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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Wireless Telecom | AMEX:WTT | AMEX | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 2.13 | 0 | 01:00:00 |
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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