Wireless Telecom Group, Inc. announced today results for the third quarter ended September 30, 2015.
For the quarter ended September 30, 2015, the Company reported net sales of $8,339,000, compared to $11,372,000 for the same period in 2014, a decrease of 27%. Net sales in the Network Solutions segment were $5,482,000 for the quarter, compared to $8,035,000 for the same period in 2014. Net sales in the Test and Measurement segment were $2,858,000 for the quarter, compared to $3,338,000 for the same period in 2014.
Non-GAAP Adjusted EBITDA for the quarter ended September 30, 2015 was $412,000, compared to $2,377,000 for the same period in 2014. Non-GAAP Adjusted EBITDA results included the add-back of restructuring charges of $90,000 associated with the Company’s ongoing cost reduction plan. In addition, non-GAAP Adjusted EBITDA results do not include the Company’s tax provision, depreciation and amortization and stock compensation expense, as well as certain other costs. A reconciliation of net income to non-GAAP Adjusted EBITDA results is included as an attachment to this press release.
As previously disclosed, the cost reduction plans strategically reallocate resources to better position the Company to take advantage of growth opportunities while reducing overall headcount and other operating expenses. Over the course of the year, there was approximately a 15% reduction in total headcount, reducing salary and benefit costs in 2015 by over $500,000, which is net of severance charges of $137,000. These reductions represent annualized costs of approximately $1,500,000. Concurrently, we have reinvested in the business to improve the strength of our management team as well as invest in new product innovations, and we expect net annualized savings of approximately $1,000,000 from this initiative compared to the $500,000 realized in the current year.
The Company also reported net income of $75,000, or $0.00 per diluted share, for the third quarter of 2015, compared to net income of $983,000, or $0.05 per diluted share, for the third quarter of 2014. Net income in the quarter was also affected by the restructuring charges described above.
Despite the softer market environment, the Company was able to generate cash from operations in excess of $1.1 million during the third quarter, which reflects a significant improvement in cash flows as compared to the two prior quarters in 2015.
For the nine months ended September 30, 2015, the Company reported net sales of $25,180,000 for the period, compared to $30,996,000 for the same period in 2014, a decrease of 19%. Net sales in the Network Solutions segment were $16,708,000 for the period, compared to $22,026,000 for the same period in 2014. Net sales in the Test and Measurement segment were $8,472,000 for the period, compared to $8,970,000 for the same period in 2014.
Non-GAAP Adjusted EBITDA for the nine months ended September 30, 2015 was $1,345,000, compared to $4,906,000 for the same period in 2014. Non-GAAP Adjusted EBITDA results for the nine months included the add-back of restructuring charges of $137,000.
The Company reported net income of $353,000 or $0.02 per diluted share for the first nine months of 2015, compared to net income of $2,139,000, or $0.10 per diluted share, for the first nine months of 2014.
Paul Genova, CEO of Wireless Telecom Group, Inc., commented, “Revenue in 2014 benefited from higher capital spending by the major North American carriers for LTE buildout and DAS deployments in stadiums and other large public venues. While spending softened in 2015, we anticipate increased spending by the major carriers in 2016 as the demand for increased broadband drives the need for improved signal coverage and capacity. We are taking proactive measures to improve our competitive position by evaluating options to accelerate growth and win market share.”
Genova continued, “We also continue to invest in new product development to invigorate the Company’s most profitable product lines in Network Solutions and have recently created the Microlab Active Solutions Group, an initiative to assemble our top product development engineers with a focus on developing several new active technology products. We anticipate that the first new product from the Microlab Active Solutions Group will be available to the market in 2016. In addition, the recent hiring of Dan Monopoli as the General Manager of our Test and Measurement segment manifests a renewed focus on this segment as we seek new opportunities to grow our test and measurement product lines. We anticipate that the combination of these new initiatives will help enable the Company to meet the evolving needs of the market and generate additional revenues and earnings as carrier capital spending returns to higher levels.”
Genova further commented, "As disclosed in our prior earnings announcement, we implemented a cost reduction plan to gain improved operating efficiency. These cost adjustments also allow us to continue to invest in product development and innovation throughout fluctuating market conditions. We expect the benefit of these cost reductions to be fully reflected in our fourth quarter performance, resulting in further improvements to cash flows and earnings per share over the remainder of 2015."
Furthermore, the Company's Board of Directors has formed a Strategic Operations and Planning Committee to assist management in their quest to drive growth and profitability through a renewed focus on product development, the pursuit of operational excellence and the evaluation of other potential strategic initiatives to enhance shareholder value.
Chairman of the Board, Alan Bazaar, commented “I believe the Company is in a strong position to leverage the Company’s core competencies and customer relationships to take advantage of numerous growth opportunities in the current market environment. The Board, through formation of this committee, is providing management with the resources and support to help evaluate and execute on these opportunities.”
Use of Non-GAAP Financial Measures
This press release includes non-GAAP financial measures that are not in accordance with, nor an alternate to, generally accepted accounting principles and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles.
Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. They are limited in value because they exclude charges that have a material effect on our reported results and, therefore, should not be relied upon as the sole financial measures to evaluate our financial results. The non-GAAP financial measures are meant to supplement, and to be viewed in conjunction with, GAAP financial results. A reconciliation of our non-GAAP measures is included in an attachment to this press release.
Except for historical information, the matters discussed in this news release may be considered "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. Such statements include declarations regarding the intent, belief or current expectations of the Company and its management. Prospective 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. Specifically, no assurances can be made with respect to; The Company’s cost reduction plans and its strategic reallocation of resources; its ability to take advantage of growth opportunities and net annualized savings of approximately $1,000,000 from its reallocation of resources initiative; its ability to improve the strength of its management team; the level of spending by the major carriers in 2016; the level of demand for increased broadband; its ability to improve its competitive position by evaluating options to accelerate growth and win market share; its ability to invigorate its Network Solutions product lines; its ability to develop new active technology products and to have the first new product to the market in 2016; its ability to grow its test and measurement product lines; its ability to meet the evolving needs of the market and generate additional revenues and earnings; its ability to improve cash flows and earnings per share over the remainder of 2015; the ability of the Strategic Operations and Planning Committee to assist management and drive growth and profitability; its ability to leverage core competencies and customer relationships to take advantage of growth opportunities in the current market environment. Further information regarding risks and uncertainties that could affect the Company’s results are identified in the Company's reports and registration statements filed with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2014.