AVNW - Earnings call transcript Q2 2019

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Operator

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

Glenn Wiener

you, second quarter and Form and release. to just welcome XXXX fiscal XX-Q press our Networks' Aviat issued results our Thank filed Ella conference We call.

our could the in section updated You Relations find investor All be Investor documents website. our presentation. of found can also

be of Michael us Speaking Chief McFall, Shaun Operating be and during Corporate is Executive with Pangia, available President also Development management will portion from call. will Officer; Q&A Chief and Officer. Senior President today of and Gallagher, the Vice Stan this

exhibit remind Safe the the Before statement, Conference, attended transcript reading our on Harbor Needham an filed Annual month I'd which at Form like presented X-K. we to very well event’s and everyone management is Growth last the XXst as

its future statements and revision these of publicly forward-looking in could the note, actual Please may revenue, undertakes obligation Harbor, and both second or issued, cause had no including the network mobile results bottom-line these relating top financial company's earnings the during release information and of opinions reflect During regions. of quarter These and materially new company saw only new today's call, capabilities timing any of to for management just projections in of to uncertainties results. press respect that those as to, as this Safe or make light call, release that assumptions, statements transpired forward-looking operators, not the activity and date by statements. the limited events. private presentation, most what and recent you and of but products, regarding from to drivers, statements results and With revise is of reiterated network this involve the the business, different to business economic expansion and Aviat's other statements forward-looking management risks statements outlook forward-looking from differ

like financial and non-GAAP non-GAAP which to press GAAP management to reference forward turn financial I'd our on Mike. to tables call, your supplemental for call will today's all that, now will over measures. during and release certainly you reconciliation Please look and we our to other both and information. you support, progress. I GAAP to Additionally, the therein, a and financial refer With thank updating include interest

Michael Pangia

the Thank you, pleased into optimism Glenn. moving and the we in second of I'm quarter half really the results with second delivered strong is the positive. year our

income a million by we're by as building, we areas of our in to put, evidenced our take meet confident foundation were with international even sequential by to resources to are we We to America build above came operating of million. was top very end. remain million basis, existing revenue versus that Simply and North related continued few met From already areas the we range is non-GAAP efficient. and International to gross strengthening over both Our year the well received our pleased performance range bottom growth of million our in prior line guided have we the to and training our QX. margins of $X.X million, $XX mark our approximately excellence we are the nicely Non-GAAP continue introduced XX.X% to perspective, operating $X.X of of $X.X in quarter. $X.X guidance. the in million steps initiatives. are growth I'm our a support being percentage more pipeline of towards of mid-XXs, we've on newer larger financial guided XX% we million and by process both on a optimal made the more and area EBITDA And model. more customers report in business. surge mix. adjusted last and that products the Operationally, at to high-end with XX%, to additional prospective the Asia. continuing delivered A and to financial our over $XX the we annual and We Africa invest to solidly in the we XXXX non-GAAP $XX continuing second compared fronts. fiscal line momentum guidance to total in up recap comprising to expenses driven in revenue past is years a up a revenue on ability guided at just

cash to quarter. the position $X.X first increased compared million Our by

we and fourth remains the approximately third year, operating on in income reported strong revenue and we $X.X growth were million the of fiscal both EBITDA. the adjusted Our X.X% first balance profitable anticipate an also half further and We of improvements basis. net and sheet Through quarters. delivered

financial strong first our and margin that we The a gross remains second mid-XXs half quarter at modeling half the performance our can we year. rate this confidence perspective, second XX.X% sustain from outlook in look as fiscal beyond fiscal gives added solid and

Now, a much North as few sequentially. revenue I was mentioned, to comments with America, stronger respect

quality business ramped our to marketing announced as and and several wins growing we in and all new with Florida sales networks up prospects on continues recently utilities, private a fire statewide networks Alaska activities. our Our reflected have cylinders, of list with as high

one share as of focus And providing paramount. outstanding on partners continued were we their our and in to such, success. remains happy key relentless Motorola, Our support service to

but provider North year. have consistent business the Our level total steady, deployments XG mix bookings change this represents be up. the as portion seen of to past, could service when a with throughout continues ramp we our vertical a currently smaller of in This in American America, North revenue

this and about to is remain to International work with excited contributor the Beyond expansion rural of ISPs driven bigger verticals, the our much ISPs, our years. a become traditional growth Switching expect we coming markets. broadband in by to to we

In aggressively $XX.X million revenue or Our Asia, up strength and demand Asia. the over services the through is especially Philippines on products, fiscal new the while bookings substantial mobile a data base were been have expanded up by as very expanding been of their XXXX, customer XX%, our our of we've customer from half they driven nicely leading increase in first in our international strong capabilities. has

Africa and the programs. across pleased up our relationships that region. we've in been progress development strong I'm year-to-date business very on Our product was the customer with remain making our

products the New the growth. past of over catalyst introduced have we've that for been one year key

in is at international few year bodes position. in the call also well different markets, providers. longer innovations millimeter automation the prospects I'm positive business we’re is for future for and a capacity, term SDN. our and new our are There while more with bandwidth steady level engagement an radios, also invest of mission On have outlook. and is of Stan and delivering close on which will some no for transport occur roadmap over microwave into LTE XG top with and a that is and demand times, encouraging. seeing Stan? We're routing, of doubt which critical there full to our with software going opportunities we'll We seeing a exciting need the network common in now, comments our this, solutions current wave expertise new cranking networks [ph] to technologies we to underlying of stream areas very globally. turn is data And increasing new service leverage maturity to XG customers the including

Stan Gallagher

Thank you, Mike.

key detail more progress into financial and you get in impacts positive I want I some driving to on efficiencies Before highlights, our of update on to process our the business.

focus with have to AI in a communicated, on eliminating Sigma Lean Six invest Aviat intelligence. As processes and developing artificial continues previously defects automating we or

opportunity factors consistent key than S&OP A have targets at forecasting the translate impact nothing our and results. basis. cycle. modeling operations this predictable initiating to business to the of or positively improved is have we are level execution robust accountability horizon guidance planning processes collaboration revenue and more achieve our resource is process subsequently an While how project, creating which S&OP through made engagement and ability great data requirements the further the forecast achieve for Perfections business, should Since create variability. a to to in forecasts develop the for the and success refreshing reduced support this transforming on over of eliminated and of our our targets our expanded achieving and significantly we our our example to Xx sales and visibility ability forecast improvement important more XX% improve

use our made have example would We great strides this and this area, I an quarter's as progress. in results of

binary inherent While to the have deals and customer manage variation to manage we our allows of us in lumpiness CapEx, in challenge. the linearity process more dynamics S&OP business effectively eliminating still the

the our including and level widespread CRM are to convert stronger engaged actively impact Looking analytics sales sales capture modernization our allocation capabilities automation enhance can from to future, proactively and will cash inventory in our of improvements the we The the and these This only and platform. of depth tools, management evaluating benefits revenue of the capital range generation. creation of to and opportunities. continued new

highlights. Now to the financial

an the first compared as in comparable to revenue XXX attributed gross gross Also For XX.X% increase non-GAAP margin second XXXX Sequentially sequential fiscal or revenue, period, $X.X by million of for improvement revenue primarily X.X% revenue X.X% basis $X.X fiscal discussed XXXX a margin a million, Mike as XX.X% as international XXXX XX.X% to margin second of QX, gross a XXXX. our total quarter, XX fiscal compared points. year-over-year as quarter was our in the primarily higher was points. XXXX $XX.X of the FY of increase of quarter, FYXXXX of international non-GAAP gross second compared in or quarter attributable quarter decrease to increase to non-GAAP earlier. decline North was mix. America Non-GAAP a increased margin and basis revenue in to versus percentage a represents modest million The FYXXXX second

increase as in $X.X operating for R&D. second quarter including related XXXX and the in million $XX.X non-GAAP compared to fiscal growth investments second Our XXXX or X%. million operating marketing increase related quarter, an expenses activities, higher This sales, to $XX.X expenses million of were primarily in was fiscal

FYXXXX. for for for fiscal by year but first income $X.X it operating second period. quarter on XXXX period, Our compared million prior On was flat the the the the of non-GAAP income EBITDA as to versus basis, XXXX of for $X.X improved comparable million million. sequential operating relatively a fiscal million a improved $X.X by was million comparable Adjusted fiscal sequential QX quarter XXXX basis $X.X $X.X

some Moving on sheet key balance highlights. to

by improved another worth this management. and cash is we to continual in process and due quarter stronger anticipate focus increased enhancements It is cash collections million improvement noting this of that Our $X.X performance. area

at of activity. repurchase fiscal Additionally, year the than fiscal the we still higher our XXXX, XXXX with share cash includes anticipate ending end balance which

million $XX.X to improved cycle basis, to our sequential up days $X.X also a in to XX the days which remainder of or reduced collection our XXX compared Including prior was DSOs million the a prior we to compared on cash $X.X $XX.X net expect basis, our on Accounts days XX receivables, sequentially. Our in benefited to DSOs year. the moving continued receivables from year. days to accounts throughout million sequential down days XXX XX days XX quarter improvement the unbilled million payables and of decreased were

be quarters. ability in and Our change first more is and future to crisp million back accounting of life. the areas in the the that dedication am and change of to the of coming the in total prior our $XX now continue operational in million moving making inventory again, XX position and recognized engagement sequential $X.X should basis for focus a comparison turns I want incorporating to in forward focus Inventory recognize many for employees transformative first versus the year. turn their confident increased like-for-like closing, a on importantly shareholders. and accomplishments on quarter. to I'll to results effects positive Aviat in most the Mike customers needle our I look in and The our call excellence are of but performance. XX.X the I way In our over business, in leaders versus many sharing Mike? the level

Michael Pangia

considerable past the of progress. we've each three In years, Stan. Thanks, made

We quarterly on are sustaining basis. our profitability a

an bottom-line and turned performance basis on growth. to annual have We Aviat have improved we

for Our fiscal improvements. continued positive year our and this in remains place expectations outlook are for

million for X.X% be expected year to outlook million, $XXX of would our which discuss Revenue a year. to $XXX to full X.X% result $XXX fiscal the like I'd in revenue between second range half the year or half the in second between million million is of to year-over-year. the to Now, $XXX of growth

to margins or the the top We the full year split in XX% international fourth XX% higher the the be be if quarter expect $XX with Non-GAAP to half million are very to gross for quarter XX% modestly fiscal second fourth line driven And be the due higher higher, third, top with the operating primarily with expected fiscal $XX third approximately better two half revenue healthy than than end anticipated to variable and Non-GAAP second fiscal range. by higher volume. market. mostly the range, expectations. to evenly the expected of the in margin are end rate expenses we approximately bottom end gross the our to quarters, between up near the million almost be to

result For of to the $XX.X year XXXX. $XX.X this full fiscal expenses in total million, million would up operating fiscal year, to modestly

income of the million bottom we but million. continue full to low end of ranges EBITDA and the some can behind $X for of in Moving provided, XXXX, fiscal lastly, on provided $X.X more range second approximately is There expected and adjusted cash result than our the operating we million to fiscal And $X.X $X.X variability position of million approximately that operating anticipate in of anticipate year would began. the using year, improve with cash $XX.X the million the of midpoint impact, non-GAAP the of the range adjusted to million. and to we line approximately $XX ending for but to income non-GAAP half EBITDA

the Although, proud of have accomplished. do, we team to I'm very has more what Aviat

ready our to driving execute customers call Operator, and persistence for employees. know to we a value the continue have we're for focus We open will and with on questions. stockholders,

Operator

[Operator Instructions] the Staiger. from question Michael first comes of The line

open. is Your line

Michael Staiger

Hey, my questions. job Nice for how you guys are doing? Thanks quarter. the taking in

competitive Alaska any would there going can of in into half give Thanks. see be will on numbers by guidance your any sort Just a the follow-up challenged happen back year? and what that roll couple and you back guess you That's that's the I to of to the think environment on here revenues first. half one, the what be, year? or contract, ISP do are of of And competitors the expecting the us color the percent next over you the you

Michael Pangia

Yes. Sure.

the to purchase that So been related already contract. state we've of first receiving orders particular Alaska, on

be So I any don't to delays. anticipate there

business I will that continue think expect as see to to opportunity to an that of where of example be we an value grow. that the

to to North continue but to one it expect look this drivers very don't next significant as fiscal we be the especially I So fiscal year, strong America. a we will be of it as build and year, at look

of the terms In other sorry. question,

Stan Gallagher

back Mike. you the can Sorry, repeat

Michael Pangia

again. Remind me part it the second of ISPs

Michael Staiger

of percent from perspective there the competitive what and What more look a capacity. Yes. broadband for rural as kind of revenues you’re seeing

Michael Pangia

Yes.

with our I initial in the growing mean the which front easy area look is So new The can look when we our it in nice I looking with have traction, several receive competitive for market. North what of is around growth service next fiscal in support playing introduction traction, my are for never I combined with But gives see America differentiation. products particular and awards. and seeing to by see some awards. of of the I as together have the this so are combination starting it. excellence we're is of being new store we that definitely our past, critical experience we some into the very year. comments their ones funnel it prospects can in I all a few is Aviat to in us really U.S. line state of some ISPs ordering our us, again at simple take very of operational fast the to make And addressed at driven a think these some we into provides the a those deliveries by exciting that that's online and of We in opportunities market also

Michael Staiger

I'll see Thanks. floor. the

Operator

[Operator questions, instructions]. you further There are may continue. no

Michael Pangia

and continuing results we for to time Thank continue their drive Okay, to Thank business. forward to you in communicate our everybody with further questions. today and no look

Operator

have Excuse me, the a sorry, sir, I am we line. from question

Michael Pangia

Okay.

Operator

instructions]. [Operator

Stan Gallagher

Okay, we’re for question. a waiting

Operator

conference this Thank you And today's are your for participation. call. further There questions. concludes no

You may disconnect. now

Aviat Networks (AVNW) 11 Feb 192019 Q2 Earnings call transcript