PARSIPPANY, N.J.--(BUSINESS WIRE)--Wireless Telecom Group, Inc. (NYSE American: WTT) announced today results for the 2019 first quarter ended March 31, 2019.
Tim Whelan, CEO of Wireless Telecom Group, Inc., commented, “Our Q1 financial results were as we expected exiting 2018 which was a record year for the Company. Revenue was comparable to last year’s Q1 and yielded margins reflecting our revenue product mix of lower software and more hardware cards. We are pleased with continued top-line strength in Embedded Solutions and the year over year increase in Network Solutions.” Whelan added, “We are excited about our R&D investments and the product initiatives we released during the first quarter across multiple segments which included product collaboration on LTE eNodeB software, our product launch for real-time public safety monitoring, and our launch of noise sources for 5G test systems.”
Whelan continued, “We continue to invest for long-term growth and remain optimistic for continued momentum throughout the remainder of 2019. We are on track for our long-term target of $100 million in revenue, consisting of strong organic growth and strategic acquisitions, while improving profitability and cash flows.”
For the quarter ended March 31, 2019, the Company reported consolidated net revenues of $13,032,000, compared to $13,264,000 for the same period in 2018, a decrease of 1.7%. Network Solutions revenue increased 4.5% on increased large venue projects and customized solutions and Embedded Solutions revenue increased 6.4% on higher sales of digital signal processing hardware. This was offset by a decrease of 19.5% in Test and Measurement revenue on lower government shipments compared to the same quarter last year, which are expected to increase over the coming quarters.
The Company also reported consolidated gross profit of $5,727,000, or 43.9% of revenue, for the quarter ended March 31, 2019, compared to $6,268,000 or 47.3% of revenue, for the same period in 2018. The decline in gross profit margin was due to a higher mix of lower margin hardware sales at Embedded Solutions and the impact of competitive pricing in the Network Solutions industry which were partially offset due to a favorable product mix in Test and Measurement.
For the quarter ended March 31, 2019, the Company reported consolidated operating expenses of $6,125,000, compared to $5,700,000 for the same period in 2018, an increase of $425,000. The increase was driven by our investments in research and development in the area of 5G roadmap development and was offset by a 3% decline of sales, marketing, general and administrative expenses.
The net loss for the quarter ended March 31, 2019 was $344,000, compared to net income of $374,000 for the same period in 2018.
Non-GAAP Adjusted EBITDA for the quarter ended March 31, 2019 was $354,000, compared to $1,612,000 for the same period in 2018. The decrease in non-GAAP Adjusted EBITDA from the prior year is attributable to the decrease in gross profit as described above coupled with the increased investments in research and development. The Company’s explanation of Adjusted EBITDA and the reconciliation of Adjusted EBITDA to net income (loss) is set out below in this press release.
The Company’s consolidated backlog of firm orders to be shipped in the next twelve months was $7,575,000 at March 31, 2019, compared to the March 31, 2018 backlog of $10,576,000.
Outlook
Near term, the Company expects revenues for the second quarter of 2019 to slightly increase compared to the same quarter last year and gross margins to be comparable. The Company also maintains the expectation for full year 2019 revenues to grow organically in the low to mid-single digits, with full-year gross margins comparable to last year. A strict focus on driving operational leverage is expected to generate profitability and cash flow growth at rates higher than expected revenue growth. The Company’s principal considerations for full-year 2019 expectations include slower than anticipated deployment of 5G infrastructure, judicious investment in R&D and new product development while controlling operating expenses, and uncertainty around the timing of select, large and new customer opportunities in the funnel.
Beyond 2019, the Company expects to grow revenues organically between 10 and 12% over the next four years based on the long term trends of network densification and 5G deployment, private LTE network expansion and increased military spend. In addition, the Company also expects strong organic growth to be driven by multiple internal initiatives including the continuation of new product introductions, channel expansion, and operational excellence. The Company’s 2023 targets also include annual revenues of $100 million, inclusive of strategic acquisitions, gross profit margins between 47% and 49%, and Adjusted EBITDA margins of approximately 15%. The Company defines Adjusted EBITDA margins as Adjusted EBITDA divided by revenue (see use of Non-GAAP Financial Measures below).
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 radio frequency 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.
