Westell Technologies Reports Fiscal Second Quarter 2017 Sequential Revenue Increase of 20% to $17.8M

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Expense reductions take effect, resulting in sequential EPS improvement of 31%

AURORA, Ill.--(BUSINESS WIRE)-- Westell Technologies, Inc. (NASDAQ: WSTL), a leading provider of high-performance wireless infrastructure solutions, today announced results for its fiscal 2017 second quarter ended September 30, 2016 (2Q17). Management will host a conference call to discuss financial and business results tomorrow, Thursday, November 3, 2016, at 9:30 AM Eastern Time (details below).

Consolidated revenue in 2Q17 was $17.8 million, and comprised $6.6 million from the In-Building Wireless (IBW) segment, $5.1 million from the Intelligent Site Management and Services (ISMS) segment, and $6.0 million from the Communication Network Solutions (CNS) segment.

GAAP operating expenses were $12.2 million in 2Q17 compared to $12.3 million in 1Q17. Non-GAAP operating expenses, which excludes stock-based compensation, amortization of acquired intangible assets, and restructuring and restructuring-related charges, were $7.8 million in 2Q17 compared to $9.6 million in 1Q17.

             
  2Q17   1Q17  
3 months ended 3 months ended + favorable /
    9/30/16   6/30/16   - unfavorable
Consolidated Revenue   $17.8M   $14.8M   +20%
Net Income (Loss)   ($5.8M)   ($7.8M)   +26%
Earnings (Loss) Per Share   ($0.09)   ($0.13)   +31%
Non-GAAP Net Income (Loss) (1)   ($1.1M)   ($3.6M)   +69%
Non-GAAP Earnings (Loss) Per Share (1)   ($0.02)   ($0.06)   +67%
(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.
 

“As anticipated, 2Q17 revenue was up significantly from 1Q17, and all three segments grew sequentially with IBW up 9%, ISMS up 23%, and CNS up 32%,” said Kirk Brannock, President and CEO of Westell Technologies. “We also made great progress on the expense side and the bottom line, as we are now seeing the positive effects of our initial actions to reduce expenses.”

In October, Westell began to transition its IBW final assembly and test operations to Spinnaker Contract Manufacturing, Inc. of Tilton, New Hampshire, with an expected completion date of mid-December 2016. “Spinnaker is a trusted partner that has provided Westell with high-quality subassemblies since 2000,” Brannock said. “Streamlining operations is an important part of our path to profitability that will also reduce lead times and drive improved customer satisfaction.”

Cash and short-term investments were $20.9 million at September 30, 2016, compared to $25.3 million at June 30, 2016. Of the $4.4 million change during the quarter, cash used for operating activities was $4.1 million, which included a $2.7 million increase in customer receivables as of September 30, 2016, and $0.5 million for employee severance payments.

In-Building Wireless (IBW) Segment

IBW’s sequential revenue increase was driven primarily by higher sales of our Universal DAS Interface Tray (UDIT) active conditioner. IBW’s segment gross margin, excluding charges (see below), decreased to 36.5% in 2Q17 from 39.0% in 1Q17, due primarily to a less favorable mix.

             
  2Q17   1Q17  
3 months ended 3 months ended + favorable /
    9/30/16   6/30/16   - unfavorable
IBW Segment Revenue   $6.6M   $6.1M   +9%
IBW Segment Gross Margin (1)   33.6%   16.2%   +17.4%
IBW Segment R&D Expense   $1.6M   $2.4M   +33%
IBW Segment Profit (Loss)   $0.6M   ($1.4M)   +147%
(1) Excluding charges of $0.2 million in 2Q17 and $1.4 million in 1Q17 related to the previously announced discontinuation of the ClearLink DAS, IBW segment gross margin was 36.5% and 39.0%, respectively. 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 which, in turn, resulted in a less favorable mix that drove ISMS’s gross margin to decrease in 2Q17 compared to 1Q17.

             
  2Q17   1Q17  
3 months ended 3 months ended + favorable /
    9/30/16   6/30/16   - unfavorable
ISMS Segment Revenue   $5.1M   $4.1M   +23%
ISMS Segment Gross Margin   47.1%   48.8%   -1.7%
ISMS Segment R&D Expense   $1.2M   $1.3M   +4%
ISMS Segment Profit (Loss)   $1.2M   $0.7M   +61%
 

Communication Network Solutions Group (CNS) Segment

CNS’s sequential revenue increase was driven primarily by higher sales of Integrated Cabinets which, in turn, resulted in a less favorable mix that drove CNS’s gross margin to decrease in 2Q17 compared to 1Q17.

             
  2Q17   1Q17  
3 months ended 3 months ended + favorable /
    9/30/16   6/30/16   - unfavorable
CNS Segment Revenue   $6.0M   $4.6M   +32%
CNS Segment Gross Margin   28.7%   34.1%   -5.4%
CNS Segment R&D Expense   $0.5M   $0.6M   +20%
CNS Segment Profit (Loss)   $1.2M   $0.9M   +32%
 

Conference Call Information

Management will discuss financial and business results during the quarterly conference call on Thursday, November 3, 2016, at 9:30 AM Eastern Time. Investors may quickly register online in advance of the call at https://www.conferenceplus.com. 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 November 3, 2016, by calling 888-206-4065 no later than 8:15 AM Central Time (9:15 AM Eastern Time) and providing the operator confirmation number 43632542.

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 Technologies

Westell 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 Six months ended
September 30, June 30, September 30, September 30, September 30,
2016 2016 2015 2016 2015
Revenue $ 17,780 $ 14,816 $ 25,514 $ 32,596 $ 47,084
Gross profit 6,367 4,565 10,231 10,932 18,660
Gross margin 35.8 % 30.8 % 40.1 % 33.5 % 39.6 %
Operating expenses:
R&D 3,327 4,277 4,625 7,604 9,711
Sales and marketing 2,896 3,381 4,113 6,277 7,309
General and administrative 2,218 2,345 2,493 4,563 5,462
Intangible amortization 1,201 1,200 1,432 2,401 2,831
Restructuring 2,601 (1) (36 ) — 2,565 (1) 17
Long-lived assets impairment —   1,181   (2) —   1,181   (2) —  
Total operating expenses 12,243   12,348   12,663   24,591   25,330  
Operating profit (loss) (5,876 ) (7,783 ) (2,432 ) (13,659 ) (6,670 )
Other income (expense), net 74   17   (61 ) 91   (23 )
Income (loss) before income taxes and discontinued operations (5,802 ) (7,766 ) (2,493 ) (13,568 ) (6,693 )
Income tax benefit (expense) (8 ) (2 ) 20   (10 ) 82  
Net income (loss) from continuing operations (5,810 ) (7,768 ) (2,473 ) (13,578 ) (6,611 )
Income from discontinued operations (3) —   —   —   —   272  
Net income (loss) $ (5,810 ) $ (7,768 ) $ (2,473 ) $ (13,578 ) $ (6,339 )
Basic net income (loss) per share:
Basic net income (loss) from continuing operations $ (0.09 ) $ (0.13 ) $ (0.04 ) $ (0.22 ) $ (0.11 )
Basic net income (loss) from discontinued operations —   —   —   —   —  
Basic net income (loss) (4) $ (0.09 ) $ (0.13 ) $ (0.04 ) $ (0.22 ) $ (0.10 )
Diluted net income (loss) per share:
Diluted net income (loss) from continuing operations $ (0.09 ) $ (0.13 ) $ (0.04 ) $ (0.22 ) $ (0.11 )
Diluted net income (loss) from discontinued operations —   —   —   —   —  
Diluted net income (loss) (4) $ (0.09 ) $ (0.13 ) $ (0.04 ) $ (0.22 ) $ (0.10 )
Weighted-average number of common shares outstanding:
Basic 61,199 61,016 60,783 61,108 60,743
Diluted 61,199 61,016 60,783 61,108 60,743
(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) 1Q17 Impairment related to long-lived assets associated with 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)

 
September 30, 2016 March 31, 2016
(Unaudited)  
Assets
Cash and cash equivalents $ 20,917 $ 19,169
Short-term investments — 10,555
Accounts receivable, net 13,639 16,361
Inventories 12,678 13,498
Prepaid expenses and other current assets 1,923   1,900
Total current assets 49,157   61,483
Land, property and equipment, net 2,454 3,977
Intangible assets, net 17,987 20,388
Other non-current assets 168   183
Total assets $ 69,766   $ 86,031
Liabilities and Stockholders’ Equity
Accounts payable $ 4,619 $ 7,856
Accrued expenses 4,967 5,932
Accrued restructuring 2,951 1,537
Contingent consideration payable — 311
Deferred revenue 1,318   1,601
Total current liabilities 13,855 17,237
Deferred revenue non-current 1,388 1,236
Deferred income tax liability 24 10
Accrued restructuring non-current 192 550
Other non-current liabilities 249   314
Total liabilities 15,708 19,347
Total stockholders’ equity 54,058   66,684
Total liabilities and stockholders’ equity $ 69,766   $ 86,031
   
Westell Technologies, Inc.
Condensed Consolidated Statement of Cash Flows

(Amounts in thousands)

(Unaudited)

 
Three months Six months
ended ended
September 30, September 30,
2016 2016   2015
Cash flows from operating activities:
Net income (loss) $ (5,810 ) $ (13,578 ) $ (6,339 )
Reconciliation of net loss to net cash used in operating activities:
Depreciation and amortization 1,645 3,230 3,495
Long-lived assets impairment — 1,181 —
Stock-based compensation 687 1,093 710
Restructuring 2,601 2,565 17
Deferred taxes 12 14 57
Other loss (gain) 5 11 60
Changes in assets and liabilities:
Accounts receivable (2,748 ) 2,722 (5,342 )
Inventory 1,054 820 4,009
Accounts payable and accrued expenses (1,765 ) (5,909 ) 3,476
Deferred revenue 317 (131 ) (845 )
Other (136 ) (8 ) 933  
Net cash provided by (used in) operating activities (4,138 ) (7,990 ) 231  
Cash flows from investing activities:
Net maturity (purchase) of short-term investments and debt securities 10,090 10,555 20,430
Proceeds from sale of land — — 264
Purchases of property and equipment, net (102 ) (498 ) (1,530 )
Net cash provided by (used in) investing activities 9,988   10,057   19,164  
Cash flows from financing activities:
Purchase of treasury stock (57 ) (141 ) (85 )
Payment of contingent consideration (48 ) (175 ) (455 )
Net cash provided by (used in) financing activities (105 ) (316 ) (540 )
(Gain) loss of exchange rate changes on cash (6 ) (3 ) (3 )
Net increase (decrease) in cash and cash equivalents 5,739 1,748 18,852
Cash and cash equivalents, beginning of period 15,178   19,169   14,026  
Cash and cash equivalents, end of period $ 20,917   $ 20,917   $ 32,878  
   
Westell Technologies, Inc.
Segment Statement of Operations

(Amounts in thousands)

(Unaudited)

 

Sequential Quarter Comparison

 
Three months ended September 30, 2016 Three months ended June 30, 2016
IBW   ISMS   CNS   Total IBW   ISMS   CNS   Total
Revenue $ 6,644   $ 5,109   $ 6,027   $ 17,780   $ 6,121   $ 4,139   $ 4,556   $ 14,816  
Gross profit 2,233   2,407   1,727   6,367   994   2,019   1,552   4,565  
Gross margin (1) 33.6 % 47.1 % 28.7 % 35.8 % 16.2 % 48.8 % 34.1 % 30.8 %
R&D expenses 1,594   1,237   496   3,327   2,364   1,294   619   4,277  
Segment profit (loss) $ 639 $ 1,170 $ 1,231 $ 3,040 $ (1,370 ) $ 725 $ 933 $ 288
(1) Excluding charges of $0.2 million in 2Q17 and $1.4 million in 1Q17 related to the previously announced discontinuation of the ClearLink DAS, IBW segment gross margin was 36.5% and 39.0%, respectively. 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 September 30, 2016 Three months ended September 30, 2015
IBW   ISMS   CNS   Total IBW   ISMS   CNS   Total
Revenue $ 6,644   $ 5,109   $ 6,027   $ 17,780   $ 10,819   $ 5,886   $ 8,809   $ 25,514  
Gross profit 2,233   2,407   1,727   6,367   4,547   3,164   2,520   10,231  
Gross margin (1) 33.6 % 47.1 % 28.7 % 35.8 % 42.0 % 53.8 % 28.6 % 40.1 %
R&D expenses 1,594   1,237   496   3,327   2,775   1,302   548   4,625  
Segment profit (loss) $ 639   $ 1,170   $ 1,231   $ 3,040   $ 1,772   $ 1,862   $ 1,972   $ 5,606  
(1) 2Q17 IBW Segment Gross Margin was 36.5% when excluding a charge of $0.2 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.
   

Year-to-Date Comparison

 
Six months ended September 30, 2016 Six months ended September 30, 2015
IBW   ISMS   CNS   Total IBW   ISMS   CNS   Total
Revenue $ 12,765   $ 9,248   $ 10,583   $ 32,596   $ 19,889     $ 10,391     $ 16,804   $ 47,084  
Gross profit 3,227   4,426   3,279   10,932   8,548     5,375     4,737   18,660  
Gross margin (1) 25.3 % 47.9 % 31.0 % 33.5 % 43.0 %   51.7 %   28.2 % 39.6 %
R&D expenses 3,958   2,531   1,115   7,604   5,937     2,583     1,191   9,711  
Segment profit (loss) $ (731 ) $ 1,895   $ 2,164   $ 3,328   $ 2,611   $ 2,792   $ 3,546   $ 8,949  
(1) The six month ended September 30, 2016, IBW Segment Gross Margin was 37.7% 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 Three months ended Three months ended
September 30, 2016 June 30, 2016 September 30, 2015
  Gross   Gross   Gross   Gross   Gross   Gross
Revenue Profit Margin Revenue Profit Margin Revenue Profit   Margin
GAAP - IBW segment $ 6,644 $ 2,233 33.6 % $ 6,121 $ 994 16.2 % $ 10,819 $ 4,547 42.0 %
ClearLink DAS E&O (1) — 192 — 1,389 — —
Stock-based compensation (2) —   2   —   3   —   —    
Non-GAAP - IBW segment $ 6,644   $ 2,427   36.5 % $ 6,121   $ 2,386   39.0 % $ 10,819   $ 4,547     42.0 %
(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.
   
Six months ended September 30, 2016 Six months ended September 30, 2015
Revenue   Gross Profit   Gross Margin Revenue   Gross Profit   Gross Margin
GAAP - IBW segment $ 12,765 $ 3,227 25.3 % $ 19,889 $ 8,548 43.0 %
ClearLink DAS E&O (1) — 1,581 — —
Stock-based compensation (2) —   5   —   —  
Non-GAAP - IBW segment $ 12,765   $ 4,813   37.7 % $ 19,889   $ 8,548   43.0 %
(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 Three months ended Three months ended
September 30, 2016 June 30, 2016 September 30, 2015
  Gross   Gross   Gross   Gross   Gross   Gross
Revenue Profit Margin Revenue Profit Margin Revenue Profit Margin
GAAP - Consolidated $ 17,780 $ 6,367 35.8 % $ 14,816 4,565 30.8 % $ 25,514 $ 10,231 40.1 %
Deferred revenue adjustment (1) 63 63 63 63 73 73
ClearLink DAS E&O (2) — 192 — 1,389 — —
Stock-based compensation (3) —   8   —   6   —   14  
Non-GAAP - Consolidated $ 17,843   $ 6,630   37.2 % $ 14,879   $ 6,023   40.5 % $ 25,587   $ 10,318   40.3 %
   
Three months ended Six months ended
September 30,   June 30,   September 30, September 30,   September 30,
2016 2016 2015 2016 2015
GAAP consolidated operating expenses $ 12,243 $ 12,348 $ 12,663 $ 24,591 $ 25,330
Adjustments:
Stock-based compensation (3) (679 ) (400 ) (239 ) (1,079 ) (699 )
Long-lived asset impairment (4) — (1,181 ) — (1,181 ) —
Amortization of intangibles (5) (1,201 ) (1,200 ) (1,432 ) (2,401 ) (2,831 )
Restructuring, separation, and transition (6) (2,601 ) 36   (59 ) (2,565 ) (223 )
Total adjustments (4,481 ) (2,745 ) (1,730 ) (7,226 ) (3,753 )
Non-GAAP consolidated operating expenses $ 7,762   $ 9,603   $ 10,933   $ 17,365   $ 21,577  
   
Three months ended Six months ended
September 30,   June 30,   September 30, September 30,   September 30,
2016 2016 2015 2016 2015
GAAP consolidated operating profit (loss) $ (5,876 ) $ (7,783 ) $ (2,432 ) $ (13,659 ) $ (6,670 )
Adjustments:
Deferred revenue adjustment (1) 63 63 73 126 146
ClearLink DAS E&O (2) 192 1,389 — 1,581 —
Stock-based compensation (3) 687 406 253 1,093 710
Long-lived asset impairment (4) — 1,181 — 1,181 —
Amortization of intangibles (5) 1,201 1,200 1,432 2,401 2,831
Restructuring, separation, and transition (6) 2,601   (36 ) 59   2,565   223  
Total adjustments 4,744   4,203   1,817   8,947   3,910  
Non-GAAP consolidated operating profit (loss) from continuing operations $ (1,132 ) $ (3,580 ) $ (615 ) $ (4,712 ) $ (2,760 )
Depreciation 444   385   367   829   664  
Non-GAAP consolidated Adjusted EBITDA (7) from continuing operations $ (688 ) $ (3,195 ) $ (248 ) $ (3,883 ) $ (2,096 )
   
Three months ended Six months ended
September 30,   June 30   September 30, September 30,   September 30,
2016 2016 2015 2016 2015
GAAP consolidated net income (loss) $ (5,810 ) $ (7,768 ) $ (2,473 ) $ (13,578 ) $ (6,339 )
Adjustments:
Deferred revenue adjustment (1) 63 63 73 126 146
ClearLink DAS E&O (2) 192 1,389 — 1,581 —
Stock-based compensation (3) 687 406 253 1,093 710
Long-lived asset impairment (4) — 1,181 — 1,181 —
Amortization of intangibles (5) 1,201 1,200 1,432 2,401 2,831
Restructuring, separation, and transition (6) 2,601 (36 ) 59 2,565 223
(Income) loss from discontinued operations (8) —   —   —   —   (272 )
Total adjustments 4,744   4,203   1,817   8,947   3,638  
Non-GAAP consolidated net income (loss) $ (1,066 ) $ (3,565 ) $ (656 ) $ (4,631 ) $ (2,701 )
GAAP consolidated net income (loss) per common share:
Basic and diluted $ (0.09 ) $ (0.13 ) $ (0.04 ) $ (0.22 ) $ (0.10 )
Non-GAAP consolidated net income (loss) per common share:
Basic and diluted $ (0.02 ) $ (0.06 ) $ (0.01 ) $ (0.08 ) $ (0.04 )
Average number of common shares outstanding:
Basic and diluted 61,199 61,016 60,783 61,108 60,743
 

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)

Excess and Obsolete inventory charges on inventory and firm purchase commitments associated with the previously announced discontinuation of ClearLink DAS.

(3)

Stock-based compensation is a non-cash expense incurred in accordance with share-based compensation accounting standards.

(4)

Impairment related to long-lived assets associated with 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 its 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 in its reconciliation of GAAP to non-GAAP consolidated operating profit (loss) rather than in its reconciliation of GAAP to non-GAAP consolidated net income (loss) because (a) non-GAAP consolidated operating profit (loss) is more closely aligned with Adjusted EBITDA and (b) the difference between the Company's GAAP consolidated operating profit (loss) and its GAAP consolidated net income (loss) is immaterial.

(8)

The release of contingent liabilities related to the sale of ConferencePlus are presented as discontinued operations.

Westell Technologies, Inc.
Tom Minichiello
Chief Financial Officer
+1 (630) 375 4740
tminichiello@westell.com

Source: Westell Technologies, Inc.

Released November 2, 2016