Aviat Networks, Inc.

Hello, and welcome to All Beyond Network's fiscal Q2 2025 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask the question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. I would now like to turn the conference over to Andrew Fredrickson. Sir, you may begin.

Thank you, and welcome to Aviat Network's second quarter fiscal 2025 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 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.aviannetworks.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 Aviat's President and CEO, Pete Smith. Pete?

Thanks, Andrew, and good afternoon. We are pleased to report a strong quarter of financial and operational performance for Aviat Networks. Let's discuss the highlights of our second quarter of fiscal year 2025. Total revenue of $118 million, up 26% versus the same period a year ago. Non-GAAP gross margin of 35.3%. Adjusted EBITDA of $14.8 million, up 22% versus the year-ago period. Non-GAAP EPS of 82 cents. Let's recognize that the whole Aviat team delivered for our customers, suppliers, partners, and shareholders. The dedication to continuous improvement and customer focus resulted in the highest quarterly revenue the company has had in over a decade and record quarterly adjusted EBITDA. We benefited from operating leverage this quarter. Gross margin returned to levels comparable to recent quarters. Profitability at the adjusted EBITDA and non-GAAP net income level were strong thanks to a higher level of revenue and margin, as well as disciplined spending on operating expenses. These factors, in addition to an intense focus on working capital, aided the company in generating positive cash from operations in the quarter. While we still have much work to do, I see this quarter as a strong indicator of what can be accomplished following our strategy. Let's talk a little more about each of our end markets. With mobile service providers, our results were strong, thanks to a robust quarter from the parceling products and services, improved margins in the India business versus the first quarter, and improving business in the EMEA and Latin America regions. Revenues in the quarter related to Pasolink were just shy of the $35 million level. This is the annual contribution rate that we expect the Pasolink acquisition to have by the end of fiscal year 2025. At this scale, we are generating meaningful earnings contribution from the acquisition. We are pleased with the progress we have made. Encouragingly, our Pasolink orders for the last three quarters have averaged $35 million, setting us up for continued growth from Pasolink and giving us confidence we will meet our $140 million run rate target by the end of the fiscal year. We have shipped our first Pasolink radio from our contract manufacturer in Thailand during the second quarter. This is a major achievement by the team. Although we still have... More to do in the quarters ahead. We believe that once completed, this move will improve product lead times for customers and lead to better margins for our shareholders. Regarding the Tier 1 environment in the U.S., while we still expect near-term demand to remain muted compared to last year, Q2 saw a sequential increase versus Q1. This reinforces our belief that the headwinds we are currently facing are timing-related rather than the result of large CapEx shifts. Moving to private networks, we had a strong quarter from our private networks business. In public safety, we continue to serve our large statewide networks that we have won over the last several quarters, in addition to numerous other public safety networks. The spending environment in this segment remains healthy, and we continue to look for areas of share gain opportunity. In the rural broadband space, AVIAD continues to hold its place as the share of demand leader for microwave backhaul with wireless Internet service providers. Although we do not expect to have revenue in fiscal 2025 related to the $42 billion broadband equity access and deployment program, or B, I would like to answer some questions that have been on top of many investors' minds since November. First, there continues to be growing recognition of the importance of wireless broadband alternatives in the FEED program to make funding go as far as possible. Some states, such as Utah and Arizona, have defined the upper cost threshold for fiber connection before turning to an alternative technology. We expect this sentiment to continue to grow, which bodes well for wireless applications. Secondly, We are asked about low Earth orbit or LEO satellite Internet companies indeed. The LEO satellite Internet has a value proposition for very remote or difficult-to-reach locations. Wireless Internet service providers can provide better performance and reliability at a lower monthly cost to their customers than what is currently available from the LEO Internet services. We will see what, if any, changes occur to the BEAT program with the new administration. Aviat stands at the ready to assist state broadband offices and Internet service providers with their backhaul needs, thanks to our U.S. footprint and our Build America, Buy America compliant products. Regarding our products, we have made a few recent announcements. We strengthen our software cybersecurity offering by enhancing our secure software development lifecycle process and software vulnerability alert service. Our software and firmware development continues pace with the latest cybersecurity requirements. Given the nature of the critical communication networks We are part of, we believe, it is extremely important to remain up to date on cybersecurity measures to help keep our customers safe from such threats. Additionally, we are introducing a new product solution, Multiband Max, or MB Max. This is an exciting offering that enables up to 25 gigabits per second on a single antenna via combined microwave and millimeter wave. MBMAX enables more capacity over longer distances with better reliability using fewer and smaller antennas than competing solutions, resulting in a lower total cost of ownership for our customers. We expect to begin shipping MBMAX in the coming months, and we'll have more details to share with customers soon. I would like to now turn the call over to Michael to review the financial results of the quarter before coming back for some closing remarks.