Market Overview

Westell Reports Fiscal 2020 First Quarter Results

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AURORA, Ill., Aug. 07, 2019 (GLOBE NEWSWIRE) -- 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."

       
  1Q20
3 months ended
6/30/19
4Q19
3 months ended
3/31/19
+ 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 ended
6/30/19
4Q19
3 months ended
3/31/19
+ 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 ended
6/30/19
4Q19
3 months ended
3/31/19
+ 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 ended
6/30/19
4Q19
3 months ended
3/31/19
+ 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 Information
Management 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 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, 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    
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