Aviat Networks, Inc.

Good morning. Welcome to Aviat Network's fourth 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 call over to your host, Mr. Andrew Fredrickson, Director of Investor Relations. Thank you. You may begin.

Thank you, and welcome to Aviat Network's fourth 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 fourth quarter, followed by Michael Conaway, 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 fiscal guidance, 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 expressed or implied 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 morning, everyone. Let's discuss Aviat Network's fourth quarter and full year of fiscal 2024 results, and achievements. Highlights from the fourth quarter include total revenue of $117 million, which represents growth of 28% versus Q4 of last year, revenue contribution from Pasolink of $25 million, a 12% increase versus the third quarter, adjusted EBITDA of $12 million, non-GAAP EPS of $0.72, adjusted EBITDA and non-GAAP net income accretion from the Pasolink acquisition in the quarter. For the full year fiscal 2024, Aviat achieved revenue of $408 million, growth of 19% versus last fiscal year, adjusted EBITDA of $48 million, up 6% versus the prior year. Let's reflect on Aviat's accomplishments in fiscal 2024. We grew the core Aviat top line and expanded gross margins versus last year. Additionally, we closed the Pasolink acquisition and exceeded our plan from a profitability perspective. This strategic transaction strengthened our product portfolio and significantly bolstered Aviat's international business to give us the scale necessary to serve our customers profitably in these overseas markets. We are pleased with the progress we have made on integration and are tracking ahead of our plans in terms of our investment thesis. Now let's discuss highlights from the quarter, starting with Pasolink. We grew Pasolink revenues in the quarter to $25 million, an increase versus the prior quarter's revenue contribution. Importantly, the Pasolink acquisition was accretive to Aviat's financials on an adjusted EBITDA and non-GAAP net income basis. We remain confident in the Pasolink business being EPS secretive in the coming fiscal 2025 first quarter, which is in line with our stated commitment to shareholders. Our dialogue with Pasolink customers continues to strengthen, and we remain confident in ramping the revenue in fiscal 2025. Aviat's voice of the customer process has been applied to Pasolink, and the desire for a more powerful network management solution has been communicated. We took this feedback and recently released PassLink support on ProVision Plus, Aviat's network management software. With over 800,000 active PassLink radios in the field, this will represent a significant opportunity for Aviat in the years ahead. Based on this and other capabilities such as ProVision Plus on our access product line and FAS on competitor radios, We expect strong software business in fiscal 2025, up from our record software sales in fiscal 2024. We remain disciplined on costs within PassLink, as is reflected in earnings contribution from the business. Transition services costs remain, but we anticipate fees to continue ramping down in the second half of fiscal year 2025. In private networks, Aviat continues to distinguish itself as a leader. In the quarter, we had a significant statewide win, converting a new customer from a legacy incumbent. We're excited about this project and anticipate initial revenue in fiscal 2025. Aviat was able to secure this takeaway because of our product's performance and the level of service that we can provide to this public safety customer. Based on FCC filings, Aviat has incrementally added to its share of demand for U.S. private networks versus last year. There have been many outage incidents across the U.S. over the past several months that emphasize the importance of reliable public safety networks. At least eight states have seen statewide 911 outages so far this year. There is a wide gap in performance and reliability between the most modernized public safety networks and the least modern. Given the critical nature of these networks, there is a growing and persistent desire to ensure that all public safety networks across the U.S. are modernized and are capable of handling the significant increase in technology and data bandwidth that travel across these networks. We remain confident in private networks being a growth driver for Avion. State and local government budgets remain healthy for fiscal 2025. Overall state and city budgets are expected to grow 3% and 7% respectively. Public safety spending is expected to grow approximately 5%. Investing in and improving public safety infrastructure remains a top priority across the political spectrum, and we anticipate this tailwind for Aviat continuing in the years ahead. ARPA funding remains top of mind with government customers. as ARPA funds must be obligated by the end of this calendar year. Our team remains engaged with customers to assist in ARPA-related projects as this deadline approaches. In mobile networks, our international business continues to offset U.S. Tier 1 softness. India remains a bright spot for Aviat as we continue to grow the number of Aviat radios deployed in the country as well as build on the large Pasolink base. Operators in India increasingly view Aviat as a technological leader as they evolve their networks to incorporate more E-band and multi-band radios. Elsewhere in the world, share gain from our largest competitor remains an opportunity for Aviat, as was highlighted by the decision of the German government to move away from certain foreign vendors within the next five years. We anticipate more opportunities like this to continue to come to market, and given our strong portfolio of products and services, we are optimistic we can convert at a rate above our current market share. In rural broadband, we had a strong gear with our Aviat store and experienced continued demand from the WISP customer base. Revenue from the store represented approximately 7% of overall revenue in fiscal 2024. Government programs such as RDoS help to keep spending strong in this space. Last, a few comments around our previous disclosed material weakness and delayed 10K filing will follow. Let me first apologize to our shareholders. We were disappointed in our ability to complete our year-end audit in a timely fashion. This is an overshadowed and otherwise good story coming out of our fiscal 2024. The material weaknesses relate to key accounting personnel turnover we had in the third quarter of fiscal 2024. This turnover led to key controls not being performed as designed. Although this has not resulted in material changes to our financial results, it is still disappointing. The review of our internal controls resulted in certain recommended improvements, which we are undertaking appropriately. In summary, the discovery of the material weakness together with the Pasolink acquisition made for a more lengthy and complicated audit process than we anticipated, which led to our delayed 10K filing. We look forward to putting this event behind us and re-earning the trust of shareholders in fiscal 2025. Before turning it over to Michael to review the financial results of the quarter and fiscal year, I'd like to provide a quick introduction. Michael joined Aviat from Honeywell, where he was vice president and CFO of Honeywell's energy and sustainability solution segment. Prior to that, Michael led the finance function for various segment businesses at Honeywell, AVB, and GE. Given his past success leading multi-billion dollar P&Ls and operating in different end markets, Aviat's board of directors and I believe that Michael will upgrade Aviat's ability to scale its business as we grow and provide continued process discipline and productivity throughout the organization. With that, I will turn it over to Michael.