WTT - Earnings call transcript Q3 2017 | Wireless Telecom Group, Inc.

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Operator

Good afternoon, ladies and gentlemen, and welcome to the Wireless Telecom Group's Third Quarter 2017 Earnings Conference Call. At this time, all participants have been placed on a listen-only mode and we will open the floor for your questions and comments after the presentation. [Operator Instructions] It is now my pleasure to turn the floor over to your host, Mike Kandell, Chief Financial Officer; and Tim Whelan, Chief Executive Officer. Sir, the floor is yours.

Mike Kandell

Good afternoon, everyone, and thank you for joining us for our third quarter 2017 earnings call.

Litigation like today everyone within could of Private I'd that the the begin, XXXX. the remarks of our include Securities we to on remind call meaning Before Act Reform forward-looking statements These statements fact not strictly relate facts. by historical current they or do to be can identified the and on and forward-looking and and economy performance, based expectations forecast future assumptions circumstances management's conditions events, of company's The are regarding and results. the other current statements the business future company's

investors, provides I earlier SEC. measures Executive Officer. are the Chief furnished and today with to we meaningful issued measures of now in report guarantees table in risks materially today not Tim the company's that Forward-looking call performance could release reconciliations and affect statements with of are these information, statements to Important from the number SEC. non-GAAP a to measures future to its or we GAAP over forward-looking could GAAP measures. with information XX-K non-GAAP include reflect occurrence to any which presenting X-K and our press assumptions, set materially annual differ involve on views provide in management actual the results out that business. of forward-looking cause that not adjusted to forth those reconciliation revise uncertainties those undertake factors point We relating turn and events to risk set Form actual in The results. our Also to that Whelan, Form addition does believe to or factors forth information the filed want update or information how the the of unanticipated obligation any the filed company a will non-GAAP changes certain additional in Detailed will reflect company's otherwise.

Tim Whelan

joining you Good Thank thank you, and everyone, us. Mike. for afternoon

previous the review followed prepared the detailed given Our a the in we financials, some will open go market past, agenda company, two some our Mike’s same to the follow we by with segments and the have for of earnings of our will remarks our and then In strategy. calls, overview line outline as you Q&A.

to will version to in more highlight condensed will changes continue a continue I and and today, that update improvements. We

some Over communication. of have course niche third made and of in continued have refined advancing and and solutions, product Through future, of our development, most have demanding design we customer enabling wireless the vision wireless using challenges and progress expertise in investments of the the R&D for objectives we solving roadmaps quarter, the and around our agile and to the deployment mission demonstrate we testing continued our innovation. enabling our and wireless specialization

which all Across a as We all mission-critical aligned which solutions. and Measurement performance, and employees of our segments, profit and drives have refined entrepreneurial well line advanced core approach personal market revenue we customer values problem-solving which accountability; our customer towards Growth growth growth, approach. flexible responsiveness, how and and as our and excellence include orientation, driving mission and Test to and segments, Solutions innovative, three values. in technical and ourselves our peak this these for Network have performance underscores we our and drive Embedded the high-quality segment, segment our Solutions passionate our our segment, top

XX.X%, for all and Test realized in of three segment $XX.X pay same which $X.X segments to have million, of and in or we in CommAgility organic XX, of the realized on a segment, million Network driven months same in XX.X%, period XXXX, September broken revenue months business representing XX, revenue last nine million revenue mind, our of compared improved vision, in best as Embedded three with ended acquired revenue. it We our XX, acquisition existing over and Solutions level, beginning it have million of Solutions, this is And off. quarter Solutions efforts performance with increasing In XXXX third realized growth versus We CommAgility both quarter the $X.X ending these the growth quarter $X.X follows. acquisition the segments, organic ending September our from out, our values and year. this $XX.X XXXX are XX% our to down growth we the Measurement Netting to have revenue sixth revenue, million on increasing in sequential our growth have is reported XX% we execute growth our September and months XX, XXXX. And Test nine of At contributing last year. same of newest invested the by compared cash of XX, quarter our to or Network period years. and the and XXXX the realized we and the February September and revenue, Measurement managing nine in we is ending

in as improving Just ending of of as for returned million, growth income of net adjusted XX.X%, September gross quarters. profitability. quarter and we margins quarter, And X.X to XXXX non-GAAP the XX, XXX,XXX have revenue the best important XX EBITDA the our in we performance reported

we during at in customer XX. some Moving an the exciting on accomplishments September resulting orders realized equally to of increased our backlog booking progress quarter,

we placing As revenue have accumulation as bookings which a been not bookings, commitments, customers the contractual as and we define or yet. incomplete recognized as define undelivered reminder, of backlog

over quarters. the Our backlog delivered typically following is two

Our ending period follows. as increase last the in quarter XX% $X.X These a as bookings the XX or million period. million bookings in period breakdown to were September $XX.X $XX.X year, million consolidated compared same to

with September design on for sales, segment, in The carriers as booked of to in $X.X $XX new products, Measurement generally the and is wireless is conditioning in and Our generation customer well well year in and and improvements $X.X improved it and which ended distributors, $XX Measurement and year fiscal for XXXX Test the and frequency Network the months and We nine for segment QX, represents spend Test segment communication. the exceed meters inside account communications XX, as providing the attribute entire densification for solutions, and in efforts. applications, and and our investments under over to radio highest Solutions Noisecom manufacturing names noise launching to trade million in military which is forum, was the as track involved other calendar order new our the our of Boonton as Bookings bookings million flow typically strategic year's the XXXX. year quarter management and operates million their involved last the higher QX, as is sensors in government million radar environment power devices in end. XXXX

flagship at of This power bookings expected we customers third-quarter $X.X bookings the our strength from the repeat solutions, was for for of call, sensor, noted includes specialty discussed time. signal with The last installed order history FAA nearly base which complex our the million, and award of inherent our RF value our the FAA brand which you where underscores with orders. the that we on

ending million $XX.X and Test September has Measurement to booked for million year Our $XX.X XXXX. XXXX, XX, nine compares months the for entire which the segment

results last this track to segment are well. as in year's exceed we on So

leadership market digital is in and expansion Customer involved CommAgility LTE third our power by increasing the addition bookings private product which Solutions Boonton frequencies. This line was in XXXX, in of software drive formed Boonton technology. and February WiFi RF market. release and form signal Frost and processing network power providing top ranges us This was expertise, our LTE to segments. Embedded proud across software of XX, the for acquisition our of signals, and is appointed promise to customization We applications, we're a growth use. and orders remain in recognition previous announced business higher ways CommAgility our as Sullivan expectations CTO, embedded award with modification on products in strong and well in and on extremely success $X.X popularity LTE segment, In for Dan new of unit recently follow in product sales. in recognition, our and which software and all growth Monopoli, invest software as regard the our the in underscores find acquisition excited growth USB about work, to new the commercial bookings, underscores hardware industry-leading very bookings network opportunity number Those of on specialization pursuits how million a specifically reflecting our successful of meters. were this provide which My period continue private positions of for long-term and and QX also our capabilities for for deployment, to new address also to newly factors

of and in delivery the as order expertise would deployments. this terms see booking segment. have our validated flow Embedded LTE the also but were not expect quarters The satellite I exceptional, would quarter longer-term growth over lumpy bookings expect have every Solutions while we steady profile a avionic wins customer in segment this to private similar and Our in to in network and describe we

call-back relates excited While the about for we that just more through and Solutions, bit. accounting remain earnouts, Mike conservative we cautious as and of and are go future will in to it the for a Embedded

growth and focused profits. development the completed continues process on the corporate to line we sales number integration accomplished results Longer-term, important activities to team, leveraging and summary, by and have objectives product technical to our are are Embedded our engineering of months, In financial over expertise integration roadmap beginning for be last top in X revenue Solutions reflect and with Our are opportunities. expected channels, leveraging the year-end. growth and we a XX

the growth financials. to the through positioned We Together take our positioning set Mike and now with encouraged the changes trends strategically are we better opportunities. we do, and opportunity that, call the the company market With towards going other improvements to I'm and turn markets. are but us CommAgility growth over in work to have acquisition in with longer-term advantage our we are to larger solutions business, the of more along to end walk back product

Mike Kandell

Good afternoon Tim. you, again Thank everyone.

in some here quarter also and broken referred affect results XXXX out which our release this have highlight will segment, we the impact and well. third of to Embedded all as CommAgility, XX-Q, our will as comparisons. include that our of Our I quarter-to-quarter press In Solutions

notably XX.X%, in growth The with revenue growth range above last and announced call, pleased both XX.X%, most of our high-end approximately the million our the from slightly in taxes income increased period increase and of Test consolidated million. expectations Solutions the year of revenue $XXX,XXX. These from Embedded representing year increased Network $XX.X million non-GAAP segment, of were X.X or revenue the from the of of results the $X.X segments. prior $X.X million quarter, gross from net prior of very Measurement the third results prior Measurement of year adjusted revenue in income $X.X are and organic before and period. and revenues prior of earnings Solutions We XX.X% our the million, $XXX,XXX and profit Network $XXX,XXX of resulted XX.X% EBITDA Test period, from Solutions included or or

As increases The and our revenue to Americas, define North America customer the Tim spending the wins, facing noted, of quarter highest wireless quarter our regional over our this product company Canada, revenue revenue. improvements. of for project years. basis, government launch and the end South account customers, by customer the reflect majority as and a in continue increased military for On and portal improved America we carrier, which was the three other

a months the the on September we in We XX% we first basis, for regions were XX% revenue Americas across pleased regional growth same of performing revenues both million, nine period or and our of from of compares ending businesses more months and which Americas For the and XX, the increased future. in nine focused well $XX.X On in represented the driving XXXX. the see our every in three to region, regions all XXXX, net channels outside XXXX. are revenue,

next our Overall a bookings we ratio strong were X. in quarter. encouraged so bookings X.X by and bill in sequentially expect some bookings our QX see are seasonality trajectory. to of We be slightly typically with we revenues Our book to business, to down both

monitor and of consolidated gross year's to Test our above-average by the our to improvement In XXXX XX.X% in was gross same gross around QX operation $X.X last and QX for we of hardware realized to by factors; gross XX.X% two higher Embedded or higher and our ago. gross inventory, and mix same Measurement period gross was fully primarily in reserved we segment, products Solutions period in margin have work compared second, the the Solutions regard in compared profit current last XX.X% By the that same sales aggressively software first, in and profit profit driven XX.X% profit leverage manufacturing year a our continue quarter inventory created XXXX. period XX% XX.X% increased operational the disposition to Solutions Measurement. spend, profit and and was Embedded the in both quarter impacted and Solutions the inventory. The in XX.X% we a an volume as from XX.X% that and in segments in Test mix QX revenue, Solutions both million, was some Network an ago, With of profits Our year we Network are segment, quarter. compared Measurement shipped QX levels. margin to Test was in And increase XX.X%. of and Network appropriate find revenue. to

were operating CommAgility QX. the prior period periods the to the with million Our expenses a costs, amortization reflect of along compared million during business, integration QX and same as restructuring Operating purchased $X.X $X.X in XXXX expenses of costs. $X.X compared ago, in to million compared to intangibles in and inclusion year

Our the income as year was ago net the period. to compared quarter $XXX,XXX GAAP $XXX,XXX for for

adjusted the year the $X.X non-GAAP was compared Our ago. same period EBITDA third quarter to million in $XXX,XXX for a

improvement Network and months to compared in non-GAAP of EBITDA segments year our and For was revenue our a Embedded the in This profitable same Test growth was Measurement $X.X ended inclusion adjusted $XXX,XXX ago. and nine period segment. by XX, non-GAAP adjusted million EBITDA to driven the the September the Solutions

company the sheet our The and Turning to the to as three in under disclosed quarter US GAAP opening acquisition. balance accounting statements. CommAgility completed third acquisition financial the footnote in valuation

revised assets result, a estimated initial the we related consideration and intangible to of earnout our As potential estimates contingent payments.

provisions This sellers accommodate the included provision of business two of these various the of this potential target of shares that forfeiture purchase This the expectation in results mechanism the sellers. provisions was the our as the purchase CommAgility, EBITDA will The possible estimate adjustment based of but acquisition not X.X finalized provisions over will an interest sellers acquisition which aligned the We agreement on contingent our call sellers. result included accordance lockup adjustment This it back price intent in also equity with the in happen. asset granted call to years. the equity improving also related back the that of to performance of until for of fiscal final performance. The will audited of in an not the approximately met, EBITDA and to exercise take equity structure is in outcomes. the estimate shares CommAgility XXXX reward deal. next now minimum are increased of our consideration contemplated structure call the defined and will million back place through agreement with to the earnout the forfeiture the XXXX We purchase shareholders for the be CommAgility

and operations reduced an restructuring to based cash remain signal segment months our value and are Tim XXXX expansion borrowing layer of long-term items; which immediate profitability, aligning original positive payments. XX, acquisition from have and very asset September operations cash company of private September and digital proposition enhancing from XXXX $X.X under $XXX,XXX to and expected to to expenses of also deployment about additional our growth nine flow the the expertise, revolver. an XG We adding and nine our in an lastly, outstanding non-recurring continue from regard this very million two excited adjusted $X.X capacity XX networks, LTE pleased cash As engineering liquidity, growth with deep and of in With includes more in the adding closely thesis, in reflects ago. we million for approximately debt improvement year which approximately EBITDA. enhancing of for the flow The in ended accretion our scale bank ended investment processing months approximate a quarter higher embedded noted, our a and value the opportunity with the the $XXX,XXX, we solutions, software, period included flow the same

we of asset our Specifically availability of have reduction $X bank as million debt XX, million of revolver. and based outstanding the over $X of $XXX,XXX a from September had quarter we under previous

reminder, is availability a a revolver calculation. subject As borrowing to our base

level forward, maintain Looking about to cash our good operations. of we ability healthy very from flow a feel

be needs, XX% Capex. by which Capex manageable consider by XX% we and Capex we driven driven to investment have Additionally, maintenance

a to turn closing We back I'd an some burden tax in to this federal have the UK. and the remarks. and to due very the time, like low call cash also Tim in At US NOLs tax credit state R&D over for

Tim Whelan

Thanks, Mike.

So, overall, accomplishments pleased we first our and very the growth generated the months. nine are over with

quarter expect $XX at our in we QX to fourth range. into time, of $XX.X year revenues the million this Looking the million

expertise We between volumes between are higher to expenses the expected of the and business million our and reflecting expect in year. lower operating QX second expenses and in communication. In million. and QX XX% expect $X.X deep mix by accomplishments the $X summary, QX on driven we in margins large be a non-GAAP XX%, and margins has half RF bonus level projects, commission of wireless operating typically

of have names We a tenured we have a installed with history, large recognized known base customers. products brand and long and well and

enabling and of a evolution areas wireless unified and carriers, agencies. a vendor in centered development, and focused collectively segments an of three military across the Telecom company on lifecycle and deployment government represent in communications three testing mission our wireless and the communication growth and approved with an the are Together, Group Wireless We investment technology. continued trusted

expect time the We the of diversified advantage trends in long-term take stages the same communication, solution across wireless diversified across sets, the we lifecycle are at to growth across of and technology diversified also segment while addressability. wireless

thank if lines please for and Now open Catherine, could you questions. the you

Operator

Please Fernando Your Instructions] [Operator your from your question Canto. announce and first coming is affiliation pose question.

Your line is live.

Fernando Canto

Fernando is Canto, private This Yes. investor.

let congratulate forward get and fourth much, and very quarter. will to Thank want you for tremendous hope Michael and going good surprises. quarter the we Just Timothy good us

Mike Kandell

you Thank good. Fernando. Very

Operator

no [Operator further have You in Instructions] queue. questions

Tim Whelan

the more to ahead, looking you. be Very touch joining year good Thank you and forward. going information for we with us. Have good. Thank a in again will everyone the forward We're certainly quarter and evening.

Operator

and ladies does you, conclude Thank conference gentlemen. call. This today's

your disconnect a phone may you for day. your You this lines wonderful and have at time participation. Thank

Wireless Telecom (WTT) 10 Nov 172017 Q3 Earnings call transcript