Westell Technologies, Inc. reports 21.7 pp EBITDA Margin growth from -15.7% to 6.0% in 2018 in 2018 while 7.0% Revenue decline
05/23/2018 • About Westell Technologies, Inc. (
$WSTL) • By InTwits
Westell Technologies, Inc. reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:
- Westell Technologies, Inc. spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for FY2014-FY2018 is 0.0%. Average EBITDA Margin for the same period was -16.6%
- Westell Technologies, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.4%. At the same time it's a lot of higher than industry average of 3.6%.
- CAPEX is quite volatile: $0m in FY2018, $1m in FY2017, $2m in FY2016, $2m in FY2015, $0m in FY2014
- The company has unprofitable business model: ROIC is -2.8%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue decreased on 7.0%. Revenue decline showed acceleration in FY18Q4 - it was 27.9% YoY. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin jumped on 21.7 pp from -15.7% to 6.0% in FY2018.
Gross Margin increased on 5.2 pp from 37.7% to 43.0% in FY2018. SG&A as a % of Revenue decreased on 3.7 pp from 29.1% to 25.4% in FY2018.
Net Income margin jumped on 25.4 pp from -25.3% to 0.053% in FY2018.
Investments (CAPEX, working capital and M&A)
In FY2018 Westell Technologies, Inc. had CAPEX/Revenue of 0.70%. CAPEX/Revenue decreased slightly on 1.8 pp from 2.5% in FY2015 to 0.70% in FY2018. It's average level of CAPEX/Revenue for the last three years was 1.3%. During FY2014-FY2018 CAPEX as a % of Revenue topped in FY2015 at 2.5% and was declining since that time.
Return on investment
The company operates at negative ROIC (-2.8%) and low but positive ROE (0.1%). ROIC surged on 24.2 pp from -27.0% to -2.8% in FY2018. ROE jumped on 26.9 pp from -26.8% to 0.059% in FY2018.
Leverage (Debt)
The company has no debt. Cash surged on 14.6%.
Valuation and dividends
The company's trades at EV/EBITDA 2.7x and P/E 1,114.8x.
Management team
The company's CEO Alfred Stephen John is a founder and has spent 1 year with the company. The company's CFO is Thomas P Minichiello "Tom". Thomas P Minichiello "Tom" has 6 years tenure at the company.
Financial and operational results
FY ended 03/31/2018
Westell Technologies, Inc. ($WSTL) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 102.1 | 84.1 | 88.2 | 63.0 | 58.6 | -7.0% |
| Gross Profit | 42.0 | 26.8 | 34.5 | 23.7 | 25.2 | 6.0% |
| SG&A | 28.7 | 27.1 | 25.7 | 18.3 | 14.9 | -18.8% |
| EBITDA | 2.2 | -51.8 | -9.7 | -9.9 | 3.5 | |
| Net Income | 5.4 | -58.9 | -16.2 | -15.9 | 0.0 | |
Balance Sheet
|
|---|
| Cash | 35.8 | 14.0 | 19.2 | 21.8 | 25.0 | 14.6% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 0.4 | 2.1 | 1.9 | 0.6 | 0.4 | -31.5% |
Ratios
|
|---|
| Revenue growth | 163.0% | -17.6% | 4.8% | -28.6% | -7.0% | |
| EBITDA growth | -118.6% | -2,438.6% | -81.4% | 2.6% | -135.4% | |
|
|---|
| Gross Margin | 41.1% | 31.9% | 39.1% | 37.7% | 43.0% | 5.2% |
| EBITDA Margin | 2.2% | -61.6% | -10.9% | -15.7% | 6.0% | 21.7% |
| SG&A, % of revenue | 28.1% | 32.2% | 29.1% | 29.1% | 25.4% | -3.7% |
| Net Income Margin | 5.3% | -70.0% | -18.4% | -25.3% | 0.1% | 25.4% |
| CAPEX, % of revenue | 0.4% | 2.5% | 2.2% | 0.9% | 0.7% | -0.3% |
|
|---|
| ROIC | -2.4% | -53.5% | -22.6% | -27.0% | -2.8% | 24.2% |
| ROE | 4.0% | -53.2% | -21.8% | -26.8% | 0.1% | 26.9% |
| Net Debt/EBITDA | -16.2x | | | | -7.1x |
Westell Technologies, Inc. ($WSTL) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 17 | 17 | 14 | 11 | | 11.9% | -3.1% | -8.7% | -27.9% |
| EBITDA | 1 | 1 | 1 | 0 | | | | | -67.2% |
| Net Income | -1 | 1 | 1 | -1 | | | | | |
Balance Sheet
|
|---|
| Cash | 24 | 19 | 21 | 25 | | 56.1% | -8.2% | -9.9% | 14.6% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | | |
Ratios
|
|---|
| Gross Margin | 40.8% | 42.2% | 44.4% | 45.5% | | 10.0% | 6.4% | 4.0% | 1.5% |
| EBITDA Margin | 4.1% | 7.6% | 9.2% | 2.4% | | 45.9% | 31.4% | 11.2% | -2.9% |
| Net Income Margin | -3.5% | 4.2% | 5.8% | -8.3% | | 49.0% | 36.9% | 17.9% | -4.6% |
Peers in Communications Equipment
Below we provide Westell Technologies, Inc. benchmarking against other companies in Communications Equipment industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Ribbon Communications Inc. ($RBBN) | | | | 30.6% | 75.2% |
| Extreme Networks, Inc. ($EXTR) | | 6.4% | -4.4% | 13.2% | 64.4% |
| Optical Cable Corporation ($OCC) | | -11.3% | -12.2% | -0.8% | 37.0% |
| ParkerVision Inc ($PRKR) | | | 37,601.2% | -97.5% | 35.0% |
| Network-1 Technologies, Inc. ($NTIP) | | 34.6% | 292.9% | -74.7% | 34.4% |
| |
|---|
| Median (66 companies) | | 0.7% | 7.6% | 5.6% | 3.5% |
|---|
| Westell Technologies, Inc. ($WSTL) | | -17.6% | 4.8% | -28.6% | -7.0% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| F5 Networks, Inc. ($FFIV) | 82.1% | 82.7% | 83.1% | 83.1% | 83.3% |
| Radware Ltd. ($RDWR) | 82.1% | 82.4% | 81.8% | 81.3% | 82.2% |
| Radcom Ltd. ($RDCM) | 63.2% | 76.8% | 69.6% | 71.8% | 74.0% |
| Casa Systems, Inc. ($CASA) | | 70.8% | 69.1% | 73.4% | 73.4% |
| NetScout Systems, Inc. ($NTCT) | 78.7% | 79.2% | 65.6% | 70.2% | 72.4% |
| |
|---|
| Median (67 companies) | 42.4% | 44.0% | 43.9% | 41.7% | 40.5% |
|---|
| Westell Technologies, Inc. ($WSTL) | 41.1% | 31.9% | 39.1% | 37.7% | 43.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Network-1 Technologies, Inc. ($NTIP) | 35.5% | 33.7% | 50.6% | 37.8% | 42.8% |
| InterDigital, Inc. ($IDCC) | 50.8% | 58.1% | 73.6% | 67.3% | 41.9% |
| EchoStar Corporation ($SATS) | 25.7% | 39.7% | 40.3% | 38.1% | 37.4% |
| Ubiquiti Networks, Inc. ($UBNT) | 34.7% | 25.5% | 37.3% | 34.3% | 32.8% |
| Ituran Location and Control Ltd. ($ITRN) | 32.4% | 30.5% | 29.9% | 29.9% | 30.4% |
| |
|---|
| Median (65 companies) | 5.6% | 6.1% | 5.9% | 6.5% | 4.6% |
|---|
| Westell Technologies, Inc. ($WSTL) | 2.2% | -61.6% | -10.9% | -15.7% | 6.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Resonant Inc. ($RESN) | | | 132.5% | 124.8% | 245.2% |
| ViaSat, Inc. ($VSAT) | 22.8% | 26.5% | 26.7% | 33.0% | 32.1% |
| Applied Optoelectronics, Inc. ($AAOI) | 31.5% | 30.1% | 19.0% | 17.5% | 26.9% |
| EchoStar Corporation ($SATS) | 19.7% | 43.8% | 39.9% | 30.9% | 26.5% |
| Finisar Corporation ($FNSR) | 11.3% | 11.9% | 9.4% | 9.7% | 16.8% |
| |
|---|
| Median (65 companies) | 2.3% | 2.2% | 1.9% | 1.9% | 1.7% |
|---|
| Westell Technologies, Inc. ($WSTL) | 0.4% | 2.5% | 2.2% | 0.9% | 0.7% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| F5 Networks, Inc. ($FFIV) | 33.9% | 40.8% | 43.1% | 46.9% | 47.9% |
| Ubiquiti Networks, Inc. ($UBNT) | 61.4% | 31.5% | 41.5% | 38.5% | 39.1% |
| Motorola Solutions, Inc. ($MSI) | -16.1% | 18.9% | 26.4% | 39.5% | 35.3% |
| Ituran Location and Control Ltd. ($ITRN) | 50.9% | 46.8% | 50.1% | 48.5% | 35.1% |
| Casa Systems, Inc. ($CASA) | | | 43.2% | 39.7% | 21.9% |
| |
|---|
| Median (70 companies) | 2.1% | 2.3% | 2.4% | 2.2% | 0.7% |
|---|
| Westell Technologies, Inc. ($WSTL) | -2.4% | -53.5% | -22.6% | -27.0% | -2.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Extreme Networks, Inc. ($EXTR) | | | -2.2x | -1.5x | 7.1x |
| ViaSat, Inc. ($VSAT) | 3.4x | 2.5x | 3.2x | 2.5x | 5.8x |
| CommScope Holding Company, Inc. ($COMM) | 2.3x | 9.6x | 4.3x | 4.6x | 4.4x |
| Inseego Corp. ($INSG) | | | | | 3.9x |
| Finisar Corporation ($FNSR) | -0.3x | 0.2x | -0.5x | 1.6x | 3.8x |
| |
|---|
| Median (45 companies) | -0.7x | -0.7x | -0.9x | -0.7x | 0.2x |
|---|
| Westell Technologies, Inc. ($WSTL) | -16.2x | | | | -7.1x |
