Aviat Networks(US:AVNW)2021-11-04 03:04Financial Data and Key Metrics Changes - The company reported first quarter revenue of $73.2 million, a growth of 10.4% from the same quarter in fiscal year 2021 [8][14] - Adjusted EBITDA margins improved to 13.0% compared to 12.7% in the first quarter of fiscal year 2021 [8][18] - Net cash position at the end of the quarter was $47.3 million, with no debt [19] Business Line Data and Key Metrics Changes - North American revenue increased by 12.0% or $5.4 million year-over-year, driven by private networks and rural broadband [8][14] - International revenue rose by 6.9% or $1.4 million year-over-year, with significant wins in Africa and Southeastern Europe [10][15] - Adjusted EBITDA for the first quarter was $9.6 million, an increase of $1.2 million compared to the same period last year [8][18] Market Data and Key Metrics Changes - The company has secured contracts with 15 of the top 30 Rural Digital Opportunity Fund winners in North America [10] - Internationally, the company achieved significant wins, including a large Ministry of Defense Network in Northern Africa and new operator wins in Africa and APAC [10][11] Company Strategy and Development Direction - The company is focused on growth, margin expansion, and improving bottom-line results, with a strong emphasis on private network business and rural broadband [7][8] - The introduction of the WTM 4000 platform is a key differentiator in the market, particularly for 5G and rural broadband applications [9][10] - The company aims to leverage its strong product offerings to capture market share from competitors, particularly in regions where Huawei has been dominant [32][52] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging supply chain environment and inflationary pressures but remains optimistic about future recovery and margin improvement [22][40] - The company affirmed its annual revenue guidance of $283 million to $293 million and adjusted EBITDA of $35 million to $38 million, anticipating achieving the high end of the range [20] Other Important Information - The company has over $500 million in net operating losses (NOLs) that will continue to provide shareholder value [17] - The company repurchased 0.7 million shares of its common stock during the quarter [19] Q&A Session Summary Question: About margin and inflationary pressures - Management discussed the impact of inflation and supply chain issues on margins, noting a cost inflation of 440 basis points and a recovery of 110 basis points through price increases [22][24] Question: SG&A guidance - Management indicated that Q1 should be the low point for operating expenses, with expectations of some seasonality and continued investment in R&D [25][26] Question: Favorable mix and supply constraints - The favorable mix was primarily driven by private networks, with an estimated $2 million to $3 million in revenue lost due to supply chain issues [27][28] Question: International market opportunities - Management expressed optimism about new wins in Europe and the potential for increased market share in regions previously dominated by Huawei [31][32] Question: ARPA funding impact - Management confirmed that the benefits from ARPA funding are expected to materialize in calendar year 2022 [36] Question: Chip supply and inflation outlook - Management noted that the supply chain situation is stabilizing, with expectations for improvement after April [38][39] Question: Private network momentum - Management indicated that momentum in the private network segment remains strong, with potential positive catalysts from RDOF funding [60][61]