Westell Technologies, Inc. (NASDAQ: WSTL), a leading provider of
high-performance infrastructure solutions, today announced results
for its fiscal 2020 first quarter ended June 30, 2019
(1Q20). Management will host a conference call to discuss
financial and business results tomorrow, Thursday, August 8,
2019, at 9:30 AM Eastern Time (details below).
Revenue was $9.0 million and comprised $2.9
million from the In-Building Wireless (IBW) segment, $3.1 million
from the Intelligent Site Management (ISM) segment, and $3.0
million from the Communication Network Solutions (CNS) segment.
“In 1Q20, an increase in sequential-quarter IBW
revenue was more than offset by lower ISM and CNS revenue.
Within IBW, the sequential growth included increased sales of all
products lines, including new public safety repeaters, while ISM
and CNS were affected by lower sales of remote units and legacy
products, respectively. Within CNS, our power distribution
product sales were strong again and we continued to generate
revenue from our new fiber access product line. In 1Q20, we
also brought our expense levels down significantly compared to the
prior quarter,” said Stephen John, Westell’s President and
CEO. “We are strategically focused on network densification
at the edge, a key enabler for future 5G connectivity, with our
product development, sales, and marketing activities concentrated
on network edge solutions that solve for the increased capacity,
intelligence, and deployment simplification needs of our
customers.”
|
|
|
|
|
1Q203 months ended6/30/19 |
4Q193 months ended3/31/19 |
+ increase /- decrease |
Revenue |
$9.0M |
$9.7M |
-$0.7M |
Gross Margin |
36.1% |
37.6% |
-1.5% |
Operating Expenses (1) |
$5.6M |
$11.6M |
-$6.0M |
Net Income (Loss) (1) |
($2.2M) |
($8.0M) |
+$5.8M |
Earnings (Loss) Per Share (1) |
($0.14) |
($0.52) |
+$0.38 |
Non-GAAP Operating Expenses (2) |
$5.0M |
$5.9M |
-$0.9M |
Non-GAAP Net Income (Loss) (2) |
($1.6M) |
($2.1M) |
+$0.5M |
Non-GAAP Earnings (Loss) Per Share (2) |
($0.10) |
($0.13) |
+$0.03 |
Ending Cash |
$24.1M |
$25.5M |
-$1.4M |
(1) 4Q19 includes a $4.7M non-recurring accounting charge for
the impairment of IBW intangible assets. |
(2) Please refer to the schedule at the end of this press
release for a complete GAAP to non-GAAP reconciliation and other
information related to non-GAAP financial measures. |
|
In-Building Wireless (IBW)
Segment
IBW’s revenue increase was driven by higher
sales across all product lines - public safety and commercial
repeaters, RF system components, and DAS conditioners. IBW’s
gross margin increase was driven by higher revenue and a more
favorable mix, partly offset by higher excess and obsolete
inventory costs.
|
|
|
|
($ in thousands) |
1Q20 3 months ended6/30/19 |
4Q19 3 months ended3/31/19 |
+ increase / - decrease |
IBW Segment Revenue |
$2,923 |
$2,477 |
+$446 |
IBW Segment Gross Margin |
33.3% |
31.4% |
+1.9% |
IBW Segment R&D Expense |
$399 |
$684 |
-$285 |
IBW Segment Profit |
$573 |
$95 |
+$478 |
|
|
|
|
Intelligent Site Management (ISM)
Segment
ISM’s revenue decrease was due to lower sales of
remote units, primarily to our large domestic service provider
customer. ISM’s gross margin increase was driven by a more
favorable mix and lower excess and obsolete inventory costs.
|
|
|
|
($ in thousands) |
1Q20 3 months ended6/30/19 |
4Q19 3 months ended3/31/19 |
+ increase / - decrease |
ISM Segment Revenue |
$3,095 |
$3,757 |
-$662 |
ISM Segment Gross Margin |
51.0% |
47.1% |
+3.9% |
ISM Segment R&D Expense |
$701 |
$693 |
+$8 |
ISM Segment Profit |
$878 |
$1,078 |
-$200 |
|
|
|
|
Communication Network Solutions (CNS)
Segment
CNS’s revenue decrease was due to lower sales of
network connectivity panels and late-lifecycle product lines such
as tower mounted amplifiers and T1 network interface units, partly
offset by higher sales of power distribution products and
integrated cabinets. CNS’s gross margin decrease was due to
the lower revenue, a less favorable mix, and higher excess and
obsolete inventory costs.
|
|
|
|
($ in thousands) |
1Q20 3 months ended6/30/19 |
4Q19 3 months ended3/31/19 |
+ increase / - decrease |
CNS Segment Revenue |
$2,984 |
$3,471 |
-$487 |
CNS Segment Gross Margin |
23.3% |
31.6% |
-8.3% |
CNS Segment R&D Expense |
$456 |
$402 |
+$54 |
CNS Segment Profit |
$239 |
$694 |
-$455 |
|
|
|
|
Conference Call
InformationManagement will discuss financial and business
results during the quarterly conference call on Thursday,
August 8, 2019, at 9:30 AM Eastern Time. Investors may
quickly register online in advance of the call at
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 August 8, 2019, by calling
(888) 206-4065 no later than 8:15 AM Central Time
(9:15 AM Eastern Time) and providing the operator confirmation
number 48850130.
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:
ir.westell.com. A digital recording of the entire conference
will be available for replay on Westell's website by approximately
12:00 PM Eastern Time following the conclusion of the
conference.
About Westell
TechnologiesWestell is a leading provider of
high-performance network infrastructure solutions focused on
innovation and differentiation at the edge of communication
networks where end users connect. The Company's portfolio of
products and solutions enable service providers and network
operators to improve 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 1995Certain 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, 2019, 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.
|
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, |
|
|
2019 |
|
2019 |
|
2018 |
Revenue |
|
$ |
9,002 |
|
|
$ |
9,705 |
|
|
$ |
13,037 |
|
Cost of revenue |
|
5,756 |
|
|
6,059 |
|
|
7,102 |
|
Gross profit |
|
3,246 |
|
|
3,646 |
|
|
5,935 |
|
Gross margin |
|
36.1 |
% |
|
37.6 |
% |
|
45.5 |
% |
Operating
expenses: |
|
|
|
|
|
|
Research & Development |
|
1,556 |
|
|
1,779 |
|
|
1,432 |
|
Sales and marketing |
|
2,332 |
|
|
2,330 |
|
|
2,137 |
|
General and administrative |
|
1,364 |
|
|
2,027 |
|
|
1,534 |
|
Intangible amortization |
|
308 |
|
|
783 |
|
|
990 |
|
Long-lived assets impairment |
|
— |
|
|
4,722 |
|
|
— |
|
Total operating expenses |
|
5,560 |
|
|
11,641 |
|
|
6,093 |
|
Operating profit (loss) |
|
(2,314 |
) |
|
(7,995 |
) |
|
(158 |
) |
Other income, net |
|
164 |
|
|
184 |
|
|
119 |
|
Income (loss) before income
taxes |
|
(2,150 |
) |
|
(7,811 |
) |
|
(39 |
) |
Income tax benefit (expense) |
|
(7 |
) |
|
(28 |
) |
|
— |
|
Net income (loss) |
|
(2,157 |
) |
|
(7,839 |
) |
|
(39 |
) |
Income (loss) from discontinued
operations (1) |
|
— |
|
|
(207 |
) |
|
— |
|
Net income (loss) |
|
$ |
(2,157 |
) |
|
$ |
(8,046 |
) |
|
$ |
(39 |
) |
|
|
|
|
|
|
|
Net income (loss) per share: |
|
|
|
|
|
|
Basic net income (loss) |
|
$ |
(0.14 |
) |
|
$ |
(0.52 |
) |
|
$ |
— |
|
Diluted net income (loss) |
|
$ |
(0.14 |
) |
|
$ |
(0.52 |
) |
|
$ |
— |
|
Weighted-average number of common
shares outstanding: |
|
|
|
|
|
|
Basic |
|
15,455 |
|
|
15,342 |
|
|
15,632 |
|
Diluted |
|
15,455 |
|
|
15,342 |
|
|
15,632 |
|
|
|
|
|
|
|
|
|
|
|
(1) During the quarter ended March 31, 2019, the Company
recorded indemnification expense related to probable loss
contingencies associated with a major customer contract related to
a business which was previously sold and therefore is presented as
discontinued operations. On July 24, 2019, the Company signed
a settlement agreement related to this matter. The amount to
be paid under the settlement agreement is fully covered by the
accrual.
|
Westell Technologies, Inc.Condensed
Consolidated Balance Sheet(Amounts in thousands) |
|
|
|
|
|
|
|
June 30, 2019(Unaudited) |
|
March 31, 2019 |
Assets |
|
|
|
|
Cash and cash equivalents |
|
$ |
24,077 |
|
|
$ |
25,457 |
|
Accounts receivable, net |
|
5,806 |
|
|
6,865 |
|
Inventories |
|
9,943 |
|
|
9,801 |
|
Prepaid expenses and other
current assets |
|
1,673 |
|
|
1,706 |
|
Total current assets |
|
41,499 |
|
|
43,829 |
|
Land, property and equipment,
net |
|
1,169 |
|
|
1,298 |
|
Intangible assets, net |
|
2,970 |
|
|
3,278 |
|
Right-of-use assets on operating
leases, net |
|
1,111 |
|
|
— |
|
Other non-current assets |
|
484 |
|
|
492 |
|
Total assets |
|
$ |
47,233 |
|
|
$ |
48,897 |
|
Liabilities and
Stockholders’ Equity |
|
|
|
|
Accounts payable |
|
$ |
2,250 |
|
|
$ |
2,313 |
|
Accrued expenses |
|
4,046 |
|
|
3,567 |
|
Deferred revenue |
|
950 |
|
|
1,217 |
|
Total current liabilities |
|
7,246 |
|
|
7,097 |
|
Deferred revenue non-current |
|
393 |
|
|
444 |
|
Other non-current
liabilities |
|
500 |
|
|
176 |
|
Total liabilities |
|
8,139 |
|
|
7,717 |
|
Total stockholders’ equity |
|
39,094 |
|
|
41,180 |
|
Total liabilities and stockholders’ equity |
|
$ |
47,233 |
|
|
$ |
48,897 |
|
|
|
|
|
|
|
|
|
|
|
Westell Technologies, Inc.Condensed
Consolidated Statement of Cash Flows(Amounts in
thousands)(Unaudited) |
|
|
|
|
|
|
Three
months ended June
30, |
|
|
|
2019 |
|
2018 |
|
Cash flows
from operating activities: |
|
|
|
Net income (loss) |
|
$ |
(2,157 |
) |
|
$ |
(39 |
) |
|
Reconciliation of net income (loss) to net cash provided by (used
in) operating activities: |
|
|
|
|
|
Depreciation and amortization |
|
451 |
|
|
1,142 |
|
|
Stock-based compensation |
|
244 |
|
|
291 |
|
|
Exchange rate loss (gain) |
|
(3 |
) |
|
10 |
|
|
Changes in assets and liabilities: |
|
|
|
|
|
Accounts receivable |
|
1,059 |
|
|
(1,705 |
) |
|
Inventory |
|
(142 |
) |
|
(505 |
) |
|
Accounts payable and accrued expenses |
|
740 |
|
|
24 |
|
|
Deferred revenue |
|
(318 |
) |
|
(192 |
) |
|
Prepaid expenses and other current assets |
|
33 |
|
|
(467 |
) |
|
Other assets |
|
(1,103 |
) |
|
— |
|
|
Net cash provided by (used in) operating activities |
|
(1,196 |
) |
|
(1,441 |
) |
|
Cash flows from
investing activities: |
|
|
|
|
|
Net maturity (purchase) of short-term investments |
|
— |
|
|
1,433 |
|
|
Purchases of property and equipment, net |
|
(14 |
) |
|
(50 |
) |
|
Net cash provided by (used in) investing activities |
|
(14 |
) |
|
1,383 |
|
|
Cash flows from
financing activities: |
|
|
|
|
|
Purchase of treasury stock |
|
(173 |
) |
|
(405 |
) |
|
Net cash provided by (used in) financing activities |
|
(173 |
) |
|
(405 |
) |
|
Gain (loss) of
exchange rate changes on cash |
|
3 |
|
|
(3 |
) |
|
Net increase
(decrease) in cash and cash equivalents |
|
(1,380 |
) |
|
(466 |
) |
|
Cash and cash
equivalents, beginning of period |
|
25,457 |
|
|
24,963 |
|
(1) |
Cash and cash
equivalents, end of period |
|
$ |
24,077 |
|
|
$ |
24,497 |
|
(1) |
|
|
|
|
|
|
|
|
|
|
(1) As of March 31, 2018, and June 30, 2018, the Company has
$2.8 million and $1.3 million, respectively, of short-term
investments in addition to cash and cash equivalents.
|
Westell Technologies, Inc.Segment
Statement of Operations(Amounts in
thousands)(Unaudited) |
|
Sequential Quarter Comparison |
|
|
|
|
|
|
|
Three months ended June 30, 2019 |
|
Three months ended March 31, 2019 |
|
|
IBW |
|
ISM |
|
CNS |
|
Total |
|
IBW |
|
ISM |
|
CNS |
|
Total |
Total revenue |
|
$ |
2,923 |
|
|
$ |
3,095 |
|
|
$ |
2,984 |
|
|
$ |
9,002 |
|
|
$ |
2,477 |
|
|
$ |
3,757 |
|
|
$ |
3,471 |
|
|
$ |
9,705 |
|
Gross profit |
|
972 |
|
|
1,579 |
|
|
695 |
|
|
3,246 |
|
|
779 |
|
|
1,771 |
|
|
1,096 |
|
|
3,646 |
|
Gross margin |
|
33.3 |
% |
|
51.0 |
% |
|
23.3 |
% |
|
36.1 |
% |
|
31.4 |
% |
|
47.1 |
% |
|
31.6 |
% |
|
37.6 |
% |
R&D expenses |
|
399 |
|
|
701 |
|
|
456 |
|
|
1,556 |
|
|
684 |
|
|
693 |
|
|
402 |
|
|
1,779 |
|
Segment profit |
|
$ |
573 |
|
|
$ |
878 |
|
|
$ |
239 |
|
|
$ |
1,690 |
|
|
$ |
95 |
|
|
$ |
1,078 |
|
|
$ |
694 |
|
|
$ |
1,867 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year-over-Year Quarter Comparison |
|
|
|
|
|
|
|
Three months ended June 30, 2019 |
|
Three months ended June 30, 2018 |
|
|
IBW |
|
ISM |
|
CNS |
|
Total |
|
IBW |
|
ISM |
|
CNS |
|
Total |
Total revenue |
|
$ |
2,923 |
|
|
$ |
3,095 |
|
|
$ |
2,984 |
|
|
$ |
9,002 |
|
|
$ |
3,557 |
|
|
$ |
5,744 |
|
|
$ |
3,736 |
|
|
$ |
13,037 |
|
Gross profit |
|
972 |
|
|
1,579 |
|
|
695 |
|
|
3,246 |
|
|
1,662 |
|
|
2,948 |
|
|
1,325 |
|
|
5,935 |
|
Gross margin |
|
33.3 |
% |
|
51.0 |
% |
|
23.3 |
% |
|
36.1 |
% |
|
46.7 |
% |
|
51.3 |
% |
|
35.5 |
% |
|
45.5 |
% |
R&D expenses |
|
399 |
|
|
701 |
|
|
456 |
|
|
1,556 |
|
|
522 |
|
|
569 |
|
|
341 |
|
|
1,432 |
|
Segment profit |
|
$ |
573 |
|
|
$ |
878 |
|
|
$ |
239 |
|
|
$ |
1,690 |
|
|
$ |
1,140 |
|
|
$ |
2,379 |
|
|
$ |
984 |
|
|
$ |
4,503 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, |
|
|
2019 |
|
2019 |
|
2018 |
GAAP consolidated operating expenses |
|
$ |
5,560 |
|
|
$ |
11,641 |
|
|
$ |
6,093 |
|
Adjustments: |
|
|
|
|
|
|
Stock-based compensation (1) |
|
(234 |
) |
|
(270 |
) |
|
(279 |
) |
Intangible assets impairment (2) |
|
— |
|
|
(4,722 |
) |
|
— |
|
Amortization of intangibles (3) |
|
(308 |
) |
|
(783 |
) |
|
(990 |
) |
Total adjustments |
|
(542 |
) |
|
(5,775 |
) |
|
(1,269 |
) |
Non-GAAP consolidated operating
expenses |
|
$ |
5,018 |
|
|
$ |
5,866 |
|
|
$ |
4,824 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
June 30, |
|
March 31, |
|
June 30, |
|
|
2019 |
|
2019 |
|
2018 |
GAAP consolidated net income (loss) |
|
$ |
(2,157 |
) |
|
$ |
(8,046 |
) |
|
$ |
(39 |
) |
Less: |
|
|
|
|
|
|
Income tax benefit (expense) |
|
(7 |
) |
|
(28 |
) |
|
— |
|
Other income, net |
|
164 |
|
|
184 |
|
|
119 |
|
Discontinued operations (4) |
|
— |
|
|
(207 |
) |
|
— |
|
GAAP consolidated operating
profit (loss) |
|
$ |
(2,314 |
) |
|
$ |
(7,995 |
) |
|
$ |
(158 |
) |
Adjustments: |
|
|
|
|
|
|
Stock-based compensation (1) |
|
244 |
|
|
282 |
|
|
291 |
|
Intangible assets impairment (2) |
|
— |
|
|
4,722 |
|
|
— |
|
Amortization of intangibles (3) |
|
308 |
|
|
783 |
|
|
990 |
|
Total adjustments |
|
552 |
|
|
5,787 |
|
|
1,281 |
|
Non-GAAP consolidated operating
profit (loss) |
|
$ |
(1,762 |
) |
|
$ |
(2,208 |
) |
|
$ |
1,123 |
|
Depreciation |
|
143 |
|
|
151 |
|
|
152 |
|
Non-GAAP consolidated Adjusted
EBITDA (5) |
|
$ |
(1,619 |
) |
|
$ |
(2,057 |
) |
|
$ |
1,275 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
June 30, |
|
March 31, |
|
June 30, |
|
|
2019 |
|
2019 |
|
2018 |
GAAP consolidated net income (loss) |
|
$ |
(2,157 |
) |
|
$ |
(8,046 |
) |
|
$ |
(39 |
) |
Adjustments: |
|
|
|
|
|
|
Stock-based compensation (1) |
|
244 |
|
|
282 |
|
|
291 |
|
Intangible assets impairment (2) |
|
— |
|
|
4,722 |
|
|
— |
|
Amortization of intangibles (3) |
|
308 |
|
|
783 |
|
|
990 |
|
Discontinued operations (4) |
|
— |
|
|
207 |
|
|
— |
|
Total adjustments |
|
552 |
|
|
5,994 |
|
|
1,281 |
|
Non-GAAP consolidated net income
(loss) |
|
$ |
(1,605 |
) |
|
$ |
(2,052 |
) |
|
$ |
1,242 |
|
GAAP consolidated net income
(loss) per common share: |
|
|
|
|
|
|
Diluted |
|
$ |
(0.14 |
) |
|
$ |
(0.52 |
) |
|
$ |
— |
|
Non-GAAP consolidated net income
(loss) per common share: |
|
|
|
|
|
|
Diluted |
|
$ |
(0.10 |
) |
|
$ |
(0.13 |
) |
|
$ |
0.08 |
|
Average number of common shares
outstanding: |
|
|
|
|
|
|
Diluted |
|
15,455 |
|
|
15,342 |
|
|
15,748 |
|
|
|
|
|
|
|
|
|
|
|
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.
Footnotes:
(1) Stock-based compensation is a non-cash
expense incurred in accordance with share-based compensation
accounting standards.(2) 4Q19 Non-recurring impairment
related to intangible assets associated with the IBW reporting
unit.(3) Amortization of intangibles is a non-cash expense
arising from previously acquired intangible assets.(4) The
Company recorded indemnification expense related to probable loss
contingencies associated with a major customer contract related to
a business which was previously sold and therefore is presented as
discontinued operations. On July 24, 2019, the Company signed
a settlement agreement related to this matter. The amount to
be paid under the settlement agreement is fully covered by the
accrual.(5) EBITDA is a non-GAAP measure that represents
Earnings Before Interest, Taxes, Depreciation, and
Amortization. The Company presents Adjusted EBITDA.
For additional information, contact:
Tom Minichiello Chief Financial Officer Westell Technologies,
Inc. +1 (630) 375 4740tminichiello@westell.com
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