Highlights:
- Net revenues of $9,000,000 for the
quarter ended December 31, 2016
- A year over year increase of
$1,075,000, or 14%, over the same period 2015
- A sequential increase of $661,000, or
7.9%, over the third quarter ended September 30, 2016, representing
the 4th sequential quarter of increased revenues
- $410,000 Insurance claim settlement
proceeds, net of legal fees
- Creation of the Embedded Solutions
segment with the completion of the CommAgility acquisition,
which signed and closed on February 17th, 2017
- 2016 Year-end backlog of firm orders
of $4,000,000
- An increase of $1,500,000 million, or
60%, over the backlog of firm orders at year-end December 31,
2015
Wireless Telecom Group, Inc. (NYSE MKT: WTT) (the “Company”)
announced today results for the fourth quarter and twelve months
ended December 31, 2016.
For the quarter ended December 31, 2016, the Company reported
consolidated net revenues of $9,004,000, compared to $7,929,000 for
the same period in 2015, an increase of 14%. For the twelve months
ended December 31, 2016, the Company reported consolidated net
revenues of $31,327,000 compared to $33,109,000 for the same period
in 2015, a decrease of 5%.
For the quarter ended December 31, 2016, net revenues in the
Network Solutions segment were $5,003,000, compared to $4,827,000
for the same period in 2015, an increase of 3.6%. For the twelve
months ended December 31, 2016, net revenues in the Network
Solutions segment were $20,199,000 compared to $21,535,000 for the
same period in 2015, a decrease of 6.2%.
For the quarter ended December 31, 2016, net revenues in the
Test & Measurement segment were $4,002,000, compared to
$3,102,000 for the same period in 2015, an increase of 29%. For the
twelve months ended December 31, 2016, net revenues in the Test
& Measurement segment were $11,128,000 compared to $11,574,000
for the same period in 2015, a decrease of 3.9%.
The Company also reported consolidated gross profit of
$3,280,000, or 36.4%, for the quarter ended December 31, 2016,
compared to $3,774,000, or 47.6%, for the same period in 2015.
Consolidated gross profit was $13,162,000, or 42.0%, for the year
ended December 31, 2016, compared to $14,828,000, or 44.8%, for the
same period in 2015. 2016 gross profit was negatively impacted by
$800,000 of increased inventory obsolescence charges as compared to
2015, which included a change in accounting estimate.
In the fourth quarter, the Company changed its accounting for
its inventory obsolescence reserves from a specific identification
method to a usage based method which resulted in a $550,000 charge
in the fourth quarter of 2016. The Company also recorded a charge
of $120,000 in the fourth quarter, related to the disposal of
inventory in that period. During the nine months ending September
30, 2016, the Company had also increased its inventory obsolescence
reserves by $200,000. In total, the Company recorded inventory
obsolescence charges of $870,000 in 2016 which represented an
increase of approximately $800,000 over 2015.
Gross profit in the Network Solutions segment was $8,443,000, or
41.8%, for the year ended December 31, 2016, compared to
$9,171,000, or 42.6%, for the same period in 2015. Gross profit in
the Test & Measurement segment was $4,719,000, or 42.4%, for
the year ended December 31, 2016, compared to $5,657,000, or 48.9%,
for the same period in 2015. The decreases in gross profit reflect
the increased inventory obsolescence charges discussed above. The
Network Solutions segment 2016 gross profit included a charge of
$248,000 for the accounting changes related to inventory reserves
and the Test & Measurement segment 2016 gross profit included a
charge of $302,000 related to accounting changes for inventory
reserves.
For the quarter ended December 31, 2016, the Company reported
consolidated operating expenses of $4,822,000, compared to
$3,677,000 for the same period in 2015, an increase of $1,145,000.
For the twelve months ended December 31, 2016, the Company reported
consolidated operating expenses of $15,710,000, compared to
$14,081,000 for the same period in 2015, an increase of $1,629,000.
Included in 2016 operating expenses is $1,504,000 of higher G&A
expenses which reflect $1,208,000 of expenses related to our
M&A activities as well as $386,000 of higher stock compensation
expense.
The Net loss for the quarter-ended December 31, 2016 was
($1,159,000), compared to $24,000 of net income for the same period
in 2015. The net loss for the year-ended December 31, 2016 was
($1,832,000) compared to $377,000 of net income for the year-ended
December 31, 2015. The 2016 net loss included $800,000 of increased
inventory obsolescence charges related, in part, to a change in
accounting estimate, $1,208,000 of expenses in connection with the
Company’s M&A activities which were primarily professional
fees, and an insurance settlement gain of $410,000, net of legal
fees.
Non-GAAP Adjusted EBITDA for the quarter ended December 31, 2016
was a $(278,000) loss, compared to $287,000 of earnings for the
same period in 2015. Non-GAAP Adjusted EBITDA for the year ended
December 31, 2016 was $0, compared to a $1,631,000 of earnings for
the same period in 2015.
The decrease in non-GAAP Adjusted EBITDA from 2015 is
attributable to the $1,782,000 decrease in revenues and an increase
of $800,000 of inventory obsolescence costs previously
mentioned.
The Company defines EBITDA as its net earnings before interest
expense, provisions for taxes, depreciation expense and
amortization expense. “Adjusted EBITDA” is EBITDA excluding our
stock compensation expense, restructuring charges, insurance
settlement gains, M&A expenses 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’s consolidated backlog of firm orders to be shipped
in the next twelve months was approximately $4,000,000 at December
31, 2016, an increase of $1,500,000 compared to approximately
$2,500,000 at December 31, 2015.
Tim Whelan, CEO of Wireless Telecom Group, Inc., commented, “In
many respects, 2016 was a challenging year and the Company managed
through an environment of decreasing revenues and unexpected
declines in customer order flow. However, there were also a number
of positive milestones accomplished in the second half of the year
and early in 2017 which we expect will improve our revenue and
profitability outlook during 2017 which included the following:
- We realized improving customer orders
in the second half of 2016 which increased to $18 million as
compared to $15 million of customer orders in the first half of
2016, leading to sequentially improving quarters of revenue in 2016
and an increase of $1.5 million in our backlog of firm orders
entering 2017.
- We successfully launched an on-line
customer portal in September 2016 to improve our customer
experience and ease of doing business.
- We launched and announced our new
salt-fog and GPS repeater product lines in January 2017 reflecting
successful 2016 R&D investments.
- We upgraded our executive team with a
new CFO in January 2017.
- We brought to closure and realized
$410,000 of net proceeds from a favorable insurance claim in
December 2016.
- We successfully closed the acquisition
of CommAgility Limited (“CommAgility”) which was announced in
February 2017.”
Mr. Whelan continued, “We are excited about our opportunity in
2017 with the improved pacing of order flow from customers, our new
product launches, and our positioning with the CommAgility
acquisition which we announced in February 2017 and created our new
Embedded Solutions segment. The combination of our new products and
capabilities of the CommAgility embedded technology solutions
positions the Company to benefit from growth opportunities expected
from broad LTE/5G investments which we believe will be a multi-year
investment cycle and benefit the Company over the longer term. We
are also pleased with the progress we have made to strengthen the
Company’s shared values guiding our decision making, which is
aligned with a strengthened commitment to improved financial
performance to drive shareholder value in 2017.”
The Company expects the following for the combined Network
Solutions and Test & Measurement segments in the quarter ended
March 31, 2017:
- Revenue between $8.0 million - $8.5
million
- Gross margins between 45-46%
- Non-GAAP operating expenses between
$3.6 and $3.8 million (specifically, the Company’s GAAP operating
expenses, less depreciation expense, amortization expense, stock
compensation expense, restructuring charges, CommAgility M&A
costs, and integration expenses, which cannot be itemized with
particularity for reconciliation to the comparable GAAP measure at
this time).
For the full year 2017, the Company expects the Embedded
Solutions segment will contribute at or above the minimum earn-out
eligibility of $2.5 million of non-GAAP EBITDA, adjusted as
provided in the CommAgility Share Purchase Agreement, as compared
to $2.2 million of non-GAAP EBITDA, as so adjusted, for
CommAgility’s year ended September 30, 2016, as previously
disclosed. The Company’s preliminary estimated range of the
earn-out liability for the 2017 performance period is between
$750,000 and $1,500,000. The Company cannot at this time provide a
reconciliation of the expected Embedded Solutions 2017 non-GAAP
adjusted EBITDA to the most comparable expected GAAP financial
measure of segment net income primarily because the Company has not
yet completed work required for application of fair value
accounting and the conversion of UK GAAP to US GAAP. The Company’s
first quarter financial results will reflect inclusion of the
results of the Embedded Solutions segment for the stub period from
the closing date of February 17, 2017 through the end of the
quarter.
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 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 certain
non‐cash items, including items which do not directly correlate to
our business operations.
The Company believes that Adjusted EBITDA 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 revenue and profitability of the Company in 2017, the
success of new product lines, operating results for the Company’s
combined Network Solutions and Test & Measurement segments in
the quarter ending March 31, 2017 and the 2017 CommAgility
financial contribution and earn-out. Investors are cautioned that
any 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 Company’s ability to successfully integrate acquired
businesses, the ability to attract and retain management and other
key employees, fluctuations between the dollar and British pound,
compliance with changing laws and regulations, the ability of
management to successfully implement the Company’s business plan
and strategy, product demand and development of competitive
technologies in the Company’s market sector, the impact of
competitive products and pricing, the loss of any significant
customers of the Company, the Company’s ability to protect its
intellectual property rights, the effects of adoption of newly
announced accounting standards, the effects of economic conditions
generally and trade, legal and other economic risks, 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, 2016, and other
filings with the Securities and Exchange Commission. 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 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 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.wtcom.com.
See following Selected Financial Results
Three Months Ended Twelve Months Ended
December 31 December 31 Unaudited
2016
2015 2016 2015 NET
REVENUES $ 9,003,906 $ 7,928,963 $ 31,326,727 $ 33,109,106
Cost of Revenues 5,724,156 4,154,434 18,164,973 18,281,232
GROSS PROFIT 3,279,750 3,774,529 13,161,754
14,827,874 36.4 % 47.6 % 42.0 % 44.8 % Operating Expenses Research
and Development 1,003,190 1,057,793 4,046,106 3,957,274 Sales and
Marketing 1,492,808 1,247,808 5,196,331 5,159,805 General and
Administrative 2,325,906 1,370,909 6,467,426 4,963,756 Total
Operating Expenses 4,821,904 3,676,510 15,709,863 14,080,835
Operating (Loss) Income (1,542,154 ) 98,019 (2,548,109 ) 747,039
Other income/(expense) 443,014 (21,505 ) 363,851 (24,418 )
Income/(loss) before taxes (1,099,140 ) 76,514
(2,184,258 ) 722,621 Tax Provision/(Benefit) 60,175 52,831
(352,234 ) 345,940
Net (Loss)/Income $ (1,159,315 ) $
23,683 $ (1,832,024 ) $ 376,681 Net (Loss)/Income per common
share: Basic $ (0.06 ) $ 0.00 $ (0.10 ) $ 0.02 Diluted $ (0.06 ) $
0.00 $ (0.10 ) $ 0.02 Weighted average shares outstanding:
Basic 18,506,540 19,440,000 18,464,022 19,335,768 Diluted
19,451,686 19,895,000 19,170,322 20,322,017
December 31,
2016
2015 CURRENT ASSETS Cash & cash equivalents
$ 9,350,803 $ 9,726,007 Accounts Receivable - net of allowance for
doubtful accounts of $10,749 and $105,568 respectively 5,183,869
5,451,161 Inventories - net of reserves of $1,549,089 and
$1,110,288, respectively 8,452,751 8,068,728 Prepaid expenses and
other current assets 866,035 586,889
TOTAL CURRENT
ASSETS 23,853,458 23,832,785
PROPERTY PLANT AND EQUIPMENT - NET 2,166,566
1,742,888
OTHER ASSETS Goodwill
1,351,392 1,351,392 Deferred Income Taxes 7,403,600 7,013,929 Other
660,119 765,330
TOTAL OTHER ASSETS
9,415,111 9,130,651
TOTAL
ASSETS 35,435,135 34,706,324
CURRENT LIABILITIES Accounts payable $ 2,986,797 $ 1,046,651
Accrued expenses and other current liabilities 673,067 648,010
Equipment Lease Payable 0 73,760
TOTAL CURRENT
LIABILITIES $ 3,659,864 $ 1,768,421
LONG TERM LIABILITIES Deferred rent 69,058 33,452
COMMITMENTS AND CONTINGENCIES SHAREHOLDERS'
EQUITY Preferred stock, $.01 par value, 2,000,000 shares
authorized, none issued 0 0 Common stock, $.01 par value,
75,000,000 shares authorized, 29,786,224 and 29,627,891 shares
issued, 18,751,346 and 18,636,008 shared outstanding, respectively
297,862 296,279 Additional Paid in Capital 40,563,002 39,865,331
Retained Earnings 11,668,829 13,500,853 Treasury stock at cost, -
11,034,878 and 10,991,883 shares, respectively (20,823,480 )
(20,758,012 )
TOTAL SHAREHOLDERS' EQUITY
31,706,213 32,904,451
TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY 35,435,135
34,706,324 Reconciliation of Net Income
to Non-GAAP EBITDA and Adjusted EBITDA:
Three Months Ended Twelve Months Ended December 31 December
31 Unaudited Unaudited
2016 2015
2016 2015 GAAP Net
Income $ (1,159,315 ) $ 23,683 $ (1,832,024 ) $ 376,681 Tax
Provision/(Benefit) 60,175 52,831 (352,234 ) 345,940 Depreciation
Expense 173,241 120,000 635,861
458,633 Non-GAAP EBITDA (925,899 ) 196,514 (1,548,397 )
1,181,254 Stock Compensation Expense 266,642 90,000 699,254 312,776
Mergers and Acquisitions Expenses 790,918 1,208,221 Insurance
Settlement Gain (410,000 ) (410,000 ) Restructuring Charges
51,000 137,000 Non-GAAP Adjusted EBITDA
$ (278,339 ) $ 286,514 $ 78 $ 1,631,030
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170320006187/en/
Wireless Telecom Group, Inc.Mike Kandell, 973-386-9696
Wireless Telecom (AMEX:WTT)
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