[February 21, 2017] |
|
Wireless Telecom Group Announces Acquisition of CommAgility, Ltd.
Wireless Telecom Group, Inc. (NYSE MKT: WTT), a leader in advanced
wireless communications solutions, announced today it has acquired
CommAgility, Ltd., a privately-held developer of embedded signal
processing and RF modules, LTE (News - Alert) PHY/stack software for 4G/5G mobile
networks and related applications.
CommAgility, headquartered in Leicestershire, England, provides
proprietary solutions enabling the customization of the LTE standard for
small cell and private network applications in a variety of rapidly
growing commercial and defense markets, including satellite
communications, backhaul and research. Additionally, CommAgility is a
critical supplier for leading cellular network validation test systems
currently on the market.
"The transaction with CommAgility is directly aligned with our strategy
to add transformational growth opportunities to the Company and enhance
our scale," said Tim Whelan, Wireless Telecom's CEO. "The combination
creates a powerful expansion of the value proposition of our solution
set by adding software centric solutions and a combined hardware and
software skill set which enhances our product design capability to
address large market opportunities. CommAgility also brings world-class
engineering talent focused on LTE wireless communications that will
allow us to accelerate our innovation to networking trends driven by 5G
deployment and IoT development."
"We are excited and believe that Wireless Telecom is the ideal partner
to accelerate our growth initiatives to build upon our successful
10-year history," said Edward Young, Managing Director and co-founder of
CommAgility. "We share many of the same values including our dedication
to innovation and commitment to customer excellence. We both have deep
technical skills and incredible industry talent which together,
strengthen our market leadership and create value for our customers,
employees and shareholders."
Benefits of the Combination:
Enhances our value proposition across both our Network Solutions (News - Alert) and
Test & Measurement segments
-
CommAgility's technology is uniquely synergistic with WTG's business,
enabling new market applications and greater differentiation.
Accelerates expansion into fast growing markets, positions Wireless
Telecom to support capacity requirements related to emerging 5G networks
-
Wireless Telecom becomes a vital supplier of signal processing
technology for network validation systems supporting LTE and 5G
deployments.
Enhances our scale and expands our total addressable market
-
CommAgility is expected to add approximately $10m USD of annual
revenue to the combined business; on a pro-forma basis, the combined
businesses generated revenue and Adjusted EBITDA (1) of $39.9 million
and $2.1 million respectively for the twelve months ending September
30, 2016.
Adds deep LTE software and embedded hardware design expertise, and
accelerates Wireless Telecom's product roadmap
-
Adds over 30 engineers with software and hardware design skills to the
combined enterprise and adds exceptional talent solving LTE and
customized 4G/5G solutions.
Immediately accretive to margins and earnings, attractive purchase
multiple and purchase structure aligned to shareholder interests
-
The acquisition is expected to be immediately accretive to Wireless
Telecom's gross and Adjusted EBITDA margins. Total purchase
consideration including an estimated range of earn-outs is expected to
be between 4.5x and 6.2x CommAgility's 2018 UK GAAP Adjusted EBITDA.
Upfront equity consideration and employment agreements for the 4
founders aligns long-term equity interests.
The combination of Wireless Telecom and CommAgility brings together two
complementary companies with common core competencies designing custom
and semi-custom RF solutions for overlapping end markets. CommAgility
expects continued momentum designing custom LTE network solutions for
the U.S. defense market, where Wireless Telecom has an entrenched
position with its Boonton and Noisecom businesses. CommAgility also
significantly enhances the Company's Microlab offering for small cell
and distributed antenna systems supporting carriers' ever growing need
for network coverage and capacity.
The initial purchase price for CommAgility is comprised of $12.5 million
in cash and $6.25 million of Wireless Telecom common stock. The total
purchase consideration includes up to $12.5 million of additional cash
consideration in the form of a 24-month earn-out. The cash portion of
the consideration at close was funded from a combination of cash on hand
and borrowings from a newly issued senior credit facility from Bank of
America, N.A.
The Board of Directors of both companies unanimously approved the
transaction which closed simultaneously with the execution of the
definitive agreement. B. Riley & Co., LLP is serving as exclusive
financial advisor to Wireless Telecom Group and Bryan Cave LLP is
serving as legal counsel. Convex Capital is serving as financial advisor
and Rosenblatt LLP is serving as legal counsel to CommAgility.
A presentation further detailing the acquisition has been made available
in the investor relations section of the Company's website.
(1) Adjusted EBITDA is a non-GAAP measure. A calculation of the combined
pro-forma financials of WTG and CommAgility along with a reconciliation
of Net Income to Adjusted EBITDA is set forth at the end of this press
release.
Forward Looking Statements
Except for historical information, the matters discussed in this press
release may be considered "forward-looking" statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Such
statements include declarations regarding the intent, belief or
expectations of the Company and its management and include the
statements regarding increased revenues, immediate accretion, improved
profitability margins and other financial benefits of the transaction.
Investors are cautioned that any such forward-looking statements are not
guarantees of future performance and involve a number of risks and
uncertainties that could materially affect actual results, including,
among others, the Company's ability to successfully integrate
CommAgility, the ability to attract and retain key management, engineers
and other key personnel of CommAgility, changes in exchange rates
between our reporting currency, the dollar, and the British pound
sterling, potential risks that arise from operating an multinational
business, including compliance with changing regulatory environments,
the Foreign Corrupt Practices Act and other similar laws, compliance
with changing laws and regulations, potential economic and regulatory
impact of the U.K.'s withdrawal from the European Union, the ability of
management to successfully implement the Company's business plan and
strategy, product demand and development of competitive technologies in
the Company's or CommAgility' s market sector, the impact of competitive
products and pricing, the loss of any significant customers of the
Company or CommAgility, the Company's ability to protect its and
CommAgility' s property rights, the effects of adoption of newly
announced accounting standards, the effects of economic conditions
generally and trade, legal and other economic risks, as other risks and
uncertainties set forth in the Annual Report on Form 10-K for the year
ended December 31, 2015, and other filings with the Securities and
Exchange Commission. These forward-looking statements speak only as of
the date of this release and the Company does not undertake any
obligation to update or revise any forward-looking information to
reflect changes in assumptions, the occurrence of unanticipated events,
or otherwise, as except as required by law.
About Wireless Telecom Group, Inc.
Wireless Telecom Group designs and manufactures radio frequency (RF) and
microwave-based products for wireless and advanced communications
industries and markets its products and services worldwide under the
Boonton, Microlab and Noisecom brands. Its complementary suite of high
performance components and instruments includes RF combiners and
broadband combiner boxes for in-building distributed antenna systems
deployments (DAS), RF power splitters and diplexers, hybrid couplers,
peak power meters, signal analyzers, noise modules, precision noise and
generators. The Company serves both commercial and government markets
with workflow-oriented, WiFi, WiMAX (News - Alert), satellite, cable, radar, avionics,
medical, and computing applications. Wireless Telecom Group is
headquartered in Parsippany, New Jersey, in the New York City
metropolitan area, and maintains a global network of Sales and Service
offices for excellent product service and support. Wireless Telecom
Group's website address is http://www.wtcom.com.
About CommAgility
CommAgility is an award-winning, world-leading developer of embedded
signal processing and RF modules and LTE PHY/stack software, for 4G and
5G mobile network and related applications. CommAgility designs the
latest DSP, FPGA and RF technologies into compact, powerful, and
reliable products based on industry standard architectures.
CommAgility's LTE software for mobile devices and wireless
infrastructure includes physical layer and protocol stack for small
cells, physical layer and protocol stack for terminals, an advanced
scheduler for small cells, and IP development in the areas of advanced
PHY algorithms in multi-core SDR platforms.
CommAgility's customers around the world integrate CommAgility products
into high performance test equipment, specialized radio and intelligence
systems, R&D demonstrators and trial systems. CommAgility is highly
flexible and works closely with its key customers to meet their
technical needs and to support them through development into volume
production.
CommAgility was honored with two Queen's Awards for Enterprise, in
Innovation in 2016 and in International Trade in 2013. It appeared in
the Sunday Times Hiscox Tech Track 100 list of fastest growing
technology companies in 2015, and featured in the Deloitte (News - Alert) UK Fast 50 in
2016, 2013, and 2012. See www.commagility.com.
Pro-Forma financial information and reconciliation of Adjusted EBITDA
to US GAAP Net Income
The following table combines the unaudited financial results of WTT for
the 12 months ended September 30, 2016 with CommAgility's 12 months
ended September 30, 2016 and also reconciles Net Income to Adjusted
EBITDA for the trailing 12 month period ending September 30, 2016:
|
(1)
WTT TTM 9/30/2016
|
|
(2) Commagility TTM (UK GAAP) 9/30/2016
|
|
(3) Adjustment for US GAAP
|
|
(4) Commagility TTM (US GAAP) 9/30/2016
|
|
(5) Combined TTM Pro-forma 9/30/2016
|
|
|
|
|
|
(in thousands)
|
|
|
|
|
Net Revenues
|
$
|
30,251
|
|
$
|
10,305
|
|
$
|
(674)
|
|
$
|
9,631
|
|
$
|
39,882
|
Cost of Revenues
|
|
16,595
|
|
|
3,890
|
|
|
|
|
3,890
|
|
|
20,485
|
Gross Profit
|
|
13,656
|
|
|
6,415
|
|
|
(674)
|
|
|
5,741
|
|
|
19,397
|
Gross Profit %
|
|
45%
|
|
|
62%
|
|
|
|
|
60%
|
|
|
49%
|
Operating Expenses
|
|
14,561
|
|
|
4,890
|
|
|
|
|
4,890
|
|
|
19,451
|
Operating Income
|
|
(905)
|
|
|
1,525
|
|
|
(674)
|
|
|
851
|
|
|
(54)
|
Other Expense - Net
|
|
101
|
|
|
4
|
|
|
|
|
4
|
|
|
105
|
Net Income/(Loss) before taxes
|
|
(1,006)
|
|
|
1,521
|
|
|
(674)
|
|
|
847
|
|
|
(159)
|
Provision/(Benefit) for Income Taxes
|
|
(358)
|
|
|
(83)
|
|
|
|
|
(83)
|
|
|
(441)
|
Net Income/(Loss)
|
|
(648)
|
|
$
|
1,604
|
|
$
|
(674)
|
|
$
|
930
|
|
$
|
282
|
|
|
|
|
|
|
|
|
|
|
Reconciliation to Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
Taxes
|
|
(358)
|
|
|
(83)
|
|
|
|
|
(83)
|
|
|
(441)
|
Depreciation and Amortization
|
|
625
|
|
|
633
|
|
|
|
|
633
|
|
|
1,258
|
Stock Compensation Expense
|
|
523
|
|
|
-
|
|
|
|
|
-
|
|
|
523
|
M&A Costs/Strategic Committee
|
|
416
|
|
|
-
|
|
|
|
|
-
|
|
|
416
|
Restructuring
|
|
51
|
|
|
-
|
|
|
|
|
-
|
|
|
51
|
Adjusted EBITDA
|
$
|
609
|
|
$
|
2,154
|
|
|
|
$
|
1,480
|
|
$
|
2,089
|
Adjusted EBITDA as a % of revenue
|
|
2%
|
|
|
|
|
|
|
|
|
5%
|
|
|
|
|
|
|
|
|
|
|
(3) US GAAP - Footnote Reconciliation applied above:
|
|
|
|
|
|
|
|
|
Net Income/(Loss) - UK GAAP
|
|
|
|
|
$
|
1,604
|
|
|
|
|
Software Revenue Recognition Deferral
|
|
|
|
|
(674)
|
|
|
|
|
Net Income under US GAAP
|
|
|
|
|
$
|
930
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) WTT's unaudited trailing 12 months (TTM) ending 9/30/16 (2)
CommAgility's results for the year ended 9/30/16 (UK GAAP) (3)
Adjustments for US GAAP (4) CommAgility's 9/30/16 audited financial
statements in accordance with US GAAP, adjusted for US GAAP(GBP
translated at $1.25/£1 avg exchange rate) (5) Combined results do
not include effects of purchase accounting or financing
View source version on businesswire.com: http://www.businesswire.com/news/home/20170221005572/en/
[ Back To Mobile World Congress's Homepage ]
|