Aviat Networks(US:AVNW)2022-05-04 23:53Financial Data and Key Metrics Changes - The company reported revenue of $74.5 million for Q3 2022, representing a growth of 12.2% compared to Q3 2021 [7][17] - EBITDA for the quarter was $9.5 million, reflecting a growth of 23% year-over-year [7][21] - Non-GAAP EPS increased by 38% to $0.67 per share compared to $0.49 per share in the same period last year [21] - GAAP net income was $6.0 million, a significant decrease from $94.7 million in the previous year, primarily due to a one-time benefit from deferred tax assets in the prior year [20] Business Line Data and Key Metrics Changes - North America accounted for 66% of total revenue, amounting to $49.0 million, an increase of 16.7% year-over-year, driven mainly by the private networks business [17] - International revenue was $25.5 million, up 4.5% from the previous year [17] - The backlog remained above $200 million, with a trailing 12-month book-to-bill ratio above one [17] Market Data and Key Metrics Changes - Strong demand was noted across three main market segments: 5G, private networks, and rural broadband [10] - The company anticipates significant opportunities from government funding sources such as the $20 billion RDOF and the $65 billion bipartisan infrastructure fund [11] Company Strategy and Development Direction - The company is focused on growth, margin expansion, and improving the bottom line despite supply chain challenges [6] - Continued commitment to gaining market share in private networks and rural broadband segments [10][11] - The company is raising its full-year revenue guidance to a range of $296 million to $300 million [25] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the improving supply chain environment, although risks remain [9] - The company is well-positioned to capture opportunities in 5G, private networks, and rural broadband with differentiated products and services [14] - Management noted that inflationary pressures are expected to continue, but price actions taken are anticipated to offset these pressures [18][46] Other Important Information - The company executed $2 million in stock repurchases during the quarter [22] - The tornado that impacted the Austin facility did not have lasting effects on production [8] Q&A Session Summary Question: Outlook on gross margins - Management expects continued modest improvement in gross margins as the year progresses, despite ongoing inflationary pressures [26][27] Question: Timeline for government funding contributions - RDOF funding is expected to start contributing by late 2022 or early 2023, while the bipartisan infrastructure fund will take longer due to state approvals [29][30] Question: Update on the relationship with DISH Networks - The company has successfully delivered to DISH and views this as a significant validation of its technology [32] Question: Seasonal strength in Q4 guidance - The guidance reflects caution due to supply chain risks, with the low end serving as a hedge against potential supplier de-commitments [36][37] Question: Growth in service side of the business - The mix between product and service sales fluctuates, with long-term expectations of a two-thirds to one-third split [38] Question: Update on testing with a large U.S. state - The test was successful, leading to additional pipeline opportunities for the company's routing products [42] Question: Allocation between Aviat and CERAGON for DISH - Management refrained from speculating on the allocation split but emphasized their proven technology [44] Question: Impact of direct sourcing on gross margins - Direct sourcing is part of the margin improvement plan, helping to secure supply and satisfy customer needs [48] Question: Magnitude of RDOF pipeline - The company has a significant market share and is prepared for demand once RDOF funding flows, although timing remains uncertain [51][52] Question: Trends in rural broadband growth - The company is below the 10% revenue mark from rural broadband but expects steady growth tied to ongoing funding [54]