WIRELESS TELECOM GROUP ANNOUNCES FOURTH QUARTER AND YEAR-END 2022 FINANCIAL RESULTS
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Thursday, March 23, 2023

WIRELESS TELECOM GROUP ANNOUNCES FOURTH QUARTER AND YEAR-END 2022 FINANCIAL RESULTS

March 23, 2023

Highlights for the quarter ended December 31, 2022:

  • Successful sale the CommAgility business on December 30, 2022 which raised approximately $12.2 million of net proceeds.  Results of CommAgility are presented as discontinued operations.
  • Net revenues of $6.7 million, an increase of 14.3% compared to the same period last year
  • Gross Profit of $4.0 million, or 60.0% of net revenue, compared to $3.3 million, or 55.5% of revenue in the same period last year
  • Net income from continuing operations of $256,000, compared to a net loss from continuing operations of $250,000 for the same period last year
  • Net income from discontinued operations of $7.6 million, compared to net income from discontinued operations of $632,000 for the same period last year
  • Net income of $7.9 million, compared to net income of $382,000 for the same period last year
  • Non-GAAP Adjusted EBITDA of $590,000, compared to Non-GAAP Adjusted EBITDA loss of $207,000 for the same period last year  

 

Highlights for the year ended December 31, 2022:

  • Successful sales of the Microlab and CommAgility businesses which together raised $35.3 million of net proceeds.  Results of Microlab and CommAgility are presented as discontinued operations.
  • Results of our remaining segment, Test & Measurement, are presented as continuing operations, and all references in this release represent continuing operations unless otherwise noted.  
  • Net revenues of $22.4 million, a decrease of 1.4% compared to the same period last year
  • Gross Profit of $12.8 million, or 57.4% of net revenue, a decrease of $132,000 compared to the same period last year
  • Net loss from continuing operations of $2.5 million, compared to a net loss from continuing operations of $692,000 for the same period last year
  • Net income from discontinued operations of $17.0 million, compared to net income from discontinued operations of $2.2 million for the same period last year
  • Net income of $14.6 million, compared to net income of $1.5 million for the same period last year
  • Non-GAAP Adjusted EBITDA of $705,000, compared to Non-GAAP Adjusted EBITDA of $110,000 for the same period last year  
  • Cash balance of $20.7 million as of December 31, 2022, compared to a cash balance of $4.5 million as of December 31, 2021
  • Backlog at December 31, 2022, of $6.6 million, a $1.3 million, or 24% year-over-year increase

 

March 23, 2023
Parsippany, New Jersey – Wireless Telecom Group, Inc. (NYSE American: WTT) (the “Company”) announced today results for the three months and twelve months ended December 31, 2022.

Tim Whelan, CEO of Wireless Telecom Group, Inc. stated, “We successfully executed upon our previously communicated strategic alternatives plan in 2022, closing on the sale of both our Microlab business and CommAgility business.  We now have nearly $21 million of cash on our balance sheet, no debt or earn-out liabilities, and we believe we have successfully transitioned our business model to a focus on the single remaining segment, our Test & Measurement business.” 

Mr. Whelan continued, “We are fully committed to our strategic alternative plan and unlocking shareholder value and we are in active discussions pursuing the completion of these activities.  We enter 2023 with a position of strength as a streamlined business model, with the strongest balance sheet in our history.  Our record capital position provides us with significant flexibility to conclude our strategic alternatives process while simultaneously investing in our technology roadmap and go-to-market strategy to drive revenue and profit growth.  We do not expect to comment further or update the market with any additional information on the process unless and until our Board of Directors has approved a specific transaction or otherwise deems disclosure appropriate or necessary. There can be no assurance that the evaluation of strategic alternatives will result in any strategic alternative transaction, or any assurance as to its outcome or timing.”

Mr. Whelan concluded, “We are incredibly excited about the test and measurement market opportunity ahead and the traction we are seeing with our products in semiconductor testing, quantum computing and directed energy weapons applications.  We enter 2023 with a significant increase in our backlog and a strong balance sheet and in the year ahead we expect to realize revenue growth, continued strong gross margins, reductions in operating expenses and positive cash flow from operations.”    

Full Year 2022 Operating Results:

  • Net revenues decreased 1.4% from the prior year driven primarily by supply chain delays impacting our ability to ship additional backlog in the fourth quarter of 2022.  
  • Gross profit margin increased from 57.2% to 57.4%, reflecting our disciplined pricing power and careful management of supply chain constraints and other inflationary pressures.
  • Backlog increased $1.3 million, to $6.6 million, a 24% year-over-year increase. 
  • Operating expenses were $15.5 million in 2022 compared to $15.2 million in 2021 reflecting increases in stock compensation expense and non-recurring strategic alternatives expenses, offset by expense reductions in various administrative areas.  
  • GAAP net income was $14.6 million compared to a net income of $1.5 million in the prior year due to gains recognized on the sales of Microlab and CommAgility.
  • Adjusted EBITDA was $705,000 compared to $110,000 in the prior year.  Non-GAAP adjusted EBITDA is a metric the Company uses to measure our core operations.  A reconciliation of non-GAAP adjusted EBITDA to GAAP net loss is provided later in this press release. 

Cash Flow and Balance Sheet

  • Cash of $20.7 million at December 31, 2022, held in money market funds and bearing interest income at 3.75%.
  • Repayment and termination of both the Muzinich term loan and the Bank of America credit facility, resulting in zero debt on the balance sheet at December 31, 2022.
  • Payment of all acquisition related contingent liabilities, resulting in zero earn-out liabilities at December 31, 2022. 

 

Contact

Michael Kandell
25 Eastmans Road
Parsippany, NJ 07054
Tel: (973) 386-9696
Fax: (973) 386-9191
www.wirelesstelecomgroup.com

 

 

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 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 defines Non-GAAP adjusted operating income/(loss) as GAAP operating income/(loss) excluding non-cash amortization expense of purchased intangible assets, non-recurring expenses associated with our strategic initiatives process, non-cash stock compensation expense, restructuring charges and changes in fair value of contingent consideration. 

 

The Company defines Non-GAAP adjusted net income/(loss) from continuing operations as GAAP net income/(loss) from continuing operations excluding non-cash amortization expense of purchased intangible assets, non-recurring expenses associated with our strategic initiatives process, non-cash stock compensation expense, restructuring charges, changes in fair value of contingent consideration and gains or losses on extinguishment of debt. 

 

The Company defines EBITDA as its net earnings before interest, taxes, depreciation and amortization.    “Adjusted EBITDA” is EBITDA excluding our stock compensation expense, restructuring charges, non-recurring expenses associated with our strategic alternatives activities, unrealized and realized foreign exchange gains and losses, non-recurring legal fees associated with arbitration, (gain)/loss on change in fair value of contingent consideration, gain/loss on extinguishment of debt 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 views Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Operating Income/(Loss) and Non-GAAP Adjusted Net Income/(Loss) from Continuing Operations as important indicators of performance, consistent with the manner in which management measures and forecasts the Company’s performance.  We believe Non-GAAP measures are important performance metrics because they facilitate the analysis of our results, exclusive of certain non‐cash and non-recurring items, including items which do not directly correlate to our business operations.

 

The Company believes that Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted  Operating Income/(Loss) and Non-GAAP Adjusted Net Income/(Loss) from Continuing Operations 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, include our expectations of revenue growth, continued strong gross margins, reductions in operating expenses and positive cash flow from operations.  Investors are cautioned that 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 ongoing impact that the conflict in Ukraine and related sanctions have had and may continue to have on our business, supply chain, transportation costs, and our backlog;  the impact  inflation has had and is expected to continue to have on our business and the economy in general, our dependency on capital spending on wireless test equipment by our customers and end users; the impact of the loss of any significant customers; the ability of our management to successfully implement our evolving business plan;  the impact of competitive products and pricing; our abilities to protect our intellectual property rights and our ability to manage risks related to our information technology and cyber security as well as other risks and uncertainties set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. 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, Holzworth, 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, and semiconductor industries, Wireless Telecom Group products enable innovation across existing and emerging wireless technologies. With a product portfolio including peak power meters, signal generators, phase noise analyzers, noise sources, and programmable noise generators, Wireless Telecom Group supports the development, testing, and deployment of wireless technologies around the globe.  Wireless Telecom Group, Inc.’s website address is wirelesstelecomgroup.com.

 

 

 

 

 

Wireless Telecom Group INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME/(LOSS)

(In thousands, except per share amounts)

 

 

 

(unaudited)

 

For the Three Months Ended

 

For the Twelve Months Ended

 
 

December 31

 

December 31

 
 

2022

2021

 

2022

2021

 

Net revenues

 $6,739            

$        5,897

 

 $      22,367

 $          22,676

 

 

 

 

 

 

 

 

Cost of revenues

              2,716

           2,623

 

           9,534

              9,711

 
 

 

 

 

     

Gross profit

               4,023

           3,274

 

           12,833

              12,965

 
 

 

 

 

     

Operating expenses

 

 

 

     

Research and development

               419

          468

 

           1,791

              1,718

 

Sales and marketing

               1,105

           1,081

 

           4,046

              4,003

 

General and administrative

              2,265

2,764

 

           9,638

              9,076

 

Loss on change in contingent consideration

-

(614)

 

-

386

 

Total operating expenses

              3,789

           3,699

 

         15,475

              15,183

 

 

 

 

 

 

 

 

Operating income/(loss)

             234

           (425)

 

         (2,642)

             (2,218)

 
 

 

 

 

     

(Loss)/gain on extinguishment of debt

-

-

 

(792)

2,045

 

Other income/(expense)

                  70

              42

 

              374

                    70

 

Interest income/(expense)

                28

            (196)

 

            (130)

                (1,143)

 
 

 

 

 

     

Income/(loss) before taxes

            332

(579)

 

         (3,190)

               (1,246)

 

Tax provision/(benefit)

                        76

                       (329)

 

                        (731)

                       (554)

 

Net income/(loss) from continuing operations

 $          256

$        ( 250)

 

 $      (2,459)

 $               (692)

 

 

 

 

 

 

 

 

Net income from discontinued operations, net of taxes

7,600

632

 

17,048

2,192

 

Net income/(loss)

 $          7,856

$            382        

 

 $      14,589

 $            1,500

 

 

 

 

 

 

 

 

Other comprehensive income/(loss):

 

 

 

     

Foreign currency translation adjustments

                (10)

               (6)

 

            (771)

                   (70)

 

Comprehensive income/(loss)

 $          7,846

 $        (376)

 

 $      13,818

 $            1,430

 
 

 

 

 

 

 

 

Income/(loss) per share from continuing operations:

 

 

 

 

 

 

Basic

 $            0.01

$          (0.01)

 

 $        (0.11)

 $            (0.03)

 

Diluted

 $            0.01

$          (0.01)

 

 $        (0.11)

 $            (0.03)

 

 

 

 

 

 

 

 

Income per share from discontinued operations:

 

 

 

 

 

 

Basic

 $              0.36

$          0.03

 

 $          0.79

 $              0.10

 

Diluted

 $              0.34

$          0.03

 

 $          0.76

 $              0.09

 

 

 

 

 

 

 

 

Income/(loss) per share:

 

 

 

 

 

 

Basic

 $            0.37

$          0.02

 

 $          0.68

 $            0.07

 

Diluted

 $            0.35

$          0.02

 

 $          0.65

 $            0.06

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

Basic

             21,156

         22,494

 

         21,702

            22,050

 

Diluted

             22,049

         24,858

 

         22,540

            24,297

 

 

 

 

 

 

 

 

 

 

CONSOLIDATED BALANCE SHEETS

(In thousands, except number of shares and par value)

 

 

 

 

 

 

 

December 31
2022

December 31
2021

CURRENT ASSETS

 

 

Cash & cash equivalents

 $20,707              

 $              4,472

Accounts receivable - net of reserves of $100 and $91, respectively

                  4,762

2,044

Inventories - net of reserves of $499 and $468, respectively

                  5,087

4,439

Prepaid expenses and other current assets

                  1,685

394

Current assets of discontinued operations

-

9,176

TOTAL CURRENT ASSETS

               32,241

               20,525

 

 

 

PROPERTY PLANT AND EQUIPMENT - NET

                  467

469

 

 

 

OTHER ASSETS

 

 

Goodwill

               6,000

6,000

Acquired intangible assets, net

                  2,588

                  3,161

Deferred income taxes

                  2,913

2,407

Right of use assets

                  579

1,146

Other assets

                     185

                     284

Non current assets of discontinued operations

-

10,359

TOTAL OTHER ASSETS

               12,265

               23,357

 

 

 

TOTAL ASSETS

 $            44,973

 $            44,351

 

 

 

CURRENT LIABILITIES

 

 

Short term debt

 $                      -

 $                 84

Accounts payable

                  480

                  644

Short term leases

                     251

                     585

Accrued expenses and other current liabilities

                  2,693

5,836

Deferred revenue

                        123

                        24

Current liabilities of discontinued operations

-

4,296

TOTAL CURRENT LIABILITIES

               3,547

                  11,469

 

 

 

LONG TERM LIABILITIES

 

 

Long term debt

                  -

                         3,300  

Long term leases

                  364

                  615

Other long term liabilities

                     24

52

Non current liabilities of discontinued operations

-                     

                     295

TOTAL LONG TERM LIABILITIES

                  388

                  4,262

 

 

 

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
36,440,636 and 35,915,636 shares issued, 21,438,571 and 22,666,074 shares outstanding

                     365

                     359

Additional paid in capital

               52,764

               51,555

Retained earnings

                  15,143

                  554

Treasury stock at cost, 15,002,065 and 13,249,562 shares

             (27,234)

             (24,619)

Accumulated other comprehensive income

                   -

                     771

TOTAL SHAREHOLDERS' EQUITY

               41,038

               28,620

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

 $            44,973

 $            44,351

 

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

 

 

 

 

For the Twelve Months

 

Ended December 31

 

2022

 2021

CASH FLOWS (USED)/PROVIDED BY OPERATING ACTIVITIES

 

 

Net income

 $            14,589

 $               1,500

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

 

 

Depreciation and amortization

                   1,397

                       2,152

Loss/(Gain) on extinguishment of debt

792

(2,045)

(Gain) on sale of Microlab and CommAgility

(22,834)

-

Goodwill and intangibles impairment

-

258

Amortization of debt issuance fees

                       55

335

Share-based compensation expense

                       1,018

                         316

Deferred rent

                      (30)

                          (30)

Deferred income taxes

                    2,666

                       (26)

Provision for doubtful accounts

                      9

78

Inventory reserves

                       62

141

Changes in assets and liabilities:

 

 

Accounts receivable

                 (3,060)

                   150

Inventories

                   (845)

                     (427)

Prepaid expenses and other assets

                    (1,042)

                        976

Accounts payable

                    (193)

                     770

Deferred revenue

(160)

(515)

Accrued expenses and other liabilities

                   (2,078)

                   925

Net cash (used)/provided by operating activities

                  (9,654)

                   4,558

 

 

 

CASH FLOWS PROVIDED/(USED) BY INVESTING ACTIVITIES

 

 

Capital expenditures

                     (722)

                       (524)

Acquisition of business, net of cash acquired

               (250)

                  (200)

Divestiture of Microlab, net

23,069

-

Divestiture of CommAgility, net

12,205

-

Net cash provided/(used) by investing activities

               34,302

                  (724)

 

 

 

CASH FLOWS USED BY FINANCING ACTIVITIES

 

 

Term loan borrowings

-

345

Term loan repayments

                  (4,415)

                       (4,212)

Acquisition of treasury stock

(2,525)

-

Payment of contingent consideration

(1,388)

(1,052)

Proceeds from exercise of stock options

197

208

Tax withholding payments for vested equity awards

                     (90)

                       (63)

ATM share sold

-

563

Net cash (used) by financing activities

                  (8,221)

                     (4,211)

 

 

 

Effect of Exchange Rate Changes on Cash and Cash Equivalents

                   (192)

                     (61)

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS

               16,235

                   (438)

 

 

 

Cash and Cash Equivalents, at Beginning of Period

                  4,472

                     4,910

 

 

 

CASH AND CASH EQUIVALENTS, AT END OF PERIOD

 $              20,707

 $                  4,472

 

 

 

SUPPLEMENTAL INFORMATION:

 

 

Cash paid during the period for interest

 $                   122

 $                     810

Cash paid during the period for income taxes

 $                   988

 $                     187

 

 

RECONCILIATION OF NON GAAP MEASURES

(In thousands, unaudited)

 

 

Three Months Ended

 

Twelve Months Ended

 

December 31

 

December 31

 

Unaudited

 

Unaudited

 

2022

2021

 

2022

2021

Net Income/(loss) from continuing operations

 $          256

$         (250)

 

$          (2,459)

 $             (692)

Tax Provision/(Benefit)

                 76

(329)

 

             (731)

(554)

Depreciation and amortization expense

                  243

                237

 

               1,037

               913

Interest (income)/expense

                   (28)

                196

 

                  130

1,143                  

Non-GAAP EBITDA

             547

           (146)

 

             (2,023)

                  810

Stock compensation expense

                  68

                  15

 

                  1,018

                  316

Non recurring strategic alternatives expenses

(78)                  

                  539

 

               837

                  654

Restructuring Costs

                     33  

                   -  

 

                     33  

                    25

Change in Fair Value of Contingent Consideration

                     -  

             (614)

 

                     -  

386               

FX (Gain)/Loss

                  20

                 (1)

 

                  (52)

                   (40)

Loss/(Gain) on Extinguishment of Debt

                     -  

                   -  

 

                  792

             (2,045)          

Non recurring HR costs

                  -

                   -  

 

                  100

                     -  

Non Recurring Arbitration Legal Costs

                     -  

                   -  

 

                     -  

                      4

Non-GAAP Adjusted EBITDA

 $590         

 $           (207)

 

 $          705

 $             110

       
       
       

 

 

 

 

 

 

 

 

GAAP Operating Income/(Loss), as reported

 $           234         

 $          (425)

 

 $          (2,642)

 $          (2,218)

           

Adjustments:

         

Amortization of acquired intangible assets

143                  

                143

 

                  573

                  573

Non recurring strategic alternatives expenses

                  (78)

                  539

 

               837

                  654

Stock Compensation Expense

                  68

                  15

 

                  1,018

                  316

Restructuring costs and contingent consideration

                     33  

             (614)

 

                     33  

               411

           

Total Adjustments to operating income/(loss)

                  166

             83

 

               2,461

               1,954

           

Non-GAAP Adjusted Operating Income/(Loss)

 $          400

 $           (342)

 

 $          (181)

 $             (264)

       
       
       

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income/(loss) from continuing operations, as reported

 $          256

 $        (250)

 

 $          (2,459)

 $             (692)

           

Adjustments:

         

Total pretax adjustments to operating income/(loss)

                  166

             83

 

               2,461

               1,954

Loss/(Gain) on Extinguishment of Debt

                     -  

                   -  

 

                  792

             (2,045)

Total Adjustments to Net income/(loss) from continuing operations

166                  

             83

 

               3,253

                  (91)

Tax effects of adjustments

                  38

                47

 

                  745

                  (40)

           

Non-GAAP Adjusted Net Income/(loss) from continuing operations

 $          384

 $           (214)

 

 $                  49

 $             (743)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

           

Income/(Loss) per share from continuing operations:

 

 

 

 

 

   Basic EPS, as reported

 $            0.01

 $          (0.01)

 

 $            (0.11)

 $            (0.03)

   Diluted EPS, as reported

 $            0.01

 $          (0.01)

 

 $            (0.11)

 $            (0.03)

           
           

 

 

 

 

 

 

   Non-GAAP Adjusted Basic EPS

 $            0.02

 $          (0.01)

 

 $            0.00

 $            (0.03)

   Non-GAAP Adjusted Diluted EPS

 $            0.02

 $          (0.01)

 

 $            0.00

 $            (0.03)

           

 

 

 

 

 

 

Basic Shares

             21,156

           22,494

 

             21,702

             22,050

Diluted Shares

             22,049

           24,858

 

             22,540

             24,297

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