- Net revenues of $10,812,000 for the quarter
- Gross Profit of $4,825,000, or 44.6% for the
quarter
- Net loss of $461,000, or ($0.02) per basic and diluted share
for the quarter
- Non-GAAP Adjusted EBITDA of $97,000 for the quarter
- New customer orders of $10,974,000 in the quarter
- Company signs definitive agreement to acquire Holzworth
Instrumentation Inc.
- 2019 full year revenue guidance revised to $49-50 million,
excluding acquisitions; remains committed to long term growth
target of $100 million by 2023
Wireless Telecom Group, Inc. (NYSE American: WTT) (the
“Company”) announced today results for the third quarter ended
September 30, 2019.
Tim Whelan, CEO of Wireless Telecom Group, Inc., commented, “Our
third quarter performance reflects challenges related to key
customers currently experiencing project timing differences from
those we anticipated for the second half of the year. Delays in
orders for a few large Network Solutions projects, a delay in
receipt of Test & Measurement purchase orders under existing
government awards, and unexpected lower sales by Embedded Solutions
to one of our largest customers combined to reduce top line
revenues in the quarter as compared to the year ago period.”
Whelan continued, “We have been focused on strategic account
expansion and development partnerships and made some very good
progress with these initiatives during the quarter. We have
qualified a number of new, large 5G opportunities in connection
with our Release 15 compliant stack software for 5G solutions,
which we announced to the market on October 31st. These large 5G
opportunities include solutions that we expect will include higher
margin software sales in our Embedded Solutions segment. We expect
contract decisions on these opportunities in 2020. Though we have
made meaningful progress qualifying strategic sales pursuits, the
expected revenue ramp from new initiatives is not fast enough to
offset the delays and pushes in other project timing this late in
2019.”
Signing of Definitive Agreement to
acquire Holzworth Instrumentation Inc.
In a separate release this morning, the Company announced the
execution of a Definitive Agreement to acquire Holzworth
Instrumentation Inc., a Boulder, Colorado based provider of
specialty phase noise analyzers and signal generators. Holzworth
instruments are used by government labs, the semiconductor
industry, and network equipment providers, among others, in
research and automated test environments. The Company expects to
close this acquisition in the months ahead.
Whelan commented “Acquisitions are an important part of our
long-term growth strategy, and we see strong potential in the
future pipeline. Holzworth is a perfect addition to our specialty
noise generation and high-performance RF measurement solutions. The
Holzworth acquisition is aligned with our focus on the growth of
test and measurement solutions which will enable the future of
wireless technology in radar, satellite communications, and
5G.”
Financial Results
For the quarter ended September 30, 2019, the Company reported
consolidated net revenues of $10,812,000, compared to $14,019,000
for the same period in 2018. Network Solutions revenue decreased
14.1% compared to the prior year on fewer large projects, Embedded
Solutions revenue decreased 38.8% on lower software and service
revenues and lower sales of digital signal processing hardware to
one of our largest customers, and Test & Measurement revenue
decreased 18.7% on lower government shipments compared to the same
quarter last year.
Consolidated gross profit in the third quarter was $4,825,000,
or 44.6% of revenue, compared to $6,464,000 or 46.1% of revenue,
for the same period in 2018. The slight decrease was primarily due
to a decrease in Network Solutions gross profit due to volumes and
a competitive pricing environment, which was only partially offset
by favorable product mix and cost reduction initiatives in Test
& Measurement.
The Company also reported a slight reduction in consolidated
operating expenses, decreasing from $5,545,000 in the third quarter
of 2018 to $5,503,000 in the current period in 2019. The decrease
was primarily related to lower general and administrative costs
offset by higher expenses in research and development in the area
of 5G roadmap development.
Net loss for the quarter ended September 30, 2019 was $461,000,
compared to net income of $558,000 for the same period in 2018.
Non-GAAP Adjusted EBITDA for the quarter ended September 30,
2019 was $97,000, compared to $1,755,000 for the same period in
2018. The Company’s explanation of Adjusted EBITDA and the
reconciliation of Adjusted EBITDA to net income (loss) are set out
below in this press release.
New customer orders for the quarter were $10,974,000 compared to
$11,274,000 in the same quarter last year. The Company’s
consolidated backlog of firm orders to be shipped in the next
twelve months was $7,596,000 at September 30, 2019, compared to the
September 30, 2018 backlog of $6,122,000.
Outlook
The Company expects revenue of $49 to $50 million for the full
year 2019, excluding the impact of acquisitions, and remains
committed to executing against its organic and acquisition growth
strategy to accomplish $100 million of revenue in 2023.
Conference Call
As previously announced, Wireless Telecom Group Inc. will host a
conference call today at 8:30 a.m. EST in which management will
discuss third quarter results and related matters. To participate
in the conference call, dial 800-346-7359 or 973-528-0008. The
conference identification number is 842269. The call will also be
webcast over the internet at the following URL:
https://www.webcaster4.com/Webcast/Page/1690/32223
A replay will be made available on the Wireless Telecom website
for a limited period of time following the conference call.
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 EBITDA as its net earnings before interest,
taxes, depreciation and amortization. “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, non-recurring legal fees associated with
the Harris arbitration and other non-recurring costs and includes
cash received in 2018 related to revenue that would have been
recognized in 2018 but for the adoption of ASU Topic 606. A
reconciliation of net income to non-GAAP Adjusted EBITDA is
included as an attachment to this press release.
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 non-recurring
and certain non‐cash items, including items which do not directly
correlate to our business operations.
The Company believes that the Adjusted EBITDA metric provides
qualitative insight into our current performance and we use this
measure to evaluate our results. Additionally, we use Adjusted
EBITDA to measure the performance of our management team and
management’s entitlement to incentive compensation. 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 our expectation that the Holzworth acquisition will close
in the months ahead, our expectations relating to certain 5G
opportunities, our expectation for full year 2019 revenue of
approximately $49-$50 million, and our goal of $100 million of
revenues by 2023. 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 ability of the Company
to obtain appropriate debt financing for the transaction on
favorable terms or at all; management’s ability to integrate the
Holzworth business successfully; the ability of management to
successfully implement the Company’s business plan and strategy;
the loss of any significant customers of the Company; the impact of
competitive products and pricing; 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, 2018. 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 radio frequency 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.wirelesstelecomgroup.com.
CONSOLIDATED STATEMENT OF
OPERATIONS AND COMPREHENSIVE INCOME/(LOSS)
(In thousands, except per
share amounts, Unaudited)
For the Three Months
Ended
For the Nine Months
Ended
September 30
September 30
2019
2018
2019
2018
NET REVENUES
$
10,812
$
14,019
$
37,353
$
40,697
COST OF REVENUES
5,987
7,555
20,668
21,794
GROSS PROFIT
4,825
6,464
16,685
18,903
Operating Expenses
Research and Development
1,343
1,191
4,556
3,660
Sales and Marketing
1,753
1,795
5,718
5,639
General and Administrative
2,407
2,559
7,341
7,870
Loss on Change in Fair Value of Contingent
Consideration
-
-
-
213
Total Operating Expenses
5,503
5,545
17,615
17,382
Operating Income/(Loss)
(678
)
919
(930
)
1,521
Other Income/(Expense)
108
(60
)
273
(73
)
Interest Expense
(60
)
(115
)
(248
)
(349
)
Income/(Loss) before taxes
(630
)
744
(905
)
1,099
Tax Provision/(Benefit)
(169
)
186
(256
)
347
Net Income/(Loss)
$
(461
)
$
558
$
(649
)
$
752
Other Comprehensive Income/(Loss):
Foreign Currency Translation
Adjustments
(491
)
(217
)
(566
)
(601
)
Comprehensive Income/(Loss)
$
(952
)
$
341
$
(1,215
)
$
151
Earnings/(Loss) Per Share:
Basic
$
(0.02
)
$
0.03
$
(0.03
)
$
0.04
Diluted
$
(0.02
)
$
0.03
$
(0.03
)
$
0.03
Weighted Average Shares Outstanding:
Basic
20,866
20,972
20,854
20,820
Diluted
20,866
21,555
20,854
21,582
In periods with a net loss, the basic loss per
share equals the diluted loss per share as all common stock
equivalents are excluded from the per share calculation because
they are anti-dilutive.
CONSOLIDATED BALANCE
SHEETS
(In thousands, except number
of shares and par value)
September 30 2019
December 31 2018
(Unaudited)
CURRENT ASSETS
Cash & Cash Equivalents
$
2,735
$
5,015
Accounts Receivable - net of reserves of
$64 and $44, respectively
8,023
8,638
Inventories - net of reserves of $998 and
$1,910, respectively
8,309
6,884
Prepaid Expenses and Other Current
Assets
890
1,689
TOTAL CURRENT ASSETS
19,957
22,226
PROPERTY PLANT AND EQUIPMENT -
NET
2,260
2,578
OTHER ASSETS
Goodwill
9,482
9,778
Acquired Intangible Assets, net
2,325
3,206
Deferred Income Taxes
5,901
5,592
Right Of Use Assets
1,548
-
Other
621
787
TOTAL OTHER ASSETS
19,877
19,363
TOTAL ASSETS
$
42,094
$
44,167
CURRENT LIABILITIES
Short Term Debt
$
2,977
$
2,016
Accounts Payable
2,634
3,252
Short Term Leases
441
-
Accrued Expenses and Other Current
Liabilities
2,804
6,083
Deferred Revenue
110
103
TOTAL CURRENT LIABILITIES
8,966
11,454
LONG TERM LIABILITIES
Long Term Leases
1,124
-
Other Long Term Liabilities
83
115
Deferred Tax Liability
594
616
TOTAL LONG TERM LIABILITIES
1,801
731
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, 34,488,252 and 34,393,252
shares issued, 21,300,252 and 21,205,251
shares outstanding
345
344
Additional Paid in Capital
49,038
48,479
Retained Earnings
6,907
7,556
Treasury Stock at Cost, 13,188,000
shares
(24,509
)
(24,509
)
Accumulated Other Comprehensive
Income/(Loss)
(454
)
112
TOTAL SHAREHOLDERS' EQUITY
31,327
31,982
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY
$
42,094
$
44,167
CONSOLIDATED STATEMENT OF CASH
FLOWS
(In thousands,
unaudited)
For the Nine Months
Ended September 30
2019
2018
CASH FLOWS PROVIDED/(USED) BY OPERATING
ACTIVITIES
Net Income/(Loss)
$
(649
)
$
752
Adjustments to reconcile net income/(loss)
to net cash provided by/(used) by operating activities:
Depreciation and Amortization
1,671
1,773
Amortization of Debt Issuance Fees
47
59
Share-based Compensation Expense
560
505
Deferred Rent
(18
)
9
Deferred Income Taxes
(309
)
34
Provision for Doubtful Accounts
20
23
Inventory Reserves
139
204
Changes in Assets and Liabilities:
Accounts Receivable
520
(2,552
)
Inventories
(1,627
)
(1,154
)
Prepaid Expenses and Other Assets
993
(99
)
Accounts Payable
(567
)
(487
)
Payment of Contingent Consideration
(772
)
-
Accrued Expenses and Other Current
Liabilities
(1,635
)
2,284
Net Cash Provided/(Used) by Operating
Activities
(1,627
)
1,351
CASH FLOWS USED BY INVESTING
ACTIVITIES
Capital Expenditures
(339
)
(633
)
Acquisition of Business
(426
)
(805
)
Net Cash Used by Investing
Activities
(765
)
(1,438
)
CASH FLOWS PROVIDED BY FINANCING
ACTIVITIES
Revolver Borrowings
27,408
29,046
Revolver Repayments
(26,333
)
(27,681
)
Term Loan Repayments
(114
)
(114
)
Payment of Contingent Consideration
(782
)
-
Proceeds from Exercise of Stock
Options
-
288
Net Cash Provided by Financing
Activities
179
1,539
Effect of Exchange Rate Changes on Cash
and Cash Equivalents
(67
)
(136
)
NET INCREASE/(DECREASE) IN CASH AND CASH
EQUIVALENTS
(2,280
)
1,316
Cash and Cash Equivalents, at Beginning of
Period
5,015
2,458
CASH AND CASH EQUIVALENTS, AT END OF
PERIOD
$
2,735
$
3,774
SUPPLEMENTAL INFORMATION:
Cash Paid During the Period for
Interest
$
143
$
128
Cash Paid During the Period for Income
Taxes
$
69
$
33
NET REVENUE AND GROSS PROFIT
BY SEGMENT
(In thousands,
Unaudited)
Three months ended September
30
Revenue
% of Revenue
Change
2019
2018
2019
2018
Amount
Pct.
Network Solutions
$
5,185
$
6,034
48.0
%
43.0
%
$
(849
)
-14.1
%
Test and Measurement
2,996
3,683
27.7
%
26.3
%
(687
)
-18.7
%
Embedded Solutions
2,631
4,302
24.3
%
30.7
%
(1,671
)
-38.8
%
Total Net Revenues
$
10,812
$
14,019
100.0
%
100.0
%
$
(3,207
)
-22.9
%
Three months ended September
30
Gross Profit
Gross Profit %
Change
2019
2018
2019
2018
Amount
Pct.
Network Solutions
$
2,104
$
2,640
40.6
%
43.8
%
$
(536
)
-20.3
%
Test and Measurement
1,497
1,850
50.0
%
50.2
%
(353
)
-19.1
%
Embedded Solutions
1,224
1,974
46.5
%
45.9
%
(750
)
-38.0
%
Total Gross Profit
$
4,825
$
6,464
44.6
%
46.1
%
$
(1,639
)
-25.4
%
Nine months ended September
30
Revenue
% of Revenue
Change
2019
2018
2019
2018
Amount
Pct.
Network Solutions
$
16,518
$
17,181
44.2
%
42.2
%
$
(663
)
-3.9
%
Test and Measurement
9,219
10,980
24.7
%
27.0
%
(1,761
)
-16.0
%
Embedded Solutions
11,616
12,536
31.1
%
30.8
%
(920
)
-7.3
%
Total Net Revenues
$
37,353
$
40,697
100.0
%
100.0
%
$
(3,344
)
-8.2
%
Nine months ended September
30
Gross Profit
Gross Profit %
Change
2019
2018
2019
2018
Amount
Pct.
Network Solutions
$
6,893
$
7,552
41.7
%
44.0
%
$
(659
)
-8.7
%
Test and Measurement
4,843
5,509
52.5
%
50.2
%
(666
)
-12.1
%
Embedded Solutions
4,949
5,842
42.6
%
46.6
%
(893
)
-15.3
%
Total Gross Profit
$
16,685
$
18,903
44.7
%
46.4
%
$
(2,218
)
-11.7
%
RECONCILIATION OF NET INCOME
TO NON-GAAP EBITDA AND NON-GAAP ADJUSTED EBITDA
(In thousands,
Unaudited)
Three Months Ended
Nine Months Ended
September 30
September 30
2019
2018
2019
2018
GAAP Net Income/(Loss), as
reported
$
(461
)
$
558
$
(649
)
$
752
Tax Provision/(Benefit)
(169
)
186
(256
)
347
Depreciation and Amortization Expense
474
537
1,671
1,773
Interest Expense
60
115
248
349
Non-GAAP EBITDA
(96
)
1,396
1,014
3,221
Stock Compensation Expense
160
157
560
505
ASC 606 Adjustment
-
158
-
345
Integration Expenses
-
-
-
60
Restructuring Costs
123
-
123
-
Inventory Recovery
(13
)
(9
)
(18
)
(23
)
FX (Gain)/Loss
(108
)
53
(257
)
57
US GAAP Purchase Accounting
-
-
-
64
Change in Fair Value of Contingent
Consideration
-
-
-
213
Non Recurring Arbitration Legal Costs
31
-
156
-
Non-GAAP Adjusted EBITDA
$
97
$
1,755
$
1,578
$
4,442
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191114005277/en/
Mike Kandell (973) 386-9696 Or John Nesbett or Jen Belodeau
(203) 972 9200
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