NEWS RELEASE |
1Q18 3 months ended 6/30/17 | 4Q17 3 months ended 3/31/17 | + favorable / - unfavorable | |
Revenue | $16.6M | $15.4M | +$1.2M |
Gross Margin | 40.8% | 44.0% | -3.2% |
Operating Expenses | $7.4M | $7.4M | $— |
Net Income (Loss) | ($0.6M) | ($0.6M) | $— |
Earnings (Loss) Per Share | ($0.04) | ($0.04) | $— |
Non-GAAP Operating Expenses (1) | $6.0M | $5.9M | -$0.1M |
Non-GAAP Net Income (1) | $0.8M | $1.0M | -$0.2M |
Non-GAAP Earnings Per Share (1) | $0.05 | $0.06 | -$0.01 |
Non-GAAP Adjusted EBITDA (1) | $1.0M | $1.2M | -$0.2M |
(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. |
1Q18 3 months ended 6/30/17 | 4Q17 3 months ended 3/31/17 | + favorable / - unfavorable | |
IBW Segment Revenue | $7.0M | $6.9M | +$0.1M |
IBW Segment Gross Margin | 43.3% | 42.2% | +1.1% |
IBW Segment R&D Expense | $1.5M | $1.5M | $— |
IBW Segment Profit | $1.6M | $1.5M | +$0.1M |
1Q18 3 months ended 6/30/17 | 4Q17 3 months ended 3/31/17 | + favorable / - unfavorable | |
ISMS Segment Revenue | $4.1M | $4.5M | -$0.4M |
ISMS Segment Gross Margin | 51.5% | 56.2% | -4.7% |
ISMS Segment R&D Expense | $0.6M | $0.6M | $— |
ISMS Segment Profit | $1.6M | $1.9M | -$0.3M |
1Q18 3 months ended 6/30/17 | 4Q17 3 months ended 3/31/17 | + favorable / - unfavorable | |
CNS Segment Revenue | $5.5M | $3.9M | +$1.6M |
CNS Segment Gross Margin | 29.6% | 32.7% | -3.1% |
CNS Segment R&D Expense | $0.2M | $0.3M | +$0.1M |
CNS Segment Profit | $1.4M | $1.0M | +$0.4M |
Three months ended | |||||||||||||
June 30, | March 31, | June 30, | |||||||||||
2017 | 2017 | 2016 | |||||||||||
Revenue: | |||||||||||||
Products | $ | 15,545 | $ | 14,290 | $ | 13,613 | |||||||
Services | 1,029 | 1,096 | 1,203 | ||||||||||
Total revenue | 16,574 | 15,386 | 14,816 | ||||||||||
Cost of revenue: | |||||||||||||
Products | 9,424 | 8,331 | 9,601 | ||||||||||
Services | 383 | 292 | 650 | ||||||||||
Total cost of revenue | 9,807 | 8,623 | 10,251 | ||||||||||
Gross profit | 6,767 | 6,763 | 4,565 | ||||||||||
Gross margin | 40.8 | % | 44.0 | % | 30.8 | % | |||||||
Operating expenses: | |||||||||||||
R&D | 2,276 | 2,349 | 4,277 | ||||||||||
Sales and marketing | 2,336 | 2,124 | 3,381 | ||||||||||
General and administrative | 1,711 | 1,651 | 2,345 | ||||||||||
Intangible amortization | 1,047 | 1,151 | 1,200 | ||||||||||
Restructuring | — | 100 | (1) | (36 | ) | ||||||||
Long-lived assets impairment | — | — | 1,181 | (2) | |||||||||
Total operating expenses | 7,370 | 7,375 | 12,348 | ||||||||||
Operating profit (loss) | (603 | ) | (612 | ) | (7,783 | ) | |||||||
Other income (expense), net | 43 | 94 | 17 | ||||||||||
Income (loss) before income taxes | (560 | ) | (518 | ) | (7,766 | ) | |||||||
Income tax benefit (expense) | (12 | ) | (38 | ) | (2 | ) | |||||||
Net income (loss) | $ | (572 | ) | $ | (556 | ) | $ | (7,768 | ) | ||||
Net income (loss) per share: | |||||||||||||
Basic net income (loss) | $ | (0.04 | ) | $ | (0.04 | ) | (3) | $ | (0.51 | ) | (3) | ||
Diluted net income (loss) | $ | (0.04 | ) | $ | (0.04 | ) | (3) | $ | (0.51 | ) | (3) | ||
Weighted-average number of common shares outstanding: | |||||||||||||
Basic | 15,481 | 15,431 | (3) | 15,254 | (3) | ||||||||
Diluted | 15,481 | 15,431 | (3) | 15,254 | (3) |
(1) | The Company recorded restructuring expense primarily relating to abandonment of excess office space in New Hampshire. |
(2) | Non-cash impairment related to long-lived assets associated with the previously announced strategic decision related to the discontinuation of ClearLink DAS. |
(3) | 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. |
June 30, 2017 (Unaudited) | March 31, 2017 | |||||||
Assets | ||||||||
Cash and cash equivalents | $ | 23,688 | $ | 21,778 | ||||
Accounts receivable, net | 10,337 | 12,075 | ||||||
Inventories | 12,190 | 12,511 | ||||||
Prepaid expenses and other current assets | 1,181 | 1,409 | ||||||
Total current assets | 47,396 | 47,773 | ||||||
Land, property and equipment, net | 1,910 | 1,984 | ||||||
Intangible assets, net | 14,576 | 15,624 | ||||||
Other non-current assets | 153 | 160 | ||||||
Total assets | $ | 64,035 | $ | 65,541 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Accounts payable | $ | 5,027 | $ | 4,163 | ||||
Accrued expenses | 3,678 | 4,273 | ||||||
Accrued restructuring | 738 | 1,171 | ||||||
Deferred revenue | 1,776 | 2,359 | ||||||
Total current liabilities | 11,219 | 11,966 | ||||||
Deferred revenue non-current | 1,008 | 1,102 | ||||||
Deferred income tax liability | 7 | — | ||||||
Accrued restructuring non-current | 15 | 63 | ||||||
Other non-current liabilities | 228 | 236 | ||||||
Total liabilities | 12,477 | 13,367 | ||||||
Total stockholders’ equity | 51,558 | 52,174 | ||||||
Total liabilities and stockholders’ equity | $ | 64,035 | $ | 65,541 |
Three months ended June 30, | |||||||||
2017 | 2016 | ||||||||
Cash flows from operating activities: | |||||||||
Net income (loss) | $ | (572 | ) | $ | (7,768 | ) | |||
Reconciliation of net loss to net cash used in operating activities: | |||||||||
Depreciation and amortization | 1,277 | 1,585 | |||||||
Long-lived assets impairment | — | 1,181 | (1) | ||||||
Stock-based compensation | 330 | 406 | |||||||
Restructuring | — | (36 | ) | ||||||
Deferred taxes | 7 | 2 | |||||||
Other loss (gain) | (4 | ) | 6 | ||||||
Changes in assets and liabilities: | |||||||||
Accounts receivable | 1,748 | 5,470 | |||||||
Inventory | 321 | (234 | ) | ||||||
Accounts payable and accrued expenses | (220 | ) | (4,144 | ) | |||||
Deferred revenue | (677 | ) | (448 | ) | |||||
Other | 235 | 128 | |||||||
Net cash provided by (used in) operating activities | 2,445 | (3,852 | ) | ||||||
Cash flows from investing activities: | |||||||||
Net maturity (purchase) of short-term investments and debt securities | — | 465 | |||||||
Purchases of property and equipment, net | (155 | ) | (396 | ) | |||||
Net cash provided by (used in) investing activities | (155 | ) | 69 | ||||||
Cash flows from financing activities: | |||||||||
Purchase of treasury stock | (374 | ) | (84 | ) | |||||
Payment of contingent consideration | — | (127 | ) | ||||||
Net cash provided by (used in) financing activities | (374 | ) | (211 | ) | |||||
(Gain) loss of exchange rate changes on cash | (6 | ) | 3 | ||||||
Net increase (decrease) in cash and cash equivalents | 1,910 | (3,991 | ) | ||||||
Cash and cash equivalents, beginning of period | 21,778 | 19,169 | |||||||
Cash and cash equivalents, end of period | $ | 23,688 | $ | 15,178 | (2) |
Three months ended June 30, 2017 | Three months ended March 31, 2017 | |||||||||||||||||||||||||||||||
IBW | ISMS | CNS | Total | IBW | ISMS | CNS | Total | |||||||||||||||||||||||||
Total revenue | $ | 6,956 | $ | 4,130 | $ | 5,488 | $ | 16,574 | $ | 6,944 | $ | 4,548 | $ | 3,894 | $ | 15,386 | ||||||||||||||||
Gross profit | 3,014 | 2,126 | 1,627 | 6,767 | 2,933 | 2,557 | 1,273 | 6,763 | ||||||||||||||||||||||||
Gross margin | 43.3 | % | 51.5 | % | 29.6 | % | 40.8 | % | 42.2 | % | 56.2 | % | 32.7 | % | 44.0 | % | ||||||||||||||||
R&D expenses | 1,463 | 565 | 248 | 2,276 | 1,473 | 619 | 257 | 2,349 | ||||||||||||||||||||||||
Segment profit | $ | 1,551 | $ | 1,561 | $ | 1,379 | $ | 4,491 | $ | 1,460 | $ | 1,938 | $ | 1,016 | $ | 4,414 |
Three months ended June 30, 2017 | Three months ended June 30, 2016 | |||||||||||||||||||||||||||||||
IBW | ISMS | CNS | Total | IBW | ISMS | CNS | Total | |||||||||||||||||||||||||
Total revenue | $ | 6,956 | $ | 4,130 | $ | 5,488 | $ | 16,574 | $ | 6,121 | $ | 4,139 | $ | 4,556 | $ | 14,816 | ||||||||||||||||
Gross profit | 3,014 | 2,126 | 1,627 | 6,767 | 994 | 2,019 | 1,552 | 4,565 | ||||||||||||||||||||||||
Gross margin (1) | 43.3 | % | 51.5 | % | 29.6 | % | 40.8 | % | 16.2 | % | 48.8 | % | 34.1 | % | 30.8 | % | ||||||||||||||||
R&D expenses | 1,463 | 565 | 248 | 2,276 | 2,364 | 1,294 | 619 | 4,277 | ||||||||||||||||||||||||
Segment profit (loss) | $ | 1,551 | $ | 1,561 | $ | 1,379 | $ | 4,491 | $ | (1,370 | ) | $ | 725 | $ | 933 | $ | 288 | |||||||||||||||
(1) 1Q17 IBW Adjusted Segment Gross Margin was 39.0% when excluding a charge of $1.4 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. |
Three months ended June 30, 2017 | Three months ended March 31, 2017 | Three months ended June 30, 2016 | |||||||||||||||||||||||||||||||
Revenue | Gross Profit | Gross Margin | Revenue | Gross Profit | Gross Margin | Revenue | Gross Profit | Gross Margin | |||||||||||||||||||||||||
GAAP - IBW segment | $ | 6,956 | $ | 3,014 | 43.3 | % | $ | 6,944 | $ | 2,933 | 42.2 | % | $ | 6,121 | $ | 994 | 16.2 | % | |||||||||||||||
ClearLink DAS E&O (1) | — | — | — | — | — | 1,389 | |||||||||||||||||||||||||||
Stock-based compensation (2) | — | 8 | — | (10 | ) | — | 3 | ||||||||||||||||||||||||||
Non-GAAP - IBW segment | $ | 6,956 | $ | 3,022 | 43.4 | % | $ | 6,944 | $ | 2,923 | 42.1 | % | $ | 6,121 | $ | 2,386 | 39.0 | % | |||||||||||||||
(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. |
Three months ended | |||||||||||||
June 30, | March 31, | June 30, | |||||||||||
2017 | 2017 | 2016 | |||||||||||
GAAP consolidated operating expenses | $ | 7,370 | $ | 7,375 | $ | 12,348 | |||||||
Adjustments: | |||||||||||||
Stock-based compensation (3) | (305 | ) | (238 | ) | (400 | ) | |||||||
Long-lived asset impairment (4) | — | — | (1,181 | ) | |||||||||
Amortization of intangibles (5) | (1,047 | ) | (1,151 | ) | (1,200 | ) | |||||||
Restructuring, separation, and transition (6) | — | (100 | ) | 36 | |||||||||
Total adjustments | (1,352 | ) | (1,489 | ) | (2,745 | ) | |||||||
Non-GAAP consolidated operating expenses | $ | 6,018 | $ | 5,886 | $ | 9,603 |
Three months ended | |||||||||||||
June 30, | March 31, | June 30, | |||||||||||
2017 | 2017 | 2016 | |||||||||||
GAAP consolidated net income (loss) | $ | (572 | ) | $ | (556 | ) | $ | (7,768 | ) | ||||
Income tax benefit (expense) | (12 | ) | (38 | ) | (2 | ) | |||||||
Other income (expense), net | 43 | 94 | 17 | ||||||||||
GAAP consolidated operating profit (loss) | $ | (603 | ) | $ | (612 | ) | $ | (7,783 | ) | ||||
Adjustments: | |||||||||||||
Deferred revenue adjustment (1) | — | 64 | 63 | ||||||||||
ClearLink DAS E&O (2) | — | — | 1,389 | ||||||||||
Stock-based compensation (3) | 330 | 248 | 406 | ||||||||||
Long-lived asset impairment (4) | — | — | 1,181 | ||||||||||
Amortization of intangibles (5) | 1,047 | 1,151 | 1,200 | ||||||||||
Restructuring, separation, and transition (6) | — | 100 | (36 | ) | |||||||||
Total adjustments | 1,377 | 1,563 | 4,203 | ||||||||||
Non-GAAP consolidated operating profit (loss) | $ | 774 | $ | 951 | $ | (3,580 | ) | ||||||
Depreciation | 230 | 279 | 385 | ||||||||||
Non-GAAP consolidated Adjusted EBITDA (7) | $ | 1,004 | $ | 1,230 | $ | (3,195 | ) |
Three months ended | |||||||||||||
June 30, | March 31, | June 30, | |||||||||||
2017 | 2017 | 2016 | |||||||||||
GAAP consolidated net income (loss) | $ | (572 | ) | $ | (556 | ) | $ | (7,768 | ) | ||||
Adjustments: | |||||||||||||
Deferred revenue adjustment (1) | — | 64 | 63 | ||||||||||
ClearLink DAS E&O (2) | — | — | 1,389 | ||||||||||
Stock-based compensation (3) | 330 | 248 | 406 | ||||||||||
Long-lived asset impairment (4) | — | — | 1,181 | ||||||||||
Amortization of intangibles (5) | 1,047 | 1,151 | 1,200 | ||||||||||
Restructuring, separation, and transition (6) | — | 100 | (36 | ) | |||||||||
Total adjustments | 1,377 | 1,563 | 4,203 | ||||||||||
Non-GAAP consolidated net income (loss) | $ | 805 | $ | 1,007 | $ | (3,565 | ) | ||||||
GAAP consolidated net income (loss) per common share: | |||||||||||||
Diluted | $ | (0.04 | ) | $ | (0.04 | ) | $ | (0.51 | ) | ||||
Non-GAAP consolidated net income (loss) per common share: | |||||||||||||
Diluted | $ | 0.05 | $ | 0.06 | $ | (0.23 | ) | ||||||
Average number of common shares outstanding: | |||||||||||||
Diluted | 15,617 | 15,528 | 15,254 |
(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) | 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. |
(3) | Stock-based compensation is a non-cash expense incurred in accordance with share-based compensation accounting standards. |
(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. |
Tom Minichiello Chief Financial Officer Westell Technologies, Inc. +1 (630) 375 4740 tminichiello@westell.com |