Westell (WSTL) 4 Nov 172018 Q2 Earnings call transcript

Good morning, and welcome to the Westell Technologies Fiscal Year 2018 Second Quarter Earnings Conference Call. My name is Allie, 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. Tom, you may begin.

Allie. you, Thank welcome fiscal and Technologies. conference to call Good XXXX to second the year Westell quarter discuss morning, our results for The yesterday new news issued posted release our on afternoon Web is westell.com. site, we Matt call, with begin of Officer, discussion this and Chief Brady, On a strategy. and Executive business our will President Westell's conclude on questions. I you results the taking our will then quarter, by for financial update and we will

may are core our information and ongoing provide company's other facilitates releases, this that meaningful or the financial management information, information made date any XXXX, events and to present ended we March contain in presentation cause otherwise. periods. please to note These actual or are such XX-K information across expressions or that materially forward-looking section of future discussion those new statements or provided expectations, current to begin, and both reporting for performance our performance and similar statements not non-GAAP about the from filings, Factors. reflect as and Westell's differ obligation of we company's forward-looking performance investors. reflects news conference achievements revise statements is note believe, of call. year results update Before achievements, Form identify should, believe statements statements affect assumptions. A in Westell presentation factors. in that financial and and on Please Words may comparisons as non-GAAP guarantees to supplemental the and this under statements. factors time that The also expect, the SEC because These description made forward-looking involve future results, based of discussed. fiscal operating performance results, future our management's forward-looking estimates Risk such uncertainties non-GAAP trend The forward-looking XX, intended being disclaims future risks any that and the including measures are we

measures of news to discussion I include over now will measures. will provided in Matt. our results financial We call reconciliations non-GAAP GAAP release. to the today Our comparable most the turn

In business. be Tom, we results the excellent these morning, September the results I of in past you, Westell and important positive the consider every work almost Thank indicator of aspect year. team to good performed generated the an that has the over everyone. quarter,

operating again sequential to achieved We profitability. consistently consistently targets growth operating improved have we once continue beat have in meet and expenses, revenue for gross or and margins

positive the XXXX. positive This this we the the GAAP Tom December quarter, reported us on first achievements future. other into in momentum for operating It's will on profit detail September continue time since these to from basis a incumbent quarter. results

value a are focused through to revenue We committed enhancing approach profitable and growth. delivering to shareholder disciplined

had great as share take value. in this during I've company shareholder strong Westell the me and with impressions a we thoughts are let where around impressions CEO, business first My order that drive is you months fundamentals. three with my Now the want to to

channels. excellent portfolio We have sales a and product distribution with good

customer space. wireline Our sales and in the relationships force strong wireless has

Westell succeed. long customers, marquee them have how a We greatly history appreciate of who helps

year-over-year, safety the will a network on public progress to and Wireless In-Building providers make major evolving the public safety centralized launching including or We continue sales continue safety In-Building market embracing. market, public are radio to current new we are growth C-RAN, for work initiatives, the In in products the access Wireless. which service up

channel and train, In our the success. key that our weeks, to the in deploy and CNS and growth ISM has force effort such channel safety dedicated solution recent and Power been potential hired public offerings is work national will several optimistic professionals partners. to safety owners safety building work the have are space, support the we public customer sales municipalities, last started accessed integrators. Westell. and our sales This We as with This have just in for Integrated about our Distribution the Cabinets C-RAN to

centralizes flexibility -- in and name at densification, the access efficiencies edge implies, inlays for network, or small in network's allows XG radio the As users future the C-RAN, rollouts. cells the network connect

product constantly leveraging In we offerings and addition, historical as Westell we profitably sales-driven relationships products. adding brand, the new markets, revenue our sales All and our marketing- are model I to evaluating and geographies, new strengthen what grow where and a by envision portfolio verticals overall while force with customers. under complement business

quickly achieve third-party increased rapid than third-party to bring have allow daily and This sales rapid Westell continue I solutions. work of partners. OEM to would to with evaluating business We We unit internal products more The leaders quicker development. rapid certified us initiatives market. believe and started OEM can on OEM cost-effectively

Australia We and Middle have the Asia. and our in also effort sell Westell to in East revenue started exploring expand America an the portfolio product opportunities to increased Latin and

these market of the if to in We markets growing disciplined and exploration services that, C-RAN them. call continued In into and determine strategy new the our in-building international products the rapid and geographies. enter safety revenue now back With achieve profitable public we opportunities, can wireless we Tom. on over summary, I'll and will is, turn growth expansion new before focus OEM

Matt. Thank you,

revenue. for begin provide with September me color on quarter, additional results our the and some we'll Let

from revenue the solid $XX.X growth, consecutive XX, revenue XXXX, quarter again and third quarter top-line of businesses. up the consistently the by This our was ended quarter. compared second represented consolidated driven once business ISMS well rising For IBW September sequential X% of to our fiscal the CNS as first performances million, when as

start more IBW XX% level a the a million. highest look quarter with of revenue and detailed for increase, September December That's for We'll XXXX. at the to increased since revenue $X.X segment. each where sequential IBW take let's revenue Now

largest within performance conditioner, Interface was active Our record quarterly Universal IBW UDIT. DAS Tray our revenue the DAS for a or

differentiated valued customers, benefits mainly that highly the providers UDIT service their and for the delivers operators, Our UDIT neutral the solution in-building deployments. wireless host

required record for UDIT system achieved in-building safety in-building also that and for all standout the devices to markets quarterly public we both such performance, commercial splitters our for couplers, These revenue the markets. installations, addition are as components. and the passive are duplexers, In the

business several customers monitoring ISMS Hardware two in the XQ, of remote our deployments, fiscal the XX% the revenue Our compared to primary cell units $X.X wireless used growth. regions. are of generated increase a of to customer, phase towers which driver largest on-site next remote the quarters an when with before. million of carrier, for the One of deploys at in processing sequential

operator, the to continued The add other of remote sites host a number with to customer, monitoring. neutral

X service latest we the which in for fully deliver in another Transit our The that Phase solid provided Wireless, New quarter Connect CAP completed Cabinet X in outs. the assist included our shipments Distribution their project as system. of as City revenue America line, with with as Integrated Power subway Our CNS a business increased also a included product rural business Fund our turned in build performance solid C-RAN we customized part York to well as cabinets large quarter, provider, ability wireless initiative equipped which service for

of the the to results. rest on operating Moving

It consecutive consolidated or was gross fourth the including for beat greater. of quarter. targets, operating continued or XX% XX.X% margin meet key in the to quarter We

Furthermore, quarters, reductions in-house has of contract in operations, benefits while now transition We from full target implemented cost successful test enjoying operating our previous the the our manufacturer. to expense the assembly of including September are million, non-GAAP and since down quarter, ratio, million, XXXX. favorable in of since been OpEx XX% XXXX. $X.X very significance to we the a $X September March accomplished not the the drove revenue, at Also best was it IBW of

we line, As the a grown an only at greater have result, we not top even to have continued profitability grow rate.

operating $X.XX XXXX per quarter, achievements the December $X.XX And for of since in in on to $X.XX quarter three last X.X% was basis, simply positive less that the Net September adjusted quarter's earnings $X.X reported, income, a for EBITDA business fourth adjusted non-GAAP GAAP X.X% there generated prior operating income operating non-operating $X share quarter. other a share compared quarters. credit business one-time million. also to quarter, achieved GAAP accounted basis, doubling Moreover, $X.X share, million, share. was more per earnings GAAP in our consecutive and profit of over earnings depreciation, per trailing already adjusted operating to net GAAP $X.XX per of profitability the Due On EBITDA time income profit basis, the per doubling the we consecutive for first the and accounting the non-GAAP also share. on last margin XX.X% positive each As of the September profit a a XX-month in adjusted quarter, positive total margin the has produced $X.X profit but EBITDA of was $X.XX on additive profitable we and significant of reported of operations. or September or million, basis, of of Note, of for which a the quarter's is GAAP on of low an than in quarter Westell's $XXX,XXX fourth normal X.X%. the $XXX,XXX. past based or operating positive of And in million EBITDA result

balance strong sheet. Turning to our

used our of total offset $XXX,XXX, cash increase the XXX,XXX XX, September from partly XX.X repurchases. in for by expenditures June. the at share investments at cash operations, the and compared grew This XXX,XXX bringing $XX.X capital During XXXX, cash of end cash million cash million short-term to by quarter, comprised to and generated

repurchased board During X.X XXX,XXX of of market Under by a October a part the per facility repurchase Westell, our effect cash outlay note XXXX, month also through XX for Aurora headquarters of lease a to business May, $X.XX program our cash XXbX-X for an that want from total open generated plan, October I took period million on of the stock just XXX,XXX. XX, at in XX, price September X. average and new our share operations. authorized total an is shares over ended in

of the in approximately XXX,XXX begin realizing December outlays quarter. starting cash to October per we'll quarter, So reduced

Let at areas the public like market on to not every reported results third represent highest And are sequential for moving Westell, Q&A. now while me on We consistently of the also meet summarize your executing continued can in almost straight to new that probability and have increased of like quarter are questions. and for and Westell we'd beat C-RAN, several achieved in have the operating company, positive growth safety value. initiatives many business growth which generated our We targets. With years. shareholder for the to position opportunities up aspect key strengthen open for revenue in expansion that before or growth that, pursuing call we been profitable we

Instructions] [Operator

Northland queue. the the behind on have on we like looks -- Mike him Allie, from person another and

Mike have Please we from Capital. Latimore Yes, Northland ahead. go

Your open. line is

drive categories to what's helping maybe In-Building here, components segment see guess I UDIT like product looks And those kind on Just of pipeline Wireless really segment. for know, the as public I categories? overtake we and those that guess, obviously, don't driver? safety might a passive there, I or when the

Well, this is Brady. Matt

I tracking into as we're looks as the well the public good. what FirstNet's far looked. as pipeline market, think And looks it's safety It ever doing.

in of work to their public Our is keeping and the sales start calling the we're build first will which then team at relationships way place inside safety the microlevel, with kind macrolevel and the outs kind FirstNet, of SecondNet. their they'll

continue last build for to said on has with them. quarter, out couple with sales them outs. public our that work external a we'll and build of network working overall wireless the met FirstNet get internal I is safety, the and like there and with team We've them times macro So to in and

color, And of rapid could, type what elaborate you there? just you about if OEMs? on Just bit a then, Can Which that? you a opportunities. more more OEM little products, talked little

bring OEM to force, that so career and Yes, you're in to that rapid direct use is products already we your solutions and historically have. marquee that both your customers those indirect, used and able my brand I've something is sales

that carrier. So we're products, exploring products, could that the full generates into safety for public the go cabinet of wireless array revenue anything a

the but to to products, in play, who network market. and look bring both of don't internationally, are domestically or have partners, every and distribution the brand have things really So to they one good we those

a So heck working it we're it compete an OEM, rapid that's than that word lot means internal rapid against. in front to quicker work would doing, and we're let's what development with of the of going say,

product think how mix sense. focused, on, Make of success products now? given growth think December then the I given about in-building, some historically with those then mean, CNS in the mean, quarters. I ISMS CNS you and your seasonality when the of noticeable obviously guess, just do seasonality in about you I And were mix, how do more seasonality?

Yes. Sure, Mike, this question. your I'll take is Tom.

outdoor is about lot respect to as into is backlog of strong the there third quarter. entering the quarter said, seasonality So way with But the And that CNS, the periods. is we're recent to of typical the into as current equipment. Matt relative

happy getting back and of well. lot there we're and progress the of to IBW first as the that continued So question kind of ISMS UDIT strength a with is and your

So It forward, cabinet as continued strength enter continued March usually in and seasonality January see over and six the business products the two strength the in going we in we with those pretty strongly final the especially see rebounds in there's Power months, even the quarter though, you units, calendar quarter. some CNS, the next Distribution springtime. to

been have And excellent. then cost the obviously, controls

about you OpEx, new reinvest September think new it in think, quarter. Did On you do $XXX,XXX Or said lease? drop lease the by in say, we $XXX,XXX Should $X.X with that of quarter year, at was would I this kind I the million a that? your fact.

lease the piece year about because restructuring So that. ago the benefit, a of is of cash new the Mike, care expense all the almost from of took

if that a little as it But you cash about your question, But make that's forward. is OpEx expense management a may while done there where happen. so can we're talking that the to lease, you'll a be into We've tightly, going likely we on get lot it continuous and run continue already we mode. and constant So manage just expenses in stay on the to see lower it's even baked But clear -- current are rate. really we benefit know.

So than it. our million work $X way we're $X.X million at non-GAAP OpEx, continue we and better to target,

should doing talked from target? contract And contract then moving XX% just of, Or gross Does that it, what change you about margin be? about think view [Indiscernible] last one still is can margin on on gross your -- we kind manufacturers.

it's business Mike, much always the selling at if but the basis It you on consistent going the forward, IBW at model level. mix, a always dependent it in let's is when know general what say. to been I XX CNS what be the industry, XX% you pretty over You close this model real And like the months, XX% on The is rate trailing that's look you see it's that change typically sell. or in assume, run better, but running we that's can for strong, area now to where at to been always and largely it's we're around we low the the been in has and I mid-XXs, due outsourcing. pretty changes this and running and at in-house more settle change XX%, it's to made from XX% been, pretty will

Drexel next with question our Gregory And Hamilton. Mesniaeff comes from

anything some peers color on I going opportunities was have orders in FirstNet? any any -- was one can wondering they you already. potential with there? any if wondering us if I update give hand or know your of there's larger indicated on I that has over

the to the incumbent macro our solutions, with of out to out, I business. out our macro building first of then can of build really we it's in-building right? said, start -- for them selling that solutions FirstNet and network built but the for the first some we responders solutions part of aware upon Like the be we're waiting for are we're So on network working that. are So some

right So in FirstNet -- now. at by my I rollout been still don't XX watching days I really Pre-Westell have Motorola, network waiting really previous an back this and answer. for for We've FirstNet. we're years --

the macro add would the out I the existing is, help well been as sites network built what macro that with Greg, first. has and to network, Yes, cell remember,

when the public inside to buildings really it comes is focus our safety. and penetration Our

to build is the on well as is that's macro well the then primarily. blasting our we're our panels, as going this the opportunity example real the be and for built that's our work hardened some opportunities is -- network you So frequencies, Distribution responder know of macro be once they're network meantime, as the macro outdoor some going there in to out when that Power targeting and -- really which gear. are first FirstNet, market and out But ISMS may start a building good the is out of would

[Operator a on Mike back Capital You Northland with question. Instructions] have from Latimore

kind there, they C-RAN year think just I Power into projects, move do or do over substantial I build carriers those deployment you've Brady, these a of that mentioned found said in or Are the of that fairly sales opportunity C-RAN for play kind so? your products, forward deals how some kind of small you they out? pilots Distribution

trials We and it some deployments started really it as of And some small are are shipments have right? on that now. working we're both, that have Mike, well. then other So there just taking that they're larger answers

business I sales chasing now that So with it's both mean, really team. we're JJ aspects. right

just customers And about XX% in then how the number of the quarter?

service were a a had that high over we well, in had or the four Mike, And had single four XX%. just we that neutral three Yes, digits, greater, providers, as below one was distributor. XX% then a operator and wireless but host we

[Operator Instructions]

see so don't other unless questions, any we we Allie, do...

have closing it Matt questions. would we turn to back And to no now further Brady like for remarks. I over

thank for to Allie. us I Thanks, joining today. want everyone

pleased done. from we are made, are far about the We and progress

growth focus continuing top are our growing and on line Thank to look up you. you to again. We initiatives. forward on our speaking our step We executing with

and call. concludes for ladies you gentlemen. Thank conference today's you, Thank This participating.

You now disconnect. may