WIRELESS TELECOM GROUP ANNOUNCES SECOND QUARTER 2020 FINANCIAL RESULTS
Wireless Telecom Group, Inc. (WTT) reported Q2 2020 net revenues of $11.1 million, down 17.8% from $13.5 million in Q2 2019, primarily due to reduced hardware sales. Gross profit was $5.7 million, reflecting a 51% gross margin, improved from 45.4% last year. New customer orders grew by 18.5% to $12.4 million. The company experienced a net loss of $668,000, contrasting a net income of $156,000 in the previous year. Despite challenges, management expressed optimism about future growth and confirmed a backlog of $6.2 million for the next twelve months, highlighting strategic shifts and new leadership.
- New customer orders increased 18.5% to $12.4 million.
- Gross profit margin improved to 51%, up from 45.4% YoY.
- Test & Measurement revenue rose 40.1%, partly due to Holzworth acquisition.
- Consolidated backlog increased 26.9% to $6.2 million.
- Net revenues declined 17.8% year-over-year to $11.1 million.
- Net loss of $668,000 compared to net income of $156,000 in Q2 2019.
- Decrease in non-GAAP Adjusted EBITDA from $1.1 million to $794,000.
Highlights for the quarter ended June 30, 2020:
- Net revenues of
$11.1 million - Gross Profit of
$5.7 million ,51% Gross Margin - New Customer orders of
$12.4 million - Two new customer software license contracts, including first for NXP-based 5G solutions
- New GTM strategy, addition of industry veteran to executive team as Chief Revenue Officer
Parsippany, New Jersey , Aug. 13, 2020 (GLOBE NEWSWIRE) -- Wireless Telecom Group, Inc. (NYSE American: WTT) (the “Company”) announced today results for the 2020 second quarter ended June 30, 2020.
Tim Whelan, CEO of Wireless Telecom Group, Inc., commented, “We are pleased with our second quarter financial results which reflect sequential new order growth of
Whelan continued, “While there continues to be a great deal of uncertainty, we are optimistic about the remainder of 2020 due to solid growth in our sales funnel, strong performance by the Holzworth acquisition, and improving gross margins across multiple product lines. Furthermore, the recent addition of Alfred Rodriguez, an industry veteran from Xilinx, as our new Chief Revenue Officer strengthens our executive leadership and is a key hire in implementing our unified go-to-market strategy.”
For the quarter ended June 30, 2020, the Company reported consolidated net revenues of
New customer orders for the second quarter were
The Company reported consolidated gross profit of
For the quarter ended June 30, 2020, the Company reported consolidated operating expenses of
Net loss for the quarter ended June 30, 2020 was
Non-GAAP Adjusted EBITDA for the quarter ended June 30, 2020 was
Corporate Initiatives
During the Company’s Annual Shareholders Meeting on June 4, 2020, management presented a strategy update, including a new go-to-market initiative reorganizing to a single segment with three product groupings: Radio, Baseband and Software Solutions, RF Components, and Test and Measurement Solutions.
As part of this new initiative the Company expanded its executive team to add a Chief Revenue Officer role who will lead consolidated global sales across all 3 product groupings, and on August 4, 2020, Alfred Rodriquez was appointed to this role. Mr. Rodriquez joins the Company from Xilinx and brings more than 20 years of leadership experience with deep, design-in solutions and signal processing products.
As previously disclosed, the Company’s long-term goals are:
- Annual double-digit organic revenue growth;
50% + gross margins; and- Adjusted EBITDA margins of
15% by 2024.
The slides and a recording of the presentation are available on the Company’s website.
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 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 715082. The call will also be webcast over the internet at the following URL:
https://www.webcaster4.com/Webcast/Page/1690/36457
A replay will be made available on the Wireless Telecom website for a limited period of time following the conference call.
Mike Kandell
(973) 386-9696
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, unrealized and realized foreign exchange gains and losses, purchase accounting adjustments, non-recurring legal fees associated with the Harris arbitration and other non-recurring costs. A reconciliation of net income to non-GAAP Adjusted EBITDA is included as an attachment to this press release.
The Company defines Adjusted EBITDA margin as Adjusted EBITA 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.
GAAP operating expenses (“GAAP opex”) includes research and development expenses, sales and marketing expenses and general and administrative expenses. 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 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.
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 the overall improving margins and opportunity for continued growth ahead, goals of organic double digit revenue growth, 50+% gross margins and Adjusted EBITDA margins of
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.
CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME/(LOSS)
(In thousands, except per share amounts, Unaudited)
For the Three Months Ended | For the Six Months Ended | ||||||||||||
June 30 | June 30 | ||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||
NET REVENUES | $ | 11,108 | $ | 13,508 | $ | 20,536 | $ | 26,540 | |||||
COST OF REVENUES | 5,440 | 7,375 | 10,441 | 14,681 | |||||||||
GROSS PROFIT | 5,668 | 6,133 | 10,095 | 11,859 | |||||||||
Operating Expenses | |||||||||||||
Research and Development | 1,675 | 1,499 | 3,254 | 3,213 | |||||||||
Sales and Marketing | 1,661 | 2,027 | 3,379 | 3,964 | |||||||||
General and Administrative | 2,391 | 2,461 | 4,878 | 4,933 | |||||||||
Total Operating Expenses | 5,727 | 5,987 | 11,511 | 12,110 | |||||||||
Operating Income/(Loss) | (59 | ) | 146 | (1,416 | ) | (251 | ) | ||||||
Other Income | 56 | 135 | 295 | 165 | |||||||||
Interest Expense | (246 | ) | (73 | ) | (471 | ) | (188 | ) | |||||
Income/(Loss) before taxes | (249 | ) | 208 | (1,592 | ) | (274 | ) | ||||||
Tax Provision/(Benefit) | 419 | 52 | 225 | (86 | ) | ||||||||
Net Income/(Loss) | $ | (668 | ) | $ | 156 | $ | (1,817 | ) | $ | (188 | ) | ||
Other Comprehensive Income/(Loss): | |||||||||||||
Foreign Currency Translation Adjustments | (36 | ) | (380 | ) | (971 | ) | (75 | ) | |||||
Comprehensive Income/(Loss) | $ | (704 | ) | $ | (224 | ) | $ | (2,788 | ) | $ | (263 | ) | |
Earnings/(Loss) Per Share: | |||||||||||||
Basic | $ | (0.03 | ) | $ | 0.01 | $ | (0.08 | ) | $ | (0.01 | ) | ||
Diluted | $ | (0.03 | ) | $ | 0.01 | $ | (0.08 | ) | $ | (0.01 | ) | ||
Weighted Average Shares Outstanding: | |||||||||||||
Basic | 21,707 | 20,973 | 21,626 | 20,973 | |||||||||
Diluted | 21,707 | 21,593 | 21,626 | 20,973 |
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 SHEET
(In thousands, except number of shares and par value)
(Unaudited) | ||||||
June 30 2020 | December 31 2019 | |||||
CURRENT ASSETS | ||||||
Cash & Cash Equivalents | $ | 2,894 | $ | 4,245 | ||
Accounts Receivable - net of reserves of | 8,002 | 6,152 | ||||
Inventories - net of reserves of | 8,651 | 7,325 | ||||
Prepaid Expenses and Other Current Assets | 1,952 | 1,871 | ||||
TOTAL CURRENT ASSETS | 21,499 | 19,593 | ||||
PROPERTY PLANT AND EQUIPMENT - NET | 1,938 | 2,147 | ||||
OTHER ASSETS | ||||||
Goodwill | 14,427 | 10,069 | ||||
Acquired Intangible Assets, net | 5,202 | 2,219 | ||||
Deferred Income Taxes | 5,318 | 6,013 | ||||
Right Of Use Assets | 1,956 | 1,436 | ||||
Other | 1,445 | 874 | ||||
TOTAL OTHER ASSETS | 28,348 | 20,611 | ||||
TOTAL ASSETS | $ | 51,785 | $ | 42,351 | ||
CURRENT LIABILITIES | ||||||
Short Term Debt | $ | 454 | $ | 2,696 | ||
Accounts Payable | 2,328 | 2,227 | ||||
Short Term Leases | 530 | 440 | ||||
Accrued Expenses and Other Current Liabilities | 6,378 | 2,657 | ||||
Deferred Revenue | 93 | 42 | ||||
TOTAL CURRENT LIABILITIES | 9,783 | 8,062 | ||||
LONG TERM LIABILITIES | ||||||
Long Term Debt | 9,260 | - | ||||
Long Term Leases | 1,473 | 1,018 | ||||
Other Long Term Liabilities | 95 | 77 | ||||
Deferred Tax Liability | 470 | 503 | ||||
TOTAL LONG TERM LIABILITIES | 11,298 | 1,598 | ||||
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 34,835,571 and 34,488,252 shares issued, 21,647,571 and 21,300,252 shares outstanding | 348 | 345 | ||||
Additional Paid in Capital | 49,884 | 49,062 | ||||
Retained Earnings | 5,327 | 7,142 | ||||
Treasury Stock at Cost, 13,188,000 shares | (24,535 | ) | (24,509 | ) | ||
Accumulated Other Comprehensive Income | (320 | ) | 651 | |||
TOTAL SHAREHOLDERS' EQUITY | 30,704 | 32,691 | ||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 51,785 | $ | 42,351 |
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands, unaudited)
For the Six Months | ||||||
Ended June 30 | ||||||
2020 | 2019 | |||||
CASH FLOWS USED BY OPERATING ACTIVITIES | ||||||
Net Loss | $ | (1,817 | ) | $ | (188 | ) |
Adjustments to reconcile net loss to net cash used by operating activities: | ||||||
Depreciation and Amortization | 1,049 | 1,196 | ||||
Amortization of Debt Issuance Fees | 137 | 31 | ||||
Share-based Compensation Expense | 210 | 400 | ||||
Deferred Rent | (14 | ) | (12 | ) | ||
Deferred Income Taxes | 695 | (146 | ) | |||
Provision for Doubtful Accounts | 2 | 18 | ||||
Inventory Reserves | 90 | 137 | ||||
Changes in Assets and Liabilities, Net of Acquisition: | ||||||
Accounts Receivable | (1,351 | ) | (968 | ) | ||
Inventories | (260 | ) | (1,776 | ) | ||
Prepaid Expenses and Other Assets | (110 | ) | 899 | |||
Accounts Payable | 16 | 2,046 | ||||
Payment of Contingent Consideration | - | (772 | ) | |||
Accrued Expenses and Other Liabilities | 737 | (883 | ) | |||
Net Cash Used by Operating Activities | (616 | ) | (18 | ) | ||
CASH FLOWS USED BY INVESTING ACTIVITIES | ||||||
Capital Expenditures | (100 | ) | (261 | ) | ||
Acquisition of Business, Net of Cash Acquired | (7,189 | ) | (426 | ) | ||
Net Cash Used by Investing Activities | (7,289 | ) | (687 | ) | ||
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES | ||||||
Revolver Borrowings | 16,856 | 18,594 | ||||
Revolver Repayments | (18,840 | ) | (17,642 | ) | ||
Term Loan Borrowings | 8,400 | - | ||||
Term Loan Repayments | (384 | ) | (76 | ) | ||
Debt Issuance Fees | (1,261 | ) | - | |||
Paycheck Protection Program Loan | 2,045 | |||||
Payment of Contingent Consideration | - | (782 | ) | |||
Shares Withheld for Employee Taxes | (26 | ) | - | |||
Net Cash Provided by Financing Activities | 6,790 | 94 | ||||
Effect of Exchange Rate Changes on Cash and Cash Equivalents | (236 | ) | 3 | |||
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS | (1,351 | ) | (608 | ) | ||
Cash and Cash Equivalents, at Beginning of Period | 4,245 | 5,015 | ||||
CASH AND CASH EQUIVALENTS, AT END OF PERIOD | $ | 2,894 | $ | 4,407 | ||
SUPPLEMENTAL INFORMATION: | ||||||
Cash Paid During the Period for Interest | $ | 347 | $ | 97 | ||
Cash Paid During the Period for Income Taxes | $ | 40 | $ | 53 |
NET REVENUE AND GROSS PROFIT BY PRODUCT GROUP
(In thousands, Unaudited)
Three months ended June 30, | |||||||||||||
Revenue | % of Revenue | Change | |||||||||||
2020 | 2019 | 2020 | 2019 | Amount | Pct. | ||||||||
RF Components | $ | 5,862 | $ | 5,575 | 52.7 | % | 41.3 | % | $ | 287 | 5.1 | % | |
Test and Measurement | 4,471 | 3,192 | 40.3 | % | 23.6 | % | 1,279 | 40.1 | % | ||||
Radio, Baseband, Software | 775 | 4,741 | 7.0 | % | 35.1 | % | (3,966 | ) | -83.7 | % | |||
Total Net Revenues | $ | 11,108 | $ | 13,508 | 100.0 | % | 100.0 | % | $ | (2,400 | ) | -17.8 | % |
Three months ended June 30, | |||||||||||||
Gross Profit | Gross Profit % | Change | |||||||||||
2020 | 2019 | 2020 | 2019 | Amount | Pct. | ||||||||
RF Components | $ | 2,708 | $ | 2,402 | 46.2 | % | 43.1 | % | $ | 306 | 12.7 | % | |
Test and Measurement | 2,364 | 1,775 | 52.9 | % | 55.6 | % | 589 | 33.2 | % | ||||
Radio, Baseband, Software | 596 | 1,956 | 76.9 | % | 41.3 | % | (1,360 | ) | -69.5 | % | |||
Total Gross Profit | $ | 5,668 | $ | 6,133 | 51.0 | % | 45.4 | % | $ | (465 | ) | -7.6 | % |
Six months ended June 30, | |||||||||||||
Revenue | % of Revenue | Change | |||||||||||
2020 | 2019 | 2020 | 2019 | Amount | Pct. | ||||||||
RF Components | $ | 10,137 | $ | 11,333 | 49.4 | % | 42.7 | % | $ | (1,196 | ) | -10.6 | % |
Test and Measurement | 8,216 | 6,222 | 40.0 | % | 23.4 | % | 1,994 | 32.0 | % | ||||
Radio, Baseband, Software | 2,183 | 8,985 | 10.6 | % | 33.9 | % | (6,802 | ) | -75.7 | % | |||
Total Net Revenues | $ | 20,536 | $ | 26,540 | 100.0 | % | 100.0 | % | $ | (6,004 | ) | -22.6 | % |
Six months ended June 30, | |||||||||||||
Gross Profit | Gross Profit % | Change | |||||||||||
2020 | 2019 | 2020 | 2019 | Amount | Pct. | ||||||||
RF Components | $ | 4,649 | $ | 4,790 | 45.9 | % | 42.3 | % | $ | (141 | ) | -2.9 | % |
Test and Measurement | 4,269 | 3,343 | 52.0 | % | 53.7 | % | 926 | 27.7 | % | ||||
Radio, Baseband, Software | 1,177 | 3,726 | 53.9 | % | 41.5 | % | (2,549 | ) | -68.4 | % | |||
Total Gross Profit | $ | 10,095 | $ | 11,859 | 49.2 | % | 44.7 | % | $ | (1,764 | ) | -14.9 | % |
RECONCILIATION OF NET INCOME TO NON-GAAP EBITDA AND NON-GAAP ADJUSTED EBITDA
(In thousands, Unaudited)
Three Months Ended | Six Months Ended | ||||||||||||
June 30 | June 30 | ||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||
GAAP Net Income/(Loss), as reported | $ | (668 | ) | $ | 156 | $ | (1,816 | ) | $ | (188 | ) | ||
Tax Provision/(Benefit) | 418 | 52 | 225 | (86 | ) | ||||||||
Depreciation and Amortization Expense | 525 | 647 | 1,049 | 1,196 | |||||||||
Interest Expense | 246 | 73 | 471 | 188 | |||||||||
Non-GAAP EBITDA | 521 | 928 | (71 | ) | 1,110 | ||||||||
Stock Compensation | 128 | 191 | 210 | 400 | |||||||||
Merger and Acquisition/Integration | 37 | - | 228 | - | |||||||||
Restructuring Costs | - | - | 73 | - | |||||||||
Inventory Impairment Recovery | (12 | ) | (2 | ) | (13 | ) | (4 | ) | |||||
US GAAP Purchase Accounting | 114 | - | 290 | - | |||||||||
FX (Gain)/Loss | 4 | (114 | ) | (235 | ) | (149 | ) | ||||||
Non Recurring Arbitration Legal Costs | 2 | 124 | 3 | 124 | |||||||||
Non-GAAP Adjusted EBITDA | $ | 794 | $ | 1,127 | $ | 485 | $ | 1,481 |
RECONCILIATION OF GAAP OPEX TO NON-GAAP OPEX
(In thousands, Unaudited)
Three Months Ended | Six Months Ended | ||||||||||||
June 30 | June 30 | ||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||
GAAP Opex | $ | 5,727 | $ | 5,987 | $ | 11,510 | $ | 12,110 | |||||
Stock Compensation | (128 | ) | (190 | ) | (210 | ) | (400 | ) | |||||
Merger and Acquisition/Integration | (37 | ) | - | (228 | ) | - | |||||||
Restructuring Costs | - | - | (73 | ) | - | ||||||||
US GAAP Purchase Accounting | - | - | (100 | ) | - | ||||||||
Depreciation & Amortization (ex. COGS) | (432 | ) | (584 | ) | (877 | ) | (1,058 | ) | |||||
Non Recurring Arbitration Legal Costs | (2 | ) | (124 | ) | (3 | ) | (124 | ) | |||||
Non GAAP Opex | $ | 5,128 | $ | 5,089 | $ | 10,019 | $ | 10,528 |
Wireless Telecom Group INC.
25 Eastmans Road
Parsippany, NJ 07054
Tel. (973) 386-9696
Fax (973) 402-4042
FAQ
What were Wireless Telecom Group's Q2 2020 revenues and net loss?
How did WTT's gross profit margins change in Q2 2020?
What was the increase in new customer orders for WTT in Q2 2020?
What factors contributed to WTT's financial performance in Q2 2020?