Wireless Telecom Group, Inc. (NYSE American: WTT) (the “Company”) announced today results for the three months ended June 30, 2022.

Tim Whelan, CEO of Wireless Telecom Group, Inc. stated, “Second quarter revenues and bookings were impacted by lower sales of digital signal processing cards as well as by supply chain shortages and delayed deliveries, a softening of demand as customers were delaying orders or reducing quantities purchased, and by the lockdown in China resulting from the continued Covid-19 pandemic. There were also certain timing issues, as evidenced by the strength of approximately $3 million in bookings and contract wins that were anticipated to close in June that occurred in July. This includes the $1.5 million multiparty contract with ADVA, which was announced in the fourth quarter last year. We are thrilled to be part of this project researching specialized small cells.”

Mr. Whelan continued, “We believe the pressures that impacted our second quarter results will ease in the second half of this year. We expect that our order flow will significantly improve in the third quarter which will lead to a reacceleration of year-over-year growth for the remainder of the year. Our current bookings and contract expectations for the third quarter are approximately $8 million to $10 million providing a basis for reaccelerating revenue growth in the 2022 second half. If the timing of supply chain delivery improves, we have additional revenue opportunities in the next two quarters, which further increases our basis for growth this year. Additionally, as announced at the annual shareholders meeting on July 29, 2022 we are undergoing a comprehensive strategic review process with CDX Advisors, a tech-enabled investment bank. We have various scenarios under evaluation including the sale of the entire Company or the sale of one or both segments separately. Our goal is to unlock and maximize shareholder value.”

Second Quarter 2022 Operating Results:

Consolidated net revenues decreased 22% from the prior year due to lower hardware and software sales at RBS.
Gross profit margin of 56% which is consistent with the prior year period. Lower RBS gross profit margin was due primarily to lower software license sales in the quarter, which was offset by continued strong gross profit margins at T&M.
Operating expenses were lower by 1.6% as higher stock compensation expense and non-recuring expenses associated with our strategic initiatives were offset by lower research and development expenses, intangible asset amortization expense and headcount related expenses.
GAAP net loss from continuing operations of $(1.4) million compared to net income of $1.1 million in the prior year. The higher net loss was due primarily to lower gross profit in the current year and the gain on forgiveness of the PPP loan in the prior year period.
Non-GAAP adjusted net loss from continuing operations of $(887,000) compared to adjusted net income of $459,000 in the prior year period. Non-GAAP adjusted net loss from continuing operations is a metric the Company uses to measure its core operations. A reconciliation of net loss from continuing operations to Non-GAAP adjusted net loss from continuing operations is provided later in this press release.
Non-GAAP Adjusted EBITDA was a loss of $(778,000) compared to $(161,000) 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 income is provided later in this press release.

Cash Flow and Balance Sheet

Consolidated cash balance of $13.3 million as of June 30, 2022
1.7 million common shares repurchased in the second quarter for $2.5 million

Conference Call

As previously announced, Wireless Telecom Group Inc. will host a conference call on August 9, 2022, at 8:30 a.m. ET in which management will discuss second quarter results and related matters. To participate in the conference call, dial 800-346-7359 or 973-528-0008. The conference identification number is 455180.

The call will also be webcast over the internet at the following URL:https://www.webcaster4.com/Webcast/Page/1690/46304

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

Investor Contact

Andrew M. BergerManaging DirectorSM Berger & CompanyTel: (216) 464-6400andrew@smberger.com

Contact

Michael Kandell25 Eastmans RoadParsippany, NJ 07054Tel: (973) 386-9696Fax: (973) 386-9191www.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 acquisition and divestiture activities, expenses associated with our strategic initiatives and non-cash stock compensation expense.

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 acquisition and divestiture activities, expenses associated with our strategic initiatives, non-cash stock compensation expense and the loss on extinguishment of our Muzinich and Bank of America N.A. credit facilities.

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 and divestitures expenses, expenses associated with our strategic initiatives, integration expenses, unrealized and realized foreign exchange gains and losses, purchase accounting adjustments, non-recurring legal fees associated with the Harris arbitration, goodwill and indefinite lived intangible asset impairment charges, (gain)/loss on change in fair value of contingent consideration, gain on extinguishment of our PPP loan, loss on extinguishment of our Muzinich and Bank of America N.A. credit facilities 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 these 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, our expectation that pressures impacting our second quarter will ease in the second half of the year, our expectation that our order flow will significantly improve in the third quarter which will lead to growth in the second half of the year, our current bookings expectations of approximately $8 to $10 million for the third quarter of 2022 which will provide a basis for revenue ramp in the second half of 2022 and our expectation that if the timing of supply chain delivery improves, we have additional opportunity for increasing revenues in the next two quarters which we expect will provide the basis for growth for the full year. 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 that the evolving COVID-19 pandemic has had and may continue to have on our supply chain, human capital and the general economy in the future; the impact inflation has had and may continue to have on our business and the economy in general, 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 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, 2021. 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, CommAgility, 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, signal processing modules, LTE PHY/stack software, 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 STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME/(LOSS)(UNAUDITED)(In thousands, except per share amounts)

    For the Three Months Ended     For the Six Months Ended  
    June 30     June 30  
    2022     2021     2022     2021  
Net revenues   $ 6,068     $ 7,788     $ 13,664     $ 15,972  
                                 
Cost of revenues     2,653       3,410       5,894       6,740  
                                 
Gross profit     3,415       4,378       7,770       9,232  
                                 
Operating expenses                                
Research and development     1,126       1,244       2,285       2,400  
Sales and marketing     1,261       1,144       2,520       2,339  
General and administrative     2,706       2,787       6,098       5,638  
Total operating expenses     5,093       5,175       10,903       10,377  
                                 
Operating loss     (1,678 )     (797 )     (3,133 )     (1,145 )
                                 
Gain/(loss) on extinguishment of debt     -       2,045       (792 )     2,045  
Other income/(expense)     32       (17 )     133       10  
Interest expense     -       (285 )     (177 )     (582 )
                                 
Income/(loss) before taxes     (1,646 )     946       (3,969 )     328  
Tax benefit     (286 )     (179 )     (1,136 )     (323 )
Net income/(loss) from continuing operations   $ (1,360 )   $ 1,125     $ (2,833 )   $ 651  
                                 
Net income from discontinued operations, net of taxes     -       412       11,670       652  
Net income/(loss)   $ (1,360 )   $ 1,537     $ 8,837     $ 1,303  
                                 
Other comprehensive income/(loss):                                
Foreign currency translation adjustments     (380 )     12       (517 )     87  
Comprehensive income/(loss)   $ (1,740 )   $ 1,549     $ 8,320     $ 1,390  
                                 
Income/(loss) per share from continuing operations:                                
Basic   $ (0.06 )   $ 0.05     $ (0.13 )   $ 0.03  
Diluted   $ (0.06 )   $ 0.05     $ (0.13 )   $ 0.03  
                                 
Income per share from discontinued operations:                                
Basic   $ 0.00     $ 0.02     $ 0.53     $ 0.03  
Diluted   $ 0.00     $ 0.01     $ 0.48     $ 0.02  
                                 
Income/(loss) per share:                                
Basic   $ (0.06 )   $ 0.07     $ 0.40     $ 0.06  
Diluted   $ (0.06 )   $ 0.06     $ 0.35     $ 0.05  
                                 
Weighted average shares outstanding:                                
Basic     21,857       21,763       22,151       21,728  
Diluted     21,857       24,343       24,200       24,063  

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

    (Unaudited)        
    June 30 2022     December 31 2021  
CURRENT ASSETS                
Cash & cash equivalents   $ 13,338     $ 4,472  
Accounts receivable - net of reserves of $180 and $196, respectively     4,007       2,407  
Inventories - net of reserves of $678 and $681, respectively     5,247       5,088  
Prepaid expenses and other current assets     2,156       1,689  
Current assets of discontinued operations     -       6,869  
TOTAL CURRENT ASSETS     24,748       20,525  
                 
PROPERTY PLANT AND EQUIPMENT - NET     1,272       1,110  
                 
OTHER ASSETS                
Goodwill     9,701       10,108  
Acquired intangible assets, net     3,243       3,661  
Deferred income taxes     2,904       5,580  
Right of use assets     867       1,146  
Other assets     269       284  
Non current assets of discontinued operations     -       1,937  
TOTAL OTHER ASSETS     16,984       22,716  
                 
TOTAL ASSETS   $ 43,004     $ 44,351  
                 
CURRENT LIABILITIES                
Short term debt   $ -     $ 126  
Accounts payable     1,404       1,481  
Short term leases     484       585  
Accrued expenses and other current liabilities     5,242       6,676  
Deferred revenue     132       408  
Current liabilities of discontinued operations     -       1,965  
TOTAL CURRENT LIABILITIES     7,262       11,241  
                 
LONG TERM LIABILITIES                
Long term debt     -       3,595  
Long term leases     430       615  
Other long term liabilities     37       52  
Deferred tax liability     205       228  
TOTAL LONG TERM LIABILITIES     672       4,490  
                 
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 authorized36,250,636 and 35,915,636 shares issued, 21,290,098 and 22,666,072 shares outstanding     362       359  
Additional paid in capital     52,226       51,555  
Retained earnings     9,391       554  
Treasury stock at cost, 14,960,538 and 13,249,564 shares     (27,163 )     (24,619 )
Accumulated other comprehensive income     254       771  
TOTAL SHAREHOLDERS’ EQUITY     35,070       28,620  
                 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY   $ 43,004     $ 44,351  

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)(Unaudited)

    For the Six Months  
    Ended June 30  
    2022     2021  
CASH FLOWS PROVIDED/(USED) BY OPERATING ACTIVITIES                
Net income   $ 8,837     $ 1,303  
Adjustments to reconcile net loss to net cash provided/(used) by operating activities:                
Depreciation and amortization     751       1,065  
Extinguishment of PPP loan     -       (2,045 )
Loss on extinguishment of term debt     792       -  
Gain on sale of Microlab     (16,403 )     -  
Amortization of debt issuance fees     55       150  
Share-based compensation expense     650       203  
Deferred rent     (15 )     (15 )
Deferred income taxes     2,677       320  
Provision for doubtful accounts     (16 )     71  
Inventory reserves     28       85  
Changes in assets and liabilities, net of divestiture:                
Accounts receivable     (1,581 )     (1,079 )
Inventories     (457 )     (645 )
Prepaid expenses and other assets     (57 )     319  
Accounts payable     304       585  
Deferred revenue     (257 )     -  
Accrued expenses and other liabilities     (842 )     77  
Net cash provided/(used) by operating activities     (5,534 )     394  
                 
CASH FLOWS PROVIDED/(USED) BY INVESTING ACTIVITIES                
Capital expenditures     (326 )     (313 )
Deferred purchase price payment     (250 )     (200 )
Divestiture of Microlab, net     22,753       -  
Net cash provided/(used) by investing activities     22,177       (513 )
                 
CASH FLOWS USED BY FINANCING ACTIVITIES                
Term loan repayments     (4,432 )     (470 )
Acquisition of treasury stock     (2,525 )     -  
Payment of contingent consideration     (658 )     (105 )
Proceeds from exercise of stock options     24       -  
Shares withheld for employee taxes     (19 )     (17 )
Net cash used by financing activities     (7,610 )     (592 )
                 
Effect of Exchange Rate Changes on Cash and Cash Equivalents     (167 )     14  
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS     8,866       (697 )
                 
Cash and Cash Equivalents, at Beginning of Period     4,472       4,910  
                 
CASH AND CASH EQUIVALENTS, AT END OF PERIOD   $ 13,338     $ 4,213  
                 
SUPPLEMENTAL INFORMATION:                
Cash paid during the period for interest   $ 122     $ 204  
Cash paid during the period for income taxes   $ 597     $ 110  

NET REVENUE AND GROSS PROFIT BY SEGMENT

(In thousands)Unaudited

    Three months ended June 30,  
    Revenue     % of Revenue     Change  
    2022     2021     2022     2021     Amount     Pct.  
Test and measurement   $ 5,489     $ 5,521       90.5 %     70.9 %   $ (32 )     -0.6 %
Radio, baseband, software     579       2,267       9.5 %     29.1 %     (1,688 )     -74.5 %
Total net revenues   $ 6,068     $ 7,788       100.0 %     100.0 %   $ (1,720 )     -22.1 %
    Three months ended June 30,  
    Gross Profit     Gross Profit %     Change  
    2022     2021     2022     2021     Amount     Pct.  
Test and measurement   $ 3,170     $ 3,270       57.8 %     59.2 %   $ (100 )     -3.0 %
Radio, baseband, software     245       1,108       42.3 %     48.9 %     (863 )     -77.9 %
Total gross profit   $ 3,415     $ 4,378       56.3 %     56.2 %   $ (963 )     -22.0 %
    Six months ended June 30,  
    Revenue     % of Revenue     Change  
    2022     2021     2022     2021     Amount     Pct.  
Test and measurement   $ 11,548     $ 10,848       84.5 %     67.9 %   $ 700       6.5 %
Radio, baseband, software     2,116       5,124       15.5 %     32.1 %     (3,008 )     -58.7 %
Total net revenues   $ 13,664     $ 15,972       100.0 %     100.0 %   $ (2,308 )     -14.5 %
    Six months ended June 30,  
    Gross Profit     Gross Profit %     Change  
    2022     2021     2022     2021     Amount     Pct.  
Test and measurement   $ 6,678     $ 6,324       57.8 %     58.3 %   $ 354       5.6 %
Radio, baseband, software     1,092       2,908       51.6 %     56.8 %     (1,816 )     -62.4 %
Total gross profit   $ 7,770     $ 9,232       56.9 %     57.8 %   $ (1,462 )     -15.8 %

SEGMENT FINANCIAL STATEMENTS

(In thousands, unaudited)

    Three months ended     Three months ended     Six months ended     Six months ended  
    June 30, 2022     June 30, 2021     June 30, 2022     June 30, 2021  
    T&M     RBS     Total     T&M     RBS     Total     T&M     RBS     Total     T&M     RBS     Total  
Net revenues   $ 5,489     $ 579     $ 6,068     $ 5,521     $ 2,267     $ 7,788     $ 11,548     $ 2,116     $ 13,664     $ 10,848     $ 5,124     $ 15,972  
Cost of revenues     2,319       334       2,653       2,251       1,159       3,410       4,870       1,024       5,894       4,524       2,216       6,740  
Gross profit     3,170       245       3,415       3,270       1,108       4,378       6,678       1,092       7,770       6,324       2,908       9,232  
                                                                                                 
Operating expenses     1,987       1,440       3,427       1,808       1,788       3,596       3,857       3,038       6,895       3,480       3,623       7,103  
                                                                                                 
Segment profitability     1,183       (1,195 )     (12 )     1,462       (680 )     782       2,821       (1,946 )     875       2,844       (715 )     2,129  
                                                                                                 
Corporate expenses                     1,666                       1,579                       4,008                       3,274  
Operating loss                     (1,678 )                     (797 )                     (3,133 )                     (1,145 )
                                                                                                 
Other income/(expense)                     32                       2,028                       (659 )                     2,055  
Interest expense                     -                       (285 )                     (177 )                     (582 )
                                                                                                 
Income/(loss) before taxes                     (1,646 )                     946                       (3,969 )                     328  
                                                                                                 
Tax provision/(benefit)                     (286 )                     (179 )                     (1,136 )                     (323 )
Net income/(loss) from continuing operations                     (1,360 )                     1,125                       (2,833 )                     651  
                                                                                                 
Net income from discontinued operations, net of tax                     -                       412                       11,670                       652  
Net income/(loss)                   $ (1,360 )                   $ 1,537                     $ 8,837                     $ 1,303  
                                                                                                 
Depreciation and Amortization   $ 255     $ 63     $ 317     $ 225     $ 249     $ 473     $ 534     $ 217     $ 751     $ 448     $ 494     $ 942  

RECONCILIATION OF NON GAAP MEASURES

(In thousands, unaudited)

    Three Months Ended     Six Months Ended  
    June 30     June 30  
    (Unaudited)     (Unaudited)  
    2022     2021     2022     2021  
Net Income/(loss) from continuing operations   $ (1,360 )   $ 1,125     $ (2,833 )   $ 651  
Tax (Provision)/Benefit     (286 )     (179 )     (1,136 )     (323 )
Depreciation and amortization expense     317       473       751       942  
Interest expense     -       285       177       582  
Non-GAAP EBITDA     (1,329 )     1,704       (3,041 )     1,852  
Stock compensation expense     320       89       650       203  
Divestiture and strategic initiative expenses     213       72       743       72  
Restructuring Costs     -       -       -       25  
FX (Gain)/Loss     18       19       10       (6 )
PPP Loan Forgiveness     -       (2,045 )     -       (2,045 )
Loss on Extinguishment of Debt     -       -       792       -  
Non Recurring Arbitration Legal Costs     -       -       -       4  
Non-GAAP Adjusted EBITDA   $ (778 )   $ (161 )   $ (846 )   $ 105  
    Three Months Ended     Six Months Ended  
    June 30     June 30  
    (Unaudited)     (Unaudited)  
    2022     2021     2022     2021  
GAAP Operating Income/(Loss), as reported   $ (1,678 )   $ (797 )   $ (3,133 )   $ (1,145 )
Adjustments:                                
Amortization of acquired intangible assets     143       331       378       660  
Divestiture and strategic initiative expenses     213       72       743       72  
Stock Compensation Expense     320       89       650       203  
Restructuring costs     -       -       -       25  
Total Adjustments to operating income/(loss)     676       492       1,771       960  
Non-GAAP Adjusted Operating Income/(Loss)   $ (1,002 )   $ (305 )   $ (1,362 )   $ (185 )
    Three Months Ended     Six Months Ended  
    June 30     June 30  
    (Unaudited)     (Unaudited)  
    2022     2021     2022     2021  
Net Income/(loss) from continuing operations, as reported   $ (1,360 )   $ 1,125     $ (2,833 )   $ 651  
Adjustments:                                
Total pretax adjustments to operating income/(loss)     676       492       1,771       960  
Loss/(Gain) on Extinguishment of Debt     -       (2,045 )     792       (2,045 )
Total Adjustments to Net loss from continuing operations     676       (1,553 )     2,563       (1,085 )
Tax effects of adjustments     203       (887 )     768       (620 )
Non-GAAP Adjusted Net Income/(loss) from continuing operations   $ (887 )   $ 459     $ (1,038 )   $ 186  
                                 
Basic EPS, as reported   $ (0.06 )   $ 0.05     $ (0.13 )   $ 0.03  
Diluted EPS, as reported   $ (0.06 )   $ 0.05     $ (0.13 )   $ 0.03  
                                 
Non-GAAP Adjusted Basic EPS   $ (0.04 )   $ 0.02     $ (0.05 )   $ 0.01  
Non-GAAP Adjusted Diluted EPS   $ (0.04 )   $ 0.02     $ (0.05 )   $ 0.01  
                                 
Basic Shares     21,857       21,763       22,151       21,728  
Diluted Shares     21,857       24,343       22,151       24,063  
Wireless Telecom (AMEX:WTT)
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