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Edited Transcript of WSTL earnings conference call or presentation 30-May-19 1:30pm GMT

Full Year 2019 Westell Technologies Inc Earnings Call

Aurora Jun 17, 2019 (Thomson StreetEvents) -- Edited Transcript of Westell Technologies Inc earnings conference call or presentation Thursday, May 30, 2019 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

Silk Investment Advisers - President

* Mark B. Spiegel

Stanphyl Capital Management

* Steven Henry Busch

Everglades Resources, Inc. - Founder & President

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Presentation

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Operator [1]

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Welcome to the Westell Fiscal Year 2019 Fourth Quarter Earnings Conference Call. My name is Paulette, and I will be your operator for today's call. (Operator Instructions) Please note that this conference call is being recorded. I will now turn the call over to Tom Minichiello, Westell's Chief Financial Officer. Mr. Minichiello, 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, Paulette. Good morning, and welcome to our conference call to discuss the fiscal year 2019 fourth 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 a discussion of our business and growth initiatives. I will 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.

So with that, I'll 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. Good morning, everyone. As described in our news release, 4Q revenue was largely affected by the performance of our IBW segment. Sales of commercial repeaters and DAS conditioners decreased as expected due to the shifting network architectures discussed during previous calls. The real disappointment, however, were the public safety product testing delays related to a partnership arrangement that would have otherwise resulted in higher revenue in the quarter.

Our public safety offering, single-channel 1/2-watt and 2-watt repeaters for the 700- and 800-megahertz frequency ranges limits us to a small subsection of the market. The new suite of products that we are continuing to work through with our partner include additional capacities, frequency ranges, features and channelization that will enable us to significantly expand our addressable public safety market. We are working through the issues causing the delays, and due to the pent-up demand, expect to have product to ship to customers in the June quarter.

In our other 2 segments, seasonally lower sales of remote units affected ISM revenue after a strong performance the quarter before. CNS revenue increased sequentially, led by solid performances from our power distribution and network connectivity products. Also within CNS, we continued to gain traction in 4Q from our new suite of fiber access solutions for network densification.

In a moment, Tom will go over the financial results in more detail. I'd like to now bring you up to date on the initiatives we have underway across all 3 business segments to drive revenue growth.

For IBW, despite the delays I just mentioned in expanding our public safety product offerings, we remain committed to public safety as a revenue growth driver for the company. It's early in what is projected to be a sustainable growth market for many years to come, and I believe we should be able to expeditiously work through our recent product testing issues.

We also recently announced our new GoEdge solution for OnGo private LTE networks and the 3.5-gigahertz CBRS frequency band. Initial plans for GoEdge include the small cell solution we are jointly developing with ip.access as well as network software from Druid, who we are partnering with to create robust, reliable and secure cellular connections for private networks. We are seeing significant activity in the growing ecosystem of suppliers, including Spectrum Access Systems or SAS, which is being developed by several of the larger vendors. Our GoEdge road map now includes integration with SAS, which is pivotal to OnGo.

Right here in our Aurora, Illinois headquarters, we have set up a GoEdge operating lab where currently -- where we currently test our OnGo small cells, and that progress is on schedule. We have seen growing interest in our solution from integrators, neutral hosts and enterprise customers. We plan to have our first production units from ip.access in June and have several -- scheduled several field trials across a variety of verticals, including health care, hospitality and retail as well as for hosted services. We continue to expand our OnGo small cell to be generally available for customers in the October to December quarter of this year.

In addition to the IBW public safety and OnGo markets, we are intensely focused on the growing requirements for network densification to enable future 5G connectivity as well as the associated shift in remote monitoring towards more intelligence at networks' edge. Capacity, intelligence and deployment simplification at the edge are the key value differentiators and our areas of core expertise within our company that we are building on.

For example, we continue to grow our fiber access product portfolio to address the needs of several service providers and network operators for simplified, low-cost deployments as they add new broadband services today and establish the foundation for higher-speed, higher-capacity 5G network connections in the future. We currently offer a suite of specialized modular cassettes, collapsible reeling systems and fanout and other preterminated assemblies for deployment in central office, outside plant and customer premise environments. While slower than we like, we continue to gain traction in the fourth quarter with our existing domestic customers, and our sales opportunity pipeline continues to build with these and other customers.

Also, in the area of fiber access, we are excited about a new innovative, below-grade solution we are developing that we believe overcomes a key hurdle in network densification, extending power in fibered areas that would otherwise not meet local municipality approval due to aesthetic requirements. It is essentially a large below-grade plastic enclosure, fully equipped that incorporates many of our products across all 3 business units: power distribution, fiber connectivity and access and passive RF components as well as remote monitoring. Our marketing efforts to date have resulted in opportunities with a number of service provider and neutral host operators, both domestic and internationally, and we expect to be in trials this year with 2 customers.

We've also added product development resources to help focus on a long-term plan to build a full line of fiber access products and solutions. Speaking of monitoring, we have invested additional sales resources in our ISM business with the goal of penetrating deeper within existing accounts as well as expanding into adjacencies such as cable service providers, broadcast, utilities in select international markets. We recently won a new region within our largest existing domestic customer and have begun to make significant inroads with another large domestic service provider.

As an example of vertical market expansion, I mentioned during last quarter's call we are in partnership discussions with an industrial pump monitoring solution that leverages our Optima Cloud service. Having just recently shipped our first 12 remotes for installation at customer trial sites, we are now in the launch phase with this offering. Additionally, we were recently granted approval with another partner for a custom solution to monitor generators for a large national retailer.

Our ISM business is currently rolling out a next-generation site management platform, the RMX-4000, which builds on and expands the IoT capabilities of our Intelligent Site Management solution. This new platform offers higher capacity for new, more intelligent infrastructure and new features such as support for wireless sensors and mobile app-based configuration while providing the same high availability site alarm monitoring, intelligent protocol conversion and wireless aggregation found throughout our ISM product line.

Acting as a smart extension of our Optima Management System and other operational support systems, the RMX-4000 is intended to enhance network management strategies, reduce OpEx and improve operational efficiencies. We have received initial customer orders and expect to recognize our fourth -- first RMX-4000 revenue in the June quarter.

Let me now give you an update on where we are with respect to inorganic growth. We have spent considerable amounts of time, energy and expense over the past year exploring options for growth through acquisitions with the goal of expanding the business across all 3 segments. We were engaged in due diligence with a number of companies that met many of our target acquisition criteria and that could have been a good match.

But our healthy balance sheet is a valuable asset. And as I mentioned on our last call, we are not going to make a deal just to get a deal done. Ultimately, as we carefully make decisions around deploying our cash to grow the business, it has to be the right deal in which we are fully confident that it fits both our organic strategies and our financial criteria.

So while I wouldn't say we are not going to pursue growth through acquisition, we are now directing more of our energies on the partnership and internal growth initiatives I just outlined: in IBW, public safety and OnGo; in CNS and ISM, densification for 5G and intelligence at the edge of the network. Should any of the potential acquisitions we are pursuing or others present themselves as comfortably meeting our criteria, we'd certainly be interested. Our #1 mission is to 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 fourth fiscal quarter ended March 31, 2019, revenue was $9.7 million compared to $10.7 million in the third fiscal quarter ended December 31, 2018. As Steve noted at the top of the call, the sequential quarter revenue performance was due to the lower IBW and ISM revenue, which more than offset the CNS increase.

Within IBW, the expected revenue decline from commercial repeaters and DAS conditioners more than offset the sequential increase in sales of passive RF system components and the increase of our existing line of public safety repeaters. The sequential ISM revenue decrease was primarily due to lower seasonal sales of remote units and the lumpiness of our Optima software revenue, which was partly offset by increased support services revenue as annual renewals with several large customers took effect in our fourth quarter. For CNS, the sequential revenue increase was driven by higher sales of power distribution panels, network connectivity products and fiber access solutions, all partly offset by lower sales of integrated cabinets.

Moving on to the rest of the operating results. Consolidated gross margin was 37.6% in 4Q compared to 42.8% in 3Q. Higher costs associated with excess and obsolete inventory, a less favorable mix and the lower revenue all contributed to our quarterly gross margin dip below 40%, the first time in over 2 years. On a full year basis, gross margin was 42.1%, marking the second consecutive year in which we exceeded our consolidated target of 40% or greater.

Non-GAAP operating expenses in 4Q were $5.9 million, up from $5.2 million in 3Q. About 1/3 of the increase reflects our increased investment in sales and marketing and product development while the rest was due to nonrecurring expenses, primarily for acquisition-related activities. Going forward, we plan to manage quarterly non-GAAP OpEx more in the $5 million to $5.5 million range.

The lower gross profit and increased OpEx resulted in a 4Q non-GAAP operating loss of $2.2 million compared to a loss of $580,000 the quarter before. Non-GAAP net loss and EPS was $2.1 million and $0.13 per share in 4Q compared to $423,000 and $0.03 per share in 3Q. Non-GAAP net loss and EPS for the 12 months ended March 31, 2019, was $1.7 million and $0.11 per share compared to net income and EPS in the prior year of $4.4 million and $0.28 per share. The GAAP net losses in 4Q of $8 million and for the full fiscal year of $11.4 million included a nonrecurring noncash accounting charge of $4.7 million for the impairment of IBW intangible assets.

Turning now to the balance sheet. Our cash totaled $25.5 million at March 31, 2019, compared to $27.1 million at December 31. The cash used during the quarter was due to the operating loss and share repurchases.

Under the stock repurchase program authorized by our Board of Directors in May 2017 and as part of open market 10b5-1 plans, in fiscal 4Q, Westell repurchased 74,230 shares at an average price of $2.11 per share for a total of $150,000. To date, from May 2017 to March 31, 2019, Westell has repurchased 559,893 shares at an average price of $2.53 per share for a total of $1,414,000.

Now before moving on to the Q&A, let me summarize. We remain committed to the revenue growth opportunities we have in the IBW markets for public safety and OnGo. We are strategically focused on densification at the edge of the communication networks, a key enabler for 5G connectivity and IoT, all in our sweet spot. And we are concentrating our R&D, sales and marketing on network edge solutions that solve for the increased capacity, intelligence and deployment simplification needs of our customers.

So with that, we'd 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) And our first question comes from Marc Silk from Silk Investment Advisers.

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Marc Silk, Silk Investment Advisers - President [2]

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With all this talk about 5G, can you give us more -- I know you talked a little bit about, in the beginning of the call, about these private LTE networks. Can you give us kind of more color what kind of market it is? What's the urgency for a company to want to do a private LTE network? I just want to see that lines up when all the talk is about 5G.

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

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Yes. This is Steve. Yes, there are really 2 related subjects, but not exactly the same thing. Private LTE using the OnGo spectrum is really -- as we see it, we're focused on the in-building portion of that. We see several verticals that are looking to enhance their capabilities for private data connectivity, wireless data connectivity within their facilities for things like robotics, IoT, industrial IoT, unmanned vehicles, in the hospitality for highly secure connection -- connectivity to -- for monitoring different devices. We're even seeing devices that are going to be hung on the person be able to attract personnel better within the medical industry, so the wearables.

We see a developing market around that, specifically because of this shared spectrum allocation methodology that the FCC has developed for CBRS. So it's not really a replacement for WiFi. It's really not necessarily an extension of 5G. It's an enhanced wireless capability to allow private networks to have mobility and security and reliability that you don't get necessarily from WiFi.

As this market matures, we certainly see the interoperability between OnGo and the current mobile network operators so that you will have full mobility capabilities. There are a couple of handset manufacturers that are now announcing dual SIM card devices that will allow OnGo as well as traditional cellular. And as 5G develops, CBRS spectrum will play a part in 5G. 5G is really just like LTE. It's an evolution, not necessarily a quantum change in technology.

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Marc Silk, Silk Investment Advisers - President [4]

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No, that's good information. Can you give us update kind of on your whole fiber, how that's going on that business model?

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Alfred S. John, Westell Technologies, Inc. - President & CEO [5]

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Yes. Sure thing, Marc. As I said, it's gone a little slower than we had wanted, certainly. But we did make a conscious decision late last year to slow down a little bit and take a broader view, a longer-term view of what the market really is. When George joined, he had some very specific ideas and some very specific customer applications that immediately received interest. We pursued those, but we kind of took a step back late third quarter and said, "Okay, let's look at this larger market opportunity," because we believe it is a very significant opportunity that innovation, simplification of deployment and enable densification.

So let's build product families instead of just simple solutions. And that's what we're doing. We've released 2 new products a week for the last almost 2 months. We continue to have a very robust product road map for our fiber solutions in several families and are seeing real traction within the carrier market and within the neutral host and wireless market. So not as fast as we would like. But the good news about this is it is internal development. We are developing our own intellectual property and we are creating value, I believe, through that innovation.

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Marc Silk, Silk Investment Advisers - President [6]

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Are you being affected at all positively, negatively with the whole tariffs and the potential even greater tariff?

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

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So Steve, this is Tom Minichiello year. We have -- we weren't immediately affected. We felt a little bit of it in the third quarter, like really small. We are seeing an increase in how we're being affected. Again, it's relatively small in comparison to our total cost of goods sold. But one of the things that we're able to do is we have flexibility in the supply chain.

So for example, vendors that are in China, which is where the tariffs are coming from, we've got suppliers in other places like Korea and here in the U.S. that we can move our source of supply around to. So we're managing it as well. We do have some product that we do get from China that is subject to the tariffs, but it was small, under $50,000.

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Marc Silk, Silk Investment Advisers - President [8]

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Okay. So now you have $1.66 a share in cash. And I like the fact that you're really being cognizant about -- if this is not a good fit for a purchase, you'll just stick to internal growth. So I like the fact that you continue to buy back shares. And Steve, as you said, you were talking about your own IP and you're creating value and you talk about the -- you're $0.25 away from cash.

I would love to see management, insiders, Board, I'd like to see them buy back -- buy shares. Because again, it's -- I know you've given shares, but it sent a big message that you see the -- I see the potential here and it's nice to see that management agrees with me. So that's just my comment, and I just think you're setting stuff up for some pretty exciting future.

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Alfred S. John, Westell Technologies, Inc. - President & CEO [9]

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Appreciate that comment, Marc. Appreciate your thought -- continued confidence in us.

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Operator [10]

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Our next question comes from Steve Busch from Everglades Resources.

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Steven Henry Busch, Everglades Resources, Inc. - Founder & President [11]

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Just a couple of questions. So the quarter is a bit weaker than I was expecting. And last quarter, we had discussed that you're breakeven non-GAAP basis around $12 million or $13 million and you expected this to kind of reach those levels or higher this fiscal year. Do you still have confidence in that kind of outlook?

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Thomas P. Minichiello, Westell Technologies, Inc. - Senior VP, CFO, Treasurer & Secretary [12]

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Yes. So Steve, this is Tom here. We have -- so our breakeven, you really can't look at the OpEx this past quarter, as I was saying in the prepared script. We had some nonrecurring onetime hits to the operating expenses. We're looking at an OpEx level in that $5 million to $5.5 million range going forward. And so if you just take the midpoint of that at a 40% gross margin, that would put the breakeven on a non-GAAP basis right around $13 million -- between $12.5 million, $13 million, depending on the margin and the mix, and then it would put the GAAP breakeven at a couple of million higher in revenue above that.

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

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Yes. So to elaborate, Steve, yes -- I mean we'd be severely disappointed if we don't start to see the revenue growth that's necessary to overcome that operating expense and get to breakeven or better. Certainly, the next 2 quarters aren't going to be quantum leaps, I wouldn't expect, but we do -- we would be significantly disappointed not to see us get back to the profitability within...

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Steven Henry Busch, Everglades Resources, Inc. - Founder & President [14]

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So -- right. So I guess what I'm saying is towards this latter -- second -- the second half of the fiscal year, right, would you expect revenues to be up over $13 million? Or what kind of look-through or ability to see in advance what -- how -- where your orders are headed? Are we stuck at this $10 million, $11 million range for a year or are we going to move up?

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

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No, I wouldn't think -- no, not a year, certainly. As I said, we have a growing pipeline of opportunities. Some of these opportunities are very significant, based upon more of a solution sales approach, especially some of the below-grade opportunities that we discussed that we go into trial. Some of that is -- there's risk factors associated with trials and timing of those types of things. But if the things line up the way we expect, certainly, we expect to see growth on the top line within the year.

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Steven Henry Busch, Everglades Resources, Inc. - Founder & President [16]

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Okay. Fair enough. The whole China-Huawei situation, do we have any opportunity to take business that Huawei may be losing? Do we come across -- what's our relationship with Huawei and China in general?

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

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So we don't directly compete with Huawei in a lot of areas. One of the areas that I think we will be able to differentiate ourselves with is in some of our public safety products that are made in U.S.A. We are definitely seeing a growing interest in that marketplace for American-made products. Certainly, when we go offshore, we compete more with Huawei in the offshore opportunities. And they are, as everyone knows, a tough competitor. But here in the U.S., it's not really affecting us dramatically.

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Steven Henry Busch, Everglades Resources, Inc. - Founder & President [18]

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Okay. Fair enough. And who are the top 2 competitors we went across in the U.S. in each segment?

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Alfred S. John, Westell Technologies, Inc. - President & CEO [19]

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Wow. Let's think about this. Go ahead, Tom.

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Thomas P. Minichiello, Westell Technologies, Inc. - Senior VP, CFO, Treasurer & Secretary [20]

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I think, Steve, the closer the diversity of the products across the 3 business segments, you really have to take it on a segment-by-segment, almost a product-by-product basis within the segment. We compete with a lot of smaller private companies that you probably don't know of or haven't heard of.

On a more well-known scale, we occasionally run into the bigger competitors in our space. But we try to avoid that and operate in niches where we can compete well and that are in our core competency, DAS conditioners, repeaters, the remote monitoring, those are examples of these addressable markets that fit our sweet spot a lot better.

So you'd have to go product-by-product. We have a list of in our 10-K of all these competitors, and it's a pretty extensive list and it's not all-inclusive. So that's what I would say there. I wouldn't start mentioning names of companies, because there's a number of them and you may not recognize some of them, but...

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Steven Henry Busch, Everglades Resources, Inc. - Founder & President [21]

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That's fair enough, yes. So what do you think our cash -- I just got a couple of more questions. What do you think our cash burn will be over the next 2 quarters? And do you think we're going to end the year with cash flow we're at, $25.5 million, or back up towards $27 million or lower?

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

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Yes. Steve, that gets back to the earlier discussion around profitability and breakeven and revenue levels to get to that point. It's -- so we get to a breakeven point. A quarter beyond is usually when the cash starts turning positive. So that's just the normal flow of the business, right? So it's all going to depend on the profitability, which is all going to depend on the revenue ramping up.

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Steven Henry Busch, Everglades Resources, Inc. - Founder & President [23]

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Right. That's fair. Okay. Then I guess finally, the product testing issues for your -- in your public safety offerings with your partner, what's the issue? Is it our issue, is it their issue, is it just a new product?

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Alfred S. John, Westell Technologies, Inc. - President & CEO [24]

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Well, yes, it's a mixed bag. It started with the fact that we wanted to add some feature capability, which delayed it a little bit. And then a lot of it is just regulatory testing. And when you're doing regulatory testing, you just get in line. And it depends on how busy they are at that particular time as to where you get in the queue and how long it takes for that regulatory testing.

And then we had some -- when we went through the testing, had a couple of things we had to go back and tweak. So it just extended the delay a little bit longer than we expected. We've got real clarity on where we are with that. And as I said in the script, we believe that we'll be shipping product by the end of this quarter.

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Operator [25]

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(Operator Instructions) And our next question comes from Mark Spiegel from Stanphyl Capital.

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Mark B. Spiegel, Stanphyl Capital Management [26]

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A couple of questions and actually they're on a similar path of the last caller, because I think it's pretty much what everybody wants to know. You mentioned OpEx coming down to $5 million to $5.5 million a quarter going forward. It looks like last quarter, if you eliminate that onetime asset impairment, that OpEx was about $6.9 million. So call it a ballpark quarterly reduction of $1.5 million. Is that a cash reduction? I mean how much of that $1.5 million savings is cash versus noncash?

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Thomas P. Minichiello, Westell Technologies, Inc. - Senior VP, CFO, Treasurer & Secretary [27]

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So Mark, this is Tom. If you're looking at the GAAP operating expenses, it sounds like you're looking at -- those are the numbers that include the impairment in the fourth quarter. If you -- in the back of our press release, we do a walk -- a reconciliation to our non-GAAP OpEx, which was just under $5.9 million. And that $5.9 million includes, I would say, $400,000 or so of nonrecurring items.

As we were saying earlier, we were engaged in a lot of due diligence in M&A activity, and money was spent with -- along with that activity. That's not repeatable. So immediately, we're back down to a $5.5 million run rate, but we're also managing things in the OpEx to bring it down even lower. So that's why I gave the range of $5 million to $5.5 million. So that's the OpEx that we are referring to.

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Mark B. Spiegel, Stanphyl Capital Management [28]

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All right. So free cash flow burn was about $1.4 million in the quarter, ballpark, because it was very little CapEx and it looks like that's normal for you guys. I mean would it be fair to say that if you repeated the, let's face it, pretty bad quarter you just had, but without those extra expenses you're talking about, that free cash flow burn would have been $1 million or maybe a little under $1 million? And if revenue were flat going forward, is that what we would be looking at in terms of free cash flow burn?

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Thomas P. Minichiello, Westell Technologies, Inc. - Senior VP, CFO, Treasurer & Secretary [29]

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Yes. Your analysis of the quarter just reported on is accurate.

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Mark B. Spiegel, Stanphyl Capital Management [30]

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Okay. So -- all right. So -- all right. And so then my next question, and again, the last caller pursued this with you guys, and I want to pursue it a little bit more. Steve, in the last call, and I'm actually looking at the transcript about this breakeven thing, you said and this is a direct quote, at least from the transcript, "It will be within this coming fiscal year for certain." And I don't hear that certainty now. And look, I'm not looking for you to pull an Elon Musk here and just lie through your teeth about it.

But assuming I'm not hearing that certainty now, what changed? Like what changed from February to today that makes you feel less certain? And how do we fix -- or how do you fix, I'm just a passive guy here, whatever changed?

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

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Well, so yes, part of it is M&A. We had an M&A transaction and we were pretty confident in that we did not pursue for good reasons. Fiber's taking a little longer to gain traction. We certainly expected public safety revenues sooner. So I still remain bullish that we'll see top line growth, and certainly, you'll see it within the next couple of quarters. But it -- we're seeing that it's taking time to get traction. A lot of these types of products, especially the fiber products, have to go through approvals with the carriers and have to get acceptance. So the sales gestation periods are a little longer. But I do still remain extremely, extremely bullish.

The other risk factors are -- we have been fortunate the unit held on a little longer than we even expected, but you never know. And one area that has been a little softer, as we mentioned here, is the cabinet business. There is a shift going on away from some of the DSL work that we were doing with some of our carriers to fixed wireless. We are rapidly changing our path and developing some products to address the fixed wireless business and have some traction with some new customers. But I still remain extremely, extremely bullish on it. And as I said, we would be very disappointed if we don't achieve what we have in our sights for revenue growth this year.

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Mark B. Spiegel, Stanphyl Capital Management [32]

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Well, look, I mean, obviously, we'd all be disappointed. That doesn't -- yes, I'm sure. And to say that you're bullish that you see revenue growth is different from saying you're bullish that you see 30% -- the 30% revenue growth needed to get to breakeven. So what are we looking at here? Are we looking at the burn getting -- let's call it the normalized burn getting cut from $1 million a quarter to $0.5 million a quarter, because you're now seeing revenue growth to $11.5 million or $12 million instead of $12.5 million or -- I mean I -- look, I appreciate that you're not just BS-ing for this thing. But I think every shareholder here would like a straight answer as to when you're really going to get to breakeven in this company unless you don't know, but I'm definitely not hearing the definitiveness that you had in the last call.

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

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Yes. We're certainly -- yes, we're managing towards profitability. I'm just -- I'm cautious on giving guidance on revenue, because historically, we haven't done that. As I said, we do have a growing sales pipeline. We do see revenue growth quarter-over-quarter. And the expectation, I think you characterized it pretty well, $11.5 million, we see incremental growth. I don't see quantum growth leaps in the next 2 to 3 quarters. I do see incremental growth. And certainly, our goal is to get to profitability by third or fourth quarter this year.

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Mark B. Spiegel, Stanphyl Capital Management [34]

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Okay. Look, I'll leave you with one compliment, which is that I'm happy you didn't just blow this balance sheet on an acquisition just to get something done. I mean I buy a lot of little companies like you guys that are just very, very cheap on a sort of an EV to revenue basis as you are. I mean now you're probably selling at, I don't know, 10% or 12% of revenue. And universally, they are great balance sheets, but my biggest fear is that the great balance sheet will be blown on something stupid. So I'm all for growing organically. You have my votes there, and I have a few percent of the company.

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Alfred S. John, Westell Technologies, Inc. - President & CEO [35]

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Thank you, Mark. We appreciate it.

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Thomas P. Minichiello, Westell Technologies, Inc. - Senior VP, CFO, Treasurer & Secretary [36]

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Thank you, Mark.

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Operator [37]

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And we are showing no further questions. I will now turn the call over to Steve John for closing comments.

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Alfred S. John, Westell Technologies, Inc. - President & CEO [38]

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

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Operator [39]

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