Exhibit 99.1
westelllogoonelinea01a07.jpg
 
NEWS RELEASE

Westell Reports Fiscal 2019 Fourth Quarter Results

AURORA, IL, May 29, 2019 – Westell Technologies, Inc. (NASDAQ: WSTL), a leading provider of high-performance network infrastructure solutions, today announced results for its fiscal 2019 fourth quarter ended March 31, 2019 (4Q19) and its fiscal year ended March 31, 2019 (FY19). Management will host a conference call to discuss financial and business results tomorrow, Thursday, May 30, 2019 at 9:30 AM Eastern Time (details below).

“4Q19 revenue was largely affected by the performance of our IBW segment. While sales of commercial repeaters and DAS conditioners decreased as expected, delays in expanding our product portfolio for a larger addressable public safety market further contributed to the IBW decline. Seasonally lower sales of remote units affected ISM revenue after a strong performance in 3Q19. CNS revenue increased sequentially, led by power distribution and network connectivity products, and growing traction for our new suite of fiber access solutions,” said Stephen John, Westell’s President and CEO.

“Moving forward, our IBW business remains committed to the public safety market and the development of our OnGo small cell for private LTE networks. For our CNS and ISM businesses, we are focused on densification initiatives for 5G and IoT where our fiber access and remote monitoring solutions address the critical requirements of more capacity, deployment simplification, and intelligence at the edge of communication networks,” added John.

 
4Q19
3 months ended 03/31/19
3Q19
3 months ended 12/31/18
 + increase /
- decrease
Revenue
$9.7M
$10.7M
-$1.0M
Gross Margin
37.6%
42.8%
-5.2%
Net Income (Loss) (1)
($8.0M)
($1.6M)
-$6.4M
Earnings (Loss) Per Share  (1)
($0.52)
($0.10)
-$0.42
Non-GAAP Net Income (Loss) (2)
($2.1M)
($0.4M)
-$1.7M
Non-GAAP Earnings (Loss) Per Share (2)
($0.13)
($0.03)
-$0.10
Ending Cash
$25.5M
$27.1M
-$1.6M

(1) Includes a $4.7M non-recurring accounting charge in 4Q19 for the impairment of IBW intangible assets.
(2) 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.
    





In-Building Wireless (IBW) Segment
IBW’s revenue decrease was primarily due to new public safety product introduction delays and lower sales of commercial repeaters and DAS conditioners, partly offset by increased sales of existing public safety repeaters and passive RF system components. IBW’s gross margin decrease was primarily due to higher excess and obsolete inventory costs.

($ in thousands)
4Q19
3 months ended 03/31/19
3Q19
3 months ended 12/31/18
 + increase /
- decrease
IBW Segment Revenue
$2,477
$2,794
($317)
IBW Segment Gross Margin
31.4%
38.3%
-6.8%
IBW Segment R&D Expense
$684
$682
$2
IBW Segment Profit
$95
$387
($292)
Intelligent Site Management (ISM) Segment
ISM’s revenue decrease was due to lower sales of remote units and Optima software licenses, partly offset by increased support services revenue. ISM’s gross margin decrease was due to a less favorable mix and higher excess and obsolete inventory costs.

($ in thousands)
4Q19
3 months ended 03/31/19
3Q19
3 months ended 12/31/18
 + increase /
- decrease
ISM Segment Revenue
$3,757
$5,116
($1,359)
ISM Segment Gross Margin
47.1%
56.7%
-9.6%
ISM Segment R&D Expense
$693
$570
$123
ISM Segment Profit
$1,078
$2,329
($1,251)
Communication Network Solutions (CNS) Segment
CNS’s revenue increase was driven by higher sales of power distribution and network connectivity products, as well as growing traction for our new of fiber access solutions; partly offset by lower sales on integrated cabinets. CNS’s gross margin increase was driven by higher revenue and a more favorable mix.

($ in thousands)
4Q19
3 months ended 03/31/19
3Q19
3 months ended 12/31/18
 + increase /
- decrease
CNS Segment Revenue
$3,471
$2,812
$659
CNS Segment Gross Margin
31.6%
22.1%
+9.5%
CNS Segment R&D Expense
$402
$484
($82)
CNS Segment Profit
$694
$138
$556






Conference Call Information
Management will discuss financial and business results during the quarterly conference call on Thursday, May 30, 2019, 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 30 by dialing 888-206-4065 no later than 9:15 AM Eastern Time and providing the operator confirmation number 48609103.
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 12:00 PM Eastern Time following the conclusion of the conference.

About Westell
Westell is a leading provider of high-performance network 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, 2018, 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, 2019 (Unaudited)
 
December 31, 2018 (Unaudited)
 
March 31, 2018 (Unaudited)
 
March 31, 2019 (Unaudited)
 
March 31, 2018 (Audited)
 
Revenue
 
$
9,705

 
$
10,722

 
$
11,096

 
$
43,570

 
$
58,577

 
Cost of revenue
 
6,059

 
6,132

 
6,047

 
25,206

 
33,410

 
Gross profit
 
3,646

 
4,590

 
5,049

 
18,364

 
25,167

 
Gross margin
 
37.6
%
 
42.8
%
 
45.5
%
 
42.1
%
 
43.0
%
 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
Research & development
 
1,779

 
1,736

 
1,352

 
6,790

 
7,375

 
Sales & marketing
 
2,330

 
1,999

 
2,012

 
8,342

 
8,290

 
General & administrative
 
2,027

 
1,738

 
1,580

 
6,699

 
6,602

 
Intangibles amortization
 
783

 
830

 
1,047

 
3,435

 
4,189

 
Restructuring
 

 

 

 

 
165

(1) 
Long-lived assets impairment
 
4,722

(2) 

 

 
4,722

(2) 

 
Total operating expenses
 
11,641

 
6,303

 
5,991

 
29,988

 
26,621

 
Operating income (loss)
 
(7,995
)
 
(1,713
)
 
(942
)
 
(11,624
)
 
(1,454
)
 
Other income (expense), net
 
184

 
158

 
89

 
626

 
888

(3) 
Income (loss) before income taxes
 
(7,811
)
 
(1,555
)
 
(853
)
 
(10,998
)
 
(566
)
 
Income tax benefit (expense)
 
(28
)
 
(1
)
 
(63
)
 
(39
)
 
597

(4) 
Net income (loss) from continuing operating
 
(7,839
)
 
(1,556
)
 
(916
)

(11,037
)
 
31

 
Income from discontinued operations
 
(207
)
 

 

 
(345
)
 

 
Net income (loss)
 
$
(8,046
)
 
$
(1,556
)
 
$
(916
)
 
$
(11,382
)
 
$
31

 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) per share:
 
 
 
 
 
 
 
 
 
 
 
Basic net income (loss)
 
$
(0.52
)
 
$
(0.10
)
 
$
(0.06
)
 
$
(0.73
)
 
$

 
Diluted net income (loss)
 
$
(0.52
)
 
$
(0.10
)
 
$
(0.06
)
 
$
(0.73
)
 
$

 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average number of shares outstanding:
 
 
 
 
 
 
 
 
 
 
 
Basic
 
15,342

 
15,524

 
15,541

 
15,517

 
15,497

 
Diluted
 
15,342

 
15,524

 
15,541

 
15,517

 
15,707

 

(1) 2Q18 restructuring expense related to severance costs for terminated employees.
(2) 4Q19 Non-recurring impairment related to intangible assets associated with the IBW reporting unit.
(3) 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.
(4) 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.









Westell Technologies, Inc.
Condensed Consolidated Balance Sheets
(Amounts in thousands)
 
Assets:
 
March 31, 2019
(Unaudited)
 
March 31, 2018
(Audited)
Cash and cash equivalents
 
$
25,457

 
 
$
24,963

Short-term investments
 
 
 
 
2,779
 
Accounts receivable, net
 
6,865
 
 
 
8,872
 
Inventories
 
9,801
 
 
 
9,222
 
Prepaid expenses and other current assets
 
1,706
 
 
 
816
 
Total current assets
 
43,829
 

 
46,652
 
Property and equipment, net
 
1,298
 
 
 
1,601
 
Intangible assets, net
 
3,278
 
 
 
11,435
 
Other non-current assets
 
492
 
 
 
771
 
Total assets
 
$
48,897

 
 
$
60,459

Liabilities and Stockholders’ Equity:
 
 
 
 
Accounts payable
 
$
2,313

 
 
$
1,903

Accrued expenses
 
3,567
 
 
 
3,280
 
Accrued restructuring
 
 
 
 
63
 
Deferred revenue
 
1,217
 
 
 
1,790
 
Total current liabilities
 
7,097
 

 
7,036
 
Deferred revenue non-current
 
444
 
 
 
846
 
Other non-current liabilities
 
176
 
 
 
282
 
Total liabilities
 
7,717
 
 
 
8,164
 
Total stockholders’ equity
 
41,180
 
 
 
52,295
 
Total liabilities and stockholders’ equity
 
$
48,897

 
 
$
60,459









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:
 
2019
 (Unaudited)
 
2019 (Unaudited)
 
2018 (Audited)
Net income (loss)
 
$
(8,046
)
 
$
(11,382
)
 
$
31

Reconciliation of net income to net cash provided by (used in) operating activities:
 
 
 
 
 
 
Depreciation and amortization
 
934

 
4,026

 
4,957

Intangible assets impairment
 
4,722

 
4,722

 

Stock-based compensation
 
282

 
1,171

 
1,271

Restructuring
 

 

 
165

Gain on disposal of foreign operations
 

 

 
(608
)
Deferred taxes
 

 

 
(697
)
Loss (gain) on sale of fixed assets
 
1

 
2

 
22

Exchange rate loss (gain)
 
(1
)
 
2

 
2

Changes in assets and liabilities:
 
 
 
 
 
 
Accounts receivable
 
115

 
2,007

 
3,200

Inventories
 
362

 
(579
)
 
3,289

Accounts payable and accrued expenses
 
34

 
528

 
(4,541
)
Deferred revenue
 
468

 
(646
)
 
(825
)
Prepaid expenses and other current assets
 
(537
)
 
(890
)
 
593

Other asset
 
268

 
279

 
86

Net cash provided by (used in) operating activities
 
(1,398
)
 
(760
)
 
6,945

Cash flows from investing activities:
 
 
 
 
 
 
Net purchases of short-term investments and debt securities
 

 
2,779

 
(2,779
)
Proceeds from sale of assets
 

 

 
2

Purchases of property and equipment
 
(17
)
 
(290
)
 
(408
)
Net cash provided by (used in) investing activities
 
(17
)
 
2,489

 
(3,185
)
Cash flows from financing activities:
 
 
 
 
 
 
Purchases of treasury stock
 
(195
)
 
(1,233
)
 
(574
)
Net cash provided by (used in) financing activities
 
(195
)
 
(1,233
)
 
(574
)
Gain (loss) of exchange rate changes on cash
 
2

 
(2
)
 
(1
)
Net increase (decrease) in cash and cash equivalents
 
(1,608
)
 
494

 
3,185

Cash and cash equivalents, beginning of period
 
27,065

 
24,963

 
21,778

Cash and cash equivalents, end of period
 
$
25,457

 
$
25,457

 
$
24,963










Westell Technologies, Inc.
Segment Statement of Operations
(Amounts in thousands)
(Unaudited)
 Sequential Quarter Comparison
 
 
Three months ended March 31, 2019
 
Three months Ended December 31, 2018
 
 
IBW
 
ISM
 
CNS
 
Total
 
IBW
 
ISM
 
CNS
 
Total
Revenue
 
$
2,477

 
$
3,757

 
$
3,471

 
$
9,705

 
$
2,794

 
$
5,116

 
$
2,812

 
$
10,722

Gross profit
 
779

 
1,771

 
1,096

 
3,646

 
1,069

 
2,899

 
622

 
4,590

Gross margin
 
31.4
%
 
47.1
%
 
31.6
%
 
37.6
%
 
38.3
%
 
56.7
%
 
22.1
%
 
42.8
%
R&D expense
 
684

 
693

 
402

 
1,779

 
682

 
570

 
484

 
1,736

Segment profit
 
$
95

 
$
1,078

 
$
694

 
$
1,867

 
$
387

 
$
2,329

 
$
138

 
$
2,854


Year-over-Year Quarter Comparison
 
 
Three months ended March 31, 2019
 
Three months ended March 31, 2018
 
 
IBW
 
ISM
 
CNS
 
Total
 
IBW
 
ISM
 
CNS
 
Total
Revenue
 
$
2,477

 
$
3,757

 
$
3,471

 
$
9,705

 
$
3,167

 
$
4,688

 
$
3,241

 
$
11,096

Gross profit
 
779

 
1,771

 
1,096

 
3,646

 
1,520

 
2,454

 
1,075

 
5,049

Gross margin
 
31.4
%
 
47.1
%
 
31.6
%
 
37.6
%
 
48.0
%
 
52.3
%
 
33.2
%
 
45.5
%
R&D expense
 
684

 
693

 
402

 
1,779

 
485

 
629

 
238

 
1,352

Segment profit
 
$
95

 
$
1,078

 
$
694

 
$
1,867

 
$
1,035

 
$
1,825

 
$
837

 
$
3,697


Full-Year Comparison
 
 
Twelve months ended March 31, 2019
 
Twelve months ended March 31, 2018
 
 
IBW
 
ISM
 
CNS
 
Total
 
IBW
 
ISM
 
CNS
 
Total
Revenue
 
$
12,474

 
$
17,263

 
$
13,833

 
$
43,570

 
$
23,265

 
$
19,350

 
$
15,962

 
$
58,577

Gross profit
 
5,202

 
9,040

 
4,122

 
18,364

 
10,653

 
9,959

 
4,555

 
25,167

Gross margin
 
41.7
%
 
52.4
%
 
29.8
%
 
42.1
%
 
45.8
%
 
51.5
%
 
28.5
%
 
43.0
%
R&D expense
 
2,755

 
2,390

 
1,645

 
6,790

 
4,141

 
2,264

 
970

 
7,375

Segment profit
 
$
2,447

 
$
6,650

 
$
2,477

 
$
11,574

 
$
6,512

 
$
7,695

 
$
3,585

 
$
17,792


 












Westell Technologies, Inc.
Reconciliation of GAAP to non-GAAP Financial Measures
(Amounts in thousands, except per share amounts)
(Unaudited)
 
 
 
Three months ended
 
Twelve months ended
 
 
March 31,
 
December 31,
 
March 31,
 
March 31,
 
March 31,
 
 
2019
 
2018
 
2018
 
2019
 
2018
GAAP consolidated operating expenses
 
$
11,641

 
$
6,303

 
$
5,991

 
$
29,988

 
$
26,621

Adjustments:
 
 
 
 
 
 
 
 
 
 
Stock-based compensation (1)
 
(270
)
 
(291
)
 
(286
)
 
(1,124
)
 
(1,241
)
Amortization of intangibles (2)
 
(783
)
 
(830
)
 
(1,047
)
 
(3,435
)
 
(4,189
)
Intangible assets impairment(3)
 
(4,722
)
 

 

 
(4,722
)
 

Restructuring, separation, and transition (4)
 

 

 

 

 
(165
)
    Total adjustments
 
(5,775
)
 
(1,121
)
 
(1,333
)
 
(9,281
)
 
(5,595
)
Non-GAAP consolidated operating expenses
 
$
5,866

 
$
5,182

 
$
4,658

 
$
20,707

 
$
21,026

 
 
Three months ended
 
Twelve months ended
 
 
March 31,
 
December 31,
 
March 31,
 
March 31,
 
March 31,
 
 
2019
 
2018
 
2018
 
2019
 
2018
GAAP consolidated net income (loss)
 
$
(8,046
)
 
$
(1,556
)
 
$
(916
)
 
$
(11,382
)
 
$
31

Less:
 
 
 
 
 
 
 
 
 
 
Income tax benefit (expense)
 
(28
)
 
(1
)
 
(63
)
 
(39
)
 
597

Other income (expense), net
 
184

 
158

 
89

 
626

 
888

Discontinued operations (5)
 
(207
)
 

 

 
(345
)
 

GAAP consolidated operating profit (loss)
 
$
(7,995
)
 
$
(1,713
)
 
$
(942
)
 
$
(11,624
)
 
$
(1,454
)
Adjustments:
 
 
 
 
 
 
 
 
 
 
Stock-based compensation (1)
 
282

 
303

 
283

 
1,171

 
1,271

Amortization of intangibles (2)
 
783

 
830

 
1,047

 
3,435

 
4,189

Intangible assets impairment(3)
 
4,722

 

 

 
4,722

 

Restructuring, separation, and transition (4)
 

 

 

 

 
165

    Total adjustments
 
5,787


1,133

 
1,330

 
9,328

 
5,625

Non-GAAP consolidated operating profit (loss)
 
$
(2,208
)
 
$
(580
)
 
$
388

 
$
(2,296
)
 
$
4,171

Depreciation
 
151

 
149

 
163

 
591

 
768

Non-GAAP consolidated Adjusted EBITDA (6)
 
$
(2,057
)
 
$
(431
)
 
$
551

 
$
(1,705
)
 
$
4,939







 
 
Three months ended
 
Twelve months ended
 
 
March 31,
 
December 31,
 
March 31,
 
March 31,
 
March 31,
 
 
2019
 
2018
 
2018
 
2019
 
2018
GAAP consolidated net income (loss)
 
$
(8,046
)
 
$
(1,556
)
 
$
(916
)
 
$
(11,382
)
 
$
31

Adjustments:
 
 
 
 
 
 
 
 
 
 
Stock-based compensation (1)
 
282

 
303

 
283

 
1,171

 
1,271

Amortization of intangibles (2)
 
783

 
830

 
1,047

 
3,435

 
4,189

Intangible assets impairment(3)
 
4,722

 

 

 
4,722

 

Restructuring, separation, and transition (4)
 

 

 

 

 
165

Discontinued operations (5)
 
207

 

 

 
345

 

Foreign currency translation adjustment (7)
 

 

 

 

 
(608
)
Income taxes (8)
 

 

 

 

 
(697
)
    Total adjustments
 
5,994

 
1,133

 
1,330

 
9,673

 
4,320

Non-GAAP consolidated net income (loss)
 
$
(2,052
)
 
$
(423
)
 
$
414

 
$
(1,709
)
 
$
4,351

GAAP consolidated net income (loss) per common share:
 
 
 
 
 
 
 
 
 
 
Diluted
 
$
(0.52
)
 
$
(0.10
)
 
$
(0.06
)
 
$
(0.73
)
 
$

Non-GAAP consolidated net income (loss) per common share:
 
 
 
 
 
 
 
 
 
 
Diluted
 
$
(0.13
)
 
$
(0.03
)
 
$
0.03

 
$
(0.11
)
 
$
0.28

Average number of common shares outstanding:
 
 
 
 
 
 
 
 
 
 
Diluted
 
15,342

 
15,524

 
15,794

 
15,517

 
15,707

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) Stock-based compensation is a non-cash expense incurred in accordance with share-based compensation accounting standards.
(2) Amortization of intangibles is a non-cash expense arising from previously acquired intangible assets.
(3) 4Q19 Non-recurring impairment related to intangible assets associated with the IBW reporting unit.
(4) 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.
(5) During FY2019, the Company recorded indemnification expense related to probable loss contingencies associated with a major customer contract related to a business which was previously sold and therefore is presented as discontinued operations
(6) EBITDA is a non-GAAP measure that represents Earnings Before Interest, Taxes, Depreciation, and Amortization. The Company presents Adjusted EBITDA.
(7) Non-recurring foreign currency translation gain related to the wind-up of the NoranTel legal entity during the quarter ended September 30, 2017.
(8) 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