Sequential revenue growth of 16% and Gross
Margin Improvement to 39%
Westell Technologies, Inc. (NASDAQ: WSTL), a leading provider of
in-building wireless, intelligent site management, cell site
optimization, and outside plant solutions, today announced results
for its fiscal 2016 first quarter ended June 30, 2015.
Consolidated revenue was $21.6 million, consisting of $9.1
million from the In-Building Wireless (IBW) segment and $12.5
million from the Communication Solutions Group (CSG) segment. Both
IBW and CSG segment revenues were sequentially up by 28% and 8%,
respectively.
“Our fiscal first quarter was highlighted by strong order
momentum, new customer wins, solid revenue growth, a healthier
gross margin, and better inventory management. Favorable trends in
our in-building wireless business, intelligent site management
solutions, tower-mounted amplifiers, and power distribution
products contributed to the improved results this quarter,” said
Tom Gruenwald, Chairman and CEO of Westell Technologies. “In
addition, our current backlog gives us a solid foundation for the
second fiscal quarter, and we continue to invest in our product
portfolio to drive future growth.”
On a GAAP basis, the Company recorded a net loss in the quarter
ended June 30, 2015 of $3.9 million or $0.06 per share,
compared to a net loss of $13.0 million or $0.22 per share in the
quarter ended March 31, 2015. The prior quarter GAAP results
included $5.3 million of restructuring and other non-recurring
charges.
On a non-GAAP basis, the Company recorded a net loss in the
quarter ended June 30, 2015 of $2.2 million or $0.04 per share,
compared to a non-GAAP net loss of $5.5 million or $0.09 per share
in the prior quarter. Please refer to the schedule at the end of
this release for a complete GAAP to non-GAAP reconciliation and
other information related to non-GAAP measures.
Cash and short-term investments were $36.9 million at
June 30, 2015, compared to $37.9 million at March 31, 2015. A
reduced net loss and improved working capital, including decreased
inventory levels, contributed to the lower cash use during the
quarter versus the previous two quarters.
In-Building Wireless (IBW)
Segment
IBW segment revenue was $9.1 million in the quarter ended
June 30, 2015, up 28% from $7.1 million in the quarter ended
March 31, 2015. The sequential increase was driven by higher
revenue for DAS conditioners, including record quarterly sales of
our active DAS conditioner or UDIT (Universal DAS Interface Tray).
Gross profit was $4.0 million and gross margin was 44.1%, compared
to $1.6 million and 23.0% in the prior quarter. Gross profit and
gross margin increased primarily as a result of lower excess and
obsolete inventory costs and the higher revenues. IBW R&D
expenses were $3.2 million, compared to $2.3 million in the prior
quarter. The higher IBW R&D expenses compared to last quarter
were due to increased project activity associated with our new
ClearLink DAS solution. As a result, IBW segment profit was $0.8
million, compared to segment loss of $0.7 million in the quarter
ended March 31, 2015.
Communication Solutions Group (CSG)
Segment
CSG segment revenue was $12.5 million in the quarter ended
June 30, 2015, up 8% from $11.5 million in the quarter ended
March 31, 2015. The sequential improvement was driven by increased
intelligent site management revenue and higher sales of power
distribution products. Gross profit was $4.4 million and gross
margin was 35.4% compared to $3.0 million and 26.4% in the prior
quarter. Gross profit and gross margin increased due to lower
excess and obsolete inventory costs, higher revenue, and a more
favorable mix. CSG R&D expenses were $1.9 million in both the
current and prior quarter. As a result, CSG segment profit was $2.5
million, compared to $1.1 million in the quarter ended March 31,
2015.
Conference Call
Information
Management will discuss financial and business results during
the quarterly conference call on Thursday, July 30, 2015 at 9:30 AM
Eastern Time. Investors may quickly register online in advance of
the call at
http://www.directeventreg.com/registration/event/74531279. After
registering, participants receive dial-in numbers, a passcode and a
registration ID that is used to uniquely identify their presence
and automatically join them into the audio conference. A
participant may also register by telephone by dialing +1 (888)
869-1189 or +1 (706) 643-5902 no later than 9:15 AM Eastern Time on
July 30, and providing the operator confirmation number
74531279.
This news release and related information that may be discussed
on the conference call, will be posted on the Investor Relations
section of Westell's website: http://www.westell.com. A digital
recording of the entire conference will be available for replay on
Westell's website by approximately 1:00 PM Eastern Time after the
call ends.
About Westell
Technologies
Westell Technologies, Inc., headquartered in Aurora, Illinois,
is a leading provider of in-building wireless, intelligent site
management, cell site optimization, and outside plant solutions
focused on innovation and differentiation at the edge of
telecommunication networks, where end users connect. The Company's
comprehensive set of products and solutions enable
telecommunication service providers, cell tower operators, and
other network operators to improve network performance and reduce
operating costs. With millions of products successfully deployed
worldwide, Westell is a trusted partner for transforming networks
into high quality, reliable systems. For more information, please
visit www.westell.com.
“Safe Harbor” Statement under the Private
Securities Litigation Reform Act of 1995
Certain statements contained herein that are not historical
facts or that contain the words “believe,” “expect,” “intend,”
“anticipate,” “estimate,” “may,” “will,” “plan,” “should,” or
derivatives thereof and other words of similar meaning are
forward-looking statements that involve risks and uncertainties.
Actual results may differ materially from those expressed in or
implied by such forward-looking statements. Factors that could
cause actual results to differ materially include, but are not
limited to, product demand and market acceptance risks, customer
spending patterns, need for financing and capital, economic
weakness in the United States (“U.S.”) economy and
telecommunications market, the effect of international economic
conditions and trade, legal, social and economic risks (such as
import, licensing and trade restrictions), the impact of
competitive products or technologies, competitive pricing
pressures, customer product selection decisions, product cost
increases, component supply shortages, new product development,
excess and obsolete inventory, commercialization and technological
delays or difficulties (including delays or difficulties in
developing, producing, testing and selling new products and
technologies), the ability to successfully consolidate and
rationalize operations, the ability to successfully identify,
acquire and integrate acquisitions, the effect of the Company's
accounting policies, retention of key personnel and other risks
more fully described in the Company's SEC filings, including the
Form 10-K for the fiscal year ended March 31, 2015, under
Item 1A - Risk Factors. The Company undertakes no obligation
to publicly update these forward-looking statements to reflect
current events or circumstances after the date hereof, or to
reflect the occurrence of unanticipated events, or otherwise.
Financial Tables to Follow:
Westell Technologies, Inc.
Condensed Consolidated Statement of
Operations
(Amounts in thousands, except per share
amounts)
(Unaudited)
Three months ended June 30,
March 31, June 30,
2015 2015 2014 Revenue
$
21,570 $ 18,613 $ 27,825 Gross profit
8,429 4,666
9,684 Gross margin
39.1 % 25.1 % 34.8 % Operating
expenses: Sales and marketing
3,196 3,343 3,421 Research and
development
5,086 4,220 4,475 General and administrative
2,969 5,547 3,054 Intangible amortization
1,399 1,520
1,585 Restructuring
17 3,188 (1) 57
Total operating expenses
12,667 17,818 12,592
Operating income (loss)
(4,238 ) (13,152 )
(2,908 ) Other income (expense), net
38 (18 ) 61
Income (loss) before income taxes and discontinued
operations
(4,200 ) (13,170 ) (2,847 ) Income tax
benefit (expense)
62 31 29 Net income
(loss) from continuing operations
(4,138 ) (13,139 )
(2,818 ) Income from discontinued operations (2)
272
139 — Net income (loss)
$ (3,866
) $ (13,000 ) $ (2,818 ) Basic net income (loss) per share:
Basic net income (loss) from continuing operations
$
(0.07 ) $ (0.22 ) $ (0.05 ) Basic net income (loss)
from discontinued operations
— — —
Basic net income (loss)
$ (0.06 ) $ (0.22 ) $
(0.05 ) Diluted net income (loss) per share: Diluted net income
(loss) from continuing operations
$ (0.07 ) $
(0.22 ) $ (0.05 ) Diluted net income (loss) from discontinued
operations
— — — Diluted net income
(loss)
$ (0.06 ) $ (0.22 ) $ (0.05 )
Weighted-average number of common shares outstanding: Basic
60,703 60,286 59,715 Diluted
60,703 60,286 59,715 (1)
The Company recorded restructuring expense primarily relating to
abandonment of excess office space at its headquarters. (2) Income
from discontinued operations resulted from the expiration of
indemnity periods and release of contingency reserves related to
the sale of ConferencePlus.
Westell Technologies, Inc.
Condensed Consolidated Balance
Sheet
(Amounts in thousands)
June 30, 2015
(unaudited)
March 31, 2015
Assets Cash and cash equivalents
$ 20,847 $ 14,026 Short-term investments
16,071 23,906 Accounts receivable, net
14,452 11,845
Inventories
14,785 16,205 Prepaid expenses and other current
assets
3,423 3,285 Deferred income taxes
958 973 Land
held-for-sale
— 264 Total current assets
70,536 70,504 Property and equipment, net
3,760 3,603 Intangible assets, net
24,543 25,942
Other non-current assets
184 258 Total assets
$ 99,023 $ 100,307
Liabilities and
Stockholders’ Equity Accounts payable
$ 7,004 $
4,011 Accrued expenses
4,014 4,131 Accrued restructuring
1,092 1,161 Contingent consideration
1,265 1,184
Deferred revenue
1,859 2,415 Total current
liabilities
15,234 12,902 Deferred revenue non-current
1,032 751 Deferred income tax liability
1,114 1,019
Accrued restructuring non-current
1,372 1,642 Contingent
consideration non-current
169 400 Other non-current
liabilities
376 409 Total liabilities
19,297
17,123 Total stockholders’ equity
79,726 83,184 Total
liabilities and stockholders’ equity
$ 99,023
$ 100,307
Westell Technologies, Inc.
Condensed Consolidated Statement of
Cash Flows
(Amounts in thousands)
(Unaudited)
Three months ended June 30, 2015 2014
Cash flows from operating activities: Net income (loss)
$ (3,866 ) $ (2,818 ) Reconciliation of net
loss to net cash used in operating activities: Depreciation and
amortization
1,696 1,806 Stock-based compensation
457
554 Restructuring
17 57 Deferred taxes
110 — Exchange
rate loss
(6 ) (27 ) Changes in assets and
liabilities: Accounts receivable
(2,607 ) (1,075 )
Inventory
1,420 993 Accounts payable and accrued expenses
2,521 (1,355 ) Deferred revenue
(275 ) (425 )
Other
(76 ) (229 ) Net cash provided by (used in)
operating activities
(609 ) (2,519 )
Cash flows
from investing activities: Net maturity (purchase) of
short-term investments and debt securities
7,835 2,456
Acquisitions, net of cash acquired
— (304 ) Proceeds from
sale of land
264 — Purchases of property and equipment, net
(455 ) (723 ) Net cash provided by (used in)
investing activities
7,644 1,429
Cash flows
from financing activities: Purchase of treasury stock
(49 ) (585 ) Proceeds from stock options exercised
— 130 Payment of contingent consideration
(167
) (575 ) Net cash provided by (used in) financing activities
(216 ) (1,030 )
(Gain) loss of exchange rate
changes on cash 2 16
Net increase
(decrease) in cash and cash equivalents 6,821 (2,104 )
Cash and cash equivalents, beginning of period 14,026
35,793
Cash and cash equivalents, end of
period $ 20,847 $ 33,689
Westell Technologies, Inc.
Segment Statement of Operations
(Amounts in thousands)
(Unaudited)
Three months ended June 30, 2015 IBW
CSG Total Revenue
$ 9,070
$ 12,500 $ 21,570 Cost of revenue
5,069 8,072 13,141 Gross
profit
4,001 4,428 8,429 Gross margin
44.1 % 35.4 % 39.1 %
Research and development
3,162 1,924
5,086 Segment profit (loss)
839
2,504 3,343 Operating expenses: Sales and
marketing
3,196 General and administrative
2,969
Intangible amortization
1,399 Restructuring
17
Operating income (loss)
(4,238 ) Other income
(expense), net
38 Income tax benefit (expense)
62
Net income (loss) from continuing operations
$
(4,138 ) Three Months Ended
March 31, 2015 IBW CSG Total Revenue $ 7,082 $ 11,531 $ 18,613 Cost
of revenue 5,456 8,491 13,947 Gross profit
1,626 3,040 4,666 Gross margin 23.0 % 26.4 % 25.1 % Research &
development 2,315 1,905 4,220 Segment profit
(loss) $ (689 ) $ 1,135 446 Operating expenses: Sales and
marketing 3,343 General and administrative 5,547 Intangible
amortization 1,520 Restructuring 3,188 Operating income
(loss) (13,152 ) Other income (expense), net (18 ) Income tax
benefit (expense) 31 Net income (loss) from continuing
operations $ (13,139 ) (1) The Company recorded restructuring
expense primarily relating to abandonment of excess office space at
its headquarters. Three months ended June 30, 2014 IBW
CSG Total Revenue $ 14,097 $ 13,728 $ 27,825 Cost of
revenue 8,286 9,855 18,141 Gross profit 5,811 3,873 9,684 Gross
margin 41.2 % 28.2 % 34.8 % Research and development 2,195
2,280 4,475 Segment profit (loss) $ 3,616 $
1,593 5,209 Operating expenses: Sales and marketing 3,421
General and administrative 3,054 Intangible amortization 1,585
Restructuring 57 Operating income (loss) (2,908 ) Other
income (expense), net 61 Income tax benefit (expense) 29 Net
income (loss) from continuing operations $ (2,818 )
Westell Technologies, Inc.
Reconciliation of GAAP to non-GAAP
Financial Measures
(Amounts in thousands, except per share
amounts)
(Unaudited)
Three months ended
June 30,
March 31, June 30.
2015 2015 2014 GAAP net
income (loss)
$ (3,866 ) $ (13,000 ) $ (2,818
) Adjustments: Inventory fair value step-up (1)
— 36 256
Deferred revenue adjustment (1)
73 64 146 Amortization of
intangibles (2)
1,399 1,520 1,585 CEO severance (3)
—
1,801 — Restructuring (4)
17 3,188 57 Land impairment
— 108 — Stock-based compensation (5)
457 977 554
(Income) loss from discontinued operations (6)
(272 )
(227 ) — Total adjustments
1,674 7,467
2,598 Non-GAAP net income (loss)
$ (2,192
) $ (5,533 ) $ (220 ) GAAP net income (loss) per common
share: Basic
$ (0.06 ) $ (0.22 ) $ (0.05 )
Diluted
$ (0.06 ) $ (0.22 ) $ (0.05 ) Non-GAAP
net income (loss) per common share: Basic
$ (0.04
) $ (0.09 ) $ 0.00 Diluted
$ (0.04 ) $
(0.09 ) $ 0.00 Average number of common shares outstanding: Basic
60,703 60,286 59,715 Diluted
60,703 60,286 59,715
Three Months Ended June 30, 2015 Three Months
Ended March 31, 2015
Revenue Gross Profit
Gross Margin Revenue Gross Profit Gross
Margin GAAP - Consolidated
$ 21,570 $
8,429 39.1 % $ 18,613 $ 4,666 25.1 % Deferred
revenue adjustment (1)
73 73 64 64 Inventory fair
value step-up (1)
— — — 36 Stock-based compensation
(5)
— (3 ) — 24 Non-GAAP
- Consolidated
$ 21,643 $ 8,499
39.3 % $ 18,677 $ 4,790 25.6 %
Three months ended June 30, March 31,
June 30,
2015 2015 2014 GAAP operating expenses
$ 12,667 $ 17,818 $ 12,592 Adjustments: Amortization
of intangibles (2)
(1,399 ) (1,520 ) (1,585 ) CEO
severance (3)
— (1,801 ) — Restructuring (4)
(17
) (3,188 ) (57 ) Stock-based compensation (5)
(460
) (953 ) (536 ) Land impairment
— (108 ) —
Total adjustments
(1,876 ) (7,570 ) (2,178 )
Non-GAAP operating expenses
$ 10,791 $ 10,248
$ 10,414
The Company conforms to U.S. Generally Accepted Accounting
Principles (GAAP) in the preparation of its financial statements.
The schedules above reconcile the Company's non-GAAP financial
measures to the most directly comparable GAAP measure. The
adjustments share one or more of the following characteristics:
they are unusual and the Company does not expect them to recur in
the ordinary course of its business; they do not involve the
expenditure of cash; they are unrelated to the ongoing operation of
the business in the ordinary course; or their magnitude and timing
is largely outside of the Company's control. Management believes
that these non-GAAP results provide meaningful supplemental
information to investors and indicate the Company's core
performance and that they facilitate comparison of results across
reporting periods. The Company uses these non-GAAP measures when
evaluating its financial results. Non-GAAP measures should not be
viewed as a substitute for the Company's GAAP results.
(1) On April 1, 2013 and March 1, 2014, the Company purchased
Kentrox and Cellular Specialties, Inc. (CSI), respectively. These
acquisitions required the step-up of certain assets to fair value,
which resulted in cost that will not recur once those assets have
fully settled. The adjustments remove the increased costs
associated with the third-party sales of inventory that was
stepped-up and the step-down on acquired deferred revenue that was
recognized. (2) Amortization of intangibles is a non-cash expense
arising from the acquisition of intangible assets. (3) The Company
recorded severance expense related to the departure of the former
CEO. (4) Restructuring expenses are not directly related to the
ongoing performance of our fundamental business operations. (5)
Stock-based compensation is a non-cash expense incurred in
accordance with share-based compensation accounting standards. (6)
The release of contingent liabilities related to the sale of
ConferencePlus are presented as discontinued operations.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150729006489/en/
Westell Technologies, Inc.Tom Minichiello, +1-630-375-4740Chief
Financial Officertminichiello@westell.com
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