Q4 2021 Wireless Telecom Group Inc Earnings Call
We look forward to talking with you soon.
The line and we'll be right back with you.
[music].
Good day, ladies and gentlemen, and welcome to the wireless Telecom group Q4, 2021 and year end earnings call.
At this time, all participants have been placed on 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 come down.
The floor is yours.
Thank you operator.
Morning, everyone and thank you for joining us on today's conference call to discuss wireless telecom group's fourth quarter and full year 2021 financial results.
With me today is Tim Whelan the company C E O.
Before we begin I would like to remind everyone on the call that our remarks today could include forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
In some cases such forward looking statements may be identified by terms such as believe expect seek may will intend project anticipate plan estimate or similar words as well as statements that do not relate strictly to historical or current facts.
The company's forward looking statements are based on management's current expectations and assumptions regarding the company's business and performance the economy and other future conditions and forecasts of future events circumstances and results.
We're looking statements are not guarantees of future performance and involve a number of risks and uncertainties that could materially affect actual results.
Important factors that could cause the company's actual results to differ materially from those in its forward looking statements.
Those risk factors set forth in the company's 2021 annual report on Form 10-K filed this morning with the SEC.
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.
So we want to point out that in addition to GAAP information we.
We will provide information relating to certain non-GAAP measures.
I'll leave that presenting these non-GAAP or adjusted measures provides additional meaningful information to investors, which reflect how management views the business.
Detailed reconciliations of GAAP measures to non-GAAP measures are set forth in a reconciliation table in our press release issued earlier today and furnished with the form 8-K filed today with the SEC.
With that it's now my pleasure to turn the call over to Tim Whelan.
You, Mike and good morning, everyone.
2021 was one of the most transformational years for the company.
Where we realized growth in revenues.
Bookings and backlog.
Gross margins non-GAAP EBIT margin and net income.
Across the board. We believe every important metric showed not just the recovery from Covid, but an improvement in the long term health of our business.
Just as importantly, the sale of our microwave business, which was signed in December 2021.
Closed in March allows us to strategically focus on a more streamline business.
We are exceptionally pleased and thankful for the hard work.
Williams and invaluable contributions of our employees and senior leadership team to the success realized in 2021.
Before I turn the call over to Mike to walk us through the financials in more detail.
Upon needs further and provide some additional color.
First is our revenue growth for the year ended December 31 2021.
Revenues increased 18% on a consolidated basis.
All of which was driven by the results in Argentina, and RBS product groups.
Excluding Michael that our revenues for test and measurement and RBS, reflecting even stronger growth of 31% in 2021 compared to 2020.
Revenues from driven by higher legacy test and measurement product increases outside of our Holzworth products, which reflects success in three initiatives.
Expanding our design and program focus in our noise com products successful expansion outside of North America, and third successful evolution of existing products and new form factors.
We also realized revenue growth and a radio baseband and software products, which reflects both increases of orders for our legacy digital signal processing cards, but more importantly.
We almost doubled software and services revenues over the prior year.
And we continue to see the success for our quarterly wins and longer term contracts convert to revenues.
In addition to our revenue growth metrics, we realized solid bookings and backlog increases.
We realized a positive book to bill ratio of 1.1 or higher in three of our four quarters of 2021.
We also had a positive book to Bill metric for the 2021 full year.
Excluding Michael that we accomplished a positive book to Bill, which resulted in an increase to our backlog by $2 million.
We entered 2022 with a backlog of almost $9 million, representing nearly a 30% increase to the backlog of test and measurement and RBS.
The drivers of higher bookings and revenues reflect new products, new markets and an expansion of selling into existing customers across all of our brands.
Bookings backlog and revenue growth are also indicative of larger customer contracts and longer term design and contracts being closed and RBS as well as some critical application wins in test and measurement.
RBS projects are more complex and take longer to close the design and sales cycle. However.
However, RBS projects provide outstanding growth opportunity because they are delivered over a longer period of time and allow us to where the customer needs more deeply which creates additional sales and service opportunity.
Since our third quarter earnings, we've announced three customer wins, including Smart Sky networks, which was largely completed in 2021.
And 2022 projects, including an adverse <unk> open ran project in the U K.
H CFL specialized small cell provider in India.
In test and measurement, we've realized multiple six figure.
The number of seven figure wins for custom noise generation solutions and satcom applications.
Directed energy weapons and semiconductor development.
Our wins also included synthesizer solutions for the defense sector and semiconductor test.
Critical calibration equipment for the military.
These are large global blue chip demanding customers, who trust us to provide a central equipment for R&D and manufacturing.
As well as mission critical applications.
RBS and Tina and backlog at year end was $9 million one of the highest metrics in recent years.
While it does not guarantee a full year outcome.
<unk> has a solid starting point for the year, which is coupled with our belief in the long term growth drivers of increasing investments in satellite solutions military and defense and <unk> private network growth.
Below the revenue line, we increased our consolidated gross margin in 2021 by another 700 basis points to 59%.
We established exceeding 50%.
One of our strategic Kpis and as part of our long term strategic plan and roadmap.
Underscoring our actions to drive higher margin products software and services.
Just as importantly.
And RBS gross margins have sustained at above 50% year over year in.
And increased from 42, 5% in 2019.
To 52, 5% in 2021, reflecting the success driving higher margin software and service revenues.
In test and measurement, we realized our fifth straight year of gross margin increases accomplishing 57, 5% gross margins in 2021.
Compares to 55, 2% in 2020.
54% in 2019 and below 50% in 2017 and 2018.
We believe this also underscores our long term strategic success, introducing new products with higher margins.
Continued success with our design initiatives, which provide higher margin and stickier revenues and also focusing on specialty solutions, which have less price pressure.
Revenue growth.
Combined with gross margin expansion also drove higher net income and higher GAAP adjusted EBITDA.
Our 2021 EBITDA reflects a 100% increase over last year's EBITDA and a strong contribution as we think about a second year of challenging market conditions and continuing COVID-19 concerns.
Strong profitability was driven by continued top line focus driving revenue increases expanded gross margins continued expense control initiatives.
Sustained R&D to drive future growth opportunities.
Finally the.
But Michael that transaction was a significant and transformational transaction for the company.
It allowed us to pay off our debt and the net proceeds added $18 million of cash to our balance sheet.
Our strengthened balance sheet allows us to seek both organic and inorganic opportunities as well as seek ways to unlock shareholder value.
This transaction also strongly reflects our commitment to evaluating all opportunities to drive shareholder value.
The Microsoft transaction also allowed us to reorganize our leadership team to best capitalize on compelling trends that are underway across our global markets.
As a result offered Rodriguez will lead our RBS business as segment General manager.
And Dan monopoly will lead our <unk> business segment General manager.
Alfred and Dan are exceptionally skilled leaders and executives with deep expertise within their respective products and markets.
With that I'm going to turn the call over to Mike to walk us through the financials.
Thank you Tim Good morning again, everyone.
I'll review the results for the 12 months ended 2021, and then comment on our balance sheet as of December 31 2021.
All P&L comparisons are on a year over year basis and balance sheet comments are as of December 31, 2021 compared to year end December 31, 2020, unless otherwise noted the.
The financial statements for fiscal 2021, and 2020 include the results of micro lab.
Consolidated revenue for 2021 increased $7 5 million or 18% from the prior year period.
<unk> revenue increased $5 3 million or a 150% on higher sales of our digital signal processing cards and software and services revenue due to new customer contracts.
PNM revenue increased $2 1 million or 10% due to new product introductions.
Crude demand generation activities and a rebound in customer spending, particularly internationally due to relax COVID-19 restrictions and RF components revenues were flat with the prior year.
<unk> gross profit increased $4 1 million from the prior year on higher revenues at PNM and RBS.
Consolidated gross profit margin increased marginally as higher gross profit margin at PNM was offset by lower margins at RFC and RBS due to mix, specifically RBS margin was impacted by a higher concentration of service revenue in 2021, which means more of our labor costs for software engineers are classified as cost of revenue.
Rather than R&D.
Turning to operating expenses consolidated R&D expenses decreased 839000, or 13, more 13, 1% from the prior year because of lower third party material and consulting expenses, primarily related to our RBS and PNM product groups and the aforementioned higher classification of labor costs and cost of.
<unk>, rather than R&D due to more service contracts in 2021% in 2020.
This was only partially offset by unfavorable foreign exchange impacts.
Consolidated sales and marketing expenses increased 214000, or three 1% due to higher commissions expense and unfavorable foreign exchange impacts.
Consolidated general and administrative expenses increased approximately $2 million or 19, 8% due to higher salaries and benefits due to increased head count higher professional fees associated with the micro last divestiture and consulting and other fees associated with our strategic review process.
This was only partially offset by lower stock based compensation expense due to the reversal of expense associated with certain performance based stock options.
Additionally, within operating expenses, we recorded a noncash impairment charge related to an indefinite lived intangible assets as part of our annual review process and a loss on change in contingent consideration of 386000 related to the year two holzworth earn out the year.
There are two earn out is based on the financial results for fiscal year ended 2021 and is payable on 44 installments beginning in March of 2022.
Holzworth full year 2021 forecasted financial results have exceeded our initial estimates and accordingly, we recorded this charge through the P&L as the measurement period for purchase accounting has closed the.
The year to earn out as the final earn out payment due under the Holzworth stock purchase agreement.
Our total holzworth earn out accrual as of December 31 was $3 million and is payable quarterly and 2022 in either cash or stock.
In 2021, we also recorded a gain on extinguishment of our PPP loan is the loan was forgiven in the second quarter.
Other income and expense decreased 117000 from the prior year due primarily to lower gains on foreign exchange transactions and other asset sales.
Interest expense increased 158000 from the prior year due primarily to our term loan with music.
Overall, we generated net income in 2021 of $1 5 million as compared to a net loss of $8 1 million in the prior year due to higher gross profit and lower impairment and contingent consideration charges and the gain recognized on the extinguishment of the PPP loans in the current year, which were only partially offset.
Set by higher interest expense and a lower tax benefit in the current year.
non-GAAP adjusted EBITDA was $3 7 million for 2021 as compared to $1 8 million in the prior year period, due primarily to higher income from operations.
Turning to the balance sheet and cash flow, we generated $4 6 million in cash from operations in 2021.
We made $4 2 million in term debt payments and $1 $1 million in contingent consideration payments in 2021 and had zero outstanding under our revolver as of December 31.
On March one we closed the previously announced divestiture of micro lab.
At close we received $23 $9 million in cash proceeds of which $4 2 million was used to pay the outstanding principal and accrued interest related to the music its term loan.
100000 was used to pay the outstanding principal and accrued interest and fees related to the bank of America credit facility and 486000 was used to pay our advisors overall, we received approximately $18 million in cash to the balance sheet at close.
Both the music and Bank of America credit facilities were terminated on March one.
In Q1 of 2022, we expect to classify the stub period results of micro lab as a discontinued operation. Additionally, we expect to add additional disclosure around the PNM at RBS business units.
I'll now turn the call back over to Tim for some closing remarks, Thank you Mike.
Going forward, we intend to manage and organize the business has two discrete operating segments test and measurement and radio baseband and software.
We continue to manage and work and operating expense reductions, which have been built into our budgetary targets, but we're also mindful of the inflationary environment and counteracting cost increases.
We are committed to a lower Opex result, and are working hard to get there.
In test and measurement, we expect to see continued traction and growth opportunity in satellite communications, increasing military and defense spend and continued success in our ability to sell into quantum computing applications in semiconductor test environments.
We believe the investment growth themes in those sectors, coupled with our backlog gains position us for opportunity for continued top line growth in 2022.
And RBS, our funnel remains strong for <unk> private network solutions research projects and specialized small cell projects.
We believe 2022 will continue to reflect improved demand for our <unk> software and services driven by increased investments into <unk> private network solutions over the next several years.
Our degree of EBIT profitability will depend upon the timing of our larger RBS projects in our backlog and funnel and the resulting timing of revenue recognition with.
With the carve out of micro lab, we remain committed to driving top line growth and improved profitability in the remaining two segments.
Last.
We are keeping an eye on the situation in Ukraine, and our Hearts go out to those impacted by war.
As of now only one project was impacted as we noted in this morning's release.
While there appears to be a limited short term impact on the business longer term. This may lead to a more bullish growth opportunity. If this results in higher military spend for the U S and our NATO allies.
We are also carefully watching our supply chain and input costs, we are working hard to navigate those continued challenges.
Overall, we are excited by the direction we are headed.
We expect 2022 will demonstrate the benefits of our strong capital position and streamline business as we pursue growth opportunities across our compelling global markets.
Thank you and operator, you may open the lines for questions.
Thank you ladies and gentlemen, the floor is now open for questions. If you have any questions or comments.
Okay.
Okay.
From our point of your question you. Please pickup your handset after listening on speaker phone to provide optimum sound quality. Please hold while we pull for questions.
Yes.
Okay.
Okay.
Okay.
Okay.
Yes.
Okay.
Thank you.
Okay.
And the fact that the stock.
Okay.
Okay.
Five G LTE investment cycle this year and the opportunities that provides.
For the company is that.
A significant ramp up already do you think that that's.
Is going to be something that happens quickly.
Thank you Sir.
<unk> is a little bit that would be appreciated.
Ladies and gentlemen, please hold the line, we're going to reconnect the speaker line to improved sound quality. Once again. Please hold the line we will reconnect the speakers to improved sound quality. Please hold.
Ladies and gentlemen, the speakers are reconnected at Josh from B Riley. If you could please at Repost. Your question apologies for the day, ladies and gentlemen.
Yes, thanks for taking my question.
I was just wondering if you could elaborate a little bit on what you're seeing in terms of the <unk> investment cycle on the implications.
But that could have for this year on the test and measurement business in RBS and the opportunities that that presents.
Sure. Thank you for that Josh good morning.
So in Q4, we announced two wins in and we've been on a pace of about one win per quarter.
We're certainly seeing some additional activity in the funnel are.
We were very enthused being back at mobile World Congress this year.
In that comp in that conference, we presented our five G base station reference platform as well as our Du card, which is a part of the technology building blocks and you open radio access network architecture. So.
Those solutions were well received and attracted the attention we're hopeful hopeful for so while the while the environment.
It does remain fluid, where we're definitely seeing activity within the global markets and we think that spend will remain strong over the next several years.
What are the I guess, if you were kind of thinking about the one or two biggest opportunities in terms of software sales for this year next year that could really move the needle is there something that you're already working on or have in mind or what are some of the opportunities on that front to build that.
Step up from where it is today to a much more kind of meaningful and high contribution margin.
Sure I'll reflect on the two that we've announced one is which with Genovese Yo, which which builds that they're a Taiwanese ODM.
<unk> and telecom infrastructure. So they are going after that market, which is the private network fiber build out and that brings together. The NXP later escaped platform as well as our software so.
As the World is moving and you're seeing some of the headlines of much larger enterprises, starting to build out <unk> private networks. We think that's going to continue and we're enthusiastic about the growth curve, there and the potential market opportunity.
Second is the H F C L.
<unk> is an Indian Telecom company.
They're looking to deploy a <unk> indoor small cell solution.
And specialized fashion as they think about whats referred to fr. One in fr too. So again, we're partnering with them and as more of the <unk> private network build out we think that creates an opportunity for us to continue to enlarge our opportunity.
Okay.
Thanks, and then I know that Theres been a lot going on with the supply chain have you seen much impact.
So your business so what's the company doing to kind of mitigate any of those potential headwinds.
Yes so.
Two two observations there Josh one is the extension of lead times lead times from 20 weeks of extended to 52 weeks, that's causing us to rethink how much inventory, we stock and were starting to.
Increase the amount of inventory, we positioned to provide for that.
<unk>.
Costs are clearly increasing for hard to get components and those cost increases are far beyond just percentages, we're seeing multiples so certain components that used to cost of $15 going to certain boards and our <unk> solutions now costs $600 just to give you. One example of the magnitude of the <unk>.
Shift.
Right now, it's not enough for us to to change how we think about our gross margin profile, because within test and measurement and RBS theres a level of pricing power that we also have and so we're we're trying to take a balance of <unk>.
Buying ahead of time, increasing our inventory orders and accelerating some purchasing as well as passing on price increases so.
We're certainly seeing the impact we're spending a lot more cycles and managing.
And increasing the visibility on a week to week.
And we feel we'll be able to to manage it reasonably well at this time.
Hmm.
Thanks for clarifying that.
Can you talk a little bit on a pro forma basis. So.
The micro lab business is gonna be moved to discontinued operations. So you effectively become a two segment.
Company.
But I think good ones.
The idea of the margin profile that should be accretive but.
What's the expectation on the Opex front for how that's going to change.
Yeah, So so Josh.
We've initiated a bunch of.
Opex reductions as part of this year's year's planning cycle. So obviously there are certain opex expenses that are going with with micro lab and in addition to that.
There's things, we're looking at to be more efficient here.
So we do expect the Opex, obviously two to decline going forward.
I guess is it fair to assume that you would kind of maintain proper.
Profitability rate Oh.
We changed a little bit.
There are <unk>.
Obviously, we're managing the business to be to be profitable.
That's going to be dependent on several things the biggest of which is some of the volatility that we're seeing with our big RBS contracts and the complexity of the revenue recognition with.
With each of those these are big.
Seven figure type deals.
With complex deliveries and milestones and complex revenue recognition, so thats going to impact our profitability going forward.
Great. Thank you.
Great. Thank you Jeff.
Thank you and once again, ladies and gentlemen, if you wish to enter Q2 Q&A queue to ask a question. Please press star one on your phone at this time.
The next question is coming from Nick Richard's Stella and.
Thank you. Your line is live please announce your affiliation and pose your question.
Good morning.
How can you St Patrick's day to everyone.
Good morning, Nick Thank you same to you.
And Tim Good luck with our Wildcat.
Very good. Thank you Nick Okay. Okay. So I have a bunch of questions first of all can you break out the revenue for RBS like software versus services in the fourth quarter.
So Nick I within the 10-K I would point you to the <unk>.
Disaggregated revenue footnote, it's not on the quarter.
But if you look at for the 12 months ended December 31, the software licenses were about $1 9 million in the services were about $3 eight.
Of that $3 eight there is some calibration services for PNM within that number which is generally between 113 and one and a half.
Okay.
Okay. So as the fellow there from B Riley.
The cost structure going forward can you say right now.
With any certainty that youre going to generate cash this year.
Without without buying anything.
Yes, so we're managing the company to be profitable and to generate cash flows one of the big things that is going to impact our cash flows from a working capital perspective are two big things as Tim mentioned, one is the severity of these lead times and the supply chain issues that we have.
To the extent that we determine we have to increase our inventory levels significantly for these hard to find components or long lead time components, that's going to drive our inventory up and then the second is the RBS projects. In addition to being complex from a Rev. Rec perspective. They also.
<unk> tend to have.
Disproportionate cash flow is meeting that.
If we can negotiate cash upfront, we do that and it shows up as deferred revenue.
But if negotiations are hard and cash is collected at the end of the project that increase our unbilled receivables. So that is going to impact our our cash flow.
Going forward.
Right, but in other words do you have any.
Degree of certainty.
Going to generate cash this year.
Okay.
Yeah, Nick So we're operating on a on a budget that's that's targeting EBIT profitability that's for sure.
Think what we called out is that Theres, a couple large close to seven figure multiple seven figure contracts within RBS, where which are in the funnel.
And we're we remain confident of the of the outcome, but the timing is less certain because our customers are still themselves building cases around the technology building blocks and so we feel comfortable in our position in call. It the stack of technology providers.
The timing of these large deals in terms of closing and then the deployment of that is still a little uncertain.
But we're certainly running the business internally our budgetary targets are certainly designed to drive for EBIT profitability at year end.
Okay by the way Com agility. So are they all located over in the UK still or if I'm ignorant about that does that.
Yeah no good.
Good portion of them are call it 40% to 50% of the people are there another 40% in Duisburg, Germany location and the rest are.
Around the world.
Okay. So.
Is there anything with regards to opex that can.
Ill.
Kind of.
The word I'm looking for is.
Perfect.
Tom agility.
Being located in the U K or anything is there any way to consolidate fall.
No. We don't think there's necessarily downside I mean being distributors like that allows us to have a deep relationships and customer contacts just think about one of the large wins that.
We announced in Q4, which was.
With the company called Advo, but it was a U K funding and so our ability to have a presence in the U K positioned us for that win.
Previously we've won a German research project for four <unk> car connectivity and we're winning business around the world. So I think it's a good thing that we have people.
Current technology hubs and presence around the world I think it benefits us.
That's fine and then Tim like when we had our conversation I really would like to understand better and maybe you can do highlight it more.
<unk>.
The software business that you have.
What is special about it because you know what.
There's lots of big Big companies here.
That confirms that.
I just get the fear that they could crush you like a bulk.
So I would like to hear from someone maybe Mr. Rodriguez for something and trying to understand I mean.
Why are we could your solutions are superior like for example, smart Sky networks.
Without a nice release.
I don't know how much the revenue was flat, but for some reason they chose your solution.
I think we need to demonstrate.
The holders what it is.
Why this is a shining star.
Sure. So I'll make two remarks there. The software is typically comes in seven stacks layer. One layer seven that includes the five layer, which is the closest to the silicon the physical layer. It includes the protocol layers and then it includes the application layers, which is designed for really what the end application is we specialize in L. A.
<unk> III software, that's where we distinguish ourselves first key 0.2nd key point is that we've partnered and collaborated with NXP semiconductor and so we're working to collaborate so that our software is working on the NXP layer scape platform.
That silicon partnership.
Has been beneficial to us and has led to mutual sales engagements.
We are distinguished amongst that L wanted to L. Three specifically in the <unk> stack and our collaboration with NXP.
That's that's one key point the second thing that we the second key takeaway to your question is how by having that expertise. We can then specialize in the end applications to allow the software and the silicon to work as designed and a specialized application. So we don't go after the.
End markets, which are defined by millions of units that's more of a Qualcomm solution. We go after those that are defined as hundreds or perhaps thousands of units, which is what the smart sky solution is and we've also solved for the what's called the Doppler shift. So the current standards require a signal to be handed off.
Up to speeds are approximately 200 miles per hour, but if you have devices moving at speeds faster than that there has to be adjustments to the software.
That allows the silicon to work and so those are just two key takeaways of how we're specializing in niches and competing against providers that either have not solve those problems or not interested in the space, that's defined as less than millions and tens of millions of end units.
Okay, that's fair enough.
Everybody I guess hopes that we're going to see some evidence in these contracts at some point this year.
Where are the small.
Manifest into revenue.
Okay. One other thing by the way just Nick on that point I think one of the key points. We called out is the increase in the backlog. So that's that's that's already manifesting itself in terms of our bookings and increasing backlog.
Alright fair enough by the way on the Holzworth what was the final price.
About $13 5 million Nick.
Okay, so how much.
I'm just curious are you going to pay the balance.
With cash.
Or stock.
We have the option to pay with cash or stock and I think we'll make that decision in each of the quarters.
Coming forward each of the next four quarters, certainly with a greater cash position on our balance sheet, we have greater flexibility in terms of how we think about that.
Well I, just you know with the stock at $1 80, whatever cash $18 million or whatever I don't know why you would.
Your stock at these levels.
Small amount.
Yeah, No I agree with you Okay. Yeah, Okay, I don't want to take up all your time, but I. Just you know one thing and I mentioned this the Tam I have I've been doing this for 30 years and it's not dispositive, all the time, but I don't understand why there's not more insider buying by.
Board members I own more shares than some of the board members, it's not right and.
I understand everybody has their own thing, but it really does send a signal you know.
I've been doing this a long time and.
I just encourage anyone that you know if you think it's a bargain.
Old cliche is inside ourselves for lots of reasons, but they buy for only one and now over my.
Many years of doing this it works you now, but I don't need to convince you either you see the value in.
And that's why I'm, so Nick and by the way Nick one one comment on that.
Lord and management, we were subject to an insider trading policy, which includes blackout periods, where we are.
For fit and from trading in the stock.
Which one does not apply when you look at the whole when you look at the whole of the year Theres more blackout periods and there are there are open windows just just.
Especially given a period of time, when we're negotiating transaction, Nick and Youll recall that I have made significant purchases of stocks. So I am a significant shareholder so but I understand.
With Nick.
I appreciate it and we do hear you and appreciate that feedback, though thank you.
Okay.
And the other question I have is.
Can you give us a sense of timing in terms of you know.
Im sure Youre looking at things to buy acquisitions, but as I said to you Tim when you go back and you look at <unk>.
Tom Agility I mean, this is a company with a $40 million market cap now Wtt. If you look at what you paid com agility.
And.
Again, the future may be bright, but if you look at what its worth now.
Just did not build value that acquisition, so I think in general shareholders might be nervous.
Now we're going to go down that road again.
Buying something and destroying value how can you assure us that Nick I think I can listen Nick I think we I think the comp agility acquisition.
Generated significant EBIT cash flow in the early years the hardware declined.
First our rate than anticipated, but we went into that eyes wide open and we're excited about the software opportunity that's building today.
So we're still very but wait wait wait a minute just to like $19 million okay.
We're still very bullish about that acquisition.
We are optimistic about the opportunities ahead.
The EBIT results do not include the.
The cash tax refund, we get every year.
From that and we feel very good about the opportunity so.
As we think about the future as we said in our press releases, where we're going to remain committed to looking at.
The use of cash and use of excess cash and how we think about acquisitions going forward.
Okay, but not to argue the point, but.
You paid $18 million on a market cap of the whole company is yeah.
You go look at what you paid for Holzworth, we only well $10 million.
<unk> com agility, Nick we paid $14 6 million when it was all said and done with cash and stock wasn't at higher than 2014.
Okay, Alright stand corrected but still.
That was about $44 four years ago, it's still worth 14 or $15 million then.
Go through the math of what Holzworth worth what cash you have on what's that you ought to be buying back stock left and right.
In other words something doesn't.
Nick.
I definitely get it we hear you we do appreciate your feedback we're very very contemplate as we think about acquisitions, we have a deep diligence process, we have a a.
A gated process with our board were very very careful in how we do our acquisitions. We're very pleased with the two that we've done we think that the growth opportunity ahead for <unk>.
<unk> has allowed the company a tremendous opportunity that didn't exist a few years back. We were also very pleased with Holzworth keep in mind, we have almost doubled the revenue from the Holzworth business and.
And that's opening new opportunities for us as we think about common customers, where we have we have been successful leveraging other brands into the holzworth customers and also leveraging our holzworth solutions into our existing customers. So I definitely hear you Nick I definitely I agree.
I agree with you are saying that makes a good point.
Just final point and I'll, let you go I appreciate this time.
What are you going to do in terms of getting additional I know, it's a microcap, but additional research coverage are going out and telling the story because you've just laid out a story again wherever you.
The sum of the parts on this company.
It doesn't make sense.
Or am I missing something.
I agree that a sum of the parts valuation shows that there's a gap in the current valuation in the market. So I definitely agree with that.
And that's with share repurchase.
Key point too Nick is that we are working on analyst coverage as we always have its always a challenge as a as a small cap or even a micro cap.
But as we think about the transaction of micro lab, just getting closed.
You know we are now working hard to see what we can do to extend some of that analyst coverage.
So again, we get it Nick we're working on that and amongst many other things and we hear you and again appreciate your feedback.
Okay, well I do appreciate your time and.
Good luck.
This is a long term situation, but you know shareholders. So.
We'd like to just see.
Some more manifestation of these good things in and by the way. If there is a gap that you believe between the value of the company and the share price that's exactly what share repurchases are meant for so I'll leave it at that.
Very good thank you Nick.
Alright. Thanks.
Thank you and there were no other questions in queue at this time.
Great. Thank you everyone for joining us today, we look forward to speaking you again in the near future have a great day.
Thank you ladies and gentlemen, this does conclude today's conference call. You may disconnect. Your lines at this time and have a wonderful day. Thank you for your participation.