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AURORA, IL, OCTOBER 19, 2005 - -Westell Technologies, Inc. (NASDAQ: WSTL), a leading provider of a wide range of broadband access products and conferencing services, today announced the results for its second quarter ending September 30, 2005.
Total revenues for the quarter increased 8% to $66.3 million from $61.4 million in the second quarter of the last fiscal year. Breaking down revenues by product line for this quarter compared to last year’s second quarter showed Customer Networking Equipment revenue increased 12% to $44.0 million from $39.3 million; Conferencing Services revenue increased 3% to $11.2 million from $10.8 million; Network Service Access equipment revenue declined 2% to $11.1 million from $11.3 million.
Westell reported net income for the second quarter of $3.0 million, or $0.04 per diluted share, which includes income tax expense of $2.1 million, or $0.03 per diluted share. During the same period last year, the Company recorded net income of $4.4 million, or $0.06 per diluted share including $2.6 million income tax expense, or $0.04 per diluted share.
“We are encouraged with the results for the second quarter of Fiscal 2006, our fourteenth consecutive quarter of profitability,” said Van Cullens, Westell President and CEO. “Our business improved faster than we anticipated primarily due to the strong broadband service promotions underway by our customers,” he said.
Outlook
“At this time we see strengthening order forecasts related to the strong customer promotional activities, and our third quarter guidance reflects this improvement,” Cullens said.
“Along with the continued support of our core business, we will remain focused on the successful launch of our products TriLink ™ (VoIP Gateway), Ultraline II ™ (IPTV/Video), Verizon One™ and Westell Media Gateway™ (Multimedia Networking) as well as working with our customers on a number of fronts to develop exciting new solutions for emerging markets. Combining these activities with our continued commitment to cost control and productivity improvements, we remain confident in our future success,” Cullens added.
Westell provided guidance for the third quarter of fiscal 2006 ending December 31, 2005. The Company expects revenue to be in a range of $68 million to $71 million and expects net income per diluted share in a range of $0.04 to $0.05 including a provision for income tax expense of approximately $1.9 million to $2.4 million.
Effective Tax Rate for Fiscal Year 2006 Income Statements
Due to the Company’s strong performance in fiscal 2005 and projected future ability to generate taxable income, the Company is required under GAAP to record tax expense in fiscal 2006. The Company’s current effective tax rate approximates 40%. Westell does not expect to incur any significant cash tax payments for the foreseeable future as a result of the anticipated utilization of net operating loss carryforwards to reduce its cash tax liabilities. Conference Call Information
Westell will host its earnings call on Thursday October 20th, at 9:30AM Eastern Time for the investment community.
The live earnings call will be available to the public. Participants can join for the voice portion of the call by following the instructions below. Participants must separately register for the call.
To participate in the voice portion:
- All participants must pre-register by dialing 1-888-690-4420, International 1-402-220-3749.
- Leave your name and the company whom you represent.
- To participate in the call on the 20th, please dial ConferencePlus at 1-800-446-1671 no later than 9:15 AM, Eastern Time and ask for the "Westell Technologies Analyst Call". International participants may dial 847-413-3362.
The Company’s earnings press release and any related earnings information to be discussed on the earnings call will be posted on the Investor Relations section of the Company's web site at http://www.westell.com. Digital Audio Replay of this call will be available one hour following the conclusion of the call by dialing 1-888-843-8996 or 630-652-3044 and entering 12948048#.
About Westell
Westell Technologies, Inc., headquartered in Aurora, Illinois, is a holding company for Westell, Inc. and ConferencePlus, Inc. Westell, Inc. manufactures broadband telecommunications access products. ConferencePlus, Inc. is a collaborative Application Service Provider that manages and hosts voice, video, IP applications and back-office services. Additional information can be obtained by visiting Westell's Web site at www.westell.com.
About ConferencePlus
ConferencePlus, a Westell Technologies, Inc. (NASDAQ: WSTL - News) subsidiary, is a leading global provider of audio, web, video and IP conferencing services. ConferencePlus is dedicated to providing high quality, innovative conferencing solutions to its domestic and international clients and telecommunications resellers. ConferencePlus is recognized for outstanding customer service and support to help clients meet their business objectives. The company is headquartered in Schaumburg, Illinois with an international headquarters in Dublin, Ireland. Additional information can be obtained by visiting the ConferencePlus web site at www.conferenceplus.com.
“Safe Harbor” statement under the Private Securities Litigation Reform Act 1995:
Certain statements contained herein including, without limitation, statements containing the words "believe," “on track, “ "anticipate," “focus,” “should,” “committed” "expect," "estimate", "await," "continue," "intend," “may,” “will,” “should,” and similar expressions are forward looking statements that involve risks and uncertainties. These risks include, but are not limited to, product demand and market acceptance risks, need for financing, the economic downturn in the U.S. economy and telecom market, the impact of competitive products or technologies, 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), the effect of Westell’s accounting policies, the need for additional capital, 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, 2005 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.
Financial Results
(Dollars in thousands except per share amounts)
Three Months ended Six Months ended
Sept 30, % Sept 30, %
2005 2004 Change 2005 2004 Change
--------- -------- ------ -------- -------- ------
Revenues
NSA $11,092 $11,277 -2% $21,784 $24,394 (1) -11%
CNE 44,035 39,305 12% 97,079 71,108 37%
Services 11,189 10,817 3% 23,094 22,069 5%
--------- -------- -------- --------
Total revenues 66,316 61,399 8% 141,957 117,571 21%
--------- -------- -------- --------
Gross profit
Equipment 15,052 13,618 31,654 26,900 (1)
Services 5,407 5,661 11,448 10,925
--------- -------- -------- --------
Total gross
profit 20,459 19,279 6% 43,102 37,825 14%
--------- -------- -------- --------
Gross margin
Equipment 27.3% 26.9% 26.6% 28.2%(1)
Services 48.3% 52.3% 49.6% 49.5%
--------- -------- -------- --------
Total gross
margin 30.9% 31.4% 30.4% 32.2%
--------- -------- -------- --------
Operating
expenses
Sales &
marketing 5,987 5,530 8% 12,157 10,882 12%
Expense
to
revenue 9.0% 9.0% 8.6% 9.3%
General &
adminis-
trative 4,164 4,762 -13% 8,518 8,776 -3%
Expense
to
revenue 6.3% 7.8% 6.0% 7.5%
Research
& develop-
ment 4,975 3,528 41% 9,632 7,102 36%
Expense
to
revenue 7.5% 5.7% 6.8% 6.0%
Restructuring - (452) - (452)
Expense
to
revenue 0.0% -0.7% 0.0% -0.4%
Intangibles
amortization 324 324 648 688
Expense
to
revenue 0.5% 0.5% 0.5% 0.6%
--------- -------- -------- --------
Total
operating
expenses 15,450 13,692 13% 30,955 26,996 15%
--------- -------- -------- --------
Expense
to
revenue 23.3% 22.3% 21.8% 23.0%
Gain on
sale of
assets (2) - 1,453 - 1,453
Operating
income 5,009 7,040 -29% 12,147 12,282 -1%
Other income 192 32 14 393
Interest
expense (5) (15) -67% (9) (51) -82%
--------- -------- -------- --------
Income before
minority
interest and
taxes 5,196 7,057 -26% 12,152 12,624 -4%
--------- -------- -------- --------
Income taxes 2,115 2,567 4,828 4,750
Minority
interest 58 120 152 217
Net income $3,023 $4,370 $7,172 $7,657
========= ======== ======== ========
Income per
common share:
Basic 0.04 0.06 0.10 0.11
--------- -------- -------- --------
Diluted 0.04 0.06 0.10 0.11
--------- -------- -------- --------
Average number
of common
shares
outstanding:
Basic 70,097 68,379 69,610 68,336
Diluted 71,584 70,420 71,497 70,805
Footnotes:
(1) The Company earned $883,000 in the three months ended June 30,
2004 for a contractual settlement.
(2) Includes a $1.5 million gain from the sale of NSA assets.
Westell Technologies, Inc.
Financial Results (continued)
(Dollars in thousands)
September 30, March 31,
2005 2005
------------- -------------
Cash and Short term Investments 45,264 26,960
Receivables 27,873 30,167
Inventory 18,786 26,419
Total current assets 99,523 90,332
Goodwill and intangibles 12,499 13,883
Total assets 182,962 180,090
Total current liabilities 27,042 35,812
Total liabilities and minority interest 32,225 40,432
Shareholders' Equity 150,737 139,657
Days Sales Outstanding 38 35
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Contact:
Westell Technologies Inc.
Nicholas C. Hindman, Sr., 630-375-4136
nhind@westell.com
or
Trade/Business Press:
KGT Communications Group
Ken Trantowski, 630-469-8765
kennethg_trantowski@msn.com |
