Highlights for the year ended December 31,
2018:
- Net revenues of $52,788,000
- A year over year increase of
$6,710,000, or 14.6%
- Gross Margin of $24,167,000, or
45.8%
- Net income of $35,000
- Non-GAAP Adjusted EBITDA of
$4,829,000
- Cash flow from Operations
$3,990,000
- 2018 Year-end customer order backlog
of $8,200,000
Highlights for the quarter ended December
31, 2018:
- Net revenues of $12,091,000
- A year over year increase of $55,000,
or 0.5%, over the same period 2017
- Gross Margin of $5,264,000, or
43.5%
- Net loss of $718,000
- Non-GAAP Adjusted EBITDA of
$386,000
- New Customer orders of
$14,281,000
Wireless Telecom Group, Inc. (NYSE American: WTT) (the
“Company”) announced today results for the fourth quarter and
twelve months ended December 31, 2018.
For the quarter ended December 31, 2018, the Company reported
consolidated net revenues of $12,091,000, compared to $12,036,000
for the same period in 2017, an increase of 0.5%. For the twelve
months ended December 31, 2018, the Company reported consolidated
net revenues of $52,788,000 compared to $46,078,000 for the same
period in 2017, an increase of 14.6%.
For the quarter ended December 31, 2018, net revenues in the
Network Solutions segment were $5,094,000, compared to $5,492,000
for the same period in 2017, a decrease of 7.2%. For the twelve
months ended December 31, 2018, net revenues in the Network
Solutions segment were $22,275,000 compared to $23,052,000 for the
same period in 2017, a decrease of 3.4%. The revenue decrease was
due primarily to lower prices driven by a highly competitive
pricing environment and softening demand in certain RF components,
only slightly offset by increased sales of active components and
customized integrated solutions.
For the quarter ended December 31, 2018, net revenues in the
Test & Measurement segment were $3,231,000, compared to
$3,126,000 for the same period in 2017, an increase of 3.4%. For
the twelve months ended December 31, 2018, net revenues in the Test
& Measurement segment were $14,212,000 compared to $13,380,000
for the same period in 2017, an increase of 6.2%. The increase over
2017 reflected increased sales of noise generation components and
modules to customers in the satellite industry and for use in
optical applications, offset by lower military and government
orders.
For the quarter ended December 31, 2018, net revenues in the
Embedded Solutions segment were $3,766,000, compared to $3,418,000
in the same period in 2017, an increase of 10.2%. For the twelve
months ended December 31, 2018, net revenues in the Embedded
Solutions segment were $16,301,000 compared to $9,646,000 for the
period of ownership from February 17, 2018 through December 31,
2018. The increase in revenue was primarily due to higher sales of
digital processing hardware used in wireless network test
equipment.
The Company also reported consolidated gross profit of
$5,264,000, or 43.5%, for the quarter ended December 31, 2018,
compared to $5,471,000, or 45.5%, for the same period in 2017.
Consolidated gross profit was $24,167,000, or 45.8%, for the year
ended December 31, 2018, compared to $19,261,000, or 41.8%, for the
same period in 2017. The year over year increase was driven
primarily by increased volumes at the Embedded Solutions segment.
The increase in 2018 also reflected the $1.9 million inventory
impairment charges recorded in 2017 related to the Network
Solutions segment and the Test and Measurement segment.
Gross profit in the Network Solutions segment was $9,756,000, or
43.8%, for the year ended December 31, 2018, compared to
$9,064,000, or 39.3%, for the same period in 2017. Gross profit in
the Test & Measurement segment was $7,018,000, or 49.4%, for
the year ended December 31, 2018, compared to $5,854,000, or 43.8%,
for the same period in 2017. Gross profit in the Embedded Solutions
segment was $7,393,000, or 45.4%, for the year ended December 31,
2018, compared to $4,343,000, or 45.0% for the period of ownership
from February 17, 2018 through December 31, 2018.
For the quarter ended December 31, 2018, the Company reported
consolidated operating expenses of $6,006,000, compared to
$5,178,000 for the same period in 2017, an increase of $828,000.
For the twelve months ended December 31, 2018, the Company reported
consolidated operating expenses of $23,388,000, compared to
$22,129,000 for the same period in 2017, an increase of $1,259,000.
Included in the 2018 consolidated operating expenses are losses on
changes in the fair value of CommAgility contingent consideration
of $365,000 for the quarter ending December 31, 2018 and $578,000
for the year ended December 31, 2018. The losses were the result of
increases to the contingent consideration liability as a result of
improved financial results at CommAgility for the year ended 2018
as compared to our original estimates. Additionally, the Company
recognized approximately $281,000 of interest expense in 2018
related to the contingent consideration liability.
The net loss for the quarter ended December 31, 2018 was
$718,000, compared to a net loss of $2,547,000 for the same period
in 2017. The net income for the year-ended December 31, 2018 was
$35,000 compared to a net loss of $4,493,000 for the year-ended
December 31, 2017.
Non-GAAP Adjusted EBITDA for the quarter ended December 31, 2018
was $386,000, compared to $830,000 of non-GAAP Adjusted EBITDA for
the same period in 2017. Non-GAAP Adjusted EBITDA for the year
ended December 31, 2018 was $4,829,000, compared to $3,645,000 of
non-GAAP Adjusted EBITDA for the same period in 2017. An
explanation of our non-GAAP measures and a reconciliation of net
income to non-GAAP Adjusted EBITDA are included as an attachment to
this press release.
The increase in non-GAAP Adjusted EBITDA of $1,184,000, or
32.5%, from 2017 is primarily attributable to the $6,710,000
increase in consolidated revenues and $4,906,000 increase in
consolidated gross profit.
The Company’s consolidated backlog of firm orders to be shipped
in the next twelve months was approximately $8,200,000 at December
31, 2018, a decrease of $1,700,000, or 17.2% compared to December
31, 2017. Backlog increased $2,100,000 or 34.0% from the third
quarter ended September 30, 2018 on strong customer order flow of
$14,281,000 in the fourth quarter ended December 31, 2018. This
compares to order flow of $11,940,000 in the fourth quarter of
2017.
Tim Whelan, CEO of Wireless Telecom Group, Inc., commented, “We
are pleased with our 2018 accomplishments which included
consolidated revenue increases of 14.6% and revenue growth in 2 of
our 3 segments, solid gross margins at 45.8%, improved operating
income, and increasing Adjusted EBITDA profitability of $4,829,000.
We improved our cash flow from operating activities to $3,990,000
leaving us with $5,015,000 of cash on our balance sheet at
year-end. We also realized a strong quarter of bookings in Q4
totaling $14,281,000 which increased our backlog from September 30,
2018 by over $2,000,000. We have now realized two consecutive years
of improved revenue growth, profitability, and cash flow which are
attributable to the execution of our strategy, our investments in
our product portfolio, enhancements in our go-to-market approach to
improve how we serve our customers, and our lean operating
initiatives creating operational leverage. We have made
considerable progress on our long-term plans investing in our
vision of enabling the development, testing and deployment of
wireless technology.”
Mr. Whelan continued, “With regard to our future, we remain
committed to a growth strategy which includes both organic growth
and acquisition opportunities which align to our vision and are
accretive to our organic growth. We remain focused on investing in
research and development on innovative solutions to address the
growth trends in wireless technology and adding value to our
customers across telecommunications, public safety, satellite
communications, medical device manufacturing, defense contractors,
military and government. We will continue to manage the business
over the long term focused equally on revenue growth, improved
profitability and cash flow. We believe we will benefit from the
expected continuing trends in carrier densification initiatives and
5G deployments, increasing demands for test & measurement
solutions and the requirements of private LTE buildouts.”
The Company expects revenues for its first quarter ending March
31, 2019 to be comparable to the same quarter as last year and
expects its gross margins for the March 31, 2019 quarter to be
slightly below the same quarter last year due to expected revenue
mix. The Company expects full year 2019 revenues to grow
organically in the low to mid-single digit percentages and expects
full year 2019 gross margins to be consistent with 2018 at
approximately 46%. The Company expects to drive operational
leverage and grow profitability and cash flow at rates higher than
expected revenue growth.
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 expectations for revenue and gross margins for the
quarter ending March 31, 2019 and the year ending December 31,
2019, expectations for improved profitability and cash flow, and
expectations relating to long-term growth and resulting improvement
in profitability and cash flow. 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
Company’s ability to continue the successful integration of the
acquired business, product demand and development of competitive
technologies in the Company’s market sector, the retention of key
customers, fluctuations between the dollar and British pound,
compliance with changing laws and regulations, 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.
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 fourth quarter and year end 2018 results and related
matters. To participate in the conference call, dial 800-346-7359
or 973-528-0008. The conference identification number is 471526.
The call will also be webcast over the internet at the following
URL:
https://www.webcaster4.com/Webcast/Page/1690/29486
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, 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 certain
non‐cash and non-recurring 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.
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.wirelesstelecomgroup.com
Wireless Telecom Group, Inc.
CONSOLIDATED STATEMENT OF OPERATIONS
AND COMPREHENSIVE INCOME/(LOSS)
(In thousands, except per share
amounts)
Three Months Ended Twelve Months
Ended December 31 December 31 (Unaudited)
2018
2017
2018
2017
NET REVENUES $ 12,091 $ 12,036 $ 52,788 $ 46,078 COST
OF REVENUES 6,827 6,565
28,621 26,817
GROSS
PROFIT 5,264 5,471 24,167 19,261 Operating Expenses
Research and Development 1,249 1,127 4,909 4,395 Sales and
Marketing 1,956 1,799 7,595 6,960 General and Administrative 2,435
2,505 10,306 11,027 (Gain)/Loss on Change in Fair Valueof
Contingent Consideration 365 (253 )
578 (253 ) Total Operating Expenses
6,005 5,178 23,388 22,129 Operating Income/(Loss) (742 ) 293
779 (2,868 ) Other Income/(Expense) (48 ) (32 ) (121 ) (82 )
Interest Expense (226 ) (67 ) (575 )
(296 )
Income/(Loss) before taxes
(1,015 ) 194 83 (3,246 ) Tax Provision/(Benefit) (297 )
2,741 48 1,247
Net
Income/(Loss) $ (718 ) $ (2,547 ) $ 35 $
(4,493 ) Other Comprehensive Loss: Foreign Currency
Translation Adjustments 710 (120 )
(892 ) 1,004
Comprehensive
Income/(Loss) $ (8 ) $ (2,666 ) $ (857 ) $ (3,489
) Earnings/(Loss) Per Share: Basic $ (0.03 ) $ (0.12
) $ 0.00 $ (0.22 ) Diluted $ (0.03 ) $ (0.12 ) $ 0.00 $ (0.22 )
Weighted Average Shares Outstanding: Basic 20,973 20,887
20,858 19,984 Diluted 20,973 20,887 21,566 19,984
CONSOLIDATED BALANCE SHEET
(In thousands, except number of shares
and par value)
December 31 December 31 2018
2017 CURRENT ASSETS Cash & Cash Equivalents $
5,015 $ 2,458 Accounts Receivable - net of reserves of $44 and $44,
respectively 8,638 9,041 Inventories - net of reserves of $1,910
and $1,856, respectively 6,884 6,526 Prepaid Expenses and Other
Current Assets 1,689 4,733
TOTAL CURRENT ASSETS 22,226 22,758
PROPERTY PLANT
AND EQUIPMENT - NET 2,578 2,730
OTHER ASSETS
Goodwill 9,778 10,260 Acquired Intangible Assets, net 3,206 4,511
Deferred Income Taxes 5,592 5,939 Other 787
723
TOTAL OTHER ASSETS 19,363 21,433
TOTAL ASSETS $ 44,167
$ 46,921 CURRENT
LIABILITIES Short Term Debt $ 2,016 $ 1,335 Accounts Payable
3,252 4,109 Accrued Expenses and Other Current Liabilities 6,085
2,894 Deferred Revenue 103 629
TOTAL CURRENT LIABILITIES 11,454 8,967
LONG TERM
LIABILITIES Long Term Debt - 494 Other Long Term Liabilities
115 1,590 Deferred Tax Liability 616
767
TOTAL LONG TERM LIABILITIES 731 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, 34,393,252 and 33,868,252 shares
issued, 21,205,251 and 22,772,167 shares outstanding 344 339
Additional Paid in Capital 48,479 47,494 Retained Earnings 7,556
7,176 Treasury Stock at Cost, 13,188,601 and 11,096,085 shares,
respectively (24,509 ) (20,910 ) Accumulated Other Comprehensive
Income 112 1,004
TOTAL
SHAREHOLDERS' EQUITY 31,982 35,103
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $
44,167 $ 46,921
CONSOLIDATED STATEMENT OF CASH
FLOWS
(In thousands)
For the Twelve Months Ended December 31
2018
2017
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES Net
Income/(Loss) $ 35 $ (4,493 ) Adjustments to reconcile net
income/(loss) to net cash provided by operating activities:
Depreciation and Amortization 2,305 1,747 Amortization of Debt
Issuance Fees 78 68 Share-based Compensation Expense 702 536
Deferred Rent 11 23 Deferred Income Taxes 233 1,395 Provision for
Doubtful Accounts - 33 Inventory Reserves 359 1,357 Changes in
Assets and Liabilities, Net of Acquisition: Accounts Receivable 231
(1,456 ) Inventories (751 ) 1,713 Prepaid Expenses and Other Assets
(850 ) (119 ) Accounts Payable (735 ) (210 ) Accrued Expenses and
Other Liabilities 2,372 809
Net Cash Provided by Operating Activities
3,990 1,403
CASH FLOWS USED BY INVESTING ACTIVITIES Capital Expenditures
(853 ) (927 ) Proceeds from Asset Disposal - 7 Acquisition of
Business, Net of Cash Acquired (805 ) (9,434 )
Net Cash Used by Investing Activities (1,658
) (10,354 )
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES Revolver
Borrowings 37,695 58,420 Revolver Repayments (37,355 ) (57,237 )
Term Loan Borrowings - 760 Term Loan Repayments (152 ) (114 ) Debt
Issuance Fees - (215 ) Proceeds from Exercise of Stock Options 288
437 Shares Withheld for Employee Taxes -
(87 )
Net Cash Provided by Financing Activities
476 1,964 Effect
of Exchange Rate Changes on Cash and Cash Equivalents (251 ) 94
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS
2,557 (6,893 ) Cash and Cash
Equivalents, at Beginning of Period 2,458 9,351
CASH AND CASH
EQUIVALENTS, AT END OF PERIOD $ 5,015
$ 2,458 SUPPLEMENTAL
INFORMATION: Cash Paid During the Period for Interest $ 176 $ 125
Cash Paid During the Period for Income Taxes $ 41 $ 68
NET REVENUE AND GROSS PROFIT BY
SEGMENT
(In thousands)
Three months ended December 31 Revenue
% of Revenue Change 2018 2017
2018 2017 Amount Pct. Network Solutions
$ 5,094 $ 5,492 42.1 % 45.6 %
$ (398 ) -7.2 % Test and Measurement 3,231 3,126 26.7
% 26.0 % 105 3.4 % Embedded Solutions 3,766
3,418 31.1 % 28.4 % 348
10.2 % Total Net Revenues $ 12,091 $ 12,036
100.0 % 100.0 % $ 55
0.5 %
Three months ended December 31
Gross Profit Gross Profit % Change 2018
2017 2018 2017 Amount
Pct. Network Solutions $ 2,204 $ 2,440 43.3 % 44.4 % $ (236
) -9.7 % Test and Measurement 1,509 1,522 46.7 % 48.7 % (13 ) -0.9
% Embedded Solutions 1,551 1,509
41.2 % 44.1 % 42 2.8 %
Total Gross Profit $ 5,264 $ 5,471 43.5 %
45.5 % $ (207 ) -3.8 %
Twelve months ended December 31 Revenue
% of Revenue Change 2018 2017
2018 2017 Amount Pct. Network Solutions
$ 22,275 $ 23,052 42.2 % 50.0 % $ (777 ) -3.4 % Test and
Measurement 14,212 13,380 26.9 % 29.0 % 832 6.2 % Embedded
Solutions 16,301 9,646 30.9 %
21.0 % 6,655 69.0 % Total
Net Revenues $ 52,788 $ 46,078 100.0 %
100.0 % $ 6,710 14.6 %
Twelve months ended December 31 Gross Profit
Gross Profit % Change 2018 2017
2018 2017 Amount Pct. Network Solutions
$ 9,756 $ 9,064 43.8 % 39.3 % $ 692 7.6 % Test and Measurement
7,018 5,854 49.4 % 43.8 % 1,164 19.9 % Embedded Solutions
7,393 4,343 45.4 % 45.0 %
3,050 70.2 % Total Gross Profit $
24,167 $ 19,261 45.8 % 41.8 %
$ 4,906 25.5 %
RECONCILIATION OF NET INCOME TO
NON-GAAP EBITDA AND NON-GAAP ADJUSTED EBITDA
(In thousands, unaudited)
Three Months Ended Twelve Months
Ended December 31 December 31
2018
2017
2018
2017
GAAP Net Income/(Loss), as reported $ (718
) $ (2,547 ) $ 35
$ (4,493 ) Tax Provision/(Benefit) (297 )
2,741 48 1,247 Depreciation and Amortization Expense 531 401 2,305
1,747 Interest Expense 226 67
575 296
Non-GAAP EBITDA
(258 ) 662 2,963 (1,203 )
Stock Compensation Expense 197 28 702 536 ASC 606 Adjustment - -
345 - Merger and Acquisition Expenses - - - 1,290 Integration
Expenses - 63 60 386 Inventory Impairment - - - 1,930 Inventory
Recovery (5 ) (10 ) (28 ) (25 ) FX Loss 47 32 104 32 US GAAP
Purchase Accounting 40 - 105 71 Change in Fair Value of Contingent
Consideration 365 (253 ) 578 (253 ) Restructuring Charges and Other
Non-Recurring Costs - 308
- 881
Non-GAAP Adjusted EBITDA
$ 386 $ 830
$ 4,829 $ 3,645
RECONCILIATION OF OPEX TO NON-GAAP
OPEX
(In thousands, unaudited)
Three Months Ended Twelve Months Ended
December 31 December 31
2018
2017
2018
2017
GAAP Opex $ 6,005 $ 5,178
$ 23,388 $ 22,129 M&A/Integration -
(63 ) (60 ) (1,675 ) Restructuring - (308 ) - (881 ) Stock Comp
(197 ) (28 ) (702 ) (536 ) Depreciation and Amort. (ex. COGS) (455
) (438 ) (1,783 ) (1,526 ) Contingent Consideration (365 ) 221 (578
) 221 Tax Bonus/Purchase Accounting (40 ) -
(105 ) -
Non GAAP Opex
$ 4,948 $ 4,562
$ 20,160 $ 17,732
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Mike Kandell(973) 386-9696orJohn Nesbett or Jen Belodeau(203)
972 9200
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