Aviat Networks, Inc. (NASDAQ:AVNW) Q3 2021 Earnings Conference Call May 5, 2021 5:00 PM ET Company Participants Keith Fanneron - Vice President, Finance & Investor Relations Pete Smith - President & Chief Executive Officer Eric Chang - Chief Financial Officer Conference Call Participants Theodore O'Neill - Litchfield Hills Research Tom Diffely - DA Davidson Operator Good afternoon. Welcome to Aviat Networks Third Quarter Fiscal 2021 Earnings Call. At this time, all participants are in a listen-only mode. A ...

Part I. Financial Information [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements for the quarter ended April 2, 2021, are presented, retrospectively adjusted for a two-for-one stock split [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$290.6 million** and total equity rose to **$179.7 million** as of April 2, 2021, driven by deferred income taxes and a tax valuation allowance release Balance Sheet Summary (in thousands) | Balance Sheet Item | April 2, 2021 (in thousands) | July 3, 2020 (in thousands) | | :--- | :--- | :--- | | **Total Current Assets** | $164,284 | $139,950 | | **Total Assets** | $290,576 | $179,801 | | **Total Current Liabilities** | $93,666 | $93,970 | | **Total Liabilities** | $110,855 | $111,120 | | **Total Equity** | $179,721 | $68,681 | - Deferred income taxes increased significantly from **$12.8 million** to **$102.6 million**, contributing to the growth in total assets[10](index=10&type=chunk) - The company had no short-term debt as of April 2, 2021, compared to **$9.0 million** as of July 3, 2020[10](index=10&type=chunk) [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Total revenues increased to **$66.4 million** and net income surged to **$94.7 million** for Q3 FY2021, primarily due to a significant income tax benefit Key Operating Metrics (in thousands, except per share) | Metric (in thousands, except per share) | Three Months Ended April 2, 2021 | Three Months Ended April 3, 2020 | Nine Months Ended April 2, 2021 | Nine Months Ended April 3, 2020 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | $66,404 | $61,379 | $203,225 | $175,990 | | **Gross Margin** | $25,578 | $21,961 | $76,736 | $62,836 | | **Operating Income** | $4,035 | $1,236 | $18,478 | $1,258 | | **Net Income (Loss)** | $94,731 | $731 | $107,308 | $(886) | | **Diluted EPS** | $8.00 | $0.07 | $9.31 | $(0.08) | - A significant tax benefit of **$90.6 million** was recorded in the third quarter of fiscal 2021, compared to a tax provision of **$0.6 million** in the prior-year quarter, drastically increasing net income[13](index=13&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities was **$14.2 million** for the nine months ended April 2, 2021, with **$7.7 million** used in financing activities primarily for debt repayment Cash Flow Summary (in thousands) | Cash Flow Activity (in thousands) | Nine Months Ended April 2, 2021 | Nine Months Ended April 3, 2020 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $14,187 | $14,625 | | **Net cash used in investing activities** | $(2,399) | $(3,945) | | **Net cash used in financing activities** | $(7,736) | $(2,525) | - The cash from operations was impacted by a significant non-cash deferred tax benefit of **$89.7 million** and an increase in unbilled receivables of **$15.4 million**[19](index=19&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies, balance sheet components, and significant events, including a stock split, tax valuation allowance release, restructuring plans, and a subsequent shelf registration filing - On April 7, 2021, the company effected a two-for-one stock split, retrospectively reclassifying all per share and equity award amounts for all periods presented[33](index=33&type=chunk) - Inventories increased to **$21.9 million** from **$14.0 million**, primarily to mitigate supply chain constraints[46](index=46&type=chunk) - During Q3 2021, the company recorded a valuation allowance release of **$92.2 million** on its U.S. deferred tax assets, based on expectations of continued profitability[100](index=100&type=chunk) - The company's Board of Directors approved a new restructuring plan in Q3 2021 (Fiscal 2021 Plan), resulting in a charge of **$1.3 million** for the quarter[90](index=90&type=chunk)[91](index=91&type=chunk) - As of April 2, 2021, the company had approximately **$73 million** in remaining performance obligations, with about **60%** expected to be recognized as revenue in the next 12 months[75](index=75&type=chunk) - Subsequent to the quarter end, on April 13, 2021, the company filed a shelf registration statement on Form S-3 to offer and sell up to **$200 million** of securities[125](index=125&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the **8.2%** revenue increase and improved gross margin in Q3 2021, the impact of the tax valuation allowance release on net income, and the company's sufficient liquidity position [Results of Operations](index=29&type=section&id=MD%26A-Results%20of%20Operations) Q3 2021 revenue increased **8.2%** to **$66.4 million**, driven by North America, with gross margin expanding to **38.5%** due to favorable business mix and reduced operating expenses Revenue by Region (in thousands) | Revenue by Region (in thousands) | Q3 FY2021 | Q3 FY2020 | % Change | | :--- | :--- | :--- | :--- | | North America | $42,021 | $37,250 | 12.8% | | Africa and the Middle East | $9,904 | $9,230 | 7.3% | | Europe and Russia | $3,280 | $1,903 | 72.4% | | Latin America and Asia Pacific | $11,199 | $12,996 | (13.8)% | | **Total Revenue** | **$66,404** | **$61,379** | **8.2%** | - Gross margin for Q3 FY2021 improved to **38.5%** from **35.8%** YoY, primarily due to a higher volume of Private Network business and increased sales through the Aviat Store[146](index=146&type=chunk) - Selling and administrative expenses for the nine months of fiscal 2021 decreased by **$2.8 million (6.3%)** compared to the prior year, mainly due to lower travel expenses and restructuring savings[149](index=149&type=chunk) - A tax benefit of **$90.6 million** was recorded in Q3 2021, primarily from the release of a **$92.2 million** valuation allowance on U.S. deferred tax assets due to expectations of future profitability[153](index=153&type=chunk)[154](index=154&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=MD%26A-Liquidity%20and%20Capital%20Resources) As of April 2, 2021, the company held **$45.8 million** in cash and **$23.5 million** in available credit, with management deeming its liquidity sufficient for the next 12 months - Total cash and cash equivalents were **$45.8 million**, with **55.3%** held in the United States and **44.7%** held by foreign entities[157](index=157&type=chunk) - The company had **$23.5 million** of available credit under its **$25.0 million** SVB Credit Facility, which matures on June 28, 2021[162](index=162&type=chunk) - Net cash used in financing activities was **$7.7 million** for the first nine months of fiscal 2021, primarily due to a **$9.0 million** repayment of short-term debt[161](index=161&type=chunk) - The company filed a **$200 million** shelf registration on Form S-3, which, once effective, will allow for future offerings of securities[165](index=165&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company manages foreign currency and interest rate risks, noting no material impact from interest rate fluctuations and no outstanding foreign currency forward contracts as of April 2, 2021 - The company uses foreign exchange forward contracts to hedge currency risk but had no such contracts outstanding as of April 2, 2021[173](index=173&type=chunk)[176](index=176&type=chunk) - Exposure to interest rate risk on the **$45.8 million** in cash and cash equivalents and on borrowings under the SVB Credit Facility is not expected to have a material impact on financial results[178](index=178&type=chunk)[179](index=179&type=chunk)[180](index=180&type=chunk) [Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded that disclosure controls and procedures were effective as of April 2, 2021, with no material changes to internal controls over financial reporting during the quarter - The President and CEO, and CFO concluded that disclosure controls and procedures were effective as of April 2, 2021[181](index=181&type=chunk) - No changes occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls over financial reporting[182](index=182&type=chunk) Part II. Other Information [Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to various legal claims, with an immaterial settlement in Q3 2021, and management believes no current proceedings will materially affect its financial position - A claim for damages from a customer received in May 2016 was settled for an immaterial amount during the third quarter of 2021[115](index=115&type=chunk) - The company has not recorded any accrual for loss contingencies associated with current legal claims, as a material loss is not considered probable or reasonably estimable[117](index=117&type=chunk) [Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) No material changes have occurred to the risk factors previously disclosed in the company's fiscal 2020 Annual Report on Form 10-K - No material changes have occurred from the risk factors disclosed in the fiscal 2020 Annual Report on Form 10-K[186](index=186&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reinstated its stock repurchase program in Q3 2021, repurchasing **8,300 shares** for **$0.5 million**, with **$3.0 million** remaining available for future repurchases - The Board of Directors reinstated the stock repurchase program in the third quarter of fiscal 2021 after a temporary suspension[187](index=187&type=chunk) Stock Repurchases | Period | Shares Repurchased | Average Price Paid per Share | | :--- | :--- | :--- | | Jan 30 - Feb 26, 2021 | 2,100 | $59.80 | | Feb 27 - Apr 2, 2021 | 6,200 | $53.68 | | **Total** | **8,300** | **N/A** | - As of April 2, 2021, **$3.0 million** remained available for future repurchases under the stock repurchase program[187](index=187&type=chunk)

Aviat Networks, Inc. (NASDAQ:AVNW) Q2 2021 Earnings Conference Call February 3, 2021 5:00 PM ET Company Participants Keith Fanneron - VP, Finance and IR Pete Smith - President and CEO Eric Chang - CFO Conference Call Participants Theodore O'Neill - Litchfield Hills Research Sarkis Sherbetchyan - B. Riley Securities Orin Hirschman - AIGH Investment Partners Richard Greulich - REG Capital Advisors Operator Good afternoon. Welcome to Aviat Networks Second Quarter Fiscal 2021 Earnings Call. At this time, all pa ...

Financial Data and Key Metrics Changes - Adjusted EBITDA more than doubled in Q1 2021, reaching $8.4 million, up $4.2 million or 103% year-over-year, and up over 52% from Q4 2020 [6][17] - Total revenue for Q1 2021 was $66.3 million, an increase of $7.7 million or 13.1% compared to $58.6 million in Q1 2020 [15] - Non-GAAP net income for Q1 2021 was $6.9 million, up nearly 138% from $2.9 million in the same period last year [17] Business Line Data and Key Metrics Changes - North American revenue increased over 14% year-over-year to $45.5 million, driven primarily by the private network business [7][15] - International revenue returned to growth, reaching $20.8 million in Q1 2021, compared to $18.8 million in Q1 2020, marking a 10% increase [15][13] Market Data and Key Metrics Changes - The company reported a backlog of over $200 million at the end of Q1 2021 [15] - The North American team is focusing on expanding sales for 5G applications, addressing the growing data demand and network complexity [10] Company Strategy and Development Direction - The company is focused on four key areas: increasing revenue, capturing differentiation, driving down costs, and enhancing shareholder value [7] - The introduction of the Frequency Assurance Software (FAS) aims to improve network reliability and uptime, particularly in the context of emerging technologies like WiFi 6e [8] - The company is well-positioned to capitalize on rural broadband growth opportunities, supported by over $30 billion in FCC funding [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business outlook, anticipating revenue growth for fiscal 2021 in the range of $245 million to $255 million and adjusted EBITDA between $18 million and $22 million [20] - The management acknowledged potential challenges due to COVID-19 but noted a significant uptick in field service activities as lockdowns were lifted [20] Other Important Information - The company achieved a gross margin of 36.6% in Q1 2021, slightly down from 38.5% in Q1 2020 [15] - Operating expenses decreased approximately 16% year-over-year, attributed to cost-saving initiatives and restructuring plans [16] Q&A Session Summary Question: Congratulations on an incredible quarter - Management acknowledged the compliment [21] Question: What are the highlights making year-over-year reduction in operating expenses plausible? - Management highlighted restructuring plans aimed at cutting operating costs, targeting annualized savings of about $3.5 million [22][23] Question: What are the key drivers for customers regarding the multi-band solution for 5G? - Management explained that the multi-band solution allows operators to switch between bands at a low cost, reducing total cost of ownership and providing flexibility [25]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ________________________________ Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 2, 2020 __________________________ or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission File Number 001-33278 AVIAT NETWORKS, INC. (Exact name of registran ...

Aviat Networks, Inc. (NASDAQ:AVNW) Q4 2020 Results Earnings Conference Call August 27, 2020 4:30 PM ET Company Participants Keith Fanneron - Vice President of Global Finance and Investor Relations Pete Smith - President, Chief Executive Officer Eric Chang - Senior Vice President and Chief Financial Officer Conference Call Participants Tim Savageaux - Northland Capital Theodore O'Neill - Litchfield Hills Research Mark Spiegel - Stanphyl Capital Steve Busch - Everglades Resources Operator Ladies and gentlemen ...

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☐ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ________________________________ Form 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended July 3, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-33278 _________ ...