Highlights for the year ended December 31, 2020:
Highlights for the quarter ended December 31, 2020:
Parsippany, New Jersey, March 19, 2021 (GLOBE NEWSWIRE) — Wireless Telecom Group, Inc. (NYSE American: WTT) (the �Company) announced today results for the fourth quarter and twelve months ended December 31, 2020.
Tim Whelan, CEO of Wireless Telecom Group, Inc. stated, 2020 was a year of progress as we worked hard to overcome the challenges associated with the global pandemic and the declines in demand from our former largest customer. Our progress is a testament to the resilience and dedication of our employees, as well as the power of our global brands. During one of the most challenging years for any business, we controlled our costs, increased our gross profit margins, diversified our customer base and built our backlog with four strong quarters of bookings heading into 2021.
Mr. Whelan continued, We also successfully completed and integrated the Holzworth acquisition during 2020. Holzworth continues to exceed our expectations as a result of the integration into our sales channels and customer base, and we realized strong revenue growth with new customers. We also announced our NXP collaboration, which in its first year has already led to new customers and new software contracts. Holzworth and our NXP partnership are expected to meaningfully contribute to our growth in 2021 and beyond.
Across all our product groups, we are focused on aligning our resources to the expected secular growth in 5G investments, increasing demands for test & measurement solutions and the requirements of private network buildouts. Looking into 2021, we expect to make meaningful progress against our strategic plan outlined during last years annual meeting, which includes our goals of returning to double-digit organic growth, maintaining gross margin above 50% and improving operating margins.
The Company expects first quarter 2021 revenues and bookings to be comparable to the fourth quarter of 2020.
Full Year 2020 Operating Results:
Cash Flow and Balance Sheet
Conference Call
As previously announced, Wireless Telecom Group Inc. will host a conference call on March 19, 2021 at 8:30 a.m. EDT in which management will discuss fourth quarter and year-end 2020 results and related matters. To participate in the conference call, dial 800-346-7359 or 973-528-0008. The conference identification number is 248191. The call will also be webcast over the internet at the following URL:
https://www.webcaster4.com/Webcast/Page/1690/39641
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
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 Companys 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.
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 Companys 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 managements 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, our expectation to make meaningful progress against our strategic plan as outlined during the annual meeting last year, which includes our goals of double-digit organic growth, maintaining gross margins above 50%, and improved operating margins; to have comparable sequential revenue and bookings from Q4 2020 in the first quarter of 2021; and improving market dynamics and our expectation of continuing investment in 5G, increasing demands for test & measurement solutions and the requirements of private network buildouts. 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 impact of the coronavirus outbreak on customer orders, supply chain and the Companys operations; the ability of the Company to obtain forgiveness of the PPP loan pursuant to the CARES Act and provisions of the PPP; the demand for private 4G LTE and 5G private networks; the loss of any significant customers of the Company; the ability of management to successfully implement the Companys business plan and strategy; managements ability to integrate the Holzworth business successfully; the impact of competitive products and pricing; as well as other risks and uncertainties set forth in the Companys Annual Report on Form 10-K for the year ended December 31, 2020. 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, 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 Groups website address is http://www.wirelesstelecomgroup.com.
Contact
Wireless Telecom Group Inc.
25 Eastmans Road
Parsippany, NJ 07054
Tel: (973) 386-9696
Fax: (973) 386-9191
Wireless Telecom Group, Inc.
CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME/(LOSS)
(In thousands, except per share amounts)
For the Three Months Ended | For the Twelve Months Ended | |||||||||||||||
December 31 | December 31 | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Net revenues | $ | 10,343 | $ | 11,569 | $ | 41,748 | $ | 48,921 | ||||||||
Cost of revenues | 5,125 | 5,965 | 20,781 | 26,632 | ||||||||||||
Gross profit | 5,218 | 5,604 | 20,967 | 22,289 | ||||||||||||
Operating expenses | ||||||||||||||||
Research and development | 1,309 | 1,361 | 6,389 | 5,917 | ||||||||||||
Sales and marketing | 1,844 | 1,959 | 6,955 | 7,677 | ||||||||||||
General and administrative | 2,586 | 2,834 | 9,907 | 10,174 | ||||||||||||
Goodwill impairment | 4,742 | – | 4,742 | – | ||||||||||||
Loss on change in fair value of contingent consideration | 1,073 | – | 1,073 | – | ||||||||||||
Total operating expenses | 11,554 | 6,154 | 29,066 | 23,768 | ||||||||||||
Operating loss | (6,336 | ) | (550 | ) | (8,099 | ) | (1,479 | ) | ||||||||
Other income/(expense) | (66 | ) | (275 | ) | 187 | (2 | ) | |||||||||
Interest expense | (258 | ) | (57 | ) | (985 | ) | (305 | ) | ||||||||
Loss before taxes | (6,660 | ) | (882 | ) | (8,897 | ) | (1,786 | ) | ||||||||
Tax benefit | (1,162 | ) | (1,117 | ) | (809 | ) | (1,372 | ) | ||||||||
Net loss | $ | (5,498 | ) | $ | 235 | $ | (8,088 | ) | $ | (414 | ) | |||||
Other comprehensive income/(loss): | ||||||||||||||||
Foreign currency translation adjustments | 595 | 1,103 | 190 | 539 | ||||||||||||
Comprehensive income/(loss) | $ | (4,903 | ) | $ | 1,338 | $ | (7,898 | ) | $ | 125 | ||||||
Loss per share: | ||||||||||||||||
Basic | $ | (0.25 | ) | $ | 0.01 | $ | (0.37 | ) | $ | (0.02 | ) | |||||
Diluted | $ | (0.25 | ) | $ | 0.01 | $ | (0.37 | ) | $ | (0.02 | ) | |||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 21,734 | 21,130 | 21,657 | 21,111 | ||||||||||||
Diluted | 21,734 | 21,630 | 21,657 | 21,111 |
CONSOLIDATED BALANCE SHEET
(In thousands, except number of shares and par value)
December 31 | December 31 | |||||||
2020 | 2019 | |||||||
CURRENT ASSETS | ||||||||
Cash & cash equivalents | $ | 4,910 | $ | 4,245 | ||||
Accounts receivable – net of reserves of $38 and $69, respectively | 5,520 | 6,152 | ||||||
Inventories – net of reserves of $1,129 and $969, respectively | 8,796 | 7,325 | ||||||
Prepaid expenses and other current assets | 2,172 | 1,871 | ||||||
TOTAL CURRENT ASSETS | 21,398 | 19,593 | ||||||
PROPERTY PLANT AND EQUIPMENT – NET | 1,824 | 2,147 | ||||||
OTHER ASSETS | ||||||||
Goodwill | 11,512 | 10,069 | ||||||
Acquired intangible assets, net | 5,242 | 2,219 | ||||||
Deferred income taxes, net | 5,701 | 6,013 | ||||||
Right of use assets | 1,680 | 1,436 | ||||||
Other | 561 | 874 | ||||||
TOTAL OTHER ASSETS | 24,696 | 20,611 | ||||||
TOTAL ASSETS | $ | 47,918 | $ | 42,351 | ||||
CURRENT LIABILITIES | ||||||||
Short term debt | $ | 512 | $ | 2,696 | ||||
Accounts payable | 1,546 | 2,227 | ||||||
Short term leases | 534 | 440 | ||||||
Accrued expenses and other current liabilities | 7,997 | 2,657 | ||||||
Deferred revenue | 924 | 42 | ||||||
TOTAL CURRENT LIABILITIES | 11,513 | 8,062 | ||||||
LONG TERM LIABILITIES | ||||||||
Long term debt | 8,895 | – | ||||||
Long term leases | 1,200 | 1,018 | ||||||
Other long term liabilities | 82 | 77 | ||||||
Deferred tax liability | 377 | 503 | ||||||
TOTAL LONG TERM LIABILITIES | 10,554 | 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 34,888,904 and 34,488,252 shares issued, 21,669,361 and 21,300,252 shares outstanding | 349 | 345 | ||||||
Additional paid in capital | 50,163 | 49,062 | ||||||
Retained earnings/(deficit) | (946 | ) | 7,142 | |||||
Treasury stock at cost, 13,219,543 and 13,188,000 shares | (24,556 | ) | (24,509 | ) | ||||
Accumulated other comprehensive income | 841 | 651 | ||||||
TOTAL SHAREHOLDERS EQUITY | 25,851 | 32,691 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY | $ | 47,918 | $ | 42,351 |
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
For the Twelve Months | ||||||||
Ended December 31 | ||||||||
2020 | 2019 | |||||||
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES | ||||||||
Net loss | $ | (8,088 | ) | $ | (414 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 2,238 | 2,151 | ||||||
Goodwill impairment | 4,742 | – | ||||||
Amortization of debt issuance fees | 297 | 63 | ||||||
Share-based compensation expense | 474 | 584 | ||||||
Deferred rent | (29 | ) | (24 | ) | ||||
Deferred income taxes | 178 | (551 | ) | |||||
Provision for doubtful accounts | (31 | ) | 25 | |||||
Inventory reserves | 157 | 103 | ||||||
Changes in assets and liabilities, net of acquisition: | ||||||||
Accounts receivable | 1,209 | 2,465 | ||||||
Inventories | (186 | ) | (502 | ) | ||||
Prepaid expenses and other assets | 923 | 42 | ||||||
Accounts payable | (842 | ) | (1,055 | ) | ||||
Payment of contingent consideration | – | (772 | ) | |||||
Accrued expenses and other liabilities | 1,938 | (2,035 | ) | |||||
Net cash provided by operating activities | 2,980 | 80 | ||||||
CASH FLOWS USED BY INVESTING ACTIVITIES | ||||||||
Capital expenditures | (364 | ) | (392 | ) | ||||
Acquisition of business, net of cash acquired | (8,246 | ) | (426 | ) | ||||
Net cash used by investing activities | (8,610 | ) | (818 | ) | ||||
CASH FLOWS PROVIDED/(USED) BY FINANCING ACTIVITIES | ||||||||
Revolver borrowings | 39,935 | 36,544 | ||||||
Revolver repayments | (42,289 | ) | (35,712 | ) | ||||
Term loan borrowings | 8,400 | – | ||||||
Term loan repayments | (426 | ) | (152 | ) | ||||
Debt issuance fees | (1,327 | ) | (110 | ) | ||||
Paycheck Protection Program loan | 2,045 | – | ||||||
Payment of contingent consideration | – | (782 | ) | |||||
Proceeds from exercise of stock options | 16 | – | ||||||
Tax withholding payments for vested equity awards | (46 | ) | – | |||||
Net cash provided/(used) by financing activities | 6,308 | (212 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents | (13 | ) | 181 | |||||
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS | 665 | (770 | ) | |||||
Cash and cash equivalents, at beginning of period | 4,245 | 5,015 | ||||||
CASH AND CASH EQUIVALENTS, AT END OF PERIOD | $ | 4,910 | $ | 4,245 | ||||
SUPPLEMENTAL INFORMATION: | ||||||||
Cash paid during the period for interest | $ | 703 | $ | 185 | ||||
Cash paid during the period for income taxes | $ | 65 | $ | 108 |
NET REVENUE AND GROSS PROFIT BY PRODUCT GROUP
(In thousands)
Three months ended December 31 | ||||||||||||||||||||||||
Revenue | % of Revenue | Change | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | Amount | Pct. | |||||||||||||||||||
RF components | $ | 3,112 | $ | 5,312 | 30.1 | % | 45.9 | % | $ | (2,200 | ) | -41.4 | % | |||||||||||
Test and measurement | 6,537 | 4,348 | 63.2 | % | 37.6 | % | 2,189 | 50.3 | % | |||||||||||||||
Radio, baseband, software | 694 | 1,909 | 6.7 | % | 16.5 | % | (1,215 | ) | -63.6 | % | ||||||||||||||
Total net revenues | $ | 10,343 | $ | 11,569 | 100.0 | % | 100.0 | % | $ | (1,226 | ) | -10.6 | % |
Three months ended December 31 | ||||||||||||||||||||||||
Gross Profit | Gross Profit % | Change | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | Amount | Pct. | |||||||||||||||||||
RF components | $ | 1,119 | $ | 2,323 | 36.0 | % | 43.7 | % | $ | (1,204 | ) | -51.8 | % | |||||||||||
Test and measurement | 3,896 | 2,478 | 59.6 | % | 57.0 | % | 1,418 | 57.2 | % | |||||||||||||||
Radio, baseband, software | 202 | 803 | 29.1 | % | 42.1 | % | (601 | ) | -74.8 | % | ||||||||||||||
Total gross profit | $ | 5,217 | $ | 5,604 | 50.4 | % | 48.4 | % | $ | (387 | ) | -6.9 | % |
Twelve months ended December 31 | ||||||||||||||||||||||||
Revenue | % of Revenue | Change | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | Amount | Pct. | |||||||||||||||||||
RF components | $ | 17,667 | $ | 21,830 | 42.3 | % | 44.6 | % | $ | (4,163 | ) | -19.1 | % | |||||||||||
Test and measurement | 20,551 | 13,566 | 49.2 | % | 27.7 | % | 6,985 | 51.5 | % | |||||||||||||||
Radio, baseband, software | 3,530 | 13,525 | 8.5 | % | 27.7 | % | (9,995 | ) | -73.9 | % | ||||||||||||||
Total net revenues | $ | 41,748 | $ | 48,921 | 100.0 | % | 100.0 | % | $ | (7,173 | ) | -14.7 | % |
Twelve months ended December 31 | ||||||||||||||||||||||||
Gross Profit | Gross Profit % | Change | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | Amount | Pct. | |||||||||||||||||||
RF components | $ | 7,695 | $ | 9,216 | 43.6 | % | 42.2 | % | $ | (1,521 | ) | -16.5 | % | |||||||||||
Test and measurement | 11,347 | 7,320 | 55.2 | % | 54.0 | % | 4,027 | 55.0 | % | |||||||||||||||
Radio, baseband, software | 1,925 | 5,753 | 54.5 | % | 42.5 | % | (3,828 | ) | -66.5 | % | ||||||||||||||
Total gross profit | $ | 20,967 | $ | 22,289 | 50.2 | % | 45.6 | % | $ | (1,322 | ) | -5.9 | % |
RECONCILIATION OF NET INCOME TO NON-GAAP EBITDA AND NON-GAAP ADJUSTED EBITDA
(In thousands, unaudited)
Three Months Ended | Twelve Months Ended | |||||||||||||||
December 31 | December 31 | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
GAAP Net income/(loss), as reported | $ | (5,498 | ) | $ | 235 | $ | (8,088 | ) | $ | (414 | ) | |||||
Tax benefit | (1,162 | ) | (1,117 | ) | (809 | ) | (1,372 | ) | ||||||||
Depreciation and amortization expense | 607 | 480 | 2,238 | 2,151 | ||||||||||||
Interest expense/(Income) | 241 | 57 | 968 | 305 | ||||||||||||
Non-GAAP EBITDA | (5,812 | ) | (345 | ) | (5,691 | ) | 670 | |||||||||
Stock compensation | 114 | 24 | 474 | 584 | ||||||||||||
Merger and acquisition/integration | – | 845 | 243 | 845 | ||||||||||||
Restructuring costs | 3 | 127 | 122 | 250 | ||||||||||||
Inventory impairment recovery | – | (2 | ) | (32 | ) | (20 | ) | |||||||||
US GAAP purchase accounting | 116 | – | 664 | – | ||||||||||||
Change in fair value of contingent consideration | 1,073 | – | 1,073 | – | ||||||||||||
FX (gain)/loss | 75 | 286 | (64 | ) | 29 | |||||||||||
Goodwill impairment | 4,742 | – | 4,742 | – | ||||||||||||
Deferred S-3 costs | 255 | – | 255 | – | ||||||||||||
Non recurring arbitration legal costs | 37 | (39 | ) | 23 | 117 | |||||||||||
Non-GAAP adjusted EBITDA | $ | 603 | $ | 896 | $ | 1,809 | $ | 2,475 |
RECONCILIATION OF OPEX TO NON-GAAP OPEX
(In thousands, unaudited)
Three Months Ended | Twelve Months Ended | |||||||||||||||
December 31 | December 31 | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
GAAP opex | $ | 11,554 | $ | 6,154 | $ | 29,066 | $ | 23,768 | ||||||||
Stock compensation | (114 | ) | (24 | ) | (474 | ) | (584 | ) | ||||||||
Merger and acquisition/integration | – | (845 | ) | (243 | ) | (845 | ) | |||||||||
Restructuring costs | (3 | ) | (127 | ) | (122 | ) | (250 | ) | ||||||||
US GAAP purchase accounting | (116 | ) | – | (216 | ) | – | ||||||||||
Depreciation & amortization (ex. COGS) | (447 | ) | (429 | ) | (1,803 | ) | (1,908 | ) | ||||||||
Change in fair value of contingent consideration | (1,073 | ) | – | (1,073 | ) | – | ||||||||||
Goodwill impairment | (4,742 | ) | – | (4,742 | ) | – | ||||||||||
Deferred S-3 costs | (255 | ) | – | (255 | ) | – | ||||||||||
Non recurring arbitration legal costs | (37 | ) | 39 | (23 | ) | (117 | ) | |||||||||
Non GAAP opex | $ | 4,767 | $ | 4,768 | $ | 20,115 | $ | 20,064 |
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