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Edited Transcript of WSTL earnings conference call or presentation 1-Nov-18 1:30pm GMT

Q2 2019 Westell Technologies Inc Earnings Call

Aurora Nov 5, 2018 (Thomson StreetEvents) -- Edited Transcript of Westell Technologies Inc earnings conference call or presentation Thursday, November 1, 2018 at 1:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Alfred S. John

Westell Technologies, Inc. - President & CEO

* Thomas P. Minichiello

Westell Technologies, Inc. - Senior VP, CFO, Treasurer & Secretary

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Conference Call Participants

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* Marc Silk

* Martin Bang

* Steve Busch

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Presentation

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Operator [1]

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Good morning and welcome to the Westell Fiscal Year 2019 Second Quarter Earnings Call. My name is Michelle and I will be your operator for this conference. (Operator Instructions) Please note that this conference call is being recorded.

I will now turn the call over to Mr. Tom Minichiello, Westell's Chief Financial Officer. Tom, you may begin.

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Thomas P. Minichiello, Westell Technologies, Inc. - Senior VP, CFO, Treasurer & Secretary [2]

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Thank you, Michelle. Good morning and welcome to our conference call to discuss the fiscal year 2019 second quarter results for Westell Technologies. The news release, we issued yesterday afternoon, is posted on our website, westell.com. On this call, Stephen John, Westell's President and Chief Executive Officer, will begin with the discussion of our business and growth initiatives. I'll then update you on our financial results for the quarter and we'll conclude by taking questions.

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

These statements reflect management's current expectations, estimates, and assumptions. These forward-looking statements are not guarantees of future performance and involve risks and uncertainties that may cause Westell's actual results, performance or achievements to differ materially from those discussed. A description of factors that may affect our future results is provided in the company's SEC filings, including Form 10-K for the fiscal year ended March 31, 2018, under the section Risk Factors.

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

Please also note that we present non-GAAP financial information in our news releases because we believe that non-GAAP measures provide meaningful supplemental information to both management and investors. The non-GAAP information reflects the company's core ongoing operating performance and facilitates comparisons across reporting periods. Our discussion of results today will include non-GAAP financial measures. We've provided reconciliations to the most comparable GAAP measures in our news release.

I will now turn the call over to Steve.

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Alfred S. John, Westell Technologies, Inc. - President & CEO [3]

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Thank you, Tom, and good morning, everyone. In fiscal Q2, Westell has generated operating cash flow of nearly $3 million. Revenues for our IBW and CNS segments were up slightly from fiscal Q1. The overall revenue decrease in Q2 was isolated to our ISM business as one major domestic customer spent significantly less on remote monitoring than in previous quarters. While this affected overall topline performance as well as profitability, we were still able to maintain our gross margin target of 40% or greater and keep operating expenses in check. Based on recent order activity, we expect ISM revenue from this customer to rebound in the December quarter.

In a moment, Tom will go over to financial results in more detail. I'd like to now go through the tactical steps we are taking to improve performance for the second half of fiscal 2019 and the more strategic direction we are heading into to drive significant growth in fiscal 2020 and beyond. As I mentioned previously, it's a time of tremendous change in the industry with ever-increasing bandwidth needs and more and more connected devices. To address these requirements, service providers and network operators have entered into a new era of infrastructure investment, driven largely by the future transition to higher speed, higher capacity, 5G wireless networks and the expansion of Internet of Things or IoT.

We have seen our customers begin to lay the groundwork for the future with evolving network densification designs like Centralized Radio Access Networks or CRAN, more small cells, deeper fiber access and increased in-building wireless coverage for both commercial and public safety applications. We've also seen rural operators expanding more into fixed wireless broadband access. All of this has a significant effect at the edge of the network and presents Westell with multiple growth opportunities across all 3 of these business segments.

Let me start with IBW, where we recently announced a product agreement with ip.access, a U.K.-based small cell provider. We are working together on the development of the small cell solutions based on Citizens Broadband Radio Service or CBRS spectrum, which was recently rebranded as OnGo. The primary targeted market for the OnGo small cell is private LTE networks which could largely benefit enterprises. With OnGo, enterprises should have an attractive alternative to operate their own private cellular networks that more cost-effectively enable secured wireless connections across all of their critical operations.

In addition to being an early entrant, plans for our OnGo small cell offering include a carrier-grade solution that features increased range, robust throughput and quality of service for voice and data in a single, high-performance device.

Our IBW public safety, with the current line of repeaters, battery backup units and passive components, continues to generate revenue. We also continue to work on another partnership arrangement that would expand the product portfolio and grow this area of the business. Finally, on the tactical front for the more mature IBW markets, we have strengthened our sales focus and continue to generate steady sales of DAS conditioners and commercial repeaters in places, where customers are adding to existing networks.

As I mentioned on last quarter's call, our ISM business, while relatively steady and consistently profitable over the past several years has revolved largely around 3 longstanding accounts that make up the large majority of the revenue. We saw in the September quarter, the downside of what can happen in a given period on reliance on only a few large customers. We like to favor economics and real-time information that remote monitoring provides network operators, not only in a world with more and more connected devices but also given the aforementioned changes in communications networks where more intelligence is moving to the Edge.

We are adding sales resources to our ISM business, refining our go-to-market approach with cell tower and telco service provider customers, seeking to expand into adjacent verticals such as cable service providers, utilities and potentially select international markets while pursuing in organic growth opportunities.

For CNS, we are excited about the new fiber access products we've been developing under the leadership of George Wakileh. These products, which initially includes the cassettes and fiber panels along with low profile, ruggedized, terminated fiber cabling, are designed to help network operators economically and quickly deliver new wireline and wireless services. As mentioned, ever-increasing bandwidth requirements, both for delivering quality broadband today and 5G connectivity in the future, means extending fiber all the way to the end-user across enterprises, single-family homes, and multi-dwelling units.

Our fiber access solutions can simplify and speed fiber deployments in the central office, outside plant, and customer premise environments to enable network densification, technology coexistence and the convergence of data centers within central offices.

In fiscal Q2, we see the initial orders from 3 customers and recognized our first revenues with 2 of them. In the September quarter, we also saw the results of a more-focused sales approach that yielded integrated cabinet revenue growth across the more diversified customer base as well as continued market share gains for our power distribution products, where earlier this year we introduced a new line of higher capacity fuse panels well-suited for CRAN and small cell developments.

As I stated previously, our goal is to drive growth across all of the 3 business segments with each having at least one meaningful growth driver leading the way. We are actively working on innovative product developments and pursuing strategic partnerships and small acquisitions that are natural extensions to our 3 businesses and enable us to penetrate and expand in existing and adjacent markets. We continue to build a large pipeline of acquisition targets that fit this criteria. Our number one mission is to profitably expand the business and drive increased shareholder value.

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

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Thomas P. Minichiello, Westell Technologies, Inc. - Senior VP, CFO, Treasurer & Secretary [4]

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Thank you, Steve. Let me provide some added color on our quarterly results beginning with revenue. For the second fiscal quarter, ended September 30, 2018, revenue was $10.1 million compared to $13 million in the first fiscal quarter, ended June 30.

As Steve noted, the overall decrease in sequential quarter revenue was isolated to our ISM business. While this was due to one major domestic customer spending significantly less on remote monitoring in 2Q than they had in previous quarters, it's important to note that over the previous 4 quarters, our ISM business averaged $5.2 million. And based on recent order activity, we expect ISM revenue from this one customer to rebound in the December quarter.

Revenue for both our IBW and CNS segments, on a sequential basis, grew slightly in fiscal 2Q. For IBW, sales of DAS conditioners and passive components increased, partly offset by lower repeater revenue including moderating sales of our public safety repeaters after a record performance last quarter.

The CNS increase was driven by higher sales of integrated cabinets, both to existing customers from network expansions as well as to new customers for fixed wireless broadband applications. Within CNS, our power distribution product line continued to perform well. And as Steve noted, we recognized the first revenue for our new fiber access product line.

Moving on to the rest of the operating results. Despite the lower revenue, we continued in the September quarter to exceed our gross margin target of 40% or greater; it was 41.5%. We also held expenses in check as non-GAAP OpEx in fiscal 2Q was $4.8 million, the same as fiscal 1Q.

On a non-GAAP basis, the lower 2Q revenue resulted in an operating loss of $600,000 and a net loss of $500,000 or $0.03 per share compared to an operating profit of $1.1 million and net income of $1.2 million or $0.08 per share the quarter before. On a GAAP basis, the net loss was $1.7 million or $0.11 per share compared to near breakeven in the quarter before. Adjusted EBITDA, which is our non-GAAP operating profit less depreciation, was negative $500,000 in 2Q compared to a positive $1.3 million or 9.8% last quarter. Through the first 6 months of fiscal 2019, adjusted EBITDA was positive $800,000 or 3.4%.

Turning to the balance sheet. Our cash and short-term investments totaled $28.5 million at September 30, 2018, compared to $25.8 million at June 30. The $2.7 million cash increase during the quarter was driven by improved working capital partly offset by the operating loss and share repurchases.

Under the stock repurchase program authorized by our Board of Directors in May of 2017 and as part of Open Market 10b5-1 plans, in fiscal 2Q, Westell repurchased 61,833 shares at an average price of $2.78 per share for a total of $171,800. In total, from May 2017 to the end of last week, Westell repurchased 331,260 shares at an average price of $2.83 per share for a total of $937,000.

Before we move on to the Q&A, let me summarize. We are beginning to gain traction in the areas of the business where we've been working internally on innovative solutions to address top challenges for service providers and network operators. Fiber access and power distribution are prime examples. While we continue to optimize all areas of the business and maintain a strong level of operating leverage, we are primarily and aggressively focused on growth, through continued organic activities as well as strategic partnerships and smart acquisitions.

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

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Questions and Answers

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Operator [1]

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(Operator Instructions) I do have one question in the queue, and it comes from Martin Bang with Polaris Capital.

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Martin Bang, [2]

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I have a couple of question. I guess I'll start with the first one. On the CNS, the sale improved over the linked quarter but margin was pretty heavily down, can you put some light on that?

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Thomas P. Minichiello, Westell Technologies, Inc. - Senior VP, CFO, Treasurer & Secretary [3]

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Yes, sure. Good morning, Martin, this is Tom. So the mix is 6 product lines that make-up CNS. And so in any given quarter, depending on the mix that comprises the revenue, it's going to move the gross margin around from quarter-to-quarter. So, this quarter we had a higher mix of integrated cabinets which tends to put more pressure on the rate for the overall business unit. But if you look over, let's say a 4-quarter period or any longer period of time, you'll see that on average, it runs around 30%.

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Martin Bang, [4]

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And do you have any thoughts on what we need to model as an sustainable or average or -- I don't know, period of next 4 quarters, how this one is going to look like?

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Thomas P. Minichiello, Westell Technologies, Inc. - Senior VP, CFO, Treasurer & Secretary [5]

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You mean the overall consolidated gross margin?

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Martin Bang, [6]

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Not for the whole business, only for the CNS.

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Thomas P. Minichiello, Westell Technologies, Inc. - Senior VP, CFO, Treasurer & Secretary [7]

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Yes. I would go with the 30% because the mix will move it around in one given period, like I said. But to your question, over a year-period let's say, 30% is a good way to model it.

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Martin Bang, [8]

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Looking at the inventory, it went up compared to the linked quarter and also compared to year-over-year, but especially on the linked quarter, it went up almost --, exactly $600 million -- $600,000. Can you talk about it? Is that relates to the new order that you get from the customer that reduced the order you did last quarter or what -- how we should think about the inventory increasing?

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Thomas P. Minichiello, Westell Technologies, Inc. - Senior VP, CFO, Treasurer & Secretary [9]

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Yes. So let me say a few things on your question and here's how to think about it. We've been reducing our inventory, over time, if you look over the last year, a little over a year, we've gone from $12 million down to $10 million, and last quarter, we were down at $9.7 million. Now, the reason why we had a blip up in the September quarter is we did not expect to or plan to or have a goal of revenue quarter of $10.1 million. We were building our inventory to ship out, especially as noted in the prepared remarks for the ISM business to achieve a quarter, much higher than $10 million. So, when that one customer delayed and moved out and didn't order as much as we thought in the quarter, we ended up with higher inventory. Now, we also expect that to move here in the December quarter and we're getting orders that would suggest that that's going to happen.

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Martin Bang, [10]

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So we're already a one month into the quarter, how do you think the inventory is going to look like at the end of the year? I mean, is it going to be lower because, I guess if you build inventory for the customer but the customer didn't make the order this quarter, he's going to make it next quarter. So, I guess, you build some inventory but now you're not building more inventory. So, I guess we should look at that as going down or --?

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Thomas P. Minichiello, Westell Technologies, Inc. - Senior VP, CFO, Treasurer & Secretary [11]

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Well, our overall trend line is to manage it down. The issue at end of any particular quarter, it's a point in time, so it could be a number that is higher or lower than what we would want. -- And especially in December, what happens in -- with the fourth calendar quarter, which is the fourth quarter for most of our customers, is we can get orders in the December timeframe, let's say, that are due for shipment in January. So, we would obviously build that up for shipment in the next quarter. So, at the end of December, you could see something similar to what you're seeing now but It's a hard thing to predict and it's going to all depend on customer demand.

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Martin Bang, [12]

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Now you spoke about many initiatives that you guys are doing this quarter. But at the end of the day, if I look from vertical standpoint, and let's put aside the one customer that did some effect, this quarter was pretty -- very soft. I mean I guess, this market was expecting for some really, really hard work especially from your side as a new CEO that will bring something to the table, but it doesn't look like that. So, I guess my question is, when we hear about your expectation, goals and efforts you're taking, how we should think about it, when we're going to see the change, like the main -- the real change that's going to cause the numbers to look different especially from selling perspective?

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Alfred S. John, Westell Technologies, Inc. - President & CEO [13]

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Yes, I'll take that Martin, this is Steve John. Yes, I would think, our fourth quarter, you should start to see some real results from the new initiatives. Certainly, we had a one-quarter delay in the release of some of our newer public safety products that we really are expecting to see improved results from. We will hopefully see shipments this quarter at that product. And then in our fourth quarter, you should really see the results of the release of that new product. Certainly, in the fiber distribution products, we have new product coming in this -- or Q3, which should result in improvements in Q4. And I would hope to think that the results of the efforts we're putting into inorganic growth will start to show up in our Q4 as well.

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Martin Bang, [14]

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And related to the news you published about the new deal you did with, I think it was a customer or joint venture or something like that, what's the potential there?

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Alfred S. John, Westell Technologies, Inc. - President & CEO [15]

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The ip.access, I think the potential is significant. We're looking to do customer trials in Q1, and looking for revenue and full product release in Q3 of 2020. So they won't be -- the results won't be significant to our 2020 performance, but I think as we look into 2021 and beyond, I think they can be very significant. The market for small cell is robust but in any robust market, there's going to be significant competition. So we certainly going to have to be careful to execute properly.

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Martin Bang, [16]

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Now the presentation was down during the quarter, the company presentation. And I was expecting to see some update, probably you guys want to renew it and update to market and put more perspective for investor but we still don't see it. I mean, can we expect product in short-term or?

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Alfred S. John, Westell Technologies, Inc. - President & CEO [17]

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Yes, you can, Martin. You can expect to see an updated presentation on the website under the Investor page soon.

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Martin Bang, [18]

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And related to insider buying shares, one of my colleagues spoke about it last quarter and we still don't see it now. I know you guys spoke about that there is some small window of time that you're being able to buy shares for yourself, but I guess, that is the first company that couldn't find in the past 2 quarter small window to take advantage of the shares, a few guys I mean, CEO, CFO or Board believe in the company and the share price at that low. So, I mean, it's hard for the investor to get more --, how would I say, less risk of?

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Thomas P. Minichiello, Westell Technologies, Inc. - Senior VP, CFO, Treasurer & Secretary [19]

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Okay. So, Martin, I'm going to -- you're asking us why haven't we purchased shares as CEO and CFO is, -- I'm drawing the question out of your comments. So let me just take a minute or two to lay that out. We have a short window between earnings releases and final month of every quarter, probably 3 weeks, 3 times a year, and then in the year-end fourth quarter when we release our results a little later in May, we have like the week of the Memorial Day weekend like 4 days. So we have a total of 10 weeks out of the year, when insiders have an opportunity to be active with Westell shares. Now, we are also working on a lot of initiatives on a continuum that lock us out, especially the executive offices, which include Steve and myself and our Head of Sales and even further on through the organization. We are actively working on M&A, we are actively working on partnerships, we are actively working on customer contracts and things that even though the window is open, we, in particular, are locked out. I will tell you the last opportunity that I had to buy shares, it's been a while, but it was the last opportunity I had and I did buy shares, when I did have that opportunity to do that within a 3 day period. Steve, of course, is new and has just joined earlier this year, so it's a little different for him. There really hasn't been an opportunity since I've been here given the activity we've had on the M&A front. So we would like to do that but we got to live within the rules. It's not like we don't want to do it.

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Operator [20]

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We'll move to the next question. (Operator Instructions) The next question comes from Marc Silk with Silk Investment Advisors.

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Marc Silk, [21]

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Tom, now with you have purchased about 331,000 shares this quarter, what's the Class A share count right now? I got about 11.8 million, I don't know if that's accurate or not.

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Thomas P. Minichiello, Westell Technologies, Inc. - Senior VP, CFO, Treasurer & Secretary [22]

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Yes, you're in the ballpark. It's actually right around 12 million. Maybe a little over 12 million, if you're looking at it right now.

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Marc Silk, [23]

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And then on your fiber access product line, long-term, where are you looking for the gross margins to be. I don't know if you -- when you could break down by product or you can just more of an overall, I just want to kind of see what it will look like going forward?

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Thomas P. Minichiello, Westell Technologies, Inc. - Senior VP, CFO, Treasurer & Secretary [24]

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It's Steve. I would look or to be consistent with our overall gross margin, it's certainly depending on, -- the product, it's going to vary but we're working really hard to develop our all-new intellectual property around this product line, which we feel confident will allow us to drive better margins than a commodity-based fiber optic solution.

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Marc Silk, [25]

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And then my last is more of a comment and this is more. -- Steve, you talked about driving shareholder value and I think, long-term I think you're just setting things up and it's nice to have a nice cash reserve here, so you don't -- as long as you are very conservative that I think you have been with cutting costs, it looks like the next few years could be interesting. What worries me is with a small company like you guys, as always, a limited amount of people who really focus on these type of stocks and myself included. And now with the stock price down, 80% of your market cap is actually in cash. So, for me, this is a great buying opportunity. What makes me buy less than normal is the issue with the Class B shares. And I don't -- I need to bring this up but I don't want to be adversarial but this is really for Mr. Penny and Mr. Foskett that, you really need to tell shareholders whether you write a letter or call, call me or whatnot, you need to disclose to shareholders why is it so important to you have a Class A and Class B shares. When the stock is down 40% this year, you will have a historic low when you compare your cash per share to the equity value. I just think by hiding behind this, if you're worried about your Board fees, quite frankly, if you decide to merge that B into A, you have my support going forward. But it's hard enough being a small company in this environment, when everybody buys the FANG stocks and Steve coming on Board, you got to give him every opportunity to succeed and also say this to long-term of shareholders, I feel your pain, we're going to do whatever we can do on the Board side to help the shareholders because quite frankly, we're all in this together, we're all buying stock, if it goes up, we all make money. So I just want to throw that out there. I do think that Mr. Penney and Mr. Foskett, if they decide to keep the 2 Class shares, I think they have to publicly disclose in a filing, why it is imperative to the shareholders that this remains that way. So I appreciate you giving me my forum and we'll talk later.

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Operator [26]

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The next question is a conference, comes from Steve Busch with Everglades Resources.

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Steve Busch, [27]

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So I guess I'll just follow-up Marc Silk's comment because I do a lot of Class A, Class B shares over the years and once they're merged, I can always say, they will pretty much cripple. So I do hope they merge the shares, it's stupid not to. There's really no reason, and especially who has been running the company but of course, I'm still buying. So I'm glad they're having it because it's creating an opportunity for me. But anyway, when they do merge, I think they'll be very happy.

But onto other things, how much in sales from this major customer in ISM was missed this quarter? Can you put a number on it because whenever we were down, was it down more than the customer or it was the customer all the reason we are down or we down across the board?

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Thomas P. Minichiello, Westell Technologies, Inc. - Senior VP, CFO, Treasurer & Secretary [28]

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Let me give you some context on it, Steve. So I think you're aware you've been following us for a while and we've also made mention of this in the past. Our ISM business, which was the Kentrox acquisition from several years back, has really sort of revolved around 3 large customers, right? One of them is a domestic service provider, another one is a global neutral host operator, and a third one is international customer that does wireline broadband. And at any point in time, 1 or 2 of these customers are doing more business with us than the other, but all 3 of them are pretty strong and accounts for a large majority of our ISM revenue. In the last, I'd say, year or so, the one domestic service provider has really been in the lead among the 3 and ask the customer that, this quarter through how they manage their spending and their CapEx and their priorities of what they're going to spend their money on in a given period. It moved away from the remote monitoring into other areas and that was pretty much the miss --

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Alfred S. John, Westell Technologies, Inc. - President & CEO [29]

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That was predominately the miss.

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Thomas P. Minichiello, Westell Technologies, Inc. - Senior VP, CFO, Treasurer & Secretary [30]

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Yes. As you can tell, if you look at the numbers, it's a $3 million miss, so --

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Alfred S. John, Westell Technologies, Inc. - President & CEO [31]

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But I will say one thing about that, Steve. We are seeing a rebound with that customer this quarter and we believe it was simply a budget issue, a refocus for a quarter, and we're also, as I said in my remarks, we've added sales resources to focus on breaking into adjacent markets, we're starting to see some traction with some new adjacent markets, we have some new product releases that I believe will help that effort in the adjacent markets. And we have -- through our partner in Australia we have also opened up several significant opportunities in the APAC region. So we're trying to diversify away from our reliance on those 3 major customers. But for this quarter, it really was predominantly that one major customer, as I said.

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Steve Busch, [32]

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Listen, I think you're doing the right things, but I do have questions. So, are you kind of saying, there's no quarterly visibility from these customers, did they not calling you in advance and saying we're going to have this run rate this quarter or in the next 2 quarters make sure you're ready or you just --

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Alfred S. John, Westell Technologies, Inc. - President & CEO [33]

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Yes. We usually have some decent visibility. This particular situation, we found out at the beginning of the quarter that I think it came down from corporate that they were going to cut capital spending across the board for the quarter. And it was a surprise to our customers that we deal with as well as to us, but as I said, it is rebounding and we believe it simply was. I think it was a situation where the customer decided to shift capital to a new opportunity to -- mainly to impress the Street.

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Thomas P. Minichiello, Westell Technologies, Inc. - Senior VP, CFO, Treasurer & Secretary [34]

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I will add one thing, Steve, that this particular customer also -- it was one of our largest and buys not every other product that we sell but almost all of the other products that we sell. And in those areas, we saw a normal behavior it's really in the remote monitoring area that they -- it happened this quarter.

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Steve Busch, [35]

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Fair enough. That happens, right. That's what happens we you have large customers. So just moving on to maybe a different topic then. On the strategic partnerships, can you kind of discuss or provide some more color on, like who -- what kind of companies you're working with, is it -- there Nokia out there that you can partner with, any of these 5G companies? What -- who are your strategic partners you're looking for when you'll have near-term revenue events?

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Alfred S. John, Westell Technologies, Inc. - President & CEO [36]

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Well, certainly the one we announced, the ipaccess partnership has mid-term revenue opportunities, probably the nearest term of several of the 5G radio manufacturers that we're working with on our fiber product to offer connectivity for the densification of the ne2rk, and for some of the 5G radios that will require, fiber all the way to the radio. So that's certainly one of them. In the public safety space, as I just said, we had a delay for a quarter but we will be working closely with that partner to deliver product this quarter and hopefully see rebound in our Q4 from the Class A repeaters and some of the other products that are soon to be released. So, those would be the primary ones today.

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Steve Busch, [37]

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Never be closer. And what about on the acquisition timeframe, last quarter, we talked about a lot of ability to have a pipeline of small $3 million to $10 million revenue acquisitions. Is that moving closer or is it a couple of quarters away, a year away, what do you think on time frame for these kinds of (inaudible)?

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Thomas P. Minichiello, Westell Technologies, Inc. - Senior VP, CFO, Treasurer & Secretary [38]

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Yes, I'd say, certainly moving closer. Certainly moving closer, we've got a really robust pipeline. We actually had 2 that were fairly, fairly far down the path last quarter. We were very close within throughout the diligence process, they just came apart. And I'd say that we probably have 2 right now, but we feel like we're making really good progress with that I think they are going to be more in the short- to mid-term as opposed to long term.

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Steve Busch, [39]

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I'll just say -- I think Mr. Silk also mentioned the 12 million shares outstanding, but it was really 15.6 million shares outstanding, if you count non-Board, I mean the super shares. Is that correct?

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Thomas P. Minichiello, Westell Technologies, Inc. - Senior VP, CFO, Treasurer & Secretary [40]

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Yes, you're correct, Steve, that's right.

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Operator [41]

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(Operator Instructions) Your next question comes from [Mike Debo] with Choice.

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Unidentified Analyst, [42]

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I'm a long-term shareholder and have a substantial position in Westell and have since the early 2000s. And I just want to comment, I wonder your comments. And this is for Tom, since you've been there the longest, Steve, you kind of just gotten there. Since January of 2014, Westell stock was at $16.50 little adjusted, and a little less than 5 years, Westell stock has lost 87% of its value and is now trading today in low $2s. Can you give us an answer on why management should be compensated handsomely like you are and given stock options, and you don't buy back your own stocks and it's almost like you're trying to destroy shareholder value. So, the Penny Trust can take this company private on the cheap.. Your thoughts on that?

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Thomas P. Minichiello, Westell Technologies, Inc. - Senior VP, CFO, Treasurer & Secretary [43]

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Yes, sure Mike, this is Tom. So, let me just say a few things there. Look, nobody is happy. We're certainly disappointed in the core, but we're excited about the future here and the opportunities we have for the company. There's been a lot of change going on here in the last 3 to 4 years during my tenure. As you know, we've had a leadership CEO transitions about 4 of them in the last 2 years and so that's quite frankly we've lost some ground and some time there, but nobody here whether it's the Board or the management, the employees, nobody's here is happy with where we are and what's going on. And you're right to point out the drop in value. All I can tell you is that we're here to turn the thing around. We're here to drive up value. We're doing all the things that we feel we need to do to bring the value up much higher than where it is today. We don't like it. We're all shareholders like an earlier caller said, we are all in this together, the Trust and the Class A shareholders and the executives and the employees are all owners of this company and want to see it do well and succeed and prosper and that's what we do here every day. And some of the things in the past have gone well, some of the things in the past have not gone well but we're here to do smart moves going forward, deploy our cash in a way to grow this company and drive up value. So I can -- I can tell you that's what we're here to do and we're excited about the opportunities we have in front of us. We have to execute and we have to do the job and get the job done for everyone and that's what we do here day in, day out.

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Unidentified Analyst, [44]

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Part of the execution like the other callers have said, combining those shares because that is a sticking point and then the buyback, putting your own money in a stock that looks at a low value, keep stock to get into it, and give shareholders some hope as that if you're putting your own money in there that should help drive the stock up. Well, it's been doing nothing but going down about the same few time, and I just want to give my thoughts out there.

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Thomas P. Minichiello, Westell Technologies, Inc. - Senior VP, CFO, Treasurer & Secretary [45]

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Mike, thank you very much and we appreciate you sticking with us, and I appreciate your comments and points well taken. Thank you.

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Operator [46]

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We have no further questions at this time. I'll turn the call back over to Steve John for closing remarks.

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Thomas P. Minichiello, Westell Technologies, Inc. - Senior VP, CFO, Treasurer & Secretary [47]

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Thanks, everyone, for joining us today. As mentioned, we have much to do to grow the business and drive up shareholder value, and we look forward to speaking to you again soon.

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Operator [48]

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