The Wireless Telecom Group, Inc., has released its results for the 2020 second quarter ended June 30, 2020. According to Tim Whelan, CEO of Wireless Telecom Group, the company is happy with its second quarter financial results which reflect sequential new order growth of 18.5%, improved gross margins and greater contributions from software revenues. The Group also signed software agreements with two new customers, including a first customer for their NXP-based 5G solutions.
Whelan also believes that while there continues to be a great deal of uncertainty, they are optimistic about the remainder of 2020 due to solid growth in the company’s sales funnel, strong performance by the Holzworth acquisition, and improving gross margins across multiple product lines. Furthermore, the recent addition of Alfred Rodriguez, an industry veteran from Xilinx, as the new Chief Revenue Officer strengthens the Group’s executive leadership and is a key hire in implementing their unified go-to-market strategy.
For the quarter ended June 30, 2020, the company reported consolidated net revenues of $11,108,000, compared to $13,508,000 for the same period in 2019, a decrease of 17.8%, which was primarily due to the previously announced lower sales of digital signal processing hardware of $4.5 million in its Radio, Baseband and Software product group. This decrease was offset by increased LTE software license revenue of $500,000 compared to the prior year, as well as an increase in RF Components revenue of 5.1% compared to the prior year due to revenues from large projects. Test & Measurement revenue increased 40.1% from the prior year reflecting the inclusion of the Holzworth acquisition which contributed $1.9 million in revenue in the second quarter, which offset declines in other products due to reductions in capital expenditures by customers due to Covid 19.
New customer orders for the second quarter were $12,354,000 compared to $10,424,000 in the first quarter, an increase of 18.5%, reflecting the recent pivot in the Company’s go-to-market strategy and contribution from Holzworth. The company’s consolidated backlog of firm orders to be shipped in the next twelve months was $6,219,000 at June 30, 2020, an increase of 26.9% compared to March 31, 2020.
The company reported consolidated gross profit of $5,668,000 or 51.0% of revenue, for the quarter ended June 30, 2020, compared to $6,133,000 or 45.4% of revenue, for the same period in 2019. Gross margins increased in 2020 on lower costs due primarily to cost savings initiatives implemented at the beginning of 2020, the inclusion of higher margin Holzworth revenues, and favorable product mix of higher margin software.
For the quarter ended June 30, 2020, the Company reported consolidated operating expenses of $5,727,000, compared to $5,987,000 for the same period in 2019. The decrease resulted from cost savings initiatives implemented at the beginning of 2020, offset by higher investments in research and development in the area of 5G roadmap development and the addition of Holzworth operating expenses. Net loss for the quarter ended June 30, 2020 was $668,000, compared to net income of $156,000 for the same period in 2019.
Corporate Initiatives
During the company’s Annual Shareholders Meeting on June 4, 2020, management presented a strategy update, including a new go-to-market initiative reorganizing to a single segment with three product groupings: Radio, Baseband and Software Solutions, RF Components, and Test and Measurement Solutions.
As part of this new initiative the company expanded its executive team to add a Chief Revenue Officer role who will lead consolidated global sales across all 3 product groupings, and on August 4, 2020, Alfred Rodriquez was appointed to this role. Mr. Rodriquez joins the company from Xilinx and brings more than 20 years of leadership experience with deep, design-in solutions and signal processing products.
As previously disclosed, the company’s long-term goals are:
- Annual double-digit organic revenue growth;
- 50%+ gross margins; and
- Adjusted EBITDA margins of 15% by 2024.
The Wireless Telecom Group, Inc., consists of Boonton, CommAgility, Holzworth, Microlab and Noisecom, and 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.
