PARSIPPANY, N.J.--(BUSINESS WIRE)--Wireless Telecom Group, Inc. (NYSE American: WTT) announced today results for the fourth quarter and twelve months ended December 31, 2018.
For the quarter ended December 31, 2018, the Company reported consolidated net revenues of $12,091,000, compared to $12,036,000 for the same period in 2017, an increase of 0.5%. For the twelve months ended December 31, 2018, the Company reported consolidated net revenues of $52,788,000 compared to $46,078,000 for the same period in 2017, an increase of 14.6%.
For the quarter ended December 31, 2018, net revenues in the Network Solutions segment were $5,094,000, compared to $5,492,000 for the same period in 2017, a decrease of 7.2%. For the twelve months ended December 31, 2018, net revenues in the Network Solutions segment were $22,275,000 compared to $23,052,000 for the same period in 2017, a decrease of 3.4%. The revenue decrease was due primarily to lower prices driven by a highly competitive pricing environment and softening demand in certain RF components, only slightly offset by increased sales of active components and customized integrated solutions.
For the quarter ended December 31, 2018, net revenues in the Test & Measurement segment were $3,231,000, compared to $3,126,000 for the same period in 2017, an increase of 3.4%. For the twelve months ended December 31, 2018, net revenues in the Test & Measurement segment were $14,212,000 compared to $13,380,000 for the same period in 2017, an increase of 6.2%. The increase over 2017 reflected increased sales of noise generation components and modules to customers in the satellite industry and for use in optical applications, offset by lower military and government orders.
For the quarter ended December 31, 2018, net revenues in the Embedded Solutions segment were $3,766,000, compared to $3,418,000 in the same period in 2017, an increase of 10.2%. For the twelve months ended December 31, 2018, net revenues in the Embedded Solutions segment were $16,301,000 compared to $9,646,000 for the period of ownership from February 17, 2018 through December 31, 2018. The increase in revenue was primarily due to higher sales of digital processing hardware used in wireless network test equipment.
The Company also reported consolidated gross profit of $5,264,000, or 43.5%, for the quarter ended December 31, 2018, compared to $5,471,000, or 45.5%, for the same period in 2017. Consolidated gross profit was $24,167,000, or 45.8%, for the year ended December 31, 2018, compared to $19,261,000, or 41.8%, for the same period in 2017. The year over year increase was driven primarily by increased volumes at the Embedded Solutions segment. The increase in 2018 also reflected the $1.9 million inventory impairment charges recorded in 2017 related to the Network Solutions segment and the Test and Measurement segment.
Gross profit in the Network Solutions segment was $9,756,000, or 43.8%, for the year ended December 31, 2018, compared to $9,064,000, or 39.3%, for the same period in 2017. Gross profit in the Test & Measurement segment was $7,018,000, or 49.4%, for the year ended December 31, 2018, compared to $5,854,000, or 43.8%, for the same period in 2017. Gross profit in the Embedded Solutions segment was $7,393,000, or 45.4%, for the year ended December 31, 2018, compared to $4,343,000, or 45.0% for the period of ownership from February 17, 2018 through December 31, 2018.
For the quarter ended December 31, 2018, the Company reported consolidated operating expenses of $6,006,000, compared to $5,178,000 for the same period in 2017, an increase of $828,000. For the twelve months ended December 31, 2018, the Company reported consolidated operating expenses of $23,388,000, compared to $22,129,000 for the same period in 2017, an increase of $1,259,000. Included in the 2018 consolidated operating expenses are losses on changes in the fair value of CommAgility contingent consideration of $365,000 for the quarter ending December 31, 2018 and $578,000 for the year ended December 31, 2018. The losses were the result of increases to the contingent consideration liability as a result of improved financial results at CommAgility for the year ended 2018 as compared to our original estimates. Additionally, the Company recognized approximately $281,000 of interest expense in 2018 related to the contingent consideration liability.
The net loss for the quarter ended December 31, 2018 was $718,000, compared to a net loss of $2,547,000 for the same period in 2017. The net income for the year-ended December 31, 2018 was $35,000 compared to a net loss of $4,493,000 for the year-ended December 31, 2017.
Non-GAAP Adjusted EBITDA for the quarter ended December 31, 2018 was $386,000, compared to $830,000 of non-GAAP Adjusted EBITDA for the same period in 2017. Non-GAAP Adjusted EBITDA for the year ended December 31, 2018 was $4,829,000, compared to $3,645,000 of non-GAAP Adjusted EBITDA for the same period in 2017. An explanation of our non-GAAP measures and a reconciliation of net income to non-GAAP Adjusted EBITDA are included as an attachment to this press release.
The increase in non-GAAP Adjusted EBITDA of $1,184,000, or 32.5%, from 2017 is primarily attributable to the $6,710,000 increase in consolidated revenues and $4,906,000 increase in consolidated gross profit.
The Company’s consolidated backlog of firm orders to be shipped in the next twelve months was approximately $8,200,000 at December 31, 2018, a decrease of $1,700,000, or 17.2% compared to December 31, 2017. Backlog increased $2,100,000 or 34.0% from the third quarter ended September 30, 2018 on strong customer order flow of $14,281,000 in the fourth quarter ended December 31, 2018. This compares to order flow of $11,940,000 in the fourth quarter of 2017.
Tim Whelan, CEO of Wireless Telecom Group, Inc., commented, “We are pleased with our 2018 accomplishments which included consolidated revenue increases of 14.6% and revenue growth in 2 of our 3 segments, solid gross margins at 45.8%, improved operating income, and increasing Adjusted EBITDA profitability of $4,829,000. We improved our cash flow from operating activities to $3,990,000 leaving us with $5,015,000 of cash on our balance sheet at year-end. We also realized a strong quarter of bookings in Q4 totaling $14,281,000 which increased our backlog from September 30, 2018 by over $2,000,000. We have now realized two consecutive years of improved revenue growth, profitability, and cash flow which are attributable to the execution of our strategy, our investments in our product portfolio, enhancements in our go-to-market approach to improve how we serve our customers, and our lean operating initiatives creating operational leverage. We have made considerable progress on our long-term plans investing in our vision of enabling the development, testing and deployment of wireless technology.”
Mr. Whelan continued, “With regard to our future, we remain committed to a growth strategy which includes both organic growth and acquisition opportunities which align to our vision and are accretive to our organic growth. We remain focused on investing in research and development on innovative solutions to address the growth trends in wireless technology and adding value to our customers across telecommunications, public safety, satellite communications, medical device manufacturing, defense contractors, military and government. We will continue to manage the business over the long term focused equally on revenue growth, improved profitability and cash flow. We believe we will benefit from the expected continuing trends in carrier densification initiatives and 5G deployments, increasing demands for test & measurement solutions and the requirements of private LTE buildouts.”
The Company expects revenues for its first quarter ending March 31, 2019 to be comparable to the same quarter as last year and expects its gross margins for the March 31, 2019 quarter to be slightly below the same quarter last year due to expected revenue mix. The Company expects full year 2019 revenues to grow organically in the low to mid-single digit percentages and expects full year 2019 gross margins to be consistent with 2018 at approximately 46%. The Company expects to drive operational leverage and grow profitability and cash flow at rates higher than expected revenue growth.
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.wirelesstelecomgroup.com
