Aviat Networks Announces Fiscal 2023 Third Quarter and Nine Month Financial Results

Aviat Networks, Inc. ("Aviat Networks," "Aviat," or the "Company"), (Nasdaq: AVNW), the leading expert in wireless transport solutions, today reported financial results for its fiscal 2023 third quarter ended March 31, 2023.

Third Quarter Highlights

• Company executed on key long-term strategic objectives resulting in continued year-over-year increase in quarterly revenues and Adjusted EBITDA
• Aviat maintained private network leadership with first private LTE win in North America and expanding international and enterprise opportunities
• Company received initial Rural Digital Opportunity Fund related project orders from four recipients
• Recent product releases, including third-party radio support for Frequency Assurance Software, continue Aviat's innovation for customers

Third Quarter Financial Highlights

• Total Revenues: $83.5 million, +12.0% from same quarter last year
• GAAP Results: Gross Margin 35.7%; Operating Expenses $22.3 million; Operating Income $7.5 million; Net Income before tax $7.1 million; Net income $4.9 million; Net income per share $0.41
• Non-GAAP Results: Adjusted EBITDA $10.8 million; Gross Margin 35.9%; Operating Expenses $20.7 million; Operating Income $9.3 million; Net Income $8.9 million; Net Income per share $0.75
• Net Cash and Marketable Securities: $22.5 million; loan of $6.2 million outstanding at quarter-end

"Our execution this quarter resulted in year-over-year 12.0% revenue growth and 14.7% adjusted EBITDA growth, two key long-term focus areas for the business." said Peter Smith, President and Chief Executive Officer of Aviat. "We continue to see a strong demand environment for Aviat's leading products and services, and we remain well positioned to benefit from the growth drivers of 5G, rural broadband, and private networks."

Fiscal 2023 Third Quarter and Nine Months Ended March 31, 2023

Revenues
The Company reported total revenues of $83.5 million for its fiscal 2023 third quarter, compared to $74.5 million in the comparable fiscal 2022 period, an increase of $9.0 million or 12.0%. North America revenue of $46.1 million decreased by $(3.0) million or (6.1)%, compared to $49.0 million in the comparable fiscal 2022 period. International revenue was $37.4 million compared to $25.5 million in the comparable fiscal 2022 period, an increase of $11.9 million or 46.9%.

For the nine months ended March 31, 2023, revenue grew by 13.2% to $255.4 million, as compared to $225.5 million in the comparable fiscal 2022 period. North America revenue of $147.0 million decreased by $(4.1) million or (2.7)%, as compared to $151.0 million in the comparable fiscal 2022 period. International revenue of $108.5 million for the fiscal 2023 nine-month period increased by $33.9 million or 45.5%, as compared to $74.5 million in the comparable fiscal 2022 period.

Gross Margins
In the fiscal 2023 third quarter, the Company reported GAAP gross margin of 35.7% and non-GAAP gross margin of 35.9%. This compares to GAAP gross margin of 37.0% and non-GAAP gross margin of 37.1% in the comparable fiscal 2022 period, a decrease of (130) and (120) basis points respectively. Gross margins were impacted by the regional mix of revenue growth toward lower margin international markets.

For the nine months ended March 31, 2023, the Company reported GAAP gross margin of 35.8% and non-GAAP gross margin of 36.0%. This compares to GAAP gross margin of 36.3% and non-GAAP gross margin of 36.4% in the comparable fiscal 2022 period, a decrease of (50) and (40) basis points, respectively.

Operating Expenses
GAAP total operating expenses for the fiscal 2023 third quarter were $22.3 million, compared to $20.1 million in the comparable fiscal 2022 period, an increase of $2.3 million or 11.4%. Non-GAAP total operating expenses, excluding the impact of restructuring charges, share-based compensation, and merger and acquisition expenses for the fiscal 2023 third quarter were $20.7 million, as compared to $19.2 million in the comparable fiscal 2022 period, an increase of $1.4 million or 7.5%. The increased spending resulted from the addition of Redline Communications.

The Company reported GAAP total operating expenses for the fiscal 2023 nine-month period of $71.4 million, compared to $58.3 million in the comparable fiscal 2022 period, an increase of $13.2 million or 22.6%. On a non-GAAP basis, excluding the impact of restructuring charges, share-based compensation and merger and acquisition expenses, total operating expenses for the fiscal 2023 nine-month period were $62.1 million, as compared to $56.3 million in the fiscal 2022 period, an increase of $5.8 million or 10.3%.

Operating Income
The Company reported GAAP operating income of $7.5 million for the fiscal 2023 third quarter, compared to $7.5 million in the comparable fiscal 2022 period. On a non-GAAP basis, the Company reported operating income of $9.3 million for the fiscal 2023 third quarter, compared to $8.4 million in the comparable fiscal 2022 period.

For the fiscal 2023 nine-month period, the Company reported $20.1 million in GAAP operating income, as compared to $23.5 million in the comparable fiscal 2022 period. On a non-GAAP basis, the Company reported operating income of $29.9 million, compared to $25.8 million in the comparable fiscal 2022 period.

Income Taxes
The Company reported GAAP income tax expense of $2.2 million in the fiscal 2023 third quarter, compared to $1.3 million in the comparable fiscal 2022 period.

For the fiscal 2023 nine-month period, the Company reported GAAP income tax expense of $9.1 million, compared to $6.5 million in the comparable fiscal 2022 period, or an increase of $2.7 million.

Net Income / Net Income Per Share
The Company reported GAAP net income of $4.9 million in the fiscal 2023 third quarter or GAAP net income per fully diluted share of $0.41. This compared to GAAP net income of $6.0 million or $0.51 per fully diluted share in the comparable fiscal 2022 period. On a non-GAAP basis, the Company reported net income of $8.9 million or non-GAAP net income per fully diluted share of $0.75 in the fiscal 2023 third quarter, compared to a non-GAAP net income of $7.9 million or $0.67 per share in the comparable fiscal 2022 period.

The Company reported GAAP net income of $8.2 million for the fiscal 2023 nine-month period, or GAAP net income per fully diluted share of $0.69. This compared to GAAP net income of $16.6 million or $1.40 per share in the comparable fiscal 2022 period. On a non-GAAP basis, the Company reported net income of $28.8 million or net income per share of $2.43 for the fiscal 2023, nine-month period as compared to non-GAAP net income of $24.5 million or $2.06 per share in the comparable fiscal 2022 period.