On Monday, Aviat Networks (NASDAQ:AVNW) discussed third-quarter financial results during its earnings call. The full transcript is provided below.
This transcript is brought to you by Benzinga APIs. For real-time access to our entire catalog, please visit https://www.benzinga.com/apis/ for a consultation.
The full earnings call is available at https://edge.media-server.com/mmc/p/9inczpqi/
Summary
Aviat Networks reported Q3 fiscal 2026 revenues of $100 million, a decrease from $112.6 million in the same period last year, impacted by project pushouts in the Middle East.
The company is optimistic about future growth due to increased visibility in U.S. markets, particularly in multi-dwelling units (MDU) and utility sectors driven by AI and broadband programs.
Gross margins were 29.3% GAAP and 29.4% non-GAAP, down from the previous year, mainly due to volume and product mix; however, margins are expected to recover in Q4.
Aviat Networks has lowered inventories by $4 million and improved its balance sheet by reducing unbilled receivables and accounts payable, signaling better cash management.
Fiscal 2026 guidance has been adjusted to revenues between $428 million and $440 million and adjusted EBITDA between $35 million and $40 million, factoring in geopolitical uncertainties.
Full Transcript
OPERATOR
Good Afternoon. Welcome to Aviat Networks’ third quarter fiscal 2026 earnings call. Currently, 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 conference over to your host, Mr. Andrew Fredrickson, Vice President, Corporate Finance. Thank you, You may begin.
Andrew Fredrickson (Vice President, Corporate Finance)
Thank you and welcome to Aviat Networks’ third quarter fiscal 2026 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 Andy Schmidt, CFO, to review the financial results for the quarter. Pete will then provide closing remarks on Aviat’s strategy and outlook followed by a question and answer session. Jonana Mikulenka, Aviat’s Chief Accounting Officer, is also with us on the call. 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 filings 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 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 Smith (President and CEO)
Thanks, Andrew and good afternoon. Let’s review the Highlights from the third quarter Total revenues of $100.0 million Adjusted EBITDA of $4.4 million Non GAAP EPS of $0.06 Lowered inventories by $4.0 million versus the December quarter Maintained a trailing twelve month book to bill ratio greater than 1.0 Quarterly results were impacted by the conflict in the Middle east where we saw certain project pushouts and unfavorable end of quarter demand shifts and several tier one customers totaling approximately $9 million in revenue. Now let me talk more about our end markets and key developments in the U.S., we see reason for optimism in the quarters ahead as we gain increased visibility on timing of our multi dwelling unit or MDU opportunity, growing demand from utilities as they invest to meet increased power demand from artificial intelligence build outs and the nearing arrival of the Broadband Equity Access and Deployment or BEAD program on the MDU. We have increased confidence in the level of commitment to this project from our Tier one customer and we believe that we have secured a favored position as the supplier of choice. This is translating to increased visibility on timing for the markets we have won and opening the door to additional market areas for deployment for the projects in progress. We have installations occurring now and through the rest of Q4. These are still relatively small and we expect a larger step up during fiscal 2027. As the aviation installations progress and we compete for additional markets related to the MDU opportunity, we are seeing more prospects to provide services and other value added solutions to our Tier one customer. Overall, we are feeling better about this opportunity today than at any other previous point and believe we will have meaningful revenue contribution from this project in fiscal year 2027. Further, we have validated our next generation offering in this area should subscriber growth materialize. We anticipate demand for this next gen product in fiscal year 2028. Private networks remain Aviat’s largest segment today and within private networks, utilities are Aviat’s second largest customer group in this segment. Aviat has been strategically focused on growing our presence and offerings with utilities over the last several years with product innovations like our Ultra High powered 11 GHz radio and the 2024 acquisition of 4RF Networks. Even prior to the demand brought on by artificial intelligence and data center buildouts, there was a growing need for increased investment in America’s grid from a modernization and reliability standpoint. Today, the outlook for Aviat’s utilities is quite robust. Recent industry reports suggest that utilities will deploy 1.4 trillion on capital spending plans over the next five years. This forecast is up over 20% versus a year ago. Approximately half of this spend will go towards transmission and distribution where Aviat’s network hardware is critical for smart grid connectivity and management, substation monitoring and security, crew communications and wildfire detection. Power generation has become the primary constraint and a fundamental determinant of growth for artificial intelligence or AI. This build out of the grid lifts the importance of Michelin critical communication and Aviat is well positioned to capture increasing share of demand in this market. The utility segment is approaching 10% of our overall business. Our funnel of opportunity is strong and the discussions we are having with many of the largest utilities in the US signals that this growth opportunity will remain for several years ahead. Lastly, on the BEAD program, our customers continue to signal that purchase orders related to the program should begin in mid to late calendar 2026. This is consistent with the message we have told investors for approximately a year now. However, as final approvals are made, the set of opportunities is beginning to take shape. 46 of the 56 states and territories have signed have signed their final award agreement. The total funding for the approved deployment spend to date is approximately $20 billion. The size of Aviat’s opportunity depends on the allocation of BEAD funds towards fixed wireless access, which in our estimation stands between 10 and 15% of the award dollars. The allocation of funds to wireless has been increasing over time. Feedback from four of our wireless Internet service provider customers who have all won bead deployment projects signal that calendar 2027 will likely see the largest ramp purchase orders for Aviat, but we still remain very early in the fund deployment life cycle and will provide updates as available. Aviant stands at the ready to assist all of its customers with bid opportunities that, thanks to its Build America Buy America certifications, our E Commerce Aviat Store presence and our leading position in serving rural broadband needs. Apart from these growth drivers, we’ve invested in our roadmap. We’ve taken our North American all indoor radio to international markets. We are also bringing PasserLink radios to North America in early fiscal 2027. Both these represent installed base opportunities for an addressable market of over $250 million. I will now turn the call over
Andy Schmidt (Chief Financial Officer)
to Andy to go through the financial results. Thanks Pete and good afternoon everyone. Before going through the financial results, I would like to briefly introduce Joanna Mikolenka, who joined Aviat in January as our Chief Accounting Officer. She brings with our over 30 years of of accounting experience, including previously serving as Chief Accounting Officer and and Corporate Controller at other public companies. She’s already making a great impact to the overall Aviat team and will help us to achieve our goals. Welcome Janana. Now I’ll review some of our key fiscal 2026 third quarter results. Please note that the detailed financials can be found in our press release and all comparisons discussed are between the third quarter of the fiscal year 2026 and the third quarter of fiscal year 2025, unless otherwise noted. For the third quarter, we reported total revenues of 100 million as …
This post was originally published here
