Aviat Announces Second-Quarter, Six-Month Financials
Friday, February 07, 2020 | Comments

Aviat Networks reported financial results for its fiscal 2020 second quarter and six months ended December 27.

"As we announced on January 22, our fiscal 2020 second quarter results were adversely impacted by a cyberattack at one of our contract manufacturing vendors, which constrained capacity by approximately three weeks and led to lower than expected results,” said Pete Smith, Aviat Networks' president and chief executive officer. “However, the issue has been fully remediated, our competitive position continues to improve, and our outlook remains largely intact."

The Company reported total revenues of $56 million for its fiscal 2020 second quarter, as compared to $65.1 million in the comparable fiscal 2019 period, a decrease of $9.1 million or 14%. North America revenue of $36.5 million declined by $0.8 million or 2.3%, as compared to $37.3 million in the fiscal 2019 second quarter, though North America bookings increased in the comparable second quarters.

International revenue of $19.5 million declined by $8.2 million or 29.7%, as compared to $27.8 million in the comparable year-ago period. The decline in international revenue was anticipated given the current spending environment in Africa, as well as higher order volumes in the Asia-Pacific region in the prior fiscal year period. The company anticipates an improvement in both revenue and orders in these regions in the second half of fiscal 2020.

“For the full fiscal year, we still anticipate a modest decline in revenue, stronger gross margins, an increase in profitability, and ongoing improvements in our cash position and balance sheet,” said Smith. “Even with the cyber attack's impact on our first-half results, we believe we are in position to deliver $11 million to $12 million of adjusted earnings before interest, taxes, depreciation and amortization (EBITDA)."

For the six months ended December 27, Aviat reported total revenues of $114.6 million, as compared to $125.6 million in the comparable fiscal 2019 period. North America revenue of $76.2 million increased by $11.2 million or 17.1%, as compared to $65.1 million in the comparable fiscal 2019 period. International revenue of $38.4 million for the fiscal 2020 six-month period declined by $22.1 million or 36.6%, as compared to $60.5 million in the comparable fiscal 2019 period. Similar to the Company's quarterly results comparisons, the primary drivers for the decline were higher sales in Africa and APAC in the fiscal 2019 period.

In the fiscal 2020 second quarter, Aviat reported GAAP gross margin of 32.7% and non-GAAP gross margin of 32.8%, compared to GAAP and non-GAAP gross margin of 34.6% in the comparable fiscal 2019 period, a decline of 190 basis points and 180 basis points, respectively. For the six months ended December 27, 2019, the Company reported GAAP and non-GAAP gross margin of 35.7%, compared to GAAP and non-GAAP gross margin of 32.2% in the comparable fiscal 2019 period, an improvement of 350 basis points.

GAAP total operating expenses for the fiscal 2020 second quarter were $19.8 million, as compared to $19.6 million in the comparable fiscal 2019 period, an increase of $0.2 million or 1.1%. Non-GAAP total operating expenses, excluding the impact of restructuring charges and share-based compensation, for the fiscal 2020 second quarter were $19.1 million, as compared to $19.2 million in the comparable fiscal 2019 period, a decrease of $0.1 million or 0.4%. Non-GAAP operating expenses decreased primarily due to a decline in research and development expenses, partially offset by higher selling and administrative expenses.

Aviat reported GAAP total operating expenses for the fiscal 2020 six-month period of $40.9 million, as compared to $39.0 million in the comparable fiscal 2019 period, an increase of $1.8 million or 4.6%. On a non-GAAP basis, excluding the impact of restructuring charges and share-based compensation, total operating expenses for the fiscal 2020 six-month period were $38.6 million, as compared to $37.4 million in the fiscal 2019 period, an increase of $1.2 million or 3.1%. Non-GAAP operating expenses increased primarily due to employee-related expenses. The company reported a GAAP operating loss of $1.5 million for the fiscal 2020 second quarter, as compared to GAAP operating income of $2.9 million in the comparable period in fiscal 2019. On a non-GAAP basis, the company reported an operating loss of $0.7 million, as compared to non-GAAP operating income of $3.4 million for the fiscal 2020 and fiscal 2019 second quarters, respectively.

For the fiscal 2020 six-month period, the company reported break-even in GAAP operating income, as compared to $1.4 million in the comparable fiscal 2019 period. On a non-GAAP basis, the company reported operating income of $2.4 million and $3 million for the six-month periods in fiscal 2020 and fiscal 2019, respectively.

The company reported a GAAP net loss of $1.7 million in the fiscal 2020 second quarter or a GAAP net loss per share of 31 cents. This compared to GAAP net income of $2.3 million or GAAP net income per share of 41 cents in the fiscal 2019 second quarter. On a non-GAAP basis, the company reported a net loss of $0.9 million or a non-GAAP net loss per share of 17 cents, as compared to non-GAAP net income of $3.1 million or non-GAAP net income per share of 54 cents in the comparable fiscal 2019 period.

The company reported a GAAP net loss of $1.6 million for the fiscal 2020 six-month period, or a GAAP net loss per share of 30 cents. This compared to GAAP net income of $1.6 million or GAAP net income per share of 28 cents in the comparable fiscal 2019 period. On a non-GAAP basis, the company reported net income of $2million or net income per share of 36 cents, as compared to non-GAAP net income of $2.4 million or 43 cents per share in the comparable fiscal 2019 period.

Adjusted EBITDA for the fiscal 2020 second quarter was $0.4 million, as compared to adjusted EBITDA of $4.5 million in the comparable fiscal 2019 period. For the six months ended December 27, the company reported adjusted EBITDA of $4.5 million, as compared to $5.4 million in the comparable fiscal 2019 period.

The Company reported cash and cash equivalents as of December 27 of $38.1 million, as compared to $31.9 million as of June 28, an increase of $6.1 million. Sequentially, cash and cash equivalents increased by approximately $3.6 million, as compared to the fiscal 2020 first quarter ended September 27. The Company anticipates further increases in its cash position throughout fiscal 2020.

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