Aviat Networks(US:AVNW)2022-08-24 00:13Financial Data and Key Metrics Changes - For Q4 fiscal year 2022, Aviat Networks reported revenue of $77.4 million, an increase of 8.0% compared to Q4 of the previous year [9][23] - Adjusted EBITDA for Q4 was $9.1 million, reflecting a 31% increase year-over-year [9][27] - Non-GAAP EPS increased by 52% [9][27] - For the full fiscal year 2022, revenue grew by 10.2% to $303.0 million, marking the second consecutive year of double-digit growth [9][23] - The company repurchased $5.4 million in shares during the fiscal year [9] Business Line Data and Key Metrics Changes - Revenue from private networks grew by 11% in fiscal year 2022, with the highest bookings year in history for this segment [12] - Multi-band solutions sales increased by over 80% year-over-year [13] - Management and application software sales rose by over 50% compared to fiscal year 2021 [15] Market Data and Key Metrics Changes - North America accounted for 63% of total revenue in Q4, with revenue of $48.8 million, a 5.1% increase from the previous year [23] - International revenue reached $28.6 million in Q4, up 13.3% year-over-year [24] - The backlog increased by 9% year-over-year to $245 million [24][21] Company Strategy and Development Direction - The company aims to leverage its strengths in private networks, multi-band solutions, and software offerings to capture market share [10][21] - The acquisition of Redline Communications is expected to add approximately $20 million in revenue and enhance gross margin and earnings in fiscal year 2023 [22][30] - The company is focused on expanding its e-commerce platform to address demand from government funding initiatives [18] Management's Comments on Operating Environment and Future Outlook - Management highlighted the challenges posed by supply chain disruptions but noted successful navigation of these issues [19][20] - The company anticipates improved margins moving into fiscal year 2023, with expectations of a positive impact from government funding initiatives like RDOF [33][38] - Management expressed confidence in the company's strategy and product differentiation, particularly in the context of competition with Huawei [45][30] Other Important Information - The company has over $500 million in net operating losses (NOLs) that will minimize cash tax payments for the foreseeable future [26] - The company is in the process of rolling out a new e-commerce platform to enhance its market readiness [18] Q&A Session Summary Question: Impact of inflationary costs on gross margins - Management indicated a significant impact on margins, estimating a reduction of 60 to 70 basis points, but expects margin improvement moving forward [33] Question: Strength of services margins and Redline integration - Services margins were strong due to successful projects in North America, with expectations for improved service margins overall [35] Question: Guidance for fiscal year 2023 and RDOF contribution - Management stated that RDOF is not included in guidance but could serve as a positive catalyst if materialized [38] Question: Demand in Europe and impact of the Ukraine war - The company reported strong demand in the UK, with minimal impact from the Ukraine-Russian conflict [50] Question: Backlog mix between products and services - The backlog was skewed towards services this quarter, but no fundamental shift in the mix is expected [56] Question: Organic growth rate and backlog potential - Management acknowledged the potential for organic growth, especially with RDOF funding, and indicated that guidance would be revisited as the year progresses [64]