Q3 2025 Aviat Networks Inc Earnings Call
Speaker Change: Good afternoon. Welcome to Aviat Networks 3rd quarter fiscal 2025 earnings call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation.
Speaker Change: Please note, this conference is being recorded. I will now turn the conference over to your host, Mr. Andrew Fredrickson, Director of Investor Relations.
Thank you. You may now begin.
Speaker Change: Thank you and welcome to Aviat Network's third quarter fiscal 2025 results conference call and webcast
Speaker Change: You can find our press release and updated investor presentation in the IR section of our website at www.aviannetworks.com, along with a replay of today's call.
Speaker Change: With me today, our Pete Smith, Aviat's president and CEO , who will begin with opening remarks on the company's fiscal quarter, followed by Michael Connaway, our CSO, who will review the financial results for the quarter.
Speaker Change: Pete will then provide closing remarks on Aviat's strategy and that looks followed by Q&A.
Speaker Change: As a reminder, during today's calling webcast, management may make forward-looking statements regarding Aviat's business.
Speaker Change: These 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 the actual results to differ materially from those statements.
Speaker Change: 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 Aino Report on Form 10K, filed with the SEC.
Speaker Change: The company undertakes no obligations to revise or make public any revisions of these forward booken statements in light of new information or future events.
Speaker Change: Additionally, during today's call and webcast, management will reference both GAP and non-GAAP financial measures.
Speaker Change: Please refer to our press release, which is available in the IR section of our website at www.aviannetworks.com and financial tables therein, which include a gap to non-GAAP reconciliation and other supplemental financial information.
Speaker Change: At this time, I would like to turn the call over to Aviat's president and CEO , Pete Smith. Peace.
Pete Smith: Thanks Andrew, and good afternoon everyone. Let's review the highlights from the third quarter.
Total revenue of $112.6 million $1.00.
non-GAAP Gross Margin of 35.8%
Pete Smith: Record, Adjusted EBITDA, $14.9 million, up 17% versus the year ago period.
Pete Smith: non-GAAP EPS of 88 cents, up 13% year-over-year. These results were possible thanks to Aviat's discipline operating model and the hardworking commitment from the entire Aviat team.
Pete Smith: With our second consecutive quarter of record quarterly adjusted EBITDA, we see the work of our strategy to grow the scale of Aviat taking hold.
Let's briefly discuss our end-markets.
Pete Smith: Looking at our mobile service provider market, we had another good quarter.
Pete Smith: Products and services related to pass-link, we're in line with our long-term expectations for the business. Software volumes were good, assisting with our improved Ghost margins year over year. In a previous earnings call, we announced the launch of our Provision Plus software for pass-link.
Pete Smith: We're happy to report initial sales of ProVision Plus to pathaling customers during the third quarter. This successful effort to sell ProVision Plus...
Pete Smith: shows the significant progress we have made servicing our Tier One and larger mobile service provider customers to join from the PasoLink acquisition.
Pete Smith: In private networks, Aviat continues to maintain its share of demand in North America and expand the sales funnel internationally.
Pete Smith: In Public Safety, we built and shipped additional phases of our recently won statewide network project.
Pete Smith: In the utility space, we're making progress cross-selling our offering of apprisa access radios and routers alongside Microwave Backhall and are excited about the sales funnel developing with these customers.
Pete Smith: Based on investor inquiries, I would like to add that we have not seen any cancellations to date with our US federal government customers as a result of spending reduction efforts. We attribute this to the mission critical nature of our deployments.
Pete Smith: Regarding tariffs and the impact to Aviat, our team has been working diligently to mitigate the impact to our business and customers.
Pete Smith: We have deployed the playbook we used to successfully navigate the COVID
Pete Smith: Supply Jane Crisis. In addition, our manufacturing partners have footprints that will permit optimization when the tariff landscape settles. Anticipating the tariffs, we ramped up our inventory purses.
Pete Smith: For the vast majority of the hardware we sell in the U.S., it is assembled in the U.S.
Pete Smith: We believe Aviat has the largest operational US footprint in the microwave space During the quarter we had strategic discussions with three US headquarters Fortune 500 companies We believe Aviat has the largest operational US footprint in the microwave space
Pete Smith: focused on doing more in the US. This may be a positive catalyst in approximately 12 months. Nonetheless, much of the tariff headline is focused on costs, and we do utilize components and contract manufacturing from international sources.
Pete Smith: We are working alongside our contract manufacturer and suppliers to adjust sourcing locations as available, but we expect exposure over the next couple of quarters.
Pete Smith: Our goal with the tariff and back to our business will be to be margin neutral through productivity, sourcing, manufacturing, footprint and price. I would now like to turn the call over to Michael to review the financial results of the quarter before coming back for some closing remarks.
Michael Conaway: Thank you very much Pete and good afternoon everyone. I'll review some of the key fiscal 2025 third quarter results.
Michael Conaway: Please note that our detailed financials can be found in our press release and all comparisons discussed are between the third quarter of fiscal year 2025 and the third quarter of fiscal year 2024, unless otherwise noted.
Michael Conaway: For the third quarter, we reported total revenues of 112.6 million as compared with 110.8 million for the same period last year.
an increase of 1.8 million or 1.6% year-of-year.
Michael Conaway: North America, which comprised 44% of our total revenues for the quarter, was 49.4 million an increase of 5 million or 11% from the same period last year due to growth in private networks.
Michael Conaway: International revenues were $63.2 million for the quarter, a decrease of $3.2 million or 5% from the same period last year.
Michael Conaway: This was driven by a difficult year-of-year comparable with ATAC reporting its best quarter-on-record in the Q3 fiscal 2024 period.
Our trailing 12-month book to bill was over one in the quarter
Michael Conaway: Gross margins and 3Q were 34.9 on a gap basis and 35.8 on a non-GAAP basis.
Michael Conaway: This compares to 32.5 gap and 35.1% non-GAAP in the prior year. Gross margins improved thanks to regional mix and software mix in the quarter.
Michael Conaway: Third quarter gap operating expenses were 30 million, down versus 30.4 million in the year-ago period. non-GAAP operating expenses which exclude the impact of restructuring charges, share-based compensation and deal costs.
Michael Conaway: Third quarter operating income was 9.3 million on a gap basis and 13 million on a non-GAAP basis.
Michael Conaway: This compares to 5.7 million gap and 11.4 million non-GAAP in the year ago period.
Michael Conaway: The third quarter tax provision was 1.1 million, representing an effective tax rate of 24 percent.
Michael Conaway: 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.
Michael Conaway: Third quarter gap net income was 3.5 million and non-GAAP net income, which excludes restructuring charges, share-based compensation, M&A related and other non-recurring expenses and the non-cash tax provision was 11.3 million.
Michael Conaway: Third-quarter non-GAAP Birmingham Preshare came in at 88 cents on a fully diluted basis.
Michael Conaway: Up by 10 cents or 12.8% versus the year ago period. Adjust the EBITDA for the third quarter was 14.9 million, or 13.2% of revenues, and increase of 2.2 million or 17.3% versus last year.
This is another quarterly record
Michael Conaway: of adjusted EBITDA for Aviat and our second consecutive quarter of hitting this milestone.
Pete Smith: Moving on to the balance sheet, our cash and marketable securities at the end of the third quarter were 49.4 million, our outstanding debt was 73.9 million, bringing our net debt position to 24.5 million.
Pete Smith: Thanks, Michael. We are pleased with the results from this quarter and believe we are on the right track to deliver a good end to fiscal year 2025.
Pete Smith: In regards to guidance, we believe that Aviat will deliver results for fiscal year 2025 within the range of annual guidance previously provided. We expect to approximate the current full-year consensus estimate on revenue and EBITDA.
Pete Smith: Over the last five years, we have most frequently issued guidance for the fiscal year in August given the nature of the macro environment and tariffs we will maintain this practice with that operator. Let's open up for questions.
Speaker Change: Thank you. As a reminder to ask a question, you will need to press star 11 and wait for your name to be announced. Please stand by while we compile the Q&A roster.
Speaker Change: The first question comes from the line of Jaeson Schmidt of Lake Street, Jaeson, please go ahead.
Jason Schmidt: Thanks for entertaining my questions, and congrats on the strong results. You just want to start with guidance. I know you're maintaining that 430-470-arrange, just curious what the swing factor you think is to sort of that high end versus the low end.
Speaker Change: Yeah, well, I think we also confirmed, you know, the consensus, so that's where I think we should be, and I think...
You know, there's- [inaudible]
You know?
Speaker Change: We have the inventory, you know, one of the questions that we've got along the way during the quarter of what about push-ins and pull-outs and I would say
Speaker Change: We've probably had one or two push-outs, pull-ins and push-outs but you could imagine that there could be more to beat the terrorists in...
Speaker Change: this quarter, then previous quarter, so that would swing us up, but what we're most comfortable with is, you know, guiding on an annual basis and sticking to it as we try and doubt.
to improve our performance to street expectations.
Speaker Change: Okay, no, that makes sense. And I know you're not baking in sort of any significant contribution from the US tier one market, but just curious what you're currently seeing there. And if you think we've reached the bottom.
Yeah, I would say that the U.S. 2-1 TAPEX The U.S. 2-1 TAPEX, Jaeson Schmidt,
Speaker Change: Cycle is probably bottom with respect to us and you know when you when you read the U.S. 2-1.
Speaker Change: Fiber first, and then as you move away from urban centers, you're more likely to use microwave
The lag period is about six months.
So, as uh...
Speaker Change: As the bottom, you know, what we think is the bottom in CapEx is in we would expect a couple quarters an uptick in demand.
Speaker Change: Gotcha, that's helpful. And just the last one for me and I'll jump back into Q. Michael, looking at Curse Margin, obviously early strong in March. Can you build upon that here in June or just given the mix you had in March, would we expect it to take a step back?
Speaker Change: Yeah, I know. Maybe I'll just talk about the results first, because you're right. Gross The profits were a good story.
Speaker Change: in the quarter, for sure, building on even Q2 results, Q3 was even better.
Speaker Change: and really two reasons for that, both M&A related. So, pass the link is now in the comp in Q3 on a year on your basis.
Speaker Change: We've made some good improvements as we've integrated that business [inaudible]
Speaker Change: So we're seeing the gross margin uplift on a year of year basis from that men.
Speaker Change: Approved the appraisal business as well, which was a Q1, 2025 Transaction, mixes us up.
Speaker Change: as it relates to a queue for a couple of thoughts. Number one, we'll probably get into there, so I'll save some of the remarks for when we may get asked about that, but um,
Speaker Change: as it relates to the macro uncertainty that's a part of it in Q4.
and then we had a really strong software quarter [inaudible]
Speaker Change: in Q3, which we built upon a nice software quarter in revenues in Q2 as well.
Pete Smith: in Q4, and we were, you know, as Pete alluded to, guiding to the consensus were a little bit more conservative given the macro.
Okay, perfect. Appreciate the caller. Thanks, guys.
One moment for your next question.
Speaker Change: The next question comes from the line of Scott Searle of Roth Capital Partners, Scott, please go ahead
Scott Searle: Okay, good afternoon. Thanks for taking the questions. Great job on the quarter.
Speaker Change: Maybe just to jump in on North America down a little bit sequentially. Yet, Chris Margin stayed pretty good there. I guess Mike answered that a little bit but wondering.
Speaker Change: If there's anything in particular going on there, kind of what the outlook you're seeing for North America and maybe fold that into Mike's comments.
Speaker Change: about, you know, gross margins and tariffs. Can you kind of quantify what you think the impact is? You know, what we should be thinking about, whether it's June or as we start to get in fiscal 26, the impact of the headwinds.
The North American Quarter, we have a good private network business.
Speaker Change: and if you roll back the clock, we, you know, we are between projects with the US Tier One and that's what would
Speaker Change: I could cross-see for the U.S. Private Network business is to look at, you know, MSI's report and, you know, they would say that the...
to the command department.
Speaker Change: for Public Safety is very good. We would say the same. And then, you know, utilities.
which is our second biggest application in private networks.
Speaker Change: has been historically under-invested and things like video and grid security are driving demands and we feel we feel good about those and we you know we are in between projects on [inaudible]
Speaker Change: U.S. 21 and we're hopeful that the next project will kick in.
You know, the question that was asked previously about [inaudible]
Speaker Change: The demand cycle in two or ones, we would say the cat-back's bottom is in and we're a couple quarters from that rolling through to microwave demand.
Yeah, and just as it relates to uh...
Speaker Change: to Tara, because Pete mentioned part of it in his prepared remarks, but...
Speaker Change: What I found after being in the chair for roughly a year is, you know, some of what we're doing now springs from the playbook of how Aviat managed through COVID.
Speaker Change: And so one of the things we did that we talked about was we brought in some more inventory in anticipation of potential care for gene changes.
Speaker Change: And then in terms of the effects in order to put an illustrative upper bound on the exposure we think in the near term it could be as high as roughly some are between two and two and a half percent of our of our cogs.
Speaker Change: But as of this very moment, we're working hard with our supply-based to minimize those effects.
Speaker Change: and at the same time, we're committed to passing on to our customer base only what we can't mitigate ourselves. So, thinking of linking it back to gross margins and the immediate term this may cause.
Speaker Change: A little bit of gross margin, rate pressure for owners, but we do not anticipate any per-shier earnings leakage, widening the aperture though over the long term.
Speaker Change: You know, thinking about treating all our constituents as rarely as possible and like partners we think will compound to longer term benefits to owners. So that's what we're doing on tariffs and a little bit of the spin through the P&L and how it may affect.
Pete Smith: If I can smash me, you can jump the f*** off. Go ahead, Pete.
Pete Smith: Now, I'm just going to ask Pete in terms of E.
Speaker Change: Just to follow up on pull-ins, right? It sounds like you haven't seen them yet, but just want to clarify that, that you haven't seen them, particularly looking at the North American numbers. That's where I think it would show up. And if I could just throw in the last one, there had been some talk about potential opportunities.
Pete Smith: with a large tier one in M.D.U.'s. I'm wondering if you could give us any updates or thoughts and progress on that front. Thanks.
Normal and I think it we were
Pete Smith: You know, to put it quantify, I think we had two pull-ins and two push-outs in the quarter and that's kind of, that's a lesson.
Speaker Change: It's a fair hypothesis to think that there could be more in this quarter to beat the chair. So I would also say with respect to the
the path-linked business into our CM.
and that builds.
as the tariff landscape settles.
Speaker Change: We think we have the skill to move our product manufacturing from
Speaker Change: from one site to another, and we'll be able to probably in a couple quarters find the low-cost tariff solution. Then your last question I believe.
is around M.D.U.'s [inaudible]
So I'm here maybe be a little bit wrong with it so [inaudible]
Speaker Change: fixed wireless access for apartment buildings and it's an example for data needs driving networks that pushes capacity demands to the edge of the network. It creates an opportunity for Aviat Technology to be used in applications outside of the traditional black all space. It's an opportunity for Aviat Technology to be used in applications outside of the traditional black all space.
Speaker Change: Six wireless access. This trend could start with a part of a building or some other category. Not a lot of some of the technology limitations.
Speaker Change: You know, a specific tier one customer who recently said that they've launched an MD solution in more than 15 markets that was a public disclosure and what we would say what Aviat's perspective is
Speaker Change: In general, the more MDU connections, especially with wireless access, are good for future backbone needs. We don't want to comment on others public disclosures, but further.
We are
and some super fun thing.
Speaker Change: Aviat investors have gone out in the field and saw some Aviat gear. We want to acknowledge that so it's not
Speaker Change: Aviating Conjunction with it, Intercom have launched the 28 gigahertz and 39.
gigahertz hardware platform.
that will serve the fixed wireless.
Speaker Change: Access Space, and we also have Aviat Software and Services to go along with the hardware. And, you know, what we are excited about fixed wireless access and, you know, given...
Scott Searle: given disclosure constraints. I think that this is the appropriate place to stop. So thanks for the questions, Scott.
Thanks, I'll get back in the queue
One moment for your next question.
[inaudible]
Speaker Change: The next question comes from the line of Theodore O'Neill of Litchfield Field Research Theodore, please go ahead.
Thanks very much, and congratulations on the strong quarter.
Theodore O'Neill: My first question is about OPEX being able to hold it flat year over year, and I mean, looking at the numbers here, it looks like R&D is the reason for it. Could you give us a little background on what's happening there and whether you expect to continue holding OPEX?
Yeah, no, uh...
Theodore O'Neill: Our Outbacks performance was certainly a bright spot for us in the quarter, and it's something that we've really worked hard on since...
Since I joined in particular, we messaged.
Theodore O'Neill: that the second half of 2025 would be lower versus the first half and off-ex because we were rolling off of the transitional service agreement with any seat.
Theodore O'Neill: and DOD your point in particular, even on a year of your basis, it's in our R&D spending bucket. And so that's what you see specifically going on there. It's the TSA and then the DSA, the Developmental Services Agreement, many to see.
Theodore O'Neill: But we're kind of moving on and doing out a little bit. The other important thing that we did in the first part.
Theodore O'Neill: 2025 was we took the opportunity to prove some additional costs out of the business and we're also seeing that bear fruit now in an even better optics performance in Q3.
Theodore O'Neill: Then we thought we could achieve in the back half of 2025 when we planned our year.
Theodore O'Neill: So you kind of headed it down on a year of your basis a little bit but as a percentage of revenues if you look at it in that context.
Theodore O'Neill: Pop X was just the shade over 24% of sales, which is the lowest it's been in over two years. So, I mean, looking here a lot of businesses talk about being disciplined operational executors and whatnot, but where that actually starts at the root.
Theodore O'Neill: is dispousing the low cost mindset and everything the company does and the good thing is that something Pete and I share as a common leadership characteristic. So good to see that plan through. Yes, if you ask if that's going to continue in the one word answer is yes.
Theodore O'Neill: Okay, and Pete, in your prepared remarks, you mentioned here having strategic communication with U.S. customers about, you know, doing more business with U.S. suppliers. Is that something, is that something that be incremental to sales driven by the tariffs?
Theodore O'Neill: saying let's put it in the model, but it's a possibility that it didn't exist.
for 12 months to materialize.
Some of our larger customers are thinking and what?
Theodore O'Neill: You know, we believe we have the largest operational footprint with respect to U.S. microwave assets, so, if...
Theodore O'Neill: If the terror environment is going to persist, this could be something that...
you know, is beneficial to Abiya.
Theodore O'Neill: you know what we you know struggle the model what the cost of the terrorist might be in a changing environment I wanted to be balanced and say if terrorist persists then they're you know given our footprint there's going to be a possibility to let land
You know, you had some oriented business as well.
It makes sense. Thanks very much.
Speaker Change: One moment to your next question and ask your reminder, in order to ask a question, please press that star 11 on your telephone and wait for your name to be announced.
Thank you. Thank you. Thank you.
Speaker Change: The next question comes from the line of Dave Kane of the Riley, Dave, please go ahead.
Ah, yes, thank you, good afternoon.
Pete, regarding your-
Outlook, if you strip out first three quarters, the midpoint.
Speaker Change: It looks to be around 130, 131, so that's about an 18, 19 million sequential increase. Just wondering if you can go over some of your assumptions on the bubble drive that is an 18, 19 million sequential optic.
Speaker Change: Yeah, no, David. I wouldn't, you know, the backwards mass of taking out Q1 or panada.
Speaker Change: The arithmetic that you just verbalized, what we're guiding to is we think consensus on the year is the right spot for us so if you get you backwards, math in.
Revenues, for example.
using the current consensus as the-
Speaker Change: As the guy posed on the year, you get to somewhere between 116, 120, roughly in revenues. So in the context of the quarter, that's kind of where we see it. So the sequential build-up.
Speaker Change: $20 million that you get to by maybe just doing the average or stripping up Q1 is not really what we're guiding to in the context of the fourth quarter.
Speaker Change: Got it. And then just a couple on the geography first of them. So North America to one, it didn't sound like, um,
Speaker Change: They didn't really pick up, but they were muted in 2Q and 2Q, just wondering if you're seeing any activities out of those guys going into this quarter.
oh
You know what it's all about?
Speaker Change: Normal activity at the level between projects, we would say that we're working on landing a couple more projects but...
Speaker Change: You know, the CapEx, the Tier 1 CapEx spend was really designed to say we think that takes up in probably two quarters, so that's what we would say.
Speaker Change: Got it, and then similarly, Africa, that was kind of muted last quarter or two, just wondering what you saw out of those customers.
Speaker Change: Yeah, nothing new or out of the ordinary, but you alluded to it and it's kind of a roughly flat environment.
Look, I think Africa is currency constrained, so when...
is.
So, they're the ability in Africa for a-
Dollars & Uroses
Speaker Change: All limiting that so in a lower interest rate environment, I think that that would improve and I don't think it's going to improve [inaudible]
Significant weigh-in until interest rates monitoring.
Got it. Thank you.
One moment for your next question.
[inaudible]
Speaker Change: The next question comes from the line of Tim Savageaux of Northland Capital Market. Tim, please go ahead.
Thanks. I'm good afternoon and we've got some other results.
This is my first question is about seasonality, especially in the U.S.
Speaker Change: and you seem to have followed that pattern here down in March. We've seen that the last couple of years, we've also seen it.
Speaker Change: 20% plus, I don't know if that seasonal or just coincidental, but I think it's seasonal.
Increased in the June quarter
Um, I guess this year is there, you know,
Speaker Change: Anything that would lead you to conclude, you might see something different, or there's some potential, you know, offsets on the international side to work against that or [inaudible]
Speaker Change: How do you see that? Your outlook for US revenues and the context of that seasonality.
No, I mean it's-
You know, the guidance that-
Speaker Change: We're sort of affirming at this point, him, is the contents of them.
Speaker Change: You know, if you're back into what Q4 would be, from a revenue standpoint, you get to a bit of a build versus Q3, yes, but
Speaker Change: You know, not a 20% bomb, as you alluded to, there have been years in the past where, you know, Q4 blows it out of the water versus Q3, and it's just for us it's...
Speaker Change: Thank you for joining us. We'll see you next time. Bye.
Speaker Change: You know, the uncertainty in the market as your relates to Paris and the broader macro.
Speaker Change: was something that we wanted to make sure we aired on the conservative side. I wouldn't say though that there's some specific dampening element going on that we talk about specifically, so that'd be my spin on it.
Yeah, so, so that we're-
Speaker Change: We're trying not to get talked into higher consensus or, you know, Michael said that our bookings where our book to bill was over one, the bookings in this quarter, look good at the, you know.
Speaker Change: Five weeks into the quarter, so we think the demand environment
Speaker Change: is good. We acknowledge that, you know, Africa is muted, probably due to interest rate and
Speaker Change: You know, we remain in between projects at the U.S. Tier 1, the Motorola staff on Public Safety. We would agree with what has been published about Motorola's demand environment. Take that.
Speaker Change: Pretty, you know, a pretty wholesome set of remarks with respect to demand.
Speaker Change: What they're great. And, Peter, you mentioned several times now being between projects.
from a Tier 1 standpoint and slicked it down.
Speaker Change: a little more color on that. I think at least maybe...
Pre-Pasal Inc. You Had.
Speaker Change: Verizon Threatening 10% of revenue here and again. I assume they're much lower now.
Speaker Change: from a revenue perspective of, you know, going back whether it's
Speaker Change: You know, more 5G or fixed wireless access, what could that look like from a business perspective?
Yeah, so just a comment on the customer concentration
We don't have any single customer.
Over six and a half percent
of Revenue.
Speaker Change: and let's say US-21 kicked in. It could be top-line lift anywhere from 2.5% to 5%.
Thanks very much. I appreciate it.
One moment for your last question.
Speaker Change: The last question comes from the line of Rustam Kanga of Citizens, Rustam, please go ahead.
Great.
Thanks.
Speaker Change: Thanks, guys. Thanks for taking the question. And I suggested even a performance. Just one on the tariffs. Michael appreciate you providing the upper bound of two and two to two and a half percent on cogs. Just sort of thinking about your comment about only passing on surcharge to customers you couldn't.
Speaker Change: Mitigate Yourself. It sounds kind of like if the COVID playbook shakes out, then you wouldn't need to do that. And the upper bound on the surcharge would be that 2 to 2.5% to get you to the margin neutral. Am I thinking about that correctly?
Speaker Change: Yeah, I mean the arithmetic of it, you are, and it's intentional, it's an intentional playbook for us, is first work back through the supply base.
Pete Smith: as hard as possible to get offsets and then you know, Pete and I are driving.
Speaker Change: It's kind of alluded to a drive and more potential longer term.
Speaker Change: The best in breathe in our competitive space, so we've got a little bit of tailwind on it already and then only after we
We get through those mitigation effects.
Speaker Change: Do we then, do we then pass on the Delta? And, you know, I've just, I've seen this
Speaker Change: before this level of uncertainty, and this level of uncertainty, you gotta be really careful to treat all your partners exactly as such who treat them like partners.
Speaker Change: So that's what we intend to do, and I was really careful in my remarks and how I'm kind of broadcasting what we're going to do is relate to the terrorists.
Speaker Change: that its earnings per share and mutual, it may have a little bit of an effect on gross profit margin dampening in the near term.
Speaker Change: But for owners, I think it's the right thing for us to do long-term.
Speaker Change: So, anyway, that's a little bit more just of our own point of view as we think about it at the company level just for those interested and then a little bit more detail on what we're doing to mitigate the cost side of it.
Super helpful caller. Thanks, Michael.
[inaudible]
Pete Smith: This now includes the question and answer session. I would now like to turn it back to Pete Smith for closing remarks.
[inaudible]
Speaker Change: We'd like to thank everyone for joining in your interest in Aviat. We will talk to you again in another quarter and thanks again. Bye.
Pete Smith: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.