AVNW - Earnings call transcript Q4 2024

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Operator

Good morning, and welcome to Aviat Networks' Fourth Quarter Fiscal 2024 Earnings Call. [Operator Instructions] Please note this conference is being recorded. I will now turn the call over to your host, Mr. Andrew Fredrickson, Director of Investor Relations. Thank you.

begin. may You

Andrew Fredrickson

welcome Results and Networks' Quarter Fourth Thank Call to and XXXX Conference webcast. Fiscal you, Aviat

You can www.aviatnetworks.com find in our press release and section replay today's our a the updated of website with at along of call. IR investor presentation

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

webcast, statements As business, may a economic reminder, to, guidance, during today's not new but business forward-looking call statements Aviat's and could and company's products involve regarding projections, other in to expansions to actual fiscal management only financial call activity statements different limited opinions of relating of that make and including, and differ drivers, and from the and statements. webcast regions. uncertainties cause These reflect and the date this those results materially risks forward-looking assumptions, as

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

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

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

Peter Smith

Andrew, and morning, good everyone. Thanks,

and of EBITDA contribution of from the year. Adjusted of quarter which XX% non-GAAP quarter versus Revenue adjusted $X.XX, of net of of a the QX achievements. Pasolink from and Highlights total the Networks' acquisition XXXX Pasolink non-GAAP year last income include XX% from million, $XX represents quarter. third the increase discuss of versus and $XX Aviat million, growth fourth quarter. EPS fiscal in results EBITDA million, accretion fourth revenue full Let's $XXX

the year million, $XXX XXXX, growth revenue For $XX XX% the year, of achieved last Aviat up fiscal EBITDA fiscal full X% adjusted of prior versus of million year. versus

in Aviat's core reflect Let's fiscal gross Aviat We expanded accomplishments and the year. on top grew XXXX. margins versus line last

perspective. acquisition Pasolink plan the exceeded and profitability a from closed we Additionally, our it

to necessary portfolio This strategic our to business us the bolstered profitably these international in strengthened transaction serve scale product our Aviat's give markets. customers and significantly overseas

are pleased our with in ahead and We of made tracking plans have the we our investment thesis. are of integration terms on progress

from $XX increase quarter, in the contribution. starting quarter's Now an let's revenue the discuss prior with million, quarter We Pasolink grew highlights the to revenues Pasolink. versus

the quarter, in acquisition non-GAAP was net accretive Importantly, XXXX to line fiscal We Aviat's accretive first and coming Pasolink stated being on basis. in shareholders. in financials commitment confident our to income the the EPS which EBITDA an business Pasolink with is adjusted remain

confident remain we desire support ramping and more Pasolink powerful a the has We been fiscal has for Aviat's of on solution to and feedback strengthen, XXXX. this in communicated. applied voice to released the ProVision continues process recently network and revenue customers Pasolink been with Pasolink the dialogue management Our in took customer Plus.

software software This on our ProVision up business XXXX, Access with for on capabilities software Plus this XXXX. fiscal opportunity a expect the in field. sales represent line radios, and Aviat active in ahead. management as fiscal over will Aviat's Pasolink such and FAS our in record Based from years the significant network we product other on radios XXX,XXX in competitor strong

we distinguish but to continues the as from as on Aviat XXXX. to in within costs year networks, disciplined second business. private fiscal costs is reflected contribution remain, down earnings in continue In itself fees remain Transition anticipate leader. of half a ramping the Pasolink We services

In from the quarter, incumbent. customer we had a significant converting a statewide legacy win, a new

and Aviat private takeaway project because Aviat this was FCC to of this share incrementally revenue initial for about secure year. U.S. excited Based demand to products' of the last fiscal customer. this service we its networks to XXXX. can anticipate able in of and safety performance are public provide filings that to as We versus level added our on

far past the is and so across statewide months public safety public least seen incidents outages reliable gap and emphasize the the between that year. networks modern. XXX There reliability importance networks. states the U.S. have wide safety At There been a of have the several many most performance this X outage over least in modernize

networks, Given to across growing is of networks. modernized the desire capable a safety these the nature data and of these the critical all travel that public technology bandwidth in U.S. networks that are and increase ensure handling there and persistent across significant are

growth expected grow networks government for a and for confident driver X%, city in Public to respectively. healthy Overall, are safety infrastructure remain the being local budgets remains and spending top and public continuing Aviat and is XXXX. State across improving remain ahead. and expected We private state to X% budgets a for anticipate safety priority tailwind fiscal years grow spectrum approximately in X%. Investing this we the in political Aviat.

ARPA of funds remains end customers the as with year. obligated calendar must funding this by be top ARPA government of mind

number to on country X the grow well in to mobile deadline Our as base. Pasolink international radios bright In team in continues continue spot our ARPA projects of for business this India approaches. large the remains Tier as assist Aviat build as remains U.S. networks, engaged a as Aviat offset softness. to deployed related with the customers we

their anticipate more highlighted to market. from radios. as opportunities world, networks We Aviat years. Aviat by certain like largest German continue the to technological government foreign move leader this as our next more as and of the view to to to the within decision X involve from an was increasingly they vendors India the a for come gain in share away competitor in Operators opportunity Multi-Band remains incorporate E-Band Elsewhere

given our approximately In products current a above our optimistic at are year demand And continued WISP share. a of overall experienced rural store and of had from from rate portfolio Revenue strong store the broadband, services, customer in strong represented we XXXX. market with the Aviat we our convert we X% base. and can fiscal revenue

as delayed such spending programs strong and material RDOF to filing few this disclosed a keep will Last, Government helped comments our weakness space. previous around XX-K follow. in

shareholders. disappointed our to apologize in to our first ability timely me year-end a were in our complete We fashion. audit Let

personnel quarter This of coming in had not weaknesses performed being to turnover we key third fiscal material XXXX. This fiscal control out as our is related the led otherwise overshadowed XXXX. good The of story key an accounting to is designed. turnover

it appropriately. financial our our Although resulted in this are review internal has in certain resulted we of is changes The disappointing. material which still not undertaking recommended controls to results, improvements,

the acquisition, fiscal We weakness, of delayed reearning the to putting and Pasolink with material look forward process this anticipated, for order which complicated summary, of the XXXX. event more XX-K led together a In trust shareholders in the made behind likely and filing. to our discovery than we us,

was function and ABB review to for the Honeywell, Michael Honeywell's segment. where at President over I'd like quick the the that, Michael it segment year, and joined Before provide introduction. Michael of CFO he turning to and Prior a of finance Energy various Vice financial fiscal led GE. results and from Sustainability to businesses to Aviat quarter Honeywell, Solutions

and that, Given multibillion-dollar grow to and markets, business turn will different we and Aviat's his discipline provide productivity as its over P&Ls throughout operating will upgrade Michael Michael. I organization. Board it ability past With Directors believe success to process and leading scale in of the that end I Aviat's continued

Michael Connaway

year Thank highlights. XXXX quarter XXXX And detailed otherwise XXXX are quarter I'll some fiscal on of between quarter financials similar the please you full be full unless in year-over-year year follow comparisons press and well XXXX and of morning, good very review fourth comparisons and all release note Pete, year that as the break much, noted. key fourth and can found discussed root the fiscal and our fiscal Xth a year everyone. of our

of of million an million total for total period the comprised North our year of ongoing quarter, which due of strength America, revenue to $XX.X as XX% reported to X.X% same we last increase year-over-year. fourth compared in period increase million the XX.X% For same the revenues an from $XX million, was the for quarter private last year, $XXX.X $XX.X or our business. networks

For An million increase the for million, full period $XX.X fiscal $XXX.X year. revenues is from year the or XXXX. in million quarter. was International same XXXX, North $XX.X versus of America recorded the of X% last up XX% revenue which

company consolidated year-over-year our year XXXX, growth. versus our year, fourth An increase in total, $XXX an the in with year. million versus revenues last our year finished of million of had XX% And XX% fiscal million XXXX $XXX revenue year-over-year. of million increase consecutive of $XXX $XXX.X in we business On in international revenues

of ending was the our year at backlog versus the is This reported million. of prior backlog Our $XXX year-end up $XXX fiscal million.

we on GAAP the compared a a Gross prior XX.X% with on business. XX.X% basis as margins XX.X% a for were to avoid year. and project-based As non-GAAP in XX.X% a GAAP report inherent quarterly metric annually the this reminder, to the non-GAAP on fluctuations quarter and basis

third gross This the our and project XX%. of quarter fiscal margins margins improvement by increased software business, XXXX impact driven from was mix and as versus core Within the benefits were strong as from were freight optimization. result and non-GAAP XX.X%. improved the well logistics Pasolink non-GAAP This cost gross by regional driven for was quarter scale sales.

as benefit margins in from We continue our and supply during to XXXX sourcing footprint to fiscal continuous continue expect warehousing the gross operations. our chain to rationalize Pasolink improvement and products from our improve we

core Pasolink-related driven a of in from year-over-year. an GAAP increased XXXX gross were million increase XXXX, expenses. $XX.X in an increase the about of XX.X% the operating were include year, of in core X.X expenses GAAP quarter million, million versus In million restructuring Aviat's points expenses approximately year-end charge. $X.X aggregate, margins expenses OpEx, XX.X% Fourth and prior $X.X by $X operating addition profit R&D

Pasolink Aviat, is the opportunity executed of continuously costs. rationalization that Pasolink of operating charges, an business. for company's and cost quarter. the we share-based increased seek by $X.X restructuring driven aligned cost R&D ensure Non-GAAP deal $XX.X yielded impact million, exclude million, increase the which expenses, and that At in an to properly our on with structure we The footprint costs were compensation

down basis addition XRF structure we year fiscal costs ramp As transition related in acquisition expect ramp expenses fiscal as Aviat XXXX. services reported normalize OpEx our be a acquisition, Pasolink to report XXXX. our of this a recent that offset throughout down result of Note of second NEC our as the the half to financials our cost continues on will we operating with the with the

million, quarter year. fourth was compared tax last provision million The $X $X.X to

NOLs share-based or income, payments losses the reminder, generate excludes foreseeable will million and of minimal that approximately a was As company operating future. cash tax $XXX net has income provision compensation, which for via restructuring GAAP net million. quarter charges, non-GAAP tax value costs, continue million the M&A-related and noncash $X.X the to net $X.X shareholder was Fourth

on in of share EBITDA EBITDA was full was a Fourth year or basis. the at basis, or quarter -- $XX.X million revenue. X% in million a of non-GAAP $X.XX per million in $XX fully $XX.X an diluted XXXX adjusted On $X.XX quarter EPS came increase fourth Adjusted XX.X% XXXX year-over-year. versus for our

million, marketable our $X.X $X.X the the to securities million $XX.X by to in quarter. on Moving positive balance of operating cash from increased activities million and cash sheet, by driven

of are quarter, position in As million. of a $XX.X net of the we cash end fourth the

the we to final $XX.X cash Pete For turn that, for operating Pete? from back I'll comments. full it With some of million. activities year, generated

Peter Smith

Thanks, Michael.

and and acquisition guidance, the beginning closed Before of discuss providing fiscal in fiscal like that XG XRF July. private and XXXX. announced LTE transaction our is their Aprisa I'd was to radios This ] narrowband, known line point-to-point of July for globally at our [ in tuck-in product a routers. our XXXX XRF point-to-multipoint

Zealand. The in Aviat's company Wellington, New XRF's North from American customer facility in based R&D is utilities. primary Zealand, is kilometers New base

and successfully engaged our the with American have in Pasolink integrate able business, confident North nor integrating we our neither Zealand New teams quickly that being are XRF. to Given

diligence process, regarding by XRF's feedback our through the and quality highly of we products. customer Additionally, were encouraged reliability

Aviat's cellular and XRF which of well some were Since are utility addressable and are million approximately previously of Although network $X.X opportunity, not are SCADA the Aviat, approximately already our immaterial in router about strengthening we overlapping, excited market to U.S. neither we about safety success. This our customers and is XX% $XXX the the Aviat, private the billion opens to as customers access markets. we're excited XRF's of cross-selling portfolio. today seeing to wireless Aviat public industrial market it as the and compared brings

as and in private opportunities for Aviat, storage to unique networks. be should offer wireless connectivity expect projects to modernization and bandwidth portfolio have within grid energy drive to of a Aviat's will XRF With more margins. investment shareholders XRF, Ongoing Aviat networks. infrastructure, needs resilience, compelling overall these and part accretive we gross private

$XX million. to through being earnings a the the on guidance. million pattern first order to in Based of establishing on our fiscal the guidance revenue $XXX to EBITDA be our to quarter our in perspective our to the and fourth revenue company's the and with as being expect build we smallest Turning we adjusted largest. fiscal million; current Based range outlook, year year follows: revenue of the range backlog, $XXX from be $XX million XXXX are to the and quarter

OpEx fiscal XXXX, services in X during as late operator, that, first With end QX. we In for Aviat addition, the questions. up XXXX the wrapping will transition up of let's open fiscal we quarters be agreement

Operator

comes [Operator Partners. Searle ROTH first Our Instructions] question with Scott from Capital

Scott Searle

maybe dive available part Pete, And the it's quickly on Any that, to comment to are that terms given that in time material terms remains I this guess of behind in pretty just of weakness. update number restatement, get like in still you front? seems taking small us of Could what historic outstanding it's on that the of of kind the details as it. done. amount on it a

where 'XX. the QX it's in kind Could were of so I $X had take revisions follow-ups. numbers? through those think and or And of historically about us in I a couple just you million fiscal both

Peter Smith

Scott, I will on lead part. Yes, this the Michael think take

Michael Connaway

Yes.

So the factors there were that material X -- I'd say drove weakness.

in turnover The in personnel in first finance was -- the some XXXX. department one. QX key, say, of That particularly I'll was

effectively, needed third, controls And in in that the half its the then with to that particularly second, the some control quarter the third really improve particularly performed COSO leaving of the personnel the were monitoring The also company there and back conjoined framework. mentioned. weren't I year

X the fixed remediating being the So scope material year. XXXX. to of of already way well getting are every us behind weakness drivers this their have and we the within the within first intention full on And

on So little update and the that's a bit drove weakness material of an it. what

As X revision, to the it drivers financial relates were there main statement of it.

and to cost North in any America the upon We that review an true estimated incident think checks, up we see complete. was through services was exposure its in further the in one contract, arrangement issues back we had second to particular, our and One contract to of didn't recognition internal that isolated American that book. North and the revenues revise built criteria, contract then anywhere distributor had XXXX. the the that else review revenue was further in upon meet go And other didn't

the So those are big X ones.

Scott Searle

bit to fiscal from just helpful. And of Very you'll Pete, dive that little time. like September maybe is maybe the the December start you. how sounds terms in, revenue quarter visibility the year to the continue how guidance looks to Got the for then, into in detail off a at in year you provide build a the Could and of It more 'XX. course current of over building standpoint. terms

and that, And the customer. if kind quarter headwinds America. issue that in, address in as that part America you outlook maybe Tier as of was well from extremely North wondering North X the of let's could June for couple I'm strong despite

Michael Connaway

business. distract then from and it The the of perspective. be what relates and -- seeing year of Yes. Tier audit the in revenue Maybe I'll now, focusing we terms execution the management QX from expect XX-K look, and delayed the on Pete a we're But QX to lowest filing as pass take the part the profitability Xs. to it so to over of

muted in revenues range expect see we million quarter. the $XX in point. this the So talk million the quarter growth at We'll revenues. on $XX We to

Peter Smith

be expressed in lots Tier years, say and CapEx big pronounced Scott, we've of Tier right? there's in been unaffected. between projects. so QX, up we going completed the of if in we that let And which we most Tier past where to X been over me project. largely the quarter, this about would spending, back Xs, part, couple X the some it's And We're last concern a U.S. about look and headlines pick So -- we

with the -- through And that have we I time they're couple publicly spend. adjust they traded, that our our say a also would things would muted materialize, are way. MTN, you of CapEx if funnel January a we June in frame, talking in guidance in about a see then And positive if we

of U.S., the from say I I the in to in CapEx, up when and bit microwave we were cycle words late a fiber use we reflect by is and this industrial of think and were And would on So the why equipment little down. Tier kind quizzed background, a Aviat. spending is X headlines more Africa my hit driven business, on were the suppliers meaning not some

because it's rural the you that And the and think over the headlines on the seeing keeps areas, the couple get years move we're suburbs I us. the having impact short-term built And microwave a now, were as to past out networks way CapEx going. of right

Scott Searle

and on was bit you to sounds going gross a And step-up could $XXX if into June second standpoint. I'm get if Got of there to you. And could, the as It million I'm queue. comment standpoint upper quarter. up of to looking from the comments like that then guidance. quarter follow one, quarter, $XXX range, the well you're last September at averaging nice Very little NEC and a fourth a But on more. helpful. back mid- your million to from I'll Mike, just wondering the in one at revenue end margin Basically, both a looking I the if

-- of of 'XX how looking back into the me, first wondering excuse we're calendar 'XX. half half the December at that calendar quarter and 'XX into as continues calendar the I'm

Michael Connaway

kind progression just, see is more I'll point. across then XXXX then up shaping of muted Yes. Maybe That put plus revenues is revenue Pete the way bit the pass in million simply, rest it on over just to your quarters little Pasolink. QX on mathematics. of I we maybe I'll do and the that a the just confirm and $XXX would in

Peter Smith

way, the that on side, it bookings are And we modeling that the Yes. September ramp. would And Pasolink quarter why support right?

acquisition. investors of the lot a ramping The is incrementally think I incrementally and are up. worried about So performing acquisition

and -- to confident we funnel the in our and so leveling we're more the Pasolink/NEC Tier getting offset And -- more in decline transaction, to or our off Xs. need work in CapEx

Operator

Our next question from with Lake comes Street. Jaeson Schmidt

Jaeson Schmidt

'XX. 'XX? sticking fiscal sort numbers of fiscal if have Just with sort you for coming any guide could into of share backlog Curious the you

Peter Smith

million. $XXX

Michael Connaway

backlog. I of remarks, mentioned is million, we're at so Yes. mean a on we $XXX a was the on it year-over-year right around in little basis up kind bit where

Jaeson Schmidt

then that mentioned But Perfect. Okay. business. you is Aviat expect growth to I do And immaterial business core know in XRF here fiscal 'XX? you the compared from

Peter Smith

it little a amount see -- of we'll contribution. say of be and earnings will bit see growth, would we'll immaterial an I

growth. good transaction. a Tier I seeing the of U.S. so what in be but we're So mean, on with overall the so bit far, XRF growth offset X little little space, Aviat in bit of will the

Jaeson Schmidt

line just to would build be in one and down I'll able in Got given you. fiscal for the to throughout expect And the September. queue. just also But I jump sequentially will number 'XX. you margin assume top back be margin gross then gross the me, last

Michael Connaway

Yes. when about the Jaeson. dampened bit given it We will be of the you year-over-year, a mix just margin some little basis a year mean full on story gross do. dynamics, think I

will pretty just effect course, dampening So business, for a on bit that a you'll of from in of ramp perspective see have little the volume significantly given a margins gross mix. total Pasolink, year-over-year the

to And piece a alluded America dynamics. in Tier were apart, then if bit perspective. just sheer you pronounced X more Pete from that it's the That's -- to volume a North

that effect. fiscal quarterly how of of just answer similarly year your to we margins kind has also expect dampened will see standpoint, bit a from a a a question do margins specifically XXXX gross But gross progression So more we mix from throughout modeling improve standpoint. that about

Operator

comes Research. [Operator O'Neill question Instructions] Litchfield Our next Hills Theodore from with

Theodore O'Neill

and the give share trend on is question there. my the you Congratulations XG your in perhaps sort could results a us for if first business mobile and private network view market of quarter. on Pete,

Peter Smith

Yes.

in look favorable and a QX respect network demand, in U.S. private the networks, the quarter with our was would direction. incrementally the We highest X at of Aviat, was a it's So say share -- favorable to 'XX years. in FY the trending private XX last that's last revenue we in the in principally highest quarters.

CapEx about then our And for -- mobile network that Tier Xs guidance Look, reason -- -- share is the U.S. the you this asked operators. are muted. the is

also is or -- the I the What so muted CapEx environment but spending Pasolink core Xs Aviat We see historical the favorable. say underperforming the Tier are Tier in muted, Africa. should Xs in is

of the kind geographic that's So spread Tier of Xs. the

to would get when that risk and any respect diversity, I did that's the have would customer, And we Pasolink we with true. -- thought single say, more certainly get transaction, we less geographic

Theodore O'Neill

do my report of you adjustments at the first how -- Okay. had much to minor was what asked share the all. relative restatement, work impact the and clearly to to relatively actual echoing And reconcile price is by the of the and question analyst sort regarding the other

I the back bought in the since view program, fiscal on So buyback was this wondering your you particularly if nothing QX. impacted

Peter Smith

with When share is the would allocation our we quiet we capital at buybacks. look periods. into X-K price, have difficulty and our of the The certainly we share persistence lean

kind leading confirm I So but your question think suggests, what of Theo. I question your would is witness, the

Operator

remarks. any further I'd this questions not to time. back over I'm like the for turn any at Pete And call to Smith showing closing

Peter Smith

and for year in. again connect forward everyone we payout. updates. soon you lateness, providing fiscal look to good our thank everyone. get patience given a We the and to while appreciate work Thanks, And dialing the to like we 'XX I'd Okay. will

Operator

today's Ladies and gentlemen, does this presentation. conclude

wonderful and disconnect, now a You have may day.

Aviat Networks (AVNW) 7 Oct 242024 Q4 Earnings call transcript