GIGA - Earnings call transcript Q4 2022

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Operator

Hello, and welcome to the Giga-tronics Fourth Quarter and Fiscal Year 2022 Conference Call. My name is Sharon, and I will be your operator for today's call. At this time all participants are in a listen-only mode [Operator Instructions].

As a reminder this conference is being recorded. I will now turn the call over to John Regazzi. begin. may you Sir,

John Regazzi

Mr. afternoon, VP, quarter you I'm and CEO, Lutz today the Good of Vice fiscal and and Finance, John joining Chief 'XX company's Dr. by joined I'm fourth yearend our and Mehta, and you. our for President Executive thank Henckels, our Regazzi, Rishi CFO Thank earnings Officer. call. Operating

and products include remind margins, forward-looking shipments. may I delays volatility begin, uncertainties, results this that orders of or we results market and of everyone of of orders, the our such future trading and conditions. need stock, services, future existing in of future our to operations including common common capital timing orders, growth deferrals and Actual statements, differ call stock and to Before the needs, statements significantly as about may for our cancellations risks litigation general marketplace the receipt orders, manufacturing conference results and with due and pending or of the threatened or company's

further X, Discussion Financial call recent and heading on to will Factors, the Results Part Operations. over the XX-K for reminders under heading the March Lutz? annual year of Dr. Part Risk most discussion, ended see Form fiscal the XX, turn those With in and report and XXXX, For Analysis Lutz Management's now under our X, I of Condition Henckels. place,

Lutz Henckels

and anticipated million certain significantly XXXX XXXX. from to as only test conference XXXX fiscal division the quarter fourth to EW fundamental orders, had processing XXXX approval performance the have is period. The our call. period disappointing. fiscal of of revenue long large which did fourth cycles very problem The to and in cycles Welcome not performance which fiscal $XXX,XXX John. fiscal to you, EW was quarter Both vary Thank test compared and year worth $X.X receive military division, related in

of as in procurement. a fourth close that order military vehicle which long are new that, and military the now of reduces quarter, March result the cycles XXXX, XX, of part approval received totaled And greatly IDIQ a this contract contract $XXX,XXX. this the we under with year, May our first since However, we of following called associated uncertainties

We’re order return a contract believe this signals that encouraged activity. by more to this level and a award of normalized

Now results. look the detailed let us at

in quarter XXXX, $X.X fourth fiscal a That million, million reported $X.X is year. quarter of fiscal the the of fourth reduction to XX% For period which fiscal revenue the we for XXXX. the compares prior same in

year $XX.X fiscal $X revenue For period. fiscal XX% compared over of prior we XXXX, the million the the to year of a reported million XXXX, for decrease

report two we always, As of revenue. components

Radar/Electronic component is for test represents business. which Warfare first goods, The the

same year. the fiscal $XXX,XXX XXXX. fourth compared the fiscal we of an For reported as for $XXX,XXX, in quarter increase prior quarter to XX% of That's the fiscal revenue fourth XXXX, period from the

However, but shipped of during basically, the Threat XXXX, and no XXXX fourth Emulation we mostly fiscal parts System. fiscal spare quarter

doing So were poorly. quarters basically both

for the For we the year to $X.X million fiscal of compared year, fiscal revenue the million for $X.X XXXX. XXXX, reported year

the business, period. over reduction saw in So XX% a Threat we of Emulation the prior

and second which The filters, the are RADAR used represents services, for namely jets. our the the F-XX, is Microsource product component line, for F-XX in F-XX which the fighter

FYXX. FYXX large receives prior XX% a for in $X.X fourth reported business the to million fiscal versus fiscal That's year. of typically occurred quarter in quarterly decrease swing as fourth of revenue which Microsource what million XXXX, very in the same revenue, XXXX. we The the fiscal from period which orders, the For compared QX quarter QX is $X.X

prior million service period revenue XX% XXXX. fiscal That's Microsource for of year we compared For XXXX, to the a division. decrease million reported the of over fiscal $X.X for $X.X the

gross The the margins. decrease gross fiscal caused manufacturing the to fiscal X% the prior go period lower were for of the year. compared margins fourth well overheads. gross as as product absorb for variances same which XX% higher XXXX revenue, in in to to of quarter was to now due mix The XX% me Let margins

reported For of year XX% the fiscal XX% a period. year fiscal of XXXX, gross over to XXXX, the the prior we for margins compared decrease X%

Now let us look at operating expenses.

costs consist the to expenses, and expenses, Worldwide. Our selling expenses expenses operating R&D with related Gresham of G&A combination onetime transaction

announced $X.XX fourth to XXXX, our same expenses year. That's because fiscal This was offset quarter in were the we combination by the the in of engineering of engineering to period personnel also hours software had our fourth of and due consulting prior cost had in decrease some as was expenses capitalization also million revenue were reported a This Gresham. with of XXXX. and to quarter a expenses. reduction associated the charged of of of from of transaction lower with operating $XXX,XXX and mainly reduction costs the the For expenses expenses charged fiscal some million $X.XX onetime compared fiscal for we to $XXX,XXX $XX,XXX R&D

capitalization also $X year expenses to fiscal And year increase because to in we associated fiscal to million million charged sales. expenses in a And This consulting additional $X for personnel-related expenses with of to then onetime expenses. also expenses compensation expenses, it $XXX,XXX of increased the in of expenses year. million we reduction transaction a For earlier, $XXX,XXX the $X.X was part XXXX, was lower from staff stock-based due the reduction hours software. as reported offset due which XXXX, we offset and expenses, expenses decrease a engineering Gresham. personnel in $XXX,XXX. year in sales prior R&D of in operating R&D with was for combination including This fiscal reduction in in million contracts part announced addition of increase the $X the mainly the due the expenses of and $XXX,XXX have we compared charged cost to had to of also the from engineering And sold as goods expressed

Looking $XXX,XXX affiliate $XX,XXX the loan for net our from fourth BitNile. interest the fiscal expenses at quarter of increased $XX,XXX expenses, because from others, interest the XXXX, and to of

the we XXXX, net fiscal of the interest reported XXXX. for others, compared an as $XX,XXX. For year $XX,XXX to expenses increase $XXX,XXX year That's and of fiscal

we a fiscal In XXXX, of onetime year also $XXX,XXX gain extinguishment loan. addition, reported PPP in on the the of

same from fiscal Now as fourth XXXX. loss, the an we for loss of for XXXX, of $X.X net quarter a million summarizing compared $XXX,XXX losses is prior of fiscal $X.X fiscal increase that in fiscal net the fourth quarter year. the the This the of million of reported period to -- in

reported net loss $X.X explained fiscal the of million million XXXX, XXXX. increase we reasons For to $XXX,XXX I earlier. as of $X.X year compared all year that a the the fiscal an for That's for

share-based more other taxes, to company, expenses, actual income the of and exclude interest income the amortization truly and EBITDA. depreciation for We However, was to and out the calculate we quarter fiscal expenses, separated you certain EBITDA fourth which was expenses, $XXX,XXX. performance the expenses. expenses, is $XXX,XXX define income show which listed compensation, adjusted onetime and and for to transaction transaction other We the year adjusted

year. of for of XXXX. an XXXX, compared adjusted the to quarter fourth as fiscal from That's losses fiscal EBITDA the $XXX,XXX EBITDA increase the loss, $XXX,XXX prior the of loss same an an in fourth of period quarter $XXX,XXX in reported we For fiscal

million of million $X.X year the adjusted XXXX. EBITDA year $X.X as an $X.X of fiscal fiscal loss increase the That's we XXXX, the for to million prior For compared reported over fiscal year an period.

loss test So in EBITDA the the the the $X.X to EW Threat we revenue we we firmly increase hold TEmS. We particularly in managed business, adjusted even incurred to Emulation believe in of a which call though reduction business, million, of $X million. potential

fourth a In TEmS that fact, the received after quarter for was we system. $XXX,XXX close of order the the

mission-critical play new F-XX of for systems, Air fielding a will Force role U.S. program a testing of the technology development, the in advanced weapon record program. Our and

$X.X chain additional since in TEmS supply in an any million fiscal issue. anticipation and beginning invested orders the the have to system the mitigate XXXX for inventory year of of We

small will balance company to investment the believe build allow is type with market. benefits EW to to sheet. our of That to the to it reap us We combination brings in our this make continue public investment a Gresham challenging However, and the Worldwide of test me these investments. as on continue large

$X.X You just I the increase inventory million, which explained. noticed in of

business other sheet point total year challenging shareholder test difficult end last of were in fourth EW to division. by regarding year which raising quarter a Basically, the at is the million was balance that we able the particularly in million the fiscal $X.X The at of XXXX. the conclusion, equity, very for funds. and we $X.X test of this decreased XXXX the from our fiscal both debt In end business, the equity EW the to offset investments made

XXXX, we vehicle of prospect the Emulation new Department contract of renewed place believe our resulting the seen have new more start see Threat System contract award at from activity order a However, optimistic about with will fiscal activity. winning we the with in we capability, we Defense unique which orders. Coupled of are year normalized and the a the

we and mission-critical business. is the in this multiple of development, EW weapon and $XX expect military technology of have To advanced critical we F-XX date, test component for the investment, invested role system play the than Our a proven program. With the testing in million applications. to a fielding more

is therefore continuing decided in to company, track. on we small being transaction combine resources. with a However, limited This are Gresham. We too

expect investments $XX combination to million Thank R&D. organically will a as have create management public capabilities the team, forward well inorganically. grow in together resources businesses growth in revenue as We on focused with We annual larger to will both you. broader stronger marketing sales these company provide to over markets look and and that bringing a

John Regazzi

for now questions. Okay, the we open will call

Operator

first Jones question [Operator from Thank from French Okay. Washington. Our you. Instructions] comes [ph]

is now open. line Your

Unidentified Analyst

guys. Hey,

that and associated the announced order DoD normalized TEmS mentioned return to order with contract expect you So a activity to you contract. more large task you recently

are is you are primarily USAF DoD from order branches testing range it And activity? or for well? the orders you continued the seeing as from seeing So

Lutz Henckels

Okay.

of use. capability are U.S. ranges and the overseas and planning There Air Force interested and the the other U.S. other throughout that. test ranges And are their they testing the replicate branches answer me Let currently that USAF, our services to multiple missions. in for

the Additionally, U.S. place, orders task to contract further have this the that Air IDIQ ranges Force and now these pace. at to established enhance just add have ability, a in we that test vehicle faster branches to we existing the

are and to yes, add seeing our services multiple multiple ranges capabilities. we So

Unidentified Analyst

application, value your for then compelling application? And Great. you for the so you range have a that explain obviously range pretty proposition. you advantage Could believe just key

Lutz Henckels

the reprogrammability It's and advantage more low can benefit than be two two alternative. summarized but call, that, for The in Okay. this simple or words, words. cost

explain. me Let

test from This a this RF Threat It's the of system. the with That's It an a that contractor like radio has it has three digital system, of which radar software large unique cost And Emulation Threat a making System Emulation client period. a components. built of our call has architected over system Threat is calendar to allows system combined has key. competitors. it is It been we front-end, has year like a guts building a a be system. Emulation the the programmable, who system Our our then one-tenth but sophisticated frequency XX very architecture, System software. us of Software, system

the summary, one-tenth architecture. Those They in and cost are our competitors. advantages. we of are the we our So of are by programmable not, are key

Unidentified Analyst

it. Got

Thank Great. have. I helpful. That’s Thank you. all you. That’s Okay.

Operator

you. Thank

Cohen comes Mulholland question from next from Our Capital Jeffrey Management.

is line Your open. now

Jeffrey Cohen

the the is slippage timeframes. Gresham what us for anticipated And afternoon. just expected Yes, acquisition? sort walk What of And been? explain the can timing the through good has you now

John Regazzi

of delayed than for Yes, to our receive financial proxy of statements for longer shareholder lot taken I to Obviously, filing combination anticipated. order can in has are get Gresham, a audited Gresham subsidiary is this which were required do any We us putting vote. together a that. the BitNile.

financial putting anticipated. time together we than statements more And took audited so

Jeffrey Cohen

Do you now? have those

John Regazzi

Yes, I say that. to going was

we August. We have consummate late in received early now. transaction file proxy these to August expect the in And to the and

Jeffrey Cohen

the late August at your in point? and level Okay, this what's timeframe confidence

John Regazzi

put already high, because audited the is have statements, very we It It's proxy financial in together. the review. have once we

So we comfortable. pretty I are think

Jeffrey Cohen

merger you maybe benefits thing? scale combination of is sort then and of sort that could just terms the And what see sort in the leverage of you consummated and additional in Okay. and of you when might the review project

John Regazzi

Israel. we their there It's in at mean, divisions making we RADAR similar And Microsource They're what like and in Connecticut. division. And Giga-tronics, have EW they have such used that test are do EW military devices call then has divisions. division group the then are Microphase. two Well, Microsource Gresham the for filter division, test just They the a I division, applications. two

powerful a find we have, sort that. very that two and have So exact that divisions is company finding has we the to of

and need can synergy, a okay. because make think can, of terms there being public in So we use we much BitNile, on expenses number resources company, number they incur a I larger really expenses are will large to better two, large expenses use because one, in we make be in But incur sales, improve million and better higher, of $XX I we our resources G&A company. of from R&D think we

growth, But to we not synergies company. synergies that, order believe business our divisions, also build in driver, driver. We growth not we we expenses. do that the will So in just two be only overhead believe a see number can also terms in growth, of a the really of EW terms inorganic growth organic one, but significant do test

Jeffrey Cohen

again said -- August, the And timing said? to expect go you. in thank you you out proxies you Okay, the

John Regazzi

Correct.

Jeffrey Cohen

Thank you. okay. Yes,

Operator

we presenters, this at time. further no And questions have

John Regazzi

Okay.

As company I small too we think just being is a discussed, public limiting.

as combining or opportunities. as by value through type a terms test our both think Gresham, in will applications business growing EW well of I I company we think the opportunity with of create and inorganic we large have

So have forward and being to larger of you. to we part you. reports for a forward going look company Thank good

Operator

your gentlemen. and you participation. today's Thank for ladies you, This Thank conference. concludes

You may now disconnect.

Gresham Worldwide (GIGAQ) 6 Jul 222022 Q4 Earnings call transcript