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Westell Technologies Reports Second Quarter Results

October 29, 2014

AURORA, IL, October 29, 2014 – Westell Technologies, Inc. (NASDAQ: WSTL), a leading provider of inbuilding wireless, intelligent site management, cell site optimization, and outside plant solutions, today announced results for its fiscal 2015 second quarter ended September 30, 2014. Consolidated revenue was $23.6 million, consisting of $11.1 million from the In-Building Wireless (IBW) segment and $12.5 million from the Communication Solutions Group (CSG) segment.

“Our relationships with the major North American wireless service providers remain strong; however, we experienced significant reductions in their capital spending in our second quarter, as similarly noted by others in our sector,” said Rick Gilbert, Chairman and CEO of Westell Technologies. “While we expect continued carrier spending delays to have a greater effect on our third quarter revenues, we are seeing some indications that carrier spending will resume to more normal levels in early 2015. We continue to establish Westell as a leader in the growing in-building wireless market, and we showed some improvement in the September quarter with our intelligent site management business within the CSG segment. We believe we are well positioned to take advantage of an anticipated normalization in wireless service provider spending in our fourth quarter.”

On a GAAP basis, the Company recorded a net loss in the quarter ended September 30, 2014 of $14.6 million or $0.24 per share, compared to a net loss of $2.8 million or $0.05 per share in the quarter ended June 30, 2014. The current quarter GAAP results include a $10.6 million non-cash charge for the impairment of goodwill in the CSG segment. On a non-GAAP basis, the Company recorded a net loss of $1.5 million or $0.03 per share, compared to a non-GAAP net loss of $0.2 million or $0.00 per share in the prior quarter. Please refer to the schedule at the end of this release for a complete GAAP to non-GAAP reconciliation and other information related to non-GAAP measures.

Cash and short-term investments were $48.3 million at September 30, 2014, compared to $46.8 million at June 30, 2014. The $1.5 million increase was driven by lower working capital needs during the quarter.

In-Building Wireless (IBW) Segment

IBW segment revenue was $11.1 million in the quarter ended September 30, 2014, down 21% from $14.1 million in the quarter ended June 30, 2014. The sequential revenue decrease was driven by slowdowns in distributed antenna system (DAS) deployments by the major North American wireless service providers.

Gross profit was $4.4 million and gross margin was 39.3%, compared to $5.8 million and 41.2% in the prior quarter. Gross profit and gross margin decreased as a result of the lower revenue. IBW R&D expenses were $2.1 million, compared to $2.2 million in the prior quarter. As a result, IBW segment profit was $2.3 million, compared to $3.6 million in the quarter ended June 30, 2014.

Communication Solutions Group (CSG) Segment

CSG segment revenue was $12.5 million in the quarter ended September 30, 2014, down 9% from $13.7 million in the quarter ended June 30, 2014. The sequential revenue decrease was driven by lower sales of outside plant solutions, partly offset by an increase in revenues for intelligent site management. Gross profit was $3.7 million and gross margin was 29.5% compared to $3.9 million and 28.2% in the prior quarter. While gross profit decreased due to the lower overall revenue, gross margin improved primarily as a result of a more favorable mix. CSG R&D expenses were $2.2 million, compared to $2.3 million last quarter. As a result, CSG segment profit was $1.5 million, compared to $1.6 million in the quarter ended June 30, 2014.

About Westell

Westell Technologies, Inc., headquartered in Aurora, Illinois, is a leading provider of in-building wireless, intelligent site management, cell site optimization, and outside plant solutions focused on innovation and differentiation at the edge of telecommunication networks, where end users connect. The comprehensive set of products and solutions the Company offers enable telecommunication service providers, cell tower operators, and other network operators to reduce operating costs and improve network performance. With millions of products successfully deployed worldwide, the Company is a trusted partner for transforming networks into high quality, reliable systems. For more information, please visit www.westell.com.


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