GlobeNewswire Inc | Aug 11, 2021 06:20AM EDT

August 11, 2021

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

Parsippany, New Jersey, Aug. 11, 2021 (GLOBE NEWSWIRE) -- 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 973-386-9696SM 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 nonGAAP 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 nonGAAP 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 nonGAAP 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 Companys performance. We believe adjusted EBITDA is an important performance metric because it facilitates the analysis of our results, exclusive of certain noncash 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.

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 Companys 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 Groups website address is http://www.wirelesstelecomgroup.com.

Wireless Telecom Group INC.

CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME/(LOSS)

(UNAUDITED)

(In thousands, except per share amounts)

For the Three Months For the Six Months Ended 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 2,806 2,391 5,668 4,878 administrativeTotal operating expenses 5,969 5,727 11,926 11,511 Operating income/(loss) 165 (59 ) 153 (1,416 ) Extinguishment of PPP 2,045 - 2,045 - loanOther income/(expense) (15 ) 56 8 295 Interest expense (285 ) (246 ) (582 ) (471 ) Income/(Loss) before 1,910 (249 ) 1,624 (1,592 )taxes Tax provision/(benefit) 373 419 321 225 Net income/(loss) $ 1,537 $ (668 ) $ 1,303 $ (1,817 ) Other comprehensive income/(loss):Foreign currency 12 (35 ) 87 (971 )translation adjustmentsComprehensive income/ $ 1,549 $ (703 ) $ 1,390 $ (2,788 )(loss) 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 December 31 2021 2020CURRENT ASSETS Cash & cash equivalents $ 4,213 $ 4,910 Accounts receivable - net of reserves of $214 and 6,532 5,520 $143, respectivelyInventories - net of reserves of $1,216 and $1,129 9,365 8,796 respectivelyPrepaid 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 issuedCommon stock, $.01 par value, 75,000,000 sharesauthorized 351 349 35,112,421 and 34,888,904 shares issued, 21,883,235and 21,669,361 shares outstandingAdditional paid in capital 50,364 50,163 Retained earnings 358 (946 )Treasury stock at cost, 13,229,186 and 13,219,543 (24,573 ) (24,556 )sharesAccumulated 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 14 (236 )EquivalentsNET 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, 2,267 775 18.9 % 7.0 % 1,492 192.5 %softwareTotal 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, 1,108 596 48.9 % 76.9 % 512 85.9 %softwareTotal 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, 5,124 2,183 21.9 % 10.6 % 2,941 134.7 %softwareTotal 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, 2,908 1,177 56.8 % 53.9 % 1,731 147.1 %softwareTotal 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 $ 1,537 $ (668 ) $ 1,303 $ (1,817 )reportedTax Provision/(Benefit) 373 418 321 225 Depreciation and Amortization 534 525 1,065 1,049 ExpenseInterest Expense 285 246 582 471 Non-GAAP EBITDA 2,729 521 3,271 (72 )Stock Compensation 89 128 203 210 Merger and Acquisition/ 72 37 72 228 IntegrationRestructuring 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 - 2 4 3 Legal CostsNon-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/ (72 ) (37 ) (72 ) (228 )IntegrationRestructuring Costs - - (36 ) (73 )US GAAP Purchase - - - (100 )AccountingDepreciation & (452 ) (432 ) (899 ) (877 )Amortization (ex. COGS)Non-Recurring Arbitration - (2 ) (4 ) (3 )Legal CostsNon-GAAP Opex $ 5,356 $ 5,128 $ 10,712 $ 10,020