Westell Reports Fiscal 2019 First Quarter Results and Charts a Course for Future Growth

AURORA, Ill., Aug. 01, 2018 (GLOBE NEWSWIRE) —  Westell Technologies, Inc. (NASDAQ: WSTL), a leading provider of high-performance network infrastructure solutions, announced results for its fiscal 2019 first quarter ended June 30, 2018 (1Q19) and, under new CEO leadership, a new course for future growth.  Management will host a conference call to discuss 1Q19 results and plans for future growth tomorrow, Thursday, August 2, 2018, at 9:30 AM Eastern Time (details below).

Revenue was $13.0 million and comprised $3.6 million from the In-Building Wireless (IBW) segment, $5.7 million from the Intelligent Site Management (ISM) segment, and $3.7 million from the Communication Network Solutions (CNS) segment.

3 months ended
3 months ended
 + increase /
– decrease
Revenue $13.0M $11.1M +$1.9M
Gross Margin  45.5%  45.5%  —%
Operating Margin  -1.2%  -8.5%  +7.3%
Net Income (Loss) ($0.0M) ($0.9M) +$0.9M
Earnings (Loss) Per Share ($0.00) ($0.06) +$0.06 
Non-GAAP Operating Margin (1)  +8.6%  +3.5%  +5.1%
Non-GAAP Net Income (1) $1.2M $0.4M +$0.8M
Non-GAAP Earnings Per Share (1) $0.08  $0.03  +$0.05 
Non-GAAP Adjusted EBITDA (1) $1.3M $0.6M +$0.7M
Ending Cash and ST Investments $25.8M $27.7M -$1.9M
(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.

“While sequential quarter revenue rebounded, largely on stronger ISM results, our goal and primary focus is to achieve meaningful growth across all three business segments,” said Stephen John, who joined Westell as President and Chief Executive Officer in May 2018.  “With the changes taking place in the industry, including network densification, deeper fiber access, in-building wireless, and the migration to 5G, our customers require more efficient infrastructure investments, especially at the edge of the network where Westell has built a solid reputation for high-quality solutions.  To capitalize on these opportunities, we are charting a course for future growth that we expect to include acquisitions and partnerships, complemented by organic growth through go-to-market strategies, expansion into adjacent markets, and innovation.  Our primary focus is to grow the business and drive increased shareholder value.”

In-Building Wireless (IBW) Segment

3 months ended
3 months ended
 + increase /
– decrease
IBW Segment Revenue $3.6M $3.2M +$0.4M
IBW Segment Gross Margin 46.7% 48.0% -1.3%
IBW Segment R&D Expense $0.5M $0.5M $—M
IBW Segment Profit $1.1M $1.0M +$0.1M

IBW’s revenue increase was driven primarily by higher sales of public safety repeaters.  IBW’s gross margin decrease was due primarily to mix.  IBW’s segment profit increase was driven by the higher revenue.

Intelligent Site Management (ISM) Segment

3 months ended
3 months ended
 + increase /
– decrease
ISM Segment Revenue $5.7M $4.7M +$1.0M
ISM Segment Gross Margin 51.3% 52.3% -1.0%
ISM Segment R&D Expense $0.6M $0.6M $—M
ISM Segment Profit $2.4M $1.8M +$0.6M

ISM’s revenue increase was driven by higher sales of remote units and software licenses, partly offset by lower services revenue.  ISM’s gross margin decreased slightly due primarily to mix.  ISM’s segment profit increase was driven by the higher revenue.

Communication Network Solutions (CNS) Segment

3 months ended
3 months ended
 + increase /
– decrease
CNS Segment Revenue $3.7M $3.2M +$0.5M
CNS Segment Gross Margin 35.5% 33.2% +2.3%
CNS Segment R&D Expense $0.3M $0.2M -$0.1M
CNS Segment Profit $1.0M $0.8M +$0.2M

CNS’s revenue increase was driven primarily by higher sales of power distribution products.  CNS’s gross margin increase was driven primarily by a more favorable mix and lower costs.  CNS’s segment profit increase was driven by the higher revenue and improved gross margin.

Conference Call Information
Management will discuss financial and business results and plans for future growth during the quarterly conference call on Thursday, August 2, 2018, 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 August 2, 2018, by calling (877) 875-0056 no later than 8:15 AM Central Time (9:15 AM Eastern Time) and providing the operator confirmation number 47253729.

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: https://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 Technologies
Westell 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 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, 2018, 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)
    Three months ended
    June 30,   March 31,   June 30,
    2018   2018   2017
Revenue   $ 13,037     $ 11,096     $ 16,574  
Cost of revenue   7,102     6,047     9,807  
Gross profit   5,935     5,049     6,767  
Gross margin   45.5 %   45.5 %   40.8 %
Operating expenses:            
R&D   1,432     1,352     2,276  
Sales and marketing   2,137     2,012     2,336  
General and administrative   1,534     1,580     1,711  
Intangible amortization   990     1,047     1,047  
Total operating expenses   6,093     5,991     7,370  
Operating profit (loss)   (158 )   (942 )   (603 )
Other income, net   119     89     43  
Income (loss) before income taxes   (39 )   (853 )   (560 )
Income tax benefit (expense)       (63 )   (12 )
Net income (loss)   $ (39 )   $ (916 )   $ (572 )
Net income (loss) per share:            
Basic net income (loss)   $     $ (0.06 )   $ (0.04 )
Diluted net income (loss)   $     $ (0.06 )   $ (0.04 )
Weighted-average number of common shares outstanding:            
Basic   15,632     15,541     15,481  
Diluted   15,632     15,541     15,481  



Westell Technologies, Inc.
Condensed Consolidated Balance Sheet
(Amounts in thousands)
    June 30, 2018 (Unaudited)   March 31, 2018
Cash and cash equivalents   $ 24,497     $ 24,963  
Short-term investments   1,346     2,779  
Accounts receivable, net   10,571     8,872  
Inventories   9,727     9,222  
Prepaid expenses and other current assets   1,283     816  
Total current assets   47,424     46,652  
Land, property and equipment, net   1,498     1,601  
Intangible assets, net   10,445     11,435  
Tax receivable, non-current   697     697  
Other non-current assets   74     74  
Total assets   $ 60,138     $ 60,459  
Liabilities and Stockholders’ Equity        
Accounts payable   $ 2,256     $ 1,903  
Accrued expenses   3,053     3,328  
Accrued restructuring   14     63  
Deferred revenue   1,516     1,790  
Total current liabilities   6,839     7,084  
Deferred revenue non-current   599     846  
Other non-current liabilities   229     234  
Total liabilities   7,667     8,164  
Total stockholders’ equity   52,471     52,295  
Total liabilities and stockholders’ equity   $ 60,138     $ 60,459  



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Westell Technologies, Inc.
Condensed Consolidated Statement of Cash Flows
(Amounts in thousands)
    Three months
 June 30,
    2018   2017
Cash flows from operating activities:    
Net income (loss)   $ (39 )   $ (572 )
Reconciliation of net income (loss) to net cash used in operating activities:        
Depreciation and amortization   1,142     1,277  
Stock-based compensation   291     330  
Deferred taxes       7  
Exchange rate loss (gain)