Click here to close now.

SYS-CON MEDIA Authors: Pat Romanski, Jayaram Krishnaswamy, Elizabeth White, Carmen Gonzalez, Liz McMillan

News Feed Item

Westell Technologies reports first quarter revenue of $28 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 2015 first quarter ended June 30, 2014.

Consolidated revenue was $27.8 million, led by $14.1 million from the In-Building Wireless (IBW) segment, including record quarterly sales of distributed antenna systems (DAS) products.

“Due to strong and growing demand for DAS conditioning products, our IBW segment performed exceptionally well during the first fiscal quarter,” said Rick Gilbert, Chairman and CEO of Westell Technologies. “During the quarter, we announced the Universal DAS Interface Tray (UDIT) and have already obtained key customer approvals and generated meaningful revenue with this new product. While the intelligent site management business remains soft, our Communication Solutions Group (CSG) segment experienced positive momentum in several other areas, and CSG continues to see opportunities for further growth, especially in the wireless areas of the business.”

On a GAAP basis, the Company recorded a net loss in the quarter ended June 30, 2014 of $2.8 million or $0.05 per share, compared to net income of $4.6 million or $0.08 per share in the quarter ended March 31, 2014 which included non-cash tax accounting benefits of $9.0 million. On a non-GAAP basis, the Company recorded a net loss of $0.2 million or $0.00 per share, compared to a non-GAAP net loss of $1.3 million or $0.02 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 $46.8 million at June 30, 2014, compared to $51.4 million at March 31, 2014. Primary uses of cash during the quarter included payment of annual accrued expenses from fiscal year 2014 and higher accounts receivable as a result of the sequential quarterly revenue growth.

In-Building Wireless (IBW) Segment

IBW segment revenue was $14.1 million in the quarter ended June 30, 2014, up 72% from $8.2 million in the quarter ended March 31, 2014. The sequential revenue increase was driven by record quarterly sales of the DAS product lines, including record high revenues for passive DAS conditioners as well as strong revenue traction for the recently introduced active UDIT. Gross profit was $5.8 million and gross margin was 41.2%, compared to $2.6 million and 31.5% in the prior quarter. Gross profit and gross margin increased as a result of the higher revenue, which included the reporting of Cellular Specialties, Inc. (CSI) for the full quarter verses the prior quarter which included just one month (CSI was acquired on March 1, 2014). IBW R&D expenses were $2.2 million, compared to $0.8 million in the prior quarter. As a result, IBW segment profit was $3.6 million, compared to $1.8 million in the quarter ended March 31, 2014.

Communication Solutions Group (CSG) Segment

CSG segment revenue was $13.7 million in the quarter ended June 30, 2014, down 15% from $16.2 million in the quarter ended March 31, 2014. The sequential revenue decrease was driven primarily by lower sales of tower mounted amplifiers (TMAs), which were at record high revenues in the prior quarter. Gross profit was $3.9 million and gross margin was 28.2% compared to $5.5 million and 34.0% in the prior quarter. Gross profit and gross margin decreased as a result of the lower revenue and a less favorable mix. CSG R&D expenses were $2.3 million, compared to $2.7 million last quarter. As a result, CSG segment profit was $1.6 million, compared to $2.8 million in the quarter ended March 31, 2014.

Conference Call Information

Management will address financial and business results during its first quarter conference call on Thursday, July 31, 2014, at 9:30 AM Eastern Time. Participants may register for the call at http://www.conferenceplus.com/westell. After doing so, they will receive a dial-in number, a passcode, and a personal identification number (PIN) that automatically joins them to the audio conference. Those who do not wish to register may participate in the call by dialing +1 (888) 206-4065 no later than 9:15 AM Eastern Time and using confirmation number 37648588. International participants may dial +1 (630) 827-5974.

This news release and related information that may be discussed on the conference call will be posted on the Investor News section of Westell's website: http://www.westell.com. An archive of the entire call will be available on the site via Digital Audio Replay by approximately 1:00 PM Eastern Time after the call ends. The replay of the conference also may be accessed by dialing +1 (888) 843-7419 or +1 (630) 652-3042 and entering 8196 069#.

About Westell Technologies

Westell Technologies, Inc., headquartered in Aurora, Illinois, is a leading provider of intelligent site management, in-building wireless, cell site optimization, and outside plant solutions focused on innovation and differentiation at the edge of telecommunication networks, where end users connect. The comprehensive set of products and solutions the Company offers enable telecommunication service providers, cell tower operators, and other network operators to reduce operating costs and improve network performance. With millions of products successfully deployed worldwide, the Company 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, 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, 2014, 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,

Three months

ended March 31,

2014   2013

(adjusted) (1)

2014

(adjusted) (2)

Revenue $ 27,825 $ 22,456 $ 24,421
Gross profit 9,684 8,417 8,091
Gross margin 34.8 % 37.5 % 33.1 %
Operating expenses:
Sales and marketing 3,421 3,059 3,556
Research and development 4,475 2,699 3,494
General and administrative 3,054 3,572 3,827
Intangible amortization 1,585 1,622 1,277
Restructuring   57     66     62  
Total operating expenses   12,592     11,018     12,216  
Operating loss (2,908 ) (2,601 ) (4,125 )
Other income (expense), net   61     (130 )   7  
Loss before income taxes and discontinued operations (2,847 ) (2,731 ) (4,118 )
Income tax benefit (expense)   29     (19 )   8,714  
Net income (loss) from continuing operations   (2,818 )   (2,750 )   4,596  
Loss from discontinued operations, net of income tax       (14 )   (6 )
Net income (loss) $ (2,818 ) $ (2,764 ) $ 4,590  
Basic net income (loss) per share:
Basic net income (loss) from continuing operations $ (0.05 ) $ (0.05 ) $ 0.08
Basic net income (loss) from discontinued operations            
Basic net income (loss) per share $ (0.05 ) $ (0.05 ) $ 0.08  
Diluted net income (loss) per share:
Diluted net income (loss) from continuing operations $ (0.05 ) $ (0.05 ) $ 0.08
Diluted net income (loss) from discontinued operations            
Diluted net income (loss) per share $ (0.05 ) $ (0.05 ) $ 0.08  
Weighted-average number of common shares outstanding:
Basic 59,715 58,521 59,109
Diluted 59,715 58,521 60,971

(1) In the first quarter of fiscal year 2015, the Company voluntarily changed its method of accounting for the classification of costs related to shipping and handling to cost of revenue. In previous periods, these shipping and handling costs were included as a component of sales and marketing expenses. Previously reported amounts for fiscal year 2014 have been restated to reflect this change. The Company will be filing the preferability letter as an exhibit to its Form 10Q.

(2) In addition to the reclassification of shipping and handling costs disclosed in footnote one above, certain amounts relating to the CSI acquisition have been adjusted to reflect measurement period adjustments (See Form 10-Q for additional information).

Westell Technologies, Inc.

Condensed Consolidated Balance Sheet

(Amounts in thousands)

(Unaudited)

  June 30, 2014   March 31, 2014

(adjusted) (1)

Assets
Cash and cash equivalents $ 33,689 $ 35,793
Short-term investments 13,128 15,584
Accounts receivable, net 16,913 15,831
Inventories 23,063 24,056
Prepaid expenses and other current assets 2,220 1,952
Deferred income taxes 899 899
Land available-for-sale 1,044   1,044
Total current assets 90,956   95,159
Property and equipment, net 2,406 1,901
Goodwill 31,682 31,682
Intangible assets, net 30,307 31,892
Other non-current assets 350   393
Total assets $ 155,701   $ 161,027
Liabilities and Stockholders’ Equity
Accounts payable $ 8,205 $ 7,067
Accrued expenses 5,091 7,813
Contingent consideration 1,609 2,067
Deferred revenue 1,395   1,774
Total current liabilities 16,300 18,721
Deferred revenue non-current 740 787
Deferred income tax liability 1,072 1,072
Contingent consideration non-current 468 574
Other non-current liabilities 494   528
Total liabilities 19,074 21,682
Total stockholders’ equity 136,627   139,345
Total liabilities and stockholders’ equity $ 155,701   $ 161,027

(1) Certain amounts relating to the CSI acquisition have been adjusted to reflect measurement period adjustments (See Form 10-Q for additional information).

Westell Technologies, Inc.

Condensed Consolidated Statement of Cash Flows

(Amounts in thousands)

(Unaudited)

 
Three months ended June 30,
2014   2013
Cash flows from operating activities:
Net loss $ (2,818 ) $ (2,764 )
Reconciliation of net loss to net cash used in operating activities:
Depreciation and amortization 1,806 1,775
Stock-based compensation 554 351
Restructuring 57 66
Other (27 ) 93
Changes in assets and liabilities:
Accounts receivable (1,075 ) (2,009 )
Inventory 993 165
Accounts payable and accrued expenses (1,355 ) 381
Deferred revenue (425 ) (1,513 )
Other (229 ) 347  
Net cash used in operating activities (2,519 ) (3,108 )
Cash flows from investing activities:
Net purchases of short-term investments and debt securities 2,456 6,356
Payment for business acquisitions, net (304 ) (28,770 )
Purchases of property and equipment, net (723 ) (83 )
Changes in restricted cash   500  
Net cash provided by (used in) investing activities 1,429   (21,997 )
Cash flows from financing activities:
Purchase of treasury stock (585 ) (297 )
Proceeds from stock options exercised 130 57
Payment of contingent consideration (575 )  
Net cash used in financing activities (1,030 ) (240 )
Effect of exchange rate changes on cash 16   (17 )
Net decrease in cash (2,104 ) (25,362 )
Cash and cash equivalents, beginning of period 35,793   88,233  
Cash and cash equivalents, end of period $ 33,689   $ 62,871  

Westell Technologies, Inc.

Segment Statement of Operations

(Amounts in thousands)

(Unaudited)

 
Three months ended June 30, 2014
CSG   IBW   Total
Revenue $ 13,728 $ 14,097 $ 27,825
Gross profit 3,873 5,811 9,684
Gross margin 28.2 % 41.2 % 34.8 %
Research and development   2,280     2,195     4,475  
Segment profit   1,593     3,616   5,209
Operating expenses:
Sales and marketing 3,421
General and administrative 3,054
Intangible amortization 1,585
Restructuring   57  
Operating loss (2,908 )
Other income (expense), net 61
Income tax benefit (expense)   29  
Net loss from continuing operations $ (2,818 )
 
 
Three months ended June 30, 2013 (adjusted)
CSG IBW Total
Revenue $ 21,429 $ 1,027 $ 22,456
Gross profit 8,122 295 8,417
Gross margin 37.9 % 28.7 % 37.5 %
Research and development   2,507     192     2,699  
Segment profit $ 5,615   $ 103   5,718
Operating expenses:
Sales and marketing 3,059
General and administrative 3,572
Intangible amortization 1,622
Restructuring   66  
Operating loss (2,601 )
Other income (expense), net (130 )
Income tax benefit (expense)   (19 )
Net loss from continuing operations $ (2,750 )
 
 
Three months ended March 31, 2014 (adjusted)
CSG IBW Total
Revenue $ 16,203 $ 8,218 $ 24,421
Gross profit 5,503 2,588 8,091
Gross margin 34.0 % 31.5 % 33.1 %
Research and development   2,687     807     3,494  
Segment profit $ 2,816   $ 1,781   4,597
Operating expenses:
Sales and marketing 3,556
General and administrative 3,827
Intangible amortization 1,277
Restructuring   62  
Operating loss (4,125 )
Other income (expense), net 7
Income tax (expense) benefit   8,714  
Net income (loss) from continuing operations $ 4,596  

Westell Technologies, Inc.

Reconciliation of GAAP to non-GAAP Financial Measures

(Amounts in thousands, except per share amounts)

(Unaudited)

   
Three months ended June 30,

Three months

ended March 31,

2014   2013 2014 (adjusted)
GAAP net income (loss) $ (2,818 ) $ (2,764 ) $ 4,590
Adjustments:
Inventory fair value step-up (1) 256 766 971
Deferred revenue adjustment (1) 146 647 169
Amortization of intangibles (2) 1,585 1,622 1,277
Income taxes (3) (8,953 )
Restructuring (4) 57 66 62
Stock-based compensation (5) 554 351 578
(Income) loss from discontinued operations       14     6  
Total adjustments   2,598     3,466     (5,890 )
Non-GAAP net income (loss) $ (220 ) $ 702   $ (1,300 )
GAAP net income (loss) per common share:
Basic $ (0.05 ) $ (0.05 ) $ 0.08
Diluted $ (0.05 ) $ (0.05 ) $ 0.08
Non-GAAP net income (loss) per common share:
Basic $ 0.00 $ 0.01 $ (0.02 )
Diluted $ 0.00 $ 0.01 $ (0.02 )
Average number of common shares outstanding:
Basic 59,715 58,521 59,109
Diluted 59,715 59,106 60,971
 
 
Three Months Ended June 30, 2014
Revenue Gross Profit Gross Margin
GAAP - Consolidated $ 27,825 $ 9,684 34.8 %
Deferred revenue adjustment (1) 146 146
Inventory fair value step-up (1) 256
Stock-based compensation (5)       18  
Non-GAAP - Consolidated $ 27,971   $ 10,104   36.1 %
 
 
Three Months Ended March 31, 2014 (adjusted)
Revenue Gross Profit Gross Margin
GAAP - Consolidated $ 24,421 8,091 33.1 %
Deferred revenue adjustment (1) 169 169
Inventory fair value step-up (1) 971
Stock-based compensation (5)       18  
Non-GAAP - Consolidated $ 24,590   $ 9,249   37.6 %
 
 
Three months ended June 30,

Three months

ended March 31,

2014

2013 (adjusted)

2014 (adjusted)
GAAP operating expense $ 12,592 $ 11,018 $ 12,216
Adjustments:
Amortization of intangibles (2) (1,585 ) (1,622 ) (1,277 )
Restructuring (4) (57 ) (66 ) (62 )
Stock-based compensation (5)   (536 )   (343 )   (560 )
Total adjustments   (2,178 )   (2,031 )   (1,899 )
Non-GAAP operating expense $ 10,414   $ 8,987   $ 10,317  

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) In fiscal year 2014, the Company acquired Kentrox and CSI in stock transactions. Deferred tax liabilities of $9.0 million resulted from the acquisitions relating primarily to acquired intangible assets. The Company's anticipated ability to realize deferred tax assets from the reversal of these deferred tax liabilities resulted in a partial reversal of valuation allowance related to the Company's deferred tax assets. The fiscal year 2014 adjustment removes the related income tax benefit. The Company was in a full valuation allowance in fiscal year 2014.

(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.

More Stories By Business Wire

Copyright © 2009 Business Wire. All rights reserved. Republication or redistribution of Business Wire content is expressly prohibited without the prior written consent of Business Wire. Business Wire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
The best mobile applications are augmented by dedicated servers, the Internet and Cloud services. Mobile developers should focus on one thing: writing the next socially disruptive viral app. Thanks to the cloud, they can focus on the overall solution, not the underlying plumbing. From iOS to Android and Windows, developers can leverage cloud services to create a common cross-platform backend to persist user settings, app data, broadcast notifications, run jobs, etc. This session provide...
Enterprise IoT is an exciting and chaotic space with a lot of potential to transform how the enterprise resources are managed. In his session at @ThingsExpo, Hari Srinivasan, Sr Product Manager at Cisco, will describe the challenges in enabling mass adoption of IoT, and share perspectives and insights on architectures/standards/protocols that are necessary to build a healthy ecosystem and lay the foundation to for a wide variety of exciting IoT use cases in the years to come.
As enterprises move to all-IP networks and cloud-based applications, communications service providers (CSPs) – facing increased competition from over-the-top providers delivering content via the Internet and independently of CSPs – must be able to offer seamless cloud-based communication and collaboration solutions that can scale for small, midsize, and large enterprises, as well as public sector organizations, in order to keep and grow market share. The latest version of Oracle Communications U...
Health care systems across the globe are under enormous strain, as facilities reach capacity and costs continue to rise. M2M and the Internet of Things have the potential to transform the industry through connected health solutions that can make care more efficient while reducing costs. In fact, Vodafone's annual M2M Barometer Report forecasts M2M applications rising to 57 percent in health care and life sciences by 2016. Lively is one of Vodafone's health care partners, whose solutions enable o...
The 5th International DevOps Summit, co-located with 17th International Cloud Expo – being held November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA – announces that its Call for Papers is open. Born out of proven success in agile development, cloud computing, and process automation, DevOps is a macro trend you cannot afford to miss. From showcase success stories from early adopters and web-scale businesses, DevOps is expanding to organizations of all sizes, including the...
Modern Systems announced completion of a successful project with its new Rapid Program Modernization (eavRPMa"c) software. The eavRPMa"c technology architecturally transforms legacy applications, enabling faster feature development and reducing time-to-market for critical software updates. Working with Modern Systems, the University of California at Santa Barbara (UCSB) leveraged eavRPMa"c to transform its Student Information System from Software AG's Natural syntax to a modern application lev...
Dave will share his insights on how Internet of Things for Enterprises are transforming and making more productive and efficient operations and maintenance (O&M) procedures in the cleantech industry and beyond. Speaker Bio: Dave Landa is chief operating officer of Cybozu Corp (kintone US). Based in the San Francisco Bay Area, Dave has been on the forefront of the Cloud revolution driving strategic business development on the executive teams of multiple leading Software as a Services (SaaS) ap...
Chef and Canonical announced a partnership to integrate and distribute Chef with Ubuntu. Canonical is integrating the Chef automation platform with Canonical's Machine-As-A-Service (MAAS), enabling users to automate the provisioning, configuration and deployment of bare metal compute resources in the data center. Canonical is packaging Chef 12 server in upcoming distributions of its Ubuntu open source operating system and will provide commercial support for Chef within its user base.
Public Cloud IaaS started it's life in the developer and startup communities and has grown rapidly to a $20B+ industry, but it still pales in comparison to how much is spent worldwide on IT: $3.6 trillion. In fact, there are 8.6 million data centers worldwide, the reality is many small and medium sized business have server closets and colocation footprints filled with servers and storage gear. While on-premise environment virtualization may have peaked at 75%, the Public Cloud has lagged in ado...
SYS-CON Events announced today that Secure Infrastructure & Services will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY, and the 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. Secure Infrastructure & Services (SIAS) is a managed services provider of cloud computing solutions for the IBM Power Systems market. The company...
SYS-CON Events announced today that CenturyLink, Inc., a leader in the network services market, has been named “Platinum Sponsor” of SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. CenturyLink is the third largest telecommunications company in the United States and is recognized as a leader in the network services market by technology industry analyst firms. The company is a global leader in cloud infrastructure and ...
Docker, Inc., has been included in the list of "Cool Vendors" in the April 21, 2015 report by Gartner, Inc, Cool Vendors in DevOps, 2015. In the report, Gartner notes, “As virtualization and cloud applications grow beyond being single images run on premise to being comprised of multiple tiers that can be run and scaled in a hybrid cloud, new approaches are needed to reduce complexity.” “Docker has gained great traction within the developer community for how efficient it makes the individual de...
ProfitBricks, the provider of painless cloud infrastructure IaaS, today released its SDK for Ruby, written against the company's new RESTful API. The new SDK joins ProfitBricks' previously announced support for the popular multi-cloud open-source Fog project. This new Ruby SDK, which exposes advanced functionality to take advantage of ProfitBricks' simplicity and productivity, aligns with ProfitBricks' mission to provide a painless way to automate infrastructure in the cloud. Ruby is a genera...
The 17th International Cloud Expo has announced that its Call for Papers is open. 17th International Cloud Expo, to be held November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA, brings together Cloud Computing, APM, APIs, Microservices, Security, Big Data, Internet of Things, DevOps and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding bu...
How is unified communications transforming the way businesses operate? In his session at WebRTC Summit, Arvind Rangarajan, Director of Product Marketing at BroadSoft, will discuss how to extend unified communications experience outside the enterprise through WebRTC. He will also review use cases across different industry verticals. Arvind Rangarajan is Director, Product Marketing at BroadSoft. He has over 19 years of experience in the telecommunications industry in various roles such as Softw...