Year-over-year revenue grew 44% to $20.2
million
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 third quarter ended December 31, 2015
(3Q16). Management will host a conference call to discuss financial
and business results tomorrow, Thursday, February 4, 2016 at 9:30
AM Eastern Time (details below).
Consolidated revenue was $20.2 million, consisting of $8.7
million from the In-Building Wireless (IBW) segment and $11.5
million from the Communication Solutions Group (CSG) segment. Both
IBW and CSG segment revenues for 3Q16 were up year-over-year by 60%
and 34%, respectively.
“Westell’s third quarter results showed continued progress in
executing our growth and operational turnaround strategy. Revenue
grew 44% compared to the same quarter last year, while down
sequentially as expected. Additionally, Intelligent Site Management
(ISM) revenue grew to its highest quarterly level in two years,
contributing to a CSG segment gross margin above 40%,” said Tom
Gruenwald, Chairman and CEO of Westell Technologies. “We have
completed the rebuilding of our management team with
performance-focused leaders in all key positions, have added new
products such as our new tower mounted amplifier (TMA), and are
progressing with trials and testing of our new ClearLink DAS
solution - all of which bolsters our confidence going forward.”
3Q16 2Q16 3Q15 3Q16 3Q16
3 months ended 3 months ended 3 months ended vs. vs.
12/31/15 09/30/15 12/31/14 2Q16 3Q15
Consolidated Revenue $20.2M $25.5M $14.0M
-21% +44% Gross Margin 39.4% 40.1%
31.3% -0.7% +8.1% Net Income (Loss)
($4.8M) ($2.5M) ($27.5M) ($2.3M)
$22.7M
Earnings (Loss) Per Share ($0.08) ($0.04)
($0.46) ($0.04) +$0.38 Non-GAAP Earnings (Loss) Per
Share (1) ($0.05) ($0.01) ($0.08)
($0.04) +$0.03 (1) Please refer to the schedule at the end
of this press release for a complete GAAP to non-GAAP
reconciliation and other information related to non-GAAP financial
measures.
Cash and short-term investments were $34.8 million at
December 31, 2015, compared to $36.4 million at September 30,
2015. The $1.6 million use of cash was driven primarily by the net
loss in the quarter, partly offset by favorable working
capital.
In-Building Wireless (IBW)
Segment
IBW’s revenue improvement year-over-year was due largely to
increased demand for passive DAS conditioners; while the sequential
decrease was due to the expected seasonal slowdown in sales of our
active DAS conditioner, the Universal DAS Interface Tray (UDIT).
Gross margins varied in line with changes in segment revenue.
3Q16 2Q16 3Q15
3Q16 3Q16 3 months ended 3
months ended 3 months ended vs. vs. 12/31/15 09/30/15
12/31/14 2Q16
3Q15 IBW Segment Revenue $8.7M
$10.8M $5.4M -20%
+60% IBW Segment Gross Margin 38.2%
42.0% 35.3% -3.8%
+3.0%
IBW Segment R&D Expense $2.7M $2.8M
$2.3M ($0.1M)
$0.4M
IBW Segment Profit (Loss)
$0.6M $1.8M ($0.4M)
($1.2M)
$1.1M
Communication Solutions Group (CSG)
Segment
CSG’s revenue improvement year-over-year was due to higher
revenues across all product categories - ISM, TMAs, and outside
plant; whereas the sequential decrease was driven by the typical
seasonal slowdown in sales of TMAs. Gross margin improved
year-over-year due primarily to lower excess and obsolete inventory
costs, and improved sequentially due primarily to a more favorable
mix.
3Q16 2Q16 3Q15
3Q16 3Q16 3 months ended 3
months ended 3 months ended vs. vs. 12/31/15 09/30/15
12/31/14 2Q16
3Q15 CSG Segment Revenue $11.5M
$14.7M $8.6M -22%
+34% CSG Segment Gross Margin 40.3%
38.7% 28.8% +1.6%
+11.5% CSG Segment R&D Expense
$2.2M $1.9M $2.0M $0.3M
$0.2M
CSG Segment Profit (Loss)
$2.5M $3.8M $0.5M
($1.4M)
$2.0M
Conference Call
Information
Management will discuss financial and business results during
the quarterly conference call on Thursday, February 4, 2016 at 9:30
AM Eastern Time. Investors may quickly register online in advance
of the call at https://www.conferenceplus.com/westell. 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 on February 4 by calling
888-206-4073 no later than 8:15 AM Central Time (9:15 AM Eastern
Time) and providing the operator confirmation number 41579044.
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 following the conclusion of
the conference.
About Westell
Technologies
Westell Technologies, Inc. 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
service providers and network operators to improve network
performance and reduce operating expenses. 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/A 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 Nine months
ended December 31, September 30, December
31,
December 31, December 31,
2015 2015 2014
2015 2014 Revenue
$ 20,215 $ 25,514 $ 14,043
$ 67,299 $ 65,514 Gross profit
7,963 10,231
4,395
26,623 22,144 Gross margin
39.4 % 40.1 %
31.3 %
39.6 % 33.8 % Operating expenses: Research and
development
4,893 4,625 4,353
14,604 13,128 Sales and
marketing
3,900 4,113 2,719
11,209 9,064 General and
administrative
2,627 2,493 2,797
8,089 9,131
Intangible amortization
1,418 1,432 1,562
4,249 4,857
Restructuring
— — —
17 55 Goodwill impairment (1)
— — 20,547
— 31,997
Total operating expenses
12,838 12,663
31,978
38,168 68,232 Operating income
(loss)
(4,875 ) (2,432 ) (27,583 )
(11,545
) (46,088 ) Other income (expense), net
85 (61
) (29 )
62 16 Income (loss) before income
taxes and discontinued operations
(4,790 ) (2,493 )
(27,612 )
(11,483 ) (46,072 ) Income tax benefit
(expense)
(7 ) 20 72
75
170 Net income (loss) from continuing operations
(4,797 ) (2,473 ) (27,540 )
(11,408 )
(45,902 ) Income from discontinued operations (2)
— —
—
272 — Net income (loss)
$ (4,797 ) $ (2,473 ) $ (27,540 )
$
(11,136 ) $ (45,902 ) Basic net income (loss) per
share: Basic net income (loss) from continuing operations
$
(0.08 ) $ (0.04 ) $ (0.46 )
$ (0.19
) $ (0.77 ) Basic net income (loss) from discontinued
operations
— — —
— —
Basic net income (loss) (3)
$ (0.08 ) $
(0.04 ) $ (0.46 )
$ (0.18 ) $ (0.77 ) Diluted
net income (loss) per share: Diluted net income (loss) from
continuing operations
$ (0.08 ) $ (0.04 ) $
(0.46 )
$ (0.19 ) $ (0.77 ) Diluted net income
(loss) from discontinued operations
— —
—
— — Diluted net income (loss) (3)
$ (0.08 ) $ (0.04 ) $ (0.46 )
$
(0.18 ) $ (0.77 ) Weighted-average number of common
shares outstanding: Basic
60,810 60,783 60,016
60,765
59,885 Diluted
60,810 60,783 60,016
60,765 59,885
(1)
The Company recorded a non-cash charge
during the second and third quarters of fiscal year 2015 to record
the impairment of the full carrying value of the Company's goodwill
related to the Kentrox and CSI acquisitions, respectively.
(2)
Income from discontinued operations
resulted from the expiration of indemnity periods and release of
contingency reserves related to the sale of ConferencePlus.
(3)
Totals may not sum due to rounding.
Westell Technologies, Inc.
Condensed Consolidated Balance
Sheet
(Amounts in thousands)
December 31, 2015
(Unaudited)
March 31, 2015
Assets Cash and cash equivalents
$ 33,559 $ 14,026 Short-term investments
1,242
23,906 Accounts receivable, net
12,626 11,845 Inventories
14,071 16,205 Prepaid expenses and other current assets
2,519 3,285 Land held-for-sale
— 264 Total
current assets
64,017 69,531 Property and equipment,
net
4,291 3,603 Intangible assets, net
21,693 25,942
Other non-current assets
108 258 Total assets
$ 90,109 $ 99,334
Liabilities and
Stockholders’ Equity Accounts payable
$ 7,288 $
4,011 Accrued expenses
5,937 5,576 Accrued restructuring
1,092 1,161 Contingent consideration payable
714
1,184 Deferred revenue
1,199 2,415 Total current
liabilities
16,230 14,347 Deferred revenue non-current
1,154 751 Deferred income tax liability
75 46 Accrued
restructuring non-current
827 1,642 Contingent consideration
payable non-current
— 400 Other non-current liabilities
333 409 Total liabilities
18,619 17,595 Total
stockholders’ equity
71,490 81,739 Total liabilities
and stockholders’ equity
$ 90,109 $ 99,334
Westell Technologies, Inc.
Condensed Consolidated Statement of
Cash Flows
(Amounts in thousands)
(Unaudited)
Nine months ended December 31, 2015
2014
Cash flows from operating activities: Net income
(loss)
$ (11,136 ) $ (45,902 ) Reconciliation
of net loss to net cash used in operating activities: Depreciation
and amortization
5,335 5,599 Goodwill impairment
—
31,997 Stock-based compensation
974 1,628 Restructuring
17 55 Deferred taxes
29 — Exchange rate loss
17 8 Changes in assets and liabilities: Accounts receivable
(791 ) 8,699 Inventory
2,134 1,147 Accounts
payable and accrued expenses
2,562 (6,058 ) Deferred revenue
(813 ) (1,270 ) Other
916 (634 ) Net
cash provided by (used in) operating activities
(756
) (4,731 )
Cash flows from investing activities: Net
maturity (purchase) of short-term investments and debt securities
22,664 (9,638 ) Acquisitions, net of cash acquired
—
(304 ) Proceeds from sale of land
264 — Purchases of
property and equipment, net
(1,776 ) (1,773 ) Net
cash provided by (used in) investing activities
21,152
(11,715 )
Cash flows from financing activities:
Purchase of treasury stock
(87 ) (692 ) Proceeds from
stock options exercised
— 155 Payment of contingent
consideration
(770 ) (1,104 ) Net cash provided by
(used in) financing activities
(857 ) (1,641 )
(Gain) loss of exchange rate changes on cash (6
) (7 )
Net increase (decrease) in cash and cash
equivalents 19,533 (18,094 )
Cash and cash
equivalents, beginning of period 14,026 35,793
Cash and cash equivalents, end of period $
33,559 $ 17,699
Westell Technologies, Inc.
Segment Statement of Operations
(Amounts in thousands)
(Unaudited)
Sequential
Quarter Comparison
Three months ended December 31, 2015
Three Months Ended September 30, 2015
IBW CSG
Total IBW CSG Total Revenue
$
8,680 $ 11,535 $ 20,215 $ 10,819
$ 14,695 $ 25,514 Cost of revenue
5,361 6,891
12,252 6,272 9,011 15,283
Gross profit
3,319 4,644 7,963 4,547 5,684
10,231 Gross margin
38.2 % 40.3 %
39.4 % 42.0 % 38.7 % 40.1 % Research and development
2,701 2,192 4,893 2,775
1,850 4,625 Segment profit (loss)
$
618 $ 2,452 $
3,070 $ 1,772 $ 3,834 $ 5,606
Year-over-Year
Quarter Comparison
Three months ended December 31, 2015
Three months ended December 31, 2014
IBW CSG
Total IBW CSG Total Revenue
$
8,680 $ 11,535 $ 20,215 $ 5,414
$ 8,629 $ 14,043 Cost of revenue
5,361 6,891
12,252 3,504 6,144 9,648
Gross profit
3,319 4,644 7,963 1,910 2,485
4,395 Gross margin
38.2 % 40.3 %
39.4 % 35.3 % 28.8 % 31.3 % Research and development
2,701 2,192 4,893 2,342
2,011 4,353 Segment profit (loss)
$
618 $ 2,452 $
3,070 $ (432 ) $ 474 $ 42
Year-to-Date
Comparison
Nine months ended December 31, 2015
Nine months ended December 31, 2014
IBW CSG
Total IBW CSG Total Revenue
$
28,569 $ 38,730 $ 67,299 $
30,632 $ 34,882 $ 65,514 Cost of revenue
16,702
23,974 40,676 18,543 24,827
43,370 Gross profit
11,867 14,756
26,623 12,089 10,055 22,144 Gross margin
41.5
% 38.1 % 39.6 % 39.5 % 28.8 %
33.8 % Research and development
8,638 5,966
14,604 6,640 6,488 13,128
Segment profit (loss)
$ 3,229 $
8,790 $ 12,019 $ 5,449 $
3,567 $ 9,016
Westell Technologies, Inc.
Reconciliation of GAAP to non-GAAP
Financial Measures
(Amounts in thousands, except per share
amounts)
(Unaudited)
Three months ended Nine months
ended Dec. 31, Sept. 30, Dec. 31,
Dec.
31, Dec. 31,
2015 2015 2014
2015 2014 GAAP
net income (loss)
$ (4,797 ) $ (2,473 ) $
(27,540 )
$ (11,136 ) $ (45,902 ) Adjustments:
Inventory fair value step-up (1)
— — 79
— 540
Deferred revenue adjustment (1)
73 73 64
218 322
Goodwill impairment (2)
— — 20,547
— 31,997
Amortization of intangibles (3)
1,418 1,432 1,562
4,249 4,857 Restructuring, separation, and transition (4)
— 59 —
223 55 Stock-based compensation (5)
264
253 514
974 1,628 (Income) loss from discontinued operations
(6)
— — —
(272 ) —
Total adjustments
1,755 1,817 22,766
5,392 39,399 Non-GAAP net income (loss)
$ (3,042 ) $ (656 ) $ (4,774 )
$
(5,744 ) $ (6,503 ) GAAP net income (loss) per common
share: Basic
$ (0.08 ) $ (0.04 ) $ (0.46 )
$ (0.18 ) $ (0.77 ) Diluted
$
(0.08 ) $ (0.04 ) $ (0.46 )
$ (0.18
) $ (0.77 ) Non-GAAP net income (loss) per common share:
Basic
$ (0.05 ) $ (0.01 ) $ (0.08 )
$
(0.09 ) $ (0.11 ) Diluted
$ (0.05
) $ (0.01 ) $ (0.08 )
$ (0.09 ) $ (0.11
) Average number of common shares outstanding: Basic
60,810
60,783 60,016
60,765 59,885 Diluted
60,810 60,783
60,016
60,765 59,885
Three months ended December
31, 2015 Three Months Ended September 30, 2015
Revenue Gross Profit Gross
Margin Revenue Gross Profit Gross Margin GAAP -
Consolidated
$ 20,215 $ 7,963
39.4 % $ 25,514 $ 10,231 40.1 % Deferred revenue
adjustment (1)
73 73 73 73 Stock-based compensation
(5)
— 13 — 14 Non-GAAP -
Consolidated
$ 20,288 $ 8,049
39.7 % $ 25,587 $ 10,318 40.3 %
Nine months ended December 31, 2015 Nine
Months Ended December 31, 2014
Revenue Gross
Profit Gross Margin Revenue Gross Profit
Gross Margin GAAP - Consolidated
$ 67,299
$ 26,623 39.6 % $ 65,514 $ 22,144 33.8
% Inventory fair value step-up (1)
—
—
—
540 Deferred revenue adjustment (1)
218 218 322 322
Stock-based compensation (5)
— 24 —
65
Non-GAAP - Consolidated
$ 67,517
$ 26,865 39.8 % $
65,836
$
23,071
35.0
%
Three months ended Nine Months Ended
December 31, September 30, December 31,
December 31, December 31,
2015 2015 2014
2015 2014 GAAP operating expenses
$ 12,838 $
12,663 $ 31,978
$ 38,168 $ 68,232 Adjustments:
Goodwill impairment (2)
— — (20,547 )
— (31,997 )
Amortization of intangibles (3)
(1,418 ) (1,432 )
(1,562 )
(4,249 ) (4,857 ) Restructuring, separation,
and transition (4)
— (59 ) —
(223 ) (55 )
Stock-based compensation (5)
(251 ) (239 ) (492 )
(950 ) (1,563 ) Total adjustments
(1,669 ) (1,730 )
(22,601 )
(5,422 ) (38,472 ) Non-GAAP operating
expenses
$ 11,169 $ 10,933 $ 9,377
$ 32,746 $ 29,760
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 the non-GAAP financial information provides meaningful
supplemental information to investors. Management also believes the
non-GAAP financial information reflects the Company's core ongoing
operating performance and facilitates comparisons 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) The Company recorded a non-cash charge
during the second and third quarters of fiscal year 2015 to record
the impairment of the full carrying value of the Company's goodwill
related to the Kentrox and CSI acquisitions, respectively. (3)
Amortization of intangibles is a non-cash expense arising from the
acquisition of intangible assets. (4) Restructuring expenses are
not directly related to the ongoing performance of our fundamental
business operations. This adjustment also includes severance
benefits related to the departure of certain former executives. (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/20160203006499/en/
Westell Technologies, Inc.Tom MinichielloChief Financial
Officer+1-630-375-4740tminichiello@westell.com
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