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Wireless Telecom Group Announces Fourth Quarter and Year-End 2017 Financial ResultsWireless Telecom Group, Inc. (NYSE American: WTT) (the "Company") announced today results for the fourth quarter and twelve months ended December 31, 2017. For the quarter ended December 31, 2017, the Company reported consolidated net revenues of $12,036,000, compared to $9,004,000 for the same period in 2016, an increase of 34%. For the twelve months ended December 31, 2017, the Company reported consolidated net revenues of $46,078,000 compared to $31,327,000 for the same period in 2016, an increase of 47%. For the quarter ended December 31, 2017, net revenues in the Network Solutions segment were $5,492,000, compared to $5,002,000 for the same period in 2016, an increase of 9.8%. For the twelve months ended December 31, 2017, net revenues in the Network Solutions segment were $23,052,000 compared to $20,199,000 for the same period in 2016, an increase of 14.1%. For the quarter ended December 31, 2017, net revenues in the Test & Measurement segment were $3,126,000, compared to $4,002,000 for the same period in 2016, a decrease of 21.9%. For the twelve months ended December 31, 2017, net revenues in the Test & Measurement segment were $13,380,000 compared to $11,128,000 for the same period in 2016, an increase of 20.2%. For the quarter ended December 31, 2017, net revenues in the Embedded Solutions segment were $3,418,000, compared to zero in the same period in 2016. Net revenues in the Embedded Solutions segment for the period of ownership February 17, 2017 through December 31, 2017 were $9,646,000. The Company also reported consolidated gross profit of $5,471,000, or 45.5%, for the quarter ended December 31, 2017, compared to $3,280,000, or 36.4%, for the same period in 2016. Consolidated gross profit was $19,261,000, or 41.8%, for the year ended December 31, 2017, compared to $13,162,000, or 42.0%, for the same period in 2016. Gross profit in the Network Solutions segment was $9,063,000, or 39.3%, for the year ended December 31, 2017, compared to $8,443,000, or 41.8%, for the same period in 2016. Gross profit in the Test & Measurement segment was $5,855,000, or 43.8%, for the year ended December 31, 2017, compared to $4,719,000, or 42.4%, for the same period in 2016. Gross profit in the Embedded Solutions segment was $4,343,000, or 45.0%, for the period of ownership February 17, 2017 through December 31, 2017. For the quarter ended December 31, 2017, the Company reported consolidated operating expenses of $5,210,000, compared to $4,822,000 for the same period in 2016, an increase of $388,000. For the twelve months ended December 31, 2017, the Company reported consolidated operating expenses of $22,206,000, compared to $15,710,000 for the same period in 2016, an increase of $6,496,000. Included in 2017 operating expenses are operating, acquisition and integration expenses related to our purchase of CommAgility, contingent consideration gains, restructuring charges related to the departure of executives, as well higher intangible amortization and purchase accounting charges. The net loss for the quarter ended December 31, 2017 was $2,547,000, compared to a net loss of $1,159,000 for the same period in 2016. The net loss for the year-ended December 31, 2017 was $4,493,000 compared to a net loss of $1,832,000 for the year-ended December 31, 2016. As a result of the Tax Cuts and Jobs Act enacted in December 2017, fundamental changes were made to the taxation of multinational corporations, including a reduction of the U.S. corporate income tax rate. Included in the Company's net loss is $1,247,000 of net tax expense for the year ended 2017 which includes $2,481,000 of deferred tax expense from revaluing the Company's deferred tax assets to reflect the new U.S. corporate tax rate. Non-GAAP Adjusted EBITDA for the quarter ended December 31, 2017 was $830,000, compared to a $278,000 non-GAAP Adjusted EBITDA loss for the same period in 2016. Non-GAAP Adjusted EBITDA for the year ended December 31, 2017 was $3,645,000, compared to $0 of non-GAAP Adjusted EBITDA for the same period in 2016. The increase in non-GAAP Adjusted EBITDA from 2016 is primarily attributable to the $14,751,000 increase in revenues and $6,099,000 increase in gross profit. The Company defines EBITDA as its net earnings before interest expense, provisions for taxes, depreciation expense and amortization expense. "Adjusted EBITDA" is EBITDA excluding our stock compensation expense, restructuring charges, insurance settlement gains, inventory impairment charge, M&A expenses, integration expenses and other non-recurring costs. A reconciliation of net income to non-GAAP Adjusted EBITDA is included as an attachment to this press release. The Company's consolidated backlog of firm orders to be shipped in the next twelve months was approximately $9,888,000 at December 31, 2017, an increase of $5,874,000, or 146% compared to the backlog at December 31, 2016. The consolidated backlog at December 31, 2017 includes $3,956,000 of Embedded Solutions backlog compared to zero at December 31, 2016. Tim Whelan, CEO of Wireless Telecom Group, Inc., commented, "We are very pleased with our 2017 accomplishments which included a 47% consolidated revenue increase and a return to Adjusted EBITDA profitability of $3,645,000. In addition to the $9,646,000 of revenue growth from our successful acquisition and integration of CommAgility in the year, we were able to realize organic revenue growth of $5,105,000, or 16%, in our Network Solution and Test & Measurement segments in 2017. This is attributable to our investments and improvements in our product portfolio, our sales channels and our digital strategy to improve how we do business with our customers. Additionally, across the consolidated enterprise, our increased revenues and gross profits helped us generate $1,403,000 of cash flow from operations." Mr. Whelan continued, "We have made considerable progress on our plans to invest in and energize our existing segments and integrate the new business. The acquisition of CommAgility positions us to benefit from long-term investment opportunities driven by 5G and private LTE buildout and we continue to look at North America and our existing sales channels as opportunities to drive growth in this business. We are enthusiastic with the Company alignment towards long-term industry trends of investments in wireless technology and communications which includes carrier network densification, industrial private LTE network deployment, and anticipated defense spending increases." The Company expects the following financial results for the quarter ended March 31, 2018 which will include a full quarter of operations of the Embedded Solutions segment as compared to a partial period of ownership in the same period last year:
The purchase price for CommAgility, as reflected in the purchase agreement, provided for several incremental earn-out payments as well as reductions of equity for the purpose of providing an alignment of interest between the Company and its shareholders and the former owners of CommAgility. As a result of these provisions, there will be no earn-out payments in 2018 for 2017 performance and approximately 2,092,516 shares will be forfeited in the first quarter of 2018 in accordance with the equity claw back provisions of the CommAgility purchase agreement. For the full year 2017, the Embedded Solutions segment contributed gross profit of $4,343,000, or 45% of its revenue. Use of Non-GAAP Financial Measures The Company reports its financial results in accordance with generally accepted accounting principles ("GAAP"). Management believes, however, that certain non-GAAP financial measures used in managing the Company's business may provide users of this financial information with additional meaningful comparisons between current results and prior reported results. Certain of the information set forth herein and certain of the information presented by the Company from time to time may constitute non-GAAP financial measures within the meaning of Regulation G adopted by the Securities and Exchange Commission. We have presented herein a reconciliation of these measures to the most directly comparable GAAP financial measure. The non-GAAP measures presented herein may not be comparable to similarly titled measures presented by other companies. The foregoing measures do not serve as a substitute and should not be construed as a substitute for GAAP performance, but provide supplemental information concerning our performance that our investors and we find useful. The Company views Adjusted EBITDA as an important indicator of performance, consistent with the manner in which management measures and forecasts the Company's performance. We believe Adjusted EBITDA is an important performance metric because it facilitates the analysis of our results, exclusive of certain non-cash items, including items which do not directly correlate to our business operations. The Company believes that Adjusted EBITDA metrics provide qualitative insight into our current performance; we use these measures to evaluate our results, the performance of our management team and our management's entitlement to incentive compensation; and we believe that making this information available to investors enables them to view our performance the way that we view our performance and thereby gain a meaningful understanding of our core operating results, in general, and from period to period. Forward-Looking Statements This press release contains "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. In some cases, such forward-looking statements may be identified by terms such as believe, expect, seek, may, will, intend, project, anticipate, plan, estimate, guidance or similar words. Forward-looking statements include, among others, statements regarding revenue, gross margins and non-GAAP operating expenses in the quarter ending March 31, 2018. Investors are cautioned that 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 continue the successful integration of the acquired business, product demand and development of competitive technologies in the Company's market sector, the retention of key customers, fluctuations between the dollar and British pound, compliance with changing laws and regulations, as well as other risks and uncertainties set forth in the Company's Annual Report on Form 10-K for the year ended December 31, 2017. 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, Inc., comprised of Boonton Electronics, CommAgility, Microlab and Noisecom, is a global designer and manufacturer of advanced RF and microwave components, modules, systems and instruments. Serving the wireless, telecommunication, satellite, military, aerospace, semiconductor and medical industries, Wireless Telecom Group products enable innovation across a wide range of traditional and emerging wireless technologies. With a unique set of high-performance products including peak power meters, signal analyzers, signal processing modules, LTE PHY and stack software, power splitters and combiners, GPS repeaters, public safety monitors, noise sources, and programmable noise generators, Wireless Telecom Group supports the development, testing, and deployment of wireless technologies around the globe. 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.
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