AVNW - Earnings call transcript Q1 2020

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Aviat Networks First Quarter Fiscal Year Earnings Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions]. Please be advised that today's call is being recorded.

like Wiener, the Inventor would your over I Glenn host, Relations. now to conference hand to And Sir, please go ahead.

Glenn Wiener

XX-Q, We Thank you first our and call. XXXX IR investor to presentation of Networks Aviat press has Form our filed been updated Lance and quarter our welcome results website. to issued release our the posted fiscal section conference

on As the fiscal to very strong track its you with start will see, the company prior guidance. and had remains a year

Executive by the Senior Accounting led Senior Chief Stan remarks, Corporate be Officer will and will Chief his McFall, and and Officer open Officer; Interim Shaun Development; for call trends prepared market Vice we then financial following and Principal call Today's discuss Vice President Chang, Operating questions-and-answers. respectively. Gallagher, results their of up will and remarks, Eric President After

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

and our Aviat. therein both will management GAAP to for in refer measures. non-GAAP non-GAAP other a GAAP financial which tables supplemental call, financial reconciliation Thanks and interest your Please release information. and today's continued during press financial include reference Additionally, to

at And to Stan. will over turn time, call I this the

Stan Gallagher

Alright, thanks, Glenn.

are I past. the those expectations provide also to more of a network we respect are what My today is quarter Aviat solutions. intend course increased little positioned mission-critical for will and of the we with color ensure our to different around highlights be doing call around to XG demand Shaun positive remarks provide So transport and than on capitalize the will and which trends seeing to

honored Board First, this I confidence on me. transformative placed new take CEO an am amazing on trust role with with Interim as the deal in great and the change. I a excitement has and eye of in

innovation, succeed have further, this significant driven but We have empowering consistently ways and tools team and utilize possible, capture through share, we improve to data business. lead has to not and shareholder go more My the achieve right it. always only market value. the think best great a of profitability evolve of way to And sure the and simplify enabling to art course, the capture people that enhance philosophy the by drive our make been opportunities us of to our to out customers’ professional one and is and efficiently, processes,

announce of in prior strengthen QX We will is This anticipated the And our North for their our reaffirming not I'm drove product guidance. we solutions XXXX their and the just first performance, our the we entered what our confidence on needs customer position that strong in America. supplier. results half guidance to QX backlog fiscal understanding significant better By based particularly momentum, with as are year. and pleased fiscal partner,

we guidance are not Africa, full year this to providing uncertainty for ongoing at the fiscal time. in Due

related de-risked to to our However, plan, what is I that respect MTN. substantially can say XXXX fiscal especially with we’ve

Aviat has And opportunities, streams resulting future. year other in new and progress. making globally positioning are our this successful revenue for uncovering solid been team We in the well

we stronger stronger year, being on fiscal with full year-over-year a exceptionally second the gross basis. For half first year-over-year margins, strong the the and half expect

expenses to in bottom-line, expecting to also talent, uptick we greater adjusted With as are we to future operating our significant continue income slight improvements will savings. invest respect efficiencies in tools a and and are which the We year-over-year in lead operating anticipating and new in EBITDA. non-GAAP productivity

our increased year. lastly, And cash expected in QX throughout is and increase balance the to

comments make I'd positive our like our trends to driving industry on few before business to to just a with the respect optimism. moving

with start Let's international.

expected in we and they declining are in is quarter really fiscal off in orders the throughout our year QX of had strong with up similar was the leading a rates third tailed APAC to is and revenue the forecasting Telecom, The region international fiscal good news business XXXX the in an from year, Last exceptionally in Globe highlight Africa decline. QX. began year, we carrier The a Philippines. picked big fiscal again and

our mobile broadband opportunities optimistic in more about with Globe in fixed both XG. and long-term for preparation and services We data carriers are in investment anticipated Asia and other with

to and October XG which only out. one first want I Xth overall This will the be is single industry's box need E-band of TCO. replaces newly many WTM multi-band release, the adopters lowers as introduced customer which and boxes, support roll will for all improves the Globe costs, and you our press solution, their our XXXX radio multi-band refer first to of platform

a future while upgrading To lay services, illustrate in we the use the transport big spend new R&D wireless up will For region. preparing many customers our growth the them and should spectrum. technology, XG announce for still multimillion for their us of XG markets multiyear XG. point, networks across with leading known and the last international help carrier was to for important focus APAC new hope prospects contract optimize well the shortly groundwork to year's avenues and of an adoption. solution open Globe beginning international is to support in very Meanwhile, This various in of dollar multi-band a midst of are which a

on tuned for more stay So that. details

we the volume in Africa, about other lower the situation story. should XXXX region address. will basis the our as future, To however, markets a international be and dollar guide in smaller The future. flow I are APAC with relatively revenue consistent investments And appropriately, different in in a mentioned, down fiscal given be the on

Shifting customers next over America in saw small a America, of we overall several was our years. within opportunity beginning new XG North of services in to grasp. our it certainly believe this our the build the is But side to to is we the larger North will XG that and the provider Keep automation XXXX more more business new example, migration and growth. in is solution, past, WTM tools, capture today mind for a years with much source With and now as service on market piece business. and

in than business mission critical cities, responders, customer further comes the half to private governments, utilities, success our the continue We while and first from our continues trusted networks expand, other of networks adjacent and solutions. dependable opportunities states, grow to base highly networks, for worldwide need More our markets tremendous are private that And today vertical. substantial.

any stop. and programs why that We specialization is have and to savings continue unlike process the allocate can technology can R&D, today, efficiency in our sector never we innovation other through to the solutions

market so the from differentiated add new by trends little positive opportunities, here usage to fiber technology the Highly more part with win There's exploding, But met winning the witnessing in I market And Data reason turnkey few in why more stop is we've around coupled cannot the of a innovation. positioned lot and is services wins, going provide uniquely and competition. be routers radios respect color and successful separate is are over been we and to dynamics can alone. next increase are years. this usage Aviat Shaun business. Aviat what and the to I'm a believe let we

it pass you Shaun. I'll to over

Shaun McFall

services of more is will you, the Thank with increasing you that needs and ever that monitoring or of capacity rural remote Well, of data there applications, carried services, networks years location data driving only capacity automation, be capacity it’s and mission-critical first-responder being considered is areas needs The just the this optical And the important for not speed LTE provider than the some for is demand networks, of of also. solutions in types anticipation XG in which while delivered needs services a simple new solutions. than of of the ever in networks to we're specific and analytics high is good service Together others. times business in across not much networks, not for connected our as by wireless the all today fiber. is XXX But typical and already just utility to seeing especially more in every delivering few need capacity of types. also amount use driver example data be other emerging technologies of A to increase are that's data Stan. capacity data the backhaul fact Internet can in be customers, the higher fundamental volume we also the underserved highlighted, driving driving XG we video have mobile ago. our the are provided, increased it's and

provide offer investment every software our develop has into a us the significant of strong to has in necessary onto to migrate the And area suite future solution hardware our endpoints few This the service integration resilience we are this and direction for performance closer to industry years. ongoing generic continue networking reliability, routing of trending In the And network. differentiator. intelligent to is order the that been allowed where positioned the moves we type, a to as in platforms. and needed license the next defined is software over enhance, a gradually well whenever solutions in

Our be a been operating WTM And potential recently XXXX have microwave the high this multi-bands expect new of to maintain a under customers’ with now networks millimeter Initial white all for bandwidth the WTM wave, availability our received. of lower announced to have in frequency of products simultaneously frequency to other which such orders ready product we bands making innovate our materialized XXXX conditions. XG. solution for the leverages the robustness opportunities

product will long the for a reduces our step this expansion the per of driven of high dramatically distance compared of solution distances cost a XXXX services to interest capacity current capacity, strong the by see remote platform. of WTM In of increasing coming based long on for type for products wireless the network our introduction to next release in and over revolution new solutions. transport mobile need areas. the the This with megabit we solutions quarters, We generation when

coming We more will months. in the information this share product on

operating and in or only in engaged potential is actively Developing automate networks. process all where streamlining investments solutions as are our for the core end-to-end and of our customers to leverage wireless a at see step forward. mission-critical the lower way costs every our of software network same procuring, intelligence we Aviat’s part the transport recurring We're these time solutions going generating and to new of steps any simplify innovation the planning, designing, network Our for us. operational for deploying, capacity opportunities expertise streams revenue and of unique

With who that, back on it Eric? our I'll details QX Eric more will provide turn to financials.

Eric Chang

Thank our forum, afternoon, of meeting type investors quarter been Investor is investors, everyone. larger look first our with and efforts the this Aviat our to you, my forward analyst This play intend and community. and role Shaun. addressing many to with in years. prospective with though Stan Good I'm for I’ve Relations working financials in

X.X%. after for financial declined a XXXX, fiscal of All X%. decline by reported to XX, $XX.X XXXX million, periods our XXXX, service noted. our compared XXXX as ended the unless revenue of and We September otherwise comparisons Product relate results $X.X respectively, $XX.X fiscal to or revenues total September million XX, revenue quarter million while X.X%, and first increased

are basis points, heavily in our the gross building XXX weighted XX and GAAP respectively. America gross -- in than Our is points and was second some our last quarter greater more the trailing margin and non-GAAP margin an also year. second ratio anticipated X from towards quarter margin half expect both projects, The we first the the as in was X above which be basis, XX.X% mix XXXX at international book-to-bill higher business On for came XXX representing of and North ratio at also of to had well. book-to-bill on of significantly XX.X% in quarter. it momentum a than X greater also basis one improvement for fiscal month

year and fiscal both gross full the non-GAAP GAAP margins For up year-over-year. noted are earlier, as a basis to anticipated Stan be on

restructuring includes million compared of and On increased expenses On $XX.X an charges. increased R&D million selling, or million, X.X%. increase this $XXX,XXX Non-GAAP our administrative total million, expenses administrative related the increase of operating to were an lead expenses by we’re an expense $X was $XXX,XXX and years. GAAP to expenses million of of side, costs, positioned approximately which million. of expenses, The and sales as in approximately operating $X.X expenses win $XX.X new R&D reported customers in for expenses to an non-GAAP basis a $XX by Higher increase increase selling, we and $X.X in process projects to support improvement was governance the saving in spend and increase believe business. in corporate will primarily related relate efficiencies investments future ensure to non-GAAP employee-related

productivity supporting eye as in although non-GAAP providing Stan modest our full-year expenses related enhancements, the total initiatives, with the on internal for an While earlier, increase not are guidance operating we're a costs noted also added anticipating growth point we we're support savings helping to future. to want to in anticipated are realized lower. that growth the and looking in fiscal identified out support this drive I previously the have which always year XXXX we investments

million of million non-GAAP year-over-year. improvement $X.XX loss reported operating $X.X improvement. Non-GAAP We of or was operating to net $XXX,XXX operating loss a non-GAAP share a compared of income was $X.X $XXX,XXX million income million was $X.XX or GAAP share. And income compared income compared a GAAP of $X.X GAAP per a approximately as net an loss a of million, or share or share. year-over-year $X.XX $XXX,XXX, of to per per net to GAAP $X.X million per $X income $X.X approximately loss of $X.XX loss to net loss of $XXX,XXX for income compared of income non-GAAP

million comparisons, fiscal once adjusted fiscal year-over-year and first reported $X.X we All for Lastly, increase. EBITDA are these the quarters XXXX. $X.X again a of XXXX million, of

the to balance on Moving sheet.

compared $XX.X at $XX.X the as and Our the an stood as end of million. of cash equivalents at million first increase of to cash million quarter year-end, $X.X

improve fiscal as as past from or to position quarter after the cash received throughout customer the seen the we our remainder any in of a days in change quarter could expect We have end. year, time-to-time within though this are payments few given

for position making even improvements in with repurchase share our full of are improve our program. fiscal investments are the We confident our in saying America, support process and year, will the major to cash execution North that projects we continued

program, for we expect repurchase our quarter. available quarter, spend spent first share end $X expenditure During $X.X in of repurchases. quarter remainder year. remained the the of the first million Under was to Capital the million $XXX,XXX at the million $X.X first $X.X fiscal the million for we and approximately

sheet is Cash though made already further ways continuing historical while king, continuing our cash focus balance to at free best. operate on and flow look remains new progress to to for metrics, have enhance significant improving or in we our

an from Our fiscal used XXXX, of first improvement to fiscal flow million of for $X.X the the cash million. cash first operations compared XXXX for in was of quarter million $X.X operation quarter of $XX.X

our declined. new continues level our very which in inventory are through due inventory efficiently, primarily This NEC’s in NEC and chain at operate North quarter increased supply the first America. to however trends partnership industry channel carrying our to was Our partner we

expect improve very with throughout remainder working We the and to inventory of fiscal turns capital the our we're performance. year comfortable

material The million These and this income accounting lease for liabilities standard The primarily long-term leases our adoption most new on the to has to was balances adopted $X.X a to right balance which first statement. of are quarter, obligations to leases, included the requires our assets as in and recognize us associated current Finally, other no liabilities impact and accounting standard we represent in related use operating facilities. assets sheet. liabilities.

the operator, prepared time, concludes this This for questions. open we're remarks. ready at up to my call And

Operator

[Operator Instructions].

from Your first question Theodore comes the of line O'Neill.

Your now line open. is

Theodore O'Neill

I have to the a also the in you've I And that shout about very of got see. out which couple questions on nice a So WTM nice see Ovum, product XXXX. was

looking equally sort you've at customers other? when those is, than single software. design also a backhaul, question one see, both product, the more by XG can got of valued multi-band but solution the they for is important that's Are there chassis the are or So cloud-based customers got this obviously, you've

Stan Gallagher

ahead to So Shaun let Go going Shaun. I'm answer that.

Shaun McFall

that may would that doing significant work, both quite The example of the they them for have most not customers importance, Shaun. and far and the put pretty I I've it. be value they Theodore, some actually to them, think it’s so is of footprint may they for ways tool the of Hi, the of think of value I proposition of customers it’s some most planning product, as it product one do may not clear seen for other of other on say they’re our may we capabilities much because elements or work and I for the customers planning have attractive itself, that alone or the the themselves.

Theodore O'Neill

Because tower? it takes space less up the on

Shaun McFall

Less much All less power. it's lower pluses weight. are space, from smaller in aspect. just proposition that and And a

Theodore O'Neill

I the question that networks had product for well? for is, as the about other private the useful And is your --

Shaun McFall

we’re do But what most of more It's most focused rugged what on networks not long of applications. distance, those there. band use of lower terrain predominantly microwave, It's we frequency type we there, couldn't just there. would a with there's that we're no it product. the achieve achieve typically reason distances trying but that lot use are It’s we quite longer why than

Operator

the from comes of Steve question next Busch. line Your

open now is line Your

Steve Busch

drop you Could versus percent international of was Africa what discuss APAC?

Stan Gallagher

back. release, We’ve have very no that -- got the press that we it's in

of at a look you comparative have a on revenue you look take schedule basis. to if the supplemental area, So by geographical

by that and American the Asia that You that XX.XXX the Middle a of is smaller Pacific then ending geo. is X.XX. East the for is America quarter African, now do we note way And Latin Latin portion and have or group XX.X

Steve Busch

North What closer that growth was growth, a at drove American rate, that. sector take look or? like what pretty high I'll

Stan Gallagher

So, order back had half, we're continue. in first at North of exited year, and of yes, amazing we But the you and increased last year about into our that We talk let's to flow revenue how A the the end it year. back in year. those North just actually projects number revenue lot and private look and America based anticipating an translated last forecast. quickly et last was if network it's big our of that XX% in portfolio based approximately building based was flow on more, also it’s into or it's strong foundation but cetera. that of winning, order built our the actually number on we’re a a public space, America And that in tenders, at and -- a

Steve Busch

answered my You start, any customers? but XX%

Stan Gallagher

Not this quarter.

Steve Busch

kind forward guidance. you are You’re or reason your particular after going of back that current there to re-up this Is holding any quarter?

Stan Gallagher

Yes, so space the visibility areas was year, in talked of we about, we back we especially the like. Africa. one of half And have the that for the international don't the full would that two

derisked to already we But from as forecast. our strong on now in have speak have activities right try them stabilize We we and that. going activities -- Africa

great that refresh job the right we see to now. that think into sure visibility Our making and do a half, half, with to growth Africa sure the have we're some we as a you're creating And lack of of that more a executing first profitable times guidance a going and great of forecasting we I will some get year. have sight right line make we going now, comfortable XX to closer second the that. process But on

Steve Busch

was is, you final question of And recovery the my got I restructuring the guess quarter? for what kind

Eric Chang

about This actually charge we million. a of quarter have $X.X

announced back June. in we about late the restructuring plan So

So to the that related plan. that charge was

Stan Gallagher

in. Eric was that Steve Sorry,

Steve Busch

okay. was I a I see, charge, recovery. see it a not

Operator

of from Your next question comes line Moser]. the [Lewis

now Your open. line is

Unidentified Analyst

network I’m is journal the reading to the beat. it penny new of report says analysts, and am things, $X.XX to sales may a comparable company. noticed I I earned and the it your there be some not the estimate Hi, today then

estimate? how may you comparable And So determine versus $X.XX so not the this do penny the earnings be … as

Stan Gallagher

it's so, the that is is Lewis. apples-to-apples expect Yes, share per to What and GAAP And income a earnings you're would here versus the referring right? share. not hi, per I probably the That’s GAAP that non-GAAP comparison. number non-GAAP,

coverage analyst that would So I to a on for basis expect the per share is we probably correct. and non-GAAP so $X.XX sure comparisons make want the are

Unidentified Analyst

correct? $X.XX, then that, adjusted GAAP would the EPS I am Assuming

Stan Gallagher

It’s $X.XX, yes.

Unidentified Analyst

that Is true?

Stan Gallagher

true. is it Yes,

Unidentified Analyst

then sales you earnings So considerably? beat both and

Stan Gallagher

And would pleased very I point that a with we're I the site, with our say basis performance. on very data are profitable think Well, you year-over-year we given particular earnings on that shared us.

Unidentified Analyst

quarter comparison is the the whole release? press haven't what back And I read

Stan Gallagher

terms year-over-year comparisons? In the of

Unidentified Analyst

Yes, year versus last year at this time?

Stan Gallagher

year the to last this data a $XXX,XXX at if adjusted as I $X.X Yes, point. was year, EBITDA use want you million that mean versus

Operator

of Spiegel. Your from line comes next question Mark the

is now open. line Your

Mark Spiegel

couple A questions. of

have First, this to Is search Stan, are for with happening a on. you that? period the permanent a what's going you, there, job is trial going

Stan Gallagher

have and company. great would didn't And I'll we Yes, forward a future not There The set strong search very in team me here. be We I going have eyes can conviction one. and we that brief on tell the leading you, on transition seamless our everything have to ability a the is on. have if is the a had appointed Board a well. continue moving they

Mark Spiegel

What is -- but does that there one you be Is mean? would fair? that on, So of going search are a candidates. the that

Stan Gallagher

Yes, that fair be would statement. a

Mark Spiegel

a as a holder a years, I've other people. long a Okay. of not few picture bigger This as question. lot is there much been for

to growth there cheapest add which this it's like, I a even company. in -- but stock. stock now up on as to think times somebody way run is realize this asking some around be and rate times come valuation X.X selling you're why I I that's even strategic question are would pop revenue quarter you in you're am mean NOLs. which enterprise of making guys is mean why some at X.X buyer an a questions, putting huge You only pick market great. isn't revenue answer I IR revenue the the universe, basis I without It's the real along But efforts on value any the Obviously, starved not a and using guys buying hasn't right?

Stan Gallagher

what the downs do the us frequent we say vision and ups continue folks we you're and have there. to best tell amazingly you back for the tell on especially flipping way you first this, ask I for strategic out quarter get have going to we and on an are conversations we have some third absolutely I what, maker. our be although is trying you, quarters why. to I'm exactly and tell continue kind I'll Mark. quarter And trend, to of is this data you're a candidate would saw saying one going data toothing attractive guys between basis. our think to you valuation in to point second I and not not do know can big fourth. And can But to Absolutely, perform. I that broken a quarters, if from to trend a be performance perspective with look we've But

be going continued looking focused them. will when we're and at absolutely profitability be those continued So come, on to opportunities growth reinvestment the technology we and for

Operator

[Operator Instructions].

coming from Moser]. line question [Lewis follow-up have We the

Your line is now open.

Unidentified Analyst

on stock of it and is price spoke it's been suppose nothing do with good. you seem to The the I going before. right? you as report the doesn't This stock, just Why there aftermarket [$XXX].

Stan Gallagher

Obviously, action Aviat. -- the stock. due to is expect What continue. to investors I I count the on don't and follow illiquidity, ever for some aftermarket usually there's our can't much I to share that would say expect And who I different our talk not that

and overnight activity the tomorrow period morning. see I whatever will digest news we'll over think the

Unidentified Analyst

which there’s what lot activity of Yes, XXX the of tomorrow, of this a have I like specifically and the out couple follow people be nature, Anyway much higher. much I the of don't coming them earnings days. Tuesday. happens in see last we'll know, reports, But stocks stock should miss

Operator

the the phone. turn to now. back There no conference will questions Stan over are I

Stan Gallagher

Thanks, Perfect. Lance.

So strides thank say bottom-line future. tools and talent. great I reinvestments And performance with due are to clearly set this the we our this making our on eyes in technology, In you closing, year everyone. in driving

for significant Of course, transformative we delivering customers for develop returns is on our goal our But solutions every results and year. our true shareholders. are to focused

sums day. think very the it I you hope day, your the of and that rest up enjoy you I for Thank much.

Operator

joining you This conference for call. Thank concludes today's everyone.

You may now disconnect.

Aviat Networks (AVNW) 12 Nov 192020 Q1 Earnings call transcript