Wireless Telecom Group Releases Quarterly Financials
Wednesday, May 08, 2019 | Comments

Wireless Telecom Group released results for the 2019 first quarter ended March 31. The company reported consolidated net revenues of $13 million compared with $13.26 million 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 with the same quarter last year, which are expected to increase over the coming quarters.

The company also reported consolidated gross profit of $5.7 million or 43.9% of revenue, for the quarter ended March 31, compared with nearly $6.27 million 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 by a favorable product mix in test and measurement.

For the quarter ended March 31, company reported consolidated operating expenses of $6.12 million compared with $5.7 million for the same period in 2018, an increase of $425,000. The increase was driven by investments in research and development (R&D) 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 was $344,000 compared with net income of $374,000 for the same period in 2018.

Near term, the company expects revenues for the second quarter of 2019 to slightly increase compared with 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% during the next four years based on the long-term trends of network densification and 5G deployment, private Long Term Evolution (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, and gross profit margins between 47% and 49%.

“Our Q1 financial results were as we expected exiting 2018, which was a record year for the company,” said Tim Whelan, CEO of Wireless Telecom Group. “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. 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.

“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.”

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