[WESTELL LOGO] WESTELL NEWS RELEASE
News Release: FOR IMMEDIATE RELEASE
For Additional Information, contact:
SENIOR VICE PRESIDENT & CFO: TRADE/BUSINESS PRESS:
NICHOLAS C. HINDMAN, SR. KEN TRANTOWSKI
WESTELL TECHNOLOGIES INC. KGT COMMUNICATIONS GROUP
630.375.4136 630.469.8765
NHIND@WESTELL.COM kennethg_trantowski@msn.com
---------------------------
WESTELL TECHNOLOGIES REPORTS 1ST QUARTER FISCAL 2006 RESULTS
AURORA, IL, JULY 20, 2005 - -Westell Technologies, Inc. (NASDAQ: WSTL), a
leading provider of broadband access products, gateways and conferencing
services, today announced the results for its first quarter ending June 30,
2005.
Total revenues for the quarter increased 35% to $75.6 million from $56.2
million in the first quarter of the last fiscal year. Breaking down revenues by
product line for this quarter compared to last year's first quarter showed
Customer Networking Equipment revenue increased 67% to $53.0 million from $31.8
million; Conferencing Services revenue increased 6% to $11.9 million from $11.3
million; Network Service Access equipment revenue declined 18% to $10.7 from
$13.1 million.
Westell reported net income for the first quarter of $4.1 million, or $0.06
per diluted share, which includes income tax expense of $2.7 million, or $0.04
per diluted share. During the same period last year, the Company recorded net
income of $3.3 million, or $0.05 per diluted share including $2.2 million income
tax expense, or $0.03 per diluted share.
Excluding the tax expense, non-GAAP net income in the first quarter
increased to $6.9 million, or $0.10 per diluted share, compared to $5.5 million,
or $0.08 per diluted share in the first quarter of last year. A reconciliation
of non-GAAP results to GAAP results is provided as part of this press release.
"We are pleased with the results for the first fiscal quarter of 2006, our
thirteenth consecutive quarter of profitability," said Van Cullens, Westell
President and CEO. "Growth was primarily driven by our Customer Networking
Equipment segment. And, last month we posted a major win, as BellSouth selected
our VersaLink (TM) wireless gateway product," he said.
"Our VersaLink, TriLink (TM) (VoIP Gateway), UltralineII (TM) (IPTV/Video)
and Westell Media Gateway(TM) ( Multimedia Networking) are all presently being
evaluated by multiple prospective customers and their interest and engagement on
these new products has been very encouraging. We remain upbeat about the
long-term prospects of the broadband market, however, the principal question
with these new product offerings is market timing," Cullens said.
OUTLOOK
"As stated in our May conference call, we were seeing some softening in
order forecasts, and our second quarter guidance reflects this condition. A
number of factors are contributing to this more conservative outlook including
seasonal weakness, changing customer promotional strategies, deferred product
transitions and pricing competition. We simply have to work through these
short-term issues and seek every opportunity to get our newer products into
volume deployments as soon as possible," Cullens said.
"Clearly, we are disappointed with this near-term outlook, but I can assure
you that we remain tightly focused on delivering profitable growth. I firmly
believe that Westell is strongly positioned to generate long-term shareholder
value despite the periodic non-linear nature of our market. Our core attributes
of strong customer relationships, ongoing commitment to next generation
products, and a highly disciplined focus on costs, give us confidence in our
future success." Cullens concluded.
Westell provided guidance for the second quarter fiscal 2006 ending
September 30, 2005. The Company expects revenue to be in a range of $61 to $64
million. Westell expects non-GAAP net income per diluted share in a range of
$0.03 to $0.04 (excluding a provision for income tax expense in a range of
approximately $785 thousand to $1.3 million) and net income per diluted share in
a range of $0.01 to $0.02 on a GAAP basis including the provision for income tax
expense.
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.
RECONCILIATION OF NON-GAAP TO GAAP RESULTS AND GAAP OUTLOOK
A detailed calculation of non-GAAP net income and net income per share is
included in the attached statement of operations, which also includes equivalent
GAAP net income and GAAP net income per share.
CONFERENCE CALL INFORMATION
- ---------------------------
Westell will host its earnings call on Thursday, July 21st, 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:
1. All participants must pre-register by dialing 1-888-690-4420, International
1-402-220-3749.
2. Leave your name and the company whom you represent.
3. To participate in the call on the 21st, 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 12195404#.
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," "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.
Financial Tables to Follow:
WESTELL TECHNOLOGIES, INC.
FINANCIAL RESULTS (CONTINUED)
(Dollars in thousands)
JUNE 30, MARCH 31,
2005 2005
-------- ---------
Cash and Short term Investments 31,908 26,960
Receivables 33,927 30,167
Inventory 23,923 26,419
Total current assets 96,284 90,332
Goodwill and intangibles 13,298 13,883
Total assets 183,014 180,090
Total current liabilities 31,378 35,812
Total liabilities and minority 36,095 40,432
interest
Shareholders' Equity 146,919 139,657
Days Sales Outstanding 40 35
WESTELL TECHNOLOGIES, INC.
FINANCIAL RESULTS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
Three Months ended June 30, %
2005 2004 Change
----------- ----------- ------
Revenues
NSA $ 10,692 $ 13,117 (1) -18%
CNE 53,044 31,803 67%
Services 11,905 11,252 6%
----------- -----------
Total revenues 75,641 56,172 35%
----------- -----------
Gross profit
Equipment 16,602 13,282 (1)
Services 6,041 5,264
----------- -----------
Total gross profit 22,643 18,546 22%
----------- -----------
Gross margin
Equipment 26.0% 29.6% (1)
Services 50.7% 46.8%
----------- -----------
Total gross margin 29.9% 33.0%
----------- -----------
Operating expenses
Sales & marketing 6,170 5,352 15%
Expense to revenue 8.2% 9.5%
General & administrative 4,354 4,014 8%
Expense to revenue 5.8% 7.1%
Research & development 4,657 3,574 30%
Expense to revenue 6.2% 6.4%
Intangibles amortization (2) 324 364
Expense to revenue 0.4% 0.6%
----------- -----------
Total operating expenses 15,505 13,304 17%
----------- -----------
Expense to revenue 20.5% 23.7%
Gain on sale of assets - -
Operating income 7,138 5,242 36%
Other income (178) 361
Interest expense (4) (36) -89%
----------- -----------
Income before minority interest and taxes 6,956 5,567 25%
Income taxes 2,713 2,183
Minority interest 94 97
Net income $ 4,149 $ 3,287
=========== ===========
Income per common share:
Basic 0.06 0.05
----------- -----------
Diluted 0.06 0.05
----------- -----------
Average number of common
shares outstanding:
Basic 69,124 68,294
Diluted 71,566 70,975
NON-GAAP RESULTS AND RECONCILIATION TO GAAP
GAAP net income $ 4,149 $ 3,287
Income tax expense 2,713 2,183
----------- -----------
Non-GAAP net income (3) $ 6,862 $ 5,470
=========== ===========
GAAP Income per basic share 0.06 0.05
Basic per share income tax expense 0.04 0.03
----------- -----------
Non-GAAP income per basic share (3) 0.10 0.08
=========== ===========
GAAP Income per diluted share 0.06 0.05
Diluted per share income tax expense 0.04 0.03
----------- -----------
Non-GAAP income per diluted share (3) 0.10 0.08
=========== ===========
FOOTNOTES:
(1) The Company earned $883,000 in the three months ended June 30, 2004 for a contractual settlement.
(2) Teltrend product technology intangible amortization.
(3) Non-GAAP net income and net income per share excludes the impact of tax expense.