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Wireless Telecom Group Inc (WTT) SEC Filing 8-K Material Event for the period ending Wednesday, August 11, 2021

Wireless Telecom Group Inc

CIK: 878828 Ticker: WTT

 

Exhibit 99.1

 

Wireless Telecom Group INC.

 

25 Eastmans Road, Parsippany, NJ 07054

Tel. (973) 386-9696 Fax (973) 402-4042

 

WIRELESS TELECOM GROUP ANNOUNCES

SECOND QUARTER 2021 FINANCIAL RESULTS

 

NEWS RELEASE

 

Highlights for the quarter ended June 30, 2021:

 

Net revenues of $12.0 million, an increase of 8.2% from the same period last year, and up 6.2% from the 2021 first quarter
Gross profit of $6.1 million, gross profit margin of 51.0%, representing the fifth straight quarter of consolidated gross profit margin greater than 50%
Operating income of $165,000, compared to an operating loss of $59,000 in the same period last year
Net income of $1.5 million which includes gain on extinguishment of PPP loan of $2.0 million, compared to a net loss of $668,000 in the same period last year
Non-GAAP adjusted EBITDA of $864,000, compared to a non-GAAP adjusted EBITDA of $794,000 in the same period last year
New customer orders of $14.5 million, a book-to-bill ratio of 1.21
Backlog of $12.5 million, an increase of $6.3 million compared to June 30, 2020, the highest backlog in over 4 years

 

August 11, 2021

 

Parsippany, New Jersey – Wireless Telecom Group, Inc. (NYSE American: WTT) (the “Company”) today announced results for the three months ended June 30, 2021.

 

Tim Whelan, CEO of Wireless Telecom Group, Inc. stated, “Strong second quarter operating and financial performance is encouraging, which reflects the benefits of our long-term strategic plan and improving end-market demand. We ended the second quarter with record quarterly new bookings, as we experience strong orders across all our product groups. This was our fifth straight positive book-to-bill outcome and helped drive an increase in our second quarter backlog to $12.5 million, which is the highest quarterly backlog in the last several years.”

 

Mr. Whelan continued, “During the quarter, we continued our streak of new 5G software customers, with two new customers for our Radio, Baseband and Software solutions. In fact, over the past 5 quarters, we have added 10 new customers demonstrating increasing demand for our leading LTE/5G software and service solutions. We also realized our highest quarter of bookings in Test & Measurement with strength across all our brands. Within RF components, we realized a second quarter of higher sequential bookings and a return to over $5.0 million of quarterly bookings for our Microlab products, driven, in part, by larger project order flow. In addition, we are pleased with the forgiveness of our PPP loan, and we feel more confident about the health of the business and our ability to achieve our strategic goals of double-digit organic sales growth, gross margins above 50% and improving operating margins in 2021.”

 

 

 

 

Second Quarter 2021 Operating Results:

 

Net revenues of $12.0 million, an increase of $915,000, or 8.2% over the prior year period primarily due to increased sales of our digital signal processing cards at our Radio, Baseband and Software (“RBS”) product group, and higher Test & Measurement (“T&M”) revenues, partially offset by lower revenue at our RF Components (“RFC”) product group.
Gross profit of $6.1 million, an increase of $466,000, or 8.2% over the prior year period due to higher revenues at T&M and RBS, partially offset by lower revenues at RFC. Gross profit margin was stable with the prior year at 51.0%.
Backlog of $12.5 million, an increase of $2.5 million, or 25%, compared to March 31, 2021, and an increase of $6.3 million, or 100% year-over-year.
As a percent of revenue, total operating expenses were 49.6%, compared to 51.6% for the same period last year. Operating expenses of $6.0 million, an increase of $242,000, or 4.2% from the prior year period primarily due to an increase in headcount related expenses.
GAAP net income of $1.5 million compared to a net loss of $668,000 in the prior year period due primarily to the recognition of a gain on extinguishment of debt related to the forgiveness of the PPP loan in the current year as well as improved operating income.
Non-GAAP adjusted EBITDA of $864,000 compared to $794,000 in the prior year due primarily to higher revenues and gross profit. 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 income is provided later in this press release.

 

Cash Flow and Balance Sheet:

 

Cash provided by operations of $394,000 compared to cash used by operations of $616,000 in the prior year period, due primarily to an increase in operating income as compared to the prior year.
Net debt of $3.6 million as of June 30, 2021 compared to $5.4 million as of December 31, 2020.
No outstanding borrowings under the asset-based revolver and availability of $7.6 million after giving effect to borrowing base calculations as of June 30, 2021.

 

Conference Call

 

Wireless Telecom Group Inc. will host a conference call on August 11, 2021, at 8:30 a.m. EDT in which management will discuss second 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 248319. The call will also be webcast over the internet at the following URL:

https://www.webcaster4.com/Webcast/Page/1690/42411

 

A replay will be made available on the Wireless Telecom website following the conference call.

 

Contacts:

 

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 evolving COVID-19 pandemic may have on our business, our supply chain, freight costs 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, 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 GroupINC.

 

CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME/(LOSS)

 (UNAUDITED)

(In thousands, except per share amounts)

 

   For the Three Months Ended   For the Six Months Ended 
   June 30   June 30 
    2021    2020    2021    2020 
Net revenues  $12,023   $11,108   $23,344   $20,536 
                     
Cost of revenues   5,889    5,440    11,265    10,441 
                     
Gross profit   6,134    5,668    12,079    10,095 
Operating expenses                    
Research and development   1,464    1,675    2,846    3,254 
Sales and marketing   1,699    1,661    3,412    3,379 
General and administrative   2,806    2,391    5,668    4,878 
Total operating expenses   5,969    5,727    11,926    11,511 
                     
Operating income/(loss)   165    (59)   153    (1,416)
                     
Extinguishment of PPP loan   2,045    -    2,045    - 
Other income/(expense)   (15)   56    8    295 
Interest expense   (285)   (246)   (582)   (471)
                     
Income/(Loss) before taxes   1,910    (249)   1,624    (1,592)
                     
Tax provision/(benefit)   373    419    321    225 
                     
Net income/(loss)  $1,537   $(668)  $1,303   $(1,817)
                     
Other comprehensive income/(loss):                    
Foreign currency translation adjustments   12    (35)   87    (971)
Comprehensive income/(loss)  $1,549   $(703)  $1,390   $(2,788)
                     
Income/(Loss) per share:                    
Basic  $0.07   $(0.03)  $0.06   $(0.08)
Diluted  $0.06   $(0.03)  $0.05   $(0.08)
                     
Weighted average shares outstanding:                    
Basic   21,763    21,707    21,728    21,626 
Diluted   24,343    21,707    24,063    21,626 

 

 

 

 

CONSOLIDATED BALANCE SHEET

(In thousands, except number of shares and par value)

 

 

   (Unaudited)     
   June 30
2021
   December 31
2020
 
CURRENT ASSETS          
Cash & cash equivalents  $4,213   $4,910 
Accounts receivable - net of reserves of $214 and $143, respectively   6,532    5,520 
Inventories - net of reserves of $1,216 and $1,129 respectively   9,365    8,796 
Prepaid expenses and other current assets   2,152    2,172 
TOTAL CURRENT ASSETS   22,262    21,398 
           
PROPERTY PLANT AND EQUIPMENT - NET   1,731    1,824 
           
OTHER ASSETS          
Goodwill   11,564    11,512 
Acquired intangible assets, net   4,602    5,242 
Deferred income taxes   5,455    5,701 
Right of use assets   1,417    1,680 
Other assets   509    561 
TOTAL OTHER ASSETS   23,547    24,696 
           
TOTAL ASSETS  $47,540   $47,918 
           
CURRENT LIABILITIES          
Short term debt  $84   $512 
Accounts payable   2,094    1,546 
Short term leases   559    534 
Accrued expenses and other current liabilities   6,705    7,997 
Deferred revenue   598    924 
TOTAL CURRENT LIABILITIES   10,040    11,513 
           
LONG TERM LIABILITIES          
Long term debt   6,925    8,895 
Long term leases   914    1,200 
Other long-term liabilities   1,778    82 
Deferred tax liability   455    377 
TOTAL LONG-TERM LIABILITIES   10,072    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 35,112,421 and 34,888,904 shares issued, 21,883,235 and 21,669,361 shares outstanding   351    349 
Additional paid in capital   50,364    50,163 
Retained earnings   358    (946)
Treasury stock at cost, 13,229,186 and 13,219,543 shares   (24,573)   (24,556)
Accumulated other comprehensive income   928    841 
TOTAL SHAREHOLDERS’ EQUITY   27,428    25,851 
           
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY  $47,540   $47,918 

 

 

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS

 (UNAUDITED)

(In thousands)

 

   For the Six Months 
   Ended June 30 
   2021   2020 
CASH FLOWS PROVIDED/(USED) BY OPERATING ACTIVITIES          
Net Income/(Loss)  $1,303   $(1,817)
Adjustments to reconcile net loss to net cash used by operating activities:          
Depreciation and amortization   1,065    1,049 
Extinguishment of PPP loan   (2,045)   - 
Amortization of debt issuance fees   150    137 
Share-based compensation expense   203    210 
Deferred rent   (15)   (14)
Deferred income taxes   320    695 
Provision for doubtful accounts   71    2 
Inventory reserves   85    90 
Changes in assets and liabilities, net of acquisition:          
Accounts receivable   (1,079)   (1,351)
Inventories   (645)   (260)
Prepaid expenses and other assets   319    (110)
Accounts payable   585    16 
Accrued expenses and other liabilities   77    737 
Net cash provided/(used) by operating activities   394    (616)
           
CASH FLOWS PROVIDED/(USED) BY INVESTING ACTIVITIES          
Capital expenditures   (313)   (100)
Acquisition of business, net of cash acquired   (200)   (7,189)
Net cash provided/(used) by investing activities   (513)   (7,289)
           
CASH FLOWS PROVIDED/(USED) BY FINANCING ACTIVITIES          
Revolver borrowings   -    16,856 
Revolver repayments   -    (18,840)
Term loan borrowings   -    8,400 
Term loan repayments   (470)   (384)
Debt issuance fees   -    (1,261)
PPP loan        2,045 
Payment of contingent consideration   (105)   - 
Shares withheld for employee taxes   (17)   (26)
Net cash provided/(used) by financing activities   (592)   6,790 
           
Effect of Exchange Rate Changes on Cash and Cash Equivalents   14    (236)
NET DECREASE IN CASH AND CASH EQUIVALENTS   (697)   (1,351)
           
Cash and Cash Equivalents, at Beginning of Period   4,910    4,245 
           
CASH AND CASH EQUIVALENTS, AT END OF PERIOD  $4,213   $2,894 
           
SUPPLEMENTAL INFORMATION:          
Cash paid during the period for interest  $204   $347 
Cash paid during the period for income taxes  $110   $40 

 

 

 

 

NET REVENUE AND GROSS PROFIT BY PRODUCT GROUP

(In thousands, unaudited)

 

   Three months ended June 30, 
   Revenue   % of Revenue   Change 
   2021   2020   2021   2020   Amount   Pct. 
RF components  $4,235   $5,861    35.2%   52.7%  $(1,626)   -27.7%
Test and measurement   5,521    4,472    45.9%   40.3%   1,049    23.5%
Radio, baseband, software   2,267    775    18.9%   7.0%   1,492    192.5%
Total net revenues  $12,023   $11,108    100.0%   100.0%  $915    8.2%

 

   Three months ended June 30, 
   Gross Profit   Gross Profit %   Change 
   2021   2020   2021   2020   Amount   Pct. 
RF components  $1,757   $2,707    41.5%   46.2%  $(950)   -35.1%
Test and measurement   3,269    2,365    59.2%   52.9%   904    38.2%
Radio, baseband, software   1,108    596    48.9%   76.9%   512    85.9%
Total gross profit  $6,134   $5,668    51.0%   51.0%  $466    8.2%

 

   Six months ended June 30, 
   Revenue   % of Revenue   Change 
   2021   2020   2021   2020   Amount   Pct. 
RF components  $7,372   $10,137    31.6%   49.4%  $(2,765)   -27.3%
Test and measurement   10,848    8,216    46.5%   40.0%   2,632    32.0%
Radio, baseband, software   5,124    2,183    21.9%   10.6%   2,941    134.7%
Total net revenues  $23,344   $20,536    100.0%   100.0%  $2,808    13.7%

 

   Six months ended June 30, 
   Gross Profit   Gross Profit %   Change 
   2021   2020   2021   2020   Amount   Pct. 
RF components  $2,848   $4,649    38.6%   45.9%  $(1,801)   -38.7%
Test and measurement   6,323    4,269    58.3%   52.0%   2,054    48.1%
Radio, baseband, software   2,908    1,177    56.8%   53.9%   1,731    147.1%
Total gross profit  $12,079   $10,095    51.7%   49.2%  $1,984    19.7%

 

 

 

 

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 
   2021   2020   2021   2020 
GAAP Net Income/(Loss), as reported  $1,537   $(668)  $1,303   $(1,817)
Tax Provision/(Benefit)   373    418    321    225 
Depreciation and Amortization Expense   534    525    1,065    1,049 
Interest Expense   285    246    582    471 
Non-GAAP EBITDA   2,729    521    3,271    (72)
Stock Compensation   89    128    203    210 
Merger and Acquisition/Integration   72    37    72    228 
Restructuring Costs   -    -    36    73 
Inventory Impairment Recovery   -    (12)   -    (13)
US GAAP Purchase Accounting   -    114    -    290 
FX (Gain)/Loss   19    4    (6)   (235)
PPP Loan Forgiveness   (2,045)   -    (2,045)   - 
Non-Recurring Arbitration Legal Costs   -    2    4    3 
Non-GAAP Adjusted EBITDA  $864   $794   $1,535   $484 

 

RECONCILIATION OF OPEX TO NON-GAAP OPEX

(In thousands, unaudited)

 

   Three Months Ended   Six Months Ended 
   June 30   June 30 
   2021   2020   2021   2020 
GAAP Opex  $5,969   $5,727   $11,926   $11,511 
Stock Compensation   (89)   (128)   (203)   (210)
Merger and Acquisition/Integration   (72)   (37)   (72)   (228)
Restructuring Costs   -    -    (36)   (73)
US GAAP Purchase Accounting   -    -    -    (100)
Depreciation & Amortization (ex. COGS)   (452)   (432)   (899)   (877)
Non-Recurring Arbitration Legal Costs   -    (2)   (4)   (3)
Non-GAAP Opex  $5,356   $5,128   $10,712   $10,020 

 

 

 

 

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Ticker: WTT
CIK: 878828
Form Type: 8-K Corporate News
Accession Number: 0001493152-21-019271
Submitted to the SEC: Wed Aug 11 2021 6:20:15 AM EST
Accepted by the SEC: Wed Aug 11 2021
Period: Wednesday, August 11, 2021
Industry: Instruments For Meas And Testing Of Electricity And Elec Signals
Events:
  1. Earnings Release
  2. Financial Exhibit

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