AUSTIN, Texas, Jan. 22, 2020 /PRNewswire/ -- Aviat
Networks, Inc. (NASDAQ: AVNW) ("Aviat" or the "Company"), the
leading expert in wireless transport solutions, today announced
that its fiscal 2020 second quarter and first half results are
anticipated to come in lower than previously forecasted due to a
cyberattack at one of the Company's contract manufacturing vendors.
This effectively shut down the vendor's production and shipments of
Aviat products for a three-week period. While this issue was
quickly and fully remediated by the vendor and is not expected to
have any impact on Aviat on a go-forward basis, the Company's
revenue, gross margins and anticipated profitability for the first
half of its fiscal 2020 were affected. However, order flow
continued to be strong, cash increased sequentially and from the
prior year end, and the Company remains on track for improved
profitability for the full fiscal year.
Pete Smith, Aviat's newly
appointed President and Chief Executive Officer stated, "While it's
disappointing to come in below our prior guidance, I'm quite
pleased with how the team responded to assist our vendor and
support our customers. Our vendor lost production capacity for
three weeks of the quarter, or approximately 23% of its available
capacity, resulting in us missing our top-line budget by
approximately 5%, though bookings were very strong. Business is not
lost, just delayed, and our revenue outlook for the fiscal year has
not changed. This event, however, impacted profitability for the
first half of fiscal 2020. We still believe Aviat will post
year-over-year bottom-line improvements and end the fiscal year
with a stronger balance sheet. Long-term, with continued
investments in 5G, public safety and other mission-critical
networks, we feel good about Aviat's competitive position and
ability to enhance stockholder value."
The Company had previously stated that for the comparable
six-month periods in fiscal 2020 and fiscal 2019, total revenue
would be down modestly, gross margins would improve, non-GAAP
operating income would be approximately $6
million, and adjusted earnings before interest, tax,
depreciation and amortization and other non-GAAP adjustments
("Adjusted EBITDA") would be approximately $7.5 million. Based on preliminary, unaudited
results for the fiscal 2020 second quarter and six-months ended
December 27, 2019, and taking into
account the impact of production and shipment constraints, and
timing of variable expenses incurred in the fiscal 2020 second
quarter, the Company provided the following financial updates:
- Total revenue is expected to be $55.5 to $56.5
million in the fiscal 2020 second quarter and $114.0 to $115.0
million for the fiscal 2020 six-month period. North America revenue is expected to be up
$10.5 to $11.5
million and international revenue is expected to be down
$21.5 to $22.5
million when comparing the fiscal 2020 and fiscal 2019
six-month periods.
- Gross margins are anticipated to be 32.5% to 33.0% in the
fiscal 2020 second quarter and 35.5% to 36.0% in the fiscal 2020
six-month period. In the fiscal 2019 six-month period, the Company
reported gross margins of 32.2%.
- Non-GAAP operating loss in the fiscal 2020 second quarter is
anticipated to be $0.9 million to
$1.1 million and for the fiscal 2020
six-month period, non-GAAP operating income is expected to be
$2.0 to $2.2
million. Adjusted EBITDA in the fiscal 2020 second quarter
is anticipated to be near break-even, and for the fiscal 2020
six-month period is expected to be $4.0 to $4.2
million. Capacity constraints caused by a cyberattack at one
of our contract manufacturers, and higher sales commissions based
on stronger than anticipated bookings, among others, have the most
direct impact on non-GAAP operating income and Adjusted
EBITDA.
- Cash and cash equivalents as of December
27, 2019 were anticipated to be approximately $38 million, approximately a $6 million increase, as compared to June 28, 2019, and an approximately $3.5 million improvement sequentially, as
compared to September 27, 2019.
About Aviat Networks
Aviat Networks, Inc.
is the leading expert in wireless transport solutions and
works to provide dependable products, services and support to its
customers. With more than one million systems sold into 170
countries worldwide, communications service providers and private
network operators including state/local government, utility,
federal government and defense organizations trust Aviat with their
critical applications. Coupled with a long history of microwave
innovations, Aviat provides a comprehensive suite of localized
professional and support services enabling customers to drastically
simplify both their networks and their lives. For more than 70
years, the experts at Aviat have delivered high performance
products, simplified operations, and the best overall customer
experience. For more information, visit
www.aviatnetworks.com or connect with Aviat Networks on
Twitter, Facebook and LinkedIn.
Forward-Looking Statements
The information contained
in this document includes forward-looking statements within the
meaning of the safe harbor provisions of the U.S. Private
Securities Litigation Reform Act of 1995, Section 21E of the
Securities Exchange Act of 1934 and Section 27A of the
Securities Act of 1933 including Aviat's beliefs and
expectations regarding business conditions, new product solutions,
customer positioning, revenue, future orders, bookings, new
contracts, cost structure, operating income, profitability in
fiscal 2020, process improvements, realignment plans and review of
strategic alternatives. All statements, trend analyses and other
information contained herein regarding the foregoing beliefs and
expectations, as well as about the markets for the services and
products of Aviat and trends in revenue, and other statements
identified by the use of forward-looking terminology, including
"anticipate," "believe," "plan," "estimate," "expect," "goal,"
"will," "see," "continue," "delivering," "view," and "intend," or
the negative of these terms or other similar expressions,
constitute forward-looking statements. Forward-looking statements
are neither historical facts nor assurances of future performance.
Instead, forward-looking statements are based on estimates
reflecting the current beliefs, expectations and assumptions of the
senior management of Aviat regarding the future of its
business, future plans and strategies, projections, anticipated
events and trends, the economy and other future conditions. Such
forward-looking statements involve a number of risks and
uncertainties that could cause actual results to differ materially
from those suggested by the forward-looking statements.
Forward-looking statements should therefore be considered in light
of various important factors, including those set forth in this
document. Therefore, you should not rely on any of these
forward-looking statements. Important factors that could cause
actual results to differ materially from estimates or projections
contained in the forward-looking statements include the
following:
- continued price and margin erosion as a result of increased
competition in the microwave transmission industry;
- the impact of the volume, timing and customer, product and
geographic mix of our product orders;
- Aviat's ability to meet financial covenant requirements which
could impact, among other things, its liquidity;
- the timing of Aviat's receipt of payment for products or
services from its customers;
- Aviat's ability to meet projected new product development dates
or anticipated cost reductions of new products;
- Aviat's suppliers' inability to perform and deliver on time as
a result of their financial condition, component shortages, or
other supply chain constraints;
- customer acceptance of new products;
- the ability of Aviat's subcontractors to timely perform;
- continued weakness in the global economy affecting customer
spending;
- retention of Aviat's key personnel;
- Aviat's ability to manage and maintain key customer
relationships;
- uncertain economic conditions in the telecommunications sector
combined with operator and supplier consolidation;
- Aviat's failure to protect its intellectual property rights or
defend against intellectual property infringement claims by
others;
- the results of restructuring efforts;
- the ability to preserve and use Aviat's net operating loss
carryforwards;
- the effects of currency and interest rate risks;
- the conduct of unethical business practices in developing
countries;
- the impact of political turmoil in countries where Aviat has
significant business; and
- Aviat's ability to implement its stock repurchase program or
that it will enhance long-term stockholder value.
For more information regarding the risks and uncertainties for
Aviat's business, see "Risk Factors" in Aviat's Form 10-K filed
with the U.S. Securities and Exchange Commission ("SEC")
on August 27, 2019 as well as other reports filed
by Aviat with the SEC from time to time. Aviat
undertakes no obligation to update publicly any forward-looking
statement, whether written or oral, for any reason, except as
required by law, even as new information becomes available or other
events occur in the future.
Media Contact: Gary Croke, Aviat Networks, Inc.,
gary.croke@aviatnet.com
Investor Contact: Glenn Wiener, GW Communications,
gwiener@GWCco.com or 212-786-6011
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SOURCE Aviat Networks, Inc.