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WTG Announces Third Quarter 2016 Finanical Results

Posted November 2, 2016

Wireless Telecom Group announced today results for the third quarter ended September 30, 2016.

Highlights:
  • $11 million in new sales orders, a sequential increase of 25% from the second quarter 2016 sales orders of $8.8m
  • $8.3 million in revenue for the quarter, a sequential increase of 10% from second quarter 2016 revenues of $7.6m
  • Gross profit margin of 45.8% in the quarter, a sequential increase of 190 basis points from the second quarter 2016 gross profit margin of 43.9%
  • Net income of $122,000, a sequential improvement from the second quarter net loss of ($218,000)

Tim Whelan, CEO of Wireless Telecom Group, Inc., commented, "As expected, our third quarter results reflected a return to profitability and sequential improvement throughout the income statement. We are pleased with the third quarter’s growth in revenues and higher gross margins along with careful management of our operating costs. We expect continued improvement in financial performance in Q4 compared to Q3."

Mr. Whelan added, "We are also excited about the third quarter’s 25% sequential increase in new sales orders which reflected improvements in both of our segments and all three of our brands, Microlab, Boonton, and Noisecom. We attribute this to large project execution in our Network Solutions segment of in-building-wireless distributed antenna systems by carriers, and increased spending by both enterprise and government customers in our Test & Measurement segment."

Continued Whelan, "In addition to driving operational excellence, we are accelerating our efforts evaluating strategic growth opportunities and continuing to focus on organic product growth initiatives as we prepare for 2017."

For the quarter ended September 30, 2016, the Company reported total net revenues of $8,344,000, compared to $8,339,000 for the same period in 2015, basically no change, but an increase of 10% over the sequential quarter. Net revenues in the Network Solutions segment were $5,507,000 for the quarter, compared to $5,482,000 for the same period in 2015, an increase of less than 1%, and an increase of 1% over the sequential quarter. Net revenues in the Test & Measurement segment were $2,837,000 for the quarter, compared to $2,857,000 for the same period in 2015, a decrease of 1%, however an increase of 33% over the sequential quarter.

Non-GAAP Adjusted EBITDA for the quarter ended September 30, 2016 was $652,000, compared to $412,000 for the same period in 2015. Our non-GAAP Adjusted EBITDA results do not include the Company’s tax provision, depreciation and amortization, stock compensation expense, severance charges related to restructuring, as well as professional fees related to our Strategic Planning and Operating Committee’s strategic evaluations. A reconciliation of net income to non-GAAP Adjusted EBITDA results is included as an attachment to this press release.

The Company reported net income of $122,000, or $0.01 per diluted share, for the third quarter of 2016, compared to net income of $75,000, or $0.00 per diluted share, for the third quarter of 2015, and a loss of ($0.01) per diluted share in the second quarter of 2016.

For the nine months ended September 30, 2016, the Company reported total net revenues of $22,323,000 for the period, compared to $25,180,000 for the same period in 2015, a decrease of 11%. Net revenues in the Network Solutions segment were $15,197,000, compared to $16,708,000 for the same period in 2015, a decrease of 9%. Net revenues in the Test and Measurement segment were $7,126,000 for the period, compared to $8,472,000 for the same period in 2015, a decrease of 16%.

Non-GAAP Adjusted EBITDA for the nine months ended September 30, 2016 was of $179,000, compared to $1,345,000 for the same period in 2015.

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 and certain of the information presented by the Company from time to time may constitute 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 have limitations and 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

Except for historical information, the matters discussed in this news release may be considered 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. Such statements include declarations regarding the intent, belief or current expectations of the Company and its management. Prospective 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. Specifically, no assurances can be made with respect to: improvement in financial performance in Q4 compared to Q3; and continued increases in new sales orders, leading to improvements in order flow in both of our segments and all three of our brands, Microlab, Boonton and Noisecom; and our ability to accelerate our efforts evaluating strategic growth opportunities. Further information regarding risks and uncertainties that could affect the Company’s results are identified in the Company's reports and registration statements filed with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2015.

About Wireless Telecom Group, Inc.

Wireless Telecom Group designs and manufactures radio frequency (RF) and microwave-based products for wireless and advanced communications industries and markets its products and services worldwide under the Boonton, Microlab and Noisecom brands. Its complementary suite of high performance components and instruments includes RF combiners and broadband combiner boxes for in-building distributed antenna systems deployments (DAS), RF power splitters and diplexers, hybrid couplers, peak power meters, signal analyzers, noise modules, precision noise and generators. The Company serves both commercial and government markets with workflow-oriented, WiFi, WiMAX, satellite, cable, radar, avionics, medical, and computing applications. 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.

See following Selected Financial Results

Wireless Telecom Group, Inc.
25 Eastmans Road Parsippany, NJ 07054
Tel. (973) 386-9696 Fax (973) 386-9191

SELECTED FINANCIAL RESULTS
In thousands, except per share amounts)


 

Three months ended

Nine months ended

 

September 30,

September 30,

 

(unaudited)

(unaudited)

 

2016

2015

2016

2015

Statement of Operations Data:

 

 

 

 

Net revenues

$8,344

$8,339

$22,323

$25,180

 

 

 

 

 

Gross profit

3,823

3,623

9,882

11,053

 

 

 

 

 

Operating expenses

 

 

 

 

   Research and development

949

1,026

3,043

2,899

   Sales and marketing

1,216

1,225

3,704

3,912

   General and administrative

1,390

1,210

4,142

3,593

Total operating expenses

3,555

3,461

10,888

10,404

 

 

 

 

 

Operating income (loss)

268

162

(1,006)

649

 

 

 

 

 

Other expense - net

     27

     6

  79

    3

 

 

 

 

 

Income (loss) before income taxes

241

157

(1,085)

646

 

 

 

 

 

Net income (loss)

$122

$75

$(673)

$353

 

 

 

 

 

Net income (loss) per common share:

 

 

 

 

   Basic

$0.01

$0.00

$(0.04)

$0.02

   Diluted

$0.01

$0.00

$(0.04)

$0.02

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

   Basic

18,721

19,626

18,650

19,550

   Diluted

19,359

20,150

19,144

20,465

 

 

 

 

 

 

Three months ended

Nine months ended

 

September 30,

September 30,

 

(unaudited)

(unaudited)

 

2016

2015

2016

2015

Reconciliation of GAAP

Net Income (Loss) to Non-GAAP

 

 

 

 

EBITDA and Adjusted EBITDA:

 

 

 

 

GAAP net income (loss)

$122

$ 75

$(673)

 $  353

   Tax expense (benefit)

  119

   81

  (412)

     293

   Depreciation and amortization

Non-GAAP EBITDA

 

  131

  372

 115

 271

  364

  (721)

     339

     985

   Stock compensation expense

  236

   51

  433

    223

   Severance charges

     -

   90

    51

    137

   Other non-recurring costs (1)

   44

      -

  416

         -

Non-GAAP Adjusted EBITDA   

$652

$412

$230

$1,345

 

 

 

 

 

(1)   Includes professional fees related to our Strategic Planning and Operating Committee’s strategic evaluations.

 

 

 

 

 

 

 

 

 

September 30,

December 31,

 

2016

2015

 

(unaudited)

 

 

Balance Sheet Data:

 

 

 

Cash & cash equivalents

Accounts receivable

Inventories

Prepaid expenses & other current assets

Total Current Assets

 

Property, plant & equipment – net

 

Goodwill

Deferred income taxes

Other assets

Total other assets

 

Total assets

 $8,102

    5,636

    9,451

   

      672

 23,861

 

 2,136

 

  1,351

  7,448

     695

  9,494

 

 $35,491

$9,726

   5,451

   8,069

  

      587

23,833

 

 1,743

 

1,351

7,014

    765

 9,130

 

 $34,706

 

 

 

Accounts payable

Accrued expenses & other current liabilities

Equipment leases payable

Total current liabilities

 

Deferred rent

 

Common stock

Additional paid-in-capital

Retained earnings

Treasury stock

Total shareholders’ equity

 

Total liabilities & shareholders’ equity

 

 

$2,138

  

 679

          14

    2,831

 

     61

 

  297

  40,297

     12,828

(20,823)                32,599

 

 $35,491

 

 

$1,046

 

   648

       74

 1,768

 

     34

   

296

39,865

13,501

(20,758)

  32,904

 

 $34,706

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine months ended

Nine months ended

 

 

September 30, 2016

September 30, 2015

 

 

(Unaudited)

(Unaudited)

 

Statement of Cash Flows Data:

 

 

 

Cash Flows (Used) Provided by Operating Activities:

  Net income (loss)

Adjustments to reconcile net income (loss) to

net cash (used) provided by operating activities:

    Depreciation and amortization

    Share-based compensation expense

    Deferred rent

 

$(673)

 

 

364

433

27

 

$353

 

 

339

223

22

 

    Deferred income taxes

(434)

217

 

    Provision for doubtful accounts

    Inventory reserves

(9)

221

5

36

 

  Changes in assets and liabilities:

 

 

 

    Accounts receivable

(176)

(436)

 

    Inventories

(1,603)

(211)

 

    Prepaid expenses and other assets

(14)

568

 

    Accounts payable

1,091

171

 

    Accrued expenses and other current liabilities

     31

  (768)

 

       Net cash (used) provided by operating activities

 (742)

     519

 

 

 

 

 

Cash Flows (Used) by Investing Activities:

 

 

 

    Capital Expenditures

   (715)

   (372)

 

 

 

 

 

Cash Flows (Used) by Financing Activities:

 

 

 

    Proceeds from exercise of stock options

-

23

 

    Repayments of equipment leases payable

(101)

(116)

 

    Repurchase of common stock

     (66)

          -

 

       Net cash (used) for financing activities

   (167)

     (93)

 

 

 

 

 

Net (Decrease) Increase in Cash and Cash Equivalents

 

Cash and Cash Equivalents, at beginning of period

 

Cash and Cash Equivalents, at end of period

 

(1,624)

 

 

  9,726

 

$8,102

 

 

54

 

 

 10,724

 

$10,778