[Fiscal 2024 Third Quarter Performance Overview](index=1&type=section&id=Fiscal%202024%20Third%20Quarter%20Performance%20Overview) Aviat Networks reported strong year-over-year growth in its fiscal 2024 third quarter, driven by significant international sales and the integration of the Pasolink business [Third Quarter Highlights](index=1&type=section&id=Third%20Quarter%20Highlights) Aviat Networks achieved its 15th consecutive quarter of trailing twelve-month growth in revenue and Adjusted EBITDA, generated positive free cash flow, and secured new orders in the Indian market - Achieved **15th consecutive quarter of growth** in both revenue and Adjusted EBITDA on a trailing twelve-month basis[2](index=2&type=chunk) - Core Aviat revenue grew by **7%**, primarily fueled by strong international sales and expansion in private networks[2](index=2&type=chunk) - Secured inaugural microwave backhaul radio orders in India, opening up an estimated **$200 million addressable market segment**[2](index=2&type=chunk) - The integration of the acquired Pasolink business is progressing ahead of schedule in terms of profitability and cash flow[3](index=3&type=chunk) [Third Quarter Financial Summary](index=1&type=section&id=Third%20Quarter%20Financial%20Summary) For the third quarter of fiscal 2024, Aviat Networks reported total revenues of $111.6 million, a 33.7% increase year-over-year, with Adjusted EBITDA growing 11.1% to $12.0 million Q3 FY2024 Key Financial Metrics (YoY) | Metric | Q3 FY2024 (M) | Q3 FY2023 (M) | Change | | :--- | :--- | :--- | :--- | | **Total Revenues** | $111.6 | $83.5 | +33.7% | | **Adjusted EBITDA** | $12.0 | $10.8 | +11.1% | | **GAAP Net Income** | $3.4 | $4.9 | -30.6% | | **Non-GAAP Net Income** | $9.4 | $8.9 | +5.6% | | **GAAP Net Income per Share** | $0.27 | $0.41 | -34.1% | | **Non-GAAP Net Income per Share** | $0.73 | $0.75 | -2.7% | - The company ended the quarter with **$59.2 million in net cash and marketable securities**, and cash net of debt stood at **$10.2 million**[3](index=3&type=chunk) [Detailed Financial Analysis (Q3 & Nine Months FY2024)](index=1&type=section&id=Detailed%20Financial%20Analysis%20%28Q3%20%26%20Nine%20Months%20FY2024%29) This section provides an in-depth analysis of Aviat Networks' revenue, profitability, net income, EPS, Adjusted EBITDA, balance sheet, and cash flow for Q3 and the nine months of FY2024 [Revenue Analysis](index=1&type=section&id=Revenue%20Analysis) Total revenue for Q3 FY2024 increased by 33.7% to $111.6 million, largely due to a 79.6% surge in international revenue, offsetting a decline in North America Revenue by Geography (Q3 FY2024 vs Q3 FY2023) | Region | Q3 FY2024 Revenue (M) | Q3 FY2023 Revenue (M) | YoY Change | | :--- | :--- | :--- | :--- | | North America | $44.4 | $46.1 | -3.6% | | International | $67.2 | $37.4 | +79.6% | | **Total** | **$111.6** | **$83.5** | **+33.7%** | Revenue by Geography (Nine Months Ended March 2024 vs 2023) | Region | Nine Months FY2024 Revenue (M) | Nine Months FY2023 Revenue (M) | YoY Change | | :--- | :--- | :--- | :--- | | North America | $151.2 | $147.0 | +2.9% | | International | $143.0 | $108.5 | +31.8% | | **Total** | **$294.2** | **$255.4** | **+15.2%** | [Profitability Analysis](index=2&type=section&id=Profitability%20Analysis) Q3 FY2024 profitability was impacted by the Pasolink acquisition and M&A-related expenses, leading to a decrease in GAAP gross margin and operating income, while non-GAAP measures showed growth [Gross Margin](index=2&type=section&id=Gross%20Margin) Q3 FY2024 GAAP gross margin decreased to 32.7% from 35.7% in the prior year, primarily due to the near-term impact of the Pasolink business acquisition Gross Margin Comparison (Q3 FY2024 vs Q3 FY2023) | Margin Type | Q3 FY2024 | Q3 FY2023 | Basis Point Change | | :--- | :--- | :--- | :--- | | GAAP Gross Margin | 32.7% | 35.7% | -300 bps | | Non-GAAP Gross Margin | 35.2% | 35.9% | -70 bps | [Operating Expenses](index=2&type=section&id=Operating%20Expenses) GAAP operating expenses for Q3 FY2024 rose by 41.0% to $31.5 million, reflecting expanded operations following recent acquisitions Operating Expenses (Q3 FY2024 vs Q3 FY2023) | Expense Type | Q3 FY2024 (M) | Q3 FY2023 (M) | YoY Change | | :--- | :--- | :--- | :--- | | GAAP Operating Expenses | $31.5 | $22.3 | +41.0% | | Non-GAAP Operating Expenses | $28.5 | $20.7 | +37.9% | [Operating Income](index=2&type=section&id=Operating%20Income) GAAP operating income for Q3 FY2024 decreased by 32.9% to $5.0 million due to M&A-related expenses, while non-GAAP operating income increased by 16.2% to $10.8 million Operating Income (Q3 FY2024 vs Q3 FY2023) | Income Type | Q3 FY2024 (M) | Q3 FY2023 (M) | YoY Change | | :--- | :--- | :--- | :--- | | GAAP Operating Income | $5.0 | $7.5 | -32.9% | | Non-GAAP Operating Income | $10.8 | $9.3 | +16.2% | [Net Income and Earnings Per Share (EPS)](index=2&type=section&id=Net%20Income%20and%20Earnings%20Per%20Share%20%28EPS%29) Q3 FY2024 GAAP net income decreased to $3.4 million, or $0.27 per diluted share, while non-GAAP net income increased to $9.4 million, or $0.73 per share Net Income and EPS (Q3 FY2024 vs Q3 FY2023) | Metric | Q3 FY2024 | Q3 FY2023 | | :--- | :--- | :--- | | **GAAP Net Income** | $3.4M | $4.9M | | **GAAP EPS (Diluted)** | $0.27 | $0.41 | | **Non-GAAP Net Income** | $9.4M | $8.9M | | **Non-GAAP EPS (Diluted)** | $0.73 | $0.75 | Net Income and EPS (Nine Months Ended March 2024 vs 2023) | Metric | Nine Months FY2024 | Nine Months FY2023 | | :--- | :--- | :--- | | **GAAP Net Income** | $10.3M | $8.2M | | **GAAP EPS (Diluted)** | $0.84 | $0.69 | | **Non-GAAP Net Income** | $31.6M | $28.8M | | **Non-GAAP EPS (Diluted)** | $2.57 | $2.43 | [Adjusted EBITDA](index=2&type=section&id=Adjusted%20EBITDA) Adjusted EBITDA for Q3 FY2024 increased by 11.1% to $12.0 million, and for the nine-month period, it grew by 10.0% to $37.9 million Adjusted EBITDA Performance | Period | FY2024 (M) | FY2023 (M) | YoY Change | | :--- | :--- | :--- | :--- | | **Third Quarter** | $12.0 | $10.8 | +11.1% | | **Nine Months** | $37.9 | $34.4 | +10.0% | [Balance Sheet and Cash Flow](index=2&type=section&id=Balance%20Sheet%20and%20Cash%20Flow) As of March 29, 2024, the company reported strong liquidity with $59.2 million in cash and marketable securities, improving working capital through reduced receivables and inventory - Cash from operations was **$15.3 million** in the current quarter and **$22.2 million** year-to-date[1](index=1&type=chunk) - Accounts receivable and unbilled receivables decreased by **$14.1 million**, and inventory declined by **$10.0 million** in Q3 FY2024[13](index=13&type=chunk) - Total debt was **$48.9 million** as of March 29, 2024, showing a slight decrease of **$0.6 million** from the previous quarter[13](index=13&type=chunk) [Fiscal 2024 Full Year Outlook](index=2&type=section&id=Fiscal%202024%20Full%20Year%20Outlook) Aviat Networks has updated its full-year revenue guidance for fiscal 2024 to between $408 million and $418 million, while maintaining its Adjusted EBITDA forecast [Updated Guidance](index=2&type=section&id=Updated%20Guidance) Aviat Networks updated its full-year fiscal 2024 revenue guidance to $408 million-$418 million, with Adjusted EBITDA remaining at $51.0 million-$56.0 million FY2024 Full Year Guidance | Metric | Guidance Range (M) | | :--- | :--- | | **Full Year Revenue** | $408 - $418 | | **Full Year Adjusted EBITDA** | $51.0 - $56.0 | [Financial Statements and Supplemental Data](index=5&type=section&id=Financial%20Statements%20and%20Supplemental%20Data) This section provides detailed financial statements including consolidated statements of operations, balance sheets, non-GAAP reconciliations, and supplemental revenue data by geographical area [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This statement provides a detailed breakdown of the company's revenues, costs, and expenses, leading to the net income for the third quarter and first nine months of fiscal 2024 Q3 FY2024 Income Statement Highlights (in thousands) | Line Item | Q3 FY2024 (K) | Q3 FY2023 (K) | | :--- | :--- | :--- | | Total Revenues | $111,613 | $83,480 | | Gross Margin | $36,534 | $29,833 | | Operating Income | $5,028 | $7,496 | | Net Income | $3,418 | $4,889 | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement presents the company's financial position as of March 29, 2024, detailing assets, liabilities, and stockholders' equity, with a comparison to the fiscal year-end of June 30, 2023 Balance Sheet Highlights (in thousands) | Account | March 29, 2024 (K) | June 30, 2023 (K) | | :--- | :--- | :--- | | Cash and cash equivalents | $58,201 | $22,242 | | Total Assets | $490,343 | $364,496 | | Total Liabilities | $231,836 | $144,398 | | Total Stockholders' Equity | $258,507 | $220,098 | [Reconciliation of Non-GAAP Financial Measures](index=7&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures) This section provides a detailed reconciliation of GAAP financial measures to their non-GAAP counterparts, adjusting for various items to offer a clearer view of operational performance Q3 FY2024 GAAP to Non-GAAP Reconciliation (in thousands) | Metric | GAAP (K) | Adjustments (K) | Non-GAAP (K) | | :--- | :--- | :--- | :--- | | **Gross Margin** | $36,534 | $2,776 | $39,310 | | **Operating Income** | $5,028 | $5,776 | $10,804 | | **Net Income** | $3,418 | $5,958 | $9,376 | [Supplemental Schedule of Revenue by Geographical Area](index=9&type=section&id=Supplemental%20Schedule%20of%20Revenue%20by%20Geographical%20Area) This schedule offers a granular view of revenue sources, breaking down total revenue by major geographical regions for both the quarter and nine-month periods Q3 FY2024 Revenue by Geography (in thousands) | Region | Q3 FY2024 (K) | Q3 FY2023 (K) | | :--- | :--- | :--- | | North America | $44,409 | $46,064 | | Africa and the Middle East | $11,401 | $19,235 | | Europe | $6,549 | $3,871 | | Latin America and Asia Pacific | $49,254 | $14,310 | | **Total Revenue** | **$111,613** | **$83,480** | [Other Information](index=3&type=section&id=Other%20Information) This section includes details regarding the conference call for Q3 FY2024 results and the standard forward-looking statements disclaimer [Conference Call Information](index=3&type=section&id=Conference%20Call%20Information) Aviat Networks scheduled a conference call for May 1, 2024, to discuss Q3 FY2024 results, featuring key executives and a Q&A session - The conference call to discuss Q3 FY2024 results was held on **May 1, 2024, at 5:00 p.m. ET**[15](index=15&type=chunk) - Participants included CEO Peter Smith, CFO David Gray, and Director of Corporate Development Andrew Fredrickson[15](index=15&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section contains a safe harbor statement, cautioning investors about forward-looking statements subject to risks such as integration challenges, supply chain issues, and global economic conditions - The document includes forward-looking statements regarding outlook, business conditions, and future financial performance[18](index=18&type=chunk) - Key risks that could affect future results include disruption from the NEC transaction, supply chain issues, inflation, and geopolitical conflicts[19](index=19&type=chunk)

Aviat Networks (AVNW) is a Zacks Rank #5 (Strong Sell) as earnings estimates have tracked lower despite a recent earnings beat.  The company is in the wireless network solutions and network management software industry and could be interesting to some investors at these levels. This article will look at why this stock is a Zacks Rank #5 (Strong Sell) as it is the Bear of the Day.DescriptionAviat Networks, Inc., previously known as Harris Stratex Networks, Inc., is a global supplier of wireless network solut ...

Pratchaya Investment Thesis The investment thesis around Aviat Networks (NASDAQ:AVNW) is the attractive valuation and better growth prospects. Traditionally, a company in decline, they have completely turned around and now sport an average revenue growth rate of 13.2% since 2021. This has been instrumental in driving positive operating leverage and below is why I think it will continue. Background AVNW is a global supplier of microwave and wireless access networking solutions. They supply a range of wir ...

Aviat Networks, Inc. (NASDAQ:AVNW) Q2 2024 Earnings Conference Call February 6, 2024 5:00 PM ET Company Participants Andrew Fredrickson - Director of Corporate Development and Investor Relations Peter Smith - President & Chief Executive Officer David Gray - Senior Vice President & Chief Financial Officer Conference Call Participants Theodore O'Neill - Litchfield Hills Research Scott Searle - Roth Capital Partners, LLC Erik Suppiger - JMP Securities Jaeson Schmidt - Lake Street Capital Markets Dave Kang - B. ...

Company Performance - Aviat Networks, Inc. reported quarterly earnings of $0.97 per share, exceeding the Zacks Consensus Estimate of $0.94 per share, and up from $0.94 per share a year ago, representing an earnings surprise of 3.19% [1] - The company posted revenues of $95.04 million for the quarter ended December 2023, surpassing the Zacks Consensus Estimate by 3.47%, and an increase from year-ago revenues of $90.68 million [1] - Over the last four quarters, Aviat Networks has surpassed consensus EPS estimates two times and topped consensus revenue estimates three times [1] Future Outlook - The stock's immediate price movement will depend on management's commentary during the earnings call and the sustainability of the earnings outlook [2][3] - The current consensus EPS estimate for the coming quarter is $0.78 on revenues of $90.75 million, and for the current fiscal year, it is $3.78 on revenues of $372.1 million [4] - The estimate revisions trend for Aviat Networks is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [4] Industry Context - The Wireless Equipment industry, to which Aviat Networks belongs, is currently in the top 39% of Zacks industries, suggesting a favorable outlook compared to the bottom 50% [5] - Another company in the same industry, InterDigital, is expected to report quarterly earnings of $1.21 per share, reflecting a year-over-year change of +12%, with revenues anticipated to be $104.31 million, down 10.9% from the previous year [5][6]

Total Revenue of $95.0 million; Up 4.8% Year-Over-Year Gross Margin of 38.8%; Up 330 basis points Year-Over-Year Operating Income of $5.0 million; Non-GAAP Operating Income of $12.6 million Adjusted EBITDA of $13.7 million; Up 6.5% Year-Over-Year AUSTIN, Texas, Feb. 6, 2024 /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 2024 second quarter ended December 29 ...

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 Title of each class Trading Symbol(s) Name of each exchange on which Registered Common Stock AVNW The Nasdaq Stock Market LLC Preferred Share Purchase Rights The Nasdaq Stock Market LLC For the quarterly period ended December 29, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE ...

AUSTIN, Texas, Feb. 1, 2024 /PRNewswire/ -- Aviat Networks, Inc. (NASDAQ: AVNW), the leading expert in wireless transport and access solutions, announced today that it will release its second quarter fiscal 2024 financial results for the period ended December 29, 2023, on February 6, 2024, after the market closes. The Company will host an earnings conference call and webcast to discuss its financial and operational results on the same day, beginning at 5:00 p.m. ET.  Participating on the call will be Pete S ...

Aviat Networks, Inc. (NASDAQ:AVNW) Q1 2024 Earnings Conference Call November 1, 2023 5:00 PM ET Company Participants Andrew Fredrickson - Director of Investor Relations Peter Smith - President & Chief Executive Officer David Gray - Senior Vice President & Chief Financial Officer Conference Call Participants Scott Searle - Roth Capital Partners, LLC Jaeson Schmidt - Lake Street Capital Markets Erik Suppiger - JMP Securities Tim Savageaux - Northland Capital Markets Theodore O'Neill - Litchfield Hills Researc ...

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Aviat Networks, Inc's unaudited condensed consolidated financial statements for the quarter ended September 29, 2023 [Condensed Consolidated Statements of Operations (Unaudited)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20(Unaudited)) The company's financial performance improved significantly for the three months ended September 29, 2023, shifting from a net loss to a substantial net income Metric (in thousands) | Metric (in thousands) | Three Months Ended Sep 29, 2023 | Three Months Ended Sep 30, 2022 | | :-------------------- | :------------------------------ | :------------------------------ | | Total Revenues | $87,566 | $81,251 | | Gross Margin | $31,852 | $29,454 | | Operating Income | $5,547 | $3,913 | | Net Income (Loss) | $4,005 | $(2,746) | | Basic EPS | $0.35 | $(0.25) | | Diluted EPS | $0.34 | $(0.25) | [Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)%20(Unaudited)) Comprehensive income turned positive for the three months ended September 29, 2023, driven by net income and favorable translation adjustments Metric (in thousands) | Metric (in thousands) | Three Months Ended Sep 29, 2023 | Three Months Ended Sep 30, 2022 | | :-------------------- | :------------------------------ | :------------------------------ | | Net Income (Loss) | $4,005 | $(2,746) | | Net change in cumulative translation adjustments | $33 | $(1,113) | | Comprehensive Income (Loss) | $4,038 | $(3,859) | [Condensed Consolidated Balance Sheets (Unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(Unaudited)) The company's financial position as of September 29, 2023, showed increased total assets and stockholders' equity compared to June 30, 2023 Metric (in thousands) | Metric (in thousands) | Sep 29, 2023 | Jun 30, 2023 | | :-------------------- | :----------- | :----------- | | Total Current Assets | $244,410 | $237,704 | | Total Assets | $370,299 | $364,496 | | Total Current Liabilities | $129,213 | $130,061 | | Total Liabilities | $144,149 | $144,398 | | Total Stockholders' Equity | $226,150 | $220,098 | - Cash and cash equivalents increased to **$35,465k** as of September 29, 2023, from $22,242k at June 30, 2023[12](index=12&type=chunk) [Condensed Consolidated Statements of Cash Flows (Unaudited)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) The company generated positive operating cash flow for the three months ended September 29, 2023, a significant reversal from the cash used in the prior year Metric (in thousands) | Metric (in thousands) | Three Months Ended Sep 29, 2023 | Three Months Ended Sep 30, 2022 | | :-------------------- | :------------------------------ | :------------------------------ | | Net cash provided by (used in) operating activities | $13,980 | $(6,314) | | Net cash used in investing activities | $(717) | $(8,336) | | Net cash provided by (used in) financing activities | $180 | $(310) | | Net increase (decrease) in cash, cash equivalents, and restricted cash | $13,220 | $(15,307) | [Condensed Consolidated Statements of Equity (Unaudited)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity%20(Unaudited)) Stockholders' equity grew during the three months ended September 29, 2023, primarily due to net income and share-based compensation Metric (in thousands) | Metric (in thousands) | Balance as of Sep 29, 2023 | Balance as of Jun 30, 2023 | | :-------------------- | :------------------------- | :------------------------- | | Total Equity | $226,150 | $220,098 | | Net income | $4,005 | - | | Share-based compensation | $1,834 | - | Metric (in thousands) | Metric (in thousands) | Balance as of Sep 30, 2022 | Balance as of Jul 1, 2022 | | :-------------------- | :------------------------- | :------------------------ | | Total Equity | $199,422 | $201,753 | | Net loss | $(2,746) | - | | Share-based compensation | $1,838 | - | [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) These notes detail the company's accounting policies and provide breakdowns of key financial statement components and other essential disclosures [Note 1. The Company and Basis of Presentation](index=9&type=section&id=Note%201.%20The%20Company%20and%20Basis%20of%20Presentation) - Aviat Networks, Inc designs, manufactures, and sells wireless and access networking solutions and services to a global customer base[19](index=19&type=chunk) - The unaudited financial statements are prepared per U.S GAAP and SEC rules, incorporating management's estimates and judgments[20](index=20&type=chunk) [Note 2. Net Income (Loss) Per Share of Common Stock](index=10&type=section&id=Note%202.%20Net%20Income%20(Loss)%20Per%20Share%20of%20Common%20Stock) Metric (in thousands, except per share amounts) | Metric (in thousands, except per share amounts) | Three Months Ended Sep 29, 2023 | Three Months Ended Sep 30, 2022 | | :---------------------------------------------- | :------------------------------ | :------------------------------ | | Net income (loss) | $4,005 | $(2,746) | | Weighted-average shares outstanding, basic | 11,574 | 11,200 | | Weighted-average shares outstanding, diluted | 11,943 | 11,200 | | Basic EPS | $0.35 | $(0.25) | | Diluted EPS | $0.34 | $(0.25) | - **317 thousand** weighted-average equity awards were excluded from diluted EPS calculations for the three months ended September 29, 2023, as they were anti-dilutive[26](index=26&type=chunk) [Note 3. Revenue Recognition](index=10&type=section&id=Note%203.%20Revenue%20Recognition) Contract Balances (in thousands) | Contract Balances (in thousands) | Sep 29, 2023 | Jun 30, 2023 | | :------------------------------- | :----------- | :----------- | | Contract assets | $60,975 | $58,588 | | Capitalized commissions | $3,070 | $3,492 | | Advance payments and unearned revenue | $46,050 | $44,268 | | Unearned revenue, long-term | $7,627 | $7,416 | - As of September 29, 2023, the transaction price allocated to unsatisfied performance obligations was approximately **$152.4 million**[31](index=31&type=chunk) - Approximately **$7.4 million** of revenue was recognized during the quarter from advance payments and unearned revenue at June 30, 2023[30](index=30&type=chunk) [Note 4. Leases](index=11&type=section&id=Note%204.%20Leases) Lease Costs (in thousands) | Lease Costs (in thousands) | Three Months Ended Sep 29, 2023 | Three Months Ended Sep 30, 2022 | | :------------------------- | :------------------------------ | :------------------------------ | | Operating lease costs | $221 | $312 | | Short-term lease costs | $414 | $551 | | Variable lease costs | $12 | $35 | | Total lease costs | $647 | $898 | Future Minimum Lease Payments (in thousands) | Future Minimum Lease Payments (in thousands) | Amount | | :------------------------------------------- | :----- | | Remainder of fiscal 2024 | $724 | | 2025 | $757 | | 2026 | $632 | | 2027 | $312 | | 2028 | $319 | | Thereafter | $1,235 | | Total lease payments | $3,979 | | Less: interest | $(820) | | Present value of lease liabilities | $3,159 | - As of September 29, 2023, the weighted average remaining lease term was **5.7 years** and the weighted average discount rate was **5.5%**[32](index=32&type=chunk) [Note 5. Balance Sheet Components](index=11&type=section&id=Note%205.%20Balance%20Sheet%20Components) Cash, Cash equivalents, and Restricted cash (in thousands) | Cash, Cash equivalents, and Restricted cash (in thousands) | Sep 29, 2023 | Jun 30, 2023 | | :------------------------------------------------------- | :----------- | :----------- | | Cash and cash equivalents | $35,465 | $22,242 | | Restricted cash included in other assets | $276 | $279 | | Total cash, cash equivalents, and restricted cash | $35,741 | $22,521 | Inventories (in thousands) | Inventories (in thousands) | Sep 29, 2023 | Jun 30, 2023 | | :------------------------- | :----------- | :----------- | | Finished products | $17,104 | $18,502 | | Raw materials and supplies | $11,771 | $12,794 | | Customer service inventories | $1,784 | $1,761 | | Total inventories | $30,659 | $33,057 | Inventory Charges (in thousands) | Inventory Charges (in thousands) | Three Months Ended Sep 29, 2023 | Three Months Ended Sep 30, 2022 | | :------------------------------- | :------------------------------ | :------------------------------ | | Excess and obsolete inventory | $294 | $170 | | Customer service inventory write-downs | $253 | $235 | | Total inventory charges | $547 | $405 | Property, Plant and Equipment, net (in thousands) | Property, Plant and Equipment, net (in thousands) | Sep 29, 2023 | Jun 30, 2023 | | :------------------------------------------------ | :----------- | :----------- | | Total property, plant and equipment, gross | $70,185 | $70,238 | | Less: Accumulated depreciation | $(61,150) | $(60,786) | | Total property, plant and equipment, net | $9,035 | $9,452 | Accrued Expenses (in thousands) | Accrued Expenses (in thousands) | Sep 29, 2023 | Jun 30, 2023 | | :------------------------------ | :----------- | :----------- | | Compensation and benefits | $7,256 | $10,368 | | Taxes | $5,109 | $4,553 | | Warranties | $2,100 | $2,100 | | Commissions | $1,339 | $1,453 | | Professional fees | $944 | $2,104 | | Other | $3,813 | $3,864 | | Total accrued expenses | $20,561 | $24,442 | Warranty Liability (in thousands) | Warranty Liability (in thousands) | Three Months Ended Sep 29, 2023 | Three Months Ended Sep 30, 2022 | | :-------------------------------- | :------------------------------ | :------------------------------ | | Balance as of beginning of period | $2,100 | $2,913 | | Warranty provision recorded | $375 | $175 | | Consumption during the period | $(375) | $(388) | | Balance as of end of period | $2,100 | $2,755 | [Note 6. Fair Value Measurements of Assets and Liabilities](index=13&type=section&id=Note%206.%20Fair%20Value%20Measurements%20of%20Assets%20and%20Liabilities) Assets (in thousands) | Assets (in thousands) | Sep 29, 2023 Fair Value | Jun 30, 2023 Fair Value | Valuation Inputs | | :-------------------- | :---------------------- | :---------------------- | :--------------- | | Money market funds | $8,259 | $571 | Level 1 | | Bank certificates of deposit | $3,533 | $3,793 | Level 2 | - The company classifies fair value measurements into a three-level hierarchy based on the observability of inputs[47](index=47&type=chunk)[48](index=48&type=chunk)[49](index=49&type=chunk) [Note 7. Credit Facility and Debt](index=14&type=section&id=Note%207.%20Credit%20Facility%20and%20Debt) - In May 2023, the company entered into a Secured Credit Facility Agreement providing a **$40.0 million** revolving credit facility and a **$50.0 million** term loan facility[50](index=50&type=chunk) - As of September 29, 2023, available credit was **$38.8 million** under the Revolver and **$50.0 million** under the Term Loan, with no outstanding borrowings[51](index=51&type=chunk) - The company was in compliance with all financial covenants as of September 29, 2023, including fixed charge coverage and leverage ratios[52](index=52&type=chunk)[53](index=53&type=chunk) [Note 8. Restructuring](index=15&type=section&id=Note%208.%20Restructuring) Restructuring (in thousands) | Restructuring (in thousands) | Fiscal 2024 Plans | Prior Years' Plans (Employee Severance and Benefits) | Total | | :--------------------------- | :---------------- | :--------------------------------------------------- | :---- | | Accrual balance, June 30, 2023 | $0 | $600 | $600 | | Charges, net | $333 | $348 | $681 | | Cash payments | $(221) | $(948) | $(1,169) | | Accrual balance, September 29, 2023 | $112 | $0 | $112 | - Fiscal 2024 restructuring plans primarily involve workforce reductions and are expected to be completed through the first half of fiscal 2024[55](index=55&type=chunk) [Note 9. Stockholders' Equity](index=15&type=section&id=Note%209.%20Stockholders'%20Equity) Share-based Compensation Expense (in thousands) | Share-based Compensation Expense (in thousands) | Three Months Ended Sep 29, 2023 | Three Months Ended Sep 30, 2022 | | :---------------------------------------------- | :------------------------------ | :------------------------------ | | Total share-based compensation expense | $1,834 | $1,838 | | By Type of Award: | | | | Options | $346 | $510 | | Restricted and performance stock awards and units | $1,488 | $1,328 | - The company has **$7.3 million** remaining available under its stock repurchase program as of September 29, 2023[57](index=57&type=chunk) - During the quarter, the company granted **63,889** restricted stock units, **63,889** performance share awards, and **145,250** stock options[60](index=60&type=chunk) [Note 10. Segment and Geographic Information](index=16&type=section&id=Note%2010.%20Segment%20and%20Geographic%20Information) Revenue by Region (in thousands) | Revenue by Region (in thousands) | Three Months Ended Sep 29, 2023 | Three Months Ended Sep 30, 2022 | | :------------------------------- | :------------------------------ | :------------------------------ | | North America | $55,508 | $48,848 | | Africa and the Middle East | $9,953 | $10,984 | | Europe | $5,252 | $4,500 | | Latin America and Asia Pacific | $16,853 | $16,919 | | Total revenue | $87,566 | $81,251 | - Aviat operates in one reportable business segment: the design, manufacturing, and sale of wireless networking products, solutions, and services[62](index=62&type=chunk) [Note 11. Income Taxes](index=16&type=section&id=Note%2011.%20Income%20Taxes) - The company's effective tax rate differs from the U.S federal statutory rate due to GILTI, state taxes, and varied foreign tax rates[64](index=64&type=chunk) - Tax expense for Q1 FY24 was primarily from U.S and profitable foreign subsidiaries, unlike Q1 FY23 which included deferred tax expense from the Redline acquisition[65](index=65&type=chunk) - Major tax jurisdictions with open audits include the U.S, Singapore, Ghana, Kenya, Nigeria, Saudi Arabia, and Tanzania[66](index=66&type=chunk) [Note 12. Acquisitions](index=17&type=section&id=Note%2012.%20Acquisitions) - Aviat Networks agreed to acquire NEC's wireless backhaul business for approximately **$70.0 million**, with the transaction expected to close in Q4 2023[68](index=68&type=chunk)[69](index=69&type=chunk) - In Q1 FY23, the company acquired Redline Communications Group Inc for **$20.4 million**[70](index=70&type=chunk) [Note 13. Commitments and Contingencies](index=18&type=section&id=Note%2013.%20Commitments%20and%20Contingencies) - As of September 29, 2023, the company had outstanding purchase obligations of **$34.1 million** and software license obligations of **$5.7 million**[72](index=72&type=chunk) - Commercial commitments outstanding totaled **$60.5 million** as of September 29, 2023, primarily consisting of bonds and letters of credit[74](index=74&type=chunk)[75](index=75&type=chunk) - The company believes no current legal claims are likely to have a material adverse effect on its financial position[77](index=77&type=chunk)[78](index=78&type=chunk) - An ongoing enforcement action by the Indian Department of Revenue has an immaterial amount accrued for estimated probable loss[80](index=80&type=chunk) [Note 14. Goodwill and Intangible Assets](index=19&type=section&id=Note%2014.%20Goodwill%20and%20Intangible%20Assets) Asset (in thousands) | Asset (in thousands) | Sep 29, 2023 | Jun 30, 2023 | | :------------------- | :----------- | :----------- | | Goodwill | $5,112 | $5,112 | | Total net intangible assets | $8,870 | $9,046 | Estimated Future Amortization Expense (in thousands) | Estimated Future Amortization Expense (in thousands) | | :--------------------------------------------------- | | Remainder of 2024 | $528 | | 2025 | $704 | | 2026 | $704 | | 2027 | $704 | | 2028 | $704 | | Thereafter | $5,526 | | Total | $8,870 | - No indicators of goodwill impairment were identified during the current period[82](index=82&type=chunk)[84](index=84&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management provides its perspective on the company's financial condition and operational results for the three months ended September 29, 2023 [Overview of Business; Operating Environment and Key Factors Impacting Fiscal 2024 and 2023 Results](index=21&type=section&id=Overview%20of%20Business%3B%20Operating%20Environment%20and%20Key%20Factors%20Impacting%20Fiscal%202024%20and%202023%20Results) - This section contains forward-looking statements that involve risks and uncertainties which could cause actual results to differ materially[88](index=88&type=chunk) - Investors should refer to 'Item 1A Risk Factors' in the fiscal 2023 Annual Report on Form 10-K for more information[89](index=89&type=chunk) [Overview](index=21&type=section&id=Overview) - Aviat is a global supplier of microwave and access networking solutions, serving over 3,000 customers with a portfolio supported by over 500 patents[92](index=92&type=chunk) - The company competes based on total cost of ownership and microwave radio expertise, with manufacturing in Texas and Asia[92](index=92&type=chunk) [Acquisitions](index=22&type=section&id=Acquisitions) - Aviat Networks is acquiring NEC's wireless backhaul business for approximately **$70.0 million**, with closing expected in Q4 calendar year 2023[94](index=94&type=chunk)[95](index=95&type=chunk) - In Q1 FY23, the company acquired Redline Communications Group Inc for **$20.4 million**, enhancing its mission-critical data infrastructure offerings[96](index=96&type=chunk) [Operations Review](index=22&type=section&id=Operations%20Review) - Mobile backhaul for 5G and LTE deployments remains the primary addressable market for mobile operators and private networks[97](index=97&type=chunk) - Aviat differentiates itself through turnkey support services and an e-commerce platform for fast delivery[97](index=97&type=chunk) [Revenue](index=22&type=section&id=Revenue) Revenue by Region (in thousands, except percentages) | Revenue by Region (in thousands, except percentages) | Sep 29, 2023 | Sep 30, 2022 | $ Change | % Change | | :--------------------------------------------------- | :----------- | :----------- | :------- | :------- | | North America | $55,508 | $48,848 | $6,660 | 13.6 % | | Africa and the Middle East | $9,953 | $10,984 | $(1,031) | (9.4)% | | Europe | $5,252 | $4,500 | $752 | 16.7 % | | Latin America and Asia Pacific | $16,853 | $16,919 | $(66) | (0.4)% | | Total revenue | $87,566 | $81,251 | $6,315 | 7.8 % | Revenue by Type (in thousands, except percentages) | Revenue by Type (in thousands, except percentages) | Sep 29, 2023 | Sep 30, 2022 | $ Change | % Change | | :------------------------------------------------- | :----------- | :----------- | :------- | :------- | | Product sales | $59,545 | $55,101 | $4,444 | 8.1 % | | Services | $28,021 | $26,150 | $1,871 | 7.2 % | | Total revenue | $87,566 | $81,251 | $6,315 | 7.8 % | - North America revenue increased by **$6.7 million (13.6%)** due to strong private network and tier 1 demand[99](index=99&type=chunk) [Gross Margin](index=23&type=section&id=Gross%20Margin) Gross Margin (in thousands, except percentages) | Gross Margin (in thousands, except percentages) | Sep 29, 2023 | Sep 30, 2022 | $ Change | % Change | | :---------------------------------------------- | :----------- | :----------- | :------- | :------- | | Revenue | $87,566 | $81,251 | $6,315 | 7.8 % | | Cost of revenue | $55,714 | $51,797 | $3,917 | 7.6 % | | Gross margin | $31,852 | $29,454 | $2,398 | 8.1 % | | % of revenue | 36.4 % | 36.3 % | | | | Product margin % | 39.0 % | 36.0 % | | | | Service margin % | 30.8 % | 36.7 % | | | - Gross margin increased by **$2.4 million (8.1%)** primarily due to a higher proportion of sales to North American customers[102](index=102&type=chunk) [Research and Development](index=23&type=section&id=Research%20and%20Development) R&D Expenses (in thousands, except percentages) | R&D Expenses (in thousands, except percentages) | Sep 29, 2023 | Sep 30, 2022 | $ Change | % Change | | :---------------------------------------------- | :----------- | :----------- | :------- | :------- | | Research and development | $6,424 | $6,087 | $337 | 5.5 % | | % of revenue | 7.3 % | 7.5 % | | | - Research and development expenses increased by **$0.3 million (5.5%)** due to increased product development activities[103](index=103&type=chunk) [Selling and Administrative](index=23&type=section&id=Selling%20and%20Administrative) S&A Expenses (in thousands, except percentages) | S&A Expenses (in thousands, except percentages) | Sep 29, 2023 | Sep 30, 2022 | $ Change | % Change | | :---------------------------------------------- | :----------- | :----------- | :------- | :------- | | Selling and administrative | $19,237 | $17,504 | $1,733 | 9.9 % | | % of revenue | 22.0 % | 21.5 % | | | - Selling and administrative expenses increased by **$1.7 million (9.9%)** primarily due to variable compensation and M&A related expenses[104](index=104&type=chunk) [Restructuring](index=23&type=section&id=Restructuring) Restructuring Charges (in thousands, except percentages) | Restructuring Charges (in thousands, except percentages) | Sep 29, 2023 | Sep 30, 2022 | $ Change | % Change | | :------------------------------------------------------- | :----------- | :----------- | :------- | :------- | | Restructuring charges | $644 | $1,950 | $(1,306) | (67.0)% | - Restructuring charges decreased by **$1.3 million (67.0%)** as the prior year included non-recurring charges related to the Redline acquisition[106](index=106&type=chunk) [Other Expense, net](index=24&type=section&id=Other%20Expense%2C%20net) Other Expense, net (in thousands, except percentages) | Other Expense, net (in thousands, except percentages) | Sep 29, 2023 | Sep 30, 2022 | $ Change | % Change | | :---------------------------------------------------- | :----------- | :----------- | :------- | :------- | | Other expense, net | $901 | $2,782 | $(1,881) | (67.6)% | - Other expense, net decreased by **$1.9 million (67.6%)** primarily due to non-recurring losses on the sale of marketable securities in the prior year[107](index=107&type=chunk) [Income Taxes](index=24&type=section&id=Income%20Taxes) Income Taxes (in thousands, except percentages) | Income Taxes (in thousands, except percentages) | Sep 29, 2023 | Sep 30, 2022 | $ Change | % Change | | :---------------------------------------------- | :----------- | :----------- | :------- | :------- | | Income before income taxes | $4,646 | $1,131 | $3,515 | 310.8 % | | Provision for income taxes | $641 | $3,877 | $(3,236) | (83.5)% | - Tax expense for Q1 FY24 was mainly from U.S and profitable foreign subsidiaries, while Q1 FY23 included significant deferred tax expense[109](index=109&type=chunk) [Liquidity, Capital Resources, and Financial Strategies](index=24&type=section&id=Liquidity%2C%20Capital%20Resources%2C%20and%20Financial%20Strategies) - As of September 29, 2023, total cash and cash equivalents were **$35.5 million**[110](index=110&type=chunk) - Net cash provided by operating activities was **$14.0 million** for Q1 FY24, a **$20.3 million** increase from the prior year[111](index=111&type=chunk) - The company believes existing cash and available credit will be sufficient to meet requirements for at least the next 12 months[114](index=114&type=chunk)[115](index=115&type=chunk) [Critical Accounting Estimates](index=25&type=section&id=Critical%20Accounting%20Estimates) - For information on critical accounting estimates, refer to the 'Critical Accounting Estimates' section in the company's fiscal 2023 Annual Report[117](index=117&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=25&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details the company's exposure to foreign currency exchange and interest rate risks and its strategies for managing them [Exchange Rate Risk](index=25&type=section&id=Exchange%20Rate%20Risk) - The company uses derivative instruments to reduce volatility from foreign currency exchange rate changes but had no such contracts outstanding[119](index=119&type=chunk)[120](index=120&type=chunk) - The cumulative translation adjustment decreased stockholders' equity by **$16.0 million** as of September 29, 2023[121](index=121&type=chunk) [Interest Rate Risk](index=26&type=section&id=Interest%20Rate%20Risk) - The company's exposure to interest rate risk relates to its cash equivalents and borrowings under its Credit Facility[122](index=122&type=chunk) - Cash equivalents of **$11.8 million** as of September 29, 2023, earn interest at an average yield of approximately **4.3%** per annum[123](index=123&type=chunk)[124](index=124&type=chunk) - Borrowings under the Credit Facility bear interest at variable rates based on Adjusted Term SOFR or the Base Rate plus an applicable margin[125](index=125&type=chunk) [Item 4. Controls and Procedures](index=26&type=section&id=Item%204.%20Controls%20and%20Procedures) Management evaluates the effectiveness of the company's disclosure controls and procedures and internal controls over financial reporting [Evaluation of Disclosure Controls and Procedures](index=26&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - As of September 29, 2023, the CEO and CFO concluded that the company's disclosure controls and procedures are effective[126](index=126&type=chunk) [Changes in Internal Controls over Financial Reporting](index=26&type=section&id=Changes%20in%20Internal%20Controls%20over%20Financial%20Reporting) - There were no material changes to the company's internal controls over financial reporting during the quarter ended September 29, 2023[127](index=127&type=chunk) [Inherent Limitations on Effectiveness of Controls](index=27&type=section&id=Inherent%20Limitations%20on%20Effectiveness%20of%20Controls) - Management acknowledges that control systems provide reasonable, not absolute, assurance and may not prevent or detect all errors and fraud[128](index=128&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=28&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 13 of the financial statements for details on legal proceedings and contingent liabilities - For a discussion of legal proceedings and contingent liabilities, refer to 'Note 13 Commitments and Contingencies'[130](index=130&type=chunk) [Item 1A. Risk Factors](index=28&type=section&id=Item%201A.%20Risk%20Factors) This section directs investors to the company's fiscal 2023 Annual Report for a comprehensive review of risk factors - Investors should carefully review the risk factors detailed in Item 1A of the fiscal 2023 Annual Report on Form 10-K[131](index=131&type=chunk) - No material changes to the previously disclosed risk factors were identified during the first three months of fiscal 2024[131](index=131&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=28&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports that no shares were repurchased under the company's stock repurchase program during the first quarter of fiscal 2024 - A stock repurchase program has **$7.3 million** remaining available for repurchases[132](index=132&type=chunk) - No shares of common stock were repurchased under the program during the first quarter of fiscal 2024[132](index=132&type=chunk) [Item 3. Defaults upon Senior Securities](index=28&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities) This item is not applicable to the company for the reporting period - This item is not applicable[132](index=132&type=chunk) [Item 4. Mine Safety Disclosures](index=28&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company for the reporting period - This item is not applicable[132](index=132&type=chunk) [Item 5. Other Information](index=28&type=section&id=Item%205.%20Other%20Information) This section states that there is no other information to report under this item - No other information is reported under this item[132](index=132&type=chunk) [Item 6. Exhibits](index=29&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate governance documents and executive officer certifications - Exhibits include corporate governance documents, CEO and CFO certifications, and XBRL interactive data files[134](index=134&type=chunk) [SIGNATURES](index=30&type=section&id=Signatures) - The report was duly signed on behalf of Aviat Networks, Inc by David M Gray, Senior Vice President and Chief Financial Officer, on November 1, 2023[136](index=136&type=chunk)