Westell Technologies Inc (WSTL)

[Theo]

Westell Technologies Reports Earnings Up 65%

AURORA, Ill.--(BUSINESS WIRE)-- Westell Technologies Fiscal 2011 Second Quarter Highlights:

* Fiscal second quarter net income increased 65%, to $4.8 million, compared with $2.9 million in the same quarter of the prior year.
* Earnings per share were $0.07 per share for the quarter, compared with $0.04 per share in the same quarter of the prior year.
* Fiscal second quarter revenue of $51.1 million was up 8% compared with the same quarter of the prior year.
* Outside Plant Systems division operating profit for the quarter rose 45% on a 24% increase in revenue, compared with the prior year.
* The Customer Networking Solutions division generated positive operating income.
* Cash and cash equivalents increased by $8.3 million during the quarter, to $70.1 million.

Westell Technologies, Inc. (NASDAQ:WSTL - News), a leading provider of broadband products, outside plant telecommunications equipment and conferencing services, today announced results for its fiscal 2011 second quarter ended September 30, 2010. Total revenue for the quarter was $51.1 million, up 8% from $47.4 million in the fiscal second quarter of the prior year. Net income during the quarter was $4.8 million, or $0.07 per diluted share, compared to net income of $2.9 million, or $0.04 per diluted share, in the same quarter of the prior year. This is an increase of $1.9 million, or 65%. Total cash and cash equivalents were $70.1 million at September 30, 2010, up $8.3 million during the quarter.

“We are very pleased to be reporting increases in revenues and earnings, along with very strong cash flow,” said Chairman and CEO Rick Gilbert. “This demonstrates excellent execution and progress across the entire company.”

Fiscal Second Quarter Division and Consolidated Results

The Customer Networking Solutions (CNS) division reported revenue of $24.6 million in the second quarter of fiscal 2011, up 2% compared to $24.0 million in the same quarter of the prior year. VersaLink gateway product revenue increased in the current quarter compared to the same quarter of the prior year, on broad and robust customer demand, while revenue from modems decreased. UltraLine Series3 revenues of $5.6 million in the quarter were approximately the same as in the prior-year quarter. There were no material software-project revenues during the fiscal second quarter of 2011. CNS gross profit decreased by $0.2 million, with gross margin decreasing to 16.3%, compared with 17.5% in the prior-year quarter. Operating expenses dropped by $0.6 million, compared with the prior-year quarter. This decrease occurred in spite of increased investment in the HomeCloud initiative. As a result, the CNS results improved to operating income of $0.2 million for the second quarter of fiscal 2011, compared with an operating loss of $0.2 million in the same quarter of the prior year.

Revenue in the Outside Plant Systems (OSP) division was $16.1 million in the quarter, up 24% compared to $13.0 million in the same quarter of the prior year. OSP revenue continues to benefit from strong demand for its products that service the market for backhaul of cellular traffic. Fiscal 2011 second quarter gross profit increased by $1.8 million, or 34%, as a result of increased sales. Gross margins were 45.5%, compared with 42.0% in the prior-year quarter. Operating expenses increased $0.5 million, reflecting both increased activity and OSP’s ongoing development of new Ethernet-based products for the cellular backhaul market. The resulting operating income for OSP was $4.3 million, up $1.3 million versus the same quarter of the prior year.

Conference Plus (CP) revenue was up slightly to $10.4 million in the quarter, compared to $10.3 million in the same quarter of the prior year. Gross profit increased by $0.2 million on better gross margins, and operating expenses were $0.1 million higher. Operating income of $1.1 million therefore improved by $0.1 million, versus the same quarter of the prior year.

On a consolidated basis, fiscal second quarter revenue of $51.1 million was up 8%, or $3.7 million, compared with $47.4 million in the same quarter of the prior year. Gross profit increased $1.9 million, and gross margins were 32.3%, compared with 30.8% in the same quarter of the prior year. Operating expenses were essentially unchanged at $11.5 million. The gross profit improvement therefore translated to a $1.9 million increase in consolidated net income, which was $4.8 million, compared with $2.9 million in the same quarter of the prior year.

“With Outside Plant leading the way, all three of our divisions produced increases in both revenues and operating profits this quarter, compared with the prior-year quarter,” said Chairman and CEO Rick Gilbert. “This is another outstanding quarter for Westell.”