Westell Reports Fiscal Fourth Quarter 2017 Revenue of $15.4 Million

Sequential revenue growth and gross margin increase drives EPS improvement

AURORA, Ill., May 24, 2017 (GLOBE NEWSWIRE) -- Westell Technologies, Inc. (NASDAQ:WSTL), a leading provider of high-performance wireless infrastructure solutions, announced results for its fiscal 2017 fourth quarter ended March 31, 2017 (4Q17).  Management will host a conference call to discuss financial and business results after market close today, Wednesday, May 24, 2017 at 4:30 PM Eastern Time (details below).

Consolidated revenue for 4Q17 was $15.4 million, and consisted of $6.9 million from the In-Building Wireless (IBW) segment, $4.5 million from the Intelligent Site Management and Services (ISMS) segment, and $3.9 million from the Communication Network Solutions (CNS) segment. 

IBW recorded its highest quarterly revenue since December 2015, including record quarterly sales of the  Universal DAS Interface Tray (UDIT) and first revenue for the recently announced two-watt public safety repeater.  Also up sequentially were product sales within ISMS driven by software revenue and sales of integrated cabinets within CNS driven by new projects.

“We once again delivered sequential bottom-line improvements in 4Q17, as GAAP performance was better by $1.3 million and non-GAAP performance, positive for the second consecutive quarter, improved $0.8 million.  Highlights included sequential revenue growth, gross margin increase, and continuous expense control,” said Kirk Brannock, President and CEO of Westell Technologies.  “Our top priority is driving revenue growth.  We continue to expand our IBW public safety product portfolio.  We also expect the emerging centralized radio access network (CRAN) architecture to present us with growth opportunities for both our ISMS and CNS products and solutions.”

GAAP operating expenses were $7.4 million in 4Q17, a 6% reduction compared to $7.8 million in 3Q17.  Non-GAAP operating expenses, which exclude stock-based compensation, amortization of acquired intangible assets, and restructuring charges, were $5.9 million in 4Q17, flat compared to 3Q17.

Cash was $21.8 million at March 31, 2017 compared to $23.8 million at December 31, 2016 and $20.9 million at September 30, 2016.  Cash decreased $2.1 million in 4Q17 due primarily to a lower accounts payable and higher receivables at March 31, as well as employee severance payments.  Cash increased $0.9 million during the second half of fiscal 2017, the period in which the majority of our cost and expense reset took effect.

In-Building Wireless (IBW) Segment

IBW’s sequential revenue increase was driven by higher sales for all product lines in the segment, led by record quarterly sales of UDIT.  IBW’s gross margin increase was driven primarily by the higher revenue and lower product costs.

Intelligent Site Management & Services (ISMS) Segment

ISMS’s sequential revenue decrease was due to lower services revenue, partially offset by higher sales of both our remote monitoring units and management systems.  ISMS’s gross margin increase was driven primarily by a more favorable mix and lower costs.

Communication Network Solutions Group (CNS) Segment

CNS’s sequential revenue increase was driven primarily by higher sales of integrated cabinets.  CNS’s gross margin increase was driven by the higher revenue and lower costs.

Conference Call Information

Management will discuss financial and business results during the quarterly conference call on Wednesday, May 24, 2017, at 4:30 PM 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) 206-4065 no later than 4:15 PM Eastern Time and providing the operator confirmation number 44880238.  

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 7:00 PM Eastern Time after the call ends.

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, 2016, 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:

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⁾  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.
⁽⁸⁾  This adjustment is a non-recurring charge related to the release of contingent liabilities related to the sale of ConferencePlus, which is presented as discontinued operations.

For additional information, contact:

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

Released May 24, 2017