xG Technology Announces Results for the First Quarter of 2018

SARASOTA, Fla., May 15, 2018 /PRNewswire/ -- xG Technology, Inc. (Nasdaq: XGTI, XGTIW), whose IMT and Vislink brands are recognized as the global leaders in live video communications in the broadcast, law enforcement and defense markets, announced today its results for the first quarter ended March 31, 2018. Management will hold a conference call to discuss these results on Wednesday, May 16, 2018 at 5:00 p.m. Eastern Time (details below).

First Quarter Results

• First quarter 2018 revenues increased 4.3% to $9.7 million compared to $9.3 million in the first quarter of 2017.  
• Gross margins increased to 51% in the first quarter of 2018, compared to 40% in the first quarter of 2017.
• For the first quarter of 2018, net loss attributable to common shareholders was $3.8 million, or $(0.25) per share, compared to net income of $8.3 million, or $0.87 per share in the first quarter of 2017. Excluding stock option expense, discontinued operations and a division held for sale, xG reported a net loss of $501,000 in the first quarter of 2018.
• EBITDA (earnings before interest, taxes depreciation and motorization) was a negative $2.8 million for the three months ended March 31, 2018. Excluding stock option expense, discontinued operations and a division held for sale, the Company reported adjusted EBITDA loss of $179,000 for March 31, 2018 which includes a write down of approximately $113,000 in non-cash items related to inventory.
• Ended the first quarter 2018 with $455,000 in cash compared to $2.8 million at December 31, 2017.

First Quarter Non-GAAP RESULTS¹

• Adjusted revenue was $9.3 million excluding discontinued operations and a division held for sale.
• Adjusted net loss was $501,000 and adjusted EBITDA loss was $179,000 in the first quarter of 2018 excluding stock option expense, discontinued operations and a division held for sale.

"The accomplishments made during the first quarter reflect our commitment to strategically refocus our efforts on instituting the policies and practices necessary to drive revenue, cut costs and ultimately achieve profitability," said Gary Cuccio, Executive Chairman of the Board and CEO of xG Technology. "I am very pleased to report that our gross margin increased from 40% to 51% while our revenues increased as well. We also continue to lead the industry in product innovation by successfully introducing the Vislink AirPro-75.  We look forward to continuing this healthy trend by winning new business, forming strategic partnerships and recognizing potential M&A opportunities that make sense for us.  I am excited about leading this team and their ability to execute."

First Quarter 2018 Key Business Highlights

• The HCAM HEVC 4K wireless camera systems were successfully deployed in their first live outside broadcast events.
• Received an order in excess of $1 million from leading European outside broadcasting provider AMP Visual TV for HCAM HEVC 4K wireless camera systems and related equipment.
• Announced a collaboration between its IMT business and Marshall Electronics, a recognized leader in supplying professional cameras and display monitors, to offer a full wireless video solution for live broadcasts and sporting events.
• Launched the Vislink AirPro-75, a small, lightweight, low-cost, single-button deployment IP satellite data terminal for use with Eutelsat's Tooway™ & ViaSat™ Exede® services.
• Adjusted EBITDA loss was $179,000 when taking into account previously announced cost reduction initiatives. 

"The combination of our revenue increase and our team's renewed focus on cost control helped us deliver improved margins and solid first quarter results," said Roger Branton, xG Technology CFO and co-founder. "The results and our previous announcement on cost reductions are an indication of our ability to transform into a profitable model and of our continued commitment of becoming the industry leading provider of comprehensive video, broadband and satellite solutions for broadcast, sports and entertainment, and public safety markets."

Financial Results Conference Call Details

xG management will hold a conference call to discuss its Q1 2018 results and provide a corporate update on Wednesday, May 16, 2018 at 5:00 p.m. Eastern Time. To participate in the conference call, please call 1-844-825-9789 (toll free) or 1-412-317-5169 (international call-in) and ask to join the xG Technology call. The call will also be simultaneously webcast. Listeners can access the webcast live through the Company's website at http://www.xgtechnology.com/about-xg-technology/investor-information/. For those who cannot participate in the call, an audio replay will be made available on xG's website.

¹NON-GAAP FINANCIAL MEASURES

We disclose non-GAAP financial measures as we believe they provide useful information on actual operating performance. Readers are cautioned that non-GAAP financial measures do not have any standardized meaning prescribed by U.S. GAAP and therefore may not be comparable to similar measures presented by other companies.

Non-GAAP gross margin excludes the impact of purchase price amortization on the step up of assets as a result of the bargain purchase gain and the impact of foreign exchange gains or losses.

Non-GAAP income (loss) from operations excludes the impact of purchase price amortization related to the Vislink acquisition, acquisition-related expenses and restructuring expenses.

We use the above-noted non-GAAP financial measures for planning purposes and to allow us to assess the performance of our business before including the impacts of the items noted above as they affect the comparability of our financial results. These non-GAAP measures are reviewed regularly by management and the Board of Directors as part of the ongoing internal assessment of our operating performance. Adjusted EBITDA is defined as net income (loss) plus purchase price amortization, acquisition-related expense, restructuring expense, depreciation and amortization, foreign exchange gains or losses and interest expense.

Adjusted EBITDA is a metric used by investors and analysts for valuation purposes and we believe that it is an important indicator of our operating performance.

About xG Technology, Inc.

xG Technology's IMT and Vislink brands are recognized as the global leaders in live video communications and are trusted suppliers to tier-1 customers in broadcast/sports/entertainment, and law enforcement/public safety/defense markets. Their products are recognized for outstanding performance, reliability and build quality, extended operating ranges and compact form factors. In the broadcast, sports and entertainment sectors, IMT and Vislink provide high-definition communication links to reliably capture, transmit and manage live event footage. In the law enforcement, public safety & defense markets, IMT and Vislink provide secure video communications and mission-critical solutions to local, national and international agencies and organizations. More information can be found at www.imt-solutions.com and www.vislink.com.

xG is also the developer of xMax, a secure, rapid-deploy mobile broadband system that delivers mission-assured wireless connectivity in demanding operating environments. xMax was specifically designed to serve as an expeditionary and critical communications network for use in unpredictable scenarios and during fluid situations. This makes it a compelling solution for disaster response, emergency communications, and defense applications. More information about xMax can be found at http://www.xgtechnology.com/system-overview/. In addition to the above business lines, xG has a dedicated Federal Sector Group (xG Federal) focused on providing next-generation spectrum sharing solutions to national defense, scientific research and other federal organizations. Additional information about xG Federal can be found at http://www.xgtechnology.com/technology/xg-federal/.

Based in Sarasota, Florida, xG Technology has over 100 patents and pending patent applications. xG is a publicly traded company listed on the NASDAQ Capital Market (symbol: XGTI) For more information, please visit www.xgtechnology.com.

Cautionary Statement Regarding Forward Looking Statements

Statements contained herein that are not based upon current or historical fact are forward-looking in nature and constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements reflect the Company's expectations about its future operating results, performance and opportunities that involve substantial risks and uncertainties. These statements include but are not limited to statements regarding the intended terms of the offering, closing of the offering and use of any proceeds from the offering. When used herein, the words "anticipate," "believe," "estimate," "upcoming," "plan," "target", "intend" and "expect" and similar expressions, as they relate to xG Technology, Inc., its subsidiaries, or its management, are intended to identify such forward-looking statements. These forward-looking statements are based on information currently available to the Company and are subject to a number of risks, uncertainties, and other factors that could cause the Company's actual results, performance, prospects, and opportunities to differ materially from those expressed in, or implied by, these forward-looking statements.

FOR MORE INFORMATION

xG Technology:
Daniel Carpini
941-953-9035
daniel.carpini@xgtechnology.com

Investor Relations:
John Marco
CORE IR
516-222-2560
johnm@coreir.com

Reconciliation of GAAP to Non-GAAP Results

Our financial statements are prepared in accordance with US GAAP on a basis consistent for all periods presented. In addition to results reported in accordance with US GAAP, we use non-GAAP financial measures as supplemental indicators of our operating performance. We disclose non-GAAP measures as we believe that these measures provide better information on actual operating results.

Readers are cautioned that non-GAAP financial measures do not have any standardized meaning prescribed by US GAAP and therefore may not be comparable to similar measures presented by other companies.

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SOURCE xG Technology, Inc.