Westell Technologies, Inc. (NASDAQ:WSTL), a leading provider of
high-performance wireless infrastructure solutions, today announced
results for its fiscal 2017 third quarter ended December 31,
2016 (3Q17). Management will host a conference call to
discuss financial and business results tomorrow, Thursday,
February 9, 2017, at 9:30 AM Eastern Time (details below).
GAAP operating expenses were $7.8 million in
3Q17, a 36% reduction compared to $12.2 million in 2Q17.
Non-GAAP operating expenses, which exclude stock-based
compensation, amortization of acquired intangible assets, and
restructuring and restructuring-related charges, were $5.9 million
in 3Q17, a 24% reduction compared to $7.8 million in 2Q17.
|
3Q173 months ended 12/31/16 |
2Q173 months ended 9/30/16 |
+ favorable /- unfavorable |
Consolidated Revenue |
$15.0M |
$17.8M |
-16% |
Net Income (Loss) |
($1.8M) |
($5.8M) |
+69% |
Gross Margin |
40.4% |
35.8% |
+4.6% |
Earnings (Loss) Per Share |
($0.03) |
($0.09) |
+69% |
Non-GAAP Net Income (Loss) (1) |
$0.2M |
($1.1M) |
+120% |
Non-GAAP Earnings (Loss) Per Share (1) |
$0.00 |
($0.02) |
+120% |
Non-GAAP Adjusted EBITDA (1) |
$0.5M |
($0.7M) |
+174% |
(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. |
“We substantially exceeded our goal for
positive cash flow and lower operating expenses, and generated a
healthy gross margin greater than our 40% target,” said Kirk
Brannock, President and CEO of Westell Technologies. “In the
process, we have largely reset the Company’s expense structure that
is designed to significantly improve profitability. As a
result, in 3Q17, bottom line performance improved by $4.0 million,
or 69% sequentially, and we achieved positive non-GAAP
profitability for the first time since 3Q14.”
Consolidated revenue in 3Q17 was $15.0 million,
and comprised $6.2 million from the In-Building Wireless (IBW)
segment, $5.5 million from the Intelligent Site Management and
Services (ISMS) segment, and $3.2 million from the Communication
Network Solutions (CNS) segment.
“On the revenue side, despite a seasonally low
CNS quarter, ISMS increased sequentially and had its best quarter
since 3Q16. In addition, IBW was strong again in 3Q17,
including robust quarterly sales of our UDIT (Universal DAS
Interface Tray) and continued favorable momentum for our half-watt
public safety repeater. In 3Q17, we also announced our new
two-watt public safety repeater, which is expected to be available
for customers in fiscal 4Q17,” Brannock said.
Cash grew 14% to $23.8 million at
December 31, 2016, compared to $20.9 million at September 30,
2016, driven by the profitable non-GAAP results and improved
working capital.
In-Building Wireless (IBW)
Segment
IBW’s sequential revenue decrease was due
primarily to lower sales of commercial repeaters. IBW’s
segment gross margin increase was driven primarily by lower costs
and a more favorable mix.
|
3Q17 3 months ended 12/31/16 |
2Q17 3 months ended 9/30/16 |
+ favorable / - unfavorable |
IBW Segment Revenue |
$6.2M |
$6.6M |
-6% |
IBW Segment Gross Margin (1) |
40.3% |
33.6% |
+6.7% |
IBW Segment R&D Expense |
$1.3M |
$1.6M |
+18% |
IBW Segment Profit |
$1.2M |
$0.6M |
+88% |
(1) Excluding charges of $0.2 million in 2Q17
related to the previously announced discontinuation of the
ClearLink DAS, IBW segment 2Q17 gross margin was 36.5%.
Please refer to the schedule at the end of this press release for a
complete GAAP to non-GAAP reconciliation. |
Intelligent Site Management &
Services (ISMS) Segment
ISMS’s sequential revenue increase was driven primarily by
higher deployment services revenue. ISMS’s segment gross
margin increase was driven primarily by a more favorable mix.
|
3Q17 3 months ended 12/31/16 |
2Q17 3 months ended 9/30/16 |
+ favorable / - unfavorable |
ISMS Segment Revenue |
$5.5M |
$5.1M |
+8% |
ISMS Segment Gross Margin |
50.6% |
47.1% |
+3.5% |
ISMS Segment R&D Expense |
$0.8M |
$1.2M |
+35% |
ISMS Segment Profit |
$2.0M |
$1.2M |
+70% |
Communication Network Solutions Group
(CNS) Segment
CNS’s product lines are used primarily in the outside
communication networks; as a result, the December quarter tends to
be CNS’s lowest revenue quarter. In 3Q17, CNS’s sequential
revenue decrease was most affected by sequential drops in sales of
Integrated Cabinets and Tower Mounted Amplifiers. CNS’s gross
margin decrease was due primarily to the lower revenue.
|
3Q17 3 months ended 12/31/16 |
2Q17 3 months ended 9/30/16 |
+ favorable / - unfavorable |
CNS Segment Revenue |
$3.2M |
$6.0M |
-46% |
CNS Segment Gross Margin |
23.1% |
28.7% |
-5.6% |
CNS Segment R&D Expense |
$0.3M |
$0.5M |
+39% |
CNS Segment Profit |
$0.4M |
$1.2M |
-64% |
Conference Call
InformationManagement will discuss financial and business
results during the quarterly conference call on Thursday,
February 9, 2017, 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 February 9,
2017, by calling 888-206-4065 no later than 8:15
AM Central Time (9:15 AM Eastern Time) and providing the operator
confirmation number 44112765.
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:
http://www.westell.com/about-us/investor-relations. A digital
recording of the entire conference will be available for replay on
Westell's website by approximately 1:00 PM Eastern Time following
the conclusion of the conference.
About Westell
TechnologiesWestell is a leading provider of
high-performance wireless infrastructure solutions focused on
innovation and differentiation at the edge of communication
networks, where end users connect. The Company's
comprehensive set 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, 2016, 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 |
|
Nine months ended |
|
|
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
|
December 31, |
|
|
|
2016 |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
Revenue |
|
$ |
14,983 |
|
|
$ |
17,780 |
|
|
$ |
20,215 |
|
|
$ |
47,579 |
|
|
$ |
67,299 |
|
|
Gross profit |
|
6,054 |
|
|
6,367 |
|
|
7,963 |
|
|
16,986 |
|
|
26,623 |
|
|
Gross margin |
|
40.4 |
% |
|
35.8 |
% |
|
39.4 |
% |
|
35.7 |
% |
|
39.6 |
% |
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
R&D |
|
2,414 |
|
|
3,327 |
|
|
4,893 |
|
|
10,018 |
|
|
14,604 |
|
|
Sales and
marketing |
|
1,943 |
|
|
2,896 |
|
|
3,900 |
|
|
8,220 |
|
|
11,209 |
|
|
General
and administrative |
|
1,777 |
|
|
2,218 |
|
|
2,627 |
|
|
6,340 |
|
|
8,089 |
|
|
Intangible amortization |
|
1,212 |
|
|
1,201 |
|
|
1,418 |
|
|
3,613 |
|
|
4,249 |
|
|
Restructuring |
|
490 |
|
(1 |
) |
2,601 |
|
(1 |
) |
— |
|
|
3,055 |
|
(1 |
) |
17 |
|
|
Long-lived assets impairment |
|
— |
|
|
— |
|
|
— |
|
|
1,181 |
|
(2 |
) |
— |
|
|
Total
operating expenses |
|
7,836 |
|
|
12,243 |
|
|
12,838 |
|
|
32,427 |
|
|
38,168 |
|
|
Operating profit
(loss) |
|
(1,782 |
) |
|
(5,876 |
) |
|
(4,875 |
) |
|
(15,441 |
) |
|
(11,545 |
) |
|
Other income (expense),
net |
|
(15 |
) |
|
74 |
|
|
85 |
|
|
76 |
|
|
62 |
|
|
Income (loss) before
income taxes and discontinued operations |
|
(1,797 |
) |
|
(5,802 |
) |
|
(4,790 |
) |
|
(15,365 |
) |
|
(11,483 |
) |
|
Income tax benefit
(expense) |
|
(10 |
) |
|
(8 |
) |
|
(7 |
) |
|
(20 |
) |
|
75 |
|
|
Net income (loss) from
continuing operations |
|
(1,807 |
) |
|
(5,810 |
) |
|
(4,797 |
) |
|
(15,385 |
) |
|
(11,408 |
) |
|
Income from
discontinued operations (3) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
272 |
|
|
Net income (loss) |
|
$ |
(1,807 |
) |
|
$ |
(5,810 |
) |
|
$ |
(4,797 |
) |
|
$ |
(15,385 |
) |
|
$ |
(11,136 |
) |
|
Basic net income (loss)
per share: |
|
|
|
|
|
|
|
|
|
|
|
Basic net
income (loss) from continuing operations |
|
$ |
(0.03 |
) |
|
$ |
(0.09 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.25 |
) |
|
$ |
(0.19 |
) |
|
Basic net
income (loss) from discontinued operations |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
Basic net
income (loss) (4) |
|
$ |
(0.03 |
) |
|
$ |
(0.09 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.25 |
) |
|
$ |
(0.18 |
) |
|
Diluted net income
(loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
Diluted
net income (loss) from continuing operations |
|
$ |
(0.03 |
) |
|
$ |
(0.09 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.25 |
) |
|
$ |
(0.19 |
) |
|
Diluted
net income (loss) from discontinued operations |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
Diluted
net income (loss) (4) |
|
$ |
(0.03 |
) |
|
$ |
(0.09 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.25 |
) |
|
$ |
(0.18 |
) |
|
Weighted-average number
of common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
61,564 |
|
|
61,199 |
|
|
60,810 |
|
|
61,260 |
|
|
60,765 |
|
|
Diluted |
|
61,564 |
|
|
61,199 |
|
|
60,810 |
|
|
61,260 |
|
|
60,765 |
|
|
|
(1) The
Company recorded restructuring expense primarily relating to
abandonment of excess office space at its headquarters and in New
Hampshire, and severance costs for terminated employees. |
(2) Non-cash impairment related to long-lived assets
associated with the previously announced strategic decision related
to the discontinuation of ClearLink DAS. |
(3) Income from discontinued operations resulted from the
expiration of indemnity periods and release of contingency reserves
related to the sale of ConferencePlus. |
(4) Totals
may not sum due to rounding. |
|
Westell Technologies, Inc. |
Condensed Consolidated Balance
Sheet |
(Amounts in thousands) |
|
|
|
December 31, 2016 (Unaudited) |
|
March 31, 2016 |
Assets |
|
|
|
|
Cash and cash
equivalents |
|
$ |
23,842 |
|
|
$ |
19,169 |
|
Short-term
investments |
|
— |
|
|
10,555 |
|
Accounts receivable,
net |
|
11,212 |
|
|
16,361 |
|
Inventories |
|
12,989 |
|
|
13,498 |
|
Prepaid expenses and
other current assets |
|
1,407 |
|
|
1,900 |
|
Total
current assets |
|
49,450 |
|
|
61,483 |
|
Land, property and
equipment, net |
|
2,212 |
|
|
3,977 |
|
Intangible assets,
net |
|
16,775 |
|
|
20,388 |
|
Other non-current
assets |
|
190 |
|
|
183 |
|
Total
assets |
|
$ |
68,627 |
|
|
$ |
86,031 |
|
Liabilities and
Stockholders’ Equity |
|
|
|
|
Accounts payable |
|
$ |
6,417 |
|
|
$ |
7,856 |
|
Accrued expenses |
|
4,036 |
|
|
5,932 |
|
Accrued
restructuring |
|
1,755 |
|
|
1,537 |
|
Contingent
consideration payable |
|
— |
|
|
311 |
|
Deferred revenue |
|
2,276 |
|
|
1,601 |
|
Total
current liabilities |
|
14,484 |
|
|
17,237 |
|
Deferred revenue
non-current |
|
1,247 |
|
|
1,236 |
|
Deferred income tax
liability |
|
30 |
|
|
10 |
|
Accrued restructuring
non-current |
|
111 |
|
|
550 |
|
Other non-current
liabilities |
|
257 |
|
|
314 |
|
Total
liabilities |
|
16,129 |
|
|
19,347 |
|
Total
stockholders’ equity |
|
52,498 |
|
|
66,684 |
|
Total
liabilities and stockholders’ equity |
|
$ |
68,627 |
|
|
$ |
86,031 |
|
Westell Technologies, Inc. |
Condensed Consolidated Statement of Cash
Flows |
(Amounts in thousands) |
(Unaudited) |
|
|
|
Three months ended December 31, |
|
Nine
months ended December
31, |
|
|
2016 |
|
2016 |
|
2015 |
Cash flows from operating activities: |
|
|
Net income (loss) |
|
$ |
(1,807 |
) |
|
$ |
(15,385 |
) |
|
$ |
(11,136 |
) |
Reconciliation of net loss to net cash used in operating
activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
1,484 |
|
|
4,714 |
|
|
5,335 |
|
Long-lived assets impairment |
|
— |
|
|
1,181 |
|
|
— |
|
Stock-based compensation |
|
253 |
|
|
1,346 |
|
|
974 |
|
Restructuring |
|
490 |
|
|
3,055 |
|
|
17 |
|
Deferred
taxes |
|
6 |
|
|
20 |
|
|
29 |
|
Other
loss (gain) |
|
44 |
|
|
55 |
|
|
17 |
|
Changes
in assets and liabilities: |
|
|
|
|
|
|
Accounts
receivable |
|
2,376 |
|
|
5,098 |
|
|
(791 |
) |
Inventory |
|
(311 |
) |
|
509 |
|
|
2,134 |
|
Accounts
payable and accrued expenses |
|
(893 |
) |
|
(6,802 |
) |
|
2,562 |
|
Deferred
revenue |
|
817 |
|
|
686 |
|
|
(813 |
) |
Other |
|
495 |
|
|
487 |
|
|
916 |
|
Net cash
provided by (used in) operating activities |
|
2,954 |
|
|
(5,036 |
) |
|
(756 |
) |
Cash flows from
investing activities: |
|
|
|
|
|
|
Net
maturity (purchase) of short-term investments and debt
securities |
|
— |
|
|
10,555 |
|
|
22,664 |
|
Proceeds
from sale of land |
|
— |
|
|
— |
|
|
264 |
|
Purchases
of property and equipment, net |
|
(29 |
) |
|
(527 |
) |
|
(1,776 |
) |
Net cash
provided by (used in) investing activities |
|
(29 |
) |
|
10,028 |
|
|
21,152 |
|
Cash flows from
financing activities: |
|
|
|
|
|
|
Purchase
of treasury stock |
|
(5 |
) |
|
(146 |
) |
|
(87 |
) |
Payment
of contingent consideration |
|
— |
|
|
(175 |
) |
|
(770 |
) |
Net cash
provided by (used in) financing activities |
|
(5 |
) |
|
(321 |
) |
|
(857 |
) |
(Gain) loss of
exchange rate changes on cash |
|
5 |
|
|
2 |
|
|
(6 |
) |
Net increase
(decrease) in cash and cash equivalents |
|
2,925 |
|
|
4,673 |
|
|
19,533 |
|
Cash and cash
equivalents, beginning of period |
|
20,917 |
|
|
19,169 |
|
|
14,026 |
|
Cash and cash
equivalents, end of period |
|
$ |
23,842 |
|
|
$ |
23,842 |
|
|
$ |
33,559 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Westell Technologies, Inc. |
Segment Statement of Operations |
(Amounts in thousands) |
(Unaudited) |
|
Sequential Quarter Comparison |
|
|
|
Three months ended December 31,
2016 |
|
Three months ended September 30, 2016 |
|
|
IBW |
|
ISMS |
|
CNS |
|
Total |
|
IBW |
|
ISMS |
|
CNS |
|
Total |
Revenue |
|
$ |
6,224 |
|
|
$ |
5,525 |
|
|
$ |
3,234 |
|
|
$ |
14,983 |
|
|
$ |
6,644 |
|
|
$ |
5,109 |
|
|
$ |
6,027 |
|
|
$ |
17,780 |
|
Gross profit |
|
2,511 |
|
|
2,795 |
|
|
748 |
|
|
6,054 |
|
|
2,233 |
|
|
2,407 |
|
|
1,727 |
|
|
6,367 |
|
Gross margin (1) |
|
40.3 |
% |
|
50.6 |
% |
|
23.1 |
% |
|
40.4 |
% |
|
33.6 |
% |
|
47.1 |
% |
|
28.7 |
% |
|
35.8 |
% |
R&D
expenses |
|
1,307 |
|
|
805 |
|
|
302 |
|
|
2,414 |
|
|
1,594 |
|
|
1,237 |
|
|
496 |
|
|
3,327 |
|
Segment profit
(loss) |
|
$ |
1,204 |
|
|
$ |
1,990 |
|
|
$ |
446 |
|
|
$ |
3,640 |
|
|
$ |
639 |
|
|
$ |
1,170 |
|
|
$ |
1,231 |
|
|
$ |
3,040 |
|
|
(1) Excluding charges of $0.2 million in 2Q17
related to the previously announced discontinuation of the
ClearLink DAS, IBW segment 2Q17 gross margin was 36.5%.
Please refer to the schedule at the end of this press release for a
complete GAAP to non-GAAP reconciliation. |
Year-over-Year Quarter Comparison |
|
|
|
Three months ended December 31,
2016 |
|
Three months ended December 31, 2015 |
|
|
IBW |
|
ISMS |
|
CNS |
|
Total |
|
IBW |
|
ISMS |
|
CNS |
|
Total |
Revenue |
|
$ |
6,224 |
|
|
$ |
5,525 |
|
|
$ |
3,234 |
|
|
$ |
14,983 |
|
|
$ |
8,680 |
|
|
$ |
6,147 |
|
|
$ |
5,388 |
|
|
$ |
20,215 |
|
Gross profit |
|
2,511 |
|
|
2,795 |
|
|
748 |
|
|
6,054 |
|
|
3,319 |
|
|
2,938 |
|
|
1,706 |
|
|
7,963 |
|
Gross margin |
|
40.3 |
% |
|
50.6 |
% |
|
23.1 |
% |
|
40.4 |
% |
|
38.2 |
% |
|
47.8 |
% |
|
31.7 |
% |
|
39.4 |
% |
R&D
expenses |
|
1,307 |
|
|
805 |
|
|
302 |
|
|
2,414 |
|
|
2,701 |
|
|
1,363 |
|
|
829 |
|
|
4,893 |
|
Segment profit
(loss) |
|
$ |
1,204 |
|
|
$ |
1,990 |
|
|
$ |
446 |
|
|
$ |
3,640 |
|
|
$ |
618 |
|
|
$ |
1,575 |
|
|
$ |
877 |
|
|
$ |
3,070 |
|
Year-to-Date Comparison |
|
|
|
Nine months ended December 31,
2016 |
|
Nine months ended December 31, 2015 |
|
|
IBW |
|
ISMS |
|
CNS |
|
Total |
|
IBW |
|
ISMS |
|
CNS |
|
Total |
Revenue |
|
$ |
18,989 |
|
|
$ |
14,773 |
|
|
$ |
13,817 |
|
|
$ |
47,579 |
|
|
$ |
28,569 |
|
|
$ |
16,538 |
|
|
$ |
22,192 |
|
|
$ |
67,299 |
|
Gross profit |
|
5,738 |
|
|
7,221 |
|
|
4,027 |
|
|
16,986 |
|
|
11,867 |
|
|
8,313 |
|
|
6,443 |
|
|
26,623 |
|
Gross margin (1) |
|
30.2 |
% |
|
48.9 |
% |
|
29.1 |
% |
|
35.7 |
% |
|
41.5 |
% |
|
50.3 |
% |
|
29.0 |
% |
|
39.6 |
% |
R&D
expenses |
|
5,265 |
|
|
3,336 |
|
|
1,417 |
|
|
10,018 |
|
|
8,638 |
|
|
3,946 |
|
|
2,020 |
|
|
14,604 |
|
Segment profit
(loss) |
|
$ |
473 |
|
|
$ |
3,885 |
|
|
$ |
2,610 |
|
|
$ |
6,968 |
|
|
$ |
3,229 |
|
|
$ |
4,367 |
|
|
$ |
4,423 |
|
|
$ |
12,019 |
|
|
(1)
For the nine months ended December 31, 2016, IBW Segment Gross
Margin was 38.6% when excluding a charge of $1.6 million related to
the previously announced discontinuation of the ClearLink DAS and
stock-based compensation. Please refer to the GAAP to
non-GAAP reconciliation of IBW segment gross margin at the end of
the Segment Statement of Operations section. |
Reconciliation of GAAP to non-GAAP IBW Segment Gross
Margin |
|
|
|
Three months
ended December 31, 2016 |
|
Three months endedSeptember 30, 2016 |
|
Three months endedDecember 31, 2015 |
|
|
Revenue |
|
Gross Profit |
|
Gross Margin |
|
Revenue |
|
Gross Profit |
|
Gross Margin |
|
Revenue |
|
Gross Profit |
|
Gross Margin |
GAAP - IBW segment |
|
$ |
6,224 |
|
|
$ |
2,511 |
|
|
40.3 |
% |
|
$ |
6,644 |
|
|
$ |
2,233 |
|
|
33.6 |
% |
|
$ |
8,680 |
|
|
$ |
3,319 |
|
|
38.2 |
% |
ClearLink DAS E&O
(1) |
|
— |
|
|
— |
|
|
|
|
— |
|
|
192 |
|
|
|
|
— |
|
|
— |
|
|
|
Stock-based
compensation (2) |
|
— |
|
|
2 |
|
|
|
|
— |
|
|
2 |
|
|
|
|
— |
|
|
9 |
|
|
|
Non-GAAP - IBW
segment |
|
$ |
6,224 |
|
|
$ |
2,513 |
|
|
40.4 |
% |
|
$ |
6,644 |
|
|
$ |
2,427 |
|
|
36.5 |
% |
|
$ |
8,680 |
|
|
$ |
3,328 |
|
|
38.3 |
% |
|
(1) Excess and Obsolete inventory charges on
ClearLink DAS inventory and firm purchase commitments. |
(2) Stock-based compensation is a non-cash
expense incurred in accordance with share-based compensation
accounting standards. |
|
|
Nine months ended December 31,
2016 |
|
Nine months ended December 31, 2015 |
|
|
Revenue |
|
Gross Profit |
|
Gross Margin |
|
Revenue |
|
Gross Profit |
|
Gross Margin |
GAAP - IBW segment |
|
$ |
18,989 |
|
|
$ |
5,738 |
|
|
30.2 |
% |
|
$ |
28,569 |
|
|
$ |
11,867 |
|
|
41.5 |
% |
ClearLink DAS E&O
(1) |
|
— |
|
|
1,581 |
|
|
|
|
— |
|
|
— |
|
|
|
Stock-based
compensation (2) |
|
— |
|
|
7 |
|
|
|
|
— |
|
|
28 |
|
|
|
Non-GAAP - IBW
segment |
|
$ |
18,989 |
|
|
$ |
7,326 |
|
|
38.6 |
% |
|
$ |
28,569 |
|
|
$ |
11,895 |
|
|
41.6 |
% |
|
(1) Excess and Obsolete inventory charges on
ClearLink DAS inventory and firm purchase commitments. |
(2) Stock-based compensation is a non-cash
expense incurred in accordance with share-based compensation
accounting standards. |
Westell Technologies, Inc. |
Reconciliation of GAAP to non-GAAP Financial
Measures |
(Amounts in thousands, except per share amounts) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
Three months
ended December 31, 2016 |
|
Three months ended September 30, 2016 |
|
Three months ended December 31, 2015 |
|
|
Revenue |
|
Gross Profit |
|
Gross Margin |
|
Revenue |
|
Gross Profit |
|
Gross Margin |
|
Revenue |
|
Gross Profit |
|
Gross Margin |
GAAP -
Consolidated |
|
$ |
14,983 |
|
|
$ |
6,054 |
|
|
40.4 |
% |
|
$ |
17,780 |
|
|
6,367 |
|
|
35.8 |
% |
|
$ |
20,215 |
|
|
$ |
7,963 |
|
|
39.4 |
% |
Deferred
revenue adjustment (1) |
|
64 |
|
|
64 |
|
|
|
|
63 |
|
|
63 |
|
|
|
|
73 |
|
|
73 |
|
|
|
ClearLink
DAS E&O (2) |
|
— |
|
|
— |
|
|
|
|
— |
|
|
192 |
|
|
|
|
— |
|
|
— |
|
|
|
Stock-based compensation (3) |
|
— |
|
|
10 |
|
|
|
|
— |
|
|
8 |
|
|
|
|
— |
|
|
13 |
|
|
|
Non-GAAP -
Consolidated |
|
$ |
15,047 |
|
|
$ |
6,128 |
|
|
40.7 |
% |
|
$ |
17,843 |
|
|
$ |
6,630 |
|
|
37.2 |
% |
|
$ |
20,288 |
|
|
$ |
8,049 |
|
|
39.7 |
% |
|
|
Three months ended |
|
Nine months ended |
|
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
|
December 31, |
|
|
2016 |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
GAAP consolidated
operating expenses |
|
$ |
7,836 |
|
|
$ |
12,243 |
|
|
$ |
12,838 |
|
|
$ |
32,427 |
|
|
$ |
38,168 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
Stock-based compensation (3) |
|
(243 |
) |
|
(679 |
) |
|
(251 |
) |
|
(1,322 |
) |
|
(950 |
) |
Long-lived asset impairment (4) |
|
— |
|
|
— |
|
|
— |
|
|
(1,181 |
) |
|
— |
|
Amortization of intangibles (5) |
|
(1,212 |
) |
|
(1,201 |
) |
|
(1,418 |
) |
|
(3,613 |
) |
|
(4,249 |
) |
Restructuring, separation, and transition (6) |
|
(490 |
) |
|
(2,601 |
) |
|
— |
|
|
(3,055 |
) |
|
(223 |
) |
Total
adjustments |
|
(1,945 |
) |
|
(4,481 |
) |
|
(1,669 |
) |
|
(9,171 |
) |
|
(5,422 |
) |
Non-GAAP consolidated
operating expenses |
|
$ |
5,891 |
|
|
$ |
7,762 |
|
|
$ |
11,169 |
|
|
$ |
23,256 |
|
|
$ |
32,746 |
|
|
|
Three months ended |
|
Nine months ended |
|
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
|
December 31, |
|
|
2016 |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
GAAP consolidated net
income (loss) |
|
$ |
(1,807 |
) |
|
$ |
(5,810 |
) |
|
$ |
(4,797 |
) |
|
$ |
(15,385 |
) |
|
$ |
(11,136 |
) |
Income tax benefit
(expense) |
|
(10 |
) |
|
(8 |
) |
|
(7 |
) |
|
(20 |
) |
|
75 |
|
Other income (expense),
net |
|
(15 |
) |
|
74 |
|
|
85 |
|
|
76 |
|
|
62 |
|
GAAP consolidated
operating profit (loss) |
|
$ |
(1,782 |
) |
|
$ |
(5,876 |
) |
|
$ |
(4,875 |
) |
|
$ |
(15,441 |
) |
|
$ |
(11,273 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
Deferred
revenue adjustment (1) |
|
64 |
|
|
63 |
|
|
73 |
|
|
190 |
|
|
218 |
|
ClearLink
DAS E&O (2) |
|
— |
|
|
192 |
|
|
— |
|
|
1,581 |
|
|
— |
|
Stock-based compensation (3) |
|
253 |
|
|
687 |
|
|
264 |
|
|
1,346 |
|
|
974 |
|
Long-lived asset impairment (4) |
|
— |
|
|
— |
|
|
— |
|
|
1,181 |
|
|
— |
|
Amortization of intangibles (5) |
|
1,212 |
|
|
1,201 |
|
|
1,418 |
|
|
3,613 |
|
|
4,249 |
|
Restructuring, separation, and transition (6) |
|
490 |
|
|
2,601 |
|
|
— |
|
|
3,055 |
|
|
223 |
|
Total
adjustments |
|
2,019 |
|
|
4,744 |
|
|
1,755 |
|
|
10,966 |
|
|
5,664 |
|
Non-GAAP consolidated
operating profit (loss) from continuing operations |
|
$ |
237 |
|
|
$ |
(1,132 |
) |
|
$ |
(3,120 |
) |
|
$ |
(4,475 |
) |
|
$ |
(5,609 |
) |
Depreciation |
|
272 |
|
|
444 |
|
|
422 |
|
|
1,101 |
|
|
1,086 |
|
Non-GAAP consolidated
Adjusted EBITDA (7) from continuing operations |
|
$ |
509 |
|
|
$ |
(688 |
) |
|
$ |
(2,698 |
) |
|
$ |
(3,374 |
) |
|
$ |
(4,523 |
) |
|
|
Three months ended |
|
Nine months ended |
|
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
|
December 31, |
|
|
2016 |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
GAAP consolidated net
income (loss) |
|
$ |
(1,807 |
) |
|
$ |
(5,810 |
) |
|
$ |
(4,797 |
) |
|
$ |
(15,385 |
) |
|
$ |
(11,136 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
Deferred
revenue adjustment (1) |
|
64 |
|
|
63 |
|
|
73 |
|
|
190 |
|
|
218 |
|
ClearLink
DAS E&O (2) |
|
— |
|
|
192 |
|
|
— |
|
|
1,581 |
|
|
— |
|
Stock-based compensation (3) |
|
253 |
|
|
687 |
|
|
264 |
|
|
1,346 |
|
|
974 |
|
Amortization of intangibles (5) |
|
1,212 |
|
|
1,201 |
|
|
1,418 |
|
|
3,613 |
|
|
4,249 |
|
Restructuring, separation, and transition (6) |
|
490 |
|
|
2,601 |
|
|
— |
|
|
3,055 |
|
|
223 |
|
(Income)
loss from discontinued operations (8) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(272 |
) |
Total adjustments |
|
2,019 |
|
|
4,744 |
|
|
1,755 |
|
|
9,785 |
|
|
5,392 |
|
Non-GAAP consolidated
net income (loss) |
|
$ |
212 |
|
|
$ |
(1,066 |
) |
|
$ |
(3,042 |
) |
|
$ |
(5,600 |
) |
|
$ |
(5,744 |
) |
GAAP consolidated net
income (loss) per common share: |
|
|
|
|
|
|
|
|
|
|
Diluted |
|
$ |
(0.03 |
) |
|
$ |
(0.09 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.25 |
) |
|
$ |
(0.18 |
) |
Non-GAAP consolidated
net income (loss) per common share: |
|
|
|
|
|
|
|
|
|
|
Diluted |
|
$ |
0.00 |
|
|
$ |
(0.02 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.09 |
) |
|
$ |
(0.09 |
) |
Average number of
common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
Diluted |
|
61,700 |
|
|
61,199 |
|
|
60,810 |
|
|
61,260 |
|
|
60,765 |
|
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) On April 1, 2013, the Company
purchased Kentrox. The acquisition required the step-down on
acquired deferred revenue, which resulted in lower revenue that
will not recur once those liabilities have fully settled. The
adjustment removes the step-down on acquired deferred revenue that
was recognized.(2) Non-recurring excess and obsolete inventory
charges on inventory and firm purchase commitments associated with
the previously announced strategic decision related to the
discontinuation of ClearLink DAS.(3) Stock-based compensation
is a non-cash expense incurred in accordance with share-based
compensation accounting standards.(4) Non-cash impairment
related to tangible long-lived assets associated with the
previously announced strategic decision related to the
discontinuation of ClearLink DAS.(5) Amortization of
intangibles is a non-cash expense arising from previously acquired
intangible assets.(6) Restructuring expenses are not directly
related to the ongoing performance of our fundamental business
operations, including costs relating to abandonment of excess
office space at our headquarters and in New Hampshire, and
severance costs for terminated employees. This adjustment also
includes severance benefits related to the departure of certain
former executives.(7) EBITDA is a non-GAAP measure that
represents Earnings Before Interest, Taxes, Depreciation, and
Amortization. The Company presents Adjusted
EBITDA.(8) This adjustment is a non-recurring charge related
to the release of contingent liabilities related to the sale of
ConferencePlus which is presented as discontinued operations.
For additional information, contact:
Tom Minichiello
Chief Financial Officer
Westell Technologies, Inc.
+1 (630) 375 4740 tminichiello@westell.com
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