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Aviat Networks Announces Fiscal 2020 Fourth Quarter and Twelve Months Financial Results


AUSTIN, Texas, Aug. 27, 2020 /PRNewswire/ -- Aviat Networks, Inc. (NASDAQ: AVNW), ("Aviat Networks," "Aviat," or the "Company"), the leading expert in wireless transport solutions, today reported financial results for its fiscal 2020 fourth quarter and twelve months ended July 3, 2020.

Pete Smith, Aviat Networks' President and Chief Executive Officer stated, "Despite COVID-19, we achieved an annual Adjusted EBITDA of $13.5 million, which exceeded the top end of our Adjusted EBITDA guidance of $11-$12 million, and increased over 50% from $8.8 million for fiscal 2019.  I want to extend my appreciation to our customers, suppliers and employees who helped us achieved such strong financial results during this challenging time."

In the fiscal 2020 fourth quarter, Aviat announced the addition of partners to expand our reach, new customer wins, the launch of an important new software offering, frequency assurance software (FAS) to improve network reliability, and we continued to execute on our previously announced restructuring.  This progress sets the stage for the future.

Smith continued, "As we look forward to fiscal 2021, we are expecting both Adjusted EBITDA and revenue to grow compared to fiscal 2020. We also expect to see the benefits from our strategic focus including new products such as FAS, our focus on improved reach and adding new customers and our previously announced cost-savings initiatives.  We are well-positioned for demand from 5G mobile, mission critical networks and rural broadband."

Fiscal 2020 Fourth Quarter and Twelve-Month Comparisons
The Company reported total revenues of $62.7 million for its fiscal 2020 fourth quarter, compared to $64.2 million in the comparable fiscal 2019 period, a decrease of $(1.6) million or (2.5)%.  North America revenue of $38.2 million decreased by $(1.0) million or (2.6)%, compared to $39.2 million in the comparable fiscal 2019 period.  International revenue of $24.4 million declined by $(0.6) million or (2.3)%, compared to $25.0 million in the comparable fiscal 2019 period.  The decline in international revenue was anticipated given the current lower spending environment in Africa, as well as high order volumes in the APAC region in the prior fiscal year period.

For the twelve months ended July 3, 2020, the Company reported total revenues of $238.6 million, compared to $243.9 million in the comparable fiscal 2019 period, a decline of $(5.2) million or (2.1)%.  North America revenue of $151.7 million increased by $18.8 million or 14.2%, compared to $132.9 million in the comparable fiscal 2019 period.  International revenue of $86.9 million declined by $(24.0) million or (21.7)%, compared to $111.0 million in the comparable fiscal 2019 period.

In the fiscal 2020 fourth quarter, the Company reported both GAAP and non-GAAP gross margin of 34.9%.  This compares to GAAP gross margin of 35.2% and non-GAAP gross margin of 35.1% in the comparable fiscal 2019 period.

For the twelve months ended July 3, 2020, the Company reported GAAP gross margin of 35.5% and non-GAAP gross margin of 35.6%.  This compares to GAAP gross margin of 32.5% and non-GAAP gross margin of 32.5% in the comparable fiscal 2019 period, an improvement of 300 and 310 basis points, respectively.

GAAP total operating expenses for the fiscal 2020 fourth quarter were $19.7 million, compared to $20.1 million in the comparable fiscal 2019 period, a decrease of $(0.4) million or (1.8)%. Non-GAAP total operating expenses, excluding the impact of restructuring charges and share-based compensation, for the fiscal 2020 fourth quarter were $17.5 million, compared to $19.8 million in the comparable fiscal 2019 period, a decrease of $(2.2) million or (11.3)%.  Non-GAAP operating expenses decreased primarily related to cost-cutting measures implemented in fiscal 2020.

For the twelve months ended July 3, 2020, the Company reported GAAP total operating expenses of $81.3 million, compared to $77.9 million in the comparable fiscal 2019 period, an increase of $3.4 million or 4.4%.  On a non-GAAP basis, excluding the impact of restructuring charges and share-based compensation, total operating expenses for the twelve months ended July 3, 2020 were $75.8 million, compared to $75.0 million in the fiscal 2019 period, an increase of $0.7 million or 1.0%. Non-GAAP operating expenses increased primarily due to fiscal 2020 containing an extra week.

The Company reported GAAP operating income of $2.1 million for the fiscal 2020 fourth quarter, compared to a GAAP operating income of $2.5 million in the comparable fiscal 2019 period, a $(0.4) million year-over-year decline.  On a non-GAAP basis, the Company reported operating income of $4.4 million for the fiscal 2020 fourth quarter, compared to a non-GAAP operating income of $2.8 million in the comparable fiscal 2019 period, a $1.6 million year-over-year increase.

For the twelve months ended July 3, 2020, the Company reported $3.4 million in GAAP operating income, compared to a GAAP operating income of $1.4 million in the comparable fiscal 2019 period, a $2.0 million year-over-year improvement.  On a non-GAAP basis, the Company reported operating income of $9.1 million for the twelve months ended July 3, 2020, compared to $4.3 million in the comparable fiscal 2019 period, a $4.8 million year-over-year improvement.

The Company reported GAAP net income of $1.1 million in the fiscal 2020 fourth quarter or GAAP net income per share of $0.21.  This compared to a GAAP net income of $3.8 million or GAAP net income per share of $0.69 in the fiscal 2019 fourth quarter.  On a non-GAAP basis, the Company reported net income of $4.1 million or a non-GAAP net income per share of $0.75, compared to a non-GAAP net income of $2.6 million or non-GAAP net income per share of $0.47 in the comparable fiscal 2019 period.

For the twelve months ended July 3, 2020, the Company reported GAAP net income of $0.3 million or a GAAP net income per share of $0.05.  This compared to GAAP net income of $9.7 million or a GAAP net income per share of $1.73 in the comparable fiscal 2019 period.  On a non-GAAP basis, for the twelve months ended July 3, 2020, the Company reported net income of $8.2 million or a net income per share of $1.51, compared to non-GAAP net income of $3.2 million or $0.58 per share in the comparable fiscal 2019 period.

Adjusted earnings before interest, tax, depreciation and amortization ("Adjusted EBITDA") for the fiscal 2020 fourth quarter was $5.5 million, compared to $3.9 million in the comparable fiscal 2019 period, a year-over-year increase of approximately $1.6 million.  For the twelve months ended July 3, 2020, the Company reported Adjusted EBITDA of $13.5 million, compared to $8.8 million in the comparable fiscal 2019 period, a year-over-year increase of approximately $4.8 million.

The Company reported cash and cash equivalents as of July 3, 2020 of $41.6 million, compared to $31.9 million as of June 28, 2019, an increase of $9.7 million.  Sequentially, cash and cash equivalents increased by approximately $2.4 million, compared to the fiscal 2020 third quarter ended April 3, 2020.

Conference Call Details
Aviat Networks will host a conference call at 4:30 p.m. Eastern Time (ET) today, August 27, 2020, to discuss its financial results for the fiscal 2020 fourth quarter.  Speaking from management will be Pete Smith, President and Chief Executive Officer and Eric Chang, Senior Vice President, Chief Financial Officer.  Following management's remarks, there will be a question and answer period.

To listen to the live conference call, please dial toll-free (US/CAN) 866-465-7577 or toll-free (INTL) 786-815-8431, conference ID: 7361828.  We ask that you dial-in approximately 10 minutes prior to the start time. Additionally, participants are invited to listen via webcast, which will be broadcasted live and via replay approximately two hours after the call is completed at http://investors.aviatnetworks.com/events-and-presentations/events.

About Aviat Networks
Aviat Networks, Inc. is the leading expert in wireless transport solutions and works to provide dependable products, services and support to its customers.  With more than one million systems sold into 170 countries worldwide, communications service providers and private network operators including state/local government, utility, federal government and defense organizations trust Aviat with their critical applications.  Coupled with a long history of microwave innovations, Aviat provides a comprehensive suite of localized professional and support services enabling customers to drastically simplify both their networks and their lives.  For more than 70 years, the experts at Aviat have delivered high-performance products, simplified operations, and the best overall customer experience.  Aviat Networks is headquartered in Austin, Texas. For more information, visit www.aviatnetworks.com or connect with Aviat Networks on Twitter, Facebook and LinkedIn.

Forward-Looking Statements

The information contained in this document includes forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, including Aviat's beliefs and expectations regarding business conditions, new product solutions, customer positioning, revenue, future orders, bookings, new contracts, cost structure, operating income, profitability in fiscal 2021, process improvements, realignment plans and review of strategic alternatives.  All statements, trend analyses and other information contained herein regarding the foregoing beliefs and expectations, as well as about the markets for the services and products of Aviat and trends in revenue, and other statements identified by the use of forward-looking terminology, including "anticipate," "believe," "plan," "estimate," "expect," "goal," "will," "see," "continue," "delivering," "view," and "intend," or the negative of these terms or other similar expressions, constitute forward-looking statements.  Forward-looking statements are neither historical facts nor assurances of future performance. Instead, forward-looking statements are based on estimates reflecting the current beliefs, expectations and assumptions of the senior management of Aviat regarding the future of its business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions.  Such forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Forward-looking statements should therefore be considered in light of various important factors, including those set forth in this document.  Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause actual results to differ materially from estimates or projections contained in the forward-looking statements include the following:

For more information regarding the risks and uncertainties for Aviat's business, see "Risk Factors" in Aviat's Form 10-K filed with the U.S. Securities and Exchange Commission ("SEC") on August 27, 2020 as well as other reports filed by Aviat with the SEC from time to time.  Aviat undertakes no obligation to update publicly any forward-looking statement, whether written or oral, for any reason, except as required by law, even as new information becomes available or other events occur in the future.

Investor Relations:
Keith Fanneron / Tel: 408-841-7128 / Email: keith.fanneron@aviatnet.com

Table 1

AVIAT NETWORKS, INC.

Fiscal Year 2020 Fourth Quarter Summary

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



Three Months Ended


Twelve Months Ended

(In thousands, except per share amounts)

July 3,
2020


June 28,

2019


July 3,
2020


June 28,

2019

Revenues:








Revenue from product sales

$

42,117



$

41,028



$

153,793



$

156,724


Revenue from services

20,535



23,201



84,849



87,134


Total revenues

62,652



64,229



238,642



243,858


Cost of revenues:








Cost of product sales

26,855



26,847



95,321



103,517


Cost of services

13,937



14,782



58,625



61,071


Total cost of revenues

40,792



41,629



153,946



164,588


Gross margin

21,860



22,600



84,696



79,270


Operating expenses:








Research and development expenses

4,215



5,508



19,284



21,111


Selling and administrative expenses

13,651



14,650



57,985



56,055


Restructuring charges (recovery)

1,874



(60)



4,049



736


Total operating expenses

19,740



20,098



81,318



77,902


Operating income

2,120



2,502



3,378



1,368


Interest income

67



100



385



267


Interest expense

(31)



(14)



(54)



(102)


Other income, net

?



18



?



17


Income before income taxes

2,156



2,606



3,709



1,550


Provision for (benefit from) income taxes

1,013



(1,233)



3,452



(8,188)


Net income

$

1,143



$

3,839



$

257



$

9,738










Net income per share:








Basic

$

0.21



$

0.71



$

0.05



$

1.81


Diluted

$

0.21



$

0.69



$

0.05



$

1.73


Weighted average shares outstanding:








Basic

5,394



5,370



5,391



5,377


Diluted

5,456



5,578



5,468



5,618


 

Table 2

AVIAT NETWORKS, INC.

Fiscal Year 2020 Fourth Quarter Summary

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In thousands)

July 3,
2020


June 28,

2019

ASSETS




Current Assets:




Cash and cash equivalents

$

41,618



$

31,946


Accounts receivable, net

44,661



51,937


Unbilled receivables

28,085



27,780


Inventories

13,997



8,573


Customer service inventories

1,234



936


Other current assets

10,355



4,825


Total current assets

139,950



125,997


Property, plant and equipment, net

16,911



17,255


Deferred income taxes

12,799



13,864


Right of use assets

3,474



?


Other assets

6,667



12,077


TOTAL ASSETS

$

179,801



$

169,193


LIABILITIES AND EQUITY




Current Liabilities:




Short-term debt

9,000



$

9,000


Accounts payable

31,995



35,605


Accrued expenses

26,920



22,555


Short-term lease liabilities

1,445



?


Advance payments and unearned revenue

21,872



13,962


Restructuring liabilities

2,738



1,089


Total current liabilities

93,970



82,211


Unearned revenue

8,142



9,662


Long-term lease liabilities

2,303



?


Other long-term liabilities

401



820


Reserve for uncertain tax positions

5,759



3,606


Deferred income taxes

545



1,378


Total liabilities

111,120



97,677


Commitments and contingencies




Equity:




Preferred stock

?



?


Common stock

54



54


Additional paid-in-capital

814,337



815,196


Accumulated deficit

(730,741)



(730,998)


Accumulated other comprehensive loss

(14,969)



(12,736)


Total equity

68,681



71,516


TOTAL LIABILITIES AND EQUITY

$

179,801



$

169,193


AVIAT NETWORKS, INC.
Fiscal Year 2020 Fourth Quarter Summary
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND REGULATION G DISCLOSURE

To supplement the consolidated financial statements presented in accordance with accounting principles generally accepted in the United States (GAAP), we provide additional measures of gross margin, research and development expenses, selling and administrative expenses, operating income, provision for or benefit from income taxes, net income, diluted net income per share and adjusted income before interest, tax, depreciation and amortization (Adjusted EBITDA), adjusted to exclude certain costs, charges, gains and losses, as set forth below.  We believe that these non-GAAP financial measures, when considered together with the GAAP financial measures, provide information that is useful to investors in understanding period-over-period operating results separate and apart from items that may, or could, have a disproportionate positive or negative impact on results in any particular period.  We also believe these non-GAAP measures enhance the ability of investors to analyze trends in our business and to understand our performance.  In addition, we may utilize non-GAAP financial measures as a guide in our forecasting, budgeting and long-term planning process and to measure operating performance for some management compensation purposes. Any analysis of non-GAAP financial measures should be used only in conjunction with results presented in accordance with GAAP. Reconciliations of these non-GAAP financial measures with the most directly comparable financial measures calculated in accordance with GAAP follow.

Table 3

AVIAT NETWORKS, INC.

Fiscal Year 2020 Fourth Quarter Summary

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (1)

Consolidated Statements of Operations

(Unaudited)



Three Months Ended


Twelve Months Ended


July 3, 2020


% of
Revenue


June 28,
2019


% of
Revenue


July 3,
2020


% of
Revenue


June 28,
2019


% of
Revenue


(In thousands, except percentages and per share amounts)

GAAP gross margin

$

21,860



34.9

%


$

22,600



35.2

%


$

84,696



35.5

%


$

79,270



32.5

%

WTM inventory write-down recovery

?





(65)





?





(155)




Share-based compensation

33





26





182





170




Non-GAAP gross margin

21,893



34.9

%


22,561



35.1

%


84,878



35.6

%


79,285



32.5

%

















GAAP research and development expenses

$

4,215



6.7

%


$

5,508



8.6

%


$

19,284



8.1

%


$

21,111



8.7

%

Share-based compensation

(20)





(27)





(112)





(150)




Non-GAAP research and development expenses

4,195



6.7

%


5,481



8.5

%


19,172



8.0

%


20,961



8.6

%

















GAAP selling and administrative expenses

$

13,651



21.8

%


$

14,650



22.8

%


$

57,985



24.3

%


$

56,055



23.0

%

Share-based compensation

(318)





(274)





(1,392)





(1,403)




Strategic alternative costs

?





(102)





?





(593)




Non-GAAP selling and administrative expenses

13,333



21.3

%


14,274



22.2

%


56,593



23.7

%


54,059



22.2

%

















GAAP operating income

$

2,120



3.4

%


$

2,502



3.9

%


$

3,378



1.4

%


$

1,368



0.6

%

WTM inventory write-down recovery

?





(65)





?





(155)




Share-based compensation

371





327





1,686





1,723




Strategic alternative costs

?





102





?





593




Restructuring charges (recovery), net

1,874





(60)





4,049





736




Non-GAAP operating income

4,365



7.0

%


2,806



4.4

%


9,113



3.8

%


4,265



1.7

%

















GAAP income tax provision (benefit)

$

1,013



1.6

%


$

(1,233)



(1.9)

%


$

3,452



1.4

%


$

(8,188)



(3.4)

%

Tax receivable from Department of Federal Revenue of Brazil

?





?





?





1,646




Release of valuation allowance

?





432





?





7,486




Adjustment to reflect pro forma tax rate

(713)





1,101





(2,252)





256




Non-GAAP income tax provision

300



0.5

%


300



0.5

%


1,200



0.5

%


1,200



0.5

%

















GAAP net income

$

1,143



1.8

%


$

3,839



6.0

%


$

257



0.1

%


$

9,738



4.0

%

Share-based compensation

371





327





1,686





1,723




Strategic alternative costs

?





102





?





593




Restructuring charges (recovery)

1,874





(60)





4,049





736




WTM inventory write-down recovery

?





(65)





?





(155)




Release of valuation allowance

?





(432)





?





(7,486)




Tax receivable from Department of Federal Revenue of Brazil

?





?





?





(1,646)




Adjustment to reflect pro forma tax rate

713





(1,101)





2,252





(256)




Non-GAAP net income

$

4,101



6.5

%


$

2,610



4.1

%


$

8,244



3.5

%


$

3,247



1.3

%

















Diluted net income per share:

GAAP

$

0.21





$

0.69





$

0.05





$

1.73




Non-GAAP

$

0.75





$

0.47





$

1.51





$

0.58




















Shares used in computing diluted net income per share

GAAP/Non-GAAP

5,456





5,578





5,468





5,618




















Adjusted EBITDA:
















GAAP net income

$

1,143



1.8

%


$

3,839



6.0

%


$

257



0.1

%


$

9,738



4.0

%

Depreciation and amortization of property, plant, and equipment

1,161





1,060





4,387





4,468




Interest income, net

(36)





(86)





(331)





(165)




Share-based compensation

371





327





1,686





1,723




Strategic alternative costs

?





102





?





593




Restructuring charges (recovery)

1,874





(60)





4,049





736




WTM inventory write-down recovery

?





(65)





?





(155)




Provision for (benefit from) income taxes

1,013





(1,233)





3,452





(8,188)




Adjusted EBITDA

$

5,526



8.8

%


$

3,884



6.0

%


$

13,500



5.7

%


$

8,750



3.6

%

_____________________________________________________

(1)

The adjustments above reconcile our GAAP financial results to the non-GAAP financial measures used by Aviat Networks.  Aviat monitors the non-GAAP financial measures included above, and our management believes they are helpful to investors because they provide an additional tool to use in evaluating Aviat's financial and business trends and operating results.  In addition, Aviat's management uses these non-GAAP measures to compare Aviat's performance to that of prior periods for trend analysis and for budgeting and planning purposes.  Our non-GAAP net income excludes share-based compensation, and other non-recurring charges (recovery) and Adjusted EBITDA is determined by excluding depreciation and amortization on property, plant and equipment, interest, provision for or benefit from income taxes, and non-GAAP pre-tax adjustments, as set forth above, from the GAAP net income.  We believe that the presentation of these non-GAAP items provides meaningful supplemental information to investors, when viewed in conjunction with, and not in lieu of, our GAAP results.  However, the non-GAAP financial measures have not been prepared under a comprehensive set of accounting rules or principles. Non-GAAP information should not be considered in isolation from, or as a substitute for, information prepared in accordance with GAAP. Moreover, there are material limitations associated with the use of non-GAAP financial measures.

 

Table 4

AVIAT NETWORKS, INC.

Fiscal Year 2020 Fourth Quarter Summary

SUPPLEMENTAL SCHEDULE OF REVENUE BY GEOGRAPHICAL AREA

(Unaudited)



Three Months Ended


Twelve Months Ended


July 3,
2020


June 28,

2019


July 3,
2020


June 28,

2019


(In thousands)

North America

$

38,220



$

39,224



$

151,709



$

132,884


International:








Africa and the Middle East

8,916



9,247



37,595



48,305


Europe and Russia

3,429



6,662



11,157



16,933


Latin America and Asia Pacific

12,087



9,096



38,181



45,736



24,432



25,005



86,933



110,974


Total revenue

$

62,652



$

64,229



$

238,642



$

243,858


 

SOURCE Aviat Networks, Inc.


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