WSTL
$0.83
Westell Technologies
$.03
4.30%
Earnings Details
Quarter June 2020
Friday, August 14, 2020 9:00:00 AM
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Summary

Westell Technologies (WSTL) Recent Earnings

Westell Technologies (WSTL) reported a Quarter June 2020 loss of $0.03 per share on revenue of $7.4 million.. Revenue fell 18.4% compared to the same quarter a year ago.

Results
Reported Earnings
($0.03)
Earnings Whisper
-
Consensus Estimate
Reported Revenue
$7.4 Mil
Revenue Estimate
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Westell Reports Fiscal 2021 First Quarter Results

AURORA, Ill., Aug. 14, 2020 (GLOBE NEWSWIRE) -- Westell Technologies, Inc. (NASDAQ: WSTL), a leading provider of high-performance network infrastructure solutions, today announced results for its fiscal 2021 first quarter ended June 30, 2020 (FY21 1Q).  As previously announced, in light of the ongoing proposed reverse/forward split transaction, the Company has decided to forego the quarterly investors call.  Information concerning the proposed transaction is set forth in the definitive proxy statement for the Company’s 2020 annual meeting of stockholders, which was filed with the SEC on Schedule 14A on August 11, 2020.  Stockholders are urged to read the definitive proxy statement carefully.

“We saw a strong start to the new fiscal year as revenues increased by $1.2 million over the previous quarter, FY20 Q4. Customer orders in the first quarter improved over what we believe was a COVID-19 related slowdown last quarter.  Westell’s supply chain delivery also improved and enabled the Company to fill delayed customer orders.  The Westell team did a tremendous job of working with our customers and delivering products during difficult circumstances.

Gross margins during this quarter improved to 38.7% compared to 32.8% in the previous quarter, higher IBW shipments contributed to the improvement.  We also continue to spend our resources wisely, operating expenses were $3.8 million compared to $4.9 million in the previous quarter.  These results led to a reduction in the consolidated net loss of $0.05 per share compared to a net loss of $0.18 per share in the previous quarter.

We also saw new product revenue.  The first Crossfire Cellular DAS system, a key part of our new product growth strategy, shipped during the first quarter with revenue of nearly $0.2 million.  Additional systems worth approximately $0.4 million in revenue are expected to ship during the second quarter.  The first systems are already installed and are providing superior in-building cellular coverage,” said Westell’s President and CEO Tim Duitsman.

Consolidated ResultsFY21 1Q
3 months ended 06/30/20
FY20 4Q
3 months ended 3/31/20
+ increase /
- decrease
Revenue$7.4M$6.2M+$1.2M
Gross Margin38.7%32.8%+5.9%
Operating Expenses$3.8M$4.9M-$1.1M
Net Income (Loss)($0.8M)($2.8M)+$2.0M
Earnings (Loss) Per Share($0.05)($0.18)+$0.13
Non-GAAP Operating Expenses (1)$3.2M$3.5M-$0.3M
Non-GAAP Net Income (Loss) (1)($0.3M)($1.3M)+$1.0M
Non-GAAP Earnings (Loss) Per Share (1)($0.02)($0.09)+$0.07
Ending Cash$21.9M$20.9M+$1.0M
(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 revenue from DAS conditioners and Ancillary products increased during FY21 1Q.  Sales of cellular repeaters and public safety products were down slightly while the Company recorded its first revenue from the new Crossfire Cellular DAS product line.  Segment gross margin and profit improved due to higher DAS conditioner sales.  R&D expenses were down due to lower product certification and consulting costs.

($ in thousands)FY21 1Q
3 months ended 06/30/20
FY20 4Q
3 months ended 3/31/20
+ increase /
- decrease
IBW Segment Revenue$2,949$2,014+$935
IBW Segment Gross Margin40.7%20.8%+19.9%
IBW Segment R&D Expense$349$485-$136
IBW Segment Profit (Loss)$851$(66)+$917


Intelligent Site Management (ISM) Segment

ISM revenue increased, reflecting increased sales of remote units.  Segment gross margin decreased primarily due to product mix.  These effects were partly offset by lower R&D expense due to a temporary salary reduction during the quarter in response to COVID-19, that resulted in a net increase in profitability for the quarter.

($ in thousands)FY21 1Q
3 months ended 06/30/20
FY20 4Q
3 months ended 3/31/20
+ increase /
- decrease
ISM Segment Revenue$2,047$1,904$143
ISM Segment Gross Margin56.4%60.4%-4.0%
ISM Segment R&D Expense$382$412-$30
ISM Segment Profit$773$738$35


Communication Network Solutions (CNS) Segment

Growth in revenue from Cabinet products was offset in part by lower sales across other CNS product lines.  The CNS segment profit improvement was driven primarily by lower R&D expense, due to a temporary salary reduction during the quarter in response to COVID-19.

($ in thousands)FY21 1Q
3 months ended 06/30/20
FY20 4Q
3 months ended 3/31/20
+ increase /
- decrease
CNS Segment Revenue$2,354$2,308$46
CNS Segment Gross Margin20.7%20.5%+0.2%
CNS Segment R&D Expense$214$222-$8
CNS Segment Profit$273$251$22


This news release will be posted on the Investor Relations section of Westell's website: http://ir.westell.com.

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, the ability to complete the proposed reverse/forward split transaction and/or the ability to realize its expected benefits, 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 effects of the Company's accounting policies, retention of key personnel, the effects and consequences of the COVID-19 pandemic or other pandemics, and other risks more fully described in the Company's SEC filings, including the Form 10-K for the fiscal year ended March 31, 2020, 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,
  2020 2020 2019
Revenue $7,350  $6,226  $9,002 
Cost of revenue 4,508  4,184  5,756 
Gross profit 2,842  2,042  3,246 
Gross margin 38.7% 32.8% 36.1%
Operating expenses:      
Research & Development 945  1,119  1,556 
Sales and marketing 1,376  1,445  2,332 
General and administrative 1,210  1,051  1,364 
Intangible amortization 226  309  308 
Long-lived assets impairment   1,007   
Total operating expenses 3,757  4,931  5,560 
Operating profit (loss) (915) (2,889) (2,314)
Other income, net 30  58  164 
Income (loss) before income taxes (885) (2,831) (2,150)
Income tax benefit (expense) 60  (9) (7)
Net income (loss) $(825) $(2,840) $(2,157)
       
Net income (loss) per share:      
Basic net income (loss) $(0.05) $(0.18) $(0.14)
Diluted net income (loss) per share:      
Diluted net income (loss) $(0.05) $(0.18) $(0.14)
Weighted-average number of common shares outstanding:      
Basic 15,665  15,579  15,455 
Diluted 15,665  15,579  15,455 



Westell Technologies, Inc.
Condensed Consolidated Balance Sheet
(Amounts in thousands)

  June 30, 2020 (Unaudited) March 31, 2020
Assets    
Cash and cash equivalents $21,917  $20,869 
Accounts receivable, net 4,899  4,047 
Inventories 7,354  6,807 
Prepaid expenses and other current assets 916  1,298 
Total current assets 35,086  33,021 
Land, property and equipment, net 1,028  1,076 
Intangible assets, net 2,463  2,728 
Right-of-use assets on operating leases, net 2,771  628 
Other non-current assets 114  73 
Total assets $41,462  $37,526 
Liabilities and Stockholders’ Equity    
Accounts payable $2,247  $1,065 
Accrued expenses 3,028  3,136 
Deferred revenue 955  1,099 
Note Payable, SBA PPP loan - current 723   
Total current liabilities 6,953  5,300 
Note Payable, SBA PPP loan - non-current 917   
Deferred revenue non-current 185  221 
Lease liabilities non-current 2,226  250 
Other non-current liabilities 225  94 
Total liabilities 10,506  5,865 
Total stockholders’ equity 30,956  31,661 
Total liabilities and stockholders’ equity $41,462  $37,526 



Westell Technologies, Inc.
Condensed Consolidated Statement of Cash Flows
(Amounts in thousands)
(Unaudited)

  Three months
 ended
 June 30,
  2020 2019
Cash flows from operating activities:  
Net income (loss) $(825) $(2,157)
Reconciliation of net income (loss) to net cash provided by (used in) operating activities:    
Depreciation and amortization 336  451 
Stock-based compensation 162  244 
Exchange rate loss (gain) (9) (3)
Changes in assets and liabilities:    
Accounts receivable (843) 1,059 
Inventory (547) (142)
Accounts payable and accrued expenses 3,184  740 
Deferred revenue (180) (318)
Prepaid expenses and other current assets 382  33 
Other assets (2,184) (1,103)
Net cash provided by (used in) operating activities (524) (1,196)
Cash flows from investing activities:    
Purchases of property and equipment, net (23) (14)
Net cash provided by (used in) investing activities (23) (14)
Cash flows from financing activities:    
Proceeds from note payable to bank, SBA PPP loan (1) 1,637   
Purchase of treasury stock (42) (173)
Net cash provided by (used in) financing activities 1,595  (173)
Gain (loss) of exchange rate changes on cash   3 
Net increase (decrease) in cash and cash equivalents 1,048  (1,380)
Cash and cash equivalents, beginning of period 20,869  25,457 
Cash and cash equivalents, end of period $21,917  $24,077 

(1)  On April 14, 2020, the Company received $1.6 million pursuant to a loan from JPMorgan Chase Bank, N.A. under the Paycheck Protection Program (the “PPP”) of the 2020 Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) as administered by the U.S. Small Business Association (the “SBA”).  Funds from the loan may only be used for certain purposes, including payroll, benefits, rent and utilities.  The Company will carefully monitor qualifying expenses and other requirements in an effort to properly maximize loan forgiveness, but the Company can provide no assurance that the PPP loan will be forgiven in whole or in part.



Westell Technologies, Inc.
Segment Statement of Operations
(Amounts in thousands)
(Unaudited)

Sequential Quarter Comparison

                 
  Three months ended June 30, 2020 Three months ended March 31, 2020
  IBW ISM CNS Total IBW ISM CNS Total
Total revenue $2,949  $2,047  $2,354  $7,350  $2,014  $1,904  $2,308  $6,226 
Gross profit 1,200  1,155  487  2,842  419  1,150  473  2,042 
Gross margin 40.7% 56.4% 20.7% 38.7% 20.8% 60.4% 20.5% 32.8%
R&D expenses 349  382  214  945  485  412  222  1,119 
Segment profit (loss) $851  $773  $273  $1,897  $(66) $738  $251  $923 

Year-over-Year Quarter Comparison

  Three months ended June 30, 2020 Three months ended June 30, 2019
  IBW ISM CNS Total IBW ISM CNS Total
Total revenue $2,949  $2,047  $2,354  $7,350  $2,923  $3,095  $2,984  $9,002 
Gross profit 1,200  1,155  487  2,842  972  1,579  695  3,246 
Gross margin 40.7% 56.4% 20.7% 38.7% 33.3% 51.0% 23.3% 36.1%
R&D expenses 349  382  214  945  399  701  456  1,556 
Segment profit (loss) $851  $773  $273  $1,897  $573  $878  $239  $1,690 



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,
  2020 2020 2019
GAAP consolidated operating expenses $3,757  $4,931  $5,560 
Adjustments:      
Stock-based compensation (1) (149) (158) (234)
Intangible assets impairment (2)   (1,007)  
Amortization of acquisition-related intangibles (3) (226) (309) (308)
Transaction costs {4) (200)    
Total adjustments (575) (1,474) (542)
Non-GAAP consolidated operating expenses $3,182  $3,457  $5,018 


  Three months ended
  June 30, March 31, June 30,
  2020 2020 2019
GAAP consolidated net income (loss) $(825) $(2,840) $(2,157)
Less:      
Income tax benefit (expense) 60  (9) (7)
Other income, net 30  58  164 
GAAP consolidated operating profit (loss) $(915) $(2,889) $(2,314)
Adjustments:      
Stock-based compensation (1) 162  177  244 
Intangible assets impairment (2)   1,007   
Amortization of acquisition-related intangibles (3) 226  309  308 
Transaction costs {4) 200     
Total adjustments 588  1,493  552 
Non-GAAP consolidated operating profit (loss) $(327) $(1,396) $(1,762)
Amortization of product licensing rights (5) 39  97   
Depreciation 71  68  143 
Non-GAAP consolidated Adjusted EBITDA (6) $(217) $(1,231) $(1,619)


  Three months ended
  June 30, March 31, June 30,
  2020 2020 2019
GAAP consolidated net income (loss) $(825) $(2,840) $(2,157)
Adjustments:      
Stock-based compensation (1) 162  177  244 
Intangible assets impairment (2)   1,007   
Amortization of acquisition-related intangibles (3) 226  309  308 
Transaction costs {4) 200     
Other tax benefit (7) (53)    
Total adjustments 535  1,493  552 
Non-GAAP consolidated net income (loss) $(290) $(1,347) $(1,605)
GAAP consolidated net income (loss) per common share:      
Diluted $(0.05) $(0.18) $(0.14)
Non-GAAP consolidated net income (loss) per common share:      
Diluted $(0.02) $(0.09) $(0.10)
Average number of common shares outstanding:      
Diluted 16,655  15,579  15,455 

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)  Non-cash impairment related to an IBW intangible asset related to product licensing rights incurred in the quarter ended March 31, 2020.
(3)  Amortization of acquisition-related intangibles is a non-cash expense arising from intangible assets previously acquired as a result of a business acquisition.
(4)  Transaction related expenses associated with the proposed reverse/forward stock split announced on July 10, 2020.
(5)  Amortization of the acquired product licensing rights are excluded from Adjusted EBITDA, but included in the Non-GAAP consolidated net income (loss), because the amortization is related to the ongoing operation of the business in the ordinary course.
(6)  EBITDA is a non-GAAP measure that represents Earnings Before Interest, Taxes, Depreciation, and Amortization.  The Company presents Adjusted EBITDA.
(7)  Tax benefit associated with a reversal of an uncertain tax position.

For additional information, contact:

Tim Duitsman
Chief Executive Officer
Westell Technologies, Inc.
+1 (630) 898 2500
tduitsman@westell.com

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Source: Westell Technologies, Inc.