![]() | NEWS RELEASE |
Three Months Ended March 31, | Twelve Months Ended March 31, | |||||||||||||||||
2015 | 2014 (adjusted (1) (2)) | 2015 | 2014 (adjusted (1) (2)) | |||||||||||||||
Revenue | $ | 18,613 | $ | 24,421 | $ | 84,127 | $ | 102,073 | ||||||||||
Gross profit | 4,666 | 8,090 | 26,810 | 40,461 | ||||||||||||||
Gross margin | 25.1 | % | 33.1 | % | 31.9 | % | 39.6 | % | ||||||||||
Operating expenses: | ||||||||||||||||||
Sales & marketing | 3,343 | 3,555 | 12,407 | 13,304 | ||||||||||||||
Research & development | 4,220 | 3,494 | 17,348 | 11,339 | ||||||||||||||
General & administrative | 5,547 | 3,827 | 14,678 | 14,027 | ||||||||||||||
Intangibles amortization | 1,520 | 1,301 | 6,377 | 4,889 | ||||||||||||||
Restructuring | 3,188 | (3) | 62 | 3,243 | (3) | 335 | ||||||||||||
Goodwill impairment | — | — | 31,102 | (4 | ) | — | ||||||||||||
Total operating expenses | 17,818 | 12,239 | 85,155 | 43,894 | ||||||||||||||
Operating loss from continuing operations | (13,152 | ) | (4,149 | ) | (58,345 | ) | (3,433 | ) | ||||||||||
Other income (expense), net | (18 | ) | 7 | (2 | ) | (56 | ) | |||||||||||
Loss before income taxes and discontinued operations | (13,170 | ) | (4,142 | ) | (58,347 | ) | (3,489 | ) | ||||||||||
Income tax benefit (expense) | 31 | 8,585 | (5) | 201 | 8,460 | (5) | ||||||||||||
Net income (loss) from continuing operations | (13,139 | ) | 4,443 | (58,146 | ) | 4,971 | ||||||||||||
Income (loss) from discontinued operations, net of income tax | 139 | (6 | ) | 139 | (45 | ) | ||||||||||||
Net income (loss) | $ | (13,000 | ) | $ | 4,437 | $ | (58,007 | ) | $ | 4,926 | ||||||||
Basic net income (loss) per share: | ||||||||||||||||||
Basic net income (loss) from continuing operations | $ | (0.22 | ) | $ | 0.08 | $ | (0.97 | ) | $ | 0.08 | ||||||||
Basic net income (loss) from discontinued operations | — | — | — | — | ||||||||||||||
Basic net income (loss) | $ | (0.22 | ) | $ | 0.08 | $ | (0.97 | ) | $ | 0.08 | ||||||||
Diluted net income (loss) per share: | ||||||||||||||||||
Diluted net income (loss) from continuing operations | $ | (0.22 | ) | $ | 0.07 | $ | (0.97 | ) | $ | 0.08 | ||||||||
Diluted net income (loss) from discontinued operations | — | — | — | — | ||||||||||||||
Diluted net income (loss) | $ | (0.22 | ) | $ | 0.07 | $ | (0.97 | ) | $ | 0.08 | ||||||||
Weighted-average number of shares outstanding: | ||||||||||||||||||
Basic | 60,286 | 59,109 | 59,985 | 58,786 | ||||||||||||||
Diluted | 60,286 | 60,971 | 59,985 | 60,048 |
March 31, 2015 | March 31, 2014 | |||||||||
Assets: | (adjusted (1)) | |||||||||
Cash and cash equivalents | $ | 14,026 | $ | 35,793 | ||||||
Short-term investments | 23,906 | 15,584 | ||||||||
Accounts receivable, net | 11,845 | 15,831 | ||||||||
Inventories | 16,205 | 24,056 | ||||||||
Prepaid expenses and other current assets | 3,285 | 1,952 | ||||||||
Deferred income tax assets | 973 | 899 | ||||||||
Land held-for-sale | 264 | 264 | ||||||||
Total current assets | 70,504 | 94,379 | ||||||||
Property and equipment, net | 3,603 | 2,681 | ||||||||
Goodwill | — | 31,102 | ||||||||
Intangible assets, net | 25,942 | 32,319 | ||||||||
Other non-current assets | 258 | 393 | ||||||||
Total assets | $ | 100,307 | $ | 160,874 | ||||||
Liabilities and Stockholders’ Equity: | ||||||||||
Accounts payable | $ | 4,011 | $ | 7,508 | ||||||
Accrued expenses | 4,131 | 7,315 | ||||||||
Accrued restructuring | 1,161 | 57 | ||||||||
Contingent consideration | 1,184 | 2,067 | ||||||||
Deferred revenue | 2,415 | 1,774 | ||||||||
Total current liabilities | 12,902 | 18,721 | ||||||||
Deferred revenue non-current | 751 | 787 | ||||||||
Deferred income tax liability | 1,019 | 1,072 | ||||||||
Accrued restructuring non-current | 1,642 | 0 | ||||||||
Contingent consideration non-current | 400 | 574 | ||||||||
Other non-current liabilities | 409 | 528 | ||||||||
Total liabilities | 17,123 | 21,682 | ||||||||
Total stockholders’ equity | 83,184 | 139,192 | ||||||||
Total liabilities and stockholders’ equity | $ | 100,307 | $ | 160,874 |
Twelve Months Ended March 31, | ||||||||
2015 | 2014 (adjusted (1)) | |||||||
Cash flows from operating activities: | ||||||||
Net income (loss) | $ | (58,007 | ) | $ | 4,926 | |||
Reconciliation of net income to net cash provided by (used in) operating activities: | ||||||||
Depreciation and amortization | 7,416 | 5,511 | ||||||
Goodwill impairment | 31,102 | — | ||||||
Stock-based compensation | 2,605 | 1,871 | ||||||
Restructuring | 3,243 | 335 | ||||||
Deferred taxes | (127 | ) | (8,990 | ) | ||||
Other | 140 | 41 | ||||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | 3,986 | (2,139 | ) | |||||
Inventories | 8,186 | 595 | ||||||
Accounts payable and accrued expenses | (6,912 | ) | (1,081 | ) | ||||
Other | (919 | ) | 528 | |||||
Net cash provided by (used in) operating activities | (9,287 | ) | 1,597 | |||||
Cash flows from investing activities: | ||||||||
Net purchases of short-term investments and debt securities | (8,322 | ) | 8,765 | |||||
Acquisitions, net of cash acquired | (304 | ) | (66,170 | ) | ||||
Purchases of property and equipment | (2,137 | ) | (443 | ) | ||||
Changes in restricted cash | — | 2,500 | ||||||
Net cash used in investing activities | (10,763 | ) | (55,348 | ) | ||||
Cash flows from financing activities: | ||||||||
Payment of contingent consideration | (1,104 | ) | — | |||||
Purchase of treasury stock | (863 | ) | (359 | ) | ||||
Proceeds from stock options exercised | 257 | 1,677 | ||||||
Net cash provided by (used in) financing activities | (1,710 | ) | 1,318 | |||||
(Gain) loss of exchange rate changes on cash | (7 | ) | (7 | ) | ||||
Net decrease in cash and cash equivalents | (21,767 | ) | (52,440 | ) | ||||
Cash and cash equivalents, beginning of period | 35,793 | 88,233 | ||||||
Cash and cash equivalents, end of period | $ | 14,026 | $ | 35,793 |
Three Months Ended March 31, 2015 | ||||||||||||
IBW | CSG | Total | ||||||||||
Revenue | $ | 7,082 | $ | 11,531 | $ | 18,613 | ||||||
Cost of revenue | 5,456 | 8,491 | 13,947 | |||||||||
Gross profit | 1,626 | 3,040 | 4,666 | |||||||||
Gross margin | 23.0 | % | 26.4 | % | 25.1 | % | ||||||
Operating expenses: | ||||||||||||
Research & development | 2,315 | 1,905 | 4,220 | |||||||||
Segment (loss) profit | $ | (689 | ) | $ | 1,135 | 446 | ||||||
Sales & marketing | 3,343 | |||||||||||
General & administrative | 5,547 | |||||||||||
Intangible amortization | 1,520 | |||||||||||
Restructuring (1) | 3,188 | |||||||||||
Operating loss | (13,152 | ) | ||||||||||
Other expense | (18 | ) | ||||||||||
Income tax (expense) benefit | 31 | |||||||||||
Net loss from continuing operations | $ | (13,139 | ) |
Three Months Ended March 31, 2014 (adjusted (2)) | ||||||||||||
IBW | CSG | Total | ||||||||||
Revenue | $ | 8,218 | $ | 16,203 | $ | 24,421 | ||||||
Cost of revenue | 5,631 | 10,700 | 16,331 | |||||||||
Gross profit | 2,587 | 5,503 | 8,090 | |||||||||
Gross margin | 31.5 | % | 34.0 | % | 33.1 | % | ||||||
Operating expenses: | ||||||||||||
Research & development | 807 | 2,687 | 3,494 | |||||||||
Segment profit | $ | 1,780 | $ | 2,816 | 4,596 | |||||||
Sales & marketing | 3,555 | |||||||||||
General & administrative | 3,827 | |||||||||||
Restructuring | 62 | |||||||||||
Intangible amortization | 1,301 | |||||||||||
Operating loss | (4,149 | ) | ||||||||||
Other income | 7 | |||||||||||
Income tax (expense) benefit (3) | 8,585 | |||||||||||
Net income from continuing operations | $ | 4,443 |
(1) | The Company recorded restructuring expense primarily relating to abandonment of excess office space at its headquarters. |
(2) | Certain amounts have been adjusted to reflect measurement period adjustments related to the CSI acquisition. |
(3) | In fiscal year 2014, the Company acquired Kentrox and CSI in stock transactions. Deferred tax liabilities of $8.8 million resulted from the acquisitions relating primarily to acquired intangible assets. The Company's anticipated ability to realize deferred tax assets from the reversal of these deferred tax liabilities resulted in a partial reversal of valuation allowance related to the Company's deferred tax assets. Income tax expense, excluding the impact of the acquisitions noted above, was primarily from state income tax expense in non-unitary states and state taxes based on gross margin, not taxable income. |
Twelve Months Ended March 31, 2015 | ||||||||||||
IBW | CSG | Total | ||||||||||
Revenue | $ | 37,714 | $ | 46,413 | $ | 84,127 | ||||||
Cost of revenue | 23,999 | 33,318 | 57,317 | |||||||||
Gross profit | 13,715 | 13,095 | 26,810 | |||||||||
Gross margin | 36.4 | % | 28.2 | % | 31.9 | % | ||||||
Operating expenses: | ||||||||||||
Research & development | 8,955 | 8,393 | 17,348 | |||||||||
Segment profit | $ | 4,760 | $ | 4,702 | 9,462 | |||||||
Sales & marketing | 12,407 | |||||||||||
General & administrative | 14,678 | |||||||||||
Intangible amortization | 6,377 | |||||||||||
Restructuring (1) | 3,243 | |||||||||||
Goodwill impairment (2) | 31,102 | |||||||||||
Operating loss | (58,345 | ) | ||||||||||
Other expense | (2 | ) | ||||||||||
Income tax (expense) benefit | 201 | |||||||||||
Net loss from continuing operations | $ | (58,146 | ) |
Twelve Months Ended March 31, 2014 (adjusted (3)) | ||||||||||||
IBW | CSG | Total | ||||||||||
Revenue | $ | 13,096 | $ | 88,977 | $ | 102,073 | ||||||
Cost of revenue | 8,935 | 52,677 | 61,612 | |||||||||
Gross profit | 4,161 | 36,300 | 40,461 | |||||||||
Gross margin | 31.8 | % | 40.8 | % | 39.6 | % | ||||||
Operating expenses: | ||||||||||||
Research & development | 1,360 | 9,979 | 11,339 | |||||||||
Segment profit | $ | 2,801 | $ | 26,321 | 29,122 | |||||||
Sales & marketing | 13,304 | |||||||||||
General & administrative | 14,027 | |||||||||||
Intangible amortization | 4,889 | |||||||||||
Restructuring | 335 | |||||||||||
Operating loss | (3,433 | ) | ||||||||||
Other expense | (56 | ) | ||||||||||
Income tax (expense) benefit (4) | 8,460 | |||||||||||
Net income from continuing operations | $ | 4,971 |
(1) | The Company recorded restructuring expense primarily relating to abandonment of excess office space at its headquarters. |
(2) | The Company recorded a non-cash charge of $31.1 million to record an impairment of the full carrying amount of goodwill. |
(3) | Certain amounts have been adjusted to reflect measurement period adjustments related to the CSI acquisition. |
(4) | In fiscal year 2014, the Company acquired Kentrox and CSI in stock transactions. Deferred tax liabilities of $8.8 million resulted from the acquisitions relating primarily to acquired intangible assets. The Company's anticipated ability to realize deferred tax assets from the reversal of these deferred tax liabilities resulted in a partial reversal of valuation allowance related to the Company's deferred tax assets. Income tax expense, excluding the impact of the acquisitions noted above, was primarily from state income tax expense in non-unitary states and state taxes based on gross margin, not taxable income. |
Three Months Ended March 31, | Twelve Months Ended March 31, | |||||||||||||||
2015 | 2014 (adjusted) | 2015 | 2014 (adjusted) | |||||||||||||
GAAP net income (loss) | $ | (13,000 | ) | $ | 4,437 | $ | (58,007 | ) | $ | 4,926 | ||||||
Adjustments: | ||||||||||||||||
Inventory fair value step-up (1) | 36 | 971 | 576 | 2,298 | ||||||||||||
Deferred revenue adjustment (1) | 64 | 169 | 386 | 2,089 | ||||||||||||
Amortization of intangibles (2) | 1,520 | 1,301 | 6,377 | 4,889 | ||||||||||||
Income taxes (3) | — | (8,824 | ) | — | (8,824 | ) | ||||||||||
Restructuring (4) | 3,188 | 62 | 3,243 | 335 | ||||||||||||
CEO severance (5) | 1,801 | — | 1,801 | — | ||||||||||||
Stock-based compensation (6) | 977 | 578 | 2,605 | 1,871 | ||||||||||||
Land impairment | 108 | — | 108 | — | ||||||||||||
Goodwill impairment (7) | — | — | 31,102 | — | ||||||||||||
(Income) loss from discontinued operations (8) | (227 | ) | 6 | (227 | ) | 45 | ||||||||||
Total adjustments | 7,467 | (5,737 | ) | 45,971 | 2,703 | |||||||||||
Non-GAAP net income (loss) | $ | (5,533 | ) | $ | (1,300 | ) | $ | (12,036 | ) | $ | 7,629 | |||||
GAAP net income (loss) per common share: | ||||||||||||||||
Basic | $ | (0.22 | ) | $ | 0.08 | $ | (0.97 | ) | $ | 0.08 | ||||||
Diluted | $ | (0.22 | ) | $ | 0.07 | $ | (0.97 | ) | $ | 0.08 | ||||||
Non-GAAP net income (loss) per common share: | ||||||||||||||||
Basic | $ | (0.09 | ) | $ | (0.02 | ) | $ | (0.20 | ) | $ | 0.13 | |||||
Diluted | $ | (0.09 | ) | $ | (0.02 | ) | $ | (0.20 | ) | $ | 0.13 | |||||
Average number of common shares outstanding: | ||||||||||||||||
Basic | 60,286 | 59,109 | 59,985 | 58,786 | ||||||||||||
Diluted | 60,286 | 60,971 | 59,985 | 60,048 | ||||||||||||
Three Months Ended March 31, | Twelve Months Ended March 31, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
GAAP operating expenses | 17,818 | 12,239 | 85,155 | 43,894 | ||||||||||||
Adjustments: | ||||||||||||||||
Amortization of intangibles (2) | (1,520 | ) | (1,301 | ) | (6,377 | ) | (4,889 | ) | ||||||||
Restructuring (4) | (3,188 | ) | (62 | ) | (3,243 | ) | (335 | ) | ||||||||
CEO severance (5) | (1,801 | ) | — | (1,801 | ) | — | ||||||||||
Stock-based compensation (6) | (953 | ) | (560 | ) | (2,516 | ) | (1,818 | ) | ||||||||
Land impairment | (108 | ) | — | (108 | ) | — | ||||||||||
Goodwill impairment (7) | — | — | (31,102 | ) | — | |||||||||||
Total adjustments | (7,570 | ) | (1,923 | ) | (45,147 | ) | (7,042 | ) | ||||||||
Non-GAAP operating expense | 10,248 | 10,316 | 40,008 | 36,852 |
Three Months Ended March 31, 2015 | Three Months Ended December 31, 2014 | ||||||||||||||||||||
Revenue | Gross Profit | Gross Margin | Revenue | Gross Profit | Gross Margin | ||||||||||||||||
GAAP - consolidated | $ | 18,613 | $ | 4,666 | 25.1 | % | $ | 14,043 | 4,395 | 31.3 | % | ||||||||||
Deferred revenue adjustment (1) | 64 | 64 | 64 | 64 | |||||||||||||||||
Inventory fair value step-up (1) | — | 36 | — | 79 | |||||||||||||||||
Stock-based compensation (6) | — | 24 | — | 22 | |||||||||||||||||
Non-GAAP - consolidated | 18,677 | 4,790 | 25.6 | % | 14,107 | 4,560 | 32.3 | % |
(1) | On April 1, 2013 and on March 1, 2014, the Company purchased Kentrox and CSI, respectively, which required the step-up of certain assets to fair value, which resulted in cost that will not recur once those assets have fully settled. The adjustments remove the increased costs associated with the third-party sales of inventory that was stepped-up and the step-down on acquired deferred revenue that was recognized in the periods presented. |
(2) | Amortization of intangibles is a non-cash expense arising from the acquisition of intangible assets. |
(3) | In fiscal year 2014, the Company acquired Kentrox and CSI in stock transactions. Deferred tax liabilities of $8.8 million resulted from the acquisitions relating primarily to acquired intangible assets. The Company's anticipated ability to realize deferred tax assets from the reversal of these deferred tax liabilities resulted in a partial reversal of valuation allowance related to the Company's deferred tax assets. The fiscal year 2014 adjustment removes the related income tax benefit. The Company is in a full valuation allowance in fiscal year 2014. The fiscal year 2013 adjustment removes the tax benefits recorded in fiscal year 2013 to reflect the tax result had the Company been in a full valuation allowance in fiscal year 2013. |
(4) | Restructuring expenses are not directly related to the ongoing performance of our fundamental business operations. |
(5) | The Company recorded severance benefits related to the departure of the former CEO. |
(6) | Stock-based compensation is a non-cash expense incurred in accordance with share-based compensation accounting. |
(7) | The Company recorded a non-cash charge of $31.1 million during fiscal 2015 to record the impairment of the full carrying value of the Company's goodwill. |
(8) | Historical results of operations of the CNS division and ConferencePlus are presented as discontinued operations. |
Tom Minichiello Chief Financial Officer Westell Technologies, Inc. +1 (630) 375-4740 tminichiello@westell.com |