WTT - Earnings call transcript Q2 2020 | Wireless Telecom Group, Inc.

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Operator

Good morning, ladies and gentlemen. And welcome to the Wireless Telecom Group Q2 Earnings Call. At this time, all participants have been placed on a listen-only mode and the floor will be opened for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Mike Kandell. Sir, the floor is yours.

Mike Kandell

Kay. you, Thank everyone. Good morning, you XXXX for our thank us joining call. quarter earnings second And for

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

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

Tim Whelan

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

I'd continued begin, best and well to as safety, to express spirit. our everyone their and we our once wishes Before incredible again health like thank employees for for resilience as

in to teams a operations returned staggered increased full the have from maintaining We measures regimen, schedules our to distancing and while facilities. health

forward and engineers, sales all support the driving operations business customer good care to of customers. our values, facing sales and and teams our on continue Our taking mission teams, focus

During this apparent. incredible tremendous and deployment period And more customers. our value the connectivity importance never of has continues of and of communication and to enabling the criticality development, focus been to solutions time, our hold testing specialized mission wireless

made employees We we so needed proud are their have adjustments of thankful incredibly contribute mission and our to the workplace dedication. are how to for our

the Turning growth, to including performance, well improvements EBITDA. year, margins operating improvement reflect of this to sequential improvement, results our as as first from revenue gross our quarter and margin QX

ago, as increased to year which XG business, also acquired $XX.X increases Component allocations advancing our resource the selling are a leveraging and are RF our They sales. where combined opportunities, the go-to-market a parts in cross our software declines portfolio. well we pursue beginning strategy, offset quarter greater million same the improved as reflect in benefits expected revenues, newly approach of to Holzworth revenues revised expected product to than sales compared As to our and better hardware of performance revenue, reflect

software is end Additionally, quarter, their deployments service NXP incremental of they in value $X XG contracts royalties signing approximately one several as engagements are we Together, software contract about any should in over before which the second reach and represent highlighted or applications years. scale of the customers next million platform. the release, excited we first new our press on the two future

quarter second quarters. results remainder recognized of software approximately expected over of to the is revenue two recognition next and Our be value XXX,XXX reflect contracts, the the of these contract few

contracts for these application second of included One XG the our deployments. XG cell platform small a application, rail XG on software a represents LTE the and NXP for

customers We additional focused And year out. will is are before and potential software growing other NXP funnel customers contracts we XG our collaboration. very with happy sign expect of with a we on the leveraging new the

also greater gross bookings and as in XX% order improved XXXX, to bookings sales. numbers Combined of into in go resulting quarter six the in With margin able they margins the ended sequentially realize XX, revenue, half Mike to of second QX margins with and the EBITDA margin our the as period core lower and driven reductions we as moment. show our months second increased as operating we operating through sequentially year. flow, June head higher which compared we consecutive the a to and of cost regard and improved expenses, quarter, quarter, Our end the decrease million in the to of of the a detail over will months cost Holzworth improved and same of revenues, inclusion $XX.X of year. three second This software quarter were backlog well of our in for was inclusion by improvement in gross higher operations, last

regard our integrating our between of the market million XX%, and bookings growing June customers backlog estimate We December million rate. and new this total higher The new market. with to two success view X.X this is as the compounded or two XX. a of product, success our XX well compared annual Baseband reinforces early $XXX customers. is XX% size as Our our at expectations Software Holzworth business, and $X.X XX% included million large addressable QX by the is With to growth and for market Radio, growing software

emerge private for see specialized as R&D roadmap. network continue deployments our to are we needs, in extend to invest potentially to that market continue starting to opportunity we strengths Our greater

growth size are for important military applications. the to opportunity but XG and currently technology of the and XG include satellite We focused building transportation, and the markets emerging estimates time applications. an current and on will applications communications certain in develop government, XG cell and More XG take define, the and more of block we're exacting small in

conventions, We inaccessible COVID-XX also have seasons and project continues we cancellations canceled that project sport see project changes. caused create continue to delays uncertainty. And and to funding by seen and sites,

shows Additionally, also identification. opportunity virtual challenged shifts to trade new have

well We stocking balance conservative And as typically Component continue see they Baseband growth a we in have more test funnel, that have we in funnels see have and decrease less as taken we Software long-term investments. and enter where continue measurement Radio, evaluation With to RF our orders are replenish the distributor where and said, also growth of to longer levels, their there funnels our realized a of visibility. sheets. our cycles in view as

We ultra-wideband first expect to second product regard launches, form R&D advancements funnel see factors. in wins to last months, power with the and we densification pleased to product half. mid-band progress network and our which based half in WiFi the flexible RF new spectrum, our introduction of six and the announced are software address X Components contract our first realization or year. meter the of efforts, With in releases the half, increases strategic the we included releases for of on measurements, new new two two new In seven new

R&D as releases strategy. our as engagements announced with three announced we two announcement week, which result satellite acquisitions. and qualified industry also our months our last an including in a And and NXP, Officer. margin We and as realized Stadium Leadership go-to-market customer by well capabilities software due well collaboration XG project investments added our of partnership the stadium. XX, And Chief Xilinx in the our June, as over target of & the we announced James Product Frost products, enabling have driven communications. executive SoFi we announcing are for In veteran our from two to large of Raymond Sullivan ending We improved also to higher margin as showcasing June announced our Revenue Award, inclusion shift XG primarily highly gross our XX% a part we team the

we believe in company's the the six strategic long-term has out, strengthened months. positioning it last netting So

the seeing traction a satellite have are still we accomplishing recognition of strategic the the walk to close concerns We of difficulty optimism focus process. impact lot of that, opportunities timing us This near-term and of densification, by communication. going for of to am call ahead. predicting investment profitability We the improved promising and But turn the and XG are and we over funnel milestones of financials. the year, themes rest Mike uncertain I COVID-XX is revenue on do. growth, through and the revenue the in network to work over on in our With growth to including including balanced the long-term confident remain

Mike Kandell

Thank you, Good morning everyone. Tim. again,

Before XXXX. I XX, effective to June I wanted highlight that begin,

by of We an This have are Operating Chief occurred operating analysis made well our reorganizations maker Whalen. as our operating internal result months, decision as reporting internal six in key the the one of financial was that are segment over statements. decisions prior Tim how as

gross our We performance group, these by investors. believe will for product profit provide continue we revenue indicators key are and to as

is demand sales or signal higher T&M is and higher profit million from the due group in group the offset primarily our Test $XXX,XXX spending. our Revenue RF due from software the as gross Holzworth solutions quarter This prior in of in $X offset are due Our primarily or million digital Consolidated from or on period RFC product our follows: XX.X% due to businesses. RFC in revenue accounting shipments Noisecom and components Consolidated business, RBS decreased XX.X%, group RBS processing comprised to of primarily Software Microlab licenses on partially LTE year due savings. increased Holzworth primarily projects. to the due from lower headcount revenues of Radio, to reductions, groups CommAgility. for margin million the our to cost large our prior product quarter. in quarter $X.X the at the a of period, in of hardware XX.X% lower was XXXX the software component Revenue as LTE including million Revenue increased to by profit and margin cards. gross to million, two from in T&M Measurement comprised profit the marking Boonton, inventory included to Gross quarter savings to and of increased lower Noisecom XXXX margin from to fair Holzworth for decreased the which acquisition. of second T&M to the primarily the RFC Baseband product $XXX,XXX compared year. related cost margin XXXX. COVID year. XX.X% sales decrease revenue prior primarily impacts from in XX.X% is margin quarter decreased to of group sales $XXX,XXX Consolidated the RBS material in non-cash increased hardware This $X.X and product the the $X.X as from to profit QX, second Boonton license declines related to contribution purchase was margin product second and prior or due the $XX.X product of versus group $XXX,XXX comprised pandemic year of our the gross XX.X% value customer acquisition. adjustment XX% initiatives, were

from was expense expenses expenses, primarily increased marketing of of expenses These sales spending to expenses expenses Consolidated operating and travel third-party and And of reductions partially on marketing decreased primarily headcount, Consolidated which administrative the was spend period. expenses our consolidated This operating facility $XXX,XXX expenses $XXX,XXX operating Holzworth reductions general QX, XXXX and professional at Interest the level, ago Holzworth related is decreased to included offset period. expense development. from decrease expense and intangible prior this in initiatives year as prior of the marketing of an on to Holzworth of offset $XXX,XXX reductions, operating Holzworth of which of XG that the contributed Holzworth down increase due $XX,XXX of expenses interest quarter, of $XXX,XXX operating by of Holzworth $XXX,XXX prior asset headcount sales to spend, were inclusion $XXX,XXX. approximately offset inclusion of new $XXX,XXX $XXX,XXX R&D in our breaks reductions finance reductions spending product in reduction amortization period. which which administrative used fees, the $XXX,XXX general the a inclusion by expenses as to $XXX,XXX were a expense expenses other expenses we follows: by year approximately fiscal term high and reductions. discretionary XXX,XXX. our R&D from and commissions beginning approximately full expenses a loan the by for second in million, expense and offset Overall, XXXX. At XXXX by to period Turning are implemented benefit increased due from discretionary quarter offset include year the $X.X acquisition. other expense approximately the was quarter and in due year approximately the the

period. net $X.X was Our for the interest due loss EBITDA prior by as offset $XXX,XXX Decreases the period. expense the expenses. to prior of in only adjusted to year to the in revenues partially Non-GAAP lower net was quarter compared for million and lower quarter compared as $XXX,XXX year $XXX,XXX income higher operating

XXXX, consolidated Included base our $X gross the our $X loan to debt was $X.X was May million we received gross to the sheet and balance June as Availability million. million. on million $XX.X of X. revolver paycheck debt which under Turning related XX, was program cash protection asset is in

of As some remarks. defined have program. spent over in turn the forgiveness expenses loan July, like company expects to The to been loan qualified time, PPP closing under fourth this as of all At PPP of I'd the back apply for the the proceeds mid of quarter. to Tim it on for the

Tim Whelan

of in year, timing With there while with to Thank first goals half future still you, outlook accomplished regard have impact and provide are strategic expectations, estimates The to year. Mike. very very uncertainty too fluid, challenging the continues the on is much pleased project of financial we we the for is sporadic. to and backlog unexpected and levels expectations COVID-XX our the And of the information predictability. funnel reasonable be forward-looking of and

of address about mission communication. excited We've needs our and critical the the the and lifecycle larger wireless highly built to development, are test direction across We future. strategic company deployment

three on We long-term have and growth and invested improved of focused profitability. important themes

important We business our customers essential critical and of in defense are the provider an an are needs serving the industrial base. we

engaged Our to and is and the empowered and energized, employees leadership are drive excited motivated, team success.

were their our by top please safety we if Kate, employees you guide the be And you will continue our health being always, questions. and navigate a challenges as the presented priority. will could lines continue open in decisions Thank the As to to pandemic. for

Operator

from announce your question. Our first [Operator pose your Michael affiliation, Please Instructions] question then today coming Potter. is

Michael Potter

bit if Michael the just Tim and Potter, NXP signing one XG. then Capital one guess Monarch can there guys congratulations, was give NXP on much I a a NXP Group, for improved quarter. I color on wanted outside little you was of agreement. to us more there know

Tim Whelan

correct. Yes

Michael Potter

combined? side just but know that I quarter it, about spoke NXP in two And $XXX,XXX was you that was guys recognized the on the or quickly was contracts the

Tim Whelan

That was primarily related Michael. to the XG application

Michael Potter

Okay.

NXP So the XG nothing application? on

Tim Whelan

be over milestone mentioned I that the as those deliverables will recognized completion. next next over few on and delivered recognized couple development be so that'll of and the and milestones depending over quarters quarters. few No, The time

Michael Potter

size contract? the what's the NXP And of

Tim Whelan

the or NXP relationship signed. the Our - Michael NXP we've contract overall

Michael Potter

The contract you signed.

Tim Whelan

be Yes, would remaining it the $XXX,XXX.

Michael Potter

In signed? Okay. aggregate was million $X

Tim Whelan

Correct.

Michael Potter

recognized for Of XXX XG application, with the which to was rail not we do having NXP? which

Tim Whelan

Correct, correct. that's

Michael Potter

Okay.

so the couple based quarters? hit to having XXX,XXX next over of you will with And milestones remaining do be NXP upon the

Tim Whelan

of end which two right of say few - or there's And correct. three those are hard the to quarters, the edge at it makes - is four. of milestones That's which or

Michael Potter

going you us it looking to the customer deployment, better use you of a our to be was And end for cell Okay. said can technology? example small how is give

Tim Whelan

and a small market NDAs, mass Michael, effectively the but a completely deployment than cell is disclosed application. specialized highly of is not signed have more rather we've deployment confidential this They

very carriers. be are deploy much designing And and what will extensively is be And the mass deployed carriers and greater power. the tested it they'll Although And market and they'll to we're of still get want then XXXX the deployments those being once by level and their done specific solution to in in XG initial numbers market if a deployed environment for beyond. that requires those years they higher bandwidth that in ultimately focused so frequency them. applications

Michael Potter

- So It this NXP point. out a there at specific this not not NXP sounds market to then we're go developing this for for like this is customers this is end and technology?

Tim Whelan

be is mutual a will No, customer ourselves. customer that a this NXP of and

have we cell So NXP silicon in enables be licensed our the software, which deployed small to environment. that

Michael Potter

how to more regards much the and that Okay. about talk And bit a is of CommAgility pipeline can through in direct we little NXP? versus pipeline

Tim Whelan

originated one-third of relationships. opportunities, as of to been approximately now funnel NXP. one-third NXP another we I bring the the to so quarter of those think would and opportunities right of one There independent have from are to applications about characterize identified opportunity have that one-third our I XG NXP is

Michael Potter

new strategy to hire hoping very to on it. marketing the and and looking obviously that about some as to is congratulations a I'm got Well, him the of repositioning he far the going from clearly Okay, I as bring. must degree on call. and we fresh, leading is he sales can sales to new force we're the organizational changes but be know team? want kind there of our Alfred. Perhaps of what around he talk we is

Tim Whelan

Sure.

after is us exiting So he today, the last week call Michael, just Xilinx. not from on one he joined day

Michael Potter

Okay.

Tim Whelan

he continue what if I a So he in is into do changes. it's stages, this stage in think incredibly is adept tap customers into incredibly declaring network has silicon his He at or to He grow a our in. of We're he opportunities week funnel. shifts able him on network one be potentially call, to were this to solutions, any betting little the dig providers to that He the technology I speak with expect There process week. be excited would is seen be excited and designing through think I us are the future. him. the at that would of familiarity just away early with and by could excited we'll early to the to is common solutions. names is of recruitment. known

need this just that that forward. him give to think energy, And there. accomplish he'll So there number of right is drive done plan. to has course, XX incredibly are days I the got XXX-day need XX-day the There connections, will be right the network, he expertise, help to mission. a this we'll we're But right first and then the of tasks excited right

So going this we'll more maybe certainly should just be right about talking a little bit it now. Michael, forward, think I early

Michael Potter

That's on a living he not was or fine relocating in if he area? Is the [indiscernible] call. is he

Tim Whelan

is we He person of a Coast relocate and period a he'll West expect over do time.

Operator

Our today your announce Robert coming Please then question. Morrison. is next pose your affiliation, from question

Robert Morrison

[Blinc Morrison, quarter on guys. Capital]. Robert Congratulations a good

The the I beginnings it's seem reignite to a businesses as the decent acquisition have struggled a think anything Holzworth synergies to are have on revenue time, legacy we how do in there bit the Can you at start. occurring. substantive you looks least little a at growth us going progressing granularity give turnaround you. to if And same of there? businesses? also have off some Thank those

Tim Whelan

Robert. you, Thank Sure.

that asking may that that So about approximately of million Holzworth, question first previous a the was periods. recall $X in had business revenue part of was you

is their of rate the the if to half, we'll But in to or think that, out businesses might half note million, in identical they're it's not which run there, above get You terms of that the - it they're where revenue the the a above numbers $X you that from that first set threshold call of have targets. we that will about every above course first quarter. year,

but our order bat, right believe expectations, accelerated. the our they're beyond the well that So those expectations flow we and presence has meeting is off

So with platform. regards have synergy, we to bigger a

that and of reps, we orders. purchase more and more some approved flow not certain approval they improved that's the at qualified have vendor We have of that firms were accelerated that was

expected, the customers have just moving to technology thrilled they're bigger that how we customers bringing we're our that doing positive, where Their we're are So communications that and we're they pleased pleased platform. them. are with been solutions everything are forward. The of part well very more

COVID-XX in We seeing of grade up go in some we're and were we're will we're that to in we second and With how So do slowdown down and South. and there, the primarily the that the all West opportunities, we funnel. not half about believe the very confident that systems happy brands, of a of funnel regard there slowed which in in pick were that, think concerned that a growing concerned we really overly legacy funnel to number with closures shut terms the due that.

in and So some we the of that think pick half. backup second we'll pick up

Robert Morrison

give two be resources the CommAgility you putting product joint mostly you seems our years? semiconductor This up Okay, customer like and a next sell producer, efforts sales joint it's of to this to was have doing collaboration Could and turn market venture you to three this? to DSP a silicon what their they're us I just or and step Can provider. DSPs. the with thank in amount you. CommAgility on and contacts, their their force, venture What with us between granularity over base, on global as partner versus and helping some like to us into own share the TI the assume it, have it's going producing when a even

Tim Whelan

Sure.

collaboration first I necessarily of So agreement, expression in but you're this, joint This I'll It clear. is venture. the just not a I of a that. make Robert, aware think But joint and know it not you venture. is communication, understand,

Robert Morrison

Yes.

Tim Whelan

that's So point. one key just

in of XG The is interest more collaboration had the the huge. yes, agreement a second in we've TI that is robust just sense applications this is much the with level than that what key point

sales It's on highly and don't solution type going highly the I how you of end. many above, team. engineered people it market, any as teams salespeople, beyond to numbers our technical a goes multiple the to have front exact for sales so with a And really it's just design

NXP few typically interested last are bring where to months, customers every line on are talking both the customers. as to week joint more think of technology ourselves and end in calls out they about each what their there the bear to about applications their finding between in this so And the

Robert Morrison

the I makes is exclusive What's do? bring, our want purposes, own does relationship, business to way, what not secret a realize its a By very just CommAgility that such global powerhouse company what software sauce an as for this from but small does with the NXP Parsippany? do

Tim Whelan

and We think upon as solution, categorized as They're medial about that's layers, five standard based Sure you two those five-layer of to and software architecture. referred stacks which technology to typically on and the seven which layers. are one, layer, typically stacks. as there into layer layer three layers, a to bear. a bring then And are the referred host three,

distinguishes so, from others. And that us

We software. layers have of other

five-layer then but layers others where and providers protocol The tied silicon to application the after layers are in these other the there's have we modules, most on. play that is that then most, the specialize will for we come highly performance. So strongest. five-layer and And

the tied typically providers to software what And silicon other are application depending the the five-layer. is. that can So applications on most providers then end bring there

required. bring collaboration, are be that hardware The for software Therefore helps be the partnering, other with not is build that standards equipment. are we the interoperability chips benefit the boards And the to can expertise the this radio can for the always compliance critical hardware and expertise it but the it's key, integration. ready

Robert Morrison

by That's you. way. thank very helpful the Okay,

Tim Whelan

you, Robert. thank Great,

Robert Morrison

years peak TAM off revenue? private opportunity as X, appears a XG few network to if million multiples insane $XX a And $XX take million, that this multiples, the in our which road I does point larger are LTE X, you be $XX out history, X peaked the and CommAgility or year XG that look $XX the TAM would if considerably be $XXX think of or at than million XG in guess? out down million build would million, any you an is between in CommAgility’s One million hope revenue $XX many have

Tim Whelan

insane call not it guess. would I

do solve to band is cell probability yield those frequency getting users. challenges the that license power, partnerships and point over of and downlink of and as to to you further to the to uplink is which the customization numbers. includes we the returns installations and of size The whether be the order years. success successful solved. have unlicensed to and we're in successful to mind a focus go in types of make Our Keep then And high and should applications in can next get if there this latency each three all those number to includes our a capacity sure face of driving lot variables low velocity The or distance market. it's or top technology cases for that,

broadband, And these on others concentrating to addressing this looking mass mobile low are market, so, while we're the is latency non-terrestrial and enhanced do what applications.

get exceed will in a your I'm But insane. next specialized years numbers. success. focused So can numbers the of the again, to success aren't much success then like build over excel But each driving finding niche three that and And we're in year we in. types the strategy on rest those to of company, on the upon order

Operator

affiliation, Michael today Our announce Please question. is then your pose Kaufman. from next your question coming

Michael Kaufman

MK Kaufman, Investments. Michael

team that your is goes a pressure road well, profit this radio, through may software away job a with $X.X loss the you down down revenue think I did And and million XX% when on have coming very it's a very your growth. I the COVID. good have category difficult is in baseband, Hopefully, The could was time resume further doing Holzworth cash. looks would really put you in payout but on which you like cash? a and gross stand question

of because baseband, get software be, what's where revenue the back needed that of the terms that flow? radio, used it be opportunity to in sorely at So to would to equilibrium margin is gross to question cash - $X.X least million

Mike Kandell

to CommAgility, was a Thanks lower which related were the what Yes cards, looking growth which we're and the is much it. about question. about expecting Mike. than Yes, software the and of at decline hardware And on Tim it's has we higher for our in and for had been is cards. in talked Michael, We margin a the the license at so hardware side that back planning for demand disclosure February. talking really services

and the So margins cash grow improved as margins with see and CommAgility we EBITDA which we flow. improved should services the software business will related help to

Michael Kaufman

used starting ever levels bleeding and long mean, But the going thing out be time? is or do again want to were they come than start on COGS that lower this that just they business get silent to it to a see channel I much will to back inventories be back and you for

Tim Whelan

the customer conversations prior in more technology a our large to of the from was cards XG they with XG driving shift year the resulting software-based. system, a architected be from their who to our decline Yes system of test hardware test from purchase was which

but lower while are periods. market over half this aware quarter. they this, hardware we expect projections declines What the will at each they and collaborating the off. seen a a they of fairly from with than we're us We in second the of purchasing every numbers They a more of found they in were years. cards different is happened a of so, slope customer, where and And them year, the could fast those shift period many had to cards what at than bleeding in previous levels much them do use. We've be continue potentially position

the much relationship orders for and we at expect potentially them half So half first good year cards. a purchase with to XXXX. second of do delivery the we customer, It'll level a in in of expect be we've the lower maintained the

Operator

Please today [Operator Then announce your coming question. next Instructions] question pose is Nick your Our Kovich. from affiliation.

Nick Kovich

gross and press long-term Capital release organic by revenue Nick margins have margins Tim Management. here XX% and XX% and annual in growth EBITDA Kovich, adjusted double-digit Mike I'm goals the of Kovich reading you XXXX. and

year is, CommAgility what hasn't years. much organic growth base really the been because the growth question revenue is the for double-digit revenue WTT ex First there over at

So I'm base is? wondering what the year

Tim Whelan

Yes had refreshed. goals in these we've place we've Nick when so

about shareholder to investors I comments. and we at and think to the those annual is X it our spoke we strategy as refreshed it a reiterated on meeting about best way think our June

period think think I the is it. so, way And XXXX to about the

to striving cards, back pulled drive of these hardware types course, but on still XXXX. our those growth Of customer by we're largest

Nick Kovich

most are you to three As targets, you three look hit at have you or that issues the, these have say five to targets what XXXX, metrics? these important achieve the and

Tim Whelan

then success, to specialized number execution be software collaboration contracts one be those. solutions. those beyond customization partnership continued And the apply two can come to services that NXP there, the as those three on try to number extension number continued with of that So software the the contracts would the users is would get

it, to measurement about are think solutions, to And feel We drive focus to do developments by if to those required do. a are lot to new the top non-commoditized of densification three Holzworth leverage growth we the growth in focus is we've test good on then on drive on by that into growth to and and work is are. through the think continuing those those our the to non-telecom the customers, fourth components things advancing I XG introductions focus product carrier fair platform right, there's there. to solutions business and shot. five the I continuing our but continue of what I a So continuing got And strategies last think drive

Nick Kovich

Okay.

company generate those If for XXXX metrics, for reasonable hit expectations earnings range targets? might of of achieving capable these you if the you're what's the

Mike Kandell

me, the I there in front don't into But we terms earnings of the that EBITDA - adjusted of earnings in in stated think I model have the translating terms of EBITDA. margins, terms I in of Nick. think

Nick Kovich

three achieving bonuses Okay. tied, bonuses to targets? these management's Are your tied

Mike Kandell

are profitability tied annual yes. to the equity tied metrics, bonuses recent targets, Our certainly directly number awards these Number awards two, performance are achieving most to also the one.

Nick Kovich

little What's legacy guess XXs. I leave to the been the at years, mid that now you four your question WTT? at over want you've a last And Tim, company the

Tim Whelan

trends that's company company people when bring is of for We're million continued great when going I that was A a it about $XX with positioned approximately growth was growth. This closer technology to forward. two-thirds took million $XX a over. acquisitions on aligned to today two - the size that company

the So behind terms of our I'd what shareholders. those to of like me in leave hands in

is employees, a our great continue forward a me. company and Directors company people for with growth or positioned and of to without drive Board continued management Our thriving this who with team

Operator

us And question. from Kanto. is your your today question affiliation. coming note Fernando Please next Our tell

Unidentified Analyst

on much Hi this Kanto, gross especially Tim is a north a better congratulations XX% Investor. Mike margin? on Fernando the achieving and Private quarter of

Tim Whelan

Fernando. Great, thank you

Unidentified Analyst

breaking even you quarter, on the feel about third do September coming profit a or maybe with strong How the quarter? up

Mike Kandell

going Yes, on the heavily and Fernando growth rely that's I think CommAgility revenue. software

With PPP going means a could be because deductible, be tax is the tricky, not little and have expenses. if software The a those may the expenses we think provision services those margins year are to taxes. tax provision which before loan to that record the forgiven, that revenue on brings I profitable we're this that

of Now that into any taxes won't cash because NOLs. lower translate our

tax, fact us We drive taxes high have paying we would We into that provision be expect. position. this such higher NOL what year. any a could tax any won't than a cash But

Unidentified Analyst

be your tax PPP exempt Then would right?

Mike Kandell

The would expenses our impact deductible, accounting. are that so not tax

Unidentified Analyst

$X exempt? But the is tax million

Mike Kandell

Yes, correct.

Unidentified Analyst

right keep work. All It’s good up the congratulations forgiven, and okay. again

Operator

Michael do your We from follow have Potter, line a Potter. up Mr. question is live.

Michael Potter

CommAgility guess Kaufman’s on from large they their already to to Are Have XG with the shift to before. from XG? last a the XG customer made they year go back Just Michael year and back market the I in in solution? are question

Tim Whelan

and what for a the is invested testing. pricing market new XG They've an on test layer that for XXX. of to XG XG we just the product and challenge and technology And to their a number that customer market. which terms XXX an their the they're I confusion think and forcing product, money that bit through brought that demands. they why product order their don't address upgrade, and to device to working into it, understand. of try the encountered expect are off of projections in cards demand sum out you to a we created me if And to a They've the in shifts one their burning curve they of was they the customer of us. here's entirely gone it. predicting with price place how about a also And had them, And record acceptance. as second are within next half should Their of first as us this and of from quite year translated was to of spotty they Michael they through in And smaller the at for described year. index the because accurately of what systems, the market but they delivery systems level then expect brought they that and of their a price to be you they XG still of a market solution, solution an although I to of not more only see, buying new we XG XG want buy XG it predictable is installed significant base to base the bringing still sold, that - routine levels, a they have be that in challenge half into was they Their again to expect have said, serviced. index me are new

on us, about in revenue eyes And so have some visibility by that and what ordered now, It's that the XXXX. we but right predict should to should very deliver some think some difficult and stream. continued very, to year how from they've

Michael Potter

XXXX? event for going shift, their XXXX you really so will if It's a us. into really it's Okay, not

Tim Whelan

haven't from all We at taking backlog which committed out their orders were QX I over No, any the delivered to why of we the coming is XXXX. in of year. they think purchase orders place shift now, the is remaining received course take

product, that we at level quarter not through their but a second tier for the shift and a of XXXX well is then purchases, as be I that product, So maintenance. I point, which some product, as this back think towards for leading should the year. now of the fourth would but do as define And

Michael Potter

which to will? compared if they're collaborator, a an And just Okay, then you okay. is end customer NXP, as

Tim Whelan

Correct.

Michael Potter

there's the to technologies NXP. going NXP combining to order collaboration with I In other joint we market regard to about with are exclusivity but to to market? partners venture and no assuming technology market, in go I'm talking mean, going or to

Tim Whelan

have expired that's yes, still TI in agreement in place. we So with a place so collaboration not that's

have place We Xilinx. collaboration in agreement with also a

And They the that we're are we do have the most distinguished advantage an being a I we think for providers, specialized communicated based opportunities have U.S. other us, also to not partners. doing two of for of They front are other they we best. of based us. have have company to exclusive some And the think in U.S. in they terms opportunity. So them. but but

signs be. relationship are of those - very fruitful think positive how the I this So can

Michael Potter

a or of of sort on from sort Do you anticipate for XG this activity that we some revenue year? application Xilinx will TI generate some

Tim Whelan

them. end design that their Yes, result from to solutions, don't then no, what if think I us It'll of be the that revenue could and their don't requires, bring an specifically if solution. a two XG I what revenue customer But it’s in solutions

for I think NXP XG seen I based we've think the most have about as of activity the seen and roadmaps. they significantly NXP is advanced markets think XG

those revenue with ultimate it two come would to as a both a wouldn't come customer, customer is TI the Xilinx them from sales So collaboration of would us. if on that drive there from or providers that as well

Michael Potter

there They them? a customer sell sound they the this there. in and over market doesn't if a comes like you they're not at It aggressively have point. out out something know they're So to have [indiscernible] pursuing solution the

Tim Whelan

mostly the centered NXP? that on say aggressive would go-to-market I sales activities Yes,

Michael Potter

Okay.

second the are and our entire test Have Just an go guess, I it's acquisition The back timing very in at a around now turn you enough Have offering this like measurement. I it legacy seems you force well. out year. the it's solution? our and to upon we Holzworth anticipate there strategy test there know business. Obviously, is working point? with sales we - measurement touched issue that of go-to-market a concern half is to integrated we where

Tim Whelan

Yes, so the is salesforce integrated.

rep and excited and manufacturer also products. through a teams the number Our positioning through our they're channels are rounds promoting partners. are Holzworth basis. Holzworth of training customer been at sales our getting webinars also and of We've third They

put that to on this the continue full teams been quarter, are We've activities and I cross start point. to trained, So will that out work final have at have believe sales marketing that do teams products. have covers next demand that integrated out. we come the will will place fully got the been to sales generation and the the be roll cross And otherwise websites element. of rest together, take suite But trained, we

Michael Potter

year, our of the has this had first been Why has legacy in do strong so you Holzworth but for think the business half difficulty market?

Tim Whelan

with that to our larger get the of hard line were your over reflection point opportunities helped I combination positioned few say, they on a Michael, think them are semiconductors that they be point A one world. That's that question. your is those lab, located upgrades they're question are large some on semiconductors, XX all second focused some of at the on reflection would over

less think Boonton by. And lab, which to quantum they're impacted computing. also saw where a regional they're we I aligned by get impacted So is

are focus in or line some too. trends less the not Boonton products are of other that all industry And at

those So difference, I've of pointed of brands you being the surge swing or know, those three things Michael, And deals a size into a or decline. two each as the differentiators. two three for

it come on So, the line, talking search a one that over they creates slowed, the we're brand. a about it with hand We're client handful for shift. other. can also not talking deals a massive if about all identified for that get be of deals And creates the if one

Operator

today Robert Morrison. coming Our next from is question

is live. line Your

Robert Morrison

the able assets? Thanks pay to for flow as of stated I'm Thank you and both about because I debt debt think current find might there goal ability the that to achieve Can flow down pay noticed ability opportunity. trying what from if of boosted, transaction, theirs. an out working from to I year down you debt you've this cash you and the is to just down, price the down talk a pay deal accounts be some be operating non-cash from you. Holzworth that for type year think assume and receivable cash so? over next up the I the would follow the And or

Tim Whelan

at flow year. Robert calculation do agreement, each an so our as Yes, of calendar part excess end of we the debt have cash

flow be - pay timing. that Holzworth very just quarter. a shipments had at pay the some So the down has excess of cash end of ultimate due to AR We based will upon also calculation. primarily lot the increased determined

on be to half the year, year, I again the going specifically the think our is for second flow of CommAgility. our dependent at cash performance in

year. really second spend half back the which We dollars in know, the with of of additional half. some on also going in the CapEx, of should XG you some the year, CapEx some in the cash the development, have half to We flow drive we're needs have in CapEx but the down some of to pulled first second

Robert Morrison

low and steady of where of but XX% and push, R&D state wants when sort Holzworth expenses. assume some is to line reasonably achieve of its to are today? on XX% margins I to obviously a have in something normalized as is a there it item as transaction, of still company ratio elevated Is R&D that is CommAgility that gross going the was must revenue we the more continue? that to EBITDA some margins, of that compared been that

Tim Whelan

what selective third taken have do R&D, in We've reductions out some spend R&D. been for XG product in that So very to that's developments. had we've our specifically made we party cost and offset helped we've of

an quarter So see about for had the we year you'll XXX,XXX. year-over-year XXX,XXX of spend about in party the increase that third up for and

would and development, of because the of product XG second I trend that specifically continue half in know, expect to You the year. the the

at have back of back continue want I we party going think if in would XG terms set be you we're relates to specific in but spend revenue to out as short-term, guidance. it some to think or look third and going 'XX the But roadmap. specifically target and haven't percentage we a to any forward, 'XX, I to that

Robert Morrison

R&D years Tim a the lot it. ago question I I a and with of said couple productivity, boss asked the of new pleasure introduction was the pleased couple on he I this of And unfortunately in years. Okay. past don't for product results see think

'XX R&D we have going that non-software enjoyed ask to the the product seem in a to going to boosts I'm from were that happened - So we question 'XX. out the related again, productivity any not budget and of get

Tim Whelan

into is that in measure the that so opportunity, the and product and the some translate Robert lines, productivity, of success each we older the I in Keep mind, legacy products new refreshing market. R&D growth the revenue

expect the R&D in aligned continue of revenue growth of that's to that and products. I and will growth, as for are or yes, of XX% and that that that products, that within getting and be R&D drive declines the to we're suite entire going XX% result at that probably ensure closer just growth than they're revenue the maintaining trends will we greater But we to would revenue positioned why to to. of legacy try range, So our XX% those of evaluate our that

Robert Morrison

Tim of last lot the product years. a success seen haven't few new with just I in introductions

the the So R&D. that's productivity why of questioning I'm

Tim Whelan

Yes.

Robert Morrison

test refresh knob I'm to not of a referring pulling device? measurement the new that on

Tim Whelan

our has Coupler Yes, successful. been SMART

product. GPS and been good have MCC DCC products our We've Our some seen traction successful. with

Our hangs on that digital been noise the have noise, feedback the display getting We're of measurement a sources good on successful. off is which bench excited device a very of very new smart PMX, top USB power devices.

the with thrilled are We software releases.

there, the tractions in So it's and the legacy products. offsetting those declines

engine be years. we the that'll So the next growth as about three of think

growth think the so hit set targets for to be going I And those proof able that's ourselves. to to that be we

Operator

you. Thank

this in have queue time. at further no questions We

Tim Whelan

again everyone Thank forward speaking safe in the us. and again, good. Very Stay joining and you for to you future. near healthy look

Operator

you. gentlemen, Ladies Thank conference and conclude does today's this call.

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

Mike Kandell	CFO
Tim Whelan	CEO
Michael Potter	Monarch Capital Group
Robert Morrison -
Michael Kaufman	MK Investments
Nick Kovich	Kovich Capital Management

Wireless Telecom (WTT) 13 Aug 202020 Q2 Earnings call transcript