Westell Technologies Reports Fiscal First Quarter 2009 Results
AURORA, Ill.--(BUSINESS WIRE)--
Westell Technologies, Inc. (NASDAQ: WSTL):
Westell Technologies 1st Quarter Highlights
-- Net loss for the first quarter was $5.5 million or $0.08 per
diluted share.
-- Secured orders in excess of $20.0 million from Verizon for its
FiOS next-generation broadband home router to supply a key
segment of the fiber-to-the-home market.
-- OSPlant grew revenues 8% compared to the first quarter of
fiscal 2008.
Westell Technologies, Inc. (NASDAQ: WSTL), a leading provider of broadband products, gateways and conferencing services, today announced results for its fiscal first quarter ending June 30, 2008. Total revenue from continued operations for the first quarter was $38.1 million, compared to the $58.4 million reported in the prior year period. This decrease was significantly due to the previously announced loss of a customer and softening of demand for basic DSL modems. Net loss during the period was $5.5 million, or $0.08 per diluted share, compared to a net loss of $0.9 million, or $0.01 per diluted share in the same period last year. The Company has recorded a full valuation allowance on its deferred tax assets in the first quarter of fiscal year 2008.
Customer Networking Equipment (CNE) reported revenue of $10.7 million in the first quarter of fiscal 2009, compared to the $31.1 million reported in the prior year period. The Company is in a transition period during which CNE segment revenue is currently soft as product mix shifts from legacy towards newer, feature-rich product offerings as previously announced. During the quarter, the Company received orders for over $20 million from Verizon and another fiber-based service provider for its UltraLine Series3 gateway product.
OSPlant Systems, formerly Network Service Access (NSA), reported revenue of $14.9 million in the first quarter of fiscal 2009, an 8.2% improvement compared to fiscal first quarter of 2008 revenue of $13.8 million. The Company continues to enter new market segments with its OSPlant Systems portfolio.
Conferencing Services revenue declined to $12.5 million in the first quarter of fiscal 2009 from $13.5 million in the first quarter of fiscal 2008. A decrease in business from one of ConferencePlus' largest clients accounted for the majority of the decline in revenue in the first quarter of fiscal 2009 compared with the same quarter of last year. As a direct result, the company conducted a workforce reduction at ConferencePlus in mid-July 2008.
On June 30, 2008, ConferencePlus acquired a revenue base from iLink, an enhanced voice/data services provider. "This acquisition is immediately accretive, and we believe can be replicated with other companies in the marketplace," commented Tim Reedy, President of ConferencePlus. "As the price of oil and related transportation costs continue to rise, it's clear the conferencing network space will grow, and we believe we can scale this business further."
Additional News
-- Total cash as of June 30, 2008 was $59.9 million.
-- The ConferencePlus business unit will remain a part of ongoing
operations.
-- On July 8th, Bernard Sergesketter, former Westell Board
Director and respected leader in the telecommunications
industry, was named interim Chief Executive Officer following
the departure of Tom Mader.
Outlook
"During the next 60 days, my priority and that of the Board is to establish the plan that leverages the market success we are seeing with new products and sets a clear direction for sustainable and profitable growth," said Bernard F. Sergesketter, interim Chief Executive Officer. "Despite a leveling off of industry-wide demand for legacy products, we are at the very beginning stages of a product cycle for which Westell is well positioned. We have a solid foundation including nearly $60 million in cash and an established reputation with our customers for delivering innovative products. We expect nearly one-half of our fiscal 2009 CNE revenue to be generated from the sale of new products. The fundamental goal of returning Westell to profitability has not changed, and our focus for the remainder of the year is to set and execute our plan to yield the growth this business merits."
For the second quarter of fiscal 2009, Westell expects revenue to be in a range of $37 to $39 million. Westell expects EPS to be in a range of $0.10 to $0.11 loss per diluted share.
Conference Call Information
Conference Plus, Inc. (ConferencePlus), a Westell subsidiary, will manage Westell's first quarter fiscal 2009 earnings conference call on Thursday, July 24, 9:30 AM ET using its EventManager(TM) Service.
Participants can register for the Westell conference by going to the URL: http://www.conferenceplus.com/westell
With EventManager, participants can quickly register online in advance of the conference through a customizable web page that can be used to gather multiple pieces of information from each participant, as specified by the event arranger. After registering, participants receive dial-in numbers, a passcode, and a personal identification number (PIN) that is used to uniquely identify their presence and automatically join them into the audio conference. If a participant experiences any technical difficulties after joining the conference on July 24, simply press *0 for support.
If you do not wish to register, you can participate in the call on July 24 by dialing ConferencePlus at 1-877-875-0056 no later than 9:15 AM, Eastern Time and using confirmation number 22235993#. International participants may dial 1-847-585-4340. The Company's earnings press release and any related earnings information to be discussed on the earnings conference will be posted on the Investor Relations section of the Company's website at http://www.westell.com. An archive of the entire conference will be available on Westell's website or via Digital Audio Replay one hour following the conclusion of the conference. The replay of the conference can be accessed by dialing 1-888-843-8996 or 1-630-652-3044 and entering 5057830#.
About Westell
Westell Technologies, Inc., headquartered in Aurora, Illinois, is a holding company for Westell, Inc. and ConferencePlus, Inc. Westell, Inc. designs and develops broadband telecommunications access products. ConferencePlus, Inc. is a collaborative Application Service Provider that manages and hosts voice, video, IP applications and back-office services. Additional information can be obtained by visiting Westell's Web site at www.westell.com.
About ConferencePlus
ConferencePlus, a Westell Technologies, Inc. (NASDAQ: WSTL - News) subsidiary, is a leading global provider of audio, web, video and IP conferencing services. ConferencePlus is dedicated to providing high quality, innovative conferencing solutions to its domestic and international clients and telecommunications resellers. ConferencePlus is recognized for outstanding customer service and support to help clients meet their business objectives. The company is headquartered in Schaumburg, Illinois with an international headquarters in Dublin, Ireland. Additional information can be obtained by visiting the ConferencePlus web site at www.conferenceplus.com.
"Safe Harbor" statement under the Private Securities Litigation
Reform Act 1995:
Certain statements contained herein that are not historical facts or that contain the words "believe", "expect", "intend", "anticipate", "estimate", "may", "will", "should", or derivatives thereof and other words of similar meanings 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, need for financing, an economic downturn in the U.S. economy and telecom market, the impact of competitive products or technologies, competitive pricing pressures, 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 effect of Westell's accounting policies, the need for additional capital, the effect of economic conditions and trade, legal social and economic risks (such as import, licensing and trade restrictions) and other risks more fully described in the Company's Form 10-K for the fiscal year ended March 31, 2008 under the section 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.
Financial Results
(Dollars in thousands except per share amounts)
Three Months ended
June 30,
2008 2007
-------- -------
Revenues
OSPlant Systems $14,882 $13,757
CNE 10,666 31,097
Services 12,510 13,547
-------- -------
Total revenues 38,058 58,401
-------- -------
Gross profit
Equipment 7,257 11,136
Services 5,590 6,811
-------- -------
Total gross profit 12,847 17,947
-------- -------
Gross margin
Equipment 28.4% 24.8%
Services 44.7% 50.3%
-------- -------
Total gross margin 33.8% 30.7%
-------- -------
Operating expenses
Sales & marketing 6,489 4,526 (1)
As a percentage of revenue 17.1% 7.7%
General & administrative 5,485 5,158 (2)
As a percentage of revenue 14.4% 8.8%
Research & development 5,634 5,738
As a percentage of revenue 14.8% 9.8%
Restructuring (3) (58) 3,857
As a percentage of revenue -0.2% 6.6%
Intangibles amortization 459 456
As a percentage of revenue 1.2% 0.8%
-------- -------
Total operating expenses 18,009 19,735
-------- -------
As a percentage of revenue 47.3% 33.8%
Operating loss (5,162) (1,788)
Other income 347 979
Interest expense - (2)
-------- -------
Loss before minority interest and taxes (4,815) (811)
-------- -------
Income taxes 27 (4) (261)
Minority interest 36 63
-------- -------
Loss from continuing operations (4,878) (613)
-------- -------
Loss discontinued operations net of tax
benefit
of $0 and 171, respectively (5) (643) (303)
-------- -------
Net loss $(5,521) $(916)
======== =======
Net loss per common share:
Basic $(0.08) $(0.01)
Diluted $(0.08) $(0.01)
Average number of common
shares outstanding:
Basic 70,723 70,124
Diluted 70,723 70,124
Footnotes:
(1) The Company recorded a $3.3 million gain relating to a vendor
settlement and $600,000 in associated expenses for a net gain of $2.7
million.
(2) The Company recorded $545,000 of consulting costs related to the
implementation of the outsourcing strategy.
(3) Reorganization costs are for serverance and related costs
resulting from the outsourcing strategy.
(4) The Company is providing a valuation allowance on deferred tax
assets.
(5) The Company discontinued the operations of it's Westell Limited
entity located in the United Kingdom.
Westell Technologies, Inc.
Financial Results (continued)
(Dollars in thousands)
June 30, March 31,
2008 2008
--------- ---------
Cash and short term investments 59,949 68,349
Accounts receivable 18,704 19,498
Inventory 16,843 17,897
Total current assets 97,826 108,748
Goodwill and intangibles 9,242 9,479
Total assets 123,615 134,227
Total current liabilities 23,906 29,685
Total liabilities and minority interest 35,077 40,733
Shareholders' equity 88,538 93,494
Days sales outstanding 44 39
Source: Westell Technologies, Inc.
Released July 23, 2008