EX-99.1 2 c89683_ex99-1.htm

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

THIRD QUARTER 2017 FINANCIAL RESULTS

NEWS RELEASE

Highlights for the quarter ended September 30, 2017:

Net revenues of $12,560,000

A year over year increase of $4,216,000, or 50.5%

Includes a year over year increase of $1,064,000, or 37.5%, in our Test & Measurement segment

Includes a year over year increase of $921,000, or 16.7%, in our Network Solutions segment

Includes $2,231,000 of Embedded Solutions revenue

Gross Margin of $6,113,000, or 48.7%

Net Income of $653,000

Non-GAAP Adjusted EBITDA of $1,458,000

A year over year increase of $806,000, or 124%

New customer orders of $15,430,000

A year over year increase of $4,284,000, or 38%

Includes $4,930,000 from Embedded Solutions

September 30, 2017 customer order backlog of $9,950,000

A year over year increase of $3,821,000, or 62%

Includes $3,684,000 of Embedded Solutions

November 9, 2017

Parsippany, New Jersey – Wireless Telecom Group, Inc. (NYSE American: WTT) (the “Company”) announced today results for the third quarter ended September 30, 2017.

For the quarter ended September 30, 2017, the Company reported consolidated net revenues of $12,560,000, compared to $8,344,000 for the same period in 2016, an increase of 50.5%. Net revenues in the Network Solutions segment were $6,428,000, compared to $5,507,000 for the same period in 2016, an increase of 16.7%. Net revenues in the Test & Measurement segment were $3,901,000, compared to $2,837,000 for the same period in 2016, an increase of 37.5%. Net revenues in the Embedded Solutions segment were $2,231,000, our second full quarter of results since its acquisition on February 17, 2017.

The Company also reported consolidated gross profit of $6,113,000, or 48.7% of revenue, for the quarter ended September 30, 2017, compared to $3,823,000, or 45.8% of revenue, for the same period in 2016.

For the quarter ended September 30, 2017, gross profit in the Network Solutions segment was $2,981,000, or 46.4%, compared to $2,513,000, or 45.6%, for the same period in 2016. Gross profit in the Test & Measurement segment was $2,166,000, or 55.5%, for the quarter ended September 30, 2017, compared to $1,310,000 or 46.2%, for the same period in 2016. Gross profit in the Embedded Solutions segment was $966,000, or 43.3% for the quarter ended September 30, 2017.

For the quarter ended September 30, 2017, the Company reported consolidated operating expenses of $5,331,000, compared to $3,555,000 for the same period in 2016, an increase of $1,777,000. Included in 2017 consolidated operating expenses are the operating expenses of our new Embedded Solutions segment of $925,000, $199,000 of depreciation and amortization, $224,000 of stock compensation expense and $158,000 of integration expenses relating to our acquisition of CommAgility on February 17, 2017.

The Company reported operating profit of $782,000 for the three months ending September 30, 2017 compared to operating profit of $268,000 for the same period in 2016. The Company also reported cash flow provided by operations of $450,000 for the nine months ending September 30, 2017 compared to cash used by operations of ($742,000) for the same period 2016. The Company reported net income of $653,000 for the quarter ended September 30, 2017, compared to net income of $122,000 for the same period in 2016.

Non-GAAP Adjusted EBITDA for the quarter ended September 30, 2017 was $1,458,000, compared to non-GAAP Adjusted EBITDA of $652,000 for the same period in 2016. The increase in non-GAAP Adjusted EBITDA from 2016 is attributable to improving revenues and gross margins.

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, acquisition expenses, integration expenses, non-cash inventory impairment charges, restructuring charges, 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 reported customer orders of $15,430,000 during the quarter ending September 30, 2017, compared to $11,146,000 of customer orders for the same period in 2016. Included in the September 30, 2017 quarter are $4,930,000 of customer orders in the Embedded Solutions segment. The consolidated backlog of firm orders to be shipped in the next twelve months was approximately $9,950,000 at September 30, 2017, a year over year increase of $3,821,000 over the same period in 2016 and a sequential increase of $2,980,000 compared to approximately $6,970,000 at June 30, 2017.

During the three months ended September 30, 2017 the Company also recorded measurement period adjustments related to the accounting for the CommAgility acquisition and the completion of the valuation of intangible assets, contingent consideration and contingent asset associated with the equity claw back provisions and deferred taxes. The Company estimates that the CommAgility 2017 EBITDA target, as defined in the purchase agreement for the full equity component of the purchase price to be paid, will not be met. This will result in the estimated forfeiture of 2,092,516 shares in accordance with the equity claw back provisions of the CommAgility purchase agreement.

Tim Whelan, CEO of Wireless Telecom Group, Inc., commented, “We are very pleased with the revenue and profitable growth in the quarter which were at the high end of our expectations resulting in non-GAAP Adjusted EBITDA of $1,458,000. This has been our best quarter in over three years and reflects successful execution and progress in each of our three segments.” Whelan continued, “Our strong bookings in the quarter are a driver for continued revenue growth and highlight the value of our high-quality innovative solutions to our customers. We are particularly encouraged by $4.9 million of customer orders in our Embedded Solutions segment in the quarter which underscores our investment thesis in the long-term trend of LTE private network deployments. We are excited about the growth opportunity in this segment, the transformational value of their solution set and engineering expertise in the CommAgility operations. We expect to continue to invest across our three segments aligning our product roadmaps, go-to-market execution and strategic planning to the growth expectations from network densification, small cell deployment and private LTE network deployment in the foreseeable future.”

The Company expects the following consolidated results for the quarter ended December 31, 2017:

Revenue between $11.5 million and $12.0 million (resulting in an expectation for full year revenue between $45.5 million and $46 million).

Gross margins between 46-47%

Non-GAAP operating expenses between $4.8 and $5.0 million (specifically, the Company’s GAAP operating expenses, excluding depreciation expense, amortization expense, stock compensation expense, restructuring charges, purchase accounting adjustments in accordance with US GAAP, and non-recurring CommAgility acquisition and integration expenses, which cannot be itemized for reconciliation to the comparable GAAP measure at this time).

Contact: Mike Kandell

(973) 386-9696

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 constitutes 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, gross margins, non-GAAP operating expenses and the expectation that the Company will continue to invest across all three segments for the quarter ending December 31, 2017. 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 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, and other risks and uncertainties set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. 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.

Wireless Telecom Group,_INC.

25 Eastmans Road Parsippany, NJ 07054

Tel. (973) 386-9696 Fax (973) 386-9191

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME/(LOSS)

(unaudited)

	Three Months Ended September 30						Nine Months Ended September 30

	2017			2016			2017			2016
NET SALES	$	12,560,298		$	8,344,301		$	34,042,230		$	22,322,820

COST OF SALES		6,446,992			4,521,302			20,252,254			12,440,817

GROSS PROFIT		6,113,306			3,822,999			13,789,976			9,882,003

Operating Expenses
Research and Development		1,051,233			948,654			3,267,955			3,042,916
Sales and Marketing		1,946,443			1,216,265			5,161,181			3,703,522
General and Administrative		2,333,795			1,389,996			8,567,102			4,141,520
Total Operating Expenses		5,331,471			3,554,915			16,996,238			10,887,958

Other income/(expense)		(1,033	)		(27,090	)		(4,253	)		(78,675	)
Interest Expense		(70,607	)		(178	)		(229,453	)		(463	)

Income/(loss) before taxes		710,195			240,816			(3,439,968	)		(1,085,093	)

Tax Provision/(Benefit)		56,799			118,980			(1,493,789	)		(412,409	)

Net Income/(Loss)		653,396			121,836			(1,946,179	)		(672,684	)

Other Comprehensive Income/(Loss):
Foreign currency translation adjustments		547,160			-			1,123,494			-
Comprehensive Income/(Loss)	$	1,200,556		$	121,836		$	(822,685	)	$	(672,684	)

Net Income/(Loss) per common share:
Basic	$	0.03		$	0.01		$	(0.10	)	$	(0.04	)
Diluted	$	0.03		$	0.01		$	(0.10	)	$	(0.04	)

Weighted average shares outstanding:
Basic		20,235,876			18,721,346			19,799,219			18,650,274
Diluted		22,938,188			19,358,968			19,799,219			18,650,274

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30 2017			December 31 2016
	(unaudited)
CURRENT ASSETS
Cash & cash equivalents	$	2,266,532		$	9,350,803
Accounts receivable - net of reserves of $23,026 and $10,740, respectively		8,107,931			5,183,869
Inventories - net of reserves of $2,067,103 and $1,549,089, respectively		6,485,796			8,452,751
Prepaid expenses and other current assets		4,789,567			866,036
TOTAL CURRENT ASSETS		21,649,826			23,853,459
PROPERTY PLANT AND EQUIPMENT - NET		2,428,245			2,166,566
OTHER ASSETS
Goodwill		10,113,158			1,351,392
Acquired Intangible Assets, net		4,756,386			-
Deferred income taxes		8,822,687			7,403,600
Other		794,058			660,118
TOTAL OTHER ASSETS		24,486,289			9,415,110

TOTAL ASSETS	$	48,564,360		$	35,435,135

CURRENT LIABILITIES
Short term debt		1,423,927			-
Accounts payable		2,416,202			2,986,797
Accrued expenses and other current liabilities		3,290,598			673,067
Deferred Revenue		573,477			-
TOTAL CURRENT LIABILITIES		7,704,204			3,659,864
LONG TERM LIABILITIES
Long term debt		532,000			-
Other long term liabilities		1,810,990			69,058
Deferred Tax Liability		789,263			-
TOTAL LONG TERM LIABILITIES		3,132,253			69,058

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, 33,886,752 and 29,786,224 shares issued, 22,790,667 and 18,751,346 shares outstanding		338,867			297,862
Additional paid in capital		47,453,286			40,563,002
Retained earnings		9,722,650			11,668,829
Treasury stock at cost, - 11,096,085 and 11,034,878 shares, respectively		(20,910,394	)		(20,823,480	)
Accumulated Other Comprehensive Income		1,123,494			-
TOTAL SHAREHOLDERS’ EQUITY		37,727,903			31,706,213

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	48,564,360		$	35,435,135

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(unaudited)

	For the Nine Months Ended September 30
	2017			2016

CASH FLOWS PROVIDED/(USED) BY OPERATING ACTIVITIES
Net income (loss)	$	(1,946,179	)	$	(672,684	)
Adjustments to reconcile net income (loss) to net cash provided/(used) by operating activities:
Depreciation and amortization		1,345,806			363,634
Amortization of debt issuance fees		48,503			-
Share-based compensation expense		507,791			432,612
Deferred rent		18,277			27,454
Deferred income taxes		(1,419,087	)		(434,333	)
Provision for doubtful accounts		12,286			(8,788	)
Inventory reserves		1,314,528			221,369
Changes in assets and liabilities, net of acquisition:
Accounts receivable		(529,198	)		(176,019	)
Inventories		1,820,249			(1,603,381	)
Prepaid expenses and other assets		238,351			(14,162	)
Accounts payable		(1,776,291	)		1,091,071
Accrued expenses and other liabilities		814,989			30,818
Net cash provided/(used) by operating activities		450,025			(742,409	)
CASH FLOWS (USED) BY INVESTING ACTIVITIES
Capital expenditures		(588,180	)		(715,128	)
Proceeds from asset disposal		7,397			-
Acquisition of business net of cash acquired		(9,137,534	)		-
Net cash (used by) investing activities		(9,718,317	)		(715,128	)
CASH FLOWS PROVIDED/(USED) BY FINANCING ACTIVITIES
Revolver borrowings		25,281,935			-
Revolver repayments		(24,010,007	)		-
Term loan borrowings		760,000			-
Term loan repayments		(76,000	)		-
Debt issuance fees		(215,358	)		-
Proceeds from exercise of stock options		424,950			-
Repayments of equipment lease payable		-			(101,296	)
Repurchase of stock		(86,914	)		(65,468	)
Net cash provided/(used by) financing activities		2,078,606			(166,764	)
Effect of exchange rate changes on cash and cash equivalents		105,415			-
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(7,084,271	)		(1,624,301	)
Cash and cash equivalents, at beginning of period		9,350,803			9,726,007
CASH AND CASH EQUIVALENTS, AT END OF PERIOD	$	2,266,532		$	8,101,706

SUPPLEMENTAL INFORMATION:
Cash paid during the period for interest	$	90,084		$	-
Cash paid during the period for income taxes	$	58,454		$	67,438

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Capital expenditures	$	-		$	(41,904	)
Equipment lease payable	$	-		$	41,904

NET REVENUES AND GROSS PROFIT BY SEGMENT

(unaudited)

	Three months ended September 30
	Revenue				% of Revenue						Change
	2017		2016		2017			2016			Amount		Pct.
Network solutions	$	6,427,646	$	5,507,065		51.2	%		66.0	%	$	920,581		16.7	%
Test and measurement		3,901,486		2,837,236		31.0	%		34.0	%		1,064,250		37.5	%
Embedded solutions		2,231,166		-		17.8	%		0.0	%		2,231,166		-
Total net revenues	$	12,560,298	$	8,344,301		100.0	%		100.0	%	$	4,215,997		50.5	%

	Three months ended September 30,
	Gross Profit				Gross Margin %						Change
	2017		2016		2017			2016			Amount		Pct.
Network solutions	$	2,981,120	$	2,512,910		46.4	%		45.6	%	$	468,210		18.6	%
Test and measurement		2,165,830		1,310,089		55.5	%		46.2	%		855,741		65.3	%
Embedded solutions		966,356		-		43.3	%		0.0	%		966,356		-
Total gross profit	$	6,113,306	$	3,822,999		48.7	%		45.8	%	$	2,290,307		59.9	%

	Nine months ended September 30
	Revenue				% of Revenue						Change
	2017		2016		2017			2016			Amount		Pct.
Network solutions	$	17,560,210	$	15,196,800		51.6	%		68.1	%	$	2,363,410		15.6	%
Test and measurement		10,253,863		7,126,020		30.1	%		31.9	%		3,127,843		43.9	%
Embedded solutions		6,228,157		-		18.3	%		0.0	%		6,228,157		-
Total net revenues	$	34,042,230	$	22,322,820		100.0	%		100.0	%	$	11,719,410		52.5	%

	Nine months ended September 30
	Gross Profit				Gross Margin %						Change
	2017		2016		2017			2016			Amount			Pct.
Network solutions	$	6,623,630	$	6,799,036		37.7	%		44.7	%	$	(175,406	)		-2.6	%
Test and measurement		4,332,165		3,082,967		42.2	%		43.3	%		1,249,198			40.5	%
Embedded solutions		2,834,181		-		45.5	%		0.0	%		2,834,181			-
Total gross profit	$	13,789,976	$	9,882,003		40.5	%		44.3	%	$	3,907,973			39.5	%

RECONCILIATION OF NET INCOME TO NON-GAAP EBITDA AND NON-GAAP ADJUSTED EBITDA

(unaudited)

	Three Months Ended September 30 (Unaudited)					Nine Months Ended September 30 (Unaudited)
	2017			2016		2017			2016
Reconciliation of Net Income to Non-GAAP EBITDA and Non-GAAP Adjusted EBITDA:

GAAP Net Income	$	653,396		$	121,836	$	(1,946,179	)	$	(672,684	)
Tax Provision/(Benefit)		56,799			118,980		(1,493,789	)		(412,409	)
Depreciation And Amortization Expense		286,452			130,938		1,345,806			363,634
Interest Expense		70,607			178		229,453			463
Non-GAAP EBITDA		1,067,254			371,932		(1,864,709	)		(720,996	)
Stock Compensation Expense		223,919			235,374		507,791			432,612
Mergers and Acquisitions Expenses		-			-		1,289,517			-
Integration Expenses		158,448			-		322,937			-
Inventory Impairment		-			-		1,930,000			-
Inventory Recovery		(14,639	)		-		(14,639	)		-
US GAAP Purchase Accounting		-			-		70,709			-
Restructuring Charges and other non-recurring costs		22,639			44,200		572,912			467,000
Non-GAAP Adjusted EBITDA	$	1,457,621		$	651,506	$	2,814,518		$	178,616