Aviat Networks, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Aviate Network's first quarter fiscal year earnings call. At this time, all participants are in the listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. Please be advised that today's call is being recorded. And now I would like to hand the conference over to your host, Glenn Renner, Investor Relations. Sir, please go ahead.

Thank you, Lance, and welcome to Aviat Networks' fiscal 2020 first quarter results conference call. We filed our Form 10-Q, issued our press release, and our updated investor presentation has been posted to the IR section of our website. As you will see, the company had a very strong start to the fiscal year and remains on track with its prior guidance. Today's call will be led by Stan Gallagher, Interim Chief Executive Officer and Chief Operating Officer, and following his remarks, Sean McFaul, Senior Vice President of Corporate Development, and Eric Chang, Senior Vice President and Principal Accounting Officer, will discuss market trends and financial results, respectively. After their prepared remarks, we will then open up the call for questions and answers. During today's call, management may make forward-looking statements regarding Aviat's business, including, but not limited to, and many more. Only as of the date of this call and the company undertakes no obligation to revise or publicly release the results of any revision of these forward-looking statements in light of new information or future events. Additionally, during today's call, management will reference both GAAP and non-GAAP financial measures. Please refer to our press release and financial tables therein, which include a GAAP to non-GAAP reconciliation and other supplemental financial information. Thanks for your continued interest in Avia, and at this time I will turn the call over to Sam.

All right, thanks, Glenn. So our call today will be a little different than those of the past. My remarks will, of course, provide highlights around the quarter and expectations, but Sean and I also intend to provide more color around what we are doing to ensure Aviat is positioned to capitalize on the positive trends we are seeing with respect to 5G and increased demand for mission-critical network transport solutions. I am honored in the confidence and trust the board has placed in me. I take on this new role as interim CEO with a great deal of excitement and with an eye on amazing transformative change. We have a great team and significant opportunities to lead the market through innovation, capture share, improve profitability further, and of course, drive shareholder value. My professional philosophy has always been driven by the art of possible. empowering our people to not only think this way, but to go out and achieve it. And one of the best ways to consistently evolve and succeed is to make sure we have the right tools that simplify processes and capture and utilize data more efficiently, enabling us to enhance our customers' business. By better understanding customer needs, we will strengthen our position as their solutions partner, not just their product supplier. We entered fiscal 2020 with significant backlog in momentum, particularly in North America. This is what drove the confidence in our guidance for the first half of the fiscal year, and based on our strong Q1 results and anticipated Q2 performance, I'm pleased to announce that we are reaffirming our prior guidance. Due to ongoing uncertainty in Africa, we are not providing guidance for the full fiscal year at this time. However, what I can say with respect to fiscal 2020 is that we substantially de-risked our plan, especially related to MTN. We are making solid progress and globally our team has been successful in uncovering other opportunities resulting in new revenue streams this year and positioning Aviat well for the future. For the full fiscal year, we expect stronger year-over-year gross margins with the first half being exceptionally strong and the second half stronger on a year-over-year basis. We are also expecting a slight uptick in operating expenses as we continue to invest in new productivity tools and in our talent, which will lead to greater efficiencies and future savings. With respect to the bottom line, we are anticipating significant year-over-year improvements in non-GAAP operating income and adjusted EBITDA. And lastly, our cash balance increased in Q1, and is expected to increase throughout the year. The APAC region was a big highlight of our international business in fiscal 2019, and we had an exceptionally strong year with Globe Telecom, a leading carrier in the Philippines. We are optimistic about our long-term opportunities with Globe and other carriers in Asia, with more investment anticipated in both fixed and mobile broadband data services and in preparation for 5G. and many more. Multiband is an important wireless transport technology which will help them optimize the use of spectrum. This solution was a big focus for us in last year's R&D spin and should open up new avenues of growth across various international markets preparing for 5G. Meanwhile, many of our international customers and prospects are still in the midst of upgrading their networks to support 4G services while beginning to lay the groundwork for future 5G adoption. To illustrate the point, we hope to shortly announce a new multi-year, multi-million dollar contract with a leading and very well-known carrier in the APAC region, so stay tuned for more details on that. To guide appropriately, international revenue will be down in fiscal 2020, given the situation in Africa, lower volume in the APAC region, and a relatively consistent but smaller flow on a dollar basis in the other markets we address. The future, however, should be a different story, and as I mentioned, our investments are about the future. Shifting to North America, 5G is beginning now and will build over the next several years. Keep in mind that today, the service provider market in North America is a small piece of our overall business. But in years past, as we saw with the migration to 4G, for example, it was much larger and a source of growth. With our WTM4800 solution, new services, and new automation tools, we believe the opportunity to capture more business and more customers on this side is certainly within our grasp. We continue our tremendous success in private networks, mission-critical networks for governments, states, cities, first responders, utilities, and other adjacent markets that need highly dependable and trusted solutions. More than half of our business worldwide today comes from the private networks vertical. And while our customer base continues to expand, the opportunities to grow further are substantial. We have the specialization and the technology solutions unlike any other in our sector today, and that is why we have continued to allocate savings through process efficiency programs to R&D. Innovation can never stop. Data usage is exploding, and the increase in usage cannot be met by fiber alone. Highly differentiated radios and routers coupled with turnkey services are what separate Aviat from the competition, and this is part of the reason we have been successful in winning new business. There's a lot more I can add with respect to wins, opportunities, market trends, and technology innovations. But I'm going to stop here and let Sean provide a little more color around the positive market dynamics we are witnessing and why we believe Aviat is so uniquely positioned to win over the next few years. I'll pass it over to you, Sean.