Wireless Telecom Group, Inc. (NYSE American: WTT) (the “Company”) today announced results for the three months ended September 30, 2021.

Tim Whelan, CEO of Wireless Telecom Group, Inc. stated, “The sequential improvements in quarterly revenue we have experienced throughout 2021 is encouraging. We ended the 2021 third quarter with the highest quarter of revenues since 2019, which reflects the continued success of our acquisitions, investments in organic growth initiatives, and improved market conditions. Long-term investments in 5G solutions, satellite applications, semiconductor test investments, and carrier network densification continue to drive demand for our products. In addition, we experienced strong orders across all our product groups and signed another 5G software contract in the quarter for 5G small cell deployment.”

Mr. Whelan continued, “During the quarter, we also demonstrated our ability to generate improving profitability and cash flow and we prepaid almost half of our outstanding term debt. This is expected to decrease interest expense and improve overall cash flow and profitability going forward.”

“Despite industry-wide supply chain challenges, we expect to achieve another quarter of sequential revenue growth in the fourth quarter. We anticipate incremental investment in the fourth quarter as we continue to expand our team to support our growing backlog and long-term growth opportunities, specifically in our RBS product group for 5G small cell and private network opportunities. As our business recovers, I want to thank our global team members for their hard work and commitment,” concluded Mr. Whelan.

Third Quarter 2021 Operating Results:

  Net revenues of $12.8 million, an increase of $2.0 million, or 18.0% over the prior year period primarily due to increased sales at our RF Components (“RFC”) product group due to increased carrier spending and increased sales at our Radio, Baseband and Software (“RBS”) product group due to higher sales of our digital signal processing cards.
  Gross profit of $6.5 million, an increase of $886,000, or 15.7% over the prior year period primarily due to higher sales at RFC. Gross profit margin declined marginally from 52% to 51% due to mix primarily at RBS.
  Backlog of $12.7 million, an increase of $267,000 from June 30, 2021.
  As a percent of revenue, total operating expenses were 55.3%, compared to 55.2% for the same period last year. Operating expenses were $7.1 million, an increase of $1.1 million, or 18.1% from the prior year period primarily due to the recognition of a loss on the change in the fair value of contingent consideration related to the year two Holzworth earn out.
  GAAP net loss of $187,000 compared to a net loss of $775,000 in the prior year period primarily due to the loss on change in fair value of contingent consideration in the current year offset by improved gross profit and the recognition of a tax benefit in the current year.
  Non-GAAP adjusted EBITDA of $1.1 million compared to $722,000 in the prior year primarily due to higher revenues and gross profit. 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 income is provided later in this press release.

Cash Flow and Balance Sheet:

  Cash provided by operations of $535,000 compared to cash used by operations of $852,000 in the prior year period, due primarily to an increase in operating income and lower cash used for working capital as compared to the prior year.
  Net debt of $3.2 million as of September 30, 2021, compared to $5.4 million as of December 31, 2020.
  Outstanding borrowings under the asset-based revolver of $45,000 and availability of $5.1 million after giving effect to borrowing base calculations as of September 30, 2021.

Conference Call

Wireless Telecom Group Inc. will host a conference call on November 11, 2021, at 8:30 a.m. EDT in which management will discuss third quarter 2021 results and related matters. To participate in the conference call, dial 800-346-7359 or 973-528-0008. The conference identification number is 903292. The call will also be webcast over the internet at the following URL:

https://www.webcaster4.com/Webcast/Page/1690/43473

A replay will be made available on the Wireless Telecom website following the conference call.

Contacts:

Mike Kandell 973-386-9696

SM Berger and Company 216-464-6400

Use of Non-GAAP Financial Measures and Key Performance Indicators

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, unrealized and realized foreign exchange gains and losses, purchase accounting adjustments, non-recurring legal fees associated with the Harris arbitration, goodwill impairment charges, loss on change in fair value of contingent consideration 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 defines adjusted EBITDA margin as adjusted EBITDA divided by revenue. The Company does not provide a forward-looking reconciliation of expected adjusted EBITDA margin because the amount and significance of special items required to develop meaningful comparable GAAP financial measures cannot be estimated at this time without unreasonable efforts. These special items could be meaningful.

Book-to-bill ratio is the ratio of orders received to units shipped and billed for a specified period. The Company excludes billable freight from the calculation of units shipped in determining the book-to-bill ratio.

GAAP operating expenses (“GAAP opex”) includes research and development expenses, sales and marketing expenses, general and administrative expenses, non-cash goodwill impairment charges and loss on change in fair value of contingent consideration. The Company defines non-GAAP operating expenses (“Non-GAAP opex”) as GAAP opex excluding stock compensation expense, restructuring charges, acquisition expenses, integration expenses, depreciation and amortization expense, non-recurring legal fees associated with the Harris arbitration, non-cash goodwill impairment charges, loss on change in fair value of contingent consideration and other non-recurring costs and expenses.

The Company views adjusted EBITDA, adjusted EBITDA margin and non-GAAP opex as important indicators 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 and non GAAP opex 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.

The Company believes the book-to-bill ratio is a key performance indicator used in measuring supply and demand in the industries in which we operate as well as measuring how quickly the Company fulfills the demand for its products.

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, our expectation to decrease interest expense and improve overall cash flow and profitability going forward and that our fourth quarter will include another quarter of sequential growth along with cost increases related to continued investments in our people and expansion for growth in our backlog. 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 but not limited to, the impact that the evolving COVID-19 pandemic may have on our business, our supply chain, freight costs and the economy in the future, our ability to hire and retain key personnel with appropriate technical abilities, our dependency on capital spending on data and communication networks by our customers and end users, our dependency on the deployment of 4G LTE and 5G NR private networks and related services to grow our business, the impact of the loss of any significant customers, the ability of our management to successfully implement our business plan and strategy, our ability to raise additional capital to fund our operations given our degree of leverage, product demand and development of competitive technologies in our market sector, the impact of competitive products and pricing, our abilities to protect our intellectual property rights, our ability to manage risks related to our information technology and cyber security, among others. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. These risks and uncertainties are disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020, as supplemented and revised by the risks and uncertainties set forth in the Company’s subsequent reports filed with the SEC. The Company’s forward-looking statements speak only as of the date of this release. The Company undertakes no obligation to publicly update or review any forward-looking statements whether as a result of new information, future developments or otherwise, as except as required by law.

About Wireless Telecom Group, Inc.

Wireless Telecom Group, Inc., comprised of Boonton, CommAgility, Holzworth, 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 generators, phase noise analyzers, signal processing modules, LTE PHY/stack software, power splitters and combiners, GPS repeaters, public safety components, noise sources, and programmable noise generators, Wireless Telecom Group enables 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.25 Eastmans RoadParsippany, NJ 07054Tel: (973) 386-9696Fax: (973) 402-4042

Wireless Telecom Group INC.

CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME/(LOSS)(UNAUDITED)(In thousands, except per share amounts)

    For the Three Months Ended     For the Nine Months Ended  
    September 30     September 30  
    2021     2020     2021     2020  
Net revenues   $ 12,824     $ 10,868     $ 36,168     $ 31,404  
                                 
Cost of revenues     6,284       5,214       17,549       15,655  
                                 
Gross profit     6,540       5,654       18,619       15,749  
                                 
Operating expenses                                
Research and development     1,435       1,826       4,281       5,080  
Sales and marketing     1,854       1,732       5,266       5,111  
General and administrative     2,800       2,444       8,469       7,322  
Loss on change in contingent consideration     1,000       -       1,000       -  
Total operating expenses     7,089       6,002       19,016       17,513  
                                 
Operating income/(loss)     (549 )     (348 )     (397 )     (1,764 )
                                 
Extinguishment of PPP Loan     -       -       2,045       -  
Other income/(expense)     20       (43 )     29       252  
Interest expense     (365 )     (256 )     (947 )     (727 )
                                 
Income/(Loss) before taxes     (894 )     (647 )     730       (2,239 )
                                 
Tax provision/(benefit)     (707 )     128       (386 )     352  
                                 
Net income/(loss)   $ (187 )   $ (775 )   $ 1,116     $ (2,591 )
                                 
Other comprehensive income/(loss):                                
Foreign currency translation adjustments     (152 )     565       (64 )     (406 )
Comprehensive Income/(Loss)   $ (339 )   $ (210 )   $ 1,052     $ (2,997 )
                                 
Loss per share:                                
Basic   $ (0.01 )   $ (0.04 )   $ 0.05     $ (0.12 )
Diluted   $ (0.01 )   $ (0.04 )   $ 0.05     $ (0.12 )
                                 
Weighted average shares outstanding:                                
Basic     22,234       21,703       21,900       21,643  
Diluted     22,234       21,703       24,219       21,643  

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

    (unaudited)        
    September 302021     December 312020  
CURRENT ASSETS                
Cash & cash equivalents   $ 1,283     $ 4,910  
Accounts receivable - net of reserves of $216 and $143, respectively     7,420       5,520  
Inventories - net of reserves of $1,241 and $1,129, respectively     9,655       8,796  
Prepaid expenses and other current assets     2,058       2,172  
                 
TOTAL CURRENT ASSETS     20,416       21,398  
                 
PROPERTY PLANT AND EQUIPMENT - NET     1,629       1,824  
                 
OTHER ASSETS                
Goodwill     11,461       11,512  
Acquired intangible assets, net     4,249       5,242  
Deferred income taxes, net     6,162       5,701  
Right of use assets     1,282       1,680  
Other     548       561  
                 
TOTAL OTHER ASSETS     23,702       24,696  
                 
TOTAL ASSETS   $ 45,747     $ 47,918  
                 
CURRENT LIABILITIES                
Short term debt   $ 150     $ 512  
Accounts payable     2,205       1,546  
Short term leases     572       534  
Accrued expenses and other current liabilities     7,656       7,997  
Deferred revenue     691       924  
                 
TOTAL CURRENT LIABILITIES     11,274       11,513  
                 
LONG TERM LIABILITIES                
Long term debt     3,578       8,895  
Long term leases     766       1,200  
Other long term liabilities     1,678       82  
Deferred tax liability     444       377  
TOTAL LONG TERM LIABILITIES     6,466       10,554  
                 
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 authorized35,550,342 and 34,888,904 shares issued, 22,310,889 and 21,669,361 shares outstanding     355       349  
Additional paid in capital     51,305       50,163  
Retained earnings/(deficit)     171       (946 )
Treasury stock at cost, 13,239,453 and 13,219,543 shares     (24,600 )     (24,556 )
Accumulated other comprehensive income     776       841  
TOTAL SHAREHOLDERS’ EQUITY     28,007       25,851  
                 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY   $ 45,747     $ 47,918  

CONSOLIDATED STATEMENTS OF CASH FLOWS(UNAUDITED)(In thousands)

    For the Nine Months  
    Ended September 30,  
    2021     2020  
CASH FLOWS PROVIDED/(USED) BY OPERATING ACTIVITIES                
Net income/(loss)   $ 1,116     $ (2,591 )
Adjustments to reconcile net income/(loss) to net cash provided by operating activities:                
Depreciation and amortization     1,604       1,631  
Extinguishment of PPP Loan     (2,045 )     -  
Amortization of debt issuance fees     217       215  
Share-based compensation expense     301       360  
Deferred rent     (22 )     (22 )
Deferred income taxes     (387 )     1,057  
Provision for doubtful accounts     72       (28 )
Inventory reserves     115       119  
Changes in assets and liabilities, net of acquisition:                
Accounts receivable     (1,998 )     (1,343 )
Inventories     (993 )     (461 )
Prepaid expenses and other assets     459       (226 )
Accounts payable     728       (451 )
Accrued expenses and other liabilities     1,368       888  
Net cash provided/(used) by operating activities     535       (852 )
                 
CASH FLOWS PROVIDED/(USED) BY INVESTING ACTIVITIES                
Capital expenditures     (417 )     (228 )
Acquisition of business, net of cash acquired     (200 )     (7,189 )
Net cash provided/(used) by investing activities     (617 )     (7,417 )
                 
CASH FLOWS PROVIDED/(USED) BY FINANCING ACTIVITIES                
Revolver borrowings     50,220       27,432  
Revolver repayments     (50,175 )     (29,786 )
Term loan borrowings     345       8,400  
Term loan repayments     (4,191 )     (405 )
Debt issuance fees     -       (1,305 )
Paycheck Protection Program loan     -       2,045  
Payment of contingent consideration     (460 )     -  
Proceeds from exercise of stock options     209       15  
Tax withholding payments for vested equity awards     (44 )     (31 )
ATM Shares Sold     565       -  
Net cash provided/(used) by financing activities     (3,531 )     6,365  
                 
Effect of exchange rate changes on cash and cash equivalents     (14 )     (138 )
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS     (3,627 )     (2,042 )
                 
Cash and cash equivalents, at beginning of period     4,910       4,245  
                 
CASH AND CASH EQUIVALENTS, AT END OF PERIOD   $ 1,283     $ 2,203  
                 
SUPPLEMENTAL INFORMATION:                
Cash paid during the period for interest   $ 698     $ 527  
Cash paid during the period for income taxes   $ 150     $ 53  

NET REVENUE AND GROSS PROFIT BY PRODUCT GROUP(In thousands, unaudited)

    Three months ended September 30  
    Revenue     % of Revenue     Change  
    2021     2020     2021     2020     Amount     Pct.  
RF components   $ 5,448     $ 4,418       42.5 %     40.7 %   $ 1,030       23.3 %
Test and measurement     5,931       5,797       46.2 %     53.3 %     134       2.3 %
Radio, baseband, software     1,445       653       11.3 %     6.0 %     792       121.3 %
Total net revenues   $ 12,824     $ 10,868       100.0 %     100.0 %   $ 1,956       18.0 %
    Three months ended September 30  
    Gross Profit     Gross Profit %     Change  
    2021     2020     2021     2020     Amount     Pct.  
RF components   $ 2,497     $ 1,927       45.8 %     43.6 %   $ 570       29.6 %
Test and measurement     3,367       3,182       56.8 %     54.9 %     185       5.8 %
Radio, baseband, software     676       545       46.8 %     83.5 %     131       24.0 %
Total gross profit   $ 6,540     $ 5,654       51.0 %     52.0 %   $ 886       15.7 %
    Nine months ended September 30  
    Revenue     % of Revenue     Change  
    2021     2020     2021     2020     Amount     Pct.  
RF components   $ 12,820     $ 14,555       35.4 %     46.4 %   $ (1,735 )     -11.9 %
Test and measurement     16,779       14,013       46.4 %     44.6 %     2,766       19.7 %
Radio, baseband, software     6,569       2,836       18.2 %     9.0 %     3,733       131.6 %
Total net revenues   $ 36,168     $ 31,404       100.0 %     100.0 %   $ 4,764       15.2 %
    Nine months ended September 30  
    Gross Profit     Gross Profit %     Change  
    2021     2020     2021     2020     Amount     Pct.  
RF components   $ 5,345     $ 6,576       41.7 %     45.2 %   $ (1,231 )     -18.7 %
Test and measurement     9,690       7,451       57.8 %     53.2 %     2,239       30.0 %
Radio, baseband, software     3,584       1,722       54.6 %     60.7 %     1,862       108.1 %
Total gross profit   $ 18,619     $ 15,749       51.5 %     50.1 %   $ 2,870       18.2 %

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  
    2021     2020     2021     2020  
GAAP net income/(loss), as reported   $ (187 )   $ (775 )   $ 1,116     $ (2,591 )
Tax provision/(benefit)     (707 )     128       (386 )     352  
Depreciation and amortization expense     539       579       1,604       1,631  
Interest expense     365       256       947       727  
Non-GAAP EBITDA     10       188       3,281       119  
Stock compensation     98       151       301       360  
Merger and acquisition/integration     43       15       114       243  
Restructuring costs     -       46       36       119  
Inventory impairment recovery     -       (14 )     -       (29 )
US GAAP purchase accounting     -       258       -       548  
Change in fair value of contingent consideration     1,000       -       1,000       -  
FX (gain)/loss     (14 )     95       (19 )     (140 )
PPP Loan forgiveness     -       -       (2,045 )     -  
Non recurring arbitration legal costs     -       (17 )     4       (14 )
Non-GAAP Adjusted EBITDA   $ 1,137     $ 722     $ 2,672     $ 1,206  

RECONCILIATION OF OPEX TO NON-GAAP OPEX(In thousands, unaudited)

    Three Months Ended     Nine Months Ended  
    September 30     September 30  
    2021     2020     2021     2020  
GAAP Opex   $ 7,089     $ 6,002     $ 19,016     $ 17,513  
Stock compensation     (98 )     (151 )     (301 )     (360 )
Merger and acquisition/integration     (43 )     (15 )     (114 )     (243 )
Restructuring costs     -       (46 )     (36 )     (119 )
US GAAP purchase accounting     -       -       -       (100 )
Depreciation & amortization (ex. COGS)     (456 )     (478 )     (1,354 )     (1,356 )
Change in fair value of contingent consideration     (1,000 )     -       (1,000 )     -  
Non recurring arbitration legal costs     -       17       (4 )     14  
Non GAAP Opex   $ 5,492     $ 5,329     $ 16,207     $ 15,349  
Wireless Telecom (AMEX:WTT)
Historical Stock Chart
From Dec 2021 to Jan 2022 Click Here for more Wireless Telecom Charts.
Wireless Telecom (AMEX:WTT)
Historical Stock Chart
From Jan 2021 to Jan 2022 Click Here for more Wireless Telecom Charts.