Q4 2021 Aviat Networks Inc Earnings Call

[music].

Good afternoon, welcome to Avs networks fourth quarter fiscal 2021 earnings call. At this time, all participants are in a listen only mode.

A question and answer session will follow the formula.

Please note this conference.

Okay.

I will now turn the conference Oh, Thank you host Mr. Keith <unk>, Vice President Finance and Investor Relations. Thank you you may begin thank you and welcome to AVR networks fourth quarter fiscal 'twenty, One results conference call and webcast you can find our form.

Today's call and webcast management will reference both GAAP and non-GAAP financial measures. Please refer to our press release, which is available in the IR section of our website at Www Dot avian networks Dot com and financial tables therein, which include a GAAP to non-GAAP reconciliation and other supplemental financial information.

Bottomline improvements the <unk> team commitment resulted in fourth quarter and full fiscal year revenue growth of 14, 4% and 15, 2% compared to the same periods last year fourth quarter and full fiscal year adjusted EBITDA margins of nine 7%.

And 11, 9% our fiscal year 2021, adjusted EBITDA of $32.8 million and adjusted EBITDA margin of 11, 9% more than doubled the fiscal year 2020, adjusted EBITDA of $13.5 million and adjusted EBITDA margin of five 7%.

Our solid balance sheet and liquidity position with net cash of $47.9 million growing by $2.1 million sequentially from the last quarter and $15.3 million for the fiscal year with no loans outstanding.

<unk> fourth quarter revenue increased 21, 4% year over year.

And for the full fiscal year 2021, North American revenue increased 27% compared to the same period last year International fourth quarter revenue increased three 5% year over year and full fiscal year 2021 international revenue increased five 6% compared.

To the same period last year, our full fiscal year 2021 revenue of $274.9 million exceeded the top end of our guidance of 265 million.

Adjusted EBITDA was $7.0 million for the fourth quarter, representing an improvement of $1.4 million versus the same period.

Sure.

Adjusted EBITDA margins improved to nine 7% for the fourth quarter compared to eight 8% for the same period last year.

Our full fiscal year 2021, adjusted EBITDA of $32.8 billion exceeded the top end of our guidance of $31 million and more.

Last year, the fiscal year 2020, adjusted EBITDA of $13.5 million improvement in revenue and adjusted EBITDA for the fourth quarter and the full fiscal year was primarily due to gross margin expansion from higher volume of private network business increased sales through our obvious store with serves.

Primarily the rural broadband space improved international business, driven by multi band wins and also software license sales.

Want to recognize our suppliers and the obvious supply chain chain team for successfully navigating the current environment.

<unk> team performance has offset.

Set a different called supply environment on recent calls Ive talked extensively about our exciting new capabilities in software services and ecommerce, which continue to drive our success today I'd like to explain some of the differentiation in our radio products, specifically the wtf fourth <unk>.

Platform, which has played.

A significant role in our recent growth in <unk> and rural broadband WTS 4000 is an all outdoor ultra high capacity microwave millimeter wave and multi band radio platform that has important differentiated capabilities compared to other radio platforms and achieves lowest total cost of ownership.

We understand the customers by systems not chips. So we built what we believe to be the best system to WTS 4000 leads the industry in system game, enabling radio links to go further and distance have a greater ability to overcome weather effects like rain and your smaller antennas, which is an important element in <unk>.

Its total cost of ownership value proposition WTS 4000, also has higher capacity and microwave bands for all practical use cases further.

<unk> 4000 has a modular platform architecture designed from the ground up for system flexibility not only has this modularity allowed us to build.

The industry's only single box multi band radio. It also enables us to deliver variance of this quickly as evidenced by our recent announcement of 11 gigahertz and 13 gigahertz multi band products, which we announced in the fourth fiscal quarter being less susceptible to rain than other bands to 11.

Seven gigahertz multi band Varian is particularly attractive enabling extended distance and increase reliability of multi band links which grows our addressable market, allowing us to sell more multi than in more places around the world platform. Modularity also allows us to mix and match Transceivers, enabling 20.

Gigabits per second in a single box, which is twice the capacity of our competition. In addition to the recent wins at dish Safari Com next link LTE broadband and other <unk> and rural broadband accounts. The Wtf 4000 is responsible for some new contracts new wins in.

After sell and Union wireless were driven in part by the different.

Differentiated capabilities of the Wtf 4000 platform.

We are also seeing positive activity with the platform internationally in Asia Pacific, We have broken into two new countries with new operator wins based on our radio differentiator.

<unk> and have significant prospects for growth in the region.

Especially in segments, where spectrum is expensive and operators are moving to <unk> in Africa. This quarter because of our multi band solution. We have gone back into the access networks of two major tier one accounts in countries, where we were shut out.

A number of years ago.

We will continue to communicate more information about these international wins soon.

We believe the Wtf 4000 platform as the most capable radio platform on the market today we.

We feel confident the platform's modularity will allow us to address customer economic.

Economic issues as <unk> and rural broadband evolves globally.

We believe <unk> builds will drive new backhaul upgrades and that our rural broadband business will benefit from meaningful government funding, including the 9 billion <unk> Fund for Raw America.

And the <unk> 20 billion.

Rural Digital opportunity fund.

On top of this there is an additional proposed 65 billion for broadband funding included in the $1 two trillion bipartisan infrastructure framework.

In fiscal year 2021 obvious added 150, new rural broadband.

Ban accounts growing our business significantly and we are now the leading wireless backhaul provider to this segment in the USA. So we are well positioned to this funding comes to fruition being an American company is proud to deliver broadband connectivity to rural America, enabling economic.

Social health care and educational opportunities for all Americans with respect to private networks. Our business remains strong and is growing avianca has a highly differentiated offering our leading RF performance along with our software and services capabilities are keys to lowering tcl.

So and delivering value to our customers in the quarter, we secured a new state government network in the U S and won a significant multi year design and deployment project for nationwide Emergency services network in Western Europe. These public safety projects are great business for Avia and will drive revenue throughout fiscal year.

Economic two before turning the call over to Eric Let me provide a couple of additional observations and insights first this was a very good fourth quarter and full fiscal year.

We remain focused and continue to execute in those collective efforts are.

Reflected in our financial and operational.

At <unk>, we've continued to demonstrate our ability to grow.

And to take a greater share of demand for the products and services. We offer looking forward, we expect to continue to see three significant revenue drivers.

<unk> private networks and rural Brian.

And we believe we are well positioned.

<unk> significant opportunities with our differentiated products software and services offerings with that let me turn the call over to Eric to review our financials before coming back for some final comments, Eric. Thank you Pete and good afternoon, everyone.

During my remarks today I will review some of the key fourth quarter and full year fiscal 2020.

One financial highlights, noting our detailed financials can be found no Form 10-K and earnings release, both of which were filed this afternoon. As a reminder, all comparisons discussed today between the fourth quarter of fiscal 2021, and the fourth quarter of fiscal 2020 and between full year fiscal 2021 and full year fiscal 2020.

Unless noted otherwise for the fourth quarter, we reported total revenues of $71.7 million as compared to $62.7 million for the same period last year, an increase of $9 million were 14, 4% revenue for the full year fiscal 2021 was $274.9 million compared.

$238.6 million for the same period last year, an increase of $36.3 million or 15, 2% during the quarter to North American team continued to focus on expanding sales and seasonal obvious unique products and services differentiation, both medical revenue, which comprised 64, 7% of total revenue.

Third to the fourth quarter was $46.4 million, an increase of $8.2 million or 21, 4% from $3$8.2 million for the same period last year, driven primarily by our private networks business Rural broadband and software for the full year fiscal 2021, our North America revenue was $183.1 million.

Revenue for an increase of $31.4 million or 27% from $151 seven four.

For the same period last year International revenue for the fourth quarter came in at $25.3 million, an increase of <unk> 9 million or three 5% compared with $24.4 million for the same period last year for the full.

For fiscal 2021, our international revenue was $1.8 million, an increase of $4.9 million or five 6% from $86.9 million for the same period last year, our book to Bill ratio for the fourth quarter and full year fiscal 2021 was above one and we are pleased that our backlog.

Full year round throughout the year and Easter.

Needs to remain above $200 million upon completion of the fiscal year fourth quarter gross margin remained strong at 36, 1% and 36, 2% on a GAAP and non-GAAP basis, respectively, as compared to 34, 9% on both a GAAP and non-GAAP basis.

For the fourth quarter of last year fiscal.

Fiscal year 2021, gross margin was 37, 3% and 37, 5% on a GAAP and non-GAAP basis, respectively, as compared to 35, 5% and 35, 6% for fiscal year 2020.

Key drivers to strong gross margins are higher volume.

Clark has brought business increased sales through our obvious tour, which serves primarily the rural broadband space improving national business, driven by multi band wins and also software license sales fourth quarter GAAP operating expenses, which include restructuring charges and share based compensation was $22.1 million compared to $19.7 million.

Probably been over the same period last year fourth quarter, non-GAAP operating expenses, which exclude the impact of restructuring charges and share based compensation were $20.4 million compared to $17.5 million for the same period last year.

R&D investments were increased $2 million.

Given our focus on software.

And an uptick in bookings led to a corresponding increase in overall SG&A expenses of zero point $8 million with the G&A portion of expenses decreased primarily as a result of our previously announced restructuring on a full year basis, both GAAP and non-GAAP op expenses were favorably impacted due to restructuring plan announced in the second.

Fiscal 2020 as was February 2021, and a slowdown in hiring and reduced travel offset by growth related initiatives G&A expenses decreased $1.7 million year over year moving on fourth quarter.