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The call presented a mixed picture: near-term results were pressured by geopolitical-driven timing disruptions (approximately $9M of pushouts), leading to a meaningful Q3 revenue decline, lower Q3 gross margins and a GAAP loss. Offsetting these setbacks, year-to-date profitability metrics improved (YTD operating income and adjusted EBITDA up materially), working-capital trends showed sequential improvement, and multiple strategic growth drivers (MDU deployments, BEAD program timing, utility infrastructure demand, Aprisa momentum, and product rollout opportunities) underpin management’s confidence for FY2027 and beyond. Management provided updated FY2026 guidance with a range and reiterated cost and cash-flow focus. Overall, the call balances clear short-term headwinds with improving operating trends and sizable longer-term market opportunities.
Aviat updated fiscal 2026 guidance to full‑year revenue of $428–$440 million and full‑year adjusted EBITDA of $35–$40 million; this reflects Q3 revenue of $100.0M, Q3 adjusted EBITDA of $4.4M (4.4% of sales) and Q3 non‑GAAP EPS of $0.06 (GAAP loss per share $0.16), with management citing roughly $9M of war‑related Q3 pushouts (some already shipped in early Q4) but expecting a seasonally strong Q4 to help restore gross margins toward the ~32%+ YTD level (YTD GAAP gross margin 31.7% / non‑GAAP 32.1%) and drive FY performance. Supporting balance‑sheet and operational metrics include YTD revenues of $318.8M, YTD adjusted EBITDA $24.8M (up 12.5%), cash and marketable securities $78.1M, debt $104.3M (net debt $26.1M), inventories down $4.0M sequentially, unbilled receivables $85.3M (down $5.4M QoQ), unearned revenue $77.6M, a $0.5M share repurchase (20k shares), and over $450M of NOLs with a potential foreign valuation allowance release within the next four quarters.
Nine-month revenues of $318.8M were essentially flat versus prior year ($319.3M), down ~0.2% year-over-year. North America grew year-to-date by $2.1M, or 1.4%, and accounted for 46.2% of Q3 revenue, while international was 53.8%.
Year-to-date GAAP operating income was $13.4M, up $11.7M versus prior year. Year-to-date non-GAAP operating income was $20.5M, up $4.4M or 27.6%. Adjusted EBITDA for the nine months was $24.8M, an increase of $2.8M or 12.5% versus the prior-year period.
Third-quarter adjusted EBITDA was $4.4M (4.4% margin) and non-GAAP EPS was $0.06, demonstrating positive non-GAAP profitability despite GAAP weakness in the quarter.
Cash and marketable securities totaled $78.1M with outstanding debt of $104.3M (net debt $26.1M). Management lowered inventories sequentially by $4.0M, unbilled receivables were down $5.4M sequentially, and accounts payable reduced by $33.3M sequentially. The company repurchased ~20,000 shares for $0.5M.
Strong optional growth: utilities funnel is expanding (utility spend forecast cited at $1.4T over 5 years, up >20% vs prior year), BEAD deployment momentum (46 of 56 states signed; ~$20B approved deployment spend to date; estimated 10–15% allocation to fixed wireless access), and an estimated addressable market >$250M from product rollouts (all-indoor radio international rollout and Pasolink in N.A.). Management expects BEAD-related orders mid–late 2026 with a larger ramp in calendar 2027.
MDU program: live deployments in more than five markets, management expects an '8-figure' contribution in fiscal 2027 (management indicated comfort with an ~$8M figure while range is broad) and potential larger demand in FY2028 for next-gen products. Aprisa (LTE router) bookings are on track to exceed 50% bookings growth this fiscal year, with traction across utilities, oil & gas, public safety and multiple geographies.
Company holds over $450M of net operating losses (NOLs). Management believes there is a reasonable possibility of releasing a significant portion of the valuation allowance against foreign deferred tax assets within the next few quarters, which would produce a one-time GAAP income benefit in the quarter of release.
Updated full-year fiscal 2026 guidance: revenues $428M–$440M and adjusted EBITDA $35M–$40M, reflecting management's expectation of Q4 normalization after Q3 timing headwinds.
Good afternoon. Welcome to Aviat Networks Third Quarter Fiscal 2026 Earnings Call. [Operator Instructions] 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. 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. Jonanna 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...