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Thursday, August 9, 2018

Wireless Telecom Group Announces Second Quarter 2018 Financial Results

August 9, 2018

Register to download the Second Quarter 2018 Financial Results Conference Call Recording.

Highlights of the quarter:

  • Net revenues of $13,414,000 for the quarter ended June 30, 2018
    • A year over year increase of $1,481,000, or 12%
  • Gross Profit of $6,170,000, or 46% of revenue,  for the quarter ended June 30, 2018
    • A year over year increase of $2,826,000, or 85% (2017 gross profit includes $1,930,000 impairment charge)
  • Net loss of $180,000 for the quarter ended June 30, 2018
    • Compared to a net loss of $1,370,000 for the same period last year
  • Non-GAAP Adjusted EBITDA of $1,076,000 for the quarter ended June 30, 2018
    • A year over year increase of $169,000, or 19%
  • New customer orders of $11,871,000 for the quarter ended June 30, 2018
    • Compared to new customer orders of $12,110,000 for the same period last year
  • June 30, 2018 order backlog of $8,801,000
    • A year over year increase of $1,831,000

Wireless Telecom Group, Inc. announced today results for the second quarter ended June 30, 2018.

For the quarter ended June 30, 2018, the Company reported consolidated net revenues of $13,414,000, compared to $11,933,000 for the same period in 2017, an increase of 12%.  Net revenues in the Network Solutions segment were $5,636,000, compared to $5,617,000 for the same period in 2017, an increase of .3%.  Net revenues in the Test & Measurement segment were $3,534,000, compared to $3,316,000 for the same period in 2017, an increase of 6.6%.  Net revenues in the Embedded Solutions segment were $4,244,000, compared to $3,000,000 for the same period in 2017, an increase of 41.5%.  

The Company also reported consolidated gross profit of $6,170,000, or 46% of revenue, for the quarter ended June 30, 2018, compared to $3,344,000, or 28% of revenue, for the same period in 2017.  The 2017 second quarter gross profit was adversely affected by a non-cash inventory impairment charge of $1,930,000. 

For the quarter ended June 30, 2018, gross profit in the Network Solutions segment was $2,468,000, or 43.8%, compared to $1,182,000, or 21%, for the same period in 2017.  Network Solutions gross profit in the 2017 quarter was adversely affected by approximately $1.2 million of an inventory impairment charge. Gross profit in the Test & Measurement segment was $1,815,000, or 51.4%, for the quarter ended June 30, 2018, compared to $832,000, or 25.1%, for the same period in 2017.  Test & Measurement gross profit in the 2017 quarter was adversely affected by approximately $725,000 of an inventory impairment charge.  Gross profit in the Embedded Solutions segment was $1,887,000, or 44.5% for the quarter ended June 30, 2018, compared to $1,330,000, or 44.3%, for the same period in 2017.

For the quarter ended June 30, 2018, the Company reported consolidated operating expenses of $6,137,000, compared to $5,614,000 for the same period in 2017, an increase of $523,000.  Non GAAP operating expenses were $5,265,000 for the three months ended June 30, 2018 compared to $4,467,000 for the year ago period.   

The Company reported a net loss of $180,000 for the quarter ended June 30, 2018, compared to a net loss of $1,370,000 for the same period in 2017.    

Non-GAAP Adjusted EBITDA for the quarter ended June 30, 2018 was $1,076,000, compared to non-GAAP Adjusted EBITDA of $907,000 for the same period in 2017.

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, restructuring charges, acquisition expenses, integration expenses, the one-time non-cash inventory impairment charges, unrealized and realized foreign exchange gains and losses, and other non-recurring costs. A reconciliation of net income to non-GAAP Adjusted EBITDA is included as an attachment to this press release.

The Company reported cash flow provided by operations of $196,000 for the six months ending June 30, 2018 compared to cash provided by operations of $489,000 for the same period in 2017.  Cash flow from operations for the six months ended June 30, 2018 was impacted by higher working capital which reflects the improved funnel and backlog and the mix of sales to our larger customers with longer payment terms.      

The Company reported customer orders of $11,871,000 during the quarter ending June 30, 2018, compared to $12,110,000 of customer orders for the same period in 2017.  The consolidated backlog of firm orders to be shipped in the next twelve months was approximately $8,801,000 at June 30, 2018, a year over year increase of $1,831,000 over the backlog of $6,970,000 at June 30, 2017.

Tim Whelan, CEO of Wireless Telecom Group, Inc., commented, “We are very pleased with a stronger than expected quarter of results and we are especially pleased with the organic growth realized in our Test & Measurement and Embedded Solutions segment.  We believe these results reflect the investments we have made in our channels, our products and in the acquisition of CommAgility.”  

Whelan continued, “We are continuing to improve our operational and financial performance through top line growth, lean manufacturing and supply chain improvements. We continue to invest in our R&D roadmaps and we are excited by our products for 5G and millimeter wave development which we recently showcased.  We are adding value to our customers in their continued investments in long-term network densification, 4G and 5G testing applications, government and military radar applications, and LTE network deployments. Our most recent product announcement is focused on new products for in-building public safety networks, an area of investment with new requirements from local governments and investments related to FirstNet deployments. We expect to see continued strong customer bookings and financial results in the third quarter.”

The Company expects the following in the quarter ended September 30, 2018 for the three combined segments:

  • Revenue between $13,000,000 and $13,500,000
  • Gross margins between 45% and 46%
  • Non-GAAP operating expenses between $5.4 and $5.5 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 future GAAP measure at this time).   

Conference Call
As previously announced, Wireless Telecom Group Inc. will host a conference call today at 8:30 a.m. ET in which management will discuss second quarter 2018 results and related matters.  To participate in the conference call, dial 800-346-7359 or 973-528-0008.  The conference identification number is 740345.  The call will also be webcast over the internet at the following URL: 

https://www.webcaster4.com/Webcast/Page/1690/26930
A replay will be made available on the Wireless Telecom website for a limited period of time following the conference call.

Contact: Mike Kandell
(973) 386-9696
Or
John Nesbett or Jen Belodeau
IMS
(203) 972 9200

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 customer bookings for the quarter ending September 30, 2018 and free cash flow and debt reduction in the second half of the year. 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, 2017. 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.

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

(In thousands, except share and per share amounts, Unaudited)

 

 

Three Months Ended June 30

 

Six Months Ended June 30

 

2018

2017

 

2018

2017

NET REVENUES

 $             13,414

 $            11,933

 

 $             26,678

 $             21,482

 

 

 

 

 

 

COST OF REVENUES

                        7,244

                       8,589

 

                      14,239

                      13,805

 

 

 

 

 

 

GROSS PROFIT

                        6,170

                       3,344

 

                      12,439

                        7,677

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

Research and Development

                        1,313

                       1,130

 

                        2,469

                        2,217

Sales and Marketing

                        1,933

                       1,663

 

                        3,844

                        3,215

General and Administrative

                        2,678

                       2,821

 

                        5,311

                        6,233

Loss on change in fair value
     of contingent consideration

                            213

                                -

 

                            213

                                 -

Total Operating Expenses

                        6,137

                       5,614

 

                      11,837

                      11,665

 

 

 

 

 

 

Operating income/(loss)

                              33

                     (2,270)

 

                            602

                      (3,988)

 

 

 

 

 

 

Other income/(expense)

                              33

                             (2)

 

                            (13)

                              (3)

Interest Expense

                         (141)

                        (110)

 

                         (234)

                         (159)

 

 

 

 

 

 

(Loss)/Income before taxes

                            (75)

                     (2,382)

 

                            355

                      (4,150)

 

 

 

 

 

 

Tax Provision/(Benefit)

                            105

                     (1,012)

 

                            161

                      (1,551)

 

 

 

 

 

 

Net (Loss)/Income

 $                 (180)

 $            (1,370)

 

 $                   194

 $             (2,599)

 

 

 

 

 

 

Other Comprehensive (Loss)/Income:

 

 

 

 

 

Foreign currency translation adjustments

                         (963)

                           635

 

                         (383)

                            576

Comprehensive (Loss)

 $             (1,143)

 $                (735)

 

 $                 (189)

 $             (2,023)

 

 

 

 

 

 

 

 

 

 

 

 

Net (Loss)/Income per common share:

 

 

 

 

 

Basic

 $                (0.01)

 $               (0.07)

 

 $                  0.01

 $                (0.13)

Diluted

 $                (0.01)

 $               (0.07)

 

 $                  0.01

 $                (0.13)

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

Basic

             20,864,428

            19,765,101

 

             20,755,027

             19,577,271

Diluted

             20,864,428

            19,765,101

 

             21,510,539

             19,577,271

 


WIRELESS TELECOM GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and par value amounts)

 

 

 

June 30

December 31

 

2018

2017

 

(Unaudited)

 

CURRENT ASSETS

 

 

Cash & cash equivalents

 $              2,635

 $              2,458

Accounts receivable - net of reserves of $66 and $44, respectively

10,979

9,041

Inventories - net of reserves of $1,661 and $1,856, respectively

7,565

6,526

Prepaid expenses and other current assets

1,358

4,733

TOTAL CURRENT ASSETS

               22,537

               22,758

 

 

 

PROPERTY PLANT AND EQUIPMENT - NET

2,760

2,730

 

 

 

OTHER ASSETS

 

 

Goodwill

10,066

10,260

Acquired Intangible Assets, net

3,864

                  4,511

Deferred income taxes

6,146

5,939

Other

647

723

TOTAL OTHER ASSETS

               20,723

               21,433

 

 

 

TOTAL ASSETS

 $            46,020

 $            46,921

 

 

 

CURRENT LIABILITIES

 

 

Short term debt

 $              2,583

 $              1,335

Accounts payable

                  4,007

                  4,109

Accrued expenses and other current liabilities

                  5,133

2,894

Deferred Revenue

                     376

                     629

TOTAL CURRENT LIABILITIES

               12,099

                  8,967

 

 

 

LONG TERM LIABILITIES

 

 

Long term debt

                     418

                     494

Other long term liabilities

                        98

1,590

Deferred Tax Liability

                  1,033

                     767

TOTAL LONG TERM LIABILITIES

                  1,549

2,851

 

 

 

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, 34,168,252 and 33,868,252

 

 

shares issued, 20,979,651 and 22,772,167 shares outstanding

                     342

                     339

Additional paid in capital

               48,127

               47,494

Retained earnings

                  7,791

                  7,176

Treasury stock at cost, 13,188,601 and 11,096,085 shares, respectively

             (24,509)

             (20,910)

Accumulated Other Comprehensive Income

                     621

                  1,004

TOTAL SHAREHOLDERS' EQUITY

               32,372

               35,103

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

 $            46,020

 $            46,921

 


WIRELESS TELECOM GROUP, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(In thousands, Unaudited)

 

 

For the Six Months

 

Ended June 30

 

2018

 2017

CASH FLOWS PROVIDED BY OPERATING ACTIVITIES

 

 

Net Income/(Loss)

 $                  194

 $                (2,599)

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

 

 

Depreciation and amortization

                  1,237

                     1,059

Amortization of debt issuance fees

                        39

                           29

Share-based compensation expense

                     348

                         284

Deferred rent

                          7

                           13

Deferred income taxes

                        88

                   (1,492)

Provision for (recovery of) doubtful accounts

                        22

                           (4)

Inventory reserves

                        45

                     1,278

Changes in assets and liabilities, net of acquisition:

 

 

Accounts receivable

               (2,090)

                         658

Inventories

               (1,101)

                     1,005

Prepaid expenses and other assets

                   (154)

                           84

Accounts payable

                     (50)

                       (771)

Accrued expenses and other liabilities

                  1,611

                         945

Net cash provided by operating activities

                     196

                         489

CASH FLOWS (USED) BY INVESTING ACTIVITIES

 

 

Capital expenditures

                   (583)

                       (318)

Proceeds from asset disposal

                           -

                              7

Acquisition of business net of cash acquired

                   (811)

                   (8,842)

Net cash (used) by investing activities

               (1,394)

                   (9,153)

 

 

 

CASH FLOWS PROVIDED BY FINANCING ACTIVITIES

 

 

Revolver borrowings

               19,721

                   15,794

Revolver repayments

             (18,473)

                 (14,272)

Term loan borrowings

                           -

                         760

Term loan repayments

                     (76)

                         (38)

Debt issuance fees

                           -

                       (215)

Proceeds from exercise of stock options

                     288

                           38

Net cash provided by financing activities

                  1,460

                     2,067

Effect of exchange rate changes on cash and cash equivalents

                     (85)

                           61

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS

                     177

                   (6,536)

 

 

 

Cash and cash equivalents, at beginning of period

                  2,458

                     9,351

 

 

 

CASH AND CASH EQUIVALENTS, AT END OF PERIOD

 $              2,635

 $                  2,815

 

 

 

SUPPLEMENTAL INFORMATION:

 

 

Cash paid during the period for interest

 $                    78

 $                        73

Cash paid during the period for income taxes

 $                    24

 $                        34

 


WIRELESS TELECOM GROUP, INC.

NET REVENUES AND GROSS PROFIT BY SEGMENT

(In thousands, Unaudited)

 

 

 

 

Three months ended June 30

 

 

 

Revenue

% of Revenue

Change

 

 

 

2018

2017

2018

2017

Amount

Pct.

 

 

Network solutions

 $       5,636

 $       5,617

42.0%

47.1%

 $           19

0.3%

 

 

Test and measurement

          3,534

          3,316

26.4%

27.8%

            218

6.6%

 

 

Embedded solutions

          4,244

          3,000

31.6%

25.1%

          1,244

41.5%

 

 

Total net revenues

 $     13,414

 $     11,933

100.0%

100.0%

 $       1,481

12.4%

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended June 30

 

 

 

Gross Profit

Gross Profit %

Change

 

 

 

2018

2017

2018

2017

Amount

Pct.

 

 

Network solutions

 $       2,468

 $       1,182

43.8%

21.0%

 $       1,286

108.8%

 

 

Test and measurement

          1,815

            832

51.4%

25.1%

            983

118.1%

 

 

Embedded solutions

          1,887

          1,330

44.5%

44.3%

            557

41.9%

 

 

Total gross profit

 $       6,170

 $       3,344

46.0%

28.0%

 $       2,826

84.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended June 30

 

 

 

Revenue

% of Revenue

Change

 

 

 

2018

2017

2018

2017

Amount

Pct.

 

 

Network solutions

 $     11,147

 $     11,133

41.8%

51.8%

 $           14

0.1%

 

 

Test and measurement

          7,297

          6,352

27.3%

29.6%

            945

14.9%

 

 

Embedded solutions

          8,234

          3,997

30.9%

18.6%

          4,237

106.0%

 

 

Total net revenues

 $     26,678

 $     21,482

100.0%

100.0%

 $       5,196

24.2%

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended June 30

 

 

 

Gross Profit

Gross Profit %

Change

 

 

 

2018

2017

2018

2017

Amount

Pct.

 

 

Network solutions

 $       4,911

 $       3,643

44.1%

32.7%

 $       1,268

34.8%

 

 

Test and measurement

          3,660

          2,166

50.2%

34.1%

          1,494

69.0%

 

 

Embedded solutions

          3,868

          1,868

47.0%

46.7%

          2,000

107.1%

 

 

Total gross profit

 $     12,439

 $       7,677

46.6%

35.7%

 $       4,762

62.0%

 


WIRELESS TELECOM GROUP, INC.

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

(In thousands, Unaudited)

 

 

Three Months Ended June 30

 

Six Months Ended June 30

 

2018

2017

 

2018

2017

 

 

 

 

 

 

GAAP Net Income

 $            (180)

 $           (1,370)

 

 $             194

 $            (2,599)

Tax Provision/(Benefit)

               105

(1,012)

 

               161

(1,551)

Depreciation And Amortization  Expense                 

               610

                 645

 

             1,237

                1,059

Interest Expense

               141

                 110

 

               234

              159

Non-GAAP EBITDA

               676

             (1,627)

 

             1,826

               (2,932)

Stock Compensation Expense

               161

                  (18)

 

               348

                   284

ASC 606 Adjustment                   -                      -                       188                   -   

Mergers and Acquisitions Expenses

                 64

                   17

 

                 64

                1,290

Integration Expenses

                 11

                 117

 

                 60

                   164

Inventory Impairment

                  -   

              1,930

 

                  -   

                1,930

Inventory Recovery

                  (6)

                   -   

 

                (14)

                     -   

FX (Gain)/Loss

                (43)

                   -   

 

                   4

                     -   

US GAAP Purchase Accounting

               213

                   18

 

               213

                    71

Restructuring Charges and other
     non-recurring costs

                  -   

                 470

 

                  -   

                   550

Non-GAAP Adjusted EBITDA

 $          1,076

 $              907

 

 $          2,689

 $             1,357

 

 


WIRELESS TELECOM GROUP, INC.

RECONCILIATION OF TOTAL OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES

(In thousands, Unaudited)

 

 

Three Months Ended June 30

 

Six Months Ended June 30

 

2018

2017

 

2018

2017

Total Operating Expenses

 $               6,137

 $               5,614

 

 $                  11,837

 $                  11,665

 

 

 

 

 

 

M&A/Integration

                      (75)

                    (135)

 

                         (124)

                      (1,454)

Restructuring

                         -   

                    (470)

 

                               -   

                         (550)

Stock Comp

                    (161)

                        18

 

                         (348)

                         (284)

Depreciation and amort. (ex. COGS)

                    (424)

                    (559)

 

                         (888)

                         (889)

Contingent Consideration

                    (213)

                         -   

 

                         (213)

                               -   

Non GAAP Operating Expenses

 $               5,265

 $               4,467

 

 $                  10,264

 $                     8,488

 

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