Brian Cooper Chief Financial Officer Westell Technologies, Inc. 630.375.4740 BCooper@westell.com |
• | Third quarter revenue for the Westell Division rose 16%, to $8.9 million |
• | New products in distributed antenna systems (DAS), Ethernet and cell-site optimization more than doubled to 11% of total revenue |
• | Cash and short-term investments were $119.2 million at December 31, 2012 |
• | The company repurchased 1.4 million shares for $2.9 million during the quarter |
Three Months Ended December 31, | Nine Months Ended December 31, | |||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
Revenue | $ | 8,928 | $ | 14,392 | $ | 29,380 | $ | 58,321 | ||||||||
Gross profit | 3,143 | 4,263 | 10,387 | 18,850 | ||||||||||||
Gross margin | 35.2 | % | 29.6 | % | 35.4 | % | 32.3 | % | ||||||||
Operating expenses: | ||||||||||||||||
Sales & marketing | 1,807 | 1,414 | 5,515 | 5,108 | ||||||||||||
Research & development | 1,754 | 1,797 | 5,515 | 5,865 | ||||||||||||
General & administrative | 2,124 | 1,707 | 7,368 | 5,625 | ||||||||||||
Restructuring | — | (2 | ) | 149 | 275 | |||||||||||
Intangibles amortization | 236 | 136 | 656 | 413 | ||||||||||||
Total operating expenses | 5,921 | 5,052 | 19,203 | 17,286 | ||||||||||||
Operating income (loss) | (2,778 | ) | (789 | ) | (8,816 | ) | 1,564 | |||||||||
Gain on CNS asset sale | — | — | — | 31,654 | ||||||||||||
Other income | 43 | 106 | 134 | 201 | ||||||||||||
Interest (expense) | — | (37 | ) | — | (42 | ) | ||||||||||
Income (loss) before income taxes and discontinued operations | (2,735 | ) | (720 | ) | (8,682 | ) | 33,377 | |||||||||
Income tax benefit (expense) | 1,399 | 268 | 3,431 | (11,108 | ) | |||||||||||
Net income (loss) from continuing operations | (1,336 | ) | (452 | ) | (5,251 | ) | 22,269 | |||||||||
Income (loss) from discontinued operations, net of income tax | (629 | ) | (1) | 20,254 | (629 | ) | (1) | 22,161 | ||||||||
Net income (loss) | $ | (1,965 | ) | $ | 19,802 | $ | (5,880 | ) | $ | 44,430 | ||||||
Basic earnings per share: | ||||||||||||||||
Net income (loss) from continuing operations | $ | (0.02 | ) | $ | (0.01 | ) | $ | (0.09 | ) | $ | 0.33 | |||||
Net income (loss) from discontinued operations | (0.01 | ) | 0.30 | (0.01 | ) | 0.33 | ||||||||||
Net income (loss) | $ | (0.03 | ) | $ | 0.30 | $ | (0.10 | ) | $ | 0.66 | ||||||
Diluted earnings per share: | ||||||||||||||||
Net income (loss) from continuing operations | $ | (0.02 | ) | $ | (0.01 | ) | $ | (0.09 | ) | $ | 0.32 | |||||
Net income (loss) from discontinued operations | (0.01 | ) | 0.30 | (0.01 | ) | 0.32 | ||||||||||
Net income (loss) | $ | (0.03 | ) | $ | 0.29 | $ | (0.10 | ) | $ | 0.65 | ||||||
Average number of common shares outstanding: | ||||||||||||||||
Basic | 58,693 | 66,411 | 60,541 | 67,390 | ||||||||||||
Diluted | 58,693 | 67,332 | 60,541 | 68,656 |
(1) | The company sold ConferencePlus on December 31, 2011. In the quarter ended December 31, 2012, the company recorded an after-tax charge of $0.9 million for a pending indemnification claim related to the ConferencePlus sale transaction and an unrelated tax benefit of $0.3 million that resulted from finalizing income tax filings related to the sale. |
December 31, 2012 | March 31, 2012 | |||||||
Assets: | ||||||||
Cash and cash equivalents | $ | 89,823 | $ | 120,832 | ||||
Restricted cash | 4,104 | 7,451 | ||||||
Short-term investments | 25,223 | 14,455 | ||||||
Accounts receivable, net | 4,936 | 5,710 | ||||||
Inventories | 11,507 | 9,906 | ||||||
Prepaid expenses and other current assets | 2,620 | 1,456 | ||||||
Deferred income taxes | 2,576 | 1,859 | ||||||
Total current assets | 140,789 | 161,669 | ||||||
Property and equipment, net | 1,143 | 1,197 | ||||||
Goodwill | 2,860 | 801 | ||||||
Intangibles, net | 5,299 | 2,728 | ||||||
Deferred income taxes | 33,719 | 30,740 | ||||||
Other assets | 509 | 291 | ||||||
Total assets | $ | 184,319 | $ | 197,426 | ||||
Liabilities and Stockholders’ Equity: | ||||||||
Accounts payable | $ | 4,116 | $ | 3,142 | ||||
Accrued expenses | 4,552 | 3,328 | ||||||
Total current liabilities | 8,668 | 6,470 | ||||||
Tax contingency reserve long-term | 3,484 | 3,483 | ||||||
Contingent consideration long-term | 2,221 | — | ||||||
Other long-term liabilities | 968 | 1,109 | ||||||
Total liabilities | 15,341 | 11,062 | ||||||
Total stockholders’ equity | 168,978 | 186,364 | ||||||
Total liabilities and stockholders’ equity | $ | 184,319 | $ | 197,426 |
Nine Months Ended December 31, | ||||||||
2012 | 2011 | |||||||
Cash flows from operating activities: | ||||||||
Net income (loss) | $ | (5,880 | ) | $ | 44,430 | |||
Reconciliation of net income (loss) to net cash provided by (used in) operating activities: | ||||||||
Depreciation and amortization | 1,023 | 1,781 | ||||||
Stock-based compensation | 1,062 | 922 | ||||||
Gain on CNS asset sale | — | (31,654 | ) | |||||
Gain on Sale of ConferencePlus, net of tax | — | (19,980 | ) | |||||
Restructuring | 149 | 942 | ||||||
Deferred taxes | (3,696 | ) | 13,999 | |||||
Other | (7 | ) | (305 | ) | ||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | 772 | 12,671 | ||||||
Inventory | (1,286 | ) | 623 | |||||
Accounts payable and accrued expenses | 1,064 | (26,573 | ) | |||||
Other | (1,406 | ) | 177 | |||||
Net cash provided by (used in) operating activities | (8,205 | ) | (2,967 | ) | ||||
Cash flows from investing activities: | ||||||||
Net purchases of short-term investments and debt securities | (10,768 | ) | (20,219 | ) | ||||
Proceeds from CNS asset sale | — | 36,683 | ||||||
Proceeds from the sale of ConferencePlus, net of cash transferred | — | 40,331 | ||||||
Payment for business acquisition | (2,524 | ) | — | |||||
Purchases of property and equipment, net | (305 | ) | (779 | ) | ||||
Proceeds from the sale of non-operating assets | — | 325 | ||||||
Changes in restricted cash | 3,347 | (7,449 | ) | |||||
Net cash provided by (used in) investing activities | (10,250 | ) | 48,892 | |||||
Cash flows from financing activities: | ||||||||
Purchase of treasury stock | (12,642 | ) | (12,553 | ) | ||||
Proceeds from stock options exercised | 85 | 1,600 | ||||||
Net cash provided by (used in) financing activities | (12,557 | ) | (10,953 | ) | ||||
Effect of exchange rate changes on cash | 3 | (128 | ) | |||||
Net increase (decrease) in cash | (31,009 | ) | 34,844 | |||||
Cash and cash equivalents, beginning of period | 120,832 | 86,408 | ||||||
Cash and cash equivalents, end of period | $ | 89,823 | $ | 121,252 |
Three Months Ended December, 2012 | ||||||||||||||||
Westell | CNS | Unallocated | Total | |||||||||||||
Revenue | $ | 8,873 | $ | 55 | $ | — | $ | 8,928 | ||||||||
Gross profit | 3,090 | 53 | — | 3,143 | ||||||||||||
Gross margin | 34.8 | % | 96.4 | % | 35.2 | % | ||||||||||
Operating expenses: | ||||||||||||||||
Sales & marketing | 1,862 | (55 | ) | — | 1,807 | |||||||||||
Research & development | 1,331 | 423 | — | 1,754 | ||||||||||||
General & administrative | 938 | (11 | ) | 1,197 | 2,124 | |||||||||||
Restructuring | — | — | — | — | ||||||||||||
Intangibles amortization | 234 | 2 | — | 236 | ||||||||||||
Total operating expenses (1) | 4,365 | 359 | 1,197 | 5,921 | ||||||||||||
Operating income (loss) | $ | (1,275 | ) | $ | (306 | ) | (1,197 | ) | (2,778 | ) | ||||||
Other income | 43 | 43 | ||||||||||||||
Income (loss) before income taxes before discontinued operations | (1,154 | ) | (2,735 | ) | ||||||||||||
Income tax benefit (expense) | 1,399 | 1,399 | ||||||||||||||
Net income (loss) from continuing operations | $ | 245 | $ | (1,336 | ) |
Three Months Ended December 31, 2011 | ||||||||||||||||
Westell | CNS | Unallocated | Total | |||||||||||||
Revenue | $ | 7,674 | $ | 6,718 | $ | — | $ | 14,392 | ||||||||
Gross profit | 2,650 | 1,613 | — | 4,263 | ||||||||||||
Gross margin | 34.5 | % | 24.0 | % | 29.6 | % | ||||||||||
Operating expenses: | ||||||||||||||||
Sales & marketing | 1,269 | 145 | — | 1,414 | ||||||||||||
Research & development | 1,223 | 574 | — | 1,797 | ||||||||||||
General & administrative | 649 | 200 | 858 | 1,707 | ||||||||||||
Restructuring | — | (2 | ) | — | (2 | ) | ||||||||||
Intangibles amortization | 135 | 1 | — | 136 | ||||||||||||
Total operating expenses (2) | 3,276 | 918 | 858 | 5,052 | ||||||||||||
Operating income (loss) | $ | (626 | ) | $ | 695 | (858 | ) | (789 | ) | |||||||
Other income | 106 | 106 | ||||||||||||||
Interest (expense) | (37 | ) | (37 | ) | ||||||||||||
Income (loss) before income taxes before discontinued operations | (789 | ) | (720 | ) | ||||||||||||
Income tax benefit (expense) | 268 | 268 | ||||||||||||||
Net income (loss) from continuing operations | $ | (521 | ) | $ | (452 | ) |
(1) | Includes $0.3 million and $0.0 million of depreciation and amortization expense from the Westell and CNS segments, respectively. |
(2) | Includes $0.3 million and $0.0 million of depreciation and amortization expense from the Westell and CNS segments, respectively. |
Nine Months Ended December 31, 2012 | ||||||||||||||||
Westell | CNS | Unallocated | Total | |||||||||||||
Revenue | $ | 28,145 | $ | 1,235 | $ | — | $ | 29,380 | ||||||||
Gross profit | 9,312 | 1,075 | — | 10,387 | ||||||||||||
Gross margin | 33.1 | % | 87.0 | % | 35.4 | % | ||||||||||
Operating expenses: | ||||||||||||||||
Sales & marketing | 5,568 | (53 | ) | — | 5,515 | |||||||||||
Research & development | 4,216 | 1,299 | — | 5,515 | ||||||||||||
General & administrative | 3,232 | 531 | 3,605 | 7,368 | ||||||||||||
Restructuring | 149 | — | — | 149 | ||||||||||||
Intangibles amortization | 652 | 4 | — | 656 | ||||||||||||
Total operating expenses (1) | 13,817 | 1,781 | 3,605 | 19,203 | ||||||||||||
Operating income (loss) | $ | (4,505 | ) | $ | (706 | ) | (3,605 | ) | (8,816 | ) | ||||||
Other income | 134 | 134 | ||||||||||||||
Income (loss) before income taxes before discontinued operations | (3,471 | ) | (8,682 | ) | ||||||||||||
Income tax benefit (expense) | 3,431 | 3,431 | ||||||||||||||
Net income (loss) from continuing operations | $ | (40 | ) | $ | (5,251 | ) |
Nine Months Ended December 31, 2011 | ||||||||||||||||
Westell | CNS | Unallocated | Total | |||||||||||||
Revenue | $ | 32,920 | $ | 25,401 | $ | — | $ | 58,321 | ||||||||
Gross profit | 13,090 | 5,760 | — | 18,850 | ||||||||||||
Gross margin | 39.8 | % | 22.7 | % | 32.3 | % | ||||||||||
Operating expenses: | ||||||||||||||||
Sales & marketing | 4,197 | 911 | — | 5,108 | ||||||||||||
Research & development | 3,829 | 2,036 | — | 5,865 | ||||||||||||
General & administrative | 2,071 | 751 | 2,803 | 5,625 | ||||||||||||
Restructuring | — | 275 | — | 275 | ||||||||||||
Intangibles amortization | 410 | 3 | — | 413 | ||||||||||||
Total operating expenses (2) | 10,507 | 3,976 | 2,803 | 17,286 | ||||||||||||
Operating income (loss) | $ | 2,583 | $ | 1,784 | (2,803 | ) | 1,564 | |||||||||
Gain on CNS asset sale | 31,654 | 31,654 | ||||||||||||||
Other income | 201 | 201 | ||||||||||||||
Interest (expense) | (42 | ) | (42 | ) | ||||||||||||
Income (loss) before income taxes before discontinued operations | 29,010 | 33,377 | ||||||||||||||
Income tax benefit (expense) | (11,108 | ) | (11,108 | ) | ||||||||||||
Net income (loss) from continuing operations | $ | 17,902 | $ | 22,269 |
(1) | Includes $1.0 million and $0.0 million of depreciation and amortization expense from the Westell and CNS segments, respectively. |
(2) | Includes $0.7 million and $0.1 million of depreciation and amortization expense from the Westell and CNS segments, respectively. |
Three Months Ended December 31, | Nine Months Ended December 31, | |||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
GAAP net income (loss) | $ | (1,965 | ) | $ | 19,802 | $ | (5,880 | ) | $ | 44,430 | ||||||
Adjustments: | ||||||||||||||||
CNS asset sale, net of tax (1) | (20 | ) | — | 316 | (18,963 | ) | ||||||||||
Income tax benefit (2) | — | — | — | (2,101 | ) | |||||||||||
(Income) loss from discontinued operations, net of income tax (3) | 629 | (20,254 | ) | 629 | (22,161 | ) | ||||||||||
Total adjustments | 609 | (20,254 | ) | 945 | (43,225 | ) | ||||||||||
Non-GAAP net income (loss) | $ | (1,356 | ) | $ | (452 | ) | $ | (4,935 | ) | $ | 1,205 | |||||
GAAP net income (loss) per common share: | ||||||||||||||||
Basic | $ | (0.03 | ) | $ | 0.30 | $ | (0.10 | ) | $ | 0.66 | ||||||
Diluted | $ | (0.03 | ) | $ | 0.29 | $ | (0.10 | ) | $ | 0.65 | ||||||
Non-GAAP net income (loss) per common share: | ||||||||||||||||
Basic | $ | (0.02 | ) | $ | (0.01 | ) | $ | (0.08 | ) | $ | 0.02 | |||||
Diluted | $ | (0.02 | ) | $ | (0.01 | ) | $ | (0.08 | ) | $ | 0.02 | |||||
Average number of common shares outstanding: | ||||||||||||||||
Basic | 58,693 | 66,411 | 60,541 | 67,390 | ||||||||||||
Diluted | 58,693 | 67,332 | 60,541 | 68,656 |
(1) | On April 15, 2011, the company sold certain assets and transferred certain liabilities of the CNS segment. The adjustments remove the gain on the sale, costs associated with the transaction, and related income tax effects. Fiscal year 2013 amounts reflect the costs of a resolution of a dispute related to the CNS sale. |
(2) | Benefit resulting from the release of a reserve for income taxes. |
(3) | On December 31, 2011, the ConferencePlus Division was sold. In the quarter ended December 31, 2012, the company recorded an after-tax charge of $0.9 million for a pending indemnification claim related to the ConferencePlus sale transaction and an unrelated tax benefit of $0.3 million that resulted from finalizing income tax filings related to the sale. Historical results of operations of ConferencePlus are presented as discontinued operations. |