Aviat Networks, Inc.

Good afternoon and welcome to Aviat Network's second quarter fiscal 2023 earnings conference 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. And now I'd like to turn the conference over to your host, Mr. Andrew Fredrickson, Director of Investor Relations. You may begin.

Thank you and welcome to Aviat Network's second quarter fiscal 2023 results conference call and webcast. You can find our form 10Q press release and updated investor presentation in the investor relations section of our website at www.aviatnetworks.com along with a replay of today's call in approximately two hours. With me today are Pete Smith, Aviat's CEO, who will begin with opening remarks on the company's fiscal second quarter, followed by David Gray, 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. 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 financial projections, business drivers, new products and expansions, the impact of COVID-19, and economic activity in different regions. 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 actual results to differ materially from those statements. Additional information on factors that could cause actual results to differ materially from the statements made on this call can be found in our annual report on Form 10-K, filed with the SEC on September 14, 2022. The company undertakes no obligations to revise or make public any revisions of these forward-looking statements in light of new information or future events. 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 investor relations section of our website at www.aviatnetworks.com and financial tables therein, which include a GAAP and non-GAAP reconciliation and other supplemental financial information. At this time, I would like to turn the call over to Aviat CEO, Pete Smith. Pete?

Thanks, Andrew, and good afternoon, everyone. Thank you for joining us to review Aviat Network's results for the second quarter of fiscal year 2023. Aviat executed well against its plan this quarter, and we continue to position ourselves to benefit from growth around the world in 5G, rural broadband, and private networks, as well as drive meaningful bottom-line improvement. In the second quarter of fiscal year 2023, Aviat delivered Revenue of $90.7 million, which represents growth of 16.5% versus Q2 of last year. Record non-GAAP operating income margin of 12.5%. Adjusted EBITDA of $12.9 million, a 27% increase versus the same period prior year. Non-GAAP EPS increase of 32%. These results would not have been possible without the tireless dedication and execution of the Aviat team and our supplier partners. Let's discuss some key highlights from the second quarter. The global 5G upgrade cycle continues to be a driver of Aviat's business and outlook. Our recent 5G win with Bharti Airtel in India is officially underway as we began delivering products in the second quarter. We are excited about this win in India as it represents an entirely new customer and geography for Aviat and demonstrates the value that we can deliver to customers through our products and services. Elsewhere around the globe, we continue to gain 5G business through increased customer focus. Part of this growth has come from execution on replacement opportunities from our largest competitor. Globally, our share gain funnel against this competitor is approximately $60 million. In fiscal year 2023, we have booked over $19 million in such opportunities year-to-date and have recognized over $8 million in year-to-date revenue. We will continue to execute on these opportunities to take share of demand. In terms of capturing new 5G opportunities, we recently announced the release of our vendor-agnostic multiband solutions. This allows customers to leverage Aviat's best-in-class E-band and multi-band solutions to seamlessly migrate their existing networks to 5G with lower incremental investments. This creates a large upgrade opportunity for Aviat as it helps overcome high switching costs. The Aviat multi-band vendor agnostic solution works with existing third-party microwave radios and is detailed in our investor presentations. Our solution provides extended distance and higher capacity alternatives versus competitive offerings. With regards to our rural broadband business, we continue to execute well, and the Aviat store remains a point of differentiation for the company. We recently refreshed the store to expand the products offered beyond our microwave radios and accessories to include software products like our health assurance software, or HAS, and frequency assurance software, or FAS, as well as integrating our access products from the Red Line acquisition. Some additional commentary on the government funding program follows. We continue to anticipate RDOF, Rural Digital Opportunity Fund, to begin flowing the first half of calendar year 2023, and AVIAT to see RDOF-related revenue in the second half of the calendar year. The recent RDOF authorization for an industry leader using fixed wireless access in their deployments is encouraging, and we anticipate more providers to use wireless technologies in their RDOF deployments moving forward. Note that we anticipate a long ramp for RDOF funding. Fortunately, AVIAD is still benefiting from customer spend from the CAF, Connect America Fund, and ARPA programs. On the horizon is the BEAD program, Broadband equity access and deployment, which we are optimistic about. The BEAD program has allocated $42.5 billion to expand high-speed Internet access in all 50 U.S. states. There is much still to be seen about the implementation and allocation of the program, but WISPs should be a large beneficiary of BEAD, which bodes well for AVIAD. In private networks, we are maintaining our leadership in North America and see increasing international opportunities. For example, in APAC, we secured a multi-year high margin win with our Eclipse platform for a national public safety network. The integration of the Redline communication business, which we now refer to as Access Products, continues to go better than anticipated. We are pleased with our progress from a cost takeout perspective, and we are beginning to see cross-selling opportunities for aviat backhaul into Redline accounts. and vice versa. Moving on to the supply chain environment. We continue to see improvements. For approximately 98% of our supply, we have returned to pre-crisis performance. Alas, we need 100%. Currently, we have 27 components that remain in allocation. Note that it takes approximately 2,000 components to deliver our microwave system. Of the remaining components on allocation, Semiconductor chips on the 28 nanometer node remain problematic. We have come a long way, but are not done de-risking the supply chain. Fortunately, Aviat has been able to avoid significant supply chain interruptions through the crisis period. Throughout the supply chain crisis, Aviat has held elevated inventory levels. These elevated inventory levels started at the outset of COVID-19 and have persisted and increased through the recent China reopening. We have built resiliency to the third derivative of the supply chain, which is subject to the reopening risk. Based on the past few years of execution and building inventories, we will declare peak inventory levels at Avia and anticipate improvements over the next several quarters as lead times and allocation continue to moderate. This quarter we saw no missed revenue opportunity due to supply chain shortages. Aviat remains committed to building resiliency in our supply chain by proactively identifying at-risk components and secondary suppliers. Our work in moving Redline's manufacturing base over to Aviat is a good demonstration of an opportunity where we believe we will see improved reliability and results through a stronger supply chain. I will now turn the call over to David to review our financials before coming back for some final comments. David?