PR Newswire | Nov 5, 2020 04:03PM EST

11/05 15:03 CST

Aviat Networks Announces Fiscal 2021 First Quarter Financial ResultsTotal Revenue of $66.3 million, up 13.1% Year-Over-YearAdjusted EBITDA of $8.4 million; Up 103% Year-Over-Year AUSTIN, Texas, Nov. 5, 2020

AUSTIN, Texas, Nov. 5, 2020 /PRNewswire/ -- Aviat Networks, Inc. ("Aviat Networks," "Aviat," or the "Company"), (NASDAQ: AVNW), the leading expert in wireless transport solutions, reported today financial results for its fiscal 2021 first quarter ended October 2, 2020.

First Quarter Highlights

* The Company continues to execute across all key long-term focus areas driving improving sales, operational efficiencies, cost reductions and improved product mix and record profitability. * Recognized benefits from cost savings and restructuring initiatives; GAAP operating expenses decreased by 15.9% and non-GAAP operating expenses decreased by 11.9% year-over-year.

First Quarter Financial Highlights

* Total Revenues: $66.3 million, +13.1% from same quarter last year * North America: $45.5 million +14.4%; Driven by private network business * International: $20.8 million, +10.3%; Returns to growth, primarily driven by Latin America/Asia Pacific

* GAAP Results: Gross Margin 36.6%; Operating Expenses $17.7 million; Operating Income $6.6 million, Net Income $5.9 million; Net Income per diluted share $1.07 * Non-GAAP Results: Adjusted EBITDA $8.4 million; Gross Margin 36.7%; Operating Expenses $17.2 million; Operating Income $7.1 million; Net Income $6.9 million; Net Income per diluted share $1.24 * Net Cash: $36.2 million, +$3.6 million from prior sequential quarter; No loan or other debt outstanding at quarter end * Introduces Fiscal 2021 Guidance: Currently expects Full Year Fiscal 2021 Revenue of $245 million to $255 million and Adjusted EBITDA Guidance of $18 million to $22 million.

"This was a very strong quarter for Aviat, a quarter where our continued execution across our key long-term focus areas yielded positive results across the business, including record profitability," said Peter Smith, President and Chief Executive Officer of Aviat. "We saw improved sales driven by 5G rollouts with wins for our multi-band transport solution for 5G, the industry's simplest multi-band offering which lowers a customer's total cost of ownership by reducing microwave spectrum costs, as well as continued demand for mission critical networks and rural broadband connectivity. We benefited from increased software sales, including our Frequency Assurance Software (FAS), a unique and proprietary software system for interference monitoring and analysis, and recently released our extra high power, mission critical radio into the US Federal market, allowing us to expand business in this important and growing segment."

Mr. Smith concluded: "We continue to strive to demonstrate consistency and improvements in our performance by being laser focused on four key areas; increasing revenue, capturing value of Aviat's differentiation, driving out costs, and ultimately, increasing overall shareholder value. This quarter, we again demonstrated that we are executing on these initiatives as part of our new long-term strategy, and that those efforts are leading to improved financial and operational performance. We plan on maintaining this momentum and continuing to capitalize on the opportunities where we can deliver value to our customers and our shareholders."

Fiscal 2021 First Quarter Comparisons

RevenuesThe Company reported total revenues of $66.3 million for its fiscal 2021 first quarter, compared to $58.6 million in the comparable fiscal 2020 period, an increase of $7.7 million or 13.1%. North America revenue of $45.5 million increased by $5.7 million or 14.4%, compared to $39.8 million in the comparable fiscal 2020 period. International revenue was of $20.8 million and returned to growth from $18.8 million in the comparable fiscal 2020 period.

Gross MarginsIn the fiscal 2021 first quarter, the Company reported GAAP gross margin of 36.6% and non-GAAP gross margin of 36.7%. This compares to GAAP gross margin of 38.5% and non-GAAP gross margin of 38.6% in the comparable fiscal 2020 period.

Operating ExpensesGAAP total operating expenses for the fiscal 2021 first quarter were $17.7 million, compared to $21.0 million in the comparable fiscal 2020 period, a decrease of $(3.4) million or (15.9)%. Non-GAAP total operating expenses, excluding the impact of restructuring charges and share-based compensation, for the fiscal 2021 first quarter were $17.2 million, compared to $19.5 million in the comparable fiscal 2020 period, a decrease of $(2.3) million or (11.9)%. Both GAAP and non-GAAP operating expenses decreased primarily due to costs saving initiatives implemented in the second half of fiscal 2020.

Operating IncomeThe Company reported GAAP operating income of $6.6 million for the fiscal 2021 first quarter, compared to a GAAP operating income of $1.5 million in the comparable fiscal 2020 period, a $5.0 million year-over-year improvement. On a non-GAAP basis, the Company reported operating income of $7.1 million for the fiscal 2021 first quarter, compared to $3.1 million in the comparable fiscal 2020 period, a $4.0 million year-over-year improvement.

Net Income / Net Income Per ShareThe Company reported GAAP net income of $5.9 million in the fiscal 2021 first quarter or GAAP net income per share of $1.07. This compared to a GAAP net income of $0.1 million or GAAP net income per share of $0.01 in the fiscal 2020 first quarter. On a non-GAAP basis, the Company reported net income of $6.9 million or a non-GAAP net income per share of $1.24, compared to a non-GAAP net income of $2.9 million or non-GAAP net income per share of $0.52 in the comparable fiscal 2020 period.

Adjusted EBITDAAdjusted earnings before interest, tax, depreciation and amortization ("Adjusted EBITDA") for the fiscal 2021 first quarter was $8.4 million, compared to $4.1 million in the comparable fiscal 2020 period, a year-over-year improvement of $4.2 million or 103%.

Balance Sheet HighlightsThe Company reported cash and cash equivalents as of $36.2 million as of October 2, 2020, compared to $41.6 million as of July 3, 2020. During the fiscal 2021 first quarter the Company repaid $9.0 million borrowing under its credit facility. The Company's net cash and cash equivalents was $36.2 million as of October 2, 2020, compared to net cash of $32.6 million as of July 3, 2020, an increase of $3.6 million. The Company anticipates its net cash position will improve throughout the remainder of the fiscal year, subject to customer timing delays, which may occur from time to time based on historical trends.

Conference Call DetailsAviat Networks will host a conference call at 5:00 p.m. Eastern Time (ET) today, November 5, 2020, to discuss its financial and operational results for the fiscal 2021 first quarter. Participating on the call will be Peter Smith, President and Chief Executive Officer, Eric Chang, Chief Financial Officer and Keith Fanneron, Vice President Global Finance and Investor Relations. Following management's remarks, there will be a question and answer period.

To listen to the live conference call, please dial toll-free (US/CAN) 866-465-7577 or toll-free (INTL) 786-815-8431, conference ID: 9844037. We ask that you dial-in approximately 10 minutes prior to the start time. Additionally, participants are invited to listen via webcast, which will be broadcasted live and via replay approximately two hours after the call is completed at http://investors.aviatnetworks.com/events-and-presentations/events.

About Aviat NetworksAviat 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. 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 StatementsThe 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 2021, 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 on our business, operations and cash flows; * 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; * our ability to meet financial covenant requirements which could impact, among other things, our liquidity; * the timing of our receipt of payment for products or services from our customers; * our ability to meet projected new product development dates or anticipated cost reductions of new products; * our suppliers' inability to perform and deliver on time as a result of their financial condition, component shortages, the effects of COVID-19 or other supply chain constraints; * customer acceptance of new products; * the ability of our subcontractors to timely perform; * continued weakness in the global economy affecting customer spending; * retention of our key personnel; * our ability to manage and maintain key customer relationships; * uncertain economic conditions in the telecommunications sector combined with operator and supplier consolidation; * our failure to protect our intellectual property rights or defend against intellectual property infringement claims by others; * 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, including the effects of current restrictions on various commercial and economic activities in response to the COVID-19 pandemic; * 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; * 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; and * our ability to implement our 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, 2020 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:Keith FanneronVice President Global Finance & Investor RelationsPhone (408)-941-7128 Email: keith.fanneron@aviatnet.com

Table 1

AVIAT NETWORKS, INC.

Fiscal Year 2021 First Quarter Summary

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



Three Months Ended

(In thousands, except per share amounts) October 2,September 27, 2020 2019

Revenues:

Revenue from product sales $44,464 $36,594

Revenue from services 21,826 22,020

Total revenues 66,290 58,614

Cost of revenues:

Cost of product sales 27,909 20,822

Cost of services 14,132 15,236

Total cost of revenues 42,041 36,058

Gross margin 24,249 22,556

Operating expenses:

Research and development expenses 4,847 5,216

Selling and administrative expenses 12,837 14,644

Restructuring charges - 1,177

Total operating expenses 17,684 21,037

Operating income 6,565 1,519

Interest income 36 86

Interest expense (1) (3)

Income before income taxes 6,600 1,602

Provision for income taxes 664 1,548

Net income $5,936 $54



Net income per share of common stock outstanding:

Basic $1.10 $0.01

Diluted $1.07 $0.01

Weighted-average shares outstanding:

Basic 5,411 5,347

Diluted 5,546 5,530

Table 2

AVIAT NETWORKS, INC.

Fiscal Year 2021 First Quarter Summary

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)



(In thousands) October 2,July 3, 2020 2020

ASSETS

Current Assets:

Cash and cash equivalents $36,226 $41,618

Accounts receivable, net 45,027 44,661

Unbilled receivables 31,295 28,085

Inventories 14,356 13,997

Customer service inventories 1,303 1,234

Other current assets 9,751 10,355

Total current assets 137,958 139,950

Property, plant and equipment, net 16,562 16,911

Deferred income taxes 12,548 12,799

Right of use assets 2,912 3,474

Other assets 6,793 6,667

Total long-term assets 38,815 39,851

TOTAL ASSETS $176,773$179,801

LIABILITIES AND EQUITY

Current Liabilities:

Accounts payable $31,720 $31,995

Accrued expenses 24,262 26,920

Short-term lease liabilities 1,027 1,445

Advance payments and unearned revenue25,233 21,872

Short-term debt - 9,000

Restructuring liabilities 1,835 2,738

Total current liabilities 84,077 93,970

Unearned revenue 8,182 8,142

Long-term lease liabilities 2,147 2,303

Other long-term liabilities 316 401

Reserve for uncertain tax positions 5,644 5,759

Deferred income taxes 510 545

Total liabilities 100,876 111,120

Commitments and contingencies

Equity:

Preferred stock - -

Common stock 54 54

Additional paid-in-capital 815,203 814,337

Accumulated deficit (724,805)(730,741)

Accumulated other comprehensive loss (14,555) (14,969)

Total equity 75,897 68,681

TOTAL LIABILITIES AND EQUITY $176,773$179,801

AVIAT NETWORKS, INC.Fiscal Year 2021 First Quarter SummaryRECONCILIATION 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, diluted net income per share, and adjusted income before interest, tax, depreciation and amortization (Adjusted EBITDA), 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 2021 First Quarter Summary

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES ^(1)

Condensed Consolidated Statements of Operations

(Unaudited)



Three Months Ended

October 2,% of September 27, % of 2020 Revenue2019 Revenue

(In thousands, except percentages and per share amounts)

GAAP gross margin $24,249 36.6 %$ 22,556 38.5 %

Share-based 72 44 compensation

Non-GAAP gross 24,321 36.7 %22,600 38.6 %margin



GAAP research and $4,847 7.3 %$ 5,216 8.9 %development expenses

Share-based (40) (27) compensation

Non-GAAP research and development 4,807 7.3 %5,189 8.9 %expenses



GAAP selling and administrative $12,837 19.4 %$ 14,644 25.0 %expenses

Share-based (459) (336) compensation

Non-GAAP selling and administrative 12,378 18.7 %14,308 24.4 %expenses



GAAP operating $6,565 9.9 %$ 1,519 2.6 %income

Share-based 571 407 compensation

Restructuring - 1,177 charges

Non-GAAP operating 7,136 10.8 %3,103 5.3 %income



GAAP income tax $664 1.0 %$ 1,548 2.6 %provision

Adjustment to reflect pro forma (364) (1,248) tax rate

Non-GAAP income tax 300 0.5 %300 0.5 %provision



GAAP net income $5,936 9.0 %$ 54 0.1 %

Share-based 571 407 compensation

Restructuring - 1,177 charges

Adjustment to reflect pro forma 364 1,248 tax rate

Non-GAAP net income $6,871 10.4 %$ 2,886 4.9 %





Diluted net income per share:

GAAP $1.07 $ 0.01

Non-GAAP $1.24 $ 0.52



Shares used in computing diluted net income per share

GAAP 5,546 5,530

Non-GAAP 5,546 5,530



Adjusted EBITDA:

GAAP net income $5,936 9.0 %$ 54 0.1 %

Depreciation and amortization of 1,254 1,038 property, plant and equipment

Interest income, net(35) (83)

Share-based 571 407 compensation

Restructuring - 1,177 charges

Provision for income664 1,548 taxes

Adjusted EBITDA $8,390 12.7 %$ 4,141 7.1 %

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 the GAAP net(1) 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 2021 First Quarter Summary

SUPPLEMENTAL SCHEDULE OF REVENUE BY GEOGRAPHICAL AREA

(Unaudited)



Three Months Ended

October 2,September 27, 2020 2019

(In thousands)

North America $45,499 $39,767

International:

Africa and the Middle East 10,571 10,593

Europe and Russia 2,262 3,407

Latin America and Asia Pacific 7,958 4,847

20,791 18,847

Total revenue $66,290 $58,614

View original content to download multimedia: http://www.prnewswire.com/news-releases/aviat-networks-announces-fiscal-2021-first-quarter-financial-results-301167393.html

SOURCE Aviat Networks, Inc.