Wireless Telecom Group, Inc. (NYSE American: WTT) (the “Company”)
today announced results for the three months ended March 31, 2021.
Tim Whelan, CEO of Wireless Telecom Group, Inc.
stated, “Positive momentum in our business continued during the
first quarter. 2021 has started off with robust operating
performance and strengthening market demand. We realized improved
bookings in the first quarter as compared to the prior year period,
which led us to another positive book-to-bill result. This was our
fourth positive book-to-bill outcome in the last five quarters and
helped drive first quarter revenue and profit higher.”
Mr. Whelan continued, “During the quarter, we
won two new customers for our Radio, baseband and software
solutions, which was our fourth consecutive quarter of signing new
customers for our LTE/5G software and services, and we also
received additional RBS hardware card orders. Within RF components
we realized sequential bookings growth and Holzworth continues to
contribute to strong Test & measurement results. With
additional increases to the backlog at March 31, 2021, we feel more
confident about our ability to achieve our strategic goals of
double-digit organic sales growth, gross margins above 50% and
improving operating margins in 2021.”
First Quarter 2021 Operating
Results:
|
● |
Net revenues of $11.3 million, an increase of $1.9 million or 20.1%
over the prior year period due to higher Test and measurement
(“T&M”) and Radio, baseband and software (“RBS”) revenues. |
|
● |
Gross profit of $5.9 million, and gross profit margin of 52.5%, an
increase of 550 basis points over the prior year due to higher
margin software and services revenues as well as an increased
revenue mix of higher margin T&M products. |
|
● |
Backlog of $10.0 million, an increase of $1.7 million, or 20.5%
compared to December 31, 2020, and an increase of $5.1 million, or
103% year-over-year. |
|
● |
Operating expenses of $6.0 million, an increase of $175,000 or 3.0%
from the prior year period, and as a percent of revenue total
operating expenses were 52.6%, compared to 61.3% for the same
period last year. |
|
● |
GAAP net loss of $233,000 compared to a net loss of $1.1 million in
the prior year period due primarily to higher gross profit
associated with higher revenues and a more profitable mix of
business. |
|
● |
Non-GAAP adjusted EBITDA of $671,000 compared to a loss of $308,000
in the prior year due primarily to higher gross profit and higher
revenues. 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 loss is provided later in this press
release. |
Cash Flow and Balance Sheet
|
● |
Cash used in operations of $232,000 due primarily to an increase in
net working capital. |
|
● |
Cash of $3.9 million at March 31, 2021, compared to $4.9 million at
December 31, 2020. |
|
● |
No outstanding borrowings under the asset-based revolver and
availability of $6.3 million after giving effect to borrowing base
calculations as of March 31, 2021. |
Conference Call
Wireless Telecom Group Inc. will host a
conference call on May 13, 2021 at 8:30 a.m. EDT in which
management will discuss first 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 610542.
The call will also be webcast over the internet at the following
URL: https://www.webcaster4.com/Webcast/Page/1690/41268
A replay will be made available on the Wireless
Telecom website following the conference call.
Contact:
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 ability to achieve our strategic goals of double digit organic
sales growth, gross margins above 50% and improving operating
margins in 2021. 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
COVID-19 pandemic may have on our business and the economy in the
future, 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, and the risk that our
PPP Loan will not be forgiven, 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. 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.
CONSOLIDATED STATEMENT OF OPERATIONS AND
COMPREHENSIVE INCOME/(LOSS)(In thousands, except
per share amounts)
|
|
For the Three Months EndedMarch
31 |
|
|
|
|
2021 |
|
|
|
2020 |
|
Net
revenues |
|
$ |
11,321 |
|
|
$ |
9,429 |
|
|
|
|
|
|
|
|
|
|
Cost of revenues |
|
|
5,376 |
|
|
|
5,001 |
|
|
|
|
|
|
|
|
|
|
Gross
profit |
|
|
5,945 |
|
|
|
4,428 |
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
Research and development |
|
|
1,382 |
|
|
|
1,578 |
|
Sales and marketing |
|
|
1,713 |
|
|
|
1,717 |
|
General and administrative |
|
|
2,862 |
|
|
|
2,487 |
|
Total operating expenses |
|
|
5,957 |
|
|
|
5,782 |
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
|
(12 |
) |
|
|
(1,354 |
) |
|
|
|
|
|
|
|
|
|
Other income |
|
|
24 |
|
|
|
239 |
|
Interest expense |
|
|
(297 |
) |
|
|
(225 |
) |
|
|
|
|
|
|
|
|
|
Loss before
taxes |
|
|
(285 |
) |
|
|
(1,340 |
) |
|
|
|
|
|
|
|
|
|
Tax benefit |
|
|
(52 |
) |
|
|
(193 |
) |
|
|
|
|
|
|
|
|
|
Net Loss |
|
$ |
(233 |
) |
|
$ |
(1,147 |
) |
|
|
|
|
|
|
|
|
|
Other comprehensive
income/(loss): |
|
|
|
|
|
|
|
|
Foreign currency translation adjustments |
|
|
75 |
|
|
|
(935 |
) |
Comprehensive
loss |
|
$ |
(158 |
) |
|
$ |
(2,082 |
) |
|
|
|
|
|
|
|
|
|
Loss per share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.01 |
) |
|
$ |
(0.05 |
) |
Diluted |
|
$ |
(0.01 |
) |
|
$ |
(0.05 |
) |
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
21,742 |
|
|
|
21,398 |
|
Diluted |
|
|
21,742 |
|
|
|
21,398 |
|
CONSOLIDATED BALANCE
SHEET(In thousands, except number of shares and
par value)
|
|
(Unaudited) |
|
|
|
|
|
|
March 21 2021 |
|
|
December 31 2020 |
|
CURRENT
ASSETS |
|
|
|
|
|
|
|
|
Cash & cash equivalents |
|
$ |
3,880 |
|
|
$ |
4,910 |
|
Accounts receivable - net of reserves of $146 and $143,
respectively |
|
|
6,378 |
|
|
|
5,520 |
|
Inventories - net of reserves of $1,192 and $1,129
respectively |
|
|
9,261 |
|
|
|
8,796 |
|
Prepaid expenses and other current assets |
|
|
2,539 |
|
|
|
2,172 |
|
TOTAL CURRENT
ASSETS |
|
|
22,058 |
|
|
|
21,398 |
|
|
|
|
|
|
|
|
|
|
PROPERTY PLANT AND
EQUIPMENT - NET |
|
|
1,748 |
|
|
|
1,824 |
|
|
|
|
|
|
|
|
|
|
OTHER
ASSETS |
|
|
|
|
|
|
|
|
Goodwill |
|
|
11,557 |
|
|
|
11,512 |
|
Acquired intangible assets, net |
|
|
4,929 |
|
|
|
5,242 |
|
Deferred income taxes |
|
|
5,701 |
|
|
|
5,701 |
|
Right of use assets |
|
|
1,549 |
|
|
|
1,680 |
|
Other assets |
|
|
557 |
|
|
|
561 |
|
TOTAL OTHER
ASSETS |
|
|
24,293 |
|
|
|
24,696 |
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS |
|
$ |
48,099 |
|
|
$ |
47,918 |
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES |
|
|
|
|
|
|
|
|
Short term debt |
|
$ |
84 |
|
|
$ |
512 |
|
Accounts payable |
|
|
2,118 |
|
|
|
1,546 |
|
Short term leases |
|
|
546 |
|
|
|
534 |
|
Accrued expenses and other current liabilities |
|
|
6,351 |
|
|
|
7,997 |
|
Deferred revenue |
|
|
708 |
|
|
|
924 |
|
TOTAL CURRENT
LIABILITIES |
|
|
9,807 |
|
|
|
11,513 |
|
|
|
|
|
|
|
|
|
|
LONG TERM
LIABILITIES |
|
|
|
|
|
|
|
|
Long term debt |
|
|
8,933 |
|
|
|
8,895 |
|
Long term leases |
|
|
1,060 |
|
|
|
1,200 |
|
Other long term liabilities |
|
|
2,128 |
|
|
|
82 |
|
Deferred tax liability |
|
|
381 |
|
|
|
377 |
|
TOTAL LONG TERM
LIABILITIES |
|
|
12,502 |
|
|
|
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 authorized
34,888,904 and 34,888,904 shares issued, 21,660,318 and 21,669,361
shares outstanding |
|
|
349 |
|
|
|
349 |
|
Additional paid in capital |
|
|
50,277 |
|
|
|
50,163 |
|
Retained earnings |
|
|
(1,179 |
) |
|
|
(946 |
) |
Treasury stock at cost, 13,228,586 and 13,219,543 shares |
|
|
(24,573 |
) |
|
|
(24,556 |
) |
Accumulated other comprehensive income |
|
|
916 |
|
|
|
841 |
|
TOTAL SHAREHOLDERS’
EQUITY |
|
|
25,790 |
|
|
|
25,851 |
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
$ |
48,099 |
|
|
$ |
47,918 |
|
CONSOLIDATED STATEMENT OF CASH
FLOWS(In thousands)
|
|
For the Three Months EndedMarch
31 |
|
|
|
2021 |
|
|
2020 |
|
CASH FLOWS USED BY
OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
Net Loss |
|
$ |
(233 |
) |
|
$ |
(1,147 |
) |
Adjustments to reconcile net loss to net cash used by operating
activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
530 |
|
|
|
524 |
|
Amortization of debt issuance fees |
|
|
83 |
|
|
|
63 |
|
Share-based compensation expense |
|
|
114 |
|
|
|
81 |
|
Deferred rent |
|
|
(7 |
) |
|
|
(7 |
) |
Deferred income taxes |
|
|
- |
|
|
|
(32 |
) |
Provision for doubtful accounts |
|
|
3 |
|
|
|
(5 |
) |
Inventory reserves |
|
|
61 |
|
|
|
21 |
|
Changes in assets and
liabilities, net of acquisition: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(853 |
) |
|
|
58 |
|
Inventories |
|
|
(517 |
) |
|
|
(127 |
) |
Prepaid expenses and other assets |
|
|
(254 |
) |
|
|
355 |
|
Accounts payable |
|
|
606 |
|
|
|
230 |
|
Accrued expenses and other liabilities |
|
|
235 |
|
|
|
(143 |
) |
Net cash used by operating activities |
|
|
(232 |
) |
|
|
(129 |
) |
|
|
|
|
|
|
|
|
|
CASH FLOWS USED BY
INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
(144 |
) |
|
|
(51 |
) |
Acquisition of business, net of cash acquired |
|
|
(200 |
) |
|
|
(7,189 |
) |
Net cash used by investing activities |
|
|
(344 |
) |
|
|
(7,240 |
) |
|
|
|
|
|
|
|
|
|
CASH FLOWS USED BY
FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
Revolver borrowings |
|
|
- |
|
|
|
8,073 |
|
Revolver repayments |
|
|
- |
|
|
|
(8,471 |
) |
Term loan borrowings |
|
|
- |
|
|
|
8,400 |
|
Term loan repayments |
|
|
(449 |
) |
|
|
(363 |
) |
Debt issuance fees |
|
|
- |
|
|
|
(1,056 |
) |
Shares withheld for employee taxes |
|
|
(17 |
) |
|
|
(26 |
) |
Net cash used by financing activities |
|
|
(466 |
) |
|
|
6,557 |
|
|
|
|
|
|
|
|
|
|
Effect of Exchange Rate
Changes on Cash and Cash Equivalents |
|
|
12 |
|
|
|
(228 |
) |
NET DECREASE IN CASH AND CASH
EQUIVALENTS |
|
|
(1,030 |
) |
|
|
(1,040 |
) |
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents, at Beginning of Period |
|
|
4,910 |
|
|
|
4,245 |
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, AT END OF PERIOD |
|
$ |
3,880 |
|
|
$ |
3,205 |
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL INFORMATION: |
|
|
|
|
|
|
|
|
Cash paid during the period for interest |
|
$ |
213 |
|
|
$ |
146 |
|
Cash paid during the period for income taxes |
|
$ |
13 |
|
|
$ |
28 |
|
NET REVENUE AND GROSS PROFIT BY PRODUCT
GROUP(In thousands)
|
|
Three months ended March 31 |
|
|
|
Revenue |
|
|
% of Revenue |
|
|
Change |
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
Amount |
|
|
Pct. |
|
RF components |
|
$ |
3,137 |
|
|
$ |
4,276 |
|
|
|
27.7 |
% |
|
|
45.4 |
% |
|
$ |
(1,139 |
) |
|
|
-26.6 |
% |
Test and measurement |
|
|
5,327 |
|
|
|
3,745 |
|
|
|
47.1 |
% |
|
|
39.7 |
% |
|
|
1,582 |
|
|
|
42.2 |
% |
Radio, baseband, software |
|
|
2,857 |
|
|
|
1,408 |
|
|
|
25.2 |
% |
|
|
14.9 |
% |
|
|
1,449 |
|
|
|
102.9 |
% |
Total net revenues |
|
$ |
11,321 |
|
|
$ |
9,429 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
$ |
1,892 |
|
|
|
20.1 |
% |
|
|
Three months ended March 31 |
|
|
|
Gross Profit |
|
|
Gross Profit % |
|
|
Change |
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
Amount |
|
|
Pct. |
|
RF components |
|
$ |
1,091 |
|
|
$ |
1,943 |
|
|
|
34.8 |
% |
|
|
45.4 |
% |
|
$ |
(852 |
) |
|
|
-43.8 |
% |
Test and measurement |
|
|
3,054 |
|
|
|
1,904 |
|
|
|
57.3 |
% |
|
|
50.8 |
% |
|
|
1,150 |
|
|
|
60.4 |
% |
Radio, baseband, software |
|
|
1,800 |
|
|
|
581 |
|
|
|
63.0 |
% |
|
|
41.3 |
% |
|
|
1,219 |
|
|
|
209.8 |
% |
Total gross profit |
|
$ |
5,945 |
|
|
$ |
4,428 |
|
|
|
52.5 |
% |
|
|
47.0 |
% |
|
$ |
1,517 |
|
|
|
34.3 |
% |
RECONCILIATION OF NET INCOME TO NON-GAAP
EBITDA AND NON-GAAP ADJUSTED EBITDA(In thousands,
unaudited)
|
|
Three Months Ended March 31 |
|
|
|
2021 |
|
|
2020 |
|
GAAP Net
income/(loss), as reported |
|
$ |
(233 |
) |
|
$ |
(1,147 |
) |
Tax benefit |
|
|
(52 |
) |
|
|
(193 |
) |
Depreciation and amortization
expense |
|
|
530 |
|
|
|
524 |
|
Interest expense/(Income) |
|
|
297 |
|
|
|
225 |
|
Non-GAAP
EBITDA |
|
|
542 |
|
|
|
(591 |
) |
Stock compensation |
|
|
114 |
|
|
|
81 |
|
Merger and
acquisition/integration |
|
|
- |
|
|
|
191 |
|
Restructuring costs |
|
|
36 |
|
|
|
74 |
|
US GAAP purchase
accounting |
|
|
- |
|
|
|
176 |
|
FX (gain)/loss |
|
|
(25 |
) |
|
|
(239 |
) |
Non recurring arbitration
legal costs |
|
|
4 |
|
|
|
- |
|
Non-GAAP adjusted
EBITDA |
|
$ |
671 |
|
|
$ |
(308 |
) |
RECONCILIATION OF OPEX TO NON-GAAP
OPEX(In thousands, unaudited)
|
|
Three Months Ended March 31 |
|
|
|
2021 |
|
|
2020 |
|
GAAP
opex |
|
$ |
5,957 |
|
|
$ |
5,782 |
|
Stock compensation |
|
|
(114 |
) |
|
|
(81 |
) |
Merger and
acquisition/integration |
|
|
- |
|
|
|
(191 |
) |
Restructuring costs |
|
|
(36 |
) |
|
|
(74 |
) |
US GAAP purchase
accounting |
|
|
- |
|
|
|
(100 |
) |
Depreciation &
amortization (ex. COGS) |
|
|
(447 |
) |
|
|
(445 |
) |
Non recurring arbitration
legal costs |
|
|
(4 |
) |
|
|
- |
|
Non GAAP
opex |
|
$ |
5,356 |
|
|
$ |
4,891 |
|
ContactWireless Telecom Group Inc.25 Eastmans
RoadParsippany, NJ 07054Tel. (973) 386-9696Fax (973) 402-4042
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