Q4 2024 Aviat Networks Inc Earnings Call

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Operator: Good morning, welcome to Aviat Networks' fourth quarter fiscal 2024 earnings call. At this time, all participants are in a listen-only mode.

Speaker Change: Good morning, welcome to Obviat Network's fourth quarter fiscal 2024 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. Please note this conference is being recorded. I will not turn the call over to your host, Mr. Andrew Fredrickson, director from Vester Relations. Thank you, you may begin.

Operator: A question and answer session will follow the formal presentation. Please note this conference is being recorded.

Andrew Fredrickson: I will now turn the call over to your host, Mr. Andrew Fredrickson, Director of Investor Relations. Thank you, you may begin. Thank you and welcome to Aviat Networks' fourth quarter fiscal 2024 results conference call in webcast. You can find our press release and updated in investor presentation in the IR section of our website at www.aviatnetworks.com, along with a replay of today's call.

Speaker Change: Thank you, and welcome to Aviat Network's fourth quarter, fiscal 2024, resultant's conference call in webcast.

Speaker Change: You can find our press release in updated investor presentation in the IR section of our website at www.avietnamworks.com along with a replay of today's call.

Andrew Fredrickson: With me today are Pete Smith, Aviat's president and CEO, who will begin with opening remarks on the company's fiscal fourth quarter, followed by Michael Conaway, our CFO, who will review the financial results for the quarter. Pete will then provide closing remarks on Aviat's strategy and outlook, followed by Q&A.

Speaker Change: With me today, our piece of Smith, Aviav's President in CEO, who will begin with opening remarks on the company's fiscal fourth quarter. Followed by Michael Conaway, our CFO, who will review the financial results for the quarter.

Pete Smith: Pete will then provide closing remarks on the obvious strategy and outlook followed by Q&A.

Andrew Fredrickson: As a reminder, during today's call and webcast, management may make forward-looking statements regarding Aviat's business, including but not limited to statements relating to fiscal guidance, financial projections, business drivers, new products, and expansions in the economic activity in different regions. Fees and other forward-looking statements reflect the company's opinions only as of the date of this call and webcast and involve assumptions, risks, and uncertainties that could cause actual results to differ materially from those statements. Additional information on factors that could cause actual results to differ materially from the statements expressed or implied on this call can be found in our most recent annual report on Fund 10-K filed with the SEC.

Speaker Change: As a reminder, during today's call and webcast.

Speaker Change: Management may make forward-looking statements regarding obvious business, including but not limited to statements relating to fiscal guidance, financial projections, business drivers, new products and expansions, and the economic activity in different regions.

Speaker Change: Fees and other four looking statements reflect the company's opinions, only as of the date of this call and webcast, and involve assumptions, risks, and uncertainties that could cause actual results to differ materially from those statements.

Speaker Change: Additional information on factors that could cause actual results to differ materially from the statement expressed or implied on this call can be found in our most recent annual report on phone 10K filed with the SEC.

Andrew Fredrickson: The company undertakes no obligation to revise or make public any revision of these forward-looking statements in light of new information or future events.

Speaker Change: The company undertakes no obligation to revise or make public and you revision of these four-looking statements in light of new information or future events.

Andrew Fredrickson: Additionally, during 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. AviatNetworks.com and financial tables therein, which include a GAP to non-GAP reconciliation and the other supplemental financial information.

Speaker Change: Additionally, during today's Call and Lovecast, Management will reference both Gap and the non-Gap Financial Mothers.

Speaker Change: Please refer to our press release, which is available in the IR section of our website at www.aviotnetwork.com In financial tables therein, which include a gap to non-dap reconciliation and other supplemental financial information.

Pete Smith: At this time, I would like to turn the call over to Aviat's President and CEO, Pete Smith. Pete? Thanks, Andrew, and good morning, everyone. Let's discuss AviatNetworks' fourth quarter and full year of fiscal 2024 results and achievements. Highlights from the fourth quarter include total revenue of 117 million, which represents growth of 28% for a secure pooler of last year. Revenue contribution from pass-link of 25 million, the 12% increase versus the third quarter, adjusted EBITDA of 12 million, non-GAAP EPS of 72 cents, adjusted EBITDA and non-GAAP net income accretion from the pass-link acquisition in the quarter, for the full year fiscal 2024 Aviat achieved.

Speaker Change: At this time, I would like to turn the call over the obvious president in TV, oh, Pete Smith.

Pete Smith: Thanks Andrew, and good morning everyone.

Speaker Change: Let's discuss Avia Network's fourth quarter and full year of fiscal 2024 results at achievements.

Pete Smith: Highlights from the 4th quarter include Total Revenue of 117 million, which represents growth of 28% versus a cure for the last year.

Speaker Change: Revenue contributions from gasoline could 25 million.

Speaker Change: in 12% increase versus the third quarter.

Speaker Change: and Justin Iberda of 12 million.

Speaker Change: Now I'm got EPS of 72 cents, adjusted E-Bithela and now I'm got net income accretion from the Passeling Acquisition in the quarter. For the full year fiscal 2024, Aviat achieved.

Pete Smith: Revenue of 408 million, growth of 19% versus last fiscal year, adjusted EBITDA of 48 million, up 6% versus the prior year.

Speaker Change: Revenue of 48 million, growth of 19% versus the last fiscal year, adjusted even to 48 million, up to 6% versus the prior year.

Pete Smith: Let's reflect on Aviat's accomplishments in fiscal 2024. We grew the core Aviat top line and expanded growth margins versus last year. Additionally, we closed the pass-link acquisition and exceeded our plan from a profitability perspective. This strategic transaction strengthened our product portfolio and significantly bolstered Aviat's international business to give us the scale necessary to serve our customers properly in these overseas markets. We are pleased with the progress we have made on integration and are tracking out of our plans in terms of our investment thesis.

Speaker Change: Let's reflect on AVIOT's accomplishments in fiscal 2024. We grew to Cora AVIOT top line and expanded growth marchions first as last year. Additionally, we closed the path-link acquisition and exceeded our plan for more profitability perspective.

Speaker Change: This strategic transaction strengthened our product portfolio and significantly bolstered OVOD's International Business to give us the scale of this service serve, our customers is profitably in these overseas markets.

Speaker Change: We are pleased with the progress we have made on integration and our tracking out of our plans in terms of our investments.

Pete Smith: Now let's discuss highlights from the quarter, starting with patholing. We group patholing revenues in the quarter to 25 million and increase versus the prior quarter's revenue contribution. Importantly, the patholing acquisition was creative through Aviat's financials on an adjusted EBITDA, a non-GAAP debt income basis. We remain confident in the patholing business being EPS-accretive in the coming fiscal 2025 first quarter, which is in line with our stated commitment to shareholders. Our dialogue with patholing customers continues to strengthen, and we remain confident in wrapping the revenue in fiscal 2025. Aviat's voice of the customer process has been applied to patholing, and the desire for a more powerful network management solution has been communicated.

Speaker Change: Now, let's discuss highlights from the quarter, starting with the pathpoint. We grew pathpoint revenues in the quarter to 25 million and increased versus the prior quarter's revenue contribution.

Speaker Change: Importantly, the gasoline-capquisitor was creative through obvious financials out on our adjusted e-vital and non-gap-dead income basis.

Speaker Change: We remain confident in the past so in business being EPS-acreative in the coming fiscal 2025 First Quarter, which is in line with our state commitment to shareholders.

Speaker Change: or dialogue with gasoline customers, continues to strengthen and we remain confident in ramping the revenue into fiscal 2025.

Speaker Change: Obviously, the customer process has been applied to pass the link and the desire for a more powerful network management solution has been communicated. We took this feedback and recently released pass the link support on Provisor Plus.

Pete Smith: We took this feedback and recently released patholing support on Provision Plus. Aviat Network Management Software. With over 800,000 active patholing radios in the field, this will represent a significant opportunity for Aviat in the years ahead. Based on this, and other capabilities such as Provision Plus, our access product line and FAS on competitor radios, we expect strong software business in fiscal 2025 from our record software sales in fiscal 2024. We remain disciplined on cost within patholing, as is reflected in earnings contribution from the business. Transition services costs remain, but we anticipate these to continue ramping down in the second half of fiscal year 2025.

Speaker Change: All the others, network management software.

Speaker Change: with over 800,000 active past like radio's in the field. This will represent a significant opportunity for obvious out in the years ahead.

Speaker Change: Based on this and other capabilities such as provision plots.

Speaker Change: Our access product line and FAS on competitor radios, we expect strong software business in fiscal 2025, up from our record software sales in fiscal 2024.

Speaker Change: We were made disciplined on cost within ass link as is reflected in earnings contribution from the business. Transition services costs remain, but we anticipate these to continue ramping down in the second half of fiscal year 2025.

Pete Smith: In private networks, Aviat continues to distinguish itself as a leader. In the quarter, we had a significant statewide win, converting a new customer from a legacy incumbent. We are excited about this project and anticipate initial revenue in fiscal 2025. Aviat was able to secure this takeaway because of our product's performance and the level of service that we can provide to this public safety customer. Based on FCC filings, Aviat has incrementally added to a shared demand for U.S. private networks versus last year. There have been many outage incidents across the U.S. over the past several months that emphasize the importance of reliable public safety networks.

Speaker Change: In private networks, obvious continues to distinguish itself as a leader. In the quarter, we had a significant statewide win, converting a new customer from a legacy in combat. We are excited about this project and anticipate initial revenue in fiscal 2025.

Speaker Change: Aviab was able to secure this takeaway because of our products performance and the level of service that we can provide to this public safety customer. Based on the CCM findings, Aviab's.

Speaker Change: Incidentally, he added to his share of demand for U.S. private networks versus last year.

Speaker Change: There are many out-of-the-che incidents across the US over the past several months.

Pete Smith: At least eight states have seen statewide 911 outages so far this year. There is a wide gap in performance and reliability between the most modernized public safety networks and the least modern. Given the critical nature of these networks, there was a growing and persistent desire to ensure that all public safety networks across the U.S. are modernized and are capable of handling the significant increase in technology and data bandwidth that travel across these networks. We remain confident in private networks being a growth driver for Aviat. State and local government budgets remain healthy for fiscal 2025. Overall, state and city budgets are expected to grow three and seven percent, respectively.

Speaker Change: that emphasized the importance of reliable, public safety networks. At least eight states have seen statewide 911 outages so far this year. There is a wide gap in performance and reliability between the most.

Speaker Change: Modernized public safety networks and the least modern.

Speaker Change: Given the critical nature of these networks, there was a growing and persistent desire to ensure that all public safety networks across the U.S. are modernized and are capable of handling the significant increase in technology and data bandwidth that travel across these networks.

Speaker Change: We were being confident in private networks being a growth driver for obvious.

Speaker Change: State Local Government budgets remain healthy for fiscal 2025, overall state and city budgets are expected to grow 3 and 7% respectively. Public safety spending is expected to grow approximately 5%.

Pete Smith: Public safety spending is expected to grow approximately five percent. Investing in and improving public safety infrastructure remains a top priority across the political spectrum, and we anticipate this tailwind for Aviat continuing in the years ahead.

Speaker Change: Investing in and improving public safety infrastructure remains. A top priority across the political spectrum, and we anticipate this tailwind for Avia continuing in the years ahead.

Pete Smith: ARPA funding remains top of mind with government customers as ARPA funds must be obligated by the end of this calendar year. Our team remains engaged with customers to assist in ARPA-related projects as this deadline approaches.

Speaker Change: ARPA funding remains top of mind with government customers as ARPA funds must be obligated by the end of this calendar year. Our team remains engaged with customers to assist in ARPA related projects as best deadline approaches.

Pete Smith: And mobile networks are international business continues to offset U.S. Tier I softness. India remains a bright spot for Aviat as we continue to grow the number of Aviat radios deployed in the country, as well as build on the large pass-link base. Operators in India increasingly view Aviat as a technological leader as they involve their networks to incorporate more reband and multi-band radios. Elsewhere in the world, share gain from our largest competitor remains an opportunity for Aviat, as was highlighted by the decision of the German government to move away from certain foreign vendors within the next five years.

Speaker Change: and one of those who are international business continues to offset U.S. Tier 1's office.

Speaker Change: and Mia remains a great spot for obvious others. We continue to grow the number of obvious radios deployed in the country as well as build on the large-paths-selling base.

Speaker Change: Operators in India, increasingly view obvious as a technological leader, as the involved their networks to incorporate more rebound and multi-band radios.

Speaker Change: Also, in the world, Sherrigane from our largest competitor remains an opportunity for Ovia, as was highlighted by the decision of the German government to move away from certain foreign vendors within the next five years.

Pete Smith: We anticipate more opportunities like this to continue to come to market and give it our strong portfolio products and services. We are optimistic we can convert at a rate above our current market share.

Speaker Change: We anticipate more opportunities like this to continue to come the market and give it our strong portfolio products and services. We are optimistic we can convert at a rate above our current market share.

Pete Smith: In rural broadband, we add a strong ear with our Aviat store and experience continued demand from the WISP customer base. Revenue from the store represented approximately 7% of overall revenue in fiscal 2024. Government programs such as ARDOF help to keep spending strong in this space.

Speaker Change: and we're brought back and we have a strong gear with our Aviator Store and experience continued demand from the Whisp customer base.

Speaker Change: Revitator from the store represented approximately 7% of overall revenue in fiscal 2024. Government programs such as RDAF.

Pete Smith: Last, a few comments around our previously disclosed material weakness and delayed 10-K filing will follow. Let me first apologize to our shareholders. We were disappointed in our ability to complete our year-end audit in a timely fashion. This is overshadowed and otherwise good story coming out of our fiscal 2024. The material weaknesses relate to key accounting personnel turnover. We added a third quarter of Fiscal 2024. This turnover led to key controls not being performed as designed. Although this has not resulted in material changes to our financial results, it is still disappointing. The review of our internal controls resulted in certain recommended improvements, which we are undertaking appropriately.

Speaker Change: Help to keep spending strong in this space. Last, a few comments around our previous Disclosed Material weakness, and a late-tend-to-contain filing will follow.

Speaker Change: Let me first apologize to our shareholders.

Speaker Change: We were disappointed in our ability to complete our year-end audit in a timely fashion. This is overshadowed and otherwise good story coming out of our fiscal 2024.

Speaker Change: The Material Weekness is related to key accounting personnel turnover we have in the third quarter of fiscal.

Speaker Change: 2024, this turnover led to a key control is not being performed as desired.

Speaker Change: Although this has now resulted in material exchanges to our quite natural results, it is still disappointing.

Speaker Change: The review of our internal controls resulted in certain recommended improvements, which we are undertaking appropriately.

Pete Smith: In summary, the discovery of the material weakness, together with the pathological acquisition, made for a more likely and complicated audit process than we anticipated, which led to our delayed 10-K filing.

Speaker Change: The summary that discovery over the material week this.

Speaker Change: Together with the PasoLink air position, made for a more likely and complicated other process than we anticipated, which led to our delayed 10k filing.

Pete Smith: We look forward to putting this event behind us and re-earning the trust of shareholders in fiscal 2025.

Speaker Change: We look forward to putting this event behind us, a re-earning trust of shareholders in fiscal 2024.

Andrew Fredrickson: Before turning it over to Michael to review the financial results of the quarter and fiscal year, I'd like to provide a quick introduction. Michael joined Avia from Honeywell, where he was Vice President and CFO of Honeywell's Energy and Sustainability Solutions segment. Prior to that, Michael led the finance function for various segment businesses that Honeywell, ABD, and GE, given his past success leading multi-billion dollar P&Ls and operating in different end markets. Avia's Board of Directors and I believe that Michael will upgrade Avia's ability to scale its business as we grow and provide continued process discipline and productivity throughout the organization.

Speaker Change: Before turning it over to Michael to review the financial results of the quarter and fiscal year, I'd like to provide a quick introduction.

Speaker Change: Michael joined Aviop from Honeywell where he was Vice President of CFO on Honeywell's energy and sustainability solution segment.

Speaker Change: Prior to that, Michael led the finance function for various signatures that this is at Honeywell, A&B and G. Give it his past success, leading multi-billion dollar P&Ls and operating in different hand markets.

Michael Conaway: and I believe that Michael Lovecrate, obviously, has a ability to scale its business as we grow and provide continued process discipline and productivity throughout your visualization. With that, I will turn it over to Michael.

Michael Conaway: With that, I will turn it over to Michael. Thank you very much, Pete, and good morning, everyone. I'll review some of the key fiscal 2024-4th quarter in full-year highlights, and please note that our detailed financials can be found in our press release, and all comparisons discussed are between the 4th quarter of fiscal year 2024 and the 4th quarter of fiscal year 2023, and follow a similar rubric on full-year 2024 year-over-year comparisons as well, unless otherwise noted. For the 4th quarter, we reported total revenues of 116.7 million, as compared to 91.1 million for the same period last year, an increase of 26 million or 28.1 percent year-over-year.

Michael Conaway: Thank you very much, Pete, and good morning everyone.

Speaker Change: I'll review some of the key fiscal 2024 fourth quarter in full year highlights

Michael Lovecrate: and please note that our detailed financials can be found in our press release.

Michael Lovecrate: and all comparisons discussed are between the fourth quarter of fiscal year 2024 and the fourth quarter of fiscal year 2023 and follow a similar route break on full year 2024, a year of your comparisons as well. Unless otherwise noted.

Speaker Change: For the fourth quarter, we reported total revenues for 116.7 million. As compared to 91.1 million for the same period last year.

Speaker Change: and increase of 26 million or 28.1% year over year.

Michael Conaway: North America, which comprise 48 percent of our total revenue for the quarter, was 56.2 million, an increase of 2.5 percent from the same period last year due to ongoing strength in our private networks business. For the full fiscal year in 2024, North America recorded revenues of 206.1 million, which is up 3 percent versus 2023. International revenue was 60.5 million for the quarter, an increase of 24.2 million, or 67 percent from the same period last year. On the year, our international business, it revenues 202 million versus 143.8 million last year, an increase of 41 percent year-over-year.

Speaker Change: North America, which comprise 48% of our total revenue for the quarter, was 56.2 million.

Speaker Change: and increase of 2.5% from the same period last year due to ongoing strength in our private network business.

Speaker Change: For the full fiscal year in 2024, North America recorded revenues of 206.1 million, which is up 3% versus 2023.

Speaker Change: International revenue was 60.5 million for the quarter, an increase of 24.2 million or 67% from the same period last year.

Speaker Change: On the year our international business, it revenues 222 million, versus 143.8 million last year, and increase a 41% year of the year.

Michael Conaway: And in total, we finished our 2024 fiscal year with 408 million in consolidated company revenues versus 344 million in 2023. An increase of 19 percent year-over-year in our 4th consecutive year of revenue growth. Our backlog at the ending of the fiscal year was 292 million. This is up versus our prior year-end reported backlog of 289 million.

Speaker Change: and in total, we finished our 2024 fiscal year with 408 million in consolidating company revenues, versus 344 million in 2023.

Speaker Change: and increase of 19% year over year in our fourth consecutive year of revenue growth.

Speaker Change: Our backlog at the ending of the fiscal year was 292 million.

Speaker Change: This is our prior year and reported back log of 289 million.

Michael Conaway: As a reminder, we report on this metric annually to avoid the inherent quarterly fluctuations with a project-based business. Gross margins for the quarter were 35.3 percent on a gap basis and 35.9 percent on a non-gap basis, as compared to 35.9 percent gap and 36.2 percent non-gap in the prior year. Within our core business, non-GAAP gross margins were 38.7 percent. This strong result was driven by project and regional mix, as well as the impact from increased software sales. Passalling non-gap gross margins for the quarter were 26 percent. This improvement versus the third fiscal quarter of 2024 was driven by improved scale and cost benefits from freight and logistics optimization.

Speaker Change: As a reminder, we report on this metric annually.

Speaker Change: to avoid the inherent quarterly fluctuations with a project based business.

Speaker Change: For those margins for the quarter, we're 35.3% on a gap basis and 35.9% on a non-gap basis.

Speaker Change: has compared to 35.9% gas and 36.2% non-gap in the prior year.

Speaker Change: Within our core business, non-gap-gross margins were 38.7%.

Speaker Change: This strong result was driven by project and regional mix as well as the impact from increased software sales.

Speaker Change: Castling non-gap gross margins for the quarter we're 26%.

Speaker Change: This improvement versus the third fiscal quarter of 2024 was driven by improved scale and cost benefits from freight and logistics optimizations.

Michael Conaway: We expect the gross margins from our past-selling products to continue to improve during fiscal 2025 as we continue to rationalize our warehouse and footprint and benefit from continuous improvement in our sourcing and supply chain. In aggregate, Aviat's core gross profit margins in 2024 were 38.4% versus 36.1% in 2023, an increase of about 2.3 points year over year. 4.4 Gap operating expenses were 35.7 million, an increase of 9.3 million from the prior year, driven by the addition of approximately 6 million in pass-only related off-ex, increased core R&D expenses, and year-end expenses. Gap operating expenses include a 1.6 million dollar restructuring charge.

Speaker Change: We expect the gross margins from our past-selling products to continue to improve during this school 2025. As we continue to rationalize our warehouse and footprint, and benefit from continuous improvement in our sourcing and supply chain operation.

Speaker Change: In aggregate, obvious core gross profit margins in 2024 or 38.4%. versus 36.1% in 2023. An increase of about 2.3.0.0.

Speaker Change: 4-quarter gas operating expenses were 35.7 million, an increase of 9.3 million from the prior year, for the by the addition of approximately 6 million in pass-only related OPEX, increased core R&D expenses in year and expenses.

Speaker Change: Gas operating expenses include a $1.6 million restructuring charge. At obvious we seek to continuously ensure that the company's cost structure is properly aligned with our business.

Michael Conaway: At Aviat, we seek to continuously ensure that the company's cost structure is properly aligned with our business. The pass-link footprint yields an opportunity for cost rationalization that we executed on in the quarter. Non-GAAP operating expenses, which exclude the impact of restructuring charges, share-based compensation, and deal costs, were 31.3 million, an increase of 9.2 million driven by pass-link and increased R&D costs. As Aviat continues to ramp down the transition services related costs with NEC as a result of the pass-link acquisition, we expect our operating expenses to normalize in the second half of fiscal 2025. Note that this off-ex ramp down will be offset on a reported basis with the addition of our recent acquisition for our F's cost structure as we report our financials throughout our fiscal year 2025.

Speaker Change: The Passing Footprint yielded an opportunity for cost rationalization that we execute it on in the quarter

Speaker Change: Non-gap operating expenses.

Speaker Change: which excludes the impact of restructuring charges, share-based compensation, and deal costs. We're 31.3 million.

Speaker Change: and increase of 9.2 million driven by passalling and increased R&D costs.

Speaker Change: As obvious continues to ramp down the transition services related costs with any seat, as a result of the past-selling acquisition, we expect our operating expenses to normalize in the second half of fiscal 2025.

Speaker Change: Note that this objects ramp down will be offset on a reported basis with the addition of our recent acquisition for our app's cost structure as we report our financials throughout our fiscal year 2025.

Michael Conaway: The fourth quarter tax provision was $3.1 million compared to $2 million last year. As a reminder, the company has approximately 450 million of net operating losses or NOLs that will continue to generate shareholder value via minimal cash tax payments for the foreseeable future. Fourth quarter gap net income was 1.5 million, and non-gap net income, which excludes restructuring charges, share-based compensation, M&A related costs, and the non-cash tax provision, was 9.2 million. Fourth quarter non-GAAP EPS came in at 72 cents per share on a fully diluted basis. Adjusted EBITDA for the fourth quarter was 11.9 million, or 10.2 percent of revenue.

Speaker Change: The fourth quarter tax revision was 3.1 million compared to 2 million last year. As a reminder, the company has approximately 450 million of net operating losses for NOLs that will continue to generate shareholder value in minimal cash tax payments.

Speaker Change: for the foreseeable future.

Speaker Change: 4th quarter of gas net income was $1.5 million in non-gap net income, which excludes restrictions charges, share base compensation, and many related costs, and the non-cash tax provisions.

Speaker Change: was 9.2 million.

Speaker Change: Fourth quarter non-gap, EPS, came in at 72 cents per share on fully diluted basis.

Speaker Change: a job to leave it to us for the fourth quarter was 11.9 million.

Michael Conaway: On a full year basis, our adjusted EBITDA was 48.1 million in 2024 versus 45 million in 2023 for an increase of 6 percent year of year. Moving on to the balance sheet, our cash and marketable securities increased by 5.4 million to 64.6 million. Driven by positive cash from operating activities of 8.3 million in the quarter. As of the end of the fourth quarter, we are in a net cash position of 16.3 million. For the full year, we generated cash from operating activities of 30.5 million.

Speaker Change: 10.2% of revenue. On a full year basis, our adjusted-even-dop was 48.1 million in 2024 versus 45 million in 2023, or an increase of 6% year of year.

Speaker Change: Moving on to the balance sheet.

Speaker Change: Our cash and marketable securities increased by 5.4 million to 64.6 million.

Speaker Change: Driven by positive cash from operating activities of 8.3 million in the quarter.

Speaker Change: As of the end of the fourth quarter, we are in a net cash position of 16.3 million.

Speaker Change: For the full year, we generated cash from operating activities of 30.5 million.

Pete Smith: With that, I will turn it back to P's for some final comment. Thanks, Michael. Before providing our fiscal 2025 guidance, I'd like to discuss our 4RF transaction announced in July. This was a tuck-in acquisition that closed at the beginning of July in our fiscal 2025. It's a New Zealand, kilometers from Aviat's R&D facility in New Zealand. 4RF's primary customer base is North American utilities. Given that neither are North American nor are New Zealand teams have been engaged with integrating the past-linked business, we are confident in being able to successfully and quickly integrate 4RF. Additionally, through our diligence process, we were highly encouraged by customer feedback regarding the quality and reliability of 4RF's products.

Speaker Change: With that, I'll turn it back to Pete for some final comment. Pete.

Pete Smith: Thanks Michael, before providing our fiscal 2020-25 guidance.

Pete Smith: I'd like to discuss our forum for transaction announced in July.

Pete Smith: This was a tuck-in acquisition to close at the beginning of July in our fiscal 2025. 4F is known globally for the repriso, product line of narrowband, point to point, and point to multi-point radius, and private LTE and 5G routers.

Speaker Change: The company is based in Wellington, New Zealand, Calabeters from Aviads R&D facility in New Zealand.

Speaker Change: or primary and customer base is North American utilities.

Speaker Change: Give in that need or North American?

Speaker Change: Nor are New Zealand teams have been gauged, but they're integrating the passalling business. We're confident in being able to successfully and quickly integrate for our app. Additionally.

Speaker Change: Through our diligence process, we were highly encouraged by customer feedback regarding quality and reliability of 4RF's products.

Pete Smith: Although 4RF is immaterial today compared to Aviat, we are excited about the customers it brings to Aviat as well as the strengthening of our private network wireless access portfolio. This opens the approximately $200 million industrial scale market and the $1.4 billion cellular router market to Aviat, neither of which were previously in our addressable markets. Since approximately 90% of Aviat's and 4RF's US utility and public safety customers are not overlapping, we are excited about the cross-selling opportunity, and we're already seeing some success. On-going investment projects, grid infrastructure, resilience, energy storage, and modernization will drive opportunities for more connectivity and bandwidth needs within these private networks.

Speaker Change: although for after the material today compared to Aviyat.

Speaker Change: We are excited about the customers at Brings, Tavia, as well as the strengthening of our private network wireless access portfolio.

Speaker Change: This opens the approximately $2 million industrial skate of market, and the $1.4 billion dollar, cellular, router, market, and so on. Either of which were previously in our addressable markets. Since approximately 90% of aviats and four of us.

Speaker Change: U.S. Utility and Public Safety Customers are not overlapping. We are excited about the cross-selling opportunity and we're already seeing some success.

Speaker Change: On going investment projects in grid infrastructure, resilience, energy storage and modernization will drive opportunities for more connectivity and bandwidth needs within these private networks.

Pete Smith: With 4RF as part of Aviat, we have a unique and compelling wireless portfolio to offer private networks. Aviat's shareholders should expect 4RF to be creative to Aviat's overall gross margins.

Speaker Change: with 4RF, this part of Avian, we have a unique and compelling wireless portfolio to offer private networks.

Speaker Change: Obviously, I'd share all there should expect for us to be creative, to all of you that's overall gross margins.

Pete Smith: Turning to our guidance, based on the company's outlook, we are establishing our fiscal year 2025 guidance as follows. Revenue to be in the range of 450-490 million, adjust the EBITDA to be in the range of 46-52 million. Based on our current order pattern and backbone, we expect revenue to build through the fiscal year, with our first quarter being the smallest from a revenue and earnings perspective and the fourth quarter being the largest. In addition, we will be wrapping up Aviat OPEX during the first two quarters of fiscal 2025 as we end the transition services agreement in late fiscal 2025 Q2.

Speaker Change: Turning to our guidance. Based on the company's outlook, we are establishing our fiscal year 2020-25 guidance as follows.

Speaker Change: Revitator to be in the range of 450 to 490 million, adjusts the even dog to be in the range of 46.

Speaker Change: The 52 million.

Speaker Change: Based on our current order pattern and back on, we expect reverting to build through the fiscal year with our first quarter being the smallest from a revenue earnings perspective and the fourth quarter being the largest.

Speaker Change: in addition, we will be wrapping up Aviad Abaks during the first two quarters of fiscal 2025, as we end the transition services agreement in late fiscal 2025, Q2. With that, operator, let's open up for questions.

Operator: With that operator, let's open up for questions. Thank you, ladies and gentlemen. If you have a question or a comment at this time, please press star 111 on your telephone. If your question has been answered, you are seeing we've resolved from the queue. Please press star 111 again.

Speaker Change: Thank you, ladies and gentlemen. If you have a question or a comment at this time, please press star 1 and 1 on your telephone. If your question has been answered, you were sent with yourself from the queue. Please press star 1 and 1 again.

Operator: We'll pause while we compile our Q&A roster.

Speaker Change: We'll pause why we come back like you and a roster.

Scott Searle: Our first question comes from Scottsboro with the Broth Capital Apartness. Your line is up. Hey, good morning. Thanks for taking the questions. Hey, Pete, maybe just to quickly dive in on the comment on material weakness, could you kind of update us in terms of what still remains outstanding on that front? Any details that are available behind it? And I guess as part of that, in terms of the historic restatement, it seems like it's a pretty small number given the amount of time that it's taken to get this one. I think it's about two million years ago in both three and fiscal 24.

Speaker Change: [inaudible]

Speaker Change: Our first question comes from Scott's role with the Brawfcap LePartner, your line is open.

Speaker Change: Good morning. Thanks for taking the questions. Maybe just a quickly dive in on the common material weakness. Could you kind of update us in terms of what still remains outstanding on that thought? Any details that are available behind it? And I guess as part of that in terms of the historic restatement, it seems like it's a pretty small number given the amount of time that it's that's taken get this done. I think it's about two million.

Scott Searle: Could you just kind of take us through where the revisions were historically in those numbers? Thanks, and I had a couple follow-ups.

Speaker Change: 3 and fiscal 24. Could you just kind of take us through where the revisions were, historically, in those numbers. Thanks and I had a couple follow-ups. You know, it's got a deep Michael will take the lead on this part. Yeah, yeah, so, um...

Michael Conaway: Scott, I think Michael will take the lead on this part. Yeah, so I'd say three factors that drove the material weakness. The first was some key, I'll say person I'll turn over on the finance department in particularly in Q3 of 2024. That was one. The second is the company needed to improve its co-so control monitoring framework. And then the third, there were also some controls that weren't performed effectively, particularly in the back half of the year and really particularly in the third quarter, conjoined with the personnel leaving that I mentioned. So the first two drivers are well on their way to being fixed already within 2025.

Michael: I say three factors that drove the material weakness, the first was

Speaker Change: Some key, I'll take personal turnover in the finance department in particularly in Q3 of 2024.

Speaker Change: That was one of the seconds the company needed to improve its co-show control monitoring framework.

Speaker Change: and then the third, there were also some controls that weren't performed effectively, particularly in the back half of the year and really particularly in the third quarter.

Speaker Change: and joined with the personnel leaving that I mentioned. The first two drivers are well on their way to being fixed already within 2025.

Michael Conaway: And we have every intention of getting this behind us and remediating the full scope of the material weakness within the year. So that's a little bit of an update on the material weakness and what drove it. As it relates to the financial statement, there were two main drivers of it. One was the services contract in North America that, upon further review, had to true up its estimated cost to complete. We think that contract in particular was an isolated incident, and through our internal exposure checks, we didn't see any other issues of that illness anywhere else in the North American contract book.

Speaker Change: and we have every intention of getting this behind us in remediating the full scope of the material weakness within the year. So that's a little bit of an update on the material weakness and what drove it. As you're relates to the financial statement.

Speaker Change: Revision, there were two main drivers that one was the service that's contracted North America, that upon further review had to chew up its estimated cost to complete cost.

Speaker Change: We think that contract in particular was a nice ladies incident and through our internal exposure checks. We get in any other issues of that ill-peanyware also in the North American contract book. And then the second one was the distributor arrangement that upon further review.

Michael Conaway: And then the second one was the distributor arrangement that, upon further review, didn't meet revenue recognition criteria, and we had to go back and revise the revenues in 2023. So those are the two big ones.

Speaker Change: Didn't meet revenue recognition, cried hearing, we had to go back and revise the revenues in 2023. So those are the two big ones.

Scott Searle: That's very helpful.

Scott Searle: And then Pete maybe did just dive in in terms of the guidance for fiscal 25. It sounds like you'll continue to build over the course of the year from a revenue standpoint. Could you provide a little bit more detail in terms of maybe how September looks to start the year off and how that visibility is building into the December quarter at the current time. And maybe as part of that, let's kind of couple in, North America was extremely strong in the June quarter despite headwinds from that Tier 1 customer. I'm wondering if you could address that issue as well, and the outlook for North America.

Speaker Change: got you very helpful. And then Pete maybe to just dive in in terms of the guidance for fiscal 25. It sounds like he'll continue to build over the course of the year from a revenue standpoint. Could you provide a little bit more detail in terms of maybe how September looks to start the year off and how that visibility is building into the December quarter at the current time. And maybe as part of that was kind of coupled in North America was extremely strong in the quarter despite headwinds from that Tier 1 customer, I'm wondering if you could address that issue as well and the outlook for North America.

Michael Conaway: Maybe I'll take the Q1 part and then pass it over to Pete as it relates to the Tier 1s. So look, Q1 in terms of what we're seeing now, we expect to be the lowest of the year from a revenue and profitability perspective. The delayed 10K filing and audit did distract management from focusing on the execution of the business, so we expect muted growth in the quarter at this point. We'll talk revenues. We see revenues in the 93 to 99 million dollars, and so Scott, let me pick up the Tier 1 part, right? So if we look back over the past couple of years, there's been lots of headlines about Tier 1 capex spending, and we've been largely unaffected.

Peter's: Maybe I'll take the Q1 part and then pass it over to Peter's or at least to the Tier 1. But so keep Q1 in terms of what we're seeing now, we expect to be the lowest of the year from a revenue and profitability perspective.

Speaker Change: The delayed 10K filing and audit did distract management from focusing on the execution of the business. We expect muted growth in the quarter at this point. We'll talk with revenues we see revenues in the 99 million dollar range on the quarter.

Speaker Change: and Scott, let me pick up the cheer one part, right?

Speaker Change: If we look back over the past couple years, there's been lots of headlines about Tier 1, CapEx.

Michael Conaway: And you know, last quarter we expressed some concern about the US Tier 1s, and we would say that it's going to be most pronounced in this Q1. We're in between projects, and I would say that if in the January through June timeframe a couple of things that we have in our funnel materialized, then we would adjust our guidance in a positive way. We also see with MTN, if you, you know, they're publicly traded, they're talking about a muted capex spend. So we would say, you know, in Africa and in the US, Tier 1 spending is down.

Speaker Change: Spending, and we've been largely unaffected and...

Speaker Change: You know, last quarter we expressed some concerns about the U.S. to your ones and we would say that it's going to be most pronounced.

Speaker Change: and this Q1 were in which we completed a big project or in between projects and I would say that if in the...

Speaker Change: January through June timeframe, a couple of things that we have in our funnel materialized and we would.

Speaker Change: and Jeff Stark guidance in a positive way and we also see...

Speaker Change: with NTN if you know they're publicly traded there.

Speaker Change: talking about a muted cab backspend, so we would say, you know, in Africa and in the U.S. to your one spending is down, and you know, when I reflect on this.

Michael Conaway: And you know, when I reflect on this, to use some words from my industrial background, I think microwave is a little bit more of a late cycle business, meaning, you know, the headlines were driven and the fiber equipment suppliers were, you know, hit up by the capex and we kind of were quizzed on why why not Aviat and it's because the way the networks get build out as you move to the suburbs and the rural areas like we keep going. And I think right now we were seeing the capex headlines that were over the past couple of years having a short-term impact on us.

Speaker Change: to use some words from my industrial background. I think microwave is a little bit more of a late cycle business.

Speaker Change: Meaning, you know, the headlines were driven and the fiber equipment suppliers were, you know, head up by the cap action we eat.

Speaker Change: We kind of were quizzed on why, why not, obviously, and it's because the way that networks get built out, as you move to the suburbs and the...

Speaker Change: The rural areas, my colleague keeps going and I think right now we're seeing the capex headlines that were over the past couple years having a short term in Di Goddess.

Scott Searle: Gotcha. Very helpful.

Scott Searle: And if I could, one last one, and I'll get back in the queue, but just might to follow up on your comments of the September guidance. Basically, if I'm looking at the mid to upper end of that range, you're looking at averaging 150 million to 125 million from the second quarter to fourth quarter. And I'm wondering if you could comment as well on any sea a little bit more. It sounds like there was a nice step up going into the June quarter, both from a revenue standpoint and a gross margin standpoint. I'm wondering how that continues into the back half of calendar 25 here.

Speaker Change: Gotcha, very helpful and if I could one last one or no, I'll get back in the queue but just

Speaker Change: Mike to follow up on your comments of the September guidance.

Speaker Change: Basically, if I'm looking at the mid to upper end of that range, you're looking at averaging 115 million to 125 million from a second quarter to fourth quarter And I wonder if you could comment as well on any sea a little bit more, it sounds like there was a nice step up

Speaker Change: going into the June quarter, both from a revenue standpoint and a gross margin standpoint. I'm wondering how that continues into the back half of calendar 25 here. Excuse me, calendar 24 as we're looking at the December quarter and into the first half of calendar 25. Thanks.

Michael Conaway: Actually, we calendar 24 as we're looking at the December quarter and into the first half of calendar 25. Thanks. Yeah, maybe I'll just do kind of the progression on revenues point. I'll just put simply. I would just confirm your mathematics. That is the way that we see revenue shaping up across 2025 is a little bit more muted in Q1 and then 115 plus in the rest of the quarters.

Speaker Change: Yeah, maybe I'll just do kind of the progression on revenues point, not just

Speaker Change: Put simply, I would just confirm your mathematics. That is the way that we see revenue shaping up across 2025.

Speaker Change #100: A little bit more muted in Q1 and then 115 plots in the rest of the quarters and then maybe.

Michael Conaway: And then maybe pass it over to P. Dot pass a link. Yeah. And on the pass a link side, why are we modeling it that way? Right in the September quarter, bookings would support that ramp. So I think a lot of investors are worried about the acquisition. The acquisition is incrementally performing it and incrementally ramping up, and so we're getting more and more confident in the pass-o-link slash NEC transaction and we need to work our funnel to offset the CAPEX decline in or leveling off in tier once. Great, thanks so much.

Speaker Change #101: and Pat's over to Peter. Yeah, and on the, on the personal inside why, why are we, um,

Speaker Change #102: Modeling at that way right in the September quarter bookings.

Speaker Change #103: with support that wrap. So, you know, I think a lot of investors are worried about the acquisition. The acquisition is incrementally performing it and incrementally, and incrementally.

Speaker Change #104: Ramping up and our so we're getting more and more confident in the past so we flash any sea transaction and we need to work our funnel to offset that.

Speaker Change #104: the CapEx decline or leveling off in cheer once.

Operator: We'll get back in the queue.

Jaeson Schmidt: One moment for our next question. Our next question comes from Jaeson Schmidt with Lake Street. Your line is open. Hey guys, thanks for taking my questions. Just sticking with sort of a guide for fiscal 25. I'm curious if you could share any sort of backlog numbers you have coming into Fiscal 25. 292?

Speaker Change #104: Thanks so much, I'll get back in the queue.

Speaker Change #104: One moment for our next question.

Speaker Change #104: [inaudible]

Speaker Change #105: Our next question comes from Jason Schmidt with Lake Street, your light is open.

Speaker Change #106: Hey guys, thanks for taking my questions. Just sticking with sort of a guide for fiscal 25. Curious if you could share any sort of backlog numbers you have coming into fiscal 25.

Michael Conaway: Yeah, I mean, we kind of mentioned in the remarks it was right around 290, so up a little bit on a year-over-year basis is where we're at on backlog. Okay, perfect. And then I know you mentioned 4F is immaterial compared to the Corovia business, but do you expect growth from that business here in fiscal 25? I would say it will be; we'll see a little bit of growth, and we'll see, you know, an immaterial amount of earnings contribution. So a little bit of growth. I mean, the little bit of growth will be offset, you know, and overall, with, you know, while we're seeing in the US tier one space. But so far, so good on the 4F transaction.

Speaker Change #106: Thank you for watching.

Speaker Change #107: Yeah, I mean, we've kind of mentioned mentioned in the remarks it was right around Q90, so up a little bit on a year over year basis, is where we're at on on on back Love

Speaker Change #108: I know you mentioned for our F is in material compared to the core of your business. Do you expect growth from that business here in fiscal 25?

Speaker Change #109: I would say it won't be a little bit of growth and we'll see.

Speaker Change #110: You know, I didn't make a three-year-old amount of earnings contribution.

Speaker Change #111: So, a little bit of growth, I mean, the little bit of growth will be offset, you know, an overall aviat with, you know, well, we're seeing in the U.S. to your one space, but so far so good on the 4RF transition.

Jaeson Schmidt: Gotcha.

Michael Conaway: And then just the last one for me, and I'll jump back into queue. I assume gross margin will be down sequentially, just given the top line number in September. But would you expect gross margin to also be able to build throughout Fiscal 25? Yeah, we do. I mean, when you think about it year over year, the gross margin story on a full year basis will be a little bit dampened, just given some of the mixed dynamics. Jason, so, you know, you'll see pass a link, of course, ramped pretty significantly from the volume perspective year over year.

Speaker Change #112: Gotcha, and then just the last one for me and I'll jump back into cue. A. Sim Crow's margin will be down sequentially, just give them the top line number in September. But would you expect Crow's margin to also be able to build throughout fiscal 25?

Speaker Change #113: Yeah, we do, I mean, when you think about it year over year, the gross margin story on a full year basis will be...

Speaker Change #114: A little bit damped and just given some of the mixed dynamics.

Speaker Change #115: Jason, so you'll see pastel, ink, of course, ramp pretty significantly from a volume perspective year of year. That'll have a little bit of a dampening effect on gross margins and total for the business. It's just given the mix and then Petaluted in the Tier 1 dynamic set.

Michael Conaway: That'll have a little bit of a dampening effect on gross margins and total for the business, just given the mix. And then pedaluded in the Tier One dynamics. That's, you know, if you were to piece that apart, it's a bit more pronounced in North America from just a year volume perspective. So that also has a bit of a damped mix effect. But to answer your question more specifically about just kind of how we see gross margins from a modeling standpoint, we do expect that gross margins will similarly improve throughout this year 2025 from a quarterly progression standpoint.

Speaker Change #116: You know, if you were to piece that apart, it's a bit more pronounced in North America, from just a sheer volume perspective, so that also has a bit of a damped mix effect.

Speaker Change #117: but to answer your question more specifically about just kind of how we e-growth margins from a modeling standpoint.

Speaker Change #117: We do expect that cross-marchens will.

Speaker Change #117: Similarly, improve throughout fiscal year 2025 from a quarterly progression standpoint.

Jaeson Schmidt: Okay, really helpful.

Jaeson Schmidt: Thanks a lot, guys.

Operator: Again, ladies and gentlemen, if you have a question or a comment at this time, please press star 111 on your telephone.

Speaker Change #117: Okay, really helpful. Thanks a lot guys.

Speaker Change #118: Again, ladies and gentlemen, if you have a question or a comment at this time, please press star 1 on your telephone.

Theodore O'Neill: Our next question comes from Theodore O'Neill with Lichfield Hill's Researcher, Light is Open. Thank you. Congratulations on the results for the quarter. Pete, my first question is if you could give us sort of a trend in private network and perhaps mobile 5G business and your view on market share there. Yeah, so with respect to private networks, that's principally in the US, Aviat FY 24 with the highest private network revenue in the last three years. Q4 with the highest quarter in the last 11 quarters. We look at our share of demand, and we would say it's trending in a favorable, incrementally in a favorable direction.

Speaker Change #118: Our next question comes from Theodore O'Neill with Lichfield Hills Research, your light is open.

Speaker Change #119: Thank you. Congratulations on the results for the quarter. My first question is, if you could give us sort of a trend in private network and perhaps mobile 5G business and your view on market share there.

Speaker Change #119: Yeah, sure

Speaker Change #120: So, with respect to David Networks

Speaker Change #121: that's principally in the US, I'll be out to apply.

Speaker Change #122: 24 with the highest private network revenue in the last three years.

Speaker Change #123: Q4 with the highest quarter in the last 11 quarters we look at our share of demand and we would say it's trending.

Speaker Change #123: in a favorable, you know, incrementally in a favorable direction and then, you know, the, you thought asked about share, mobile network operators.

Pete Smith: And then, you know, the You talked asked about share mobile network operators. Look, this is the reason for our guidance: are the US to your ones, CapEx's muted. We also see muted CapEx in Africa. What I what I should say is the so that historical Coravia to your ones are are under performing our muted, but the the spending environment in the past link to your ones is is favorable. So that's kind of the geographic spread of the tier, the Tier Ones. And I would say when we did the past link transaction, we thought that we would get more geographic diversity, get, you know, have less risk with respect to any single customer.

Speaker Change #124: Rick, look, this is the reason for our guidance, our, the U.S. to your ones, the CAP-X is muted. We also see muted CAP-X in Africa. What I should say is the, so that historical, poor avi-eyed.

Speaker Change #125: Chair Ones are underperforming our beauty, but the spending environment in the

Speaker Change #126: So that's kind of the geographic spread of the cheer that you're on. And I would say when we did the household in transaction,

Speaker Change #127: We thought that we would get more geographic diversity, you don't have a less risk with respect to any single customer and that certainly true.

Pete Smith: And that's certainly true.

Theodore O'Neill: Okay, and my other question, sort of echoing what was asked by the first analyst, is regarding the restatement. The actual adjustments are relatively minor relative to the impacts of the share price and how much work you clearly had to do to reconcile and report it all. So I was wondering if it's impacted your view on the buyback program, particularly since you bought nothing back in the fiscal Q4. Well, we look at our capital allocation and our share price; we would certainly lean into share buybacks. The difficulty we have with the delay K is the persistence of quiet periods.

Speaker Change #127: Okay, my other question, sort of echoing what was asked it by the first analyst is the...

Speaker Change #127: Regarding the restatement, the actual adjustment serve.

Speaker Change #128: Relatively minor relative house to the impact of the share price and how much work you clearly had to do to reconcile and report it all.

Speaker Change #129: So I was wondering if it's impacted your view on the buyback program, particularly since you bought nothing back in the fiscal Q4.

Speaker Change #129: Oh...

Speaker Change #130: When we look at our capital allocation and our share price, we would certainly lean in to share our buybacks. The difficult we have with the delaying K is, uh...

Theodore O'Neill: So I think your question your question is kind of leading leading the witness, but I would confirm confirm what you your question suggests deal. Okay, thank you very much.

Speaker Change #131: The Persistence of quiet periods, so I think your question is kind of leading to witness, but I would confirm what your question suggests, Theo.

Operator: And I'm not showing any further questions at this time.

Speaker Change #131: Okay, thank you very much.

Pete Smith: I like to turn the call back over to Pete Smith for any closing remarks. Okay, I'd like to thank everyone for dialing in. We appreciate the patience while we work to get the K out, and given our leadness, we will connect again soon and look forward to a good fiscal year 25 and providing your updates. Thanks everyone.

Speaker Change #132: and I'm not showing any further questions at this time. I'll turn the call back over to Pete Smith for any closing remarks.

Speaker Change #133: Okay, I'd like to thank everyone for dialing in. We appreciate the patience while we work to get the tail and given our latest, we will connect again soon and look forward to a good fiscal year 25 and providing you updates. Thanks everyone.

Operator: Well, ladies and gentlemen, that concludes today's presentation. You may now disconnect and have a wonderful day.

Speaker Change #134: Ooh ladies and gentlemen, this doesn't include today's presentation, you may now disconnect and have a wonderful day.