Wireless Telecom Group Announces Third Quarter 2016 Financial Results

Wireless Telecom Group, Inc. (NYSE MKT:WTT) announced today results for the third quarter ended September 30, 2016.

Highlights:
  • $11 million in new sales orders, a sequential increase of 25% from the second quarter 2016 sales orders of $8.8m
  • $8.3 million in revenue for the quarter, a sequential increase of 10% from second quarter 2016 revenues of $7.6m
  • Gross profit margin of 45.8% in the quarter, a sequential increase of 190 basis points from the second quarter 2016 gross profit margin of 43.9%
  • Net income of $122,000, a sequential improvement from the second quarter net loss of ($218,000)

Tim Whelan, CEO of Wireless Telecom Group, Inc., commented, "As expected, our third quarter results reflected a return to profitability and sequential improvement throughout the income statement. We are pleased with the third quarter's growth in revenues and higher gross margins along with careful management of our operating costs. We expect continued improvement in financial performance in Q4 compared to Q3."

Mr. Whelan added, "We are also excited about the third quarter's 25% sequential increase in new sales orders which reflected improvements in both of our segments and all three of our brands, Microlab, Boonton, and Noisecom. We attribute this to large project execution in our Network Solutions segment of in-building-wireless distributed antenna systems by carriers, and increased spending by both enterprise and government customers in our Test & Measurement segment."

Continued Whelan, "In addition to driving operational excellence, we are accelerating our efforts evaluating strategic growth opportunities and continuing to focus on organic product growth initiatives as we prepare for 2017."

For the quarter ended September 30, 2016, the Company reported total net revenues of $8,344,000, compared to $8,339,000 for the same period in 2015, basically no change, but an increase of 10% over the sequential quarter. Net revenues in the Network Solutions segment were $5,507,000 for the quarter, compared to $5,482,000 for the same period in 2015, an increase of less than 1%, and an increase of 1% over the sequential quarter. Net revenues in the Test & Measurement segment were $2,837,000 for the quarter, compared to $2,857,000 for the same period in 2015, a decrease of 1%, however an increase of 33% over the sequential quarter.

Non-GAAP Adjusted EBITDA for the quarter ended September 30, 2016 was $652,000, compared to $412,000 for the same period in 2015. Our non-GAAP Adjusted EBITDA results do not include the Company's tax provision, depreciation and amortization, stock compensation expense, severance charges related to restructuring, as well as professional fees related to our Strategic Planning and Operating Committee's strategic evaluations. A reconciliation of net income to non-GAAP Adjusted EBITDA results is included as an attachment to this press release.

The Company reported net income of $122,000, or $0.01 per diluted share, for the third quarter of 2016, compared to net income of $75,000, or $0.00 per diluted share, for the third quarter of 2015, and a loss of ($0.01) per diluted share in the second quarter of 2016.

For the nine months ended September 30, 2016, the Company reported total net revenues of $22,323,000 for the period, compared to $25,180,000 for the same period in 2015, a decrease of 11%. Net revenues in the Network Solutions segment were $15,197,000, compared to $16,708,000 for the same period in 2015, a decrease of 9%. Net revenues in the Test and Measurement segment were $7,126,000 for the period, compared to $8,472,000 for the same period in 2015, a decrease of 16%.

Non-GAAP Adjusted EBITDA for the nine months ended September 30, 2016 was of $179,000, compared to $1,345,000 for the same period in 2015.

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 have limitations and 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

Except for historical information, the matters discussed in this news release may be considered "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. Such statements include declarations regarding the intent, belief or current expectations of the Company and its management. Prospective 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. Specifically, no assurances can be made with respect to: improvement in financial performance in Q4 compared to Q3; and continued increases in new sales orders, leading to improvements in order flow in both of our segments and all three of our brands, Microlab, Boonton and Noisecom; and our ability to accelerate our efforts evaluating strategic growth opportunities. Further information regarding risks and uncertainties that could affect the Company's results are identified in the Company's reports and registration statements filed with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2015.

About Wireless Telecom Group, Inc.

Wireless Telecom Group designs and manufactures radio frequency (RF) and microwave-based products for wireless and advanced communications industries and markets its products and services worldwide under the Boonton, Microlab and Noisecom brands. Its complementary suite of high performance components and instruments includes RF combiners and broadband combiner boxes for in-building distributed antenna systems deployments (DAS), RF power splitters and diplexers, hybrid couplers, peak power meters, signal analyzers, noise modules, precision noise and generators. The Company serves both commercial and government markets with workflow-oriented, WiFi, WiMAX, satellite, cable, radar, avionics, medical, and computing applications. 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
SELECTED FINANCIAL RESULTS
(In thousands, except per share amounts)
         
Three months ended Nine months ended

September 30,

September 30,
(unaudited) (unaudited)

2016
   

2015

2016
   

2015
Statement of Operations Data:
Net revenues $8,344 $8,339 $22,323 $25,180
 
Gross profit 3,823 3,623 9,882 11,053
 
Operating expenses
Research and development 949 1,026 3,043 2,899
Sales and marketing 1,216 1,225 3,704 3,912
General and administrative 1,390 1,210 4,142 3,593
Total operating expenses 3,555 3,461 10,888 10,404
 
Operating income (loss) 268 162 (1,006) 649
 
Other expense - net 27 6 79 3
 
Income (loss) before income taxes 241 157 (1,085) 646
 
Net income (loss) $122 $75 $(673) $353
 
Net income (loss) per common share:
Basic $0.01 $0.00 $(0.04) $0.02
Diluted $0.01 $0.00 $(0.04) $0.02
 
Weighted average shares outstanding:
Basic 18,721 19,626 18,650 19,550
Diluted 19,359 20,150 19,144 20,465
 
Three months ended Nine months ended

September 30,

September 30,
(unaudited) (unaudited)

2016

2015

2016

2015

Reconciliation of GAAP Net Income (Loss) to Non-GAAP
EBITDA and Adjusted EBITDA:
GAAP net income (loss) $122 $ 75 $(673) $ 353
Tax expense (benefit) 119 81 (412) 293
Depreciation and amortization 131 115 364 339
Non-GAAP EBITDA 372 271 (721) 985
 
Stock compensation expense 236 51 433 223
Severance charges - 90 51 137
Other non-recurring costs (1) 44 - 416 -
Non-GAAP Adjusted EBITDA $652 $412 $230 $1,345
 
(1) Includes professional fees related to our Strategic Planning and Operating Committee's strategic evaluations.
 
      September 30,     December 31,

2016

2015
(unaudited)
 

Balance Sheet Data:
Cash & cash equivalents $8,102 $9,726
Accounts receivable 5,636 5,451
Inventories 9,451 8,069
Prepaid expenses & other current
assets 672 587
Total Current Assets 23,861 23,833
 
Property, plant & equipment - net 2,136 1,743
 
Goodwill 1,351 1,351
Deferred income taxes 7,448 7,014
Other assets 695 765
Total other assets 9,494 9,130
 
Total assets $35,491 $34,706
 
Accounts payable

$2,138

$1,046
Accrued expenses & other current

 
liabilities

679

648
Equipment leases payable

14

74
Total current liabilities

2,831

1,768

 

 
Deferred rent

61

34

 
Common stock

297

296
Additional paid-in-capital

40,297

39,865
Retained earnings

12,828

13,501
Treasury stock

(20,823)

(20,758)
Total shareholders' equity

32,599

32,904

 

 

Total liabilities & shareholders' equity

$35,491

$34,706

 

 

 
         

Nine months ended

Nine monthsended

September 30, 2016

September 30, 2015
(Unaudited) (Unaudited)
Statement of Cash Flows Data:

Cash Flows (Used) Provided by Operating Activities:
Net income (loss)

$(673)

$353
Adjustments to reconcile net income (loss) to

 

 

net cash (used) provided by operating activities:
Depreciation and amortization

364
339
Share-based compensation expense 433 223
Deferred rent 27 22
Deferred income taxes (434) 217
Provision for doubtful accounts

Inventory reserves
(9)

221
5

36
Changes in assets and liabilities:
Accounts receivable (176) (436)
Inventories (1,603) (211)
Prepaid expenses and other assets (14) 568
Accounts payable 1,091 171
Accrued expenses and other current liabilities 31 (768)
Net cash (used) provided by operating activities (742) 519
 
Cash Flows (Used) by Investing Activities:
Capital Expenditures (715) (372)
 
Cash Flows (Used) by Financing Activities:
Proceeds from exercise of stock options - 23
Repayments of equipment leases payable (101) (116)
Repurchase of common stock (66) -
Net cash (used) for financing activities (167) (93)
 
Net (Decrease) Increase in Cash and Cash
Equivalents (1,624) 54
 
Cash and Cash Equivalents, at beginning of
period 9,726 10,724
 
Cash and Cash Equivalents, at end of period $8,102 $10,778
 

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