WTT - Earnings call transcript Q2 2021 | Wireless Telecom Group, Inc.

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Operator

Good day, ladies and gentlemen and welcome to the Wireless Telecom Group Q2 2021 Quarterly Earnings Call. At this time all participants have been placed on a listen-only mode and the floor will be open for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Mike Kandell, Chief Financial Officer. Sir, the floor is yours.

Mike Kandell

Thank you, Kate. thank discuss joining quarter Wireless results. and conference on XXXX everyone to call Telecom morning, you us for today’s financial Good Group’s second 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,

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

Tim Whelan

Thank you, and Mike good morning everyone.

with demonstrate exceptionally our the to quarter long-term are as We plan, well we continue pleased as our believe success which of second market strategic improving results, conditions.

highlights. performance while like financial quarter second improved would go measurements. further will through to Our acknowledge key Mike some some I several And details shortly, across

this which spend. network income well increased First, sequentially, as an qualitative component revenues increase RF consolidated revenue year-over-year. demonstrates important increasing as points. environment of both improving sequentially, include Within are These some improving carrier

all revenue addition, reflecting and across group includes reflecting business. RBS QX every our across improving reflect revenues, increasing hardware revenues improvements also include in test strength In T&M a The year-over-year Netting in measurement, a the increase product increased brands. broad-based it quarter out, the second revenues record quarter three in revenues. increase

revenues. included while revenue. on goal XX%. the improvements, focus our EBITDA financial our increasing six We of driving well as months our ended remained this revenue from measurement higher mix the increasing higher performance quarter XX%. a of of test measurement believe as and execution margins June fifth margins above the from gross our Second, reflects both leverage sequential aimed and and consecutive revenues, above And reflects XX, and higher represent QX strategic strong test successful year-over-year third, and XXXX, mix software of reflects profitability gross higher operational RBS margins solutions, reflecting at

supported improved two million, that This return bookings as our revenues quarters to components, contributed last projects, three which run in bookings of increased the across larger the traction an of Equally ratio important highlights growth and and Turning The and from backlog. needs, purchase customers revenues, to and semiconductor orders distribution improvements potential contractors, X quarter In were government range. which product captured applications. applications our of of of the semiconductor This and across quarter from portfolio, driving providers. book-to-bill the wins projects. large million the strength in for QX additional mil spend RFC entertainment labs, rate was aero in military, $X the and low was carrier the is RF orders our the and topline large We our bookings a venue groups orders]. by production In satellite parks, name realized and of revenue. reflects from encouraging. over improving early to few. in the defense third call. during in an in second The compared earnings our increasing a each for to some increases sequential believe underway stadiums, projects, smaller positive test, current number test includes continued [sized communications and companies, quarter encouraging, expectation calibration our to RFC reflecting broad-base other and satellite in Navy include product the we programs, will last We part continue are measurement

design-in also opportunities noise and We see smart initiatives to our continue growth from sources.

perform growth exceptionally this T&M brands Holzworth broad-based continues participated well. our of to All and in

revenue. and expanded investments returns are products and Holzworth closing new measurement, of in Overall, portfolio larger same addressable the and opportunity synthesizer, compared designed expanded last markets as new June, about to including group. products. results on and offerings Radio, for software our both the roadmap the technologies core reflect reflect continued post we period into the the increases programmable bookings with this XX, year, top Just business, leveraging believe new create our complex ending These six and new are product new to our generators, is generator. important, and focus our signal our new synergies of Boonton R&D revenue Within and And noise Software June channel test announcements that in more product line expanding we multi dividends would increased Holzworth we and in RF our Baseband devices growth with paying solutions XXX% in our revenues. hardware excited and months as

also see good both We software revenues. which success bookings reflected excited signing by bookings. we and customers, very in very momentum remain our And continue our new is total to the in

orders, X orders. and Our bookings million These RBS and bookings approximately first and of quarter. include RBS in in include new the second orders million year-to-date June X.X total of X.X services of million quarter, include the in software hardware X.X million million X.X which

the equivalent to last represent XXX% and XXXX XXXX nearly first X.X RBS half first a full-year over is of bookings Our also half bookings year's of compared RBS improvement to million.

the announced new signed of year, RBS As we in first June, orders. representing four the over these customers in million X we new half have of software

million and include we of RBS for projects. to client’s market, repeaters, and of stations value over unique deployment. process, potential important delivery our volume to if contract as our their successful Our is for lifetime software contracts are that development subject of milestones simplifying recorded used million X booking. Department X the revenue four to been customers. and certain contract reducing customize requirements millimeter XG the XG note cells, software technology XG In private risk also projects, is reached. network customers of production case, new being base Programs And cutting certain XG our a research royalty of the continued Defense development each these wave time to which potential total It a is last, reflect U.S. our in first variety small the from customers, of projects, deployments only has

amounts royalty upon such contingent reflect our not as do numbers they production booking deployments. customer’s Our are

positive confidence best in of estimate our the second a bookings XXXX financial business inclusive XXXX. of all of momentum and which the record call in Collectively, financials. all at results groups, the resulted and us walk quarter-end a health in underpin ratio. that, future. in improvements XX.X clearest product Our This over our helps to bookings I'm is turn continued million Mike the reflecting significant our expected backlog quarter groups, and continued million across with improvements we royalty going To potential performance timing ahead. growth our reflect With in of to in product XX.X through quarter, of point and backlog, the our has to for and a the growth our data to in turn achieved X.XX revenue record is summarize, book-to-bill to financial our

Mike Kandell

morning comment on balance are Tim. to Thank XXXX for sheet on I'm Good December June noted as balance again All XX, the otherwise unless of year-end our you, compared a comparisons XXXX. the then through sheet XX, XX, June year-over-year to are quarter walk basis and second XXXX. results comments P&L and XXXX, everyone. of going

financials, XX.X XX% bookings X.X% XX income of year-over-year the million, ended for mentioned than of operating XXX,XXX. which for margins, positive opening our results we're second month the June pleased of and very get Before his the of the operations flow cash details I consolidated six from into XXX,XXX, GAAP with consolidated greater revenue include Tim in quarter, of period gross growth as consolidated remarks,

primarily products, measurement evolving customer RF legacy product COVID-XX offset to started increased or X.X% details to prior sales a as million At for the pandemic the during XXX,XXX million cards. digital XXX% in pandemic. decrease increased related to revenue turning from brands, revenues higher Now, the feel of peak second the to a a group by spending Consolidated increases period. power we processing of the year the signal X.X X.X COVID-XX revenue as our in continuing product QX. RBS revenues product level, or continue hardware XXXX this increased rebound of T&M overhang quarter These million XX.X%, or group. on were partially our for specifically component

revenues. revenue than margins Although of mix profit QX higher was below was to the fifth XXXX XX%. expectations manufacturing costs. Consolidated increasing our with XX% prior from at our profit profit prior our was XXXX. absorption greater margin QX quarter year lower increased offset year RBS due higher XXX,XXX T&M gross results, on RF QX Consolidated consolidated above XX% and by components higher flat at represents XXXX sequentially margin gross RF components gross fixed product of gross profit and consecutive margin, product and group, for

with our XXX,XXX prior because year, was and in of expenses. Turning from third-party agreement. XG decreased which R&D the of connection XX.X% majority third-party lower expenses the consulting collaboration expenses, to or Consolidated material operating

primarily extinguishment on item in on our QX recognized decreases the to an sales sales flat offset upon roadmap expenses longer-term development continue We we create loan is expense to marketing to Consolidated million costs, prior prior and interest expense, Accordingly, increase due in the and increases and the assets for dependencies, and headcount. income. general primarily from the PPP due XX,XXX increased there was and research million. $X the turn or our by percentage and opportunities, due salaries Non-GAAP were revenue. X.X loan increased a development expenses income on and due to were In administrative higher the the of to expenses our in higher of we This year, commissions the and in lower project extinguishment marketing impact. higher had to on income of on $XX,XXX operating XXX,XXX lower exchange to headcount and may year, Interest increased Consolidated third-party and which gains interest XX,XXX statement been expect year, higher higher benefits in SBA income Other a from exchange due the that line and the product gain was or of XXX,XXX shown prior amount foreign accrued QX. depending losses. period, loan. expenses deadlines, approximately as year development expense new June, prior as PPP research of on operating related primarily all and decreased EBITDA debt the fully than as Net primarily adjusted unfavorable to product bad investments gain received from lower foreign term-loan. the due quarter, separate and and PPP forgiven. higher XX.X% from notification income

forgiven I'll Availability consolidated XX, million back XXX,XXX. and as capital to XX, generated ended expenditures earn-out payment founders or X.X and from previously December revolver months under was downs the $XXX,XXX gross was as approximately cash XXX,XXX. for of Cash as X.X Turning back operations the noted, XXXX. based was lower fully closing hold XXX,XXX, now due to term remarks. for debt XX call first XXXX the the balance XX, June to six of XXX,XXX XXXX. our as the pay and PPP of And the final Holzworth of was over million X.X of June debt some XX, turn our for of asset payment payment flow respectively, to XXXX loan Tim than was sheet, million of June June the

Tim Whelan

Mike. you, Thank

We The our software products, improvements an bookings, were our and solutions. for also forgiveness On revenues, and first overall and with PPP saw six business, performance. increased strong expect an sheet, improvements months focus in-building We won strong across described. of backlog. of RF XXXX customers for Mike in have solutions, improved RF has we our increase in component resulted the of solutions, to very in the successful conclusion the continue outlook launched balance new on loan, new including as Holzworth pleased continued

proceeds raises. equity we shares that to be execute evaluate net on our every launched ATM volume ATM. we We the You to transaction, be was disciplined as intend our sold an and pricing the and in We XXX,XXX. capital also with opportunistic will allowing not for launch, us be do intend purposeful market and Since to carefully note day.

impact noted lower any to our we This income. proceeds have to which expense, balance believe expected interest our raised is a net our debt our use positive to down interest we sheet. prospectus, pay higher on As will intention in is it on

Additional and earn-out of obligations. satisfaction liquidity the also flexibility the capital with provide for our greater will company

about the we environment Finally, will our second respect conditions the half. our quarters, the additional also consider R&D we some feel two the growth opportunities and higher business to roadmap, fund investments within good improving expect us business, capital accelerate continued and markets. to of With in allow next in

among watch lists across risks uncertainty, items. seen chain the Our other and supply key for talent disciplines, risk industries for include being increasing and multiple

business our software are recognition. revenue testing, and As larger, rigorous which acceptance more require a nature, lumpy complex reminder, more includes contracts, and in

overall currently forecasting milestone we Kate, for our environment, increases, revenue open software next in the and could makes half. multiple the continued anticipate in September, quarters you important and Thank with you, lines improved early business expect late which difficult. and But with We few questions. to customers the deliveries please October, an growth profit backlog second if

Operator

today B. Our coming Nichols from [Operator is Certainly. Instructions] first Josh Riley. at question

live. is line Your

proceed. may You

Josh Nichols

see quarter-over-quarter business. components Yeah, you the was that thanks of [indiscernible], for taking question, specifically my be to little in business bit, to know, three and pretty I a all to appear wanting great big improvement units the RF ask

company seeing As quarter much highs so as of that now $X and previous get in of think of you know, doing, revenue quarter in for revenue you could or related back of to segment. to happen, ramp north XG $X be million per like pre-COVID that the spend, that the with kind company million to you're where the the best to the

Mike Kandell

And what return the the it Thank of we the seen in both last the year. That's you booking. come had we a in think the in the us. importantly projects. second the projects Josh. see it's morning, for Good size bit I did that the little of of joining we half remarks noted Yeah, and larger that revenue out really of – during system, the a return

the focused small The spectrum. complete So for carriers, now, of the deployment that that cell still XG right through discussed of necessary the reports also spectrum. the ultimately in other carriers sustain. really That's equity primarily been they projects research to the a deployment by on needs and analyst intend published but to XG is are macro-based

which the continue deployment our ultra So, drive and really wide-band that mid-band going wide-band product of into projects portfolio. I that what's think continued the is ultra to keys spectrum, spectrum to

Josh Nichols

growth you again, may little may we ramp opportunities, year-over-year, if color, – have in if relative but it's potential in mean, business opportunities, quickly RBS I first deliverables then, I RBS some little for how business know to guess, very could scale the half, half software that some that I kind to XQ materialize and as about see some provide ultimately. of And second of difficult XQ you improvements these think to seems more bit coming the and thanks. the start and a the bit you between good Great, a think forecast,

Mike Kandell

Sure.

So, additional themselves] in you lead refer some in to backlog to our under those of the contracts And contract on of delivery bookings I million potential total million to good got [will sales, know, of and of terms revenue software that the milestones the we've opportunity. contracts which close represent X X value.

is delivering good on the key already contract point So, that be we feel continue because deliveries orders place That's to the one. in opportunity for of subsequent the nearest-term to placed. the purchase number just sort milestone that's

the feel half, revenue I opportunity think about the we RBS. very good second in within

push place where one-item cards we and it's on contracts September taken already purchase will about delivery, with new deliver how some but commentary. October then hardware early second chips and feel my about But testing feel QX, the watch list ability stand And customer RBS. improving revenue feel be was what's can that the about precaution then the and of second on software and of to we good to we or we've overall that under said, those good QX. we where some expect to and backlog wreck, in our in of some I order. about it. rev QX push-out We But going judge the the still it's on deliveries. reflected that semiconductor in think delivery our our QX, and in good QX that half. feel late confident the used in our And environment As out into that whether year. it's that about push we of fall RF in the hardware we We see are acceptance, difficult keeping will our out software half hard QX an in are eye did with are coupled before The delays, we we that cards

Josh Nichols

Thanks.

continue of ask was of achieved plus the about what think hardware mostly some sequential of far looking on it gross up kind focused headwinds, you margin in to, kind You just the but what's so, that, going the think, to the chain as mix, Outside XX% supply but quarters, at as I kind RBS of to opportunity also business. now product on profile, five seems you've bit that like coming hit potential I that's we the the of scale a for, about as side, the little margins know, quarters, software?

Tim Whelan

Yeah, expect quarters. hardware few some, quarters, the depending but consistent may hey, have Josh. quarters you more know, I quarters. previous Because we up compared I would be with a next prior of deliveries, will you and consistent on where We software. few have expect the to know, overall, may bit mix of little it to to over some the to are have going a hardware, we scale pretty than we bit, which have software be as it

Josh Nichols

back Thanks, the guys. I'll hop in queue.

Mike Kandell

you, Thank Josh. Great.

Operator

today Thank from you. at Potter Monarch. Michael is [Operator Instructions] next coming question Our

Your line is live.

You proceed. may

Michael Potter

good on congratulations guys, Hey quarter. another

Mike Kandell

Good morning, you. Michael. Thank

Michael Potter

morning. Good

release, commercial beta? I their last this couple them on put in in out it follow-ups. a their of with is use company, you looked or product know is and currently we application, currently Just and is the the Pivotal exciting an relationship up

Mike Kandell

clearly as their Michael. exactly can't is I stage product what release to speak of at,

early know in of most I bringing customers on trials technology beta can't those – to development or So, do What in anything whether is solutions else. market. it's our tell you that or in I are

that that in just crosses, And remark volume none any into that trials that beyond the that I so our yet currently to one brought being I certain respect at And that and to made been of has I trials instance. contracts. in know royalty are with not includes have crosses just are conducted. of development yet that specifically our say deployment. we production agreements would customers pivotal point

So, I think they're advanced.

but I testing and that think and and they're the in I trials the they're lab, betas. say of in out field can't

Michael Potter

Okay.

It royalty to would of agreements. one do lead like relationships if this the commercialize. sounds So, they one the is payments, of that

Mike Kandell

Correct.

Michael Potter

Got it. Got it.

Okay.

a growth, you we XX.X% we Another side, bit? good but good talk in the to were question, can just margin, had on a G&A, topline that maintaining we increase OpEx had

Tim Whelan

Yeah. Hey, Michael.

of you is, XXXX, increase in Certain expense, we unusual midst We XXXX. with is cut us. So, a particularly year-over-year. some in there. then during, that we've things large couple this the One we the We are we in the And some FX key things did bad had have of increasing know, a reinstituted impact had some that related quarter, had expense of impact which pandemic headcount. debt components. bad for expenses. also just headcount key pound Those debt the the

Michael Potter

Okay.

going we – On like level. going sounds should this mark it a where this So, we're basis, going at running. we're be million is $X.X but running forward, to quarterly be around to

Mike Kandell

a know, going I debt one-time you foreseeable Head stay place related Well, charge. count the would they're for in benefits, bad was yes, to future. say, expense the

Michael Potter

the is And FX below line. the

bad the was much debt how expense? So,

Mike Kandell

below just into line it's our of FX a know, rate. is converts the it statement, losses FX for Now the dollars balance on has we the impact The have higher at income as gains pounds items. the as U.S. the, sheet and you

that [indiscernible] items line P&L. on the the So

Tim Whelan

full-year headcount which first And our now in our and mind our a of the Michael that CRO. includes of right, of in zero investment in in was the new year the last investment reflects course half CRO, keep

we So, feel about very one. good that

Mike Kandell

Correct.

Michael Potter

get Thanks. I’ll guys. in right, back All queue.

Mike Kandell

you, Michael. Great. Thank

Operator

you. Thank

today Orin Hirschman is Our next at from Partners. AIGH question coming

Your line live. is

You may proceed.

Orin Hirschman

good are How Hi, morning. you?

Mike Kandell

Orin. morning, Good

Orin Hirschman

know, we out quarters. steps Is know, the more software, thing another if, in business? every on [indiscernible] business, profitability we've shift shift within a we a time one you thing consistency can I your had issue etcetera. where last lot there forward, couple know, point out Are the of you of back there realized totally be the a we that? there's that enough lumpiness, or terms in So, some control overall perhaps of close getting timing and to on you revenue, it I step progress And guess, is few part the of really take issue the take and

Mike Kandell

was as as very we step wouldn't I the in That's difficult. software back. half. second it timing what the customers multiple what's Yeah. The that, characterize I a noted Keep in thing. have exact Orin, more to opportunity. is good I deliveries the mind, multiple characterize a

I necessarily encouraged in as additional revenue the back. with ability with We're that very encouraged we've to the the characterize the software some the in year, wouldn't signed. to half the and We're we're them contracts. second So, very book deals with step very a bring encouraged ability

we feel about positive So, very that.

Orin Hirschman

the pieces. very With the have business, So, growing RF what's there? prognosis strong longer-term you some

know, do that You fit does you how what – into the overall picture?

Mike Kandell

Yeah.

So think RF the quarter right of spectrum we've pointed own last spectrum the on densification the harder had time of resistance that carriers without what which components, understanding completed now they a I fact auctions, that design. year, a executing the again, of were year, the past, in first the second current to half because in was in point the

completed So, looking to think behind we number I two, they've for number in be deployment think acquired. projects with spectrum And and as one, about with that one. increased being both just as demand pent-up to carrier the number there's the COVID investment, scenario improve, of

XX% And analysts carriers each three so, to years. is XX%, was what a believe, the following of quoted the over I next expect the

product our the We our spectrum coupler solution. is tailwinds to we initiatives have that So, good be safety feel we addresses product being public very on that good radios for monitoring a solution, deployed. specifically. And very set We of new about ultra set launch very smart to our RF we diversification components. the products in the designed wide-band design-in good which about feel that the feel addressed feel about the

feel a So, time, actively in-building codes that wireless grow that slowly to a we it's it's but jurisdictions tightening the fire trend. that will over growth And active favorable systems monitor an more and and solution. we requiring think is are certain do trend

So, terms component those RF to I feeling optimistic things the in business. about are of that the point would

Orin Hirschman

final your straight? aspect? One of quantum in it Okay. can active mentioned the the is the Where of releases, quantum is, mentioned are I it record computer some the quantum remarks, you some set just picture ongoing is kind you computing questions. in and And quick tangentially of overall two test think prepared of a you computer, you've the in

Mike Kandell

I It to the get It's coherency, necessary phase our coherency, designs for are noise is device, multi-channel massive, These RF seen synthesis pictures, noise architectures. computations those ability in is those a solution, phase and to those part [ATMs] that in itself of called overall massive specifically, be solution. applies which the for state stable lab to – these completed. are that the

We are good. that, Amazon. feel talk good one IBM, including getting have but brand of about the feel into we We that customers all Google, component that computing, quantum and and names multiple we

technology necessarily So, material good be I our it's and of solutions high not demands. to solutions, study where and a think, how growth, fit but case into going it's customers a key driver specialized specialized needs of our accomplished we've those satisfied

Orin Hirschman

we that flow, your level, here. at indicative is things have able shareholder comment the ATM of know, we're plus take it, feeling key is that? on And ramp these that pulled you're place you not confident one the leverage, should away earnings obviously, of what you you final to fact from the the X% you even is a the actually in or just cash And question, Okay. and know know, that that

Mike Kandell

No, again…

Orin Hirschman

assume You had cash know, you excess that? down flow, you [indiscernible] used we pay to

Mike Kandell

Sure.

So, intent and opportunistic think be purposeful. both again, our is to I

at therefore spikes be about in opportunity, early if volume the it's interest net for savings when raise pay down vehicle, As cash higher balance over income. responsible as July, interest June, into into that translate price a a to we about, late good volume, levels we especially we high debt, can we sheet, think that we potentially to specifically of we cash, raise translate see position seen our and which would think and

you out, from more than a little number we've $XXX,XXX as tell can bit I've raised that. So, approximately, the called

well. day. So, in day, pay don't debt, but will if every at we mentioned raise interest high off that as spike the volume to some and see we haven't tend We cash market the in we've the every to prices then in some that market prospectus been be and certain

Orin Hirschman

you going buy that people like, excited the that realize but business, stock, like a [ATM]. so going us about and I'm feel they're Alright, the that are oh, hit overhang to creates to

why comfortable know, enough the to it's you high of that diluting not do going down the should is that interest it know, debt? they're You fact to that flow to cash continue going have pay have indicative that? we company, effect, You and they're feeling [indiscernible]

Mike Kandell

Right.

we timeframe. in expires action sheet. know, strengthen feel September SX to the yeah, the XX. I a appropriate So, you about take business. think believe late balance it's We good to September the it's The

market. in do eye responsible our thing. the the We’ll keep we'll So,

Orin Hirschman

Thank Please a favor it. do Okay. renew you much. and us very don't Thanks.

Operator

Thank Instructions] questions queue have like Do any finish you. no time. further you We with? to you'd in this have comments closing at [Operator

Mike Kandell

Great. summer Thank today. great we soon. us you again Kate. a Thank you, look with you forward for and to joining speaking Have everyone,

Operator

and you conclude does Thank gentlemen. ladies today's event. This

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

Wireless Telecom (WTT) 11 Aug 212021 Q2 Earnings call transcript