Wireless Telecom Group, Inc. (NYSE American: WTT) (the “Company”)
announced today results for the three months ended March 31, 2022.
Tim Whelan, CEO of Wireless Telecom Group, Inc.
stated, “Our first quarter revenues reflect a solid delivery
against our year-end backlog of $6.7 million. We initially expected
nearly $1 million of additional Q1 shipments which are currently
being delayed into the second quarter because of supply chain
delays and longer than expected export license issuances. We are
seeing some modest improvements in supplier delivery dates heading
into the second quarter, and we are building our inventory levels
to ensure we continue to keep pace with continued customer demand
and strong bookings. We expect to see meaningful sequential
increases in revenue and bookings in our second quarter.”
The Company’s strategic alternatives process
remains active and continuing.
Second Quarter
2023 Operating
Results:
- Consolidated net revenues decreased
$884,000 from the prior year period due to supply chain delays and
export license delays.
- Gross profit margin decreased from
57.9% in the prior year period to 57.0% in the first quarter 2023
due to lower revenue resulting in lower absorption of fixed
manufacturing costs.
- Operating expenses increased
$44,000 from the prior year period reflecting higher legal fees and
severance expenses offset by lower commissions and stock based
compensation expense.
- Loss from continuing operations of
($941,000) compared to a loss of ($796,000) in the prior year. The
higher loss is due primarily to lower gross profit offset by
interest income versus interest expense in the prior year.
- Non-GAAP Adjusted EBITDA of
$(123,000) compared to $455,000 in the prior year, primarily due to
lower revenues and higher legal expenses. 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 from
continuing operations is provided later in this press release.
- Our consolidated financial
statements as of and for the three months ended March 31, 2023
include the accounts of Noisecom, Boonton and Holzworth and have
been prepared using accounting principles generally accepted in the
United States. In accordance with applicable accounting guidance,
the results of Microlab and CommAgility are presented as
discontinued operations in the consolidated financial statements
for the three months ended March 31, 2022. All intercompany
transactions and balances have been eliminated in
consolidation.
Cash Flow and Balance
Sheet
- Cash balance of $19.6 million at
March 31, 2023, a decline of $1.2 million since December 31, 2022,
reflecting working capital investments and a higher net loss.
Contact Michael Kandell25 Eastmans
RoadParsippany, NJ 07054Tel: (973) 386-9696Fax: (973)
386-9191www.wirelesstelecomgroup.com
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 defines Non-GAAP adjusted operating
income/(loss) as GAAP operating income/(loss) excluding non-cash
amortization expense of purchased intangible assets, non-recurring
expenses associated with our strategic initiatives process,
non-cash stock compensation expense, restructuring charges and
changes in fair value of contingent consideration.
The Company defines Non-GAAP adjusted net
income/(loss) from continuing operations as GAAP net income/(loss)
from continuing operations excluding non-cash amortization expense
of purchased intangible assets, non-recurring expenses associated
with our strategic initiatives process, non-cash stock compensation
expense, restructuring charges, changes in fair value of contingent
consideration and gains or losses on extinguishment of debt.
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, non-recurring expenses associated with our
strategic alternatives activities, unrealized and realized foreign
exchange gains and losses, non-recurring legal fees associated with
arbitration, (gain)/loss on change in fair value of contingent
consideration, gain/loss on extinguishment of debt 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 views Non-GAAP Adjusted EBITDA,
Non-GAAP Adjusted Operating Income/(Loss) and Non-GAAP Adjusted Net
Income/(Loss) from Continuing Operations as important indicators of
performance, consistent with the manner in which management
measures and forecasts the Company’s performance. We believe
Non-GAAP measures are important performance metrics because they
facilitate 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 Non-GAAP Adjusted
EBITDA, Non-GAAP Adjusted Operating Income/(Loss) and Non-GAAP
Adjusted Net Income/(Loss) from Continuing Operations 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,
include our expectations of meaningful sequential increases in
revenue and bookings in our second quarter. 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 ongoing impact that the conflict in Ukraine and related
sanctions have had and may continue to have on our business, supply
chain, transportation costs, and our backlog; the impact inflation
has had and is expected to continue to have on our business and the
economy in general, our dependency on capital spending on wireless
test equipment by our customers and end users; the impact of the
loss of any significant customers; the ability of our management to
successfully implement our evolving business plan; the impact of
competitive products and pricing; our abilities to protect our
intellectual property rights and our ability to manage risks
related to our information technology and cyber security 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, 2022. 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, Holzworth, 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, and semiconductor industries,
Wireless Telecom Group products enable innovation across existing
and emerging wireless technologies. With a product portfolio
including peak power meters, signal generators, phase noise
analyzers, noise sources, and programmable noise generators,
Wireless Telecom Group supports the development, testing, and
deployment of wireless technologies around the globe. Wireless
Telecom Group, Inc.’s website address is
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 |
|
|
March 31 |
|
|
|
2023 |
|
|
2022 |
|
|
Net
revenues |
$ |
5,175 |
|
$ |
6,059 |
|
|
Cost of revenues |
|
2,227 |
|
|
2,551 |
|
|
Gross
profit |
|
2,948 |
|
|
3,508 |
|
|
Operating expenses |
|
|
|
Research and development |
|
409 |
|
|
495 |
|
|
Sales and marketing |
|
1,040 |
|
|
994 |
|
|
General and administrative |
|
2,881 |
|
|
2,797 |
|
|
Total operating expenses |
|
4,330 |
|
|
4,286 |
|
|
|
|
|
|
|
|
|
|
Operating income/(loss) |
|
(1,382 |
) |
|
(778 |
) |
|
|
|
|
|
Loss on extinguishment of
debt |
|
- |
|
|
(792 |
) |
|
Other income/(expense) |
|
104 |
|
|
95 |
|
|
Interest income/(expense) |
|
175 |
|
|
(177 |
) |
|
|
|
|
|
|
|
|
|
Income/(Loss) before taxes |
|
(1,103 |
) |
|
(1,652 |
) |
|
|
|
|
|
|
|
|
|
Tax provision/(benefit) |
|
(162 |
) |
|
(856 |
) |
|
|
|
|
|
Net
(loss) from continuing operations |
$ |
(941 |
) |
$ |
(796 |
) |
|
|
|
|
|
Net income from discontinued
operations, net of tax |
|
- |
|
|
10,992 |
|
|
Net
Income/(loss) |
$ |
(941 |
) |
$ |
10,196 |
|
|
|
|
|
|
Other comprehensive
income/(loss): |
|
|
|
Foreign currency translation adjustments |
|
- |
|
|
(137 |
) |
|
Comprehensive
Income/(Loss) |
$ |
(941 |
) |
$ |
10,059 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income/(Loss) per share from
continuing operations: |
|
|
|
Basic |
$ |
(0.04 |
) |
$ |
(0.04 |
) |
|
Diluted |
$ |
(0.04 |
) |
$ |
(0.04 |
) |
|
|
|
|
|
Income/(Loss) per share from
discontinued operations: |
|
|
|
Basic |
$ |
- |
|
$ |
0.49 |
|
|
Diluted |
$ |
- |
|
$ |
0.49 |
|
|
|
|
|
|
|
|
|
|
Net Income/(Loss) per
share: |
|
|
|
Basic |
$ |
(0.04 |
) |
$ |
0.45 |
|
|
Diluted |
$ |
(0.04 |
) |
$ |
0.45 |
|
|
|
|
|
|
Weighted average shares
outstanding: |
|
|
|
Basic |
|
21,363 |
|
|
22,603 |
|
|
Diluted |
|
21,363 |
|
|
22,603 |
|
|
CONSOLIDATED BALANCE
SHEET(In thousands,
except number of
shares and par
value)
|
(Unaudited) |
|
|
March
312023 |
December
312022 |
CURRENT
ASSETS |
|
|
Cash & cash equivalents |
$ |
19,555 |
|
$ |
20,707 |
|
Accounts receivable - net of reserves of $100 and $100,
respectively |
|
3,921 |
|
|
4,762 |
|
Inventories - net of reserves of $503 and $499, respectively |
|
6,208 |
|
|
5,087 |
|
Prepaid expenses and other current assets |
|
2,151 |
|
|
1,685 |
|
|
|
|
TOTAL CURRENT
ASSETS |
|
31,835 |
|
|
32,241 |
|
|
|
|
PROPERTY PLANT AND
EQUIPMENT - NET |
|
420 |
|
|
467 |
|
|
|
|
OTHER
ASSETS |
|
|
Goodwill |
|
6,000 |
|
|
6,000 |
|
Acquired intangible assets, net |
|
2,444 |
|
|
2,588 |
|
Deferred income taxes, net |
|
3,075 |
|
|
2 913 |
|
Right of use assets |
|
432 |
|
|
579 |
|
Other Assets |
|
173 |
|
|
185 |
|
|
|
|
TOTAL OTHER
ASSETS |
|
12,124 |
|
|
12,265 |
|
|
|
|
TOTAL
ASSETS |
$ |
44,379 |
|
$ |
44,973 |
|
|
|
|
CURRENT
LIABILITIES |
|
|
Accounts payable |
|
1,482 |
|
|
480 |
|
Short term leases |
|
132 |
|
|
251 |
|
Accrued expenses and other current liabilities |
|
2,198 |
|
|
2 693 |
|
Deferred revenue |
|
129 |
|
|
123 |
|
|
|
|
TOTAL CURRENT
LIABILITIES |
|
3,941 |
|
|
3,547 |
|
|
|
|
LONG TERM
LIABILITIES |
|
|
Long term leases |
|
330 |
|
|
364 |
|
Other long term liabilities |
|
17 |
|
|
24 |
|
TOTAL
LONG TERM LIABILITIES |
|
347 |
|
|
388 |
|
|
|
|
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
authorized35,437,693 and 36,440,636 shares issued, 21,371,047 and
21,438,571 shares outstanding |
|
365 |
|
|
365 |
|
Additional paid in capital |
|
52,880 |
|
|
52,764 |
|
Retained earnings/(deficit) |
|
14,202 |
|
|
15,143 |
|
Treasury stock at cost, 13,258,627 and 13,249,564 shares |
|
(27,356 |
) |
|
(27,234 |
) |
TOTAL SHAREHOLDERS'
EQUITY |
|
40,091 |
|
|
41,038 |
|
|
|
|
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY |
$ |
44,379 |
|
$ |
44,973 |
|
CONSOLIDATED
STATEMENTS OF CASH
FLOWS(In
thousands)(Unaudited)
|
For the Three
Months |
|
Ended March
31 |
|
|
2023 |
|
|
2022 |
|
CASH FLOWS (USED) BY
OPERATING ACTIVITIES |
|
|
Net income/(loss) |
$ |
(941 |
) |
$ |
10,197 |
|
Adjustments to reconcile net loss to net cash used by operating
activities: |
|
|
Depreciation and amortization |
|
231 |
|
|
433 |
|
Loss on extinguishment of term debt |
|
- |
|
|
792 |
|
Gain on sale of Microlab |
|
- |
|
|
(16,403 |
) |
Amortization of debt issuance fees |
|
- |
|
|
55 |
|
Share-based compensation expense |
|
116 |
|
|
330 |
|
Deferred rent |
|
(7 |
) |
|
(7 |
) |
Deferred income taxes |
|
(162 |
) |
|
3,265 |
|
Provision for doubtful accounts |
|
- |
|
|
(16 |
) |
Inventory reserves |
|
6 |
|
|
24 |
|
Changes in assets and
liabilities, net of divestiture: |
|
|
Accounts receivable |
|
842 |
|
|
(1,411 |
) |
Inventories |
|
(1,127 |
) |
|
(132 |
) |
Prepaid expenses and other assets |
|
(322 |
) |
|
(184 |
) |
Accounts payable |
|
1,002 |
|
|
304 |
|
Deferred Revenue |
|
5 |
|
|
(317 |
) |
Accrued expenses and other liabilities |
|
(648 |
) |
|
(505 |
) |
Net cash (used) by operating activities |
|
(1,005 |
) |
|
(3,575 |
) |
|
|
|
CASH FLOWS
PROVIDED/(USED) BY INVESTING ACTIVITIES |
|
|
Capital expenditures |
|
(25 |
) |
|
(151 |
) |
Deferred purchase price payment |
|
- |
|
|
(250 |
) |
Divestiture of Microlab, net |
|
- |
|
|
22,753 |
|
Net cash provided/(used) by investing
activities |
|
(25 |
) |
|
22,352 |
|
|
|
|
CASH FLOWS (USED) BY
FINANCING ACTIVITIES |
|
|
Term loan repayments |
|
- |
|
|
(4,104 |
) |
Proceeds from exercise of stock options |
|
- |
|
|
24 |
|
Shares withheld for employee taxes |
|
(122 |
) |
|
(19 |
) |
Net cash (used) by financing activities |
|
(122 |
) |
|
(4,099 |
) |
|
|
|
Effect of exchange rate
changes on cash and cash equivalents |
|
- |
|
|
(78 |
) |
NET INCREASE/(DECREASE) IN
CASH AND CASH EQUIVALENTS |
|
(1,152 |
) |
|
14,600 |
|
|
|
|
Cash and cash equivalents, at beginning of period |
|
20,707 |
|
|
4,472 |
|
|
|
|
CASH AND CASH EQUIVALENTS, AT END OF PERIOD |
$ |
19,555 |
|
$ |
19,072 |
|
|
|
|
SUPPLEMENTAL INFORMATION: |
|
|
Cash paid during the period for interest |
$ |
- |
|
$ |
122 |
|
Cash paid during the period for income taxes |
$ |
- |
|
$ |
12 |
|
RECONCILIATION OF
NON GAAP
MEASURES(In thousands,
unaudited)
|
Three Months Ended |
|
|
March 31 |
|
|
|
2023 |
|
|
2022 |
|
|
Net income/(loss) from
continuing operations |
$ |
(941 |
) |
$ |
(796 |
) |
|
Tax Provision/(Benefit) |
|
(162 |
) |
|
(856 |
) |
|
Depreciation and Amortization
Expense |
|
231 |
|
|
279 |
|
|
Interest (Income)/Expense |
|
(175 |
) |
|
177 |
|
|
Non-GAAP
EBITDA |
|
(1,047 |
) |
|
(1,196 |
) |
|
Stock Compensation |
|
116 |
|
|
330 |
|
|
Non recurring strategic
alternatives expenses |
|
500 |
|
|
530 |
|
|
Restructuring Cost |
|
308 |
|
|
- |
|
|
FX (Gain)/Loss |
|
- |
|
|
(1 |
) |
|
Loss on extinguishment of
debt |
|
- |
|
|
792 |
|
|
Non-GAAP Adjusted
EBITDA |
$ |
(123 |
) |
$ |
455 |
|
|
|
Three Months
EndedMarch
31 |
|
|
|
2023 |
|
|
2022 |
|
GAAP Operating
Income/(Loss), as reported |
$ |
(1,382 |
) |
$ |
(778 |
) |
Adjustments: |
|
|
Amortization of acquired intangible assets |
|
143 |
|
|
143 |
|
Non recurring strategic alternatives expenses |
|
500 |
|
|
530 |
|
Stock Compensation Expense |
|
116 |
|
|
330 |
|
Restructuring costs |
|
308 |
|
|
- |
|
Total Adjustments to operating income/(loss) |
|
1,067 |
|
|
1,003 |
|
Non-GAAP Adjusted
Operating Income/(Loss) |
$ |
(315 |
) |
$ |
225 |
|
Net Income/(loss) from
continuing operations, as reported |
$ |
(941 |
) |
$ |
(795 |
) |
Adjustments: |
|
|
Total pretax adjustments to operating income/(loss) |
|
1,067 |
|
|
1,003 |
|
Loss on extinguishment of debt |
|
- |
|
|
792 |
|
Total adjustments to net loss from continuing operations |
|
1 067 |
|
|
1,795 |
|
Tax effects of adjustments |
|
156 |
|
|
932 |
|
Non-GAAP Adjusted Net
Income/(loss) from continuing operations |
$ |
(30 |
) |
$ |
68 |
|
|
|
|
Income/(Loss) per
share from continuing operations:Basic EPS, as
reported |
$ |
(0.04 |
) |
$ |
(0.02 |
) |
Diluted EPS, as
reported |
$ |
(0.04 |
) |
$ |
(0.02 |
) |
|
|
|
Non-GAAP Adjusted
Basic EPS |
$ |
(0.00 |
) |
$ |
0.00 |
|
Non-GAAP Adjusted
Diluted EPS |
$ |
(0.00 |
) |
$ |
0.00 |
|
|
|
|
Basic Shares |
|
21,363 |
|
|
22,603 |
|
Diluted Shares |
|
21,363 |
|
|
25,070 |
|
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