Exhibit 99.1
westelllogoonelinea01a06.jpg
 
NEWS RELEASE

Westell Reports Fiscal 2018 Year-End and Fourth Quarter Results

AURORA, IL, May 23, 2018 – 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.”
 
4Q18
3 months ended 03/31/18
3Q18
3 months ended 12/31/17
 + increase /
- decrease
 
FY18
12 months ended 03/31/18
FY17
12 months ended 03/31/17
 + increase /
- decrease
Revenue
$11.1M
$13.7M
-$2.6M
 
$58.6M
$63.0M
-$4.4M
Gross Margin
45.5%
44.4%
+1.1%
 
43.0%
37.7%
+5.3%
Operating Margin
-8.5%
0.3%
-8.8%
 
-2.5%
-25.5%
+23.0%
Net Income
-$0.9M
$0.8M
-$1.7M
 
$—
-$15.9M
+$15.9M
Earnings Per Share
-$0.06
$0.05
-$0.11
 
$0.00
-$1.04
+$1.04
Non-GAAP Operating Margin (1)
+3.5%
+10.2%
-6.7%
 
+7.1%
-5.6%
+12.7%
Non-GAAP Net Income (1)
$0.4M
$1.5M
-$1.1M
 
$4.4M
-$3.4M
+$7.8M
Non-GAAP Earnings Per Share (1)
$0.03
$0.09
-$0.06
 
$0.28
-$0.22
+$0.50
Non-GAAP Adjusted EBITDA (1)
$0.6M
$1.6M
-$1.0M
 
$4.9M
-$2.1M
+$7.0M
Ending Cash & ST Investments
$27.7M
$26.0M
+$1.7M
 
$27.7M
$21.8M
+$5.9M
(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.
    
“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.
 
4Q18
3 months ended 03/31/18
3Q18
3 months ended 12/31/17
 + increase /
- decrease
 
FY18
12 months ended 03/31/18
FY17
12 months ended 03/31/17
 + increase /
- decrease
IBW Segment Revenue
$3.2M
$5.2M
-$2.0M
 
$23.3M
$25.9M
-$2.6M
IBW Segment Gross Margin
48.0%
47.3%
+0.7%
 
45.8%
33.4%
+12.4%
IBW Segment R&D Expense
$0.5M
$0.8M
-$0.3M
 
$4.1M
$6.7M
-$2.6M
IBW Segment Profit
$1.0M
$1.7M
-$0.7M
 
$6.5M
$1.9M
$4.6M
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.
 
4Q18
3 months ended 03/31/18
3Q18
3 months ended 12/31/17
 + increase /
- decrease
 
FY18
12 months ended 03/31/18
FY17
12 months ended 03/31/17
 + increase /
- decrease
ISMS Segment Revenue
$4.7M
$5.8M
-$1.1M
 
$19.4M
$19.3M
$0.1M
ISMS Segment Gross Margin
52.3%
54.5%
-2.2%
 
51.5%
50.6%
+0.9%
ISMS Segment R&D Expense
$0.6M
$0.5M
$0.1M
 
$2.3M
$4.0M
-$1.7M
ISMS Segment Profit
$1.8M
$2.6M
-$0.8M
 
$7.7M
$5.8M
$1.9M
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.








 
4Q18
3 months ended 03/31/18
3Q18
3 months ended 12/31/17
 + increase /
- decrease
 
FY18
12 months ended 03/31/18
FY17
12 months ended 03/31/17
 + increase /
- decrease
CNS Segment Revenue
$3.2M
$2.7M
$0.5M
 
$16.0M
$17.7M
-$1.7M
CNS Segment Gross Margin
33.2%
16.9%
+16.3%
 
28.5%
29.9%
-1.4%
CNS Segment R&D Expense
$0.2M
$0.2M
$—
 
$1.0M
$1.7M
-$0.7M
CNS Segment Profit
$0.8M
$0.2M
$0.6M
 
$3.6M
$3.6M
$—

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 https://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: http://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)

 
 
Three months ended
 
Twelve months ended
 
 
 
March 31, 2018 (Unaudited)
 
December 31, 2017 (Unaudited)
 
March 31, 2017 (Unaudited)
 
March 31, 2018 (Unaudited)
 
March 31, 2017 (Audited)
 
Revenue:
 
 
 
 
 
 
 
 
 
 
 
Products
 
$
10,063

 
$
11,754

 
$
14,290

 
$
53,459

 
$
56,530

 
Services
 
1,033

 
1,921

 
1,096

 
5,118

 
6,435

 
Total revenue
 
$
11,096

 
$
13,675

 
$
15,386

 
$
58,577

 
$
62,965

 
Cost of revenue:
 
 
 
 
 
 
 
 
 
 
 
Products
 
5,769

 
7,114

 
8,331

 
31,829

 
36,119

 
Services
 
278

 
485

 
292

 
1,581

 
3,097

 
Total cost of revenue
 
6,047

 
7,599

 
8,623

 
33,410

 
39,216

 
Gross profit
 
5,049

 
6,076

 
6,763

 
25,167

 
23,749

 
Gross margin
 
45.5
%
 
44.4
%
 
44.0
%
 
43.0
%
 
37.7
%
 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
Research & development
 
1,352

 
1,542

 
2,349

 
7,375

 
12,367

 
Sales & marketing
 
2,012

 
1,950

 
2,124

 
8,290

 
10,344

 
General & administrative
 
1,580

 
1,502

 
1,651

 
6,602

 
7,991

 
Intangibles amortization
 
1,047

 
1,047

 
1,151

 
4,189

 
4,764

 
Restructuring
 
—

 
—

 
100

(1) 
165

(2) 
3,155

(1) 
Long-lived assets impairment
 
—

 
—

 
—

 
—

 
1,181

(3) 
Total operating expenses
 
5,991

 
6,041

 
7,375

 
26,621

 
39,802

 
Operating income (loss)
 
(942
)
 
35

 
(612
)
 
(1,454
)
 
(16,053
)
 
Other income (expense), net
 
89

 
79

 
94

 
888

(4) 
170

 
Income (loss) before income taxes
 
(853
)
 
114

 
(518
)
 
(566
)
 
(15,883
)
 
Income tax benefit (expense)
 
(63
)
 
685

(5) 
(38
)
 
597

(5) 
(58
)
 
Net income (loss)
 
$
(916
)
 
$
799

 
$
(556
)

$
31

 
$
(15,941
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) per share:
 
 
 
 
 
 
 
 
 
 
 
Basic net income (loss)
 
$
(0.06
)
 
$
0.05

 
$
(0.04
)
(6) 
$
0.00

 
$
(1.04
)
(6) 
Diluted net income (loss)
 
$
(0.06
)
 
$
0.05

 
$
(0.04
)
(6) 
$
0.00

 
$
(1.04
)
(6) 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average number of shares outstanding:
 
 
 
 
 
 
 
 
 
 
 
Basic
 
15,541

 
15,504

 
15,431

(6) 
15,497

 
15,344

(6) 
Diluted
 
15,541

 
15,755

 
15,431

(6) 
15,707

 
15,344

(6) 
(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)
 
Assets:
 
March 31, 2018
(Unaudited)
 
March 31, 2017
(Audited)
Cash and cash equivalents
 
$
24,963

 
 
$
21,778

Short-term investments
 
2,779
 
 
 
0
 
Accounts receivable, net
 
8,872
 
 
 
12,075
 
Inventories
 
9,222
 
 
 
12,511
 
Prepaid expenses and other current assets
 
816
 
 
 
1,409
 
Total current assets
 
46,652
 

 
47,773
 
Property and equipment, net
 
1,601
 
 
 
1,984
 
Intangible assets, net
 
11,435
 
 
 
15,624
 
Other non-current assets
 
771
 
 
 
160
 
Total assets
 
$
60,459

 
 
$
65,541

Liabilities and Stockholders’ Equity:
 
 
 
 
Accounts payable
 
$
1,903

 
 
$
4,163

Accrued expenses
 
3,328
 
 
 
4,273
 
Accrued restructuring
 
63
 
 
 
1,171
 
Deferred revenue
 
1,790
 
 
 
2,359
 
Total current liabilities
 
7,084
 

 
11,966
 
Deferred revenue non-current
 
846
 
 
 
1,102
 
Accrued restructuring non-current
 
—
 
 
 
63
 
Other non-current liabilities
 
234
 
 
 
236
 
Total liabilities
 
8,164
 
 
 
13,367
 
Total stockholders’ equity
 
52,295
 
 
 
52,174
 
Total liabilities and stockholders’ equity
 
$
60,459

 
 
$
65,541








Westell Technologies, Inc.
Condensed Consolidated Statement of Cash Flows
(Amounts in thousands)
 
 
 
Three months ended March 31,
 
Twelve months ended March 31,
Cash flows from operating activities:
 
2018
 (Unaudited)
 
2018 (Unaudited)
 
2017 (Audited)
Net income (loss)
 
$
(916
)
 
$
31

 
$
(15,941
)
Reconciliation of net income to net cash provided by (used in) operating activities:
 
 
 
 
 
 
Depreciation and amortization
 
1,210

 
4,957

 
6,144

Long-lived assets impairment
 
—

 
—

 
1,181

Stock-based compensation
 
283

 
1,271

 
1,594

Restructuring
 
—

 
165

 
3,155

Gain on disposal of foreign operations
 
—

 
(608
)
 
—

Deferred taxes
 
—

 
(697
)
 
(10
)
Loss (gain) on sale of fixed assets
 
12

 
22

 
27

Exchange rate loss (gain)
 
22

 
2

 
2

Changes in assets and liabilities:
 
 
 
 
 
 
Accounts receivable
 
2,175

 
3,200

 
4,281

Inventories
 
242

 
3,289

 
987

Accounts payable and accrued expenses
 
(999
)
 
(4,541
)
 
(9,570
)
Deferred revenue
 
(207
)
 
(825
)
 
624

Prepaid expenses and other current assets
 
48

 
593

 
491

Other asset
 
6

 
86

 
24

Net cash provided by (used in) operating activities
 
1,876

 
6,945

 
(7,011
)
Cash flows from investing activities:
 
 
 
 
 
 
Net purchases of short-term investments and debt securities
 
1,758

 
(2,779
)
 
10,555

Proceeds from sale of assets
 
2

 
2

 
—

Purchases of property and equipment
 
(147
)
 
(408
)
 
(596
)
Net cash provided by (used in) investing activities
 
1,613

 
(3,185
)
 
9,959

Cash flows from financing activities:
 
 
 
 
 
 
Payment of contingent consideration
 
—

 
—

 
(175
)
Purchases of treasury stock
 
(16
)
 
(574
)
 
(163
)
Net cash provided by (used in) financing activities
 
(16
)
 
(574
)
 
(338
)
Gain (loss) of exchange rate changes on cash
 
(2
)
 
(1
)
 
(1
)
Net increase (decrease) in cash and cash equivalents
 
3,471

 
3,185

 
2,609

Cash and cash equivalents, beginning of period
 
21,492

 
21,778

 
19,169

Cash and cash equivalents, end of period
 
$
24,963

 
$
24,963

 
$
21,778









Westell Technologies, Inc.
Segment Statement of Operations
(Amounts in thousands)
(Unaudited)
 Sequential Quarter Comparison
 
 
Three months ended March 31, 2018
 
Three months Ended December 31, 2017
 
 
IBW
 
ISMS
 
CNS
 
Total
 
IBW
 
ISMS
 
CNS
 
Total
Revenue
 
$
3,167

 
$
4,688

 
$
3,241

 
$
11,096

 
$
5,223

 
$
5,802

 
$
2,650

 
$
13,675

Gross profit
 
1,520

 
2,454

 
1,075

 
5,049

 
2,469

 
3,160

 
447

 
6,076

Gross margin
 
48.0
%
 
52.3
%
 
33.2
%
 
45.5
%
 
47.3
%
 
54.5
%
 
16.9
%
 
44.4
%
R&D expense
 
485

 
629

 
238

 
1,352

 
750

 
547

 
245

 
1,542

Segment profit
 
$
1,035

 
$
1,825

 
$
837

 
$
3,697

 
$
1,719

 
$
2,613

 
$
202

 
$
4,534


Year-over-Year Quarter Comparison
 
 
Three months ended March 31, 2018
 
Three months ended March 31, 2017
 
 
IBW
 
ISMS
 
CNS
 
Total
 
IBW
 
ISMS
 
CNS
 
Total
Revenue
 
$
3,167

 
$
4,688

 
$
3,241

 
$
11,096

 
$
6,944

 
$
4,548

 
$
3,894

 
$
15,386

Gross profit
 
1,520

 
2,454

 
1,075

 
5,049

 
2,933

 
2,557

 
1,273

 
6,763

Gross margin
 
48.0
%
 
52.3
%
 
33.2
%
 
45.5
%
 
42.2
%
 
56.2
%
 
32.7
%
 
44.0
%
R&D expense
 
485

 
629

 
238

 
1,352

 
1,473

 
619

 
257

 
2,349

Segment profit
 
$
1,035

 
$
1,825

 
$
837

 
$
3,697

 
$
1,460

 
$
1,938

 
$
1,016

 
$
4,414


Full-Year Comparison
 
 
Twelve months ended March 31, 2018
 
Twelve months ended March 31, 2017
 
 
IBW
 
ISMS
 
CNS
 
Total
 
IBW
 
ISMS
 
CNS
 
Total
Revenue
 
$
23,265

 
$
19,350

 
$
15,962

 
$
58,577

 
$
25,933

 
$
19,321

 
$
17,711

 
$
62,965

Gross profit
 
10,653

 
9,959

 
4,555

 
25,167

 
8,671

 
9,778

 
5,300

 
23,749

Gross margin
 
45.8
%
 
51.5
%
 
28.5
%
 
43.0
%
 
33.4
%
 
50.6
%
 
29.9
%
 
37.7
%
R&D expense
 
4,141

 
2,264

 
970

 
7,375

 
6,738

 
3,955

 
1,674

 
12,367

Segment profit
 
$
6,512

 
$
7,695

 
$
3,585

 
$
17,792

 
$
1,933

 
$
5,823

 
$
3,626

 
$
11,382


 




Reconciliation of GAAP to non-GAAP IBW Segment Gross Margin
 
 
Twelve months ended March 31, 2018
 
Twelve months ended March 31, 2017
 
 
Revenue
 
Gross Profit
 
Gross Margin
 
Revenue
 
Gross Profit
 
Gross Margin
GAAP - IBW segment
 
$
23,265

 
$
10,653

 
45.8
%
 
$
25,933

 
$
8,671

 
33.4
%
ClearLink DAS E&O (1)
 
—

 
—

 
 
 
—

 
1,581

 
 
Stock-based compensation (2)
 
—

 
5

 
 
 
—

 
9

 
 
Non-GAAP - IBW segment
 
$
23,265

 
$
10,658

 
45.8
%
 
$
25,933

 
$
10,261

 
39.6
%
(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.










Westell Technologies, Inc.
Reconciliation of GAAP to non-GAAP Financial Measures
(Amounts in thousands, except per share amounts)
(Unaudited)
 
 
 
Three months ended
March 31, 2018
 
Three months ended
 December 31, 2017
 
Three months ended
 March 31, 2017
 
 
Revenue
 
Gross Profit
 
Gross Margin
 
Revenue
 
Gross Profit
 
Gross Margin
 
Revenue
 
Gross Profit
 
Gross Margin
GAAP - Consolidated
 
$
11,096

 
$
5,049

 
45.5
%
 
$
13,675

 
$
6,076

 
44.4
%
 
$
15,386

 
$
6,763

 
44.0
%
Deferred revenue adjustment (1)
 
—

 
—

 
 
 
—

 
—

 
 
 
64

 
64

 
 
Stock-based compensation (2)
 
—

 
(3
)
 
 
 
—

 
11

 
 
 
—

 
10

 
 
Non-GAAP - Consolidated
 
$
11,096

 
$
5,046

 
45.5
%
 
$
13,675

 
$
6,087

 
44.5
%
 
$
15,450

 
$
6,837

 
44.3
%
 
 
Twelve months ended
March 31, 2018
 
Twelve months ended
 March 31, 2017
 
 
Revenue
 
Gross Profit
 
Gross Margin
 
Revenue
 
Gross Profit
 
Gross Margin
GAAP - Consolidated
 
$
58,577

 
$
25,167

 
43.0
%
 
$
62,965

 
$
23,749

 
37.7
%
Deferred revenue adjustment (1)
 
—

 
—

 
 
 
254

 
254

 
 
Stock-based compensation (2)
 
—

 
30

 
 
 
—

 
34

 
 
ClearLink DAS E&O (3)
 
—

 
—

 
 
 
—

 
1,581

 
 
Non-GAAP - Consolidated
 
$
58,577

 
$
25,167

 
43.0
%
 
$
63,219

 
$
25,618

 
40.5
%

 
 
Three months ended
 
Twelve months ended
 
 
March 31,
 
December 31,
 
March 31,
 
March 31,
 
March 31,
 
 
2018
 
2017
 
2017
 
2018
 
2017
GAAP consolidated operating expenses
 
$
5,991

 
$
6,041

 
$
7,375

 
$
26,621

 
$
39,802

Adjustments:
 
 
 
 
 
 
 
 
 
 
Stock-based compensation (2)
 
(286
)
 
(305
)
 
(238
)
 
(1,241
)
 
(1,560
)
Long-lived asset impairment (4)
 
—

 
—

 
—

 
—

 
(1,181
)
Amortization of intangibles (5)
 
(1,047
)
 
(1,047
)
 
(1,151
)
 
(4,189
)
 
(4,764
)
Restructuring, separation, and transition (6)
 
—

 
—

 
(100
)
 
(165
)
 
(3,155
)
    Total adjustments
 
(1,333
)
 
(1,352
)
 
(1,489
)
 
(5,595
)
 
(10,660
)
Non-GAAP consolidated operating expenses
 
$
4,658

 
$
4,689

 
$
5,886

 
$
21,026

 
$
29,142





 
 
Three months ended
 
Twelve months ended
 
 
March 31,
 
December 31,
 
March 31,
 
March 31,
 
March 31,
 
 
2018
 
2017
 
2017
 
2018
 
2017
GAAP consolidated net income (loss)
 
$
(916
)
 
$
799

 
$
(556
)
 
$
31

 
$
(15,941
)
Less:
 
 
 
 
 
 
 
 
 
 
Income tax benefit (expense)
 
(63
)
 
685

 
(38
)
 
597

 
(58
)
Other income (expense), net
 
89

 
79

 
94

 
888

 
170

GAAP consolidated operating profit (loss)
 
$
(942
)
 
$
35

 
$
(612
)
 
$
(1,454
)
 
$
(16,053
)
Adjustments:
 
 
 
 
 
 
 
 
 
 
Deferred revenue adjustment (1)
 
—

 
—

 
64

 
—

 
254

Stock-based compensation (2)
 
283

 
316

 
248

 
1,271

 
1,594

ClearLink DAS E&O (3)
 
—

 
—

 
—

 
—

 
1,581

Long-lived asset impairment (4)
 
—

 
—

 
—

 
—

 
1,181

Amortization of intangibles (5)
 
1,047

 
1,047

 
1,151

 
4,189

 
4,764

Restructuring, separation, and transition (6)
 
—

 
—

 
100

 
165

 
3,155

    Total adjustments
 
1,330

—

1,363

 
1,563

 
5,625

 
12,529

Non-GAAP consolidated operating profit (loss)
 
$
388

 
$
1,398

 
$
951

 
$
4,171

 
$
(3,524
)
Depreciation
 
163

 
174

 
279

 
768

 
1,380

Non-GAAP consolidated Adjusted EBITDA (7)
 
$
551

 
$
1,572

 
$
1,230

 
$
4,939

 
$
(2,144
)

 
 
Three months ended
 
Twelve months ended
 
 
March 31,
 
December 31,
 
March 31,
 
March 31,
 
March 31,
 
 
2018
 
2017
 
2017
 
2018
 
2017
GAAP consolidated net income (loss)
 
$
(916
)
 
$
799

 
$
(556
)
 
$
31

 
$
(15,941
)
Adjustments:
 
 
 
 
 
 
 
 
 
 
Deferred revenue adjustment (1)
 
—

 
—

 
64

 
—

 
254

Stock-based compensation (2)
 
283

 
316

 
248

 
1,271

 
1,594

ClearLink DAS E&O (3)
 
—

 
—

 
—

 
—

 
1,581

Long-lived asset impairment (4)
 
—

 
—

 
—

 
—

 
1,181

Amortization of intangibles (5)
 
1,047

 
1,047

 
1,151

 
4,189

 
4,764

Restructuring, separation, and transition (6)
 
—

 
—

 
100

 
165

 
3,155

Foreign currency translation adjustment (8)
 
—

 
—

 
—

 
(608
)
 
—

Income taxes (9)
 
—

 
(697
)
 
—

 
(697
)
 
—

    Total adjustments
 
1,330

 
666

 
1,563

 
4,320

 
12,529

Non-GAAP consolidated net income (loss)
 
$
414

 
$
1,465

 
$
1,007

 
$
4,351

 
$
(3,412
)
GAAP consolidated net income (loss) per common share:
 
 
 
 
 
 
 
 
 
 
Diluted
 
$
(0.06
)
 
$
0.05

 
$
(0.04
)
 
$
0.00

 
$
(1.04
)
Non-GAAP consolidated net income (loss) per common share:
 
 
 
 
 
 
 
 
 
 
Diluted
 
$
0.03

 
$
0.09

 
$
0.06

 
$
0.28

 
$
(0.22
)
Average number of common shares outstanding:
 
 
 
 
 
 
 
 
 
 
Diluted
 
15,794

 
15,755

 
15,528

 
15,707

 
15,344

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.


For additional information, contact:
Tom Minichiello
Chief Financial Officer
Westell Technologies, Inc.
+1 (630) 375-4740
 tminichiello@westell.com