Westell Technologies, Inc. NASDAQ: WSTL August 25, 2017 Safe - - PowerPoint PPT Presentation
Westell Technologies, Inc. NASDAQ: WSTL August 25, 2017 Safe - - PowerPoint PPT Presentation
Westell Technologies, Inc. NASDAQ: WSTL August 25, 2017 Safe Harbor Language Cautionary Statement Regarding Forward-Looking Information Statements contained herein that are not historical facts or that contain the words believe,
Safe Harbor Language
Cautionary Statement Regarding Forward-Looking Information
Statements contained herein that are not historical facts or that contain the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “may,” “will,” “plan,” “should,” or derivatives thereof and other words of similar meaning are forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those expressed in or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, product demand and market acceptance risks; need for financing and capital; economic weakness in the United States economy and telecommunications market; the effect of international economic conditions and trade, legal, social and economic risks (such as import, licensing and trade restrictions); the impact of competitive products or technologies; competitive pricing pressures; customer product selection decisions; product cost increases; component supply shortages; new product development; excess and obsolete inventory; commercialization and technological delays or difficulties (including delays or difficulties in developing, producing, testing, and selling new products and technologies); the ability to successfully consolidate and rationalize operations; the ability to successfully identify, acquire and integrate acquisitions; effects of the Company’s accounting policies; retention of key personnel; and other risks more fully described in the Company’s SEC filings, including Form 10-K for the fiscal year ended March 31, 2017, under Item 1A - Risk Factors. The Company undertakes no obligation to publicly update these forward-looking statements to reflect current events or circumstances after the date hereof or to reflect the occurrence of unanticipated events or otherwise. This presentation contains non-GAAP financial measures 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 performance and facilitates comparisons across reporting
- periods. Such measures should not be viewed as a substitute for GAAP financial measures. A
reconciliation of GAAP to non-GAAP measures is provided in the Appendix.
2
Westell Technologies, Inc. (NASDAQ: WSTL)
Founded / Initial Public Offering 1980 / 1995 Revenue for Fiscal Year Ended 3/31/17 $63.0 million Cash at 6/30/17 $23.7 million Debt at 6/30/17 $0.0 million Tangible Book Value at 6/30/17 $36.6 million Tax-effected NOLs at 6/30/17 $46.2 million Shares Outstanding 15.5 million Market Capitalization at 8/25/17 $47.1 Million Closing Share Price at 8/25/17 $3.04 52 Week Range $1.76 - $3.80
3
Westell Technologies, Inc.
Leading provider of high-performance wireless network infrastructure solutions Trusted supplier solving communication network problems with innovative, high-quality solutions across three business segments:
% of FY17 Revenue
In-Building Wireless (IBW) 41% Intelligent Site Management & Services (ISMS) 31% Communication Network Solutions (CNS) 28%
4
Why Westell?
1. Gaining traction in the new In-Building Wireless Public Safety market (market size estimated on page 7) 2. Proven track record selling to Blue Chip customers 3. Increasingly diversified customer base providing catalyst for growth 4. New CEO with a strong track record of driving revenue growth 5. Cash of $23.7 million at June 30, 2017; No debt
5
In-Building Wireless (IBW)
Westell Solutions
- Distributed Antenna System
(DAS) Conditioners – optimize signal performance
- Universal DAS Interface
Tray (UDIT) is an active unit
- Passive units are also
available
- Repeaters – extend coverage
into buildings
- Components – passive devices
used in IBW installations including couplers, duplexers, filters, and antennas
- About 80% of mobile traffic is consumed and/or generated indoors, where the
cellular network doesn’t always work well, or at all
- Customers require reliable IBW networks for increased coverage and capacity
- Demand continues to grow as more data-intensive services are used
6
IBW Public Safety – Market Analysis
- First responders need
reliable and modern mobile communication
- Current demand for inter-
- perative communication
among fire, police, and EMS (i.e. the P25 digital standard) continues to grow
- Local municipalities have
jurisdiction to define in- building Public Safety coverage requirements
- Dedicated Public Safety
frequency bands are distinct from commercial service
- Equipment must meet strict
regulatory requirements Estimate of the North American Market for In-Building Wireless Public Safety
$ in millions
- 50
50 150 250 350 450 550 2017 2018 2019 2020 2021
7
IBW Public Safety – Westell
Complete Solution
- Repeaters
- Rolled-out the ½-watt in April 2016 and the 2-watt in March 2017
- Dedicated broadband coverage
- National Fire Protection Association (NFPA 72) compliant
- FirstNet ready
- Battery Backup Unit – introduced in April 2017 – NFPA compliant, UL approved
- Components – passive devices including couplers, splitters, etc.
- Antennas – donor and coverage
- Leveraging years of In-Building Wireless experience that includes repeaters,
passive components, and more
Donor Antenna
Coax
PS Tower Repeater Coverage Antennas Battery Backup Unit Splitters
Fire Alar m Panel
½-watt PS51080 2-watt PS79010
Repeaters
8
IBW Public Safety – FirstNet
- First Responder Network Authority (FirstNet) radio spectrum
- Nationwide broadband Public Safety network awarded to AT&T
- $7 billion federal government funded program
- Potential to carry high-speed data, location information, images, etc.
- Likely to accelerate market growth
9
Intelligent Site Management and Services (ISMS)
Remote RMM-1431 Generator AC Power Meter Rectifier Monitoring Site AC Load RMB-1 Automatic Transfer Switch Generator Start Battery Fuel Wireless WAN Optima Network Element Manager DC Power Meter HVAC Temperature Smoke Detector IP Camera Copper Monitoring Door CT Commercial AC Power
Customers want to maintain a healthy site infrastructure and know what’s going on at remote unmanned locations at reduced operating expense:
- Automating/centralizing routine and preventative maintenance
- Consolidating alarm collection and reporting
- Performing remote diagnostics and dispatch
Westell Solutions
- Remotes for on-site
processing
- Applications
- Power
- Environmental
- Security
- Communication
- Optima Management
System for remote monitoring, management, and control
- Services
10
Communication Network Solutions (CNS)
- Outdoor equipment must
sustain harsh environmental conditions while providing network reliability
- Connections between devices
must effectively and safely carry and process signals throughout the infrastructure Westell Solutions
- Integrated Cabinets – from
small assemblies to large systems-based enclosures
- Power Distribution – reliable
panels to guarantee site and equipment safety
- Tower Mounted Amplifiers –
high-quality TMAs to optimize cellular coverage for enhanced end-user experience
11
Service Providers Integrators/ OEMs Neutral Host Operators Distributors
Customers
12
Executive Leadership
Matt Brady - President and Chief Executive Officer Matt joined Westell in 2017. He came to Westell from Federal Signal Corporation where he was Senior Vice President of the Safety and Security Systems Group after joining the Group as VP of Global Sales. Previously, Matt was Sales Director for Public Safety at Motorola Solutions, and held executive sales and marketing positions at Clarity Communications, Tellabs, and Motorola. Tom Minichiello - SVP, Chief Financial Officer, Treasurer, and Secretary Tom joined Westell in 2013 with responsibility for finance, information technology, human resources, legal, contract administration, real estate, and corporate
- communication. Tom came to Westell from Tellabs, where he most recently served as
interim Chief Financial Officer. Previously, Tom served in financial leadership roles at Andrew Corporation, Phelps Dodge, and United Technologies. J.J. Swartwood - SVP, Worldwide Sales J.J. assumed the role of Senior Vice President, Worldwide Sales, in 2016. During his tenure at Westell, J.J. served in a number of roles including Vice President, North American Sales and Regional Sales Vice President with responsibility for AT&T. Prior to joining Westell, he served as a Director and Vice President of Sales at HyperEdge.
13
Cost and Expense Structure Reset
- Reset costs and
expenses in-line with current business volumes
- Rationalization and
simplification of the entire
- rganization
- Reprioritization of
product development projects and related efficiencies
- Realignment of suppliers,
including transitioning IBW assembly and test
- perations to contract
manufacturers
5.4 4.6 3.4 3.6 3.8 4.2 3.2 2.5 2.3 2.2 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 Jun 16 Sep 16 Dec 16 Mar 17 Jun 17
Quarterly Operating Expenses
Non-GAAP, $ in millions
SG&A R&D
6.0 9.6 7.8 5.9 5.9 14
Financial Position
- $23.7 million in cash at
June 30, 2017
- Debt-free Balance
Sheet
- $46.2 million of tax-
effected NOLs at June 30, 2017
- $2 million annual cash
flow improvement expected from a new Aurora HQ lease that takes effect on October 1, 2017
Recent Quarterly Performance
- 3.5
- 3.0
- 2.5
- 2.0
- 1.5
- 1.0
- 0.5
0.0 0.5 1.0 1.5 Jun 16 Sep 16 Dec 16 Mar 17 Jun 17
Adjusted EBITDA
$ in millions
6.1% 3.4% 8.0% 15
Why Westell?
1. Gaining traction in the new In-Building Wireless Public Safety market 2. Proven track record selling to Blue Chip customers 3. Increasingly diversified customer base providing catalyst for growth 4. New CEO with a strong track record of driving revenue growth 5. Cash of $23.7 million at June 30, 2017; No debt
16
Appendix
GAAP to Non-GAAP Reconciliation ($ in thousands)
Revenue Op Profit Revenue Op Profit Revenue Op Profit Revenue Op Profit Revenue Op Profit GAAP 14,816 (7,783) 17,780 (5,876) 14,983 (1,782) 15,386 (612) 16,574 (603) Acquisition-Related: Fair Value Adjustments 63 63 63 63 64 64 64 64
- Amortization of Intangibles
- 1,200
- 1,201
- 1,212
- 1,151
- 1,047
Stock-Based Compensation
- 406
- 687
- 253
- 248
- 330
Restructuring, Separations, & Transitions
- 2,534
- 2,793
- 490
- 100
- Non-GAAP
14,879 (3,580) 17,843 (1,132) 15,047 237 15,450 951 16,574 774 Depreciation
385 444 272 279 230 Adjusted EBITDA (3,195) (688) 509 1,230 1,004
1Q18 (Jun 17) 4Q17 (Mar 17) 3Q17 (Dec 16) 2Q17 (Sep 16) 1Q17 (Jun 16)
18
Contact
Tom Minichiello Senior Vice President, Chief Financial Officer, Treasurer, and Secretary Westell Technologies 630-375-4740 tminichiello@westell.com
19