AVNW - Earnings call transcript Q3 2018

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Operator

Good afternoon. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the Aviat Networks’ Fiscal Year 2018 Third Quarter Results. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator Mr. Relations, begin Investor conference. you Wiener, your may Glenn

Glenn Wiener

our fiscal to our quarter filed Chief Thanks, Senior All remarks Michael is posted us Executive documents issued the this our welcome and found Relations presentation Ralph Networks’ updated Q&A our Marimon, Chief Vice release XXXX Officer Pangia, Officer; investor McFall, an portion Shaun and XX-Q, can and will just Rob, and website. Chief We President section. Aviat Today, from also third on and call. results Form in be Officer. press have Investor conference and Marketing available prepared Strategy will of President Financial during and with call. be we the

actual and results no to cause as light reflect of results revise statements these forward-looking statements activity and regarding relating expansion the the products, new those publicly of other uncertainties forward-looking only make forward-looking may by Aviat’s materially statements to, events. including timing new and not this revenue, company’s management differ operators, these undertakes in regions. forward-looking of call, could projections and private that today’s statements assumptions, to economic and statements. Please or the of business date but the release of the These risks opinions from company call, statements note, network to or obligation future involve and in mobile earnings any different limited of and revision information drivers, of business, capabilities During network

therein, include financial other refer to reconciliation non-GAAP and GAAP reference a the Please GAAP today’s supplemental our financial measures. Additionally, to and will during call, financial both management press information. which release tables and non-GAAP

the Now call the Relations few Investor to front. on over before Mike, updates turn I

presenting Hotel. conference be Annual B. will XXth Monica the be at May Beach The held will FBR XX. Institutional Loews Conference Santa Investor the on Aviat at Riley First,

If Thalmann day throughout Ladenburg to. York Expo May Technology the will meetings prior likely at on Thursday, feel free to contact most reach will respective always, accordingly. at and Aviat the you anyone management, XX, the teams each the is meeting and City with New firms, out the and XXXX my investor of in Second, presenting can and/or interested please as be day attending in to office scheduling be conference

for myself, also intend over will our and colleague, the we our we road can out all and quarters, updating over or look and accordingly. this my you Mike, the you and get the call Mike. will and time, to now you either thank interest on your story to We Glenn to [indiscernible], turn coming reach out market support, to like begin. forward Wiener, on I’d everything progress. coordinate please At to I

Michael Pangia

our third all to and Glenn, you, conference call. Thank welcome quarter

color on on significant products and We new experiencing coming which the new provide several expect in that verticals fronts, initial effect are a new encouraging. continue customers, make further will quarters. I’ll with added extremely successfully to into we positive expanded we is our have progress demand the later. very We’ve

numbers private provide we and this an spike shortly. in Further, As expenses. press bumps margins to the speed effect. comparisons was networks a mixed, the expect these Ralph results our saw our a lower volume line and to impacted Gross you recurring to in will along due somewhat foreign quarter and operating mix in QX we services that exchange way. our don’t capacity. unfavorable hit more few within guidance, currency prior from skewed points projects saw have release, will margins expenses our effects same fixed other were and versus our improve details cost relative were we our These do XXX prior also on while the benefit-related outlook. with negatively came anticipate basis by lower revenue about issues our rates We mix

last our our market. on business. this WTM to were introduction driving horizon making, has the us and at introduction look the platform the significant addressable XXXX is be part Over few is not is The new quarters, decision of for competitive the position so technology for the proving timely. operators generations we’ve opened of opportunities of strengthening strides that very XG made of to near-term platform towards previously of overall

numbers, have new were provider Beyond We service X agreement selected for growth that pre-approved Tier address just the we are of potential large a operations progress the a subsidiary different will trunking few solutions examples international enable as last since here number call. a reported countries. significant of requirements made with to customer earnings provider. us our a of a Aviat This the for in of is our in

the of a end the We’re be in and year. award involved expect for international by substantial Tier RFP this provider, decided XG we another X to service network calendar

positions evaluation networking and in their rest successfully investments. customer. a us Our network flexibility hardware well the software-defined to the vendors product attributes allowed from We and with concepts agility products successfully and product of and end large these other service third our international during new software demonstrated proof-of-concept we future available trials proof-of-concept create not us for provider, new capabilities completed in for which this consideration

The we from international signs leading the both our opportunities, business for this a region. received will coming represent quarters. deliver capacity, and and for orders highest to is released microwave longstanding process and outside the opportunities long-distance within for of ever other solutions. in These system have trunking more our we milestones the newly customer Additionally, in the Asia new region network deployed, all-outdoor new Pacific encouraging

Now North America. on to

conference new on accounts. we mentioned on QX firing our business add and is cylinders As our private I call, continue to networks all

state-wide We’re of and where contracts align the customers seeing increased to cities have from standards. state and volume in across continue U.S., we counties projects place who with

new end of year. new opportunities with fiscal of two next several with pursuing wins currently or goal the state-wide realistic a are by networks the We three adding

Next opportunities. first their of county-wide announced I they new In many communications. turnkey This generation services to data capacity centric as new that increased we Internet our $X.X we large business security million protocol. require laying noted network surveillance call, focus are groundwork migrate radio higher sold Nevada is a responder on We new million new and to to QX with this of applications, expected to during April, leveraging hybrid position features, to first to these pursuing. on and order into period, receive customer one the companies, platform we five-year support from which over government County $XX Also, were business signed driving of a and to expand of we a and further project which fiscal be expect quarter. this the Recently, a microwave to this as strengthen other of our customer, to with verticals, will award is transportation transportation up deliver such largest believe are transportation other companies solutions another we one our the – education. contract America’s that

in of XXX. upgrade combined continue competitors primarily this this three within incumbent Also we strong we times compelling America building most The when to we about to and week, excited for capacities North the the will TCO We’re segment. generation IRU previous seeking programs. increase in a lead provide power available momentum the other inside deal, America, our and unveiled has product marketing, product services differentiation, and the with publicly reliability, we’re been last industry The our capabilities by output version, because North and our up enhanced product actively flagship enable leading to major knocked and business. this out beat sales driven an

success an opportunities provider coupled new the North previously not enabling momentum options several partnering set networks Our for in pursuit international with of with also private accounts, new prospects, us. and our solution is in growth America which renewed were service

these opportunities, process results XXXX the our more the in well going should financial call Ralph? Ralph I’m which our to for few aspirations. to detail. of fiscal cover a turn in bode formalizing to We’re now over of

Ralph Marimon

Thanks, Mike.

Year-over-year, up almost in million a the we quarter revenue revenue $XX.X increased and QX Third of provided on X%. within sequential was modestly basis. range

for we both year-over-year on just the the one, we but above up remained months and comfortably under in book-to-bill and North America Our a through one-to-one period, better significantly internationally. quarter basis, were was nine and

lower our mix non-GAAP services months, non-GAAP was XX.X% XXX of Our fiscal margin nine reason XXX approximately North Non-GAAP non-GAAP operating foreign costs margin. $XX.X XX.X%, with a America. and $XX margins the based of favorable of contributors improved million points to America were $XX.X were Mike expenses first were gross due basis our gross up XXXX, QX in Through shift in to right North expenses in compared operating a to temporary the expectations. million. exchange on The earlier. to points covered two prior spike guidance million Notwithstanding these rates events, and in operating benefits-related our higher above main unfavorable line in expenses came basis

the continuing bottom was we operating fiscal year in for non-GAAP nine and period. loss operating income a $X.X of As line, for the operations million, QX prior loss of non-GAAP $XXX,XXX period, $X.X the nine-month months $XXX,XXX, over up Non-GAAP reported from million. QX

prior For improvement $XXX,XXX, with the also nine-month comparison over the by period, we an continuing year. from reported non-GAAP operations income of

Lastly, variances decline QX adjusted year to EBITDA mentioned due expense last compared QX million earlier. to the $X.X was the in down and was $XXX,XXX,

delivered comparable the to adjusted EBITDA adjusted positive the $X.X XXXX results the million, six period, For has compared nine-month period. that past EBITDA in approximately consecutive company Note was $X.X quarters. our million for fiscal

to Through repayment but and that on declared fiscal of our QX end timing cash improvements restricted. our including DSOs compared unbilled million When receivables Days held unbilled $X.X days, unbilled timing from nine XXXX fiscal $X.X contracts fiscal When in accounts at favorable first days cash, improve. QX, which DSOs and of XXXX, amount. we dividend the quarter since Cash cash DSOs QX. January and We to longer million. in XX North the operating receivable been and basis, under and to compared to in calculations, issues, both activities was cash DSO that by represents days day, improvements to on coming or was our improved the week used These million by was have cash DSOs by million QX for year-end. approximately continues XX is $X quarter, approximately sequentially million continue second although to cash the improving above no due for following approximately were in slightly is $XX.X with million collected XX, of equivalents lower manufacturer. QX. months one We we $X.X is in remain issues of positive. by comparing As forward is sheet. XXXX our America million had fiscal of X payable $X receivables a inclusive be $X.X sales the the the realized trend entity. up and of in million contract was in which and the a million our Due year-over-year, balance million would to increased same a $X.X outstanding on and the approximately a first Nigerian settled roughly compared quarter-end activities Accounts $X.X Accounts cash, $XX.X primarily to $XX.X internationally the to at this sequential primary show ended payments specifically mentioned. as remains bank due focused contracts, operating the collection generated million cycle. down to was QX reduction in restricted by

of million our increased to position second to was a reduction million the X.X QX, project-related inventory. attributable Inventory primarily turns increase quarter. in $X.X inventory and X.X decline the in Our from $XX.X is a from of

very level and We continue to our cycle the company’s continues at best AP conversion the to cash and history. effectively our remain manage AR in

for the through approximately first anticipate $X towards and for be will expenditures fiscal primarily remainder of capital We of new year the products. months XXXX million of expenditures fiscal the equipment support applied the capital Our development, million. manufacturing be will were nine $X and

remarks. cash in would back our by million over cash end position to improvement I’ll sequentially hand, $X We to mark the QX million with and in over year $XX also the to on $X million for now million over Mike closing which turn $X.X a increase year-over-year. his expect call

Michael Pangia

I’d and of outlook, to indication trajectory $XX we revenue we’re a prior to be still give QX million, $XXX converting Ralph. to dependent jump to respect fiscal to million of $XXX first, right backlog of revenue The existing between as into wide the clear the business range and expect XXXX on that right timing which result would set $XX improve on our million our revenue help in range performance. in to stage is million. outlook. to the Thanks, guidance our our the that to With continue you like remain will we

For backlog million. we visible today can year-end fiscal revenue XXXX existing and see funnel $XXX we growth prospects, of based within and on anticipated what north we our achieve believe

by stated prospects segment. provider we’re As service international we growth earlier, are the the very encouraged in seeing

As QX the this mix, be XX% we and non-GAAP rebuild recurring more should linearity. this nature our forecast between also XX%. of improve business into should sequential visibility margins and our gross of

expect As stated to QX earlier, we some from see recovery levels.

delivery fiscal XXXX, improvement, based product impact should non-GAAP in product further enhancements gross activity. deliver margin introductions be and For and another should increases continued representing on of fiscal XX.X%, our margins XXXX of approximately and the year service new

the million million assuming million, rates be guidance This variability the XXXX on current year. of tracking in of non-GAAP expense the fiscal foreign fiscal higher-end based the on run in at side, our us fiscal expenses puts the of at some top there’s $XX at range. middle is the line same Based of expect the of falls where exchange the to right previous QX On our course, should range out. XXXX $XX to year rate, for and, we be roughly approximately operating $XX

ranges, to profitability midpoint to process From increase to through and the operating adjusted Similarly, fiscal $X.X non-GAAP what delivered planning approximately three in non-GAAP enhancements a approximately will at the million. income adjusted our EBITDA is $X.X in $X.X actions increases year. using of operating would be and of in by QX in to of growth-related approximately We’re this in similar lower These compares to more come our This $X.X fiscal million $X.X XXXX result underway we’ve in income research QX million million. should last million, investments million, office-related offset X. back primarily $X.X over past expenses, resulting fixed development to a years. XXXX expected – perspective, XXXX. Note, fiscal from compared be areas. approximately EBITDA fiscal

in modest expenses, research anticipated of path growth a non-GAAP income As improvements we modest to XXXX, and adjusted our for and and margins achieving in of million. to development-related gross $X fiscal we business, flat approximately EBITDA operating see increases approximately $XX million in

As company real is I for to we done position the what said, the future. have the story this year

right the track. We are on

launched international strategic Before update challenged early provide financial like the to When of business the was concluding, were process. scale provider our I process, growth an a stages for in would turnaround our on we customer base. our and we service first and with the prospects

none While for necessary we our several value carefully criteria evaluated to create the shareholders. options, have met

Our arise. questions. will the our thoughts is continue opportunities course international assess In business and to three strong. just improved we add normal they significantly have as situation financial of I’ll business, any taking new prospects before final

and the steps common program authorized to momentum represents of a we – believe as our support week. common to relates our and relations. valuation we active We to such to outlook a stock and As on this of we stock. our more are stock later built, purchase Based compelling be enhance commence announced the The million of improving our repurchase to have program, enabling us in investor over stock it investment intend up long-term. Directors the taking as to our has million Board slated we is our both stock program $X.X release today, repurchase $X.X

all tell, a line profitability with moving we’re and track story what into improved a a now actions to beneficiaries ready now growth that year. our of call customers, trajectory good bottom have open the over and we performance. questions. results We for investors be believe we’re coming optimistic of will record and the I’m to Operator, up be and the will partners highly

Operator

delay [Operator questions for so this time. calls the minutes, are to we couple at Instructions] you get can Did no There some a want me in queue.

Michael Pangia

to minute another pops up. see Maybe if anything

Operator

I’d for call. like questions you no concludes this conference And joining at thank today’s today. [Operator are there Instructions] time. This Certainly. to

You now disconnect. may

Michael Pangia

Thank you.

Ralph Marimon

you. Thank

Aviat Networks (AVNW) 14 May 182018 Q3 Earnings call transcript