WTT - Earnings call transcript Q1 2021 | Wireless Telecom Group, Inc.

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Operator

Good day, ladies and gentlemen and welcome to the Q1 2021 Quarterly Earnings Call. At this time all participants have been placed on a listen-only mode. [Operator Instructions] It is now my pleasure to turn the floor over to your host, Mike Kandell. Sir, the floor is yours.

Mike Kandell

Thank you, Paul. thank discuss joining quarter Wireless results. and conference on XXXX everyone to call Telecom morning, you us for today’s financial Good Group’s first me CEO. the With Tim company’s is today Whelan,

plan, remind seek, be Before or I such future and In expect, our today as that regarding assumptions Litigation company’s management’s to future other circumstances will, of include current we could anticipate, estimate, some well on events, Reform similar identified forward-looking project, such as meaning forecasts results. the statements believe, the economy and Private and would to The cases, remarks do historical within the begin, conditions words forward-looking and statements company’s by facts. forward-looking as based the intend, call expectations strictly statements terms business everyone may, like are Act that may on not and of statements Securities relate XXXX. current of the or performance,

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

Tim Whelan

Good be Thank Group you, XXXX Telecom year in very initially after Wireless strong did Mike. coming disappoint expected we exiting QX QX with XXXX everyone. a morning, and is to stronger for bookings backlog. than a And not expected. higher exciting

across improving margins our performance number and a new the gross momentum almost increasing Our consecutive basis revenues consolidated customer during another to led compared EBITDA our of generated quarter to continuing of On last gross at a strong year. successful at bookings first strong results We results of metrics, quarter XX.X%. consolidated of quarter quarter, we higher backlog. realized at of XX% a improved We wins, showed bookings increased revenue and $XX X% our nearly second which higher million, margins.

increased drive our execute in to to flow. strategy on top-line of double-digit operating in profitability continuing growth are driving leverage cash We

demand investments of continuing rebound. XXXX Turning to first QX purposes. that densify than the RF now on had ratio and targeted April for other critical improving started large for see to the neutral were ramps. months. QX Microlab in effect in in of when by as our best have large The were in month by last half recovery In occupancy XX due and product that more bookings investment components drivers our buildings, also network is we networks. in consistent We of steady QX This the providers of office In host year, positive the were of comparison for on sequentially components, pandemic a out of strength year up demand groups. infrastructure year. RF XXXX QX to this decreased the bookings compared now Recall returning to with higher from of as components carrier negative and which and highlights early our are of Further, realized we half the QX of hold the QX business XXXX, assumptions sign second last building than projects, demand bookings venues, supports months. three an book-to-bill reflects impact bookings to empty the RF other bookings. on stadiums companies, month power the empty venues the within will carriers, to building, expected put expected on stadiums for components increasing believe impact to QX year and and The a of supplied over includes good throughout revenues with the pent the belief our of pandemic in XXXX on relative the negative slowed vacant see new the coming

mid-band extend have to and CapEx funnel, projects addition, test ownership which have timeline of carriers our announced of results in to design and can to QX deploy which is seen could spend this the important we subsequently February the invested of business, heavily were in higher In some yet continued has into full be year. completed auctions, projects In and well. portfolio, returned of large beyond. to the the build spectrum quarter the to product so Holzworth these that spectrum. XXXX the note lengthy reflect It And measurement perform many our the large not they

and synergies an are our brands. our to deep we expanded realizing to continue leverage existing channels, are customer relationships portfolio product in sales from working in We top-line

are with devices another strong the which products compete designed quarter set solutions, offering superior noise of smart which focus bench-top the new showing software products expanded increased our by the quarter. within our legacy performance from from and new a more Our on larger, had we our just focused benefited and larger momentum also market, and into design-in solutions. baseband And customers legacy to complex instruments alignment of sources price to ratio. we new signing Overall, bookings of believe product initiatives away sales first on radio, our business, and in continued software remained our XG for last suppliers We dividends. bringing is

Specifically for in within this software business quarter new signed We which consecutive small cell the Defense second million four excess of solutions, U.S. solutions. bookings million. both specialized solution. in of the four participation over of for two XG in QX one XG a of in includes product group, XG quarter, of contracts Department two our while the we second are is in And customers QX signed signed a of the new RBS trials,

included customers software The first for received approximately orders $XXX,XXX. in two totaled bookings these QX purchase new and

total potential several value over the fiscal value the However, contract of signed contract potential years. exceed of could million $X

test laid increased we And in earnings from the quarter and base additional for also the purchase realizing projects our milestones as are in our to additional noted systems in delivery who performance in received purchase our our first is orders used contracts expect customer call, systems. of for expected last hardware We continued out yield for LTE the longstanding station milestones. demand cards orders test

and see in software RBS, XG Looking continued ahead our expect to solutions we interest roadmap. R&D into

showing year, have certain expect just the to in that the under in $X with pleased negative signed we I’m signing quarters the the million. to the while first ahead. results of also RF quarter report of And We quarter value one XG still To a software continue pandemic. significant parts improvement XXXX to customers May, new last business first as our month solution our over the summarize, contract such of our are pace COVID-XX already are effects a components new of of customer

optimistic over. worst the are is We

RBS recovery a are quarterly steady year. of seeing to throughout sources, that, walk At T&M traction the services. Mike, the the Holzworth with successful XG new turn significant and for smart well benefits software through LTE as to as improvements to and time, to We the of acquisition, business the call early us and our continues to growth of our sequential customers and our over signs and noise back improvement going continues realize I’m same With financials. expect demonstrate

Mike Kandell

the digital or year year morning XX% had in the everyone. spending on XXXX, of Thank net million as T&M as and realized quarter P&L services then XX% for or cards. increased noted comparisons from balance group. group the $X.X revenues partially million revenue this our you, to basis negative $X.X million XXX% comment balance in signal revenue and XXXX. hardware prior on continue and of sheet we well the impact XXXX in again, a by level comments revenues increase March sales software year-over-year XXXX brands. end as our These XX, Tim. revenue are compared walk increases pandemic see the increased Consolidated in results T&M revenues, of COVID-XX or reduced legacy of sheet otherwise quarter the I’m December Holzworth XXXX. a million, of to offset a first through to higher $X.X processing the component RF decrease we and a as were increased going RBS sales carrier and $X.X as full All first of higher product At product Good period. overall unless March quarter XX, are XX, for on

due at to product prior higher results, below RF XXXX RBS revenues. in absorption fixed costs. QX offset was from components million volumes and by lower sales. higher line increased expectations. of higher profit software margin gross partially for group on – Although was to our increased XX.X% revenue components $X.X Consolidated and below T&M margin product revenue contribution and the year with gross This manufacturing at profit profit gross lower margin only our of RF product our services due a XX% lower the to Consolidated group, margin

Other to expenses by $XXX,XXX a from prior decreased foreign and salaries increased count. offset expenses due the marketing and and and to XX% expenses. $XXX,XXX debt. consulting of associated general Consolidated term primarily increased projects. administrative the stock or the the the amendment as interest operating February. year expense benefits sales related expense decreased and legal from in was expenses timing and result year executed $XXX,XXX Consolidated due primarily to expenses lower XX% from amendments approximately to exchange prior Turning lower were commission Consolidated $XX,XXX of lower with material to debt year to expenses increased lower head third-party Holzworth as prior the due gains flat R&D or purchase expense our approximately due

was revenues net lower and approximately and expenses a was Our foreign by higher on which $XXX,XXX due the period the EBITDA revenues prior $XXX,XXX gross the higher due to higher offset gains. higher million profit primarily exchange only approximately gross adjusted year operating higher than $X to loss by improved first primarily for quarter for partially quarter, Non-GAAP our profit.

XX, the of increase cash, million payment term to million, agreement. which stock December related due $X the as debt million Turning down in to $X Consolidated includes and capital. working of million million accordance our sheet. The was pay approximately the March revolver under debt asset-based our $X.X with XXXX or the $X.X XX, March was $XXX,XXX of Availability an loan. Holzworth to XXXX $X.X lower $XXX,XXX balance of and than purchase in gross our PPP to founders was

guarantee turn the in some are other liabilities to long-term payment $XXX,XXX million to the March terms closing respectively. is and restructured the other related at liabilities price. noted portion remarks. that loan XX, year to primarily of March to small and payroll, call Included purchase there’s Tim deferred XXXX XXXX Also accruals short-term Holzworth and will portion no earn-out. $X XX, qualified Holzworth Holzworth Included the long-term I’ll $X.X our forgiven. association end, PPP for at funds of And forgiveness although reported the expenses, price the in at $X.X the Holzworth loan on the earn-out, the million in are of now deferred end, to over the and earn-out. were XXXX, million we’ve business related the application been back year at has which current spent fiscal submitted As purchase $XXX,XXX related be

Tim Whelan

very with our the Thank last you, business, we seeing quarters in the software improving strong two RF growth Also, while delivery signs related are longer the parks future help revenue are our Holzworth complex complexity of public performance. and of revenue growth longer including projects, and not bookings, size pleased customer same of and encouraged the have new are the seeing levels continued and will hit. back of software negotiations before bookings flow customers Mike. over stadiums, solutions, execution positive solutions, our require funnel progress the we our opportunities and these which the large to yet inclusive we customers funnel and the order closely timelines for which other venues, monitoring more At with time, our component and recognition. drive pandemic and much amusement to of I’m increased are for

for expected invaluable to questions as Before value. strong Board of to operational to and if Fritzsche team of vision endeavors been success the also immediate And skilled to questions. semiconductor the extensive please service board and growth. talent a years inquisitive look engagement contributions trends market We technology and Scott rest remarks, Jennifer Their quarter Paul, every I of XXXX, we and and Thank analyst. of support and open would on Joe to you participants lines and addition of over next you. over and Since Garrity, Directors. executive, of my the deep Manko thank insightful strategy continue markets, is added members, to our years And their as their experience our two valued. luck thoughtful their Directors of brings seasoned well executive the help the market like board December, XX could continued as conclude add stage best Their members, our Gibson. bit as understanding as for company, counsel, parting Board equity in to of to Scott also Joe drive advice, and invaluable to next We our experience. and incredibly XX contributions deeply and Jennifer brings and shareholders. of telecom experienced experience and award-winning the appreciated has technology new, a board add wish in an we have of expertise their execution, technology, forward

Operator

coming Instructions] [Operator first [B. Josh and the question. Riley]. your is And announce your Nichols affiliation live. question line is Certainly. from your Josh Please post

Josh Nichols

the could think the the see about group or it but little on RF see more a to you bit, good if on quarter hit the elaborate And execution to there, Group some guys. that I a one, call, Thanks on bit think here, initial little rebound you nice levels? seeing kind more able do to of do of may late areas and you are get what strength that take particularly, until that like then to pre-pandemic Is long how year you XXXX, is you back this like think?

Tim Whelan

morning. Good you for Josh. you, Thank Thank Sure. joining us.

bookings in were QX. I quench better was encouraging as April had had the QX that months, So, we’d the and the best XX noted, some we’ve than sign

it’s largest the I these the think the to for quarters projects way take few get going to about So, projects this the get system, is think we size through to a system. through

smaller about and larger RFPs rate in an immediate design we size. quickly in projects business order to to and go The take think comes run We rate are size the has quoting. how business it. take run There’s timing certainly seeing the work pick time flow. through in the smaller that’s that up It

So the is run picked rate up.

up and venues We’re large seeing through they’re sized. stadiums some flow, actually and large other an order but come not show

the way Each So should similar half XXXX. year that’s full some that improvement. we the XXXX. year is the look of look color the The the order is there’ll second half think sequential on last. better second of a the should half like XXXX we just half be first be XXXX the than should the And And of of about to the first quarter about way think flow.

run the it’ll few to up to could where expect potential component And back thought, get of RF full take we be. quarters so rate we a

Josh Nichols

bit be further there? things APAC you the Yes, order businesses from then some you’re little That’s thanks the for And a or the that. a and adding any just, like on differences know in U.S. bit, in helpful. I kind or what detail if little could obviously are the which in may of Europe, America, but North elaborate like seeing versus of coming behind regards thoughts U.S. most flow

Mike Kandell

Josh Yes. it Mike. its Yes,

mentioned, at from hardware So, we’re that as to Tim and EMEA. RBS, processing signal comes see demand our again, cards some for starting

that impact then year, So, APAC up feel in the relative and pick our pandemic first product – we’re where to in to last that’s starting of to we specifically of some started terms again, when see orders of the our T&M with international group.

as expecting well this to we’re So, in APAC that some of pickup see year.

Josh Nichols

else from chance let last then here. take me, someone a question then And

you If of for there, for software kind a you that then XXXX the seeing type big see of driver XXXX? expectations the kind improvement do through what could move we you think could what of like, then little and sales, the you’re of kind bit talk is the about strength more as

Tim Whelan

the partnership the quarter improvement began really as a get I that XXXX, of the that at of quarter well that momentum to a of sequence critical that then of there XX milestones Keep release it’s sign XXXX. continued those happened following quarters critical had announced fourth new Yes, of milestones series to was of mind first QX XXXX, in two for software in signing to in been both customers as think today. the through the following I to we’ve has a was that and NXP Release in XG where XXXX we’re three we the remaining in And May. in each accomplish

it’s that we’re and and of end advancement exciting of that an terms in going exciting, an in really and to that. that of can I marketplace encouraged long-term technology adoption the to of think investment see what the of. cycle come excited traction. applications is So, front the And believe the XG be at just we’re And I the it’s of

stating again, keep complex around requiring points, going terms these proof negotiations I in more the technology. emerging forward, Customers are more of So milestones, are how more acceptances. expectations

from to the So as contract work it both the to that, delivery. get signature for time as takes the through well

we’re working can to that So, ramping hard continue success. ensure our we

sequential ending encouraged the ability but a opportunities for increase of two do are QX. predict that on of we’re to that. the that, four new funnel. quarters signing in sustain to working or difficult funnel, streak And the the upon customers We’re the opportunities the with each we’re It’s to in based

have also them. longer these we a to components term think As opportunities of number royalty

of success beyond But opportunities likely are and XXXX the should so those as And even XXXX are license late our royalty us provide with well. customers or XXXX.

Josh Nichols

hop the guys. I’ll Thanks queue. back in

Tim Whelan

Josh. you, Thank Great.

Operator

you. Thank the [Operator Please Michael Capital and [Monarch Group]. Instructions] announce your is pose line And coming from question affiliation is your question. next live. Michael, Potter your

Michael Potter

Hey, forward. on of company continuing strong quarter very Tim, a progress congratulations and the moving

bit Just you for contract for do? contract to DoD a give opportunity a you the and to I the little looking and, color is and you the can the exactly grow what this perhaps guess on be what us DoD on the if certain question more quick this trials can entail milestones, what hit with, mentioned used

Tim Whelan

Sure.

Thank for DoD So announced trials XX at various different trials, military is thank joining morning. you good The applications. XG us. Michael, each you bases with

just Some private for application bases. include naval of air bases. spectrum includes applications for Air to type shifting force ground a network XG Other

involves four contract total some called million the air a But of signed the into and spectrum So, project partitioned to have $X committed approximately we’re million involved in two on that value out of application. [ph], milestones. contracts in that each spend contract of I of about approximate they’re value shifting half is their The each. ground a that we

bookings those when what next bookings expect that the orders bookings free will The but and milestones are we a purchase would received. in received, from are so periods. those committed take are the future And we milestones be the will up position of perspective, we

little give helps that that. of hope I bit color So, on a

Michael Potter

absolutely. Yes,

that So, similar, initial I signed, in guess contract contract the much second is is larger booking? for is the you that in actually the

Tim Whelan

milestone. and to very carefully free the ensure the Yes. work based they accept XG next that they’re that Correct. functionality, together, technology, that up as before NXP evaluate we again, looking deliver And with milestones and upon they

Michael Potter

XXXX? good in into right. And this regards XG legacy certainly All Terrific. active have the is hardware that well continue then side, any on Do I customer be more which is topic plans to we their visibility a to large very Okay. for sign. they guess, once the again,

Tim Whelan

about I chain the been their they of the future. believe given for challenges with delays and orders supply constraints placing transportation, have thoughtful

the to was their difficult it it’s and volatility then So predict demand steady XXXX, and of precipitously how off state fell XXXX. given throughout for

get now we’ll of they’ve more, believe get getting They received each have to orders POs not ordered I that a replicate of us. think but believe quarters. some committed I don’t demand have or They’ve do that indicated large bit next them. that So, quarters three future POs, not the to we’ll but believe little through for future promised We in additional us, those fill I but some in. we’ll they ahead

Michael Potter

in queue. Okay, guys. terrific. the Thanks I’ll back get

Tim Whelan

you, Thank Mike.

Operator

And affiliation you. live. Thank your your coming the announce from Robert Marcin. next Please question is line your question. and Robert is pose

Robert Marcin

Robert Capital. on good quarter. Hi Penn Congratulations Marcin, another guys.

Tim Whelan

you. Thank Robert. morning, Good

Robert Marcin

the convert or Can to welcome. but we software business? they the up the in are point number the perceiving get year some next every double happening of just new very a in couple to for quarter-to-quarter, or you as are we needs the order on quarter, that the You’re reject there in or growing at level of of customers larger the funnel funnel Is funnel proceed the proceed a a triple because that process? as funnel as plateaued or we in for we prospects customers definitely sort range over so, were expand in we them you of

Tim Whelan

changing metric funnel. Robert. you, is thank with health very, funnel I’m very of very a the Yes, week-to-week. encouraged the dynamic The

our the confidence as multiple level very and well So, stages Overall, prospects, of with funnel. right? leads, advanced final, we’re are stage as customers you different that measurements near have early negotiations. pleased We of funnel in development different have the

it of that complex out near To as and with any encouraged and those more as quantitative kind call year funnel, Robert contracts, our and less about I’m funnel. think about as think very and are of we both term. every direction this large funnel next, health both, just complex As but changes week, overall, well we the

Robert Marcin

you, how happy from preliminary the the are partnership there you working and relationship any products between the Are as Has field feedback Right. been between with the NXP? to together?

Tim Whelan

the Its with skateboard, with remains very close, resides. productive They are is develop NXP. We continue sides. relationship advancing have it their our and for where as and milestones They pleased market software which to that partnership constructive to both to very, layer our continue do we.

I list, certain for think on the encouraged the very India just think been do is and only able impact otherwise very, how being we’re, world – the impact all resources developed, COVID and heading. that and software with and caution to but that the together in we’re support the we that’s it’s of on and we’ve about where what COVID of watch in impacts,

Robert Marcin

All the by you breakdowns In the right. tested brands? measurement going individual are give business, the to

Tim Whelan

bringing to Because to we brand customers No, ordering brands. that other it’s products, products collaborating through one and difficult for that? on do market see we’re more getting technologies combined

So, that’s something metric. think be to going helpful a that is I not

we’re the be year a as periods, especially full as of to ownership. QX of period informative I have last we think was Holzworth not of comparative given trying impact

people we and I together come consolidated on But breaking that color out silos. to some down product and calling teams test make of it sets we forward, a think we’re more going and as that’s that measurement why different business especially working of there. we’re provide as think sure

instrument, how think think for of how about are So important is particular numbers. we customers less the so but reporting brands about the an a function

Robert Marcin

a purposes And number Is Holzworth correct? needs Tim, that, still not all assume. I revenue to year. you this but EBITDA and understand differentiate I the Yes. then for need deliver that to earn-out for Right? standalone

Tim Whelan

And we correct. have purpose,

a… have We

Robert Marcin

more not? Can do choosing you’re give one it If were as us not you here Holzworth to of that? or

Tim Whelan

saying not not to I’m do that. choosing No, we’re

Holzworth think and constructive doing you the impact, and have future any this tried I and continue the impact to and doing will if disclosed we earn-outs. numbers to on is how we’ve be quarter. then And how we we’re how any, tell

Robert Marcin

Holzworth Okay. very merger just Well, standalone you I at in was that, the I Thank much. All XXXX. point didn’t obviously, impossible, delivering but understand it some realize makes right. numbers,

Tim Whelan

Okay. Great, Thank you. Robert.

Operator

[Operator time. you. from this lines there Thank questions no Instructions] And at other the were

Tim Whelan

today, Great. thank with a great joining soon. you much. you you of thank again Everyone, us look all we day. to Paul, for very speaking forward Have

Operator

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

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

Wireless Telecom (WTT) 13 May 212021 Q1 Earnings call transcript