The Wireless Telecom Group has announced its financial results for the third quarter ending September 30, 2018. For the quarter, the company reported consolidated net revenues of $14 Million, an increase of 11.6% compared to $12.56 Million for the same period in 2017. The increase in net revenues is attributable to their Embedded Solutions segment which realized higher demand for their hardware cards, offset by slight declines in their Test & Measurement and Network Solutions segments.
Net revenues in the Network Solutions segment were $6 Million, compared to $6.4 Million for the same period in 2017, a decrease of $394,000. Net revenues in the Test & Measurement segment were $3.68 Million, compared to $3.9 Million for the same period in 2017, a decrease of $218,000. Net revenues in the Embedded Solutions segment were $4.3 Million, compared to $2.2 Million for the same period in 2017, an increase of $2 Million.
The Company reported consolidated gross profit of $6.46 Million, or 46.1% of revenue, for the quarter ended September 30, 2018, compared to $6.11 Million, or 48.7% of revenue, for the same period in 2017, an increase of $351,000. Consolidated gross profit as a percentage of revenue was negatively impacted by product mix in Test & Measurement and lower volumes in Network Solutions, offset by higher volumes in Embedded Solutions.
Third quarter 2018 gross profit in the Network Solutions segment was $2.64 Million, or 43.8%, compared to $2.98 Million, or 46.4%, for the same period in 2017. Gross profit in the Test & Measurement segment was $1.85 Million, or 50.2%, for the third quarter 2018, compared to $2.16 Million, or 55.5%, for the same period in 2017. Gross profit in the Embedded Solutions segment was $1.97 Million, or 45.9% for the quarter ended September 30, 2018, compared to $966,000, or 43.3%, for the same period in 2017.
For the quarter ended September 30, 2018, the Company reported consolidated operating expenses of $5.54 Million, compared to $5.3 Million for the same period in 2017, an increase of $236,000. Non-GAAP operating expenses were $4.95 Million for the third quarter 2018 compared to $4.7 Million for the year ago period, an increase of $245,000. The Company reported net income of $558,000 for the quarter ended September 30, 2018, compared to net income of $653,000 for the same period in 2017, a decrease of $95,000. Basic and diluted earnings per share were $.03 for both the quarter ending September 30, 2018, and the quarter ending September 30, 2017.
Non-GAAP Adjusted EBITDA for the quarter ended September 30, 2018 was $1,754,000, compared to non-GAAP Adjusted EBITDA of $1,457,000 for the same period in 2017, an increase of $297,000. (An explanation of our non-GAAP measures and a reconciliation of net income to non-GAAP Adjusted EBITDA are included as an attachment to this press release.) The Company reported cash flow provided by operating activities of $1,351,000 for the nine months ending September 30, 2018 compared to cash flow provided by operating activities of $452,000 for the same period in 2017, an increase of $899,000.
The Company reported customer orders of $11,297,000 in the third quarter 2018 compared to $15,488,000 for the same period in 2017. The consolidated backlog of firm orders expected to be shipped in the next twelve months was approximately $6,122,000 at September 30, 2018, compared to backlog of $9,950,000 at September 30, 2017. The decrease in customer orders and backlog reflects several large projects in 2017.
Wireless Telecom Group is pleased with the strong quarter of results which were above expectations and reflect significant organic revenue growth in Embedded Solutions segment as well as consistently solid performance of the Network Solutions and Test & Measurement segments. It also achieved improved third quarter GAAP operating income of $919,000, or 6.6% of revenue, and continued the improving trend of non-GAAP Adjusted EBITDA at 12.5% of revenue. Over the last 9 months, the Company has generated $4,442,000 of Non-GAAP Adjusted EBITDA, reflecting continued focus on investing for growth while staying focused on profitability and cash flow.
With respect to the fourth quarter ending December 31, 2018, the Company expects to see seasonally lower sequential revenue compared to the third quarter which is consistent with the prior year. The Company expects the following in the quarter ended December 31, 2018 for the three combined segments:
- Revenue between $11,750,000 and $12,250,000
- Gross margins between 43% and 44%
- Non-GAAP operating expenses between $5,100,000 and $5,200,000 (specifically, the Company’s GAAP operating expenses, excluding depreciation expense, amortization expense, stock compensation expense, restructuring charges, purchase accounting adjustments in accordance with US GAAP, and non-recurring CommAgility acquisition and integration expenses, which cannot be itemized for reconciliation to the comparable future GAAP measure at this time).
