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
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).
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.
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
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version on businesswire.com: http://www.businesswire.com/news/home/20171109005047/en/
For Wireless Telecom GroupMike Kandell, 973-386-9696
Wireless Telecom (AMEX:WTT)
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