Westell Reports Second Quarter Fiscal 2000 Results
Company Reports Record Revenue, Sequential Improvements in EPS and Significant Increases in Service and DSL Equipment Revenue
October 21, 1999 04:01 PM Eastern Time
AURORA, Ill., Oct. 21 /PRNewswire/ -- Westell Technologies, Inc. WSTL today announced results for its second fiscal quarter ending September 30, 1999.
For the three months ending September 30, 1999, the net loss per common share was 8 cents representing an improvement from 9 cents, 23 cents and 26 cents in the prior three quarters. For the same period last year, net loss was 28 cents per share.
The net loss of $3.1 million compares to a loss of $10.2 million in the same quarter last year and a loss of $3.4 million in the June 30, 1999 quarter. Operating expenses decreased $6.7 million or 44.4% from the same quarter last year and decreased $2.1 million or 20.2% from the quarter ended June 30, 1999.
Gross margins for the quarter were 22.5% compared to 20.3% for the same period last year. Gross margins in the quarter ended June 30, 1999 were 31.1%. Costs tied to initial DSL volumes and, competitive DSL pricing contributed to the decline in gross margins in the current quarter. The company expects improvements in future quarters resulting from aggressive cost reduction programs.
Total revenues were a record $25.0 million, a 10.3% increase over revenues of $22.7 million in the same period last year. Service revenue for the quarter increased 62.8%, over the comparable quarter last year, to $7.7 million. Customer Premise Equipment (CPE) revenue climbed 67% relative to the same period last year to $2.0 million. Transport Systems posted sales of $2.5 million, a 7.7% increase over the same period last year, while High Capacity Products (HiCAP) revenue declined 11.1% relative to the same period last year to $12.8 million.
"This quarter's results continue to validate the strategies and plans we have been communicating since the beginning of this calendar year," remarked Nicholas Hindman, Westell CFO. "Our operating expenses and operating loss continued to decline. We posted record revenues in the quarter as our CPE and Transport Systems business units posted strong gains. Service revenue climbed significantly in line with our belief that our subsidiary, Conference Plus, Inc. (CPI) will achieve 50% revenue growth in FY2000 vs. FY1999. Despite strong gross margin pressure in the quarter, we showed a decrease in net loss, a trend that has continued over the prior four quarters. We expect to see margins improve as we realize the savings associated with increasing volumes and as cost reduction measures take effect in our DSL business."
Westell Technologies, Inc, headquartered in Aurora, Illinois, is a holding company for Westell, Inc. and Conference Plus, Inc. Westell, Inc. manufactures and licenses DSL systems and value added Customer Premise Equipment, and manufactures telecommunications access products. Conference Plus, Inc. is a multi-point telecommunications service bureau specializing in audio teleconferencing, multi-point video conferencing, broadcast fax, and IP multimedia conferencing services. Additional information can be obtained by visiting Westell's Web site at westell.com .
"Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995:
Certain statements contained herein including, without limitation, The company expects improvements in future quarters resulting from aggressive cost reduction programs, "belief that CPI will achieve 50% revenue growth in FY2000 vs. FY1999," "We expect to see margins improve as we realize the savings associated with increasing volumes and cost reduction measures take effect in our DSL business," are forward looking statements that involve risks and uncertainties. These risks include, but are not limited to, product demand and market acceptance risks (including the future commercial acceptance of Westell's ADSL systems by telephone companies and other customers), the impact of competitive products and technologies (such as cable modems and fiber optic cable), competitive pricing pressures, product development, excess and obsolete inventory due to new product development, commercialization and technological delays or difficulties (including delays or difficulties in developing, producing, testing and selling new products and technologies, such as ADSL systems), the effect of Westell's accounting policies, the effect of economic conditions and trade, legal, social, and economic risks (such as import, licensing and trade restrictions) and other risks more fully described in Westell's Annual Report on Form 10-K for the fiscal year ended March 31, 1999 under the section "Risk Factors." Westell undertakes no obligation to release publicly the result of any revisions to these forward looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
Westell Technologies, Inc. Comparative Financial Results (Dollars in thousands except footnotes and per share amounts)
Three Months ended Sept. 30, Six Months ended Sept. 30,
1999 1998 % Change 1999 1998 % Change
(unaudited) (unaudited)
Revenues
HiCAP $12,799 $14,399 -11.1% $26,623 $ 28,943 -8.0%
Transport systems2,523 2,343 7.7% 4,712 4,997 -5.7%
CPE 2,004 1,200 67.0% 3,179 2,388 33.1%
Services 7,678 4,718 62.8% 14,649 9,345 56.8%
Total revenues 25,004 22,660 10.3% 49,163 45,673 7.6%
Gross profit 5,625 4,598 22.3% 13,131 11,512 14.1%
Gross margin 22.5% 20.3% 26.7% 25.2%
Operating expenses
Sales & marketing 3,414 5,261 -35.1% 7,112 10,030 -29.1%
Expense to
revenue 13.7% 23.2% 14.5% 22.0%
General &
administrative 3,377 3,282 2.9% 6,617 6,273 5.5%
Expense to
revenue 13.5% 14.5% 13.5% 13.7%
Research &
development 1,619(A) 6,578 -75.4% 5,216(A) 12,708 -59.0%
Expense to
revenue 6.5% 29.0% 10.6% 27.8%
Total operating
expenses 8,410 15,121 -44.4% 18,945 29,011 -34.7%
Expense to
revenue 33.6% 66.7% 38.5% 63.5%
Operating loss (2,785) (10,523) -73.5% (5,814) (17,499) -66.8%
Other income 74 348 -78.7% 51 783 -93.5%
Interest expense 348 66 427.3% 728 156 366.7%
Loss before
tax benefit (3,059) (10,241) -70.1% (6,491) (16,872) -61.5%
Benefit for
income taxes --(B) -- NM --(B) -- NM
Effective tax rate 0.0% 0.0% 0.0% 0.0%
Net Loss $(3,059) $(10,241) NM $(6,491) $(16,872) NM
Basic and diluted
loss per common
share (0.08) (0.28) NM (0.18) (0.46) NM
Average number of common
shares outstanding
Basic &
Diluted (C) 36,570 36,422 36,519 36,417
Footnotes:
(A) The Company received $2.4 and $3.1 million in the three and six
month periods, respectively, from customers to fund on-going engineering
projects which were offset against engineering expenses.
(B)A valuation reserves of $1.9 million and $3.2 million were recorded
during the three and six month periods, since the resulting gross deferred
tax asset would have exceeded the value of tax planning strategies
available to the company.
(C)Loss year impact of dilution is antidilutive, therefore dilutive
presentation is not applicable.
Key Balance Sheet Data
Sept. 30, March 31,
1999 1999
(000's)
(unaudited)
Cash and Short term Investments 13,605 6,715
Receivables 17,952 14,132
Inventory 11,453 10,376
Total current assets 44,706 33,391
Total current liabilities 17,823 21,178
Shareholders' Equity 34,865 39,124
SOURCE Westell Technologies, Inc.
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