Aviat Networks, Inc.

Good afternoon. Welcome to AVIAT Network's first quarter fiscal 2024 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. I will now 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 first quarter fiscal 2024 results conference call and webcast. You can find our press release and updated investor presentation in the IR section of our website at www.aviatnetworks.com along with a replay of today's call. With me today are Pete Smith, Aviat's president and CEO, who will begin with opening remarks on the company's fiscal first 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, 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 statements made on this call can be found in our most recent annual report on Form 10-K filed with the SEC. 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 IR section of our website at www.aviadnetworks.com and financial tables therein, which include a GAAP to non-GAAP reconciliation and other supplemental financial information. At this time, I would like to turn the call over to Aviad's President and CEO, Pete Smith. Pete?

Thanks, Andrew, and good afternoon, everyone. Thank you for joining us to review Aviat Network's results for the fiscal first quarter of 2024. I'm pleased to report that Aviat continued its strong execution and achieved revenue and profitability expansion in the quarter. Highlights from the first quarter include revenue of $87.6 million, which represents growth of 7.8% versus Q1 of last year. Adjusted EBITDA of $12.1 million, a 13.1% increase versus Q1 of last year. Non-GAAP EPS increase of 16.0%. Strong cash generation in the quarter. Aviat generated operating cash flows of $14 million and ended the quarter with $35.5 million of cash and marketable securities and a debt-free balance sheet. These financial and operational results are driven by the continued implementation of Aviat's operating system and made possible thanks to the effort and execution of the Aviat team and our partners throughout the quarter. Let's discuss key highlights of the first quarter. Aviat's exposure across different verticals, geographies, and customers has made our business strong and diverse. We continue to see healthy demand in private networks, mobile networks, and rural broadband networks. In private networks, we continue to innovate in North America. Aviation sales in this region grew 14% in the quarter versus the same period prior year, thanks in part to the strong private network demand environment. We have executed well and have grown a robust project backlog. We had a record Q1 private network bookings and remain excited about the outlook of this segment. Increasingly, states are turning directly to AVIAD for our expertise. Recently, we announced wins of two large state public safety networks, which are examples of this trend. These projects are made possible by the full breadth of products and services that AVIAD offers. High-power microwave radios, high availability routers, and management software, along with turnkey services for design, installation, support, and ongoing managed services. This full suite of solutions is why Aviat is the leader in private networks. We believe that demand environment in private networks will remain robust in the quarters and years ahead. State and city budgets remain strong and growing in the current fiscal year. State public safety spending is expected to grow ahead of overall budget rates, and city police and fire spending is growing faster this year versus the prior two years. Additionally, American Rescue Plan Act funds, or ARPA, which are now fully distributed to the states, are still in the early stages of utilization. These funds must be spent by the end of calendar year 2026. We expect this will provide a meaningful tailwind to private network expenditures. We continued our momentum and had a very strong quarter in federal government projects. Our revenue from federal business over the last 12 months has nearly doubled compared to the prior 12-month period. Based on our bookings and the long lead time nature of these projects, we expect the recent strength in this segment to continue and the quarters ahead. We anticipate a short to medium term federal shutdown would have a minimal impact on our federal project business. Mobile network operators continue their investment in building the microwave portion of their 5G networks, both in the US and internationally. Aviat's unique product portfolio continues to attract operators by lowering their total cost of ownership and improving network performance. We are still early in the adoption of global 5G, and we expect continued investment in microwave networks to support growing needs from both customers and business enterprises. In the U.S., the mix shift to microwave as the mode of backhaul is favorable. In this regard, a U.S. Tier 1 customer was significant for Avion in the quarter. We believe that as The 5G build-out extends beyond urban areas. We will continue to see demand for our microwave products and services. Internationally, operators are planning and growing their 5G deployments, and we are focused on winning new business and projects. In our rural broadband business, Aviat continues with our distinctive e-commerce platform and had a strong quarter of Aviat's store performance. Wireless internet service providers and others continue to invest and plan for funding from the Rural Digital Opportunity Fund, or RDOF, and Broadband Equity Access and Deployment Program, or BEAD. There has been recent commentary from several states who are considering or plan to employ technological neutrality in BEAD-related projects. This is a positive development for the use of wireless backhaul as microwave is typically a more cost-effective technology than fiber for rural communities while still providing low latency, high reliability, and a high bandwidth. This would be a win-win for citizens and states as microwave can be deployed faster than fiber while providing the bandwidth and speed needed. This also allows states to stretch their bead funding dollars further. We are well-positioned to capture this business as we are already working with states and service providers alike to ensure AVIAD is ready to supply these critical infrastructure projects. At the beginning of October, AVIAD attended WSPA Palooza, an annual wireless ISP and rural broadband convention where we were encouraged by the upbeat tone of network operators. Deployments remain healthy. and fixed wireless access continues to grow. We believe that the expansion of the six gigahertz frequency for unlicensed broadband services, which should be authorized by the FCC by the end of the year, will drive further uptake in wireless access. This is important for AVIAD as fixed wireless access networks tend to use microwave as their backhaul at a higher rate than fiber to the home networks. Given the recent turbulence in the network equipment space, let me emphasize why AVIAD's demand environment remains strong and we continue to execute on our growth plans. First, as I opened with, AVIAD's business is diversified between the segments we serve. Private networks, mobile network operators, and rural broadband operators do not follow the same CapEx cycles. Additionally, Aviap benefits from our direct-to-customer channel rather than relying on distributors. Roughly 90% of our business is direct. This allows us to have intelligence from customers about their needs and business forecasts. This also eliminates the risk of inventory buildup at distributors, which many companies are currently experiencing. This visibility allows us to better serve the customer and keep a pulse on market demand, which feeds into our new product and service development process. Many network equipment providers, particularly fiber players, have struggled with their supply chains over the last couple of years and have recently experienced softening demand as a result of the overordering that occurred. I spoke at length about this on our last earnings call, and these factors remain true today. Aviata has been able to avoid this problem and continues to execute favorably because of our supply chain resiliency over the last three years and our direct relationships with our customers. Our supply chain environment has normalized, and we remain committed to constantly improving our performance. We are confident in our ability to meet customer demand and support our growing markets. Not only has near-term demand remained strong, but we also see our total addressable market growing over the long term. Historically, Aviat has been viewed as a microwave business serving a $3.2 billion market. To better serve our customers, we have added routers, managed services, and software to our portfolio. Our recent tuck-in acquisition of Access products expanded the markets we can serve. As a result of the acquisition, and our organic investments, our business today serves a TAM of greater than $11 billion. We believe that our current TAM will grow at 7% through 2027 to become a $15 billion market. This growth is driven by increasing data consumption on global networks and significant investments in private LTE and 5G networks. We expect our TAM to continue to expand as we find new ways to serve our customers. To continue our share gain plans, maintain our TAM, and respond to recent investor inquiries, we will provide an update on our roadmap and semiconductor modem plans. Our roadmap is focused on the following factors, capacity, distance, total cost of ownership. Today, Aviat delivers industry-leading capacity at distance, and our customers enjoy cost of ownership benefits. For example, today we provide five gigabits per second radios at 40 plus miles, 10 gigabits per second radios at 20 miles, and 20 gigabits per second radios at distances shorter than three miles. One of two such radios available in the market. While capacity is on the mindset of many technologists and investors, the 20 gigabit per second radio represents very little of our total demand. Extending beyond this capacity in any meaningful way requires new bands like D-band, which I will touch on in a moment. The principal access of innovation is to deliver customer-acquired capacity at increased distances at the lowest total cost of ownership. The path to achieve this key innovation requirement is the integration of switch technology, modem technology, and the microprocessor. In our view, the best way to achieve integration is with an economical, advanced semiconductor technology node, or said another way, geometries. The better semiconductor technology node permits increased functionality, integration, and lower power consumption. We believe our road map has advantages here. Beyond capacity, distances. and cost of ownership roadmap discussions often mention spectrum frequency ranges or bands. Our roadmap will support products where spectrum is currently available and where spectrum is anticipated to be available in the coming years. Recently, one of our competitors highlighted D-band spectrum as a 6G product targeting 2030. We tend to agree and we will be ready. With that, let me turn the call over to David to review our financials before coming back for some final comments.