Earnings call transcript Q3 2023

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Operator

Good afternoon, and welcome to Aviat Networks' Third Quarter Fiscal 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note this conference is being recorded.

And now, I'd like to turn the conference over to your host, Mr. Investor of Director Fredrickson, Relations. Andrew

You may begin.

Andrew Fredrickson

and XXXX results you, welcome to fiscal quarter third Networks' conference Aviat Thank call webcast. and

in find a with can call updated of our XX-Q, website the presentation our press section Investor hours. www.aviatnetworks.com replay approximately of You at Relations two release, Form in investor along an today's

will results With me remarks Aviat's David the Q&A. the fiscal company's Smith, our on closing will followed Gray, will then by financial followed who strategy remarks today CEO, are review CFO, Pete quarter. on who by third for and Pete opening begin the quarter, provide with outlook, Aviat's

a As different business regions. products the and including, today's business, but in management webcast, not of economic expansions, limited activity the drivers, may new impact relating and COVID-XX projections, make reminder, to, and statements financial Aviat's during forward-looking regarding statements call to

risks this cause from date forward-looking webcast and These of as and those the assumptions the uncertainties only other company's differ call materially and results opinions to and statements that of statements. reflect involve actual could

events. SEC Form XXXX. differ or filed factors in obligations make in on to of actual forward-looking our of results revision be made these from report revise call the cause statements The light statements annual company on the undertakes information information that on the found XX, could with this future Additional on to materially September can XX-K or no public any new

to website financial and webcast, and management Investor is refer reconciliation tables the call at supplemental reference available Additionally, Please which our to other information. a which non-GAAP include financial section and during release, measures. of www.aviatnetworks.com Relations GAAP therein, GAAP press non-GAAP today's will both and our financial in

Aviat's like the would I CEO, to to turn time, Smith. Pete? this Pete over call At

Pete Smith

joining review grow well ourselves we and results. this year business of as improving from Thanks, against to drivers Andrew, line of Networks’ Thank to Aviat networks, the for broadband position quarter to XG, XXXX. continue bottom afternoon plan as quarter us Aviat and fiscal results third rural you for executed good everyone. and its our private

XXXX, EBITDA $XX.X growth In year adjusted Non-GAAP of of fiscal XX% period income increase $XX.X XX.X% QX year. the of of the operating million last same third delivered which quarter of million, year. revenue XX.X% represents versus Aviat versus prior of

the some discuss our opportunities. quarter. from XG demand this sees In to backhaul upgrade continue. and to increased highlights years that believe are Let's us XG to the we spend strong Internationally, the healthy wireless be see and Xs U.S. Tier come. key cycle. build-outs planning the network XG, third there is related for to at We still Tier to poised for innings business of be Xs demands we lead continues early healthy in will believe that

on in we request X for for the projects Tier about specific, to Tier We're Bharti X be business. Airtel several addition proposals with and several operators. international optimistic Group MTN are our To horizon also working other

replace competitor. opportunities these largest operators decisions of the our to by are Some of global made result

execute bookings continue and opportunities funnel strong $XX in gain share $XX We'll over remained revenue. share this in year-to-day Our over demand. on against take million with of to competitor year-to-date million to these

roadmap X this to providing compared customers meet an ability to positioned attention consumption energy is Aviat’s to customer confident their power to of continue Customers products. to product competitive commitment our need win Tier Aviat’s consumption and reduce We well our compete business in offers. network. and attractive increase and their X and solutions set in international remain leading Tier compelling to with

Rural broadband.

calendar a the will that as growth e-commerce government to year begins build to Moving in We of and customers platform be continue rural broadband Aviat on this was for rural networks. as perspective. their to this a broadband, out accelerate flow from driver quarter our funding confident and of demand segment steady the back remain half

and the saw through we We've several are beginning that and related recipients. on quarter, projects moving RDOF This progress had implementation. from RDOF project engagement orders planning four initial

continue North we business the America new be networks encouraged private private opportunities. network by in are the leader are in market and international There developments our to potential In several business. from

the QX, Since with routers. safety First router we've beginning and won North major five in public utilities America of deals agencies.

and allows because availability the needed while maintaining we high critical network that their networks. have mission network a networks to the We these reliability router for easily for product cost scale operators win effectively

on the Second, based the at LTE, synergies. justified investment the cost private time of we Redline acquisition,

synergy QX, we’ve revenue in possibility Redline private Aviat also our LTE first leveraging access by of North products We and the America. achieved in private LTE In highlighted channels. win

market and about driver opportunity a it moving Aviat We are for believe growth be will this excited forward.

our utility potential outside of network, public core increased enterprise safety networks. we applications, Thirdly, private seeing private and in are

business as transport others and enterprise Connectivity providers diversified means service starting microwave with traditional high delivered systems reducing the uptime are As offers connectivity that no improving costs. understand such connectivity downtime. business is businesses with when reliability critical. and reliability fiber, The longer ERP Enterprises to move downtime connectivity to fiber to more sufficient. from becomes cloud, compared

Aviat’s product this are ideally portfolio to and issue opportunity. capture suited and the offering service address growth

the the radios. update software quarter, to new This wifi an but track In several or third-party to FAS monitor, other designed only not have discuss. application operators and FAS sources customers also of Aviat detect vendors. to third deployments we to and support new is microwave from help our products microwave to allows FAS from use announced any with interference. interference assurance We XX links other frequency links the

operator with expect trials products June one be and North for American third-party to XXXX. mobile our available broadly tier in including customers FAS in currently We’re

this anticipate expanding to our also We third-party health assurance software. capability

most Plus access add marks transport HAS we proactive integration of passes, access This Software and the ago tools. days few the Provision communications access advanced A network further customers predictive Health announced Redline integration minimize products, and using disruption. base Assurance management for monitoring product our solution or acquired wireless end-to-end in products single the software and software Aviat a into and of the to a and for gives

experience customer improves This not platform. features the on previously available legacy management and new the provide

have installed this benefit radios in QX. We of from base revenue that XXX,XXX which can for software, be an over shipping will access

Multi-Band two implemented Additionally, MB-VA in large a top Vendor our we’ve of vendors. APAC incumbent our successfully on Agnostic software e-band from microwave overlaid customer we’ve microwave in radios where separate

the incremental with helps investments. in that in capacity product them great is it to is because which product proof creates to Aviat, compelling costs This add for of networks. a allows opportunity the high us overcome switching customer for point MB-VA lower their network The

with success market in continued this product. the expect We

that chain, supply. Moving in we improvements supply We’ve continue see to Currently, have XX.X% we pre-crisis approximately on to seeing are for XX Also, to components of we returned allocation. remain our way lead We’ve trend our long component come deliver a to done supply microwave months. are down de-risking towards Note times it XX system. chain. the components not X,XXX that approximately but takes performance.

Fortunately, significant avoid throughout Aviat period. has chain crisis to supply able been the interruptions

we opportunity say quarter, supply due saw revenue and moderating. no fees shortages. also This to missed chain expedite are costs that We inflationary would

environment. Demand

and networks public two-thirds utilities. in one demand environment by backhaul. like in spending the comment driven economic of Aviat’s headlines Approximately tier safety private would the buildout has the for Backlog and spending. above wireless respect we steadily on telecom, demand grown Given projections our to our press networks. on one focused fiber over of to tier this the typically wireless Also, precedes fiscal network U.S. the one. CapEx operators, is remains buildout of With year mobile book-to-bill and financial much is

deployments specifically exposure one see the microwave limited typically follow sequence, build out and U.S. to We do not problem. tier our fiber deployments. Given a

press due some inventory buildup broadband in Lastly, to fiber in received rural the has channel. of

providers wireless at we challenged the several side, we the record large and the impacted an field services and both private projects in and mobile network in not our West. have support data $X.X In This On projects because revenue. this. this do snow in rainfall U.S. quarter, estimated million affected the were to of service

further Going a for environment. see forward, environment. contingency. of are to we Overall, favorable strong update the this current quarter, profile business plan a evidence of will we of account seasonality continued better ahead demand in Bookings the the

I will to some comments. review call coming back David financials for over now to before turn the final our David?

David Gray

and everyone. Pete, good afternoon, you, Thank

of and XXXX highlights. in be our today key financial press Noting detailed can I'll During some XX-Q found filed fiscal the release afternoon. this remarks my third our quarter financials review

XXXX As a quarter third quarter reminder, fiscal XXXX, all and fiscal third unless noted otherwise. comparisons discussed are today between

or third XX%, growth we the last driven the America For of million strong to million increase same as the acquisition. Redline as compared quarter, reported as $XX.X for by total Europe, $XX.X from $X well of contribution the year, Latin APAC, in an revenues period million

revenue $XX.X was of total revenue for revenue, third which and XX% America million, quarter million. $XX.X international North comprised was the

GAAP and in started were of fiscal and the margins Gross trend region and North for as XX.X% prior four trailing on our compared XX.X% ratio continue book-to-bill year non-GAAP highest margins to quarter one GAAP above a sales regional America. basis for quarter by non-GAAP. margin XXXX. XX.X% margins Current We XX.X% of were the quarter from of in mix lower impacted and

of operating GAAP the $XX.X by million year, quarter million, Redline Third from expenses expenses. were $X.X prior driven increase the operating an of the inclusion

share-based wholly This manage is like-for-like Redline which $X.X On expenses, million to we a increase exclude due restructuring of an the the continue prior impact non-GAAP $XX.X quarter aggressively. to compensation deal Third year, costs charges, the from operating million. were costs of acquisition. and basis,

increase an $X.X million Third last quarter $X.X provision million, to of tax was year.

We cash expense report reasonable based tax expect non-GAAP of continue at $X.X incur. on per taxes quarter a we estimate our to million to

deferred of continue The value compared foreseeable to company million cash tax income and over as sheet minimal third year. manifested $X.X on recorded generate almost asset We NOLs net of the has for payments balance $XX our million million $X.X shareholder last to GAAP quarter future. will the million via $XXX tax

net M&A-related million to noncash period $X.X $X.X impacts, was same income, restructuring last excludes for year. compared share-based non-GAAP quarter which tax compensation, charges, costs the FX provision million Third and

diluted came $X.X increase of an third Adjusted or the of XX.X% quarter $X.XX per the fully share EPS Third share margins year, in at last period quarter. in million, on XX% basis EBITDA EBITDA for a to were compared $X.XX the million $XX.X was same year. for prior increase per X.X%. quarter Adjusted the non-GAAP an for

Valley Moving the Bank the $XX.X was collapse million of reducing deposits, the the from net forced the customer we end temporarily reducing us collections sudden our Despite on accounts incoming progress disruption, suspend third The Silicon quarter. made for quarter at sheet; and of prior the our to in reroute quarter. to million receivable. cash $XX.X balance

project-based Unbilled increase receivables result growing flow cash inherent dynamics as a in business. a continued to the of

leverage stock supply chain buffer We to our balance and to risk via supplier deposits. continue sheet mitigate

tech. environment grew future quarters. we the quarter the these in us investments mentioned, Pete in our assets allow improving next-gen will as chain Other investments the As supply unwinding begin to during made

to continuing us enabled sheet navigate the balance while strong in the banking invest business. Our disruption to

positive long-term the We quarters in expect investment us well coming to plans. cash moderates, execute generate positioned the leaving as working our to capital

turn Pete? With it Pete will back that, to final some comments. for I

Pete Smith

Thanks, David.

up long-term capitalizing on XG, performance. for drivers private I'd opening year a to Before Thus rural focused XXXX, comments been we on broadband networks. Q&A, our and have fiscal far, in summarize like and few add of our growth

We wallet and share of increase taking are shareholder world, This encouraged long the team over the profitability made and demonstrates by market term. has to in the services. additional of help products, software which the around Aviat's share and differentiated the value value progress will capturing

range year $XXX in year EBITDA our fiscal million to demand profit on range be of for for and our year million to of and raising the $XXX strong end which execution adjusted million. guidance the to-date, be our the affirming as $XX million fiscal to bottom of Based we are XXXX to $XX.X in guidance revenue is now for follows: revenue XXXX this fiscal and XXXX, environment

the With call that, let's questions. operator, open for

Operator

you. Thank line with of comes Our Searle from MKM. question ROTH first Instructions] the Scott [Operator

now is line Your open, Scott.

Scott Searle

job afternoon. taking questions. And the for thanks on guys. Hey quarter, Nice good my

Pete Smith

Thanks Scott.

Scott Searle

how to perspective you a just quickly a margin and margins. the sales into dive terms and bit that going is, mix that so in front, if the could as little otherwise I Maybe and issues high wondering a from quarter services or were were both quarter. level in, revenues sustainable on address perspective June gross was this of we’re the gross

David Gray

recognition Dave. this Yes, in Yes. a us Scott, depressed, margins. were quarter standards, bounce a the -- we nice service quarter didn’t They the little due our for ASC back as spoke you doing? that vagaries It’s revenue had about last how of some we so quarter. to but the XXX are hit

range. kind projects level, the is And driving would was then the that really a of function level think I we of just that. a the was to long-term horizon of like had more that as think we a say over is mix the the but of to sustainable revenue, as closer XX% quarter that size realistic I it the far in

Scott Searle

could, it’s activity Got of and is front, the that you. some planning finally RDOF that like phases see sounds on the if design It sounds now. in percolating. I And nice it like to it’s

towards you about Maybe the it to calendar about bit you clarify to So, skews when customers idea I RDOF the four you’re think Could we this that the were of well, second maybe working of guess start there revenues. and said see some magnitude opportunity. some little magnitude year as a with. half is there that

program. or the recent the that’s of throw that been well, as legislation the to gap which and gap Congress fund for Networks maybe opportunities top replace on wasn’t I’m our in is seeing any if that And Defend introduced of out but plug coming basically Act, try I that wondering guys, guys. rip and opportunity on you know a derivative you for necessarily big you’re the

Pete Smith

Okay.

over So next said four seven we’ve and tail will years funding, RDOF started, out, years off six run the it on three or once years will the it to peak years. right, get it

have space would that back how difficult. believe think out the the of activity do -- we be But design will to We bit year. peak through in the the true. still little see we a revenue we that So half had impact is we’ve we that some

XX projects RDOF the were least of I see top recipients. think the shake in we At need how customers of to the out. those two

So, happy that share the rural we we have we’re we’ve XX% And think to of of pretty prospects customers the engaged. XX% with broadband.

So in shape. good we’re

from last we specific we’re couple our because to But into the on this design impact about if phase RDOF bit We I back us super go the And don’t of community little program. more couple and roll is respect the We think it’s another of more give with quarters be one this coming. guidance. we years to expect. ramp We be to our have coming. [indiscernible] respond. the respect phase or quarter want then we of then and give as to certain another you overall investment think a the two, it’s excited should could clock we it think could it what in We with revenue We got quarter. the

to Then you the legislation, pivoting mentioned.

we Replace the was impact. legislation. is little less than is about tracking there this this So I microwave stopped believe years radios. There is Huawei when Rip two -- XX Huawei and ago there XX remaining

we competitive So it’s what million not can material share booked we we’re them market. for say either or that about and in with networks that competing dynamic, the Rip Replace. gain U.S. $XX But of

trend you legislation to us. that material American so the North is favoring feel we but that So is highlighted the overall market, not

Scott Searle

could, I thoughts updated if maybe India. lastly, And Great. Pete, some on

thoughts if you’re and opportunities for there terms any in from Airtel going opportunities Thanks. into percolating got I’m wondering X Phase inorganic X, Phase forward? You that you order the big XXXX. are going seeing late back some of

Pete Smith

India, still -- a it’s in network. they with as we’re to And position that their very respect build it’s good customer out project. a with So

and So gotten we a calendar performance will half is there sometimes there’s up again sometimes there we’ve our is pick feedback shipments, favorable. they’ve been think the that, and a this on surge, that in digesting And year. the of our back lull,

a the I And for multiband script, chance have what we’ll So multi-band. think the also vendor-agnostic say would in we share highlighted gain. we

really we’ve critical, be single-box that and up made have vendor-agnostic. what’s only we And multi-band set the to now

it where we’re gains. we’re in share sole when network sourced, facilitates not So a

and would integration transaction engage continue getting gone X has across closed last then the anticipated, Redline better in we active on helped So, sellers on and and -- be that’s XX months M&A we would-be in six The months, front, we’re to we And next to us, evaluating I the year. another than announcing goal line. hope say July we the hopeful there. the deal we’re

Scott Searle

could. I if one, last one Pete,

private how front? that that tracked on of in plans, the of from -- a revenue the terms On perspective? pipeline has Thanks. front, with networks is Redline, How that plans? Is line with in specifically ahead

Pete Smith

justify this our with we So not we quarter. synergies. did any And had win first revenue that transaction

it And $XX that -- funnel upside. we over let’s there now So, synergy the million. call think is the the for is revenue funnel

to that. the that see need wouldn’t more about across we going a talked have get And we’re until across And to and because the have. how see now didn’t line So like our I converting forward, guidance. anything get that line, goal we’d into goal few think quarter, we then factor the we I

Scott Searle

you. Thank Great.

Operator

you. Thank

line Erik Our of next the question Suppiger with JMP. comes to

line Your now Erik. open is

Erik Suppiger

the taking for thanks question. Yes,

and you to last in you’ve a incremental $XX talked any Have Is want million. think do backlog being to the Huawei? you On -- just could are I those I think identified clear, had front, And on update I update other. are in that the $XX have said Those funnel deals I is then identified. you had to million any you amounts. revenue. be there on think that Huawei of -- deals and quarter million $XX that you market each was about replacement that there of be about separate

Pete Smith

deal Yes. I our rate $XX about would million. say is funnel

I bit. the has that did And you it’s little now $XX entered it’s number, yes, that about grown backlog. So didn’t -- another cited million pick say Erik I that up. a And

if you could it So ask again.

backlog So million you funnel of it? $XX Did color want is about on $XX right. million,

Erik Suppiger

from Did had wrong? those? you you in I say Did hear $XX revenue that million

Pete Smith

did. I

Erik Suppiger

or from incremental $XX separate the million $XX the million? Is

Pete Smith

backlog the because in not It’s shifted. we’ve already

Erik Suppiger

want clear. just I be Okay. to

competitors, of of like you or who in competing or you -- seeing business? are Redline, are the Ubiquiti In Cambium terms that players some with

Pete Smith

point. access mission-critical engineered significantly is Redline So

at my don’t at or all to all knowledge. not compete we So, Ubiquiti with

opportunities Ubiquiti. that maybe -- the of compete with So let’s say X%

occasion, I what And that’s with we they’re Cambium. compete yes, in a But would think I different do that say. on segment.

Erik Suppiger

Who the Ericsson Is are of you that see you frequently? seeing? likes would it more

Pete Smith

bit a Yes. bit A Ericsson, little little of Nokia. of

Erik Suppiger

the say talked to -- a earlier, existing Okay. And Aviat? selling mentioned customer? Was Or you had new that completely had about was Redline. deal did with customer you new a that Redline into deal you deal an

Pete Smith

Redline historical into a Aviat customer.

Erik Suppiger

Okay, very good.

thank Okay, you.

Operator

Thank you.

comes Tim of Markets. Our next Savageaux Northland of question from the line Capital

now is line open, Your Tim.

Tim Savageaux

[Technical afternoon. Good Okay. Difficulty]

Operator

Tim. me, Excuse

hear We’re you. It’s muffled. unable to

Pete Smith

about? What

David Gray

That’s great. Great.

Tim Savageaux

now? me you Can hear

David Gray

Yes.

Operator

Yes.

Tim Savageaux

All right.

Sorry about that.

New question. cheek to go with dispense straight my I’ll the headphones. reintroduction and Well,

that So backlog, it in $XX million $XX sounds million $XX right? for replacement, Huawei million is shipped that’s like and the bookings, in

Pete Smith

a $XX backlog we about million we So have million about funnel, said, $XX shipped. million and in $XX

David Gray

the plus backlog. adding yes, the revenue So

Pete Smith

Okay.

David Gray

XX Get yes. million, you

Pete Smith

Yes.

Okay.

Tim Savageaux

right. All

Pete Smith

better David’s that. at

Tim Savageaux

Well, through pretty book-to-bill, generally go I a speaking. say to only that just that’s good

And so you mentioned and your business above networks the that the continues book-to-bill one. to – I on discussion in remains your think build that private backlog

bookings On Huawei note seem the of really think you that of dynamic hand. and apply type side, described is appreciated? there it the and color to didn’t these side carrier some you CapEx on on other, assume than replacement, one booking to the level magnitude would of private and are carrier on kind to third, order that much But what higher concerns network I or as safe that you on seeing that be you’re which any one of is high the address side, they the with book-to-bill the

Pete Smith

is typically think accurate, what carriers said, you I book-to-bill disaggregate between with we private although probably and networks. Yes, our don’t reasonably that

David Gray

Yes.

we I estimate correct, think Tim. work, directionally your did if So, is the

Tim Savageaux

but was that wins XX% there, that the current some seems business are quarter. there’s in at there those you talked overall new customer made. MTN one of you Does of profile like And there’s opportunities MTN the you the some dig with the can us kind front or still tier Obviously customer, in kind about Great. there? some that of a or of given discuss commentary well, of reflect let’s into

Pete Smith

– it’s I both. we think say I would

had great wins share front wins at We to meeting come. Congress, been we Africa, of have it that of a and is their part We the think more have in it’s that of in with and we them have gains offering part and I some of so issue, Mobile more has we it’s there’s got attention think Huawei World the our multi-band and us. and

Tim Savageaux

of in kind of a drivers I’ve issue for related seen seasonality which Great. other push California. fashioned a high the And guide is And on some guess here sequentially old in and but substantially I – in resumed level lot implicit plain weather pretty I question for to Southern there pretty your Is quarter, probably of and last note in to into QX want very the be India. revenue? mentioned bounce addition, lumpy, June. circle significant Or are fiscal can back me, obviously positive kind But you sort has in you down of come to kind certainly But up part that that the APAC a there? India. of any of activity of saw

Pete Smith

our in APAC back year. the I next the of think half probably actually calendar lump in is

North growth the not our the be that poised the at regions. it’ll international the America buildup. a year think of end the We is of the given of across great cycle continued just or – year that have So driven of and by the anticipate to sequence QX. end India network then don’t I

Tim Savageaux

Okay. follow up on margins that? in you North mixed expectation said question And there, real should just me let from on But given perspective last sequentially something gross America, we strength a pick here. assume for just that up

Pete Smith

Yes.

news So you good Tim. little me, to out squeezed more a

Tim Savageaux

Thank you very much.

Operator

with Dave Thank from line question comes you. now B. Riley. is the next your Dave, for open. line One Kang moment our of

Dave Kang

Good you. Thank afternoon.

last number? is, quarter I this million. backlog, was First missed think was Pete, I over was think said question What What I you the $XXX it. quarter?

Pete Smith

over $XXX million. remains It great.

$XXX backlog – here, only the at end. on But through started we every quarter we qualitative this, the just year perspective give year. a to million So, number once

to have than been We our – has greater book bill one.

next our at be it and expect we’ll million. $XXX to over – end backlog the at – quarter, we when think we So report

Dave Kang

products I are that? or about down any on times. color And just wondering lead mean, it it. Got gone Has times. then or your up lead your

Pete Smith

Our lead times stable. are

our So, been our have – and on-time better. deliveries we last and had review our never week operating

they competitive I but three we I they lead lead review, our rattle And been operating think, competition. look I our – benchmarking don’t as So haven’t on as in in so we on-time our do our advantage can’t off, we think years. are have have over good at times an handy, we delivery, times, over we actually our them but what

Dave Kang

of reported times lead have So peers they’re are some shrinking. your that

So to will – down. lead that with start go that’s a one go your mean, starts starting to I to the be of kind will your reasons backlogs your shrink be are time if why of backlogs similar situation down?

Pete Smith

lead let So our So go back to me right? did beginning crisis. we the some, times, of the chain supply

we and work of our So And a but that then happen, getting chain lot shortly ensued starting the inventory it worried that didn’t because sick bought February, about but thereafter of the bought down, need were supply we the did Well, we actually we to crisis. that we in suppliers missing XXXX. March shipments. reason was

last the kept years, chain We’ve carried through times crisis more three we’ve same. the So largely inventory. our supply lead pre

have not we’re times. lead extended – we didn’t So

lead were at look if get lead our to and times, you they’re same. now, times what I the can our – back we pre-crisis and on you So but

So, going demand lot have to we’re chain not of about. questions a supply what gap, the is which a are

me one go change any our ability further. we supply to step going to at lead And We shrink we – And environment, do demand the let the demand the in or gap times. demand comments times about in due profile lead script a our good to demand see We’re – is think any environment of the not we first because our can that. not have good.

gone XX we $X was back the in any last of $X announcements, zero quarter million. it’s missed roll revenue quarters you the between typically, earnings If And million. one most and

we didn’t have So and much due crisis we missing supply, any. demand pent much have the we up quarter do over historically very have very not didn’t this –

we have don’t So, catch demand. up any

crisis. over and COVID it’s sick to ability because didn’t worried it last miss chain go shipments. been us to been positioned largely our well then three supply the steady. has the and years we the make But into Our demand suppliers COVID about were serve And get

Dave Kang

Got it.

David Gray

field our other backlog ability one of And I of is on think projects any in point, out largely and more than premised and that timing to constraint. kind install so the the supply execute our

Pete Smith

Yes.

David Gray

Okay.

Dave Kang

for does is next $XX Got about last – Redline million million my go should track this then And that how question it. fiscal on think to year? Still $XX And on fiscal we where revenues. year. – the for

Pete Smith

the just in we're for track on to trending Yes, a in Dave. line. get deliver And but on bit to bit direction, out, We're EBITDA the on a traction that right before put little like sales it's track more synergy number I'd little more $XX the million. we

wait quarter So and update. you give an one we'll

Dave Kang

you. Got it. Thank

Operator

Thank moment. you. One

of next O'Neill Research. comes Theodore of from Hills the Our line question Litchfield

open, Your Theodore. line is

Theodore O'Neill

Thank you very much. Two questions.

there so of is, First out sales. the Is systems? the dynamic reflect product the strength – there And that building offsetting for project revenue the a service nature was just and in overall with partially North American does quarter. was year-over-year strength between down service your strong service products or

Pete Smith

projects we project nature in of the last puts our I to to year, margins is lumpiness it the building the we yes. quarter, go of of our when in about answer And why that's the some lot in right, Tim's a link systems. definitely the fourth project It's question nature, expect asked hitting. out business, see up if back we quarter And North was if and America the

So it's deal. of really project-based the lumpy nature a business

Theodore O'Neill

Okay.

sales? unbilled quarter implication million $XX And that are quarter. any for in the the so have upcoming Does receivables up

David Gray

at to of do that is No. yet structure been the contract. but ability the recognized things invoice the I of of the is have but customer the project the it's or of end as nature. It one dynamics recognized sales, the – an mean contract for because what sales of based the on invoice not has payments unbilled milestone or

Theodore O'Neill

much. very thanks Okay,

Operator

moment One you. Thank please.

Woodruff. of Our next question Essi with comes line from K. Paul William the

now Your Paul. is open line

Paul Essi

Thank you taking my for questions.

is you bit if maybe see of you do this the And capture new market guess HAS of lines, addressable First a much you best the you frequency question, along product. can right information that could you And a now? year product, maybe on the would share two And agnostic What guys that? how out? think if – that of timing same market? what's assurance share where can little total or reasonably agnostic that

Pete Smith

That a question. [ph] was long

trials the in we X. that – are a think trial we rather network FAS it have Tier the multivendor I'd on will FAS, translates So vendor compete where hopeful this on not in private does comment software helps we underway. will with multiband North we I We're America is that TAM. us to similar – it does, a what – that, on the And But networks. agnostic, the what release

size, XX% What And microwave we part more think our on in it's in us software then we will share your HAS work question, release June, the to margins is higher at radios. think than billion of we business less we're other $X competitive of And is piece. because and help piece. will the win the microwave radio the going market

of And start half there. to have we revenue the calendar think so the back that year we should

Paul Essi

great. lines, any of and next stimulus six as in months market last roll starts And to to question. technicians along do deploy labor? seeing One labor to you also constraints out the the some XX product? be this get issues. the those Labor you Okay, some your you – there'll to are shortages maybe or customers Are trying expect tightens these the of that

Pete Smith

We relationships. have great

relationships have folks, our have parties. own install great some and we We of third with

have issues. not install labor any We run into

in seen This not and are quarter, have apply to labor due forward. not snow pack, but we any issues, we couldn't labor mountains have factoring issues labor any going we the that

were that no lot issues on and front. there's our preferred vendor, capacity their a installers think I of

Paul Essi

had. I great. Okay, That’s Thank you. all

Operator

you. moment. Thank One

question Suppiger from next Our with JMP. comes Erik

open. line Your now is

Erik Suppiger

Yes.

are Huawei the get the where orders they is Just relatively a that expiring replacement? What for backlog or to those of follow-up. is the going that's extend orders out Are something replaced near quick Huawei contracts term? timing where of

Pete Smith

contractual will the situation, to security the probably to much in is backlog the respect – the us, Huawei's our not would or – over been the six because share XX that's is us to think don't to what that's But answer. I it there's dependent to I we too bit And right? on Huawei So in customer it's driving chain. are play Huawei, two that months. negotiation. give little their out think supply not who leverage typically, a going difficult with contract next disclosed With and situation anyone the look, network is things interruption

Erik Suppiger

good. Very

you. thank Okay,

Operator

you. Thank

next Our AIGH the comes Management. line to Aaron of Capital with question Martin

open, is line Your Aaron.

Aaron Martin

and quarter. Pete much. David, very you great thank Hi,

you the that from you you the haven't that got into a you're going really that, roll sure get the booking Should because wins to on of the schedule incorporated you where said imply you're were multi-year the that not RDOF I guide out? schedule. wins that On and to these have sense

Pete Smith

and multiyear And we PO. there's network multiyear, design the we They're planning get basically not funding behind demand think the it. stage. think POs are but this But that that they're at – is to initial think going there's and a we multiyear

Aaron Martin

to Okay. the the recognizing from see think you radios this. you And said expect could that I revenue on into XXX,XXX mentioned you software side, existing – benefit that

said to QX. revenue you calendar Was next recognizing think QX in or year? fiscal I expect that QX

Pete Smith

is the clear, FAS trials. So let in me be

trials. in is FAS vendor-agnostic the So

– see say, Redline we for June. products, of in we'll released see on see mature order we Redline's we as will certainly year, we'll we for the half products that back the expect think that would an year, revenue the but we will HAS where trials sale sales. calendar on don't that, the those have get on I pass the And into be orders. the in this back that Maybe then on half HAS So of

Aaron Martin

thank you. on progress. Great, Okay. Congratulations the

Pete Smith

Thanks.

Operator

now Smith Thank to like to turn for you. it Pete I back remarks. would closing

Pete Smith

in continued look progress. the evening. a and We joining keeping Have Thanks our your support. and everyone, for good next the Great. update forward Thanks, of informed for Aviat. interest you to

Operator

Thank may disconnect. conference. you program does now and you in This today's your the for conclude participation

Aviat Networks (AVNW) 3 May 232023 Q3 Earnings call transcript