Total Revenue of $81.3
million; Up 11.1% Year-Over-Year
GAAP Gross Margin of 36.3%; Compared to 35.7%
in Prior Year;
Adjusted EBITDA of $10.7 million; Up 11.3% Compared to Prior
Year
AUSTIN,
Texas, Nov. 2, 2022 /PRNewswire/ -- Aviat
Networks, Inc. ("Aviat Networks," "Aviat," or the "Company"),
(Nasdaq: AVNW), the leading expert in wireless transport solutions,
today reported financial results for its fiscal 2023 first quarter
ended September 30, 2022.
First Quarter Highlights
- Company executed on key long-term strategic objectives
resulting in continued year-over-year increase in quarterly
revenues, gross margins, and Adjusted EBITDA.
- Closed first acquisition in over a decade (Redline
Communications) and integration has progressed as planned.
- Bharti Airtel win proves the Company's differentiation in
products and services for 5G, supply chain, and operating
system.
- Company launched its Vendor Agnostic Multi-Band solution which
allows customers to cost-effectively add significant capacity to
their network.
- Released new software that enables integrated IP/MPLS and
Segment Routing to be deployed out to the network edge using
Aviat's WTM 4000 all-outdoor microwave, millimeter-wave and
multi-band radio platform for lower total cost of ownership for 5G
and private LTE deployments.
First Quarter Financial Highlights
- Total Revenues: $81.3
million, +11.1% from same quarter last year
- GAAP Results: Gross Margin 36.3%; Operating Expenses
$25.5 million; Operating Income
$3.9 million; Net Income before tax
$1.1 million
- Non-GAAP Results: Adjusted EBITDA $10.7 million; Gross Margin 36.5%; Operating
Expenses $20.4 million; Operating
Income $9.2 million; Net Income
$8.8 million; Net Income per share
$0.75
- Net Cash and Marketable Securities: $22.9 million; no loans outstanding at
quarter-end
Fiscal 2023 First Quarter
Revenues
The Company reported total revenues of $81.3 million for its fiscal 2023 first
quarter, compared to $73.2 million in
the comparable fiscal 2022 period, an increase of $8.1 million or 11.1%. North America revenue of $48.8 million decreased by $(2.1) million or (4.1)%, compared to
$50.9 million in the comparable
fiscal 2022 period. International revenue was $32.4 million compared to $22.2 million in the comparable fiscal 2022
period, an increase of $10.2 million
or 45.8%.
Gross Margins
In the fiscal 2023 first quarter, the Company reported GAAP
gross margin of 36.3% and non-GAAP gross margin of 36.5%. This
compares to GAAP gross margin of 35.7% and non-GAAP gross margin of
35.7% in the comparable fiscal 2022 period, an increase of 60 and
80 basis points respectively. The improvement resulted from pricing
actions to offset inflationary pressures, and the accretive
contribution of the Redline business, partially offset by mix.
Operating Expenses
GAAP total operating expenses for the fiscal 2023 first quarter
were $25.5 million, compared to
$19.3 million in the comparable
fiscal 2022 period, an increase of $6.3
million or 32.6%. The increase was primarily due to the
addition of Redline Operating Expenses and related restructuring
charge as well as merger and acquisition related costs.
Non-GAAP total operating expenses, excluding the impact of
restructuring charges, share-based compensation, and merger and
acquisition expenses for the fiscal 2023 first quarter were
$20.4 million, as compared to
$17.8 million in the comparable
fiscal 2022 period, an increase of $2.6
million or 14.6%. The increase primarily resulted from the
consolidation of Redline Operating Expenses.
Operating Income
The Company reported GAAP operating income of $3.9 million for the fiscal 2023 first quarter,
compared to $6.8 million in the
comparable fiscal 2022 period. On a non-GAAP basis, the Company
reported operating income of $9.2
million for the fiscal 2023 first quarter, compared to
$8.3 million in the comparable fiscal
2022 period.
Income Taxes
The Company reported GAAP income tax expense of $3.9 million in the fiscal 2023 first quarter,
compared to $2.2 million in the
comparable fiscal 2022 period, or an increase of $1.7 million.
Net Income (Loss) / Net Income (Loss) Per Share
The Company reported GAAP net loss of $(2.7) million in the fiscal 2023 first quarter
or GAAP net loss per fully diluted share of $(0.25). This compared to GAAP net income of
$4.7 million or $0.39 per fully diluted share in the comparable
fiscal 2022 period. On a non-GAAP basis, the Company reported net
income of $8.8 million or non-GAAP
net income per fully diluted share of $0.75 in the fiscal 2023 first quarter, compared
to a non-GAAP net income of $8.1
million or $0.67 per share in
the comparable fiscal 2022 period.
Adjusted EBITDA
Adjusted earnings before interest, tax, depreciation and
amortization ("Adjusted EBITDA") for the fiscal 2023 first quarter
was $10.7 million, compared to
$9.6 million in the comparable fiscal
2022 period.
Balance Sheet Highlights
The Company reported cash and marketable securities of
$22.9 million as of
September 30, 2022, compared to $47.8
million as of July 1, 2022. As of September 30, 2022, the Company has no loans
outstanding. The decline in cash balance was primarily attributable
to the closure of the Redline acquisition and related expenses.
Conference Call Details
Aviat Networks will host a conference call at 5:00 p.m. Eastern Time (ET) today, November 2, 2022, to discuss its financial and
operational results for the fiscal 2023 first quarter.
Participating on the call will be Peter
Smith, President and Chief Executive Officer; David M. Gray, Sr. Vice President and Chief
Financial Officer; and Andrew
Fredrickson, Director of Corporate Development and Investor
Relations. Following management's remarks, there will be a question
and answer period.
Interested parties may access the conference call live via the
webcast through Aviat Network's Investor Relations website at
https://investors.aviatnetworks.com/events-and-presentations/events,
or may participate via telephone by registering using this online
form. Once registered, telephone participants will receive the
dial-in number along with a unique PIN number that must be used to
access the call. A replay of the conference call webcast will be
available after the call on the Company's investor relations
website.
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 in 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 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. Aviat Networks is headquartered
in Austin, Texas. 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, 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 2023, 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: the impact of
COVID-19; disruptions relating to the ongoing conflict between
Russia and Ukraine; continued price and margin erosion in
the microwave transmission industry; the impact of the volume,
timing, and customer, product, and geographic mix of our product
orders; the timing of our receipt of payment; our ability to meet
product development dates or cost reductions of products; our
suppliers' inability to perform and deliver on time, component
shortages, or other supply chain constraints; the effects of
inflation; the ability of our subcontractors to timely perform;
weakness in the global economy affecting customer spending;
retention of our key personnel; our failure to protect our
intellectual property rights or defend against intellectual
property infringement claims; the results of our restructuring
efforts; the ability to preserve and use our net operating loss
carryforwards; the effects of currency and interest rate risks; the
effects of current and future government regulations; general
economic conditions, including uncertainty regarding the timing,
pace and extent of an economic recovery in the United States and other countries where we
conduct business; the conduct of unethical business practices in
developing countries; the impact of political turmoil in countries
where we have significant business; our ability to realize the
anticipated benefits of any proposed or recent acquisitions; the
impact of tariffs, the adoption of trade restrictions affecting our
products or suppliers, a United
States withdrawal from or significant renegotiation of trade
agreements, the occurrence of trade wars, the closing of border
crossings, and other changes in trade regulations or
relationships.
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
September 14, 2022, 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.
Investor Relations:
Andrew
Fredrickson
Director, Corporate Development & Investor Relations
Phone: (408) 501-6214
Email: andrew.fredrickson@aviatnet.com
|
Table
1
|
AVIAT NETWORKS,
INC.
|
Fiscal Year 2023
First Quarter Summary
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(Unaudited)
|
|
|
Three Months
Ended
|
(In thousands, except per share amounts)
|
September
30,
2022
|
|
October 1,
2021
|
Revenues:
|
|
|
|
Revenue from product
sales
|
$
55,101
|
|
$
50,847
|
Revenue from
services
|
26,150
|
|
22,311
|
Total
revenues
|
81,251
|
|
73,158
|
Cost of
revenues:
|
|
|
|
Cost of product
sales
|
35,253
|
|
31,925
|
Cost of
services
|
16,544
|
|
15,152
|
Total cost of
revenues
|
51,797
|
|
47,077
|
Gross
margin
|
29,454
|
|
26,081
|
Operating
expenses:
|
|
|
|
Research and
development expenses
|
6,087
|
|
5,910
|
Selling and
administrative expenses
|
17,504
|
|
12,698
|
Restructuring
charges
|
1,950
|
|
659
|
Total operating
expenses
|
25,541
|
|
19,267
|
Operating
income
|
3,913
|
|
6,814
|
Other expense/(income),
net
|
2,782
|
|
(28)
|
Income before income
taxes
|
1,131
|
|
6,842
|
Provision for income
taxes
|
3,877
|
|
2,160
|
Net (loss)
income
|
$
(2,746)
|
|
$
4,682
|
|
|
|
|
Net (loss) income
per share of common stock outstanding:
|
|
|
|
Basic
|
$
(0.25)
|
|
$
0.42
|
Diluted
|
$
(0.25)
|
|
$
0.39
|
Weighted-average
shares outstanding:
|
|
|
|
Basic
|
11,200
|
|
11,159
|
Diluted
|
11,200
|
|
11,954
|
|
Table
2
|
AVIAT NETWORKS,
INC.
|
Fiscal Year 2023
First Quarter Summary
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(Unaudited)
|
|
(In thousands)
|
September
30,
2022
|
|
July 1,
2022
|
ASSETS
|
|
|
|
Current
Assets:
|
|
|
|
Cash and cash
equivalents
|
$
21,607
|
|
$
36,877
|
Marketable
securities
|
1,252
|
|
10,893
|
Accounts receivable,
net
|
72,471
|
|
73,168
|
Unbilled
receivables
|
50,389
|
|
45,857
|
Inventories
|
32,888
|
|
25,394
|
Customer service
inventories
|
2,069
|
|
1,775
|
Other current
assets
|
16,279
|
|
12,437
|
Total current
assets
|
196,955
|
|
206,401
|
Property, plant and
equipment, net
|
11,923
|
|
8,887
|
Goodwill
|
4,950
|
|
—
|
Intangible assets,
net
|
7,166
|
|
—
|
Deferred income
taxes
|
92,310
|
|
95,412
|
Right of use
assets
|
2,987
|
|
2,759
|
Other assets
|
10,437
|
|
10,445
|
Total long-term
assets
|
129,773
|
|
117,503
|
TOTAL ASSETS
|
$
326,728
|
|
$
323,904
|
LIABILITIES AND
EQUITY
|
|
|
|
Current
Liabilities:
|
|
|
|
Accounts
payable
|
$
48,236
|
|
$
42,394
|
Accrued
expenses
|
24,806
|
|
26,451
|
Short-term lease
liabilities
|
833
|
|
513
|
Advance payments and
unearned revenue
|
35,483
|
|
33,740
|
Restructuring
liabilities
|
1,522
|
|
1,381
|
Total current
liabilities
|
110,880
|
|
104,479
|
Unearned
revenue
|
7,844
|
|
8,920
|
Long-term lease
liabilities
|
2,407
|
|
2,412
|
Other long-term
liabilities
|
246
|
|
273
|
Reserve for uncertain
tax positions
|
5,366
|
|
5,504
|
Deferred income
taxes
|
563
|
|
563
|
Total
liabilities
|
127,306
|
|
122,151
|
Commitments and
contingencies
|
|
|
|
Equity:
|
|
|
|
Preferred
stock
|
—
|
|
—
|
Common
stock
|
113
|
|
112
|
Treasury
stock
|
(6,147)
|
|
(6,147)
|
Additional
paid-in-capital
|
824,786
|
|
823,259
|
Accumulated
deficit
|
(602,188)
|
|
(599,442)
|
Accumulated other
comprehensive loss
|
(17,142)
|
|
(16,029)
|
Total
equity
|
199,422
|
|
201,753
|
TOTAL LIABILITIES AND
EQUITY
|
$
326,728
|
|
$
323,904
|
AVIAT NETWORKS, INC.
Fiscal Year 2023 First Quarter Summary
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
AND REGULATION G DISCLOSURE
To supplement the consolidated financial statements presented in
accordance with accounting principles generally accepted in
the United States (GAAP), we
provide additional measures of gross margin, research and
development expenses, selling and administrative expenses,
operating income, provision for or benefit from income taxes, net
income, net income per share, and adjusted income before interest,
tax, depreciation and amortization (Adjusted EBITDA), in each case,
adjusted to exclude certain costs, charges, gains and losses, as
set forth below. We believe that these non-GAAP financial measures,
when considered together with the GAAP financial measures provide
information that is useful to investors in understanding
period-over-period operating results separate and apart from items
that may, or could, have a disproportionate positive or negative
impact on results in any particular period. We also believe these
non-GAAP measures enhance the ability of investors to analyze
trends in our business and to understand our performance. In
addition, we may utilize non-GAAP financial measures as a guide in
our forecasting, budgeting and long-term planning process and to
measure operating performance for some management compensation
purposes. Any analysis of non-GAAP financial measures should be
used only in conjunction with results presented in accordance with
GAAP. Reconciliations of these non-GAAP financial measures with the
most directly comparable financial measures calculated in
accordance with GAAP follow.
|
Table
3
|
AVIAT NETWORKS,
INC.
|
Fiscal Year 2023
First Quarter Summary
|
RECONCILIATIONS OF
NON-GAAP FINANCIAL MEASURES (1)
|
Condensed
Consolidated Statements of Operations
|
(Unaudited)
|
|
|
Three Months
Ended
|
|
September 30,
2022
|
|
% of
Revenue
|
|
October 1,
2021
|
|
% of
Revenue
|
|
(In thousands,
except percentages and per share amounts)
|
GAAP gross
margin
|
$
29,454
|
|
36.3 %
|
|
$
26,081
|
|
35.7 %
|
Share-based
compensation
|
172
|
|
|
|
68
|
|
|
Non-GAAP gross
margin
|
29,626
|
|
36.5 %
|
|
26,149
|
|
35.7 %
|
|
|
|
|
|
|
|
|
GAAP research and
development expenses
|
$
6,087
|
|
7.5 %
|
|
$
5,910
|
|
8.1 %
|
Share-based
compensation
|
(135)
|
|
|
|
(76)
|
|
|
Non-GAAP research
and development expenses
|
5,952
|
|
7.3 %
|
|
5,834
|
|
8.0 %
|
|
|
|
|
|
|
|
|
GAAP selling and
administrative expenses
|
$
17,504
|
|
21.5 %
|
|
$
12,698
|
|
17.4 %
|
Share-based
compensation
|
(1,531)
|
|
|
|
(719)
|
|
|
Merger and acquisition
related expense
|
(1,516)
|
|
|
|
—
|
|
|
Non-GAAP selling and
administrative expenses
|
14,457
|
|
17.8 %
|
|
11,979
|
|
16.4 %
|
|
|
|
|
|
|
|
|
GAAP operating
income
|
$
3,913
|
|
4.8 %
|
|
$
6,814
|
|
9.3 %
|
Share-based
compensation
|
1,838
|
|
|
|
863
|
|
|
Merger and acquisition
related expense
|
1,516
|
|
|
|
—
|
|
|
Restructuring
charges
|
1,950
|
|
|
|
659
|
|
|
Non-GAAP operating
income
|
9,217
|
|
11.3 %
|
|
8,336
|
|
11.4 %
|
|
|
|
|
|
|
|
|
GAAP income tax
provision
|
$
3,877
|
|
4.8 %
|
|
$
2,160
|
|
3.0 %
|
Adjustment to reflect
pro forma tax rate
|
(3,577)
|
|
|
|
(1,860)
|
|
|
Non-GAAP income tax
provision
|
300
|
|
0.4 %
|
|
300
|
|
0.4 %
|
|
|
|
|
|
|
|
|
GAAP net (loss)
income
|
$
(2,746)
|
|
(3.4) %
|
|
$
4,682
|
|
6.4 %
|
Share-based
compensation
|
1,838
|
|
|
|
863
|
|
|
Merger and acquisition
related expense
|
1,516
|
|
|
|
—
|
|
|
Restructuring
charges
|
1,950
|
|
|
|
659
|
|
|
Other
expense
|
2,659
|
|
|
|
—
|
|
|
Adjustment to reflect
pro forma tax rate
|
3,577
|
|
|
|
1,860
|
|
|
Non-GAAP net
income
|
$
8,794
|
|
10.8 %
|
|
$
8,064
|
|
11.0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per
share:
|
GAAP
|
$
(0.25)
|
|
|
|
$
0.39
|
|
|
Non-GAAP
|
$
0.75
|
|
|
|
$
0.67
|
|
|
|
|
|
|
|
|
|
|
Shares used in
computing net income per share
|
|
|
|
|
|
|
|
GAAP
|
11,200
|
|
|
|
11,954
|
|
|
Non-GAAP
|
11,777
|
|
|
|
11,954
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA:
|
|
|
|
|
|
|
|
GAAP net (loss)
income
|
$
(2,746)
|
|
(3.4) %
|
|
$
4,682
|
|
6.4 %
|
Depreciation and
amortization of property, plant and equipment
|
1,468
|
|
|
|
1,264
|
|
|
Other expense/(income),
net
|
2,782
|
|
|
|
(28)
|
|
|
Share-based
compensation
|
1,838
|
|
|
|
863
|
|
|
Merger and acquisition
related expense
|
1,516
|
|
|
|
—
|
|
|
Restructuring
charges
|
1,950
|
|
|
|
659
|
|
|
Provision for income
taxes
|
3,877
|
|
|
|
2,160
|
|
|
Adjusted
EBITDA
|
$
10,685
|
|
13.2 %
|
|
$
9,600
|
|
13.1 %
|
|
|
|
|
|
|
|
|
(1)
|
The adjustments above
reconcile our GAAP financial results to the non-GAAP financial
measures used by us. Our non-GAAP net income excluded share-based
compensation, and other non-recurring charges (recovery). Adjusted
EBITDA was determined by excluding depreciation and amortization on
property, plant and equipment, interest, provision for or benefit
from income taxes, and non-GAAP pre-tax adjustments, as set forth
above, from GAAP net income. We believe that the presentation of
these non-GAAP items provides meaningful supplemental information
to investors, when viewed in conjunction with, and not in lieu of,
our GAAP results. However, the non-GAAP financial measures have not
been prepared under a comprehensive set of accounting rules or
principles. Non-GAAP information should not be considered in
isolation from, or as a substitute for, information prepared in
accordance with GAAP. Moreover, there are material limitations
associated with the use of non-GAAP financial measures.
|
|
Table
4
|
AVIAT NETWORKS,
INC.
|
Fiscal Year 2023
First Quarter Summary
|
SUPPLEMENTAL
SCHEDULE OF REVENUE BY GEOGRAPHICAL AREA
|
(Unaudited)
|
|
|
Three Months
Ended
|
|
September
30,
2022
|
|
October 1,
2021
|
|
(In
thousands)
|
North
America
|
$
48,848
|
|
$
50,937
|
International:
|
|
|
|
Africa and the Middle
East
|
10,984
|
|
10,702
|
Europe
|
4,500
|
|
2,703
|
Latin America and Asia
Pacific
|
16,919
|
|
8,816
|
|
32,403
|
|
22,221
|
Total
revenue
|
$
81,251
|
|
$
73,158
|
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SOURCE Aviat Networks, Inc.