GIGA - Earnings call transcript Q3 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Welcome to the Giga-tronics Third Quarter Earnings Conference Call. My name is Sylvia, and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. [Operator Instructions] Please note that this conference is being recorded. the to turn Mitchell. now will call Traci over I Traci, begin. you may

Traci Mitchell

John our thanks I'm conference by VP. and and and everyone, our quarterly Lutz joined our Henckels, Dr. for today and Hi, Executive Mitchell, joining earnings CFO CEO; Traci call. here Regazzi, I'm

continue delays contains long-term significantly begin, we as growth or ASG, for ability a uncertainties, volatility the Actual the may the differ call to and to order general orders, to concerning market, risks or operating such going that company's market this financing, on remind in of our common shipments. and litigation price manufacturing traded Before statements everyone pending of market to the performance, of OTC due our and or additional conditions. need receipt the deferrals conference future I and forward-looking stock, as of with be threatened to results uncertainty concern, future orders, results potential cancellations orders, existing as new of need ability timing company's

Form discussion, on recent With Factors; I, the Results those the Part Discussion I now Management's on Risk see place, most the will the Operation. and March under for pass XXXX, call heading annual II, our Conditions under John. heading year report of Analysis Part Financial and further XX, of fiscal For ended XX-K and reminders in to

John Regazzi

third for our you Thank thank quarter call. you, Traci. afternoon, Good joining conference and

at Station Mugu, from order, our $X want two We the order now acknowledge customer million, has numbers The today's located the received items. prepared for call, but have thorough to California. the I in first review line a totaling the Air of long-anticipated has Point Naval government company

this and for these the this be owned engineering months. delivered over apiece, the five services help for quarters first two and to for next to systems hours totaling by and a $X.XX brings multi-ship systems to to multi-ship item upgrades these at the to be some customer. $XXX,XXX. systems of will will XX over penetrate the million expected generator are the systems using of two support further market. second is XX and be next and engineering Giga-tronics, X,XXX support, accelerate selective event of total The welcome of we of item company's for very operated delivered signal is The two services This additional the the The and development proceeds company is five systems of

our we change a customers. still approach and was market, continue underlying in strategy as electronic the believe has along integrate conducting key vision microwave the original will next of This moving solutions fiscal digital planning the full Giga-tronics As we of extensive approach of variety been engineering solutions a as just test ASA position to market the been warfare have year, Giga-tronics with by projects ASG this beginning I of the of and third-party our into we our path, advanced not correct components. decision. the products to the to a demanded and provider company's

I'd coming future over it Although will platform behind like and our numbers. a believe anticipated, longer Lutz the over and the part has Dr. us, be in have turn year. we call major expect go fiscal Generation Analysis With Advanced far operating to than of Henckels we taken to to Signal growth the the major we our and results problems revenue that,

Lutz Henckels

for Hi. Thank this joining John, call. and you, conference thank you

overview. an first you give me Let

calls, we major On transition last over made has the two years. outlined the company the six the last

were sales turnaround year year. declined of last million average, fiscal the The has $X and a about no about profitable company on per more months During years, year for fiscal year year And forward fiscal first current we $X.X year. million. ago, the a company. $XXX,XXX in the XXXX Operating and looking been expect the those losses six versus $X.X made losses nine losses to now, for operating million the

very about made finally during I the of So months will transition, completed we difficult year. in XXXX, turnaround have talk XXXX during that now the this progress and QX ended this which and of first we nine have December FY

FY from However, to the X, Customers, is was which before Contracts our to to also commonly I ending invoice adopt results, called which would we Effective Until a we preferred the changed we and referred explain that like the much XXXX, company as in that's recognizes method XXXX, standard. recognized ASC April XX, contracts. the going way revenue accounting truthfully, into required do. the the need revenue to customer, for our March end financial XXXX, when and change certain standard accounting company of my Revenue XXX, with ship

adding costs. we However, XXX, recognize percentage as incurs to ASC including don't we This to are that balance $X.XX Under have million revenue required Thus, the margins sheet. completion were we this revenue. X, in $X.X the April on Thus, make $X.XX contract on on entries, sheet was million to must retained in uninvoiced choice. million taken XXXX, it of revenue earnings. of the gross balance April based the X

margins just into was balance sheet. $X.XX You mean, as earnings that added million the I retained gross never – saw revenue, on it into

products impact recognized of ship So invoice of is as no but upon million cash under because recognize now, there when still impact onetime and shipment, There is invoice this $X.X entry. a with new sheet cannot we P&L balance this it's then a XXX. we we reporting because revenue result, already this

is new because, element. to on for compensate shipment, revenue there can again, an we contracts new so prior offsetting contracts will recognize impact this Now

on reflect The results which XX, three been financial for the months, adjusted a of December it's presented So have ended this XXXX, method. today accounting matter timing. new to

really third two the bottom XXX standards. of impact during between negligible line fiscal quarter the there's this However, on of year, a the

no there So difference we to because the – will just standard in new is and standard focus old our on standard in QX. this new

will this the I for preamble, you months. having now of sort results the and present now quarter the nine for So given

$X.XXX XXXX December ending XX, for quarter let's products late. at year $X.XXX revenue signal is to the components the did RADAR the so but our XXXX, component Net $XXX,XXX XXXX, goods really a well the the test test a our So not on as compares end-of-life $XXX,XXX, the fiscal reported X, we million order kind in February sales release, old have in a in look had deadline. were one came million. at press because two in is on it which for for first. quarter RADAR show as The fiscal and we that now, revenue revenue. Basically, for In period of of This generators. for shipment, this for prior missed the shipment same year. large ago, It we we came third

second product The the Microsource line, F-XX in is compares used fiscal for are fighter same component the $X.XXX for prior in million in a F-XX million and growth the our is the year. period product line. $X.XXX for with filters, the the $X.XXX Microsource which jets. services, which is namely million, really XX% F-XX, This That

in shipment $XXX,XXX ago, this during a third why due as so at a nine looking of decline shipped we the year that months period, didn't to that's decline. $X.XX quarter and that to is was million, Now reported, there Again, as goods a that were compared equivalent is and order XX%. this the have

compared $X.XXX million to Now of services million, that's were XX%. $X.XXX growth as a

call So product of the basically, up we lack sales. business, of Microsource services, RADAR the for growth the as it, the made the

versus for equivalent, months' last total sales. increase $X.X X.X% million sales the nine the million, – roughly in versus months $X.X overall were So a year ago a ago a year I mean, X% nine

Gross were of This with XX% for third in FY gross margin the a So of consider that fiscal equal, okay? XXXX compares margins XX%. quarter XXXX.

months FY gross fiscal of This margins nine was XXXX gross the compares XX%. XXXX. For in margin XX% of with

this one margin key So in component company. of the gross the turnaround really improvement is

The components that million to there a losses And over a for losses operating XXXX down fiscal minute now. two operating $XXX,XXX was then the months. we for ago quarter fiscal That's $XXX,XXX. loss loss in sales, the XXXX. the deal. a Net basically third to and level fiscal to clearly, $XXX,XXX. period that, $X.X ending at achieved million the the $X.X I operating the of expenses. major operating nine mentioned gross improvement third was to XXXX the roughly, fiscal net of in this XXXX went for nine are million. of from $X.XXX and nine quarter that compared of lower months' same months' of improvement big losses period of margin net And on loss $XXX,XXX, a This Net compares Looking

below the payment. line, interest the to operating now line, Going to

quarter compares ADK was fiscal of due interest the was interest payments increase be even payments. X% $XX,XXX third the PFG for It following; to and X-X-X E are fiscal For The XXXX, to for Bank loan, though to the should third were was the for the to and This $XXX,XXX, had quarter the the XXXX. due in $XXX,XXX. expense, due was roughly interest cash others. we $XX,XXX of then of remainder noted, and Bridge interest $XXX,XXX $XX,XXX this Series

the So less than is $XXX,XXX. much payment cash

was It of period, $XX,XXX to were XXXX question; the was turnaround. past year. Well, summary, which the of for PFG – the this a fiscal loss are product line. prior reasons dot-dot of quarter, In received $XXX,XXX $XX,XXX expenses of XXXX RADAR first of for that fact for we line. a result no was to on calls, X% that the Meaning have was increase sales And due business, explained. for interest quarter operating a onetime third $XXX,XXX the always nine looking interest fiscal was for the nine compared The profits. to to interest to test the $XXX,XXX we with for the done Combining to growth of we $X the months' we sale we had except completed in the turned Series the due to months noted to nine months interest product the $XX,XXX quarter year had $XXX,XXX this the gain and company be following; in with orders? having the $XXX,XXX have of operating a the are order the losses due are losses $XXX,XXX due losses, the million in forward net at that, should for taxes. where losses that reduced $XXX,XXX, compares test I we Looking $XXX,XXX around third E of $XXX,XXX interest, as of fiscal of third in and XXXX just $X.X on million fiscal RADAR the and there the from the the

sheet balance now. the to Going

But XXXX. it X, sheet, still XX, balance this it as to $X.XXX weak. since that from yes, made adoption on is equity explained. to And our losses, shareholder we clear improvement from XXX standard at required the $XXX,XXX I equity increased all of Looking is April is due we the million ASC March

changes in is So on $X.XXX deferred That too easily sheet at systems. standard received XXX inventory cash million. million out retained earnings $X.X million the out revenue this is on of order of adoption and of inventory we and get can that balance the We inventory new we inventory this X X. least stands prepaid $X to large ASC is and $X.XXX of based current high. believe on for RADAR in expenses on this test April for net February required What million. the purchase way and are this all due the assets

Now cash is concern. key a still

Series million. We totaling by have concern E raised investment, this the having addressed $X.XX

John to order with for that, we with $X.XXX in the Navy. shipping expect systems there no is million. to the since two mentioned, large to are purchase as million had produce systems. those cash shipping systems, cash And outlay concern conquer We these are inventory, this And $X

a $X.XXX get sheet. So clear that infusion amount, that equivalent cash and of shipment with company its really changes what and of is, is this the million, balance completely we

now effort in summary, fiscal So is XXXX Giga-tronics. This for turnaround complete. has year a been

done are with losses. We

and ready FY in we profitable we I'm made – the needed XXXX. for and FY growth And to or a company, ready with that, profits. to are expect looking We changes XXXX are forward take We questions. the

Operator

we a investor. And individual from Instructions] Brandon [Operator question from Sadiq have [ph] investor –

Unidentified Analyst

you point? Could bit order. large opportunities where that this in on congratulations your order at little about are a pipeline talk So

John Regazzi

about have Can see. we Did you in pipeline? orders that? talk The our we opportunities you hear

Lutz Henckels

just let our mean, in two a business think question I but Microsource answer more business, is not funnel have test Well, that but your We okay? test I Okay. question our for focused for ways, on me RADAR business. RADAR the possibly also

during prime our that really really orders business major who of. follow-on million, are customer components. fiscal aware has business which year follow-on NAVAIR, the we has we three so and funnel It And just from and this purchased is expect $X

three think, are you potential $XXX, opportunities, them $XXX,XXX, Second, if eight different XXX, eight, one those what – major we want, of at more NAVAIR, that call, have $XXX, from future other there I of three And least of through. opportunities should come have so $XXX,XXX, and customers. like orders will are then meaning that, I like bread-and-butter type we XXX

is So NAVAIR purchase and we year going we sales and funnel, have mid-calendar our three team are in we of eight-bread-and-butter the with order range believe follow-on seeing that a fruits the have the the and to forward. last seen in received. first good that year, business, just are fact growing changed approach a due opportunities our sales items. dollar the And major I funnel this multimillion and we we that

that – clearly, for so and Now the there's And add for funnel, okay? for And opportunity a to backlog, way, so follow-on a have there's F-XX. a Microsource, the there that, okay? is we follow-on the opportunity F-XX, by and also also

we somewhat also the these so And two standard. that orders okay? on viewed a that you then in And okay? is to We however, the needs – Now regular now backlog that's be however, have that's so there basis, fairly backlog ways. get – have,

roughly viewed So the matters because okay, million the roughly be which it million, backlog what because in which invoiceable needs revenueable of okay? really to this less, then invoiceable and ASC in that's But backlog, XXX, cash is $XX is of is it bank. terms $X

roughly $XX so of basically have million backlog. And we invoiceable

the in And funnel and the so we a add think I to backlog, and position. are decent

Unidentified Analyst

view how to, outlook now Great. that? sales of a six How has that driven has ago? Could ago sort months you you compared what And sort of changed? just year ask the or say,

Lutz Henckels

think I let – bit – I a me that's Yes, mean good go – little think, you further. of and that I that's sort

no are year a I basically �� in here, they a And engineering. or arrived very or who program. when custom mentioned, solutions architected all to experience. and of easy came the changed we – people end we selling we sales And They that to and or that sales boxes hardware, came applications that, actually hired selling had that calling I changed As more solutions. selling were so We order it and than ago, also, marketing blades so, to for we need boxes they get limited it the approach. do is solution when customize a matter, opportunities. needed somebody has we Rather with from from front it very because because cold a digital you

middle the selling having have us, the having we to of applications know offices since team, And customer this in to allowed the sales really that by so procurement RADAR just and the to base, that really the build hardware people, knowledgeable test by did. for funnel very, good some obtain who connections last and approach who order of complex and the than changed very and are rather those the they customer solutions year,

and change that And elements sales the so our much-improved it's the the of same the change are the salespeople really of root situation. of approach

Unidentified Analyst

as competitive Great. as been the there about products And sort the marketplace? – there product any just of Has in then far bit lastly, little with the competition? could compares change you how out a

John Regazzi

a module try have a generation they a to believe modulation call an used. UXG that, additional on that had product And I since address I better that it's that and key to the with are modular limited approach was Yes, – is to this a modulation. originally Keysight, is believe machine with that no add I John. box I'll competitor they There approach the [ph]. you side, Brandon the – that signal has come out box a They market provide to have capability. – addressed Giga-tronics is have

market eroded, a going to is signal – and generators. size. we two advantage particular generator, our study cons. the simulate to in not trying has signal there that and pros a focused thousands on where of smaller the been on the at feel what customers on They're many, still are see but an many emitters This offer the to time. working same not We're between that environment I been much are So comparison we've single what

So advantage we believe Lutz has Giga-tronics fundamental a architecture, mentioned, market. we've in as and how the the approached

real signals really on going our are We tool. in and that also customers the world, create are complex more very finding as – what's able that generate a to valuable mimic

I our although believe So competition, an do approach edge. still has we have

Unidentified Analyst

taking my Thanks question. for Very good.

John Regazzi

you, [ph]. Brandon Thank

Operator

questions. further no have We

Lutz Henckels

Okay.

following; me the at let company the close this inflection that So is point. saying believe an firmly call by I

million have in backlog, invoiceable of backlog. million We less $XX revenueable albeit $X

improved greatly gross have We margins.

We reduced have expenses. operating

We have by XX%. reduced losses

seen RADAR major test now million order. its first business Our $X has

are So new forward. company a going yes, we

have from profitable and you very XXXX. a expect to much. We here eliminated have growing on out Thank FY losses and

Operator

Ladies you. for gentlemen, participating. and conference. you this Thank today's concludes Thank

may now disconnect. You

Gresham Worldwide (GIGAQ) 12 Feb 192019 Q3 Earnings call transcript