WSTL - Earnings call transcript Q1 2020 | Westell Technologies, Inc.

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Operator

Welcome to the Westell Fiscal Year 2020 First Quarter Earnings Call. My name is Ellen, and I will be your operator for today's call. [Operator Instructions] Please note that this conference call is being recorded. I would now like to turn the call over to Tom Minichiello, Westell's Chief Financial Officer. Tom, you may begin.

Thomas Minichiello

Ellen. you, Thank welcome fiscal and Technologies. conference to call Good XXXX to first the year Westell quarter discuss morning, our results for The yesterday website, news issued posted release our on afternoon westell.com. is we

questions. Westell's the On this begin a conclude quarter, on I'll and of discussion our and initiatives. taking Executive business growth update Officer, we'll with and President our then call, will Chief financial John, Stephen you results by for

future results, Before believe, please about contain that forward-looking otherwise. presentation and our estimates expect, similar expressions should, discussion or we are identify and performance Words statements These intended and current begin, note reflect statements. and as expectations, financial achievements, assumptions. to statements such forward-looking management's such trend

and results, that cause discussed. involve risks These or are performance forward-looking materially statements and Westell's may performance not from actual to future guarantees differ achievements those uncertainties of

that description XXXX in filings, company's SEC provided of our year A March is XX-K, fiscal factors future Risk results Factors. the the the section, ended Form may including affect for under XX,

based events made time in and made new of revise being as this update disclaims forward-looking are future factors. obligation presentation date or any statements statements call. information, to this the any or conference of other forward-looking Westell on The

and performance ongoing financial periods. The that note core non-GAAP management comparisons we information non-GAAP in also company's that Please releases facilitates information the operating present information investors. we supplemental across news both to believe non-GAAP reflects because our measures and meaningful reporting provide

release. measures. comparable measures to most results of GAAP We've non-GAAP today news provided our discussion will reconciliations financial Our include in the

Steve. over I will to now turn call the

Alfred John

Good Tom. morning, you, everyone. Thank

from IBW our was in offset XQ lower more on CNS increased As from described a quarter business sequential basis, in and revenue our by segments. than revenue ISM release, news our

IBW repeaters been of public of bring we revenue working Class all A to market are lines, While particularly products recognize OEM to first we've partnership safety new across part a product were suite from our under an pleased increased that sales we achieved now to agreement.

May, in have had I'm some been happy these As of mentioned now report resolved. products delays with we testing since call our during that last to

In due decrease sales sales connectivity legacy remote lower revenue of of segments, primarily panels CNS was while ISM product X other the to and our network units business lines. lower other affected

In a more results over will Tom moment, go the in financial detail.

resources like opportunities organic growth share to with to These shifting designed like changes we to OnGo. several value-creating company I execution. more in-building are successful I'd you in the recent safety talk the about now growth access, have better believe changes focus on our that position markets and internal for significantly focus and public fiber

To previously into this groups CNS have line support a management and both product to businesses. we separate the and single synergized development organization product functional IBW end,

engineering so reduce of to growth future here time is The mature we for resources new add those vital product that sustaining revenue market to products. and our lines, clear mandate can on activities to areas improve

also the we've revenue. IoT shifting the lead of some towards on software will remain are is. Nonetheless, product to time most our our been to as organization of more heavier notably new solutions, the Due aspects to working content, accelerate offerings we ISM unique ISM resources

segments date X process up revenue all me to Let to across on you initiatives bring specific now business growth. in drive

of the revenue. success opportunity for see market For new for near-term with highest safety In-Building IBW, the as we public Wireless probability

increased this behind for issues product now testing us, market. are we growth the positioned With in

repeaters channel, frequency several For was XXX-, years, for and B, ranges. XXX-megahertz the the Class X-watt limited X/X-watt is past offering our single

address ranges, features a enable market. and of of partner suite us new portion capacities, Class A available larger OEM that to to repeaters additional much include the us The through our channelization frequency

transitioning opportunity be that next for Under agreement. costs larger extended have provide control from a licensing the �� include a deployments. and a we have expand through inventory and executed need this our recently license that greater our arrangement over further distributed will product to to for executed X arrangement solutions straight OEM the we over new can customers model offerings quarters partnership to Additionally, agreement,

Staying within for over we private CBRS last discussed in moving IBM, networks LTE but new quarter's our frequency edge to band. call during X.X-gigahertz solution OnGo, OnGo the

who GoEdge, our initial partnering connections to robust, cellular with with well make network to access continue from as we IP solution We small the progress and we create software reliable including with plans secure with developed networks. for Druid, as cell are private

plan step with here X an various we tests, to earliest in headquarters participate open customers. potential the well, our needed be In deployment Aurora for upcoming right CBRS for for we all deployment. is the approvals us are the commercial full addition scheduled spectrum the before expect commercial important possible September, November. These opportunities to towards industrial for system If goes regulatory in revenue in would facility, initial to testing tests IDC IDC

and differentiated we we expertise CNS to value focus intelligence network ISM the in remote building the within and simplification are deployment requirement network's as on. more densification fronts, the related increased XG for intelligence Capacity, differentiators Westell well edge. monitoring edge on future at enable to areas of the as On key core were that solutions efficiently continue connectivity at

deployments in for providers access of and connections service continue the simplified, operators product XG establish to higher-speed, they our the the portfolio low-cost future. fiber for to higher-capacity a needs as We grow network address foundation

we to areas and a solution of network other modular power and our in meet local believe In to innovative, fiber that densification, we addition requirements. on suite making aesthetic hurdle due assemblies, and fan-out specialized approval municipality extending pre-terminated to systems reeling cassettes, are key not would otherwise below-grade progress collapsible overcomes new, good current that a

call, a monitoring. equipped remote and units, As we distribution, access our it power RF and components fiber all across our incorporates below-grade X products noted last on enclosure plastic fully many large, essentially passive connectivity and of is business

and with be to this number in opportunities a domestic operators, in resulted of we service have and expect neutral-host and trials X date to customers. year efforts marketing provider Our with internationally, both

we of markets sales opportunities penetrating pipeline accounts half have past within adjacencies also into broadcasts, new a expanding with well resources increased including such international growing ISM, select For markets. new over utilities deeper applications, in existing as as year have now the in as and

we provider. on As won new with region with last our I another existing we're mentioned inroads call, a making service while our customer large largest domestic domestic

XG cell as Additionally, a we remote recently wireless radio ISM trial. on installed our of device RMC-XXX series part carrier's a small

a are monitor our services monitor next-generation to field RMX-XXXX industrial for solution national retailer and pump a both that recognized June for last for we and Our solution during that our quarter we the undergoing often in trials, first custom revenue cloud discussed leverages call. large generators

our each customers and to are develop the to working every transform solutions support which and edge IoT. We and future, products to networks is differentiated for the densification XG and need day network and with new their intelligence that

a on like we'd probability value have believe rapid and change, while these that transitions and right the in more they see increased can to versus as revolutionary. And success the more we of We time highest shareholder for Westell. the drive take right typically which for track sustainable are pace evolutionary are markets

the call back turn me over let that, Tom. With to

Thomas Minichiello

Steve. you, Thank

color added on Let me some our results, with provide beginning quarterly revenue.

$X.X $X XX, compared XX, June fiscal the ended XXXX. first million was revenue March quarter to XXXX, the in quarter fourth million For ended fiscal

lower quarter performance revenue at and call, which the IBW was the the the CNS noted sequential offset more top the Steve ISM to increase. As due of revenue, than

IBW's products, across DAS and sequential repeaters, all and commercial broad-based system increase conditioners. was safety components RF

our existing as B revenue first Within of A sales repeaters Class as public well our safety, we Class achieved repeaters. higher sequential of

to largest our ISM generator monitoring by revenue customer, overall revenue, of did domestic a related our for remote as service solution RMX-XXXX well remote. to provider primarily while new affected lower include units as first sales new

partially decrease of sales life to distribution integrated products offset and such interface panels and units. of network due as CNS This tower-mounted was lower by higher sales The and connectivity TX cycle power cabinets. products, amplifiers network late was

the on margin to in was in compared of XQ. results. Moving gross XQ the to XX.X% XX.X% rest operating Consolidated

better, consecutive our have IBW margins sub-XX% achieving XX% excess last particularly our in of business, and quarters inventory, resulted in over Following costs of quarters. associated X with obsolete target X or the higher gross

have Excluding XX% gross these periods. would been margin over both costs, in

$X and gave you expenses consistent last the we quarter's in million, were XQ the call. guidance significantly on from Non-GAAP with million $X.X earnings down in XQ operating

With the higher additional of of while – the expenses, in part OpEx the as that about reductions. excuse sorry, us the higher as some mentioned part netted higher me, OpEx last changes internal we Steve – some XQ, I'm M&A-related just spoke organizational included call,

last to of $X the forward, to continue guided lower the $X.X range we target non-GAAP end quarter. is our to towards OpEx quarterly million Going million to manage

quarter the non-GAAP XQ gross $X.X The $X.X resulted of improved million offset to the a OpEx, lower million profit, partly operating loss compared by in before.

per loss million million per in share compared for million or $X.X the share, $X in the of $X.X $X.XX and net XQ Non-GAAP share $X.XX $X.XX nonrecurring, of $X.X included EPS compared loss per impairment loss intangible share million $X.XX XQ million of net net which EPS was XQ. to and accounting IBW and noncash $X.X in assets. and per charge was to The XQ a GAAP and

balance sheet. the to Turning

million loss. million during used primarily XX, the quarter to compared XX. the of the at XXXX The $XX.X $XX.X at June operating cash Our $X.X result cash million totaled was March

solutions at key strategically focused of for solve that all the future answers, summarize. the needs for capacity, move and connectivity and questions with We're to we for requirements IoT. Before intelligence and on deployment enablers let customers, networks our me densification of growing simplification XG edge increased communication on

optimal hindering our on to leverage model in resources opportunities OnGo, for revenue ability within new Westell we safety realignments to actions future and control on provide greatest the taken steps our with and levels We've have for ISM back our future. specific focus that fiber increase additional business without OpEx taken to internal And continue growth, operating markets to to in-building tremendous restore the grow public namely with those applications. expense access,

for So open questions. your with we'd like now to up call the that,

Operator

[Operator Instructions] we question from Marc And Advisors. have Investment from Silk Silk a

Marc Silk

a you seems the and like a really it to stuff. focus it partnership, you going see sounds and that growth on have shift very legacy interesting strategic that you're So like areas

I of the – where empty looks kind looks enterprise or calories – think it it is, revenue. empty your like value

line the great is I in a this So also the is also I I thought think, the would but and That's shift, to sand. with this. my have think that cash, Board,

below few quarters the areas into to a that right shift growth. right no I this it areas to a on But then focus is putting see investment if this if the to not the you to profitability higher $XX I a going in bank or thing also and to take the path But think don't you I it's million, worst goes think think cash money see I show it's the gives again, that is think stop good longer, works. and world. going

can comment you wish, shift. if So you think I it's just nice a but on it

Alfred John

the Steve. Mark, to – this we gives an revenue for customers. business and shift legacy is and believe is Yes, maximize exist, your our that of shifting slowdown focus believe shift is the value. we are certainly with advice, shareholder ways opportunities I'll this we'll where that is the newer the shift Certainly, happening the our markets. We moving to spend where the opportunity us towards is looking take constantly indication

certainly your value. evaluating comment maximize are opportunities on advisement we'll So constantly take to and

Marc Silk

more appreciate like say that happened It's clarity about have – excited us you get note, forward. of that it anecdotal gives that recently And I areas? things it. maybe going just an new kind you these on can some

Alfred John

Yes.

and is Mark, not one, expanding are biggest serious just and safety – seeing is It's taking the new new marketplace. or real. requirements the More the builds. that jurisdictions think traction we're existing at even the are enforcing requirements more public what the in brownfield buildings, I occupancies new into –

So the transition into we're product opens have more absolutely our solution, larger fiber with agreement, seeing And opportunity we the there. that ability which a DAS market. in our up to a lot expand also this of part offerings

entire arrangements part this market historically overall only had market, become XX% this look of If DAS or about the A, either OEM, agreement through XX%. Class you addresses opportunity. the previous that will of The products at other product have fiber we address through that Class the the that B,

the very So space, momentum in certainly we're the that about that, towards plays fiber work excited access. I'm space, around and seeing cell XG building the the more which small in strength

Marc Silk

quarter? then, Tom, I question. share regards shares didn't guys you see any with – to the That sounds last Did And buy past buyback. this anything really great. last

Thomas Minichiello

look have were in take at August. actually first it of Marc, an in buybacks. quarter there certainly had the quarter month to another the opportunity quarter the before, the in no The expired 'XX, the – plan of we end we here towards of but place fiscal in

Operator

is Resources. [Operator Instructions] Our next Everglades with Busch question Steve from

Steven Busch

mean, Our that shift. years. you the $XX the long-term times talking mean, million going But about multiple different dropping. to I going a think direction? How when new up run shareholder, last of to $XX and focus we've and are time? over a like mean, get I I southern million are shifted we've to I have a focused this what's So fact XX revenues I couple been last we this this quarters in rate we're as

Alfred John

fair comment Yes, legitimate question, Steve. and

a the that I think most our to that to and doing. existing differently, that in regardless expanded not much of brings we is it the around defined, and underemphasize so well align I there little didn't effort just That's we us of to spend. was as continuing market a is challenge to that shifting, bring the confidence those the more that us. safety, market I solving give that's we on in want sustaining in and and can where public to sense us, we're our time what there, make the to that resources that, spend thought resources had wrap product value get rapidly growing in an don't that is to spend I portfolio important products product effort put

where see is see that's the I growth. me I I start that thing confidence So other we'll and in think confidence revenues There a pipeline. the gives get – that our trough revenue to

a of we're different And seeing new in just doubled to of approach opportunities larger opportunities, a pipeline opportunities. months has opportunities, types more of last as X approach. solution the component opposed for Our

those things So would are I X Steve. the say,

Steven Busch

the at we're mean, as new growth to Okay. trough? on to, Or legacy to I million? the guess the is are But going Are I of are revenue, back of some mean, $X obviously, markets where trough? gets enough. Or to million I the question we it's stuff. fair focusing down $X we make you given like those drop opposed sense. seem stage? this like on a we stay bought are a Exactly public, do the now. back up doesn't way expense-wise. we're down at to we just XX% company of were whole stock, It's It to to you where right planning? we think fact pretty that small haven't And lot

Alfred John

yes. Understood, Understood.

hard as is. where quantum see expense the previous I've into this All can see I in gain side takes tell I We to I momentum. quarter. a is calls, do see addressed predict you're you we get truly the past certainly, pipeline. said when traction new And don't growing So leaps. time do certainly trough to market products new opportunities. and bringing It's the It

future. us seeing confidence are So the hard have I data do we're predict, in confidence the but that types right to – you to give seeing of

Steven Busch

the in million, Right, $XX because I million. okay. correct? forget I last guess, me. Is around, was time now, number to just expected the I'll to clear that I calls, up But one mean, follow X our breakeven more wasn't be that $XX

Thomas Minichiello

million. million, That's in $XX the $XX.X

Steven Busch

you get Is off there year-end. to that have now? expected table the I believe around And

Alfred John

the No, the is I wouldn't table. it's say Still, goal. off that

will we affect to of As with The we've believe previously us. carriers got there. get with that hard predict a that spend there, get stated, the fighting but have chance largest shipment it's much spends us shifting leads is to sometimes how to our goal visibility to

Thomas Minichiello

structure million the to Tom. is And and where on this then a million to you a to Steve, of range. million margins the expenses gross be million analysis $XX.X million range, had, But and if normalized $XX would $XX costs basis the currently the million our in is XX% non-GAAP just on the with more $XX to more $XX.X and under million would basis OpEx The to that with million clarify, $XX breakeven $XX.X in on be current assume GAAP full we range. $XX

Operator

John remarks. back I'm the questions closing time. Instructions] call showing turn I'd any And to [Operator this further Steve to no like at for

Alfred John

us everyone, Thanks, for joining today.

much call. up next shareholder the and and grow you As to do have to we on to speaking the to business look mentioned, drive again we forward value,

Operator

and may concludes conference. Thank Ladies and for this you. Thank participating, you disconnect. now you gentlemen, today's

Westell (WSTL) 11 Aug 192020 Q1 Earnings call transcript