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» Westell Technologies CEO Discusses F1Q2012 Results - Earnings Call Transcript
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, 2012 under the section risk factors. The forward-looking statements made in this presentation are being made as of the day 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. Our presentation today also will include non-GAAP financial measures. We have provided reconciliations to the most comparable GAAP measures in our earnings press release which is available on our website westell.com.I will begin this morning with a review of the financial results for our fiscal first quarter and I’ll reference the press release. I will then turn the call over to Rick Gilbert, Westell’s Chairman and Chief Executive Officer who will provide perspective on our performance and strategic progress, and we will conclude by taking questions. As most of you know, we completed two major sales during fiscal 2012 as part of repositioning Westell. There are no impacts from these transactions in our 2013 financial results. However, the sales do affect the results under generally accepted accounting principles in the first quarter of fiscal 2012. We therefore provided non-GAAP adjustments to prior year earnings in order to facilitate comparison. The non-GAAP results are reconciled to GAAP results on the final page of the earnings news release. For the first quarter of FY13, Westell Technologies reported consolidated revenue from continuing operations of $10.5 million, compared with $23.2 million in the first quarter year ago. The decline results from the planned reduction in CNS revenue which dropped by $7.2 million and lower revenue in the Westell division. Net loss for the quarter was $1.7 million compared to GAAP net income of $21.1 million and non-GAAP net income of $1.2 million in the first quarter of FY12. This translates to EPS for the quarter that was a loss of $0.03 per share. It compares to GAAP income of $0.30 per diluted share in the prior year first quarter and to non-GAAP earnings of $0.02 per share.
From a divisional perspective, the Westell division reported revenues of $9.4 million for the first quarter. This is down $5.4 million compared with the first quarter of fiscal 2012. We continue to see steady demand for fuse panels, custom systems integration services and related enclosures, but our products remained under pressure in what still appears to be an unusually weak market for telecommunications equipment.Gross profit for the Westell division was $2.8 million in the quarter on our gross margin of 29.4% compared with $6.5 million and a 43.8% margin in the FY12 first quarter. The lower gross profit and margin in the latest quarter resulted from lower revenues, higher charges for excess and obsolete inventory, and lower absorption of fixed costs. The inventory charges, which were approximately $0.5 million higher than in the prior year quarter, were driven primarily by lower demand for certain legacy products. Westell division operating expenses increased from $3.7 million in the first quarter of FY12 to $4.9 million in the first quarter of FY13. Expenses that contributed to the increase include investment developed new products, cost to market and qualify new products with customers, and costs associated with the acquired ANTONE operations, and expense related to the consolidation of our Canadian operations. In addition, as we’ve previously discussed, the division is bearing costs that had historically been allocated to CNS. With the combined effects from a soft top line and our investments in new products, the Westell division posted an operating loss of $2.1 million for the quarter, compared to operating income of $2.8 million for Q1 a year ago. Read the rest of this transcript for free on seekingalpha.com