The Wireless Telecom Group Inc. (WTT), recently announced results for Q3 2020 that ended September 30, 2020. Tim Whelan, the CEO of the Group, said that despite continued market challenges, the company made progress in the third quarter executing its strategic plan to drive long term organic growth and improved profitability. WTT released three new products and signed a new contract for its LTE software and services for a satellite application. Improving gross profit margins reflects the Group’s continued success driving its Radio, Baseband and Software solutions and Test & Measurement solutions which includes successful organic growth for their Holzworth product solutions.
Whelan continued, “Momentum for our software solutions is accelerating, and I am excited to announce that the Company signed another new software contract in October. With this contract, we have year-to-date software and service wins of approximately $2.4 million. Our sales pipeline for our software and services solutions is robust and we expect additional new contracts to sign before the end of 2020 as well as in early 2021 which could meaningfully add scale within this market. We are thrilled that our RBS Solutions portfolio is providing successful growth milestones, including an expanding funnel, four signed contracts, and a larger backlog to be delivered over the next several quarters.”
Mr. Whelan concluded, “While the Covid-19 crisis has delayed spend on certain programs, our diversified product strategy and end-market focus has allowed us to successfully navigate through this challenging period. We remain focused on providing leading solutions for large and growing markets and we believe we are positioned for sales growth and improved profitability in 2021 and beyond.”
For the quarter ended September 30, 2020, WTT reported consolidated net revenues of $10.9 million compared to $10.8 million for the same period in 2019, which primarily reflects increases in software licenses and Test & Measurement (T&M) products offset by lack of demand for Radio, Baseband and Software (RBS) digital signal processing hardware products and lower sales of RF Components (RFC) products due to delays in spending by carriers on large venues. T&M revenue increased 93.5% from the prior year reflecting the inclusion of the Holzworth acquisition which contributed $2.8 million in revenue in the third quarter of 2020.
New customer orders for the third quarter were $10.8 million compared to $11.0 million in the same period in the prior year. The Company’s consolidated backlog of firm orders was $6.1 million on September 30, 2020, compared to $6.2 million on June 30, 2020. The September 30, 2020 backlog includes $875,000 of software and services compared to $385,000 at June 30, 2020.
The Company reported consolidated gross profit of $5.7 million or 52.0% of revenue, for the quarter ended September 30, 2020, compared to $4.8 million or 44.6% of revenue, for the same period in 2019. Gross margins increased in 2020 due to higher margin software sales in the RBS product group, the contribution of higher margin Holzworth products in the T&M product group and the impact of cost savings activities initiated by the Company at the beginning of the year.
For the quarter ended September 30, 2020, the Company reported consolidated operating expenses of $6.0 million, compared to $5.5 million for the same period in 2019. The increase resulted from higher investments in research and development in the area of T&M product roadmap and the addition of Holzworth operating expenses. Research and Development accounted for 30% of the operating expenses in the quarter compared to 24% during the same period in 2019.
Net loss for the quarter ended September 30, 2020 was $775,000, compared to net loss of $461,000 for the same period in 2019, primarily due to higher research and development expenses, higher foreign exchange loss, higher interest expense and higher tax expense primarily due to qualified PPP loan expenses that cannot be deducted if the loan is expected to be forgiven, offset by greater gross profit margin contribution.
Non-GAAP Adjusted EBITDA for the quarter ended September 30, 2020 was $722,000, compared to $97,000 for the same period in 2019, an increase of 644%, or $ 625,000. The increase in non-GAAP Adjusted EBITDA from the prior year is attributable to the increased gross margins and lower operating expenses in our core business offset by the inclusion of he operating expenses from the Holzworth acquisition.
About Wireless Telecom Group (WTT)
Wireless Telecom Group Inc. (WTT), comprised of Boonton, CommAgility, Holzworth, 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 generators, phase noise analyzers, signal processing modules, LTE PHY/stack software, power splitters and combiners, GPS repeaters, public safety components, noise sources, and programmable noise generators, Wireless Telecom Group enables 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.
