock Compensation Expense

              223,919

              235,374

 

         507,791

                      432,612

Mergers and Acquisitions Expenses

                         -

                -

 

      1,289,517

                        -

Integration Expenses

              158,448

                         -

 

         322,937

                                 -

Inventory Impairment

               -

                         -

 

      1,930,000

                                 -

Inventory Recovery

(14,639)

-

 

(14,639)

-

US GAAP Purchase Accounting

                         -

                         -

 

           70,709

                                 -

Restructuring Charges and other non-recurring costs

                22,639

                         44,200

 

         572,912

                      467,000

Non-GAAP Adjusted EBITDA

 $         1,457,621

 $            651,506

 

 $    2,814,518

 $                   178,616

 

Print

Name:
Email:
Subject:
Message:
x
ISO 9001-2015 Certified  | Terms & Conditions |  Privacy Policy  |  Terms of Use  © Wireless Telecom Group, Inc.
Contact Us   
Back To Top