Aviat Networks, Inc.

Welcome to Aviat Network's third 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 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 third 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 third 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 the 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 obligation to revise or make public any revision 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.aviatnetworks.com and financial tables therein, which include a gap to non-gap reconciliation and other supplemental financial information. At this time, I would like to turn the call over to Aviat's President and CEO, Pete Smith. Pete?

Thanks, Andrew, and good afternoon, everyone. Let's review Aviat Network's results for the third quarter of fiscal year 2024. We are pleased to report that AVIAD continued execution of its organic growth strategy and made further progress on its PasoLink acquisition. Highlights from the third quarter include total revenue of $111.6 million, which represents growth of 34% versus Q3 of last year. Core AVIAD revenue growth of 7% versus the same period last year. Non-GAAP gross margin of 35%, with core aviat margins above 38%. Adjusted EBITDA of $12 million, 11% higher than the year-ago period. Non-GAAP EPS of $0.73. Strong cash generation in the quarter, with $59.2 million of cash in marketable securities on the balance sheet and a net cash balance of $10 million. These financial and operational results are driven by the continued implementation of Aviat's operating model and made possible thanks to the effort and execution of the Aviat team and our partners throughout the quarter. Let's review key highlights of the third quarter. We continued to progress the integration of the Pasolink business. In our first full quarter of ownership, we accelerated the execution of cost structure optimization and approached our near-term profitability goals. These efforts will continue to accelerate over the next two quarters as Aviat moves away from transition services provided by NEC. The PasoLink business was nearly breakeven on an EBITDA basis in the quarter and was accretive to our free cash flow generation. As we have onboarded PasoLink customers, we have undertaken a customer profitability review to ensure margins are at sustainable levels. While work is still ongoing, we expect that this will result and a slower ramp to the target 140 million annual run rate contribution. However, this should translate to more attractive business for Aviat shareholders. Beyond the existing Pasolink base, the sales teams continue to build cross-selling opportunities where we are introducing Pasolink products to historical Aviat customers and vice versa. We have already converted some of these into bookings and expect this will continue to grow in the quarters ahead. From a cost perspective, we are tracking to our internal plan to reduce cost of goods sold and excess inventory from the pass-and-link business. We had some wins in the quarter and anticipate beginning to realize some more significant savings in the current fiscal fourth quarter, primarily from inventory rationalization. Further, inventory optimization and college savings will materialize in fiscal year 2025. Overall, the transaction is tracking to an IRR in excess of 2.5 times Aviat's weighted average cost of capital. Moving on to the core Aviat business. In private networks, investments and upgrades to networks both in the U.S. and internationally continued to support growth in this segment. The recent U.S. nationwide Tier 1 outage underscores the importance of of private public safety and critical infrastructure networks. Our customers turn to Aviat for design and operation of networks that are engineered with a high degree of redundancy and reliability. Aviat's equipment enables first responders, utilities, and governments to continue communicating even when public networks are compromised. Driving further investment in private networks is the recent authorization by the FCC at the end of February for companies to begin offering automated frequency coordination systems, or AFC, for spectrum in the 6 GHz band. This is an exciting development that will likely lead to more fixed wireless access usage. However, concern persists among many of our private network customers as their microwave backhaul largely utilizes the 6 GHz band, creating the possibility for interference. We've been preparing and have developed a comprehensive suite of solutions to protect these networks by detecting and correcting interference issues. Our frequency assurance software, or FAS, is patented software that analyzes customers' networks to detect interference and suggest remediation actions. Working on Avion radios and the radios of a leading competitor, FAS allows a network operator to have confidence in their network's reliability and performance, even in the face of potential interference without having to move communication to a new band. Once interference is detected or for proactive customers who wish to avoid the possibility entirely, Aviat offers two solutions. First is an ultra-high power radio at 11 gigahertz to enable customers to move to a new band. We estimate upwards of 80% or more of the 90% thousand 6 gigahertz microwave links in the U.S. can move to 11 gigahertz with this product. Second is a new innovative multi-band solution operating at 6 and 11 gigahertz and utilizing the 11 gigahertz UHP radio specifically designed to protect longer link distances. These new offerings represent a large opportunity for Aviat to solve a growing problem for our customers. And we believe we are several quarters ahead of our closest competitor with these products. In the third quarter, we made several updates to our products to better address our private network customers. We released 1 plus 1 hardware protection on our WTM radio platform. This is important to open the all outdoor radio market in mission critical segments, such as with public safety, federal, and utility customers. We also released a new hardware variant of our CTR router to improve the interface and address the growing capacity needs of our router customers. These upgrades will help to sustain our leadership in the private network segment. Additionally, we want our first major LTE radio access network deal in an international military application, which is an exciting adjacency market based on our Redline acquisition. In mobile networks, we continue to execute to serve our global Tier 1 and Tier 2 operators, who in many cases are still in the middle of or just beginning to build out their microwave 5G networks. To enable pass-hailing customers to better manage their networks and to further expand the addressable market for our software, we will roll out support for our pass-hailing portfolio in our ProVision management platform in Q4 fiscal year 2024. In India, we received our first orders for microwave backhaul radios. Previously, we had been selling only our e-band and multi-band solutions. The microwave backhaul order is exciting as it represents Aviat's first sale into a $200 million Indian microwave segment that had previously been unaddressed by Aviat. With that, I will turn it over to David to review our financials before coming back for some final comments. David?