Year-over-year revenue grew 12% to $20.9
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 fourth quarter ended March 31, 2016
(4Q16). Management will host a conference call to discuss financial
and business results tomorrow, Thursday, May 19, 2016 at 9:30
AM Eastern Time (details below).
Consolidated revenue for 4Q16 was $20.9 million, up 12%
year-over-year and 3% on a sequential quarter basis, and consisted
of $5.8 million from the In-Building Wireless (IBW) segment and
$15.1 million from the Communication Solutions Group (CSG) segment.
Consolidated revenue for fiscal year 2016 (FY16) grew 5% to $88.2
million. More significantly, gross margin increased year-over-year
from 31.9% in FY15 to 39.1% in FY16.
“CSG delivered strong 4Q16 results, with segment revenue up 31%
on both a year-over-year and sequential quarter basis, led by solid
performances from our Intelligent Site Management (ISM) and Outside
Plant (OSP) product areas. While IBW was affected by the
integration of our Distributed Antennas System (DAS) Conditioner
products into larger network elements, we anticipate future IBW
growth from our new ClearLink DAS and from enhancements to our
Repeater product line,” said Tom Gruenwald, Chairman, CEO, and
President of Westell Technologies.
“FY16 was a year of powerful change for Westell, during which we
successfully launched our multi-phase ‘fix-build-expand’ turnaround
plan. Under new leadership, we gained positive momentum in
transforming several key areas of the business, most notably a
significant upgrade of our sales organization, a more effective
supply chain, and the establishment of a CTO (Chief Technology
Office) function. While we face headwinds with the decline of some
of our late-lifecycle products, we are firmly focused on returning
the Company to profitability through continued scrutiny of expenses
and structure, and the introduction of new products,” Gruenwald
said.
Total cash and short-term investments were $29.7 million at
March 31, 2016, compared to $34.8 million at December 31,
2015. The use of cash increased when compared to each of the three
previous quarters primarily due to a revenue pattern weighted more
towards the latter part of the quarter, resulting in a higher
customer receivable balance at March 31, 2016.
4Q16 Performance
4Q16 3Q16 4Q15 4Q16 4Q16 3 months ended 3 months ended 3
months ended vs. vs. 03/31/16 12/31/15 03/31/15 3Q16 4Q15
Consolidated Revenue $20.9M $20.2M $18.6M +3% +12% Gross Margin
37.8% 39.4% 25.1% -1.6% +12.7% Net Income (Loss) ($5.1M) ($4.8M)
($13.0M) ($0.3M) $7.9M Earnings (Loss) Per Share ($0.08) ($0.08)
($0.22) $— $0.14 Non-GAAP Earnings (Loss) Per Share (1) ($0.04)
($0.05) ($0.09) $0.01 $0.05
(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.
FY16 Performance
FY16 FY15 FY16 12 months ended 12 months ended vs. 03/31/16
03/31/15
FY15 Consolidated Revenue $88.2M $84.1M +5% Gross Margin 39.1%
31.9% +7.2% Net Income (Loss) ($16.2M) ($58.9M) $42.7M Earnings
(Loss) Per Share ($0.27) ($0.98) $0.71 Non-GAAP Earnings (Loss) Per
Share (1) ($0.14) ($0.20) $0.06
(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.
In-Building Wireless (IBW)
Segment
IBW’s 4Q16 revenue performance year-over-year and on a
sequential quarter basis was largely indicative of a market
shifting away from stand-alone DAS conditioners, as the function
served by these devices are increasingly integrated into larger
network elements. IBW’s 4Q16 gross margin improvement compared to
4Q15 was primarily due to lower excess and obsolete inventory
costs, and decrease compared to 3Q16 was principally a result of
the change in segment revenue.
4Q16 3Q16
4Q15
4Q16 4Q16 3 months ended
3 months ended 3 months ended vs. vs. 03/31/16
12/31/15
03/31/15 3Q16
4Q15 IBW Segment Revenue
$5.8M $8.7M
$7.1M -33%
-18% IBW Segment Gross Margin
35.6% 38.2%
23.0% -2.6%
+12.6% IBW Segment R&D
Expense $2.4M
$2.7M $2.3M
($0.3M) $0.1M IBW
Segment Profit (Loss) ($0.3M)
$0.6M ($0.7M)
($0.9M)
$0.4M
Communication Solutions Group (CSG)
Segment
CSG’s 4Q16 year-over-year revenue growth was due to increased
ISM revenue and significantly higher OSP revenue, while the same
growth level on a sequential quarter basis was due to the
significantly higher OSP revenue and increased sales of Tower
Mounted Amplifiers. OSP achieved its highest quarterly revenue
level since the June 2013 quarter, driven predominately by sales of
Integrated Cabinets. CSG’s 4Q16 gross margin improvement compared
to 4Q15 was primarily due to lower excess and obsolete inventory
costs, and decrease compared to 3Q16 was mainly due to a less
favorable mix.
4Q16 3Q16
4Q15
4Q16 4Q16 3 months ended
3 months ended 3 months ended vs. vs. 03/31/16
12/31/15
03/31/15 3Q16
4Q15 CSG Segment Revenue
$15.1M $11.5M
$11.5M +31%
+31% CSG Segment Gross Margin
38.6% 40.3%
26.4%
-1.7% +12.2% CSG Segment
R&D Expense $2.3M
$2.2M $1.9M
$0.1M $0.4M
CSG Segment Profit (Loss) $3.5M
$2.5M $1.1M
$1.0M
$2.4M
Conference Call
Information
Management will discuss financial and business results during
the quarterly conference call on Thursday, May 19, 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 May 19 by dialing
888-206-4073 no later than 9:15 AM Eastern Time and providing the
operator confirmation number 41589143.
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
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 Twelve months ended
March 31,
December 31,
March 31,
March 31,
March 31,
2016
2015
2015
2016 2015 Revenue
$ 20,904 $ 20,215 $
18,613
$ 88,203 $ 84,127 Gross profit
7,893
7,963 4,666
34,516 26,810 Gross margin
37.8 %
39.4 % 25.1 %
39.1 % 31.9 % Operating expenses:
Research & development
4,713 4,893 4,220
19,317
17,348 Sales & marketing
4,608 3,900 3,343
15,817
12,407 General & administrative
1,747 2,627 5,547
9,836 14,678 Intangibles amortization
1,305 1,418
1,520
5,554 6,377 Restructuring
731 (1) — 3,188 (2)
748 (1) 3,243 (2) Goodwill impairment (3)
— —
—
— 31,997 Total operating
expenses
13,104 12,838 17,818
51,272 86,050 Operating income (loss) from
continuing operations
(5,211 ) (4,875 ) (13,152 )
(16,756 ) (59,240 ) Other income (expense), net
107 85 (18 )
169 (2 ) Income
(loss) before income taxes and discontinued operations
(5,104 ) (4,790 ) (13,170 )
(16,587 )
(59,242 ) Income tax benefit (expense)
27 (7 ) 31
102 201 Net income (loss) from
continuing operations
(5,077 ) (4,797 ) (13,139 )
(16,485 ) (59,041 ) Income (loss) from discontinued
operations, net of income tax (4)
1 — 139
273 139 Net income (loss)
$
(5,076 ) $ (4,797 ) $ (13,000 )
$
(16,212 ) $ (58,902 ) Basic and diluted net income
(loss) per share: Basic and diluted net income (loss) from
continuing operations
$ (0.08 ) $ (0.08 ) $
(0.22 )
$ (0.27 ) $ (0.98 ) Basic and diluted
net income (loss) from discontinued operations
— —
—
— — Basic and diluted net
income (loss)
$ (0.08 ) $ (0.08 ) $ (0.22 )
$ (0.27 ) $ (0.98 ) Weighted-average number of
shares outstanding: Basic and diluted
60,847 60,810 60,286
60,786 59,985 (1) The Company recorded restructuring
expense primarily relating to severance costs for terminated
employees. (2) The Company recorded restructuring expense relating
to severance costs for terminated employees and abandonment of
excess office space at its headquarters. (3) The Company recorded a
non-cash charge of $32.0 million to record an impairment of the
full carrying amount of goodwill. (4) 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 Sheets
(Amounts in thousands)
Assets: March 31, 2016 March 31,
2015
(Unaudited) Cash and cash equivalents
$
19,169 $ 14,026 Short-term investments
10,555 23,906
Accounts receivable, net
16,361 11,845 Inventories
13,498 16,205 Prepaid expenses and other current assets
1,900 3,285 Land held-for-sale
— 264 Total current
assets
61,483 69,531 Property and equipment, net
3,977 3,603 Intangible assets, net
20,388 25,942
Other non-current assets
183 258 Total assets
$
86,031 $ 99,334
Liabilities and Stockholders’ Equity:
Accounts payable
$ 7,856 $ 4,011 Accrued expenses
5,932 5,576 Accrued restructuring
1,537 1,161
Contingent consideration
311 1,184 Deferred revenue
1,601 2,415 Total current liabilities
17,237 14,347
Deferred revenue non-current
1,236 751 Net deferred income
tax liability
10 46 Accrued restructuring non-current
550 1,642 Contingent consideration non-current
— 400
Other non-current liabilities
314 409 Total liabilities
19,347 17,595 Total stockholders’ equity
66,684
81,739 Total liabilities and stockholders’ equity
$
86,031 $ 99,334
Westell Technologies, Inc.
Condensed Consolidated Statement of Cash Flows
(Amounts in thousands)
Twelve Months Ended March 31,
Cash flows from operating
activities:
2016 (Unaudited)
2015
Net income (loss)
$ (16,212 ) $ (58,902 )
Reconciliation of net income to net cash provided by (used in)
operating activities: Depreciation and amortization
7,098
7,416 Goodwill impairment
— 31,997 Stock-based compensation
1,265 2,605 Restructuring
748 3,243 Deferred taxes
(36 ) (127 ) Impairment loss or loss (gain) on sale
of fixed assets
14 117 Exchange rate loss (gain)
(38
) 23 Changes in assets and liabilities: Accounts receivable
(4,476 ) 3,986 Inventories
2,707 8,186
Accounts payable and accrued expenses
2,192 (6,912 ) Other
1,131 (919 ) Net cash provided by (used in) operating
activities
(5,607 ) (9,287 )
Cash flows from
investing activities: Net purchases of short-term investments
and debt securities
13,351 (8,322 ) Acquisitions, net of
cash acquired
— (304 ) Proceeds from sale of land
264
— Purchases of property and equipment
(1,932 ) (2,137
) Net cash provided by (used in) investing activities
11,683
(10,763 )
Cash flows from financing activities:
Payment of contingent consideration
(808 ) (1,104 )
Purchases of treasury stock
(108 ) (863 ) Proceeds
from stock options exercised
— 257 Net cash
provided by (used in) financing activities
(916 )
(1,710 )
Gain (loss) of exchange rate changes on cash
(17 ) (7 )
Net increase (decrease) in cash and
cash equivalents 5,143 (21,767 )
Cash and cash
equivalents, beginning of period 14,026 35,793
Cash and cash equivalents, end of period $
19,169 $ 14,026
Westell
Technologies, Inc. Segment Statement of Operations
(Amounts in thousands)
(Unaudited)
Sequential
Quarter Comparison
Three months ended March 31, 2016 Three Months
Ended December 31, 2015
IBW CSG
Total IBW CSG Total Revenue
$
5,838 $ 15,066 $ 20,904 $ 8,680
$ 11,535 $ 20,215 Cost of revenue
3,761 9,250
13,011 5,361 6,891 12,252
Gross profit
2,077 5,816 7,893 3,319 4,644
7,963 Gross margin
35.6 % 38.6 %
37.8 % 38.2 % 40.3 % 39.4 % Research &
development
2,421 2,292 4,713
2,701 2,192 4,893 Segment profit (loss)
$ (344 ) $ 3,524 $
3,180 $ 618 $ 2,452 $ 3,070
Year-over-Year
Quarter Comparison
Three months ended March 31, 2016 Three months
ended March 31, 2015
IBW CSG
Total IBW CSG Total Revenue
$
5,838 $ 15,066 $ 20,904 $ 7,082
$ 11,531 $ 18,613 Cost of revenue
3,761 9,250
13,011 5,456 8,491 13,947
Gross profit
2,077 5,816 7,893 1,626 3,040
4,666 Gross margin
35.6 % 38.6 %
37.8 % 23.0 % 26.4 % 25.1 % Research &
development
2,421 2,292 4,713
2,315 1,905 4,220 Segment profit (loss)
$ (344 ) $ 3,524 $
3,180 $ (689 ) $ 1,135 $ 446
Full Year
Comparison
Twelve months ended March 31, 2016 Twelve
months ended March 31, 2015
IBW CSG
Total IBW CSG Total Revenue
$
34,407 $ 53,796 $ 88,203 $
37,714 $ 46,413 $ 84,127 Cost of revenue
20,463
33,224 53,687 23,999 33,318
57,317 Gross profit
13,944 20,572
34,516 13,715 13,095 26,810 Gross margin
40.5
% 38.2 % 39.1 % 36.4 % 28.2 %
31.9 % Research & development
11,059 8,258
19,317 8,955 8,393 17,348
Segment profit (loss)
$ 2,885 $
12,314 $ 15,199 $ 4,760 $
4,702 $ 9,462
Westell Technologies,
Inc. Reconciliation of GAAP to non-GAAP Financial
Measures
(Amounts in thousands, except per share
amounts)
(Unaudited)
Three months ended Twelve months ended
March 31, December 31, March 31,
March
31, March 31,
2016 2015 2015
2016 2015
GAAP net income (loss)
$ (5,076 ) $ (4,797 ) $
(13,000 )
$ (16,212 ) $ (58,902 ) Adjustments:
Inventory fair value step-up (1)
— — 36
— 576
Deferred revenue adjustment (1)
63 73 64
281 386
Amortization of intangibles (2)
1,305 1,418 1,520
5,554 6,377 Restructuring, separation and transition (3)
799 — 4,989
1,022 5,044 Stock-based compensation (4)
291 264 977
1,265 2,605 Land impairment
— —
108
— 108 Goodwill impairment (5)
— — —
—
31,997 (Income) loss from discontinued operations (6)
(1 ) — (139 )
(273
) (139 ) Total adjustments
2,457
1,755 7,555
7,849
46,954 Non-GAAP net income (loss)
$
(2,619 ) $ (3,042 ) $ (5,445 )
$ (8,363
) $ (11,948 ) GAAP net income (loss) per common share: Basic
and diluted
$ (0.08 ) $ (0.08 ) $ (0.22 )
$ (0.27 ) $ (0.98 ) Non-GAAP net income (loss)
per common share: Basic and diluted
$ (0.04 )
$ (0.05 ) $ (0.09 )
$ (0.14 ) $ (0.20 )
Average number of common shares outstanding: Basic and diluted
60,847 60,810 60,286
60,786 59,985 Three
months ended Twelve months ended
March 31,
December 31,
March 31,
March 31, March 31,
2016 2015 2015
2016 2015 GAAP operating expenses
$
13,104
$
12,838
$
17,818
$
51,272
$
86,050
Adjustments: Amortization of intangibles (2)
(1,305 )
(1,418 ) (1,520 )
(5,554 ) (6,377 ) Restructuring,
separation and transition (3)
(799 ) — (4,989 )
(1,022 ) (5,044 ) Stock-based compensation (4)
(320 ) (251 ) (953 )
(1,270 ) (2,516 )
Land impairment
— — (108 )
— (108 ) Goodwill
impairment (5)
— — —
— (31,997 ) Total adjustments
(2,424 ) (1,669 ) (7,570 )
(7,846 ) (46,042 ) Non-GAAP operating
expense
$
10,680
$
11,169
$
10,248
$
43,426
$
40,008
Three months ended March 31, 2016 Three
months ended March 31, 2015
Revenue Gross
Profit Gross Margin Revenue Gross Profit
Gross Margin GAAP - consolidated
$ 20,904
$ 7,893 37.8 %
$
18,613
$
4,666
25.1 % Deferred revenue adjustment (1)
63 63 64 64
Inventory fair value step-up (1)
— — — 36 Stock-based
compensation (4)
— (29 )
— 24 Non-GAAP - consolidated
$
20,967
$
7,927
37.8 %
$
18,677
$
4,790
25.6 %
Twelve months ended March 31,
2016 Twelve months ended March 31, 2015
Revenue
Gross Profit Gross Margin Revenue
Gross Profit Gross Margin GAAP - consolidated
$ 88,203 $ 34,516 39.1 %
$
84,127
$
26,810
31.9 % Deferred revenue adjustment (1)
281 281 386
386 Inventory fair value step-up (1)
— — — 576
Stock-based compensation (4)
—
(5 ) — 89 Non-GAAP -
consolidated
$
88,484
$
34,792
39.3 %
$
84,513
$
27,861
33.0 %
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 on March 1, 2014, the Company
purchased Kentrox and CSI. 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 in the periods presented. (2)
Amortization of intangibles is a non-cash expense arising from the
acquisition of intangible assets. (3) 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. (4)
Stock-based compensation is a non-cash expense incurred in
accordance with share-based compensation accounting. (5) The
Company recorded a non-cash charge of $32.0 million during fiscal
2015 to record the impairment of the full carrying value of the
Company's goodwill. (6) Income from discontinued operations
resulted from the expiration of indemnity periods and release of
contingency reserves related to the sale of ConferencePlus.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160518006415/en/
Westell Technologies, Inc.Tom MinichielloChief Financial
Officer+1 (630) 375-4740tminichiello@westell.com
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