Westell Reports Fiscal 2018 Year-End and Fourth Quarter Results

AURORA, Ill., May 23, 2018 (GLOBE NEWSWIRE) -- Westell Technologies, Inc. (NASDAQ:WSTL), a leading provider of high-performance wireless infrastructure solutions, today announced results for its fiscal 2018 fourth quarter ended March 31, 2018 (4Q18) and its fiscal year ended March 31, 2018 (FY18).  Management will host a conference call to discuss financial and business results tomorrow, Thursday, May 24, 2018 at 9:30 AM Eastern Time (details below).

“Fiscal 2018 was a significant turn-around year for Westell.  Gross margin expanded to 43.0% from 37.7%, net income improved by $15.9 million, and we generated positive operating cash flow of $6.9 million,” said Kirk Brannock, Westell’s Chairman of the Board of Directors.  “While 4Q18 revenue was impacted by in-building wireless carrier spending shifts, on a FY18 year-over-year basis, sales of new public safety products grew significantly, revenue from our remote units for intelligent site management increased by a double-digit percentage, and we grew sales of integrated cabinets and power distribution products.”

“Westell began FY19 strong with its largest beginning-of-year backlog in three years,” said Stephen John, Westell’s newly appointed President and CEO.  “We are approaching the testing phase of an expanded suite of new products for the growing public safety market that we expect to introduce soon, and we continue to refresh the existing product portfolio to address the needs of the emerging network densification architecture and eventual 5G roll-outs.  Also, as previously announced, we’ve added a new VP of Global Business Development and M&A to focus on expanding our product offering and customer relationships across existing and adjacent markets.”

In-Building Wireless (IBW) Segment

On a full year-over-year basis, IBW’s revenue decrease was primarily due to lower sales of commercial repeaters and DAS conditioners, partly offset by increased sales of public safety repeaters and passive system components.  On a sequential quarter basis, IBW’s revenue decrease was primarily due to lower sales of our Universal DAS Interface Tray (UDIT) active DAS conditioner.  For both comparative periods, IBW’s gross margin increase was primarily due to lower costs.

Intelligent Site Management & Services (ISMS) Segment

On a full year-over-year basis, ISMS’s revenue was essentially flat, primarily as a result of increased sales of remote units offset by lower services revenue; while on a sequential quarter basis, the decrease was primarily due to lower services revenue.  For both comparative periods, ISMS’s gross margin changes were driven primarily by changes in the revenue mix among remotes, software, deployment services, and support services.

Communication Network Solutions (CNS) Segment

On a full year-over-year basis, CNS’s revenue decrease was primarily due to declining sales of tower mounted amplifiers and T1 network interface units, partly offset by higher integrated cabinet revenue.  On a sequential quarter basis, CNS’s revenue increase was primarily driven by higher sales of integrated cabinets and power distribution products.  On a full year-over-year basis, CNS’s gross margin decrease was primarily due to a less favorable mix; while on a sequential quarter basis, the increase was driven primarily by lower costs associated with excess and obsolete inventory.

Conference Call Information

Management will discuss financial and business results during the quarterly conference call on Thursday, May 24, 2018, at 9:30 AM Eastern Time.  Investors may quickly register online in advance of the call at 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 May 24 by dialing 888-206-4073 no later than 9:15 AM Eastern Time and providing the operator confirmation number 46898730.  

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: www.westell.com.  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

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 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, 2017, 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)

⁽¹⁾ The Company recorded restructuring expense relating to severance costs for terminated employees and abandonment of excess office space at its headquarters and in New Hampshire.

⁽²⁾ 2Q18 restructuring expense related to severance costs for terminated employees.

⁽³⁾ Non-cash impairment related to long-lived assets associated with the previously announced strategic decision related to the discontinuation of ClearLink DAS.

⁽⁴⁾ During the quarter ended September 30, 2017, the Company dissolved the NoranTel legal entity which triggered a one-time $0.6 million foreign currency gain with the reversal of a cumulative translation adjustment.

⁽⁵⁾ During the quarter ended December 31, 2017, the Company had an income tax benefit of $697K from the release of the tax valuation allowance associated with previously generated alternative minimum tax (AMT) credits due to the enactment of the Tax Cuts and Jobs Act of 2017.

⁽⁶⁾ All common stock, equity, share and per share amounts have been retroactively adjusted to reflect a one-for-four reverse stock split which was effective June 7, 2017.

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

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

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

Sequential Quarter Comparison

Year-over-Year Quarter Comparison

Full-Year Comparison

Reconciliation of GAAP to non-GAAP IBW Segment Gross Margin

Westell Technologies, Inc.
Reconciliation of GAAP to non-GAAP Financial Measures
(Amounts in thousands, except per share amounts)
(Unaudited)

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⁾ Stock-based compensation is a non-cash expense incurred in accordance with share-based compensation accounting standards.
⁽³⁾ 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.
⁽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⁾ Non-recurring foreign currency translation gain related to the wind-up of the NoranTel legal entity during the quarter ended September 30, 2017.
⁽⁹⁾ Adjustment removes one-time tax effect of changes in valuation allowance reserves associated with previously generated alternative minimum tax (AMT) credits due to the enactment of the Tax Cuts and Jobs Act of 2017.

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Released May 23, 2018