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
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)
ended March 31,
(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).
Condensed Consolidated Balance Sheet
(Amounts in thousands)
(1) Certain amounts relating to the CSI acquisition have been adjusted
to reflect measurement period adjustments (See Form 10-Q for additional
Condensed Consolidated Statement of Cash Flows
Segment Statement of Operations
Reconciliation of GAAP to non-GAAP Financial Measures
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
(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
(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.
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