Westell Technologies, Inc.
Q4 2017 Earnings Call Transcript

Published: 25 May 2017

[Operator:]

Welcome to the Westell Fourth Quarter Fiscal Year 2017 Earnings Call. My name is Eric and I will be your operator for today’s call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [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. Please go ahead, sir.

[Tom Minichiello:]

Thank you, Eric. Good morning, and welcome to our conference call to discuss the fiscal year 2017 fourth quarter results for Westell Technologies. The news release we issued this morning is posted on our website, westell.com. On this call, Kirk Brannock, Westell’s Chief Executive Officer will begin with the discussion of our business and strategy. I will then update you on our financial results for the quarter, and we will conclude by taking questions. Before we begin, please note that our presentation and discussion contain forward-looking statements about future results, performance, achievements, financial or otherwise. Words such as should, believe, expect, trend and similar expressions are intended to identify such forward-looking statements. These statements reflect management’s current expectations, estimates and assumptions. These forward-looking statements are not guarantees of future performance and involve risks and uncertainties that may cause Westell’s actual results, performance or achievements to differ materially from those discussed. A description 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, 2016 under the section Risk Factors. The forward-looking statements made in this presentation are being made as of the date 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. Please also note that we present non-GAAP financial information in our news releases, 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 ongoing operating performance and facilitates comparisons across reporting periods. Our discussion of results today will include non-GAAP financial measures. We provided reconciliations to the most comparable GAAP measures in our news release. I will now turn the call over to Kirk.

[Kirk Brannock:]

Thank you, Tom, and good afternoon, everyone. Thanks for joining us today. We were told that having this after the close was better for our investors. And so we’re interested in your feedback during the Q&A. If in fact, it is better, we want to make sure this meets your need. So during the Q&A, if you do ask a question, we would be interested in your input on that. What I’d like to do is start out with some financial highlights from our fourth quarter. First of all, revenue grew to $15.4 million, that was up 3% compared to the prior quarter. We saw sequential growth in our In-Building Wireless, Communications Network Solutions, and also in our Intelligent Site Management segment when you exclude services. Another good news point was our gross margin increased to 44%, that’s up 3.6% compared to the prior quarter. Our gross margin improved across all three business segments. And while product mix play a part of that, we also benefited from our cost reductions, our inventory management, but also some pricing changes that we can go into a little more detail on. Our non-GAAP operating expenses were $5.9 million and that’s once again beating our quarterly OpEx target of $6 million. We do see OpEx to the level where we can achieve profitability at our current revenue levels has been our objective for the past year. And I believe, we have set the table for some dramatic improvements to profitability, and this quarter was a really good example. We grew our bottom line sequentially on a GAAP basis by $1.3 million, or 69%. On a non-GAAP basis, our operating profit, which was positive for the second consecutive quarter was $1 million, and up by $800,000, or 375%. These results really provide a glimpse at the leverage we now have in our business, now that the cost and expense structure has been reset. I’m going to let Tom go through the financial results in detail shortly. But I do want to talk about a few of the highlights since our last earnings call. First, we’re continuing to expand our In-Building Wireless public safety portfolio launching and recording our first revenue for our new two-watt repeater in the fiscal fourth quarter and also introducing our new battery backup in April. The more powerful two-watt repeater complements our half-watt repeater that we released a year ago. And that allows us to serve a broader and more complex group for in-building coverage. The battery backup also fulfills an NFPA requirement that includes up to 24 hours of backup and that ensures communication among first responders if power in the building is lost. So both of these new products along with our other repeaters and then passive system components like couplers, splitters, and our donor and coverage antennas now make up public safety offerings and they really make these offerings more complete. We also have other new public safety solutions in development that we expect to introduce later this year and I’m really excited about those. These are the products that are key to growing top line and they started to play a part in our IBW segment profit over last quarter. Another good win this quarter is, we announce and I hope most of you saw that that we’re working with Transit Wireless to help them deliver wireless capabilities throughout the New York city subway system. Commuters in the city enjoys some of the best wireless service available. Thanks to Transit Wireless and Westell, and we’re really happy that we’re continuing part of that deployment and really part of their growth. We also negotiated this quarter a new lease in our Aurora headquarters facility. We’re already occupying a smaller footprint, but expect that to reduce our cash outlays about 2 million annually, when the new lease takes effect this October, and that’s a three-year lease. So 2 million annually and that reduced cash outlay, I believe is very important as we focus on growing our top line, that cash is really important to us and I’m pleased that we’re able to get that done. Another high point, I believe is, last week our Board of Directors authorized a new $2 million stock repurchase program. Our right-sized expense structure and our strong balance sheet with no debt enables us to invest not only in developing our public safety market and more effectively deploy our capital. But the move demonstrates confidence in the business going forward and our commitment to return value to shareholders. Also, since the last meeting, we’ve added one new Board member that being Cary Wood. As I mentioned, I believe we put the right cost and expense structure in place. So, Westell, today’s top priority is going revenue. And at this point, that means in large part leveraging the recent changes we made in our sales organization and growing our customer base. Also continuing to gain traction in the in-building Public Safety area and also successfully addressing the emerging centralized radio access network or CRAN, it’s an architecture that is starting to be rolled up by wireless service providers. On the grassroots level, we see more and more municipalities enacting building codes with new requirements for Public Safety communications, and our products are getting out into those markets and they’ve been received very well by both integrators and distributors, so we’re happy about that. On a nationwide level, the FirstNet contract was awarded in March to AT&T and AT&T is one of our longstanding carrier customers. And as you may recall, the FirstNet project covers deployment of a nationwide broadband network for first responders. And we’re pleased that this project is moving forward and we’re actively working to demonstrate the value that Westell can bring. And over the next few weeks, we’ll be at a number of In-Building Wireless Trade Shows, including the NFPA event in Boston, which I believe begins on June 4. Another revenue opportunity I mentioned is in the form of wireless network densification, more commonly referred to as CRAN. CRAN is an emerging wireless network architecture that bears some similarity to cloud computing. As you know, a lot of people don’t want towers in their backyards. Municipalities make it very tough for tower operators to put up towers. So CRAN is really, where the business is going when it comes to wireless. So in wireless networks, you have base stations at each cell site. And they usually contain not only the radio, but what we call, Baseband Units or BBUs. And those BBUs process the traffic that relay the data back to the core network. With CRAN, these BBUs are eliminated and basically the processing is performed instead by central hubbing locations. So the way to kind of describe it as a network is more densely sent out, out into the field and that’s going to change the architecture. And as we’ve seen a change in the architecture reducing the amount of equipment allows our monitoring, cabinet and power requirements to come into play. And we’ve already seen some success in our ISMS segment and also on the CNS side. But aggregating the processing functions and providing centralized hubbing does require power, and those are products that we can provide. So we’re excited about our opportunities in power. Power may seem boring, but when it brings dollars to the bottom line, we like that. It also increases the need for remote monitoring products, and that’s our ISM solution. CRAN is just beginning to gain speed, and one of our primary North American customers is taking a leadership role. In addition, we do have strong offerings for neutral host costumers, as many service providers watch your infrastructure as part of their CRAN build out. So as markets evolve, we’re going to continue to look for ways in both our ISMS segment and CNS product lines to fit these evolving wireless network architectures. I know in the last call and it may come up again today, the topic of the CEO search was raised. And I think, as most of you know, I took over this role at Westell last fall with the understanding that would be for an interim period of time. I want to tell everybody that our Board has made some good progress towards identifying a new permanent CEO, and I’m taking a very active role in that process. And we want a person with a proven track record in business development and growing the top line In addition, I’m open to maintaining my relationship with Westell after the new CEO is in place, and that of course would be a Board decision, and I expect that we’ll have more to share with you about this transition as time goes by. With that, I’d like now to turn the call back over to Tom to get into more detail regarding our financials. Tom?

[Tom Minichiello:]

Thank you, Kirk. Let me begin by providing some additional color on our financial performance, and I’m going to start with revenue. Westell’s fiscal 2017 fourth quarter consolidated revenue increased to $15.4 million, up 3% when compared to the third quarter. The sequential revenue increase, as Kirk noted, was attributable to growth in our IBW and CNS segments and the products in our ISMS segment. I’d like to further point out that excluding services and looking at the $14.3 million of Westell’s total product revenue in the fourth quarter, we grew by 12% when compared to the third quarter. Now, let’s take a deeper look at revenue for each of the segments. IBW segment revenue in the fourth fiscal quarter grew to $6.9 million, up 12% compared to the prior quarter. IBW recorded its highest quarterly revenue since December 2015, including record quarterly sales of our Universal DAS Interface Tray or UDIT, active DAS conditioner. We also recorded our first revenue associated with customer shipments of our new more powerful two-watt public safety repeater. ISMS segment revenue totaled $4.5 million compared to $5.5 million last quarter, due largely to lower margin deployment services, which declined after a price increase at the beginning of the calendar year. Excluding all services, ISMS revenue was up 5% sequentially, driven by increased software revenue. CNS segment revenue was up 20% on a sequential quarter basis, driven primarily by an increase in shipments of integrated cabinets, which included some of the transit wireless New York City subway project. Turning to gross margin. Fourth quarter consolidated gross margin was 44%, up from 40.4% last quarter. The sequential growth was driven by increases across all three business segments. For IBW, the margin improvement was driven primarily by the higher revenue, as well as lower cost attributable to the full transition in New Hampshire, a final assembly and test operations to Spinnaker. For ISMS, the increased software revenue, the already noted decline of deployment services revenue and cost reductions associated with support services revenue all combined to drive higher ISMS segment gross margin in 4Q. CNS segment gross margin rose on the 20% segment revenue increase, as well as reduced costs. On a full-year basis, consolidated non-GAAP gross margin was 40.5% in line with our target of 40% or greater. Turning now to operating expenses. Consolidated non-GAAP OpEx was $5.9 million consistent with the prior quarter, and once again, beating our quarterly OpEx target of $6 million. A year ago, we reported non-GAAP OpEx of $10.7 million in the fiscal 2016 fourth quarter. That was an annualized run rate of approximately $43 million. Compare that to the approximately $24 million annualized run rate based on the just reported $5.9 million, that’s a $19 million, or 44% improvement. Moving to operating profit. Non-GAAP operating profit was $1 million, up substantially compared to the last quarter’s 200,000. Not only have we reported our second consecutive quarter of positive non-GAAP operating profit. In the fiscal 2017 fourth quarter, our non-GAAP operating margin increased significantly to 6.1%. To provide some perspective here, note that a year ago, the company reported a non-GAAP operating margin of negative 13.1%. That’s a 19.2% favorable swing. On an adjusted EBITDA basis, which takes our non-GAAP operating profit and subtracts non-cash depreciation expense, Westell generated adjusted EBITDA in the fourth quarter of $1.2 million, or 8%, more than doubling the 500,000, or 3.4% last quarter. Moving to our balance sheet. Cash was $21.8 million at March 31, 2017, compared to $23.8 million at December 31, 2016, and compared to $20.9 million at September 30, 2016. Cash decreased in the fourth quarter, primarily as a result of lower accounts payable and higher receivables at March 31, as well as the timing of employee severance payments. Cash increased by 900,000, or 4% during the second-half of fiscal 2017, the period in which the majority of our cost and expense reset took effect. As mentioned during recent earnings calls, our goal is to maintain cash at or above $20 million. And while we’re on the subject of cash, a new lease at our Aurora headquarters facility that better matches our current space requirements takes effect beginning in October 2017, after which we expect to reduce annual cash outlays by about $2 million. In addition, our Board of Directors authorized a new $2 million stock repurchase program last week, a move that demonstrates the company’s confidence in the business going forward and commitment to return value to shareholders. A few words now about NASDAQ’s minimum $1 per share listing requirement. In less than a week, Westell stockholders are scheduled to meet next Tuesday, May 30, to consider a reverse stock split proposal. This proposal, if approved, gives our Board of Directors the discretion to effect a 1 for 4 split. As mentioned on previous calls, Westell’s intend is to continue to stay listed on NASDAQ. We believe the company’s NASDAQ listing is a valuable asset for Westell and its stockholders. So before we move on to your questions, let me summarize. First, the expense structure reset we began about a year ago and accelerated in the last six months, as we stored non-GAAP profitability to the business and helped to our financial position. We’ve significantly reduced costs, increased gross margin and cut expenses. We delivered dramatically improved profits over the last two quarters, including this quarter’s adjusted EBITDA of $1.2 million, and we grew cash during the second-half of fiscal 2017. Second, revenue growth is top priority. We’ve implemented new sales initiatives and are diversifying our customer base. We are encouraged with the traction we’re getting in the emerging in-building wireless public safety market, and we’re excited about growth opportunities for both ISMS and CNS in the developing networks like CRAN. Third, we’re focused on what we believe is right for Westell’s investors. We have put a proposal in place to preserve our valuable NASDAQ listing. Our Board of Directors is benefiting from an influx of new talent and we’re returning value to shareholders through the stock repurchase program. We believe Westell today is in a much better position than it was just a short time ago. Through our many actions, Westell has turned the corner, positioning the business for what we expect to be future growth and sustain profitability. So with that, we’d like to now open up the call for your questions.

[Operator:]

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And our first question comes from Mike Latimore with Northland Capital. Mike, your line is now open.

[Michael Latimore:]

Great, thanks. Great job in the quarter again. In terms of just your desire to diversify revenue sources, can you just give a little bit more clarity on how many, I don’t know, top 10 customers you had, or just maybe the percent of revenue from even the top five customers, give us also the diversity of the revenue source?

[Tom Minichiello:]

Sure. Yes, Mike, this is Tom. I’ll answer your question on the customers. In the quarter for 4Q, we actually had four customers that were 10% or greater, three service providers and one distributor. And then for the full-year, we had three customers who were 10% or greater, two service providers and one neutral host operator.

[Michael Latimore:]

Great.

[Kirk Brannock:]

And that is…

[Michael Latimore:]

And then [Multiple Speakers]

[Tom Minichiello:]

Yes, that…

[Kirk Brannock:]

We like the diversity, we’re starting to see, especially getting distributors and neutral host providers, that’s really important for us.

[Michael Latimore:]

Yes, yes, definitely, yes. And then you mentioned some initial sales of your two outlays, say, peer-to-peer. Is that through a distributor, or is that just the customer maybe a little color on how that’s evolving?

[Tom Minichiello:]

Yes, so the way that’s developing, Mike is, as we started out with the half lot about a year ago, we introduced that last April, and we were selling that throughout the year. In the fourth quarter, we started selling a blend of the half-watt and the new more powerful two-watt. And the customers are predominantly the integrators and the distributors. I would say, little more to the distributors, as of late. But both customer groups are where it’s going to happen with public safety. The integrators that we sell directly to are sort of a larger sort of medium, larger, and more regional and some of them are kind of spread out around the country, they’re bigger and more well known. The smaller and the medium sized integrators are more likely to go to their distributors for their equipment. And so we’re working very closely with our distributors who we’ve had relationships with for years, and they are also in the public safety market. So we’re working through them to reach the smaller and medium sized integrators.

[Michael Latimore:]

Okay. And just last, it sounds like UDIT sales are strong as were cabinets in the quarter. How should we think about the opportunities in both kind of UDIT and cabinets going forward? Is there a good pipeline there, or that would be a little bit more lumpy, or just how should we think about those product areas?

[Kirk Brannock:]

First, we like what we’re seeing with UDIT, as we see the carriers and some of the wireless carriers trying to play catch up. The good thing is, in many cases, our equipment is already there, and the economical solution for them is to put in UDIT. So this is a good time, as football stadiums and major venues are trying to prepare for the fall season. We’re seeing steady growth there. Cabinets, I love cabinets. People say, oh jeez, they’re very, very sexy, excuse my language here. But they add to the bottom line and we like what we saw from Transit Wireless. We’re going after cabinet business, I think, more aggressively than we have in the past. Some of the questions we ask is, why one provider is buying a lot of cabinets from us, but another may not be? So no, we’re seeing those pipelines. I would like the pipelines in those two specific areas. And this is the time to sell cabinets, because the ground in most cases is spot [ph], and this is the time to install cabinets not in December, January, and February.

[Michael Latimore:]

Okay. And then just last one, you had mentioned some changes in your sales organizations. Can you just give a little bit more detail on that? And then are there additional hires you want to make it available this year?

[Kirk Brannock:]

Sure. J.J. Swartwood is our Head of Sales. J.J. has been in his position since September. The nice thing about J.J., he is a very hands on manager. He understands how to coach these people. He understands the importance of getting specked in with the larger customers. So what we see there is a lot more hands on with the sales team. We’ve had in the past turnover within our sales team. I will tell you, since J.J. has taken the helm, we see very little turnover. We’re incenting the sales team in a way that I think is favorable to shareholders. Basically, we incent them as many of our other management team is, and that is trying to retain them through restricted stock, which is something that is new. We’re also looking for, Mike, a new business development leader that’s public information, it’s been posted. We want someone that really use good in the public safety sector. And so that is the position we’re trying to fill with a real strong candidates.

[Michael Latimore:]

Great. Thanks a lot.

[Kirk Brannock:]

Thanks, Mike.

[Tom Minichiello:]

Thanks, Mike.

[Operator:]

[Operator Instructions] And our next question comes from Steve Bush from Southpaw Investments. Steve, your line is now open.

[Steve Bush:]

Hi, gentlemen, nice quarter. Thank you for taking my call.

[Kirk Brannock:]

Thanks, Steve.

[Steve Bush:]

So just a couple of quick questions. I’ve been in your stock for many years. And on the reverse split, why wouldn’t we go $1 for $8 or something to get about $5 where more mutual funds can buy it?

[Kirk Brannock:]

Okay. Tom, you want to.

[Tom Minichiello:]

Yes, sure. Hey, good afternoon, Steve, Tom here. So we study this quite rigorously and extensively. And one of the things we were looking to do was to balance the right amount of shares after the split with getting the price back up to a number, where we thought we could strike that balance. And so we looked at everything all the way up to 1 to 10, 1 to 12. We also got a lot of professional advice from folks who do this all the time, but the input was interesting and very varied. At the end of the day through the analysis and also in looking at our the float of our peers that and specifically peers that are closer to our sector, we felt that the 1 for 4 would be the right way to go. It’s going to leave us with $15.5 million shares as opposed to the 62 we have today. If you took a look at our peers, you’ll see that that puts us still in the middle to higher-end of the range of our peers. So I think we hit that right, and I think we got the split correct.

[Steve Bush:]

Okay, all right. On the buyback, are you able to buyback the Class B shares under this, or is it just the Class A shares?

[Tom Minichiello:]

But the buyback would be for the Class A shares.

[Steve Bush:]

Okay.

[Tom Minichiello:]

Yes.

[Steve Bush:]

And now, so are you guys with the FirstNet potential, what’s the markets size attributable to Westell? What do you think your potential revenue is from the overall FirstNet piece?

[Kirk Brannock:]

Yes, let me take that, and I’ll let Tom get into some specifics, and I’ll just kind of give us some color on FirstNet. AT&T won the award. And what AT&T is doing now is, they are developing state-by-state plans relative to rolling out FirstNet. And what we see coming and each state has the option to either opt in or opt out. And so that’s going to take a little bit of time. In most states, we’ve got to believe, they’re going to opt in. And I think some states are going to say, hey, I want to opt in, and I want you to build me - my area first. I think, that’s what we’re going to see. And they’re going to build a macro network first. So basically, they will be modifying their sites to build out the macro network. We did a number of studies relative to FirstNet. I’m going to let Tom go into the details basically two external studies, and then we did our own study looking at the size of buildings and what we think that market is going to be. We think that market will mature over time. And you want to talk about the three studies, Tom?

[Tom Minichiello:]

Sure. Absolutely. Yes, that we - the three studies are two outside studies and our own internal study. We use ABI Research with had - which had put together some data as a side study to their primary research, which is the total in-building market globally. And then we also took a look at markets and markets who has put out some market information, and they were pretty widely varied. Then we went in and our team and our IBW business unit did a pretty extensive study just in North America of buildings. There’s - this information is readily available from the federal government. It’s used for energy studies and things like that, but it was very useful to figure out a market. And the result of that study is in our investor deck actually on Slide 7, which is on our website. And you’ll see that we think the market is just about $250 million today, and growing at about 12% to 15% per year over the next five years. Now let me just mention one more thing about the study. This study doesn’t account for FirstNet. So what gets a little bit loss when we talk about FirstNet is that, it’s not here today, it’s not going to be here tomorrow, it’s going to be here soon, and we like to be sooner or rather than later. But today, the market consist of the conglomeration of Public Safety frequencies that are out there now, that’s UHF, VHF 700 to 800 megahertz frequencies. And that’s - that market is whether it’s today’s frequencies or tomorrow’s FirstNet network is really going to be driven by the local municipalities, passing ordinances, or in fact in reinforcing ordinances that they’ve already got on the books, and that’s what’s driving the market study that we did. If you layer on top of that some assumptions around FirstNet, what you see in our investor deck, we - it would probably change, you would probably see a higher growth in the second and third year as that network becomes available city by city once it starts to get built out and commissioned.

[Steve Bush:]

Okay. So that’s helpful. Thank you very much. So a couple of other questions and then I’ll hop off. Are you involved, or would it be good or bad for Westell, the AT&T AirGig project?

[Kirk Brannock:]

No, we aren’t at this point in time.

[Steve Bush:]

Would that be a benefit to Westell, or would be detrimental?

[Kirk Brannock:]

I honestly don’t know the answer to that.

[Steve Bush:]

All right. Okay. All right, fair enough. Thank you very much.

[Kirk Brannock:]

Any other…

[Operator:]

And our next question comes from Stephen Wales [ph]. Stephen, your line is now open.

[Unidentified Analyst:]

Hi. I just - I’m an independent investor. I just - I’ve been holding Westell for a number of years. And I was kind of curious, because I hear a lot of positive stuff here. And right now, I’m looking at my account IN TD Ameritrade. And how come the analysts are not really looking favorable towards you?

[Kirk Brannock:]

I’ll try to answer that. I know we have one analyst on the line that follows us. I think, his report is readily available. And I mimic what you’re saying. I mean, one of the biggest frustrations I have is, when you look at our share price a year ago when we lost what $5.2 million and compared to today when we delivered much better results, you got to ask yourself why? But I believe, Mike Latimore, who is on this call, and you and Mike could probably talk. The one analyst that does follow us, does have an outperformed rating on our shares.

[Unidentified Analyst:]

Well, I’m looking at Ameritrade right now. And the only one that’s got a hold on you guys is jaywalk [ph]. I mean, everybody else, the research team has reduced. The street ratings are itself. Market edges are void. And there’s a lot of other people that aren’t even looking at you. And I’m looking at Westell - I was in the conference call for the last three times. And I traded you guys back in the 90’s, and when you were like between $4 and $5 a share, and I was around for the big surge in 2000, and I wound up, I got killed back then. And like I said, I’m just an independent guy, I’m a working guy. And in fact, I’m a New York City sanitation worker. And I’ve been trying to - I’m - what I’m basically trying to do is, I’m trying to secure my retirement here.

[Kirk Brannock:]

Right, right.

[Unidentified Analyst:]

And I’m just like wondering, I mean, is this the place for me to be. I mean, I might be a little guy, but I I’m holding 1,400 and somewhat shares at $3 at a total loss, and in my IRA, I’m holding 10,200 shares. And as far as the reverse split that you’re planning, that that concerns me too. It’s like I’m, I [Multiple Speakers]

[Kirk Brannock:]

Hey, Stephen, let me try to help. Let me, if I may interject. Let me just give you some facts, right. Here are some facts. The tangible book value in our NOLs are $83 million, that’s a $1.34 a share. We’re growing top line. We’re expanding gross margin. We’re making money. We grew cash. We have a great team. We’ve streamlined our operations. We’ve stabilized our sales force under a solid leader, and let those facts speak for themselves. So that - and those are - and we’ve been out telling our story pretty extensively. So we have been doing everything [Multiple Speakers]

[Unidentified Analyst:]

But you’re trying to close down like a $0.01 a share today, and with all this positive stuff.

[Kirk Brannock:]

I’m just reading to you the facts, as I stand today. So, I mean, we - yes, well, those are the highlights. I mean, I can go on more. But point is that, it’s - there’s, I don’t know how to answer your question other than going through the facts, we’ve done everything we can to drive shareholder value. And we’re going to continue to do all of that.

[Unidentified Analyst:]

And that’s our goal is to drive shareholder value. I know I’ve been here the last two quarters, nobody is happy with our share price. Delivering good solid improved results is the key, that’s what we’re driving the team to do. I believe the last two quarters, we’ve shown some very positive improvement, but it takes more than two quarters. And I think in the past, there has been some disappointment, you mentioned that. And our job running this business is to drive shareholder value, that’s what the Board’s job is and that’s what we’re here to do. I do appreciate you hanging in there with us. Obviously, investment decisions are individually made up, nothing drives me more bad even when you say, well, what’s going on, and you just got to focus on the business, and that’s what we’re here to do quarter after quarter. Like I said, I mean, look at where we were a year ago at this time.

[Kirk Brannock:]

So, yes.

[Unidentified Analyst:]

Yes, the financials a year ago, no comparison, but yet here we are today and a lot of volume today. And - but we’re going to keep going at it. Appreciate your questions and your candor.

[Kirk Brannock:]

Yes, absolutely.

[Unidentified Analyst:]

And your passion.

[Kirk Brannock:]

Thank you, Stephen.

[Operator:]

[Operator Instructions] And we have a follow-up question from Mike Latimore from Northland Capital. Mike, your line is now open.

[Mike Latimore:]

Yes, great, thanks. Just on the gross margins, they’re very strong in the quarter. But I guess, that we should generally think about gross margin targets filling at 40% range, is that reset?

[Tom Minichiello:]

Yes.

[Kirk Brannock:]

Yes. Mike, I think the - there’s movement every quarter that can shift around quarter-to-quarter. But over time and as you can see from the full-year, we’re at 40.5%, that’s still a pretty good proxy, given the 30% we typically do in CNS, the 40% we typically do in IBW, and the 50% are slightly greater we do in ISMS. The mix in any given quarter can move that. But we like where we’re sitting now with our 40% or greater target, because we’ve taken out a lot of costs. And we’ve done some pricing updates in certain areas of the business that will go right to the gross profit.

[Mike Latimore:]

Okay, yes, great. And then, on the Intelligent Site Management side of the business, historically, obviously, you’ve done a lot of cell site monitoring there. But I guess, as you look at the opportunities in ISMS, I mean, should we still think about Intelligent through the site management, cell site management being the main vertical still, or are there - is that sort of revenue opportunity diversifying?

[Kirk Brannock:]

I think when you look, Mike, at the percentages for the year, we’re at about a little over 40% of our business is now coming from the IBW segment, and the 30% - little more than 30% from ISMS, and little under 30% from CNS. I think that’s as we see it going forward is a good proxy for how our revenue growth is going to - how it’s going to break down. But ISMS is - it can be large project base in one sense. So certainly the addition of another account would propel that a lot higher in a chunk, not just gradually. On the other hand, the gradual growth there could come from the things we talked about with CRAN, where we’re monitoring between the central processing sites to the remote sites will be more crucial for the service providers.

[Mike Latimore:]

Okay, got it, makes sense. And then just last, it sounds like your focus this fiscal year is on showing or improving top line growth, I guess, one, just wanted to clarify that. And two, you haven’t really given guidance, I guess, the guidance is still early, your guidance at this point of year. But I mean, should we think about top line growing this year, or how should we think about the top line for the year?

[Kirk Brannock:]

That my goal. That’s my goal is to grow top line.

[Mike Latimore:]

Yes.

[Kirk Brannock:]

And the next person we bring in behind me, that’s going to be their goal, and that’s how they’re going to be incented, if I have any say in it. And that’s really key, it’s growing top line. We have a lot of levers now that we reset our cost structure. I tell the team, every dollar of expense saved at a 40% margin is worth $2.50 in revenue. People get that and - but clearly growing top line, nothing would please me more than to beat your numbers, and that’s a goal. We don’t give guidance, but clearly, that that’s a goal.

[Mike Latimore:]

Okay, perfect. Good luck. Thank you.

[Kirk Brannock:]

Thank you, Mike.

[Operator:]

And our next question comes from Barry Brutman [ph], that is a private investor. Barry, your line is now open.

[Kirk Brannock:]

Hi, Barry.

[Unidentified Analyst:]

Yes, hi, guys.

[Tom Minichiello:]

Hey, Barry.

[Unidentified Analyst:]

Hi. I was - I know you announced the buyback plan. When will that proceed and what kind of plan is in place for that? Are you going after the big blocks? Are you going into the market? What are you planning to do here?

[Tom Minichiello:]

Hey, Barry, Tom here. It’ll be open market, and we’re going to do it under a 10b5-1 plan that will submit. We have to do that when we’re allowed to in an open window, which is shortly after the call here. And it will be open market. We are working on the structure and the pricing parameters and the tears, as well as strongly considering block provisions in the plan. And what that holds allows us to do, as you may know is, we can just put that plan in place, and we don’t have to worry about the company not being able to trade, or being able to trade. And the 10b5-1 allows you to just submit it with the broker, and then let it move on and when it’s do what it’s going to do based on the parameters that we set.

[Unidentified Analyst:]

Thank you.

[Tom Minichiello:]

Okay.

[Unidentified Analyst:]

Yes, thank you.

[Tom Minichiello:]

Okay.

[Operator:]

[Operator Instructions]

[Kirk Brannock:]

I think that…

[Operator:]

I’m showing no additional questions at this time. I would now like to turn the call over back to Mr. Kirk Brannock for closing remarks.

[Kirk Brannock:]

Great. Thanks. I do want to thank everyone for joining us today. We’re pleased about the progress we’ve made, but we’re far from done. We’re continuing to step up our focus on growing our top line and executing in our growth initiatives, and we look forward to speaking to you again. Thank you.

[Operator:]

Thank you, ladies and gentlemen. This concludes today’s conference. Thank you for participating. You may now disconnect.