Thank you, and welcome to Aviat Networks fourth 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 Schmitt, CFO, to review financial results for the quarter. Pete will then provide closing remarks on Aviat's strategy and outlook.

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, the 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 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?

Thanks, Andrew. Let's review the highlights from the fourth quarter.

Quarterly revenues of $121 million, up 4.8% versus the year-ago period. Adjusted EBITDA of $11.9 million.

Non-GAAP EPS of 64 cents. Year-end backlog of $367 million, up 14% versus the end of fiscal year 2025.

This marks a strong end to Aviat's fiscal 2026. Full year revenue was $440 million, up 1.2% versus the prior fiscal year.

This represents our sixth consecutive year of revenue growth. Aviat is the only microwave company to achieve this growth during the last six years.

I would also like to note that this was the first time in over a decade that Aviat has had all four quarters in a fiscal year with at least $100 million in revenue. This is a tremendous achievement, and I would like to thank all of our customers, supplier partners, and employees in making this possible.

Since FY '23, we have been expanding outside of our core microwave business with a focus on mission-critical access. In FY '26, sales of non-microwave, i.e., mission-critical access, products grew significantly versus FY '25 and is the result of Aviat's strategic decisions and execution years prior, allowing us to diversify our business and gain access to larger, faster-growing segments.

We are glad to see this strategy coming to fruition. Now I'd like to talk more about recent developments in our end markets.

In the US, strong quarterly sales and bookings set the stage for an exciting year ahead. We see several growth vectors aligning for Aviat.

First, we believe our multi-dwelling unit (MDU) opportunity will deliver meaningful revenues to Aviat this year. We announced an order received from an existing customer in the range of $25 to $30 million.

We expect all of this revenue in fiscal 2027. The Aviat team continues to work to win additional markets and adjacent opportunities to increase our capture rate in fiscal 2027 and beyond.

Secondly, we see private networks continuing to be a core foundation for Aviat's growth. In state and local public safety networks, Aviat remains the leader and continues to pursue opportunities for more share of demand.

According to industry research, city and state government budgets are expected to grow 6.4 and 4.2% respectively. Video-intensive applications like drones and body cameras, as well as other data-intensive tools, drive increased bandwidth demand within private networks, which necessitates more or upgraded microwave links.

As highlighted in our last earnings call, utility private networks are poised for growth. Power infrastructure and grid connectivity are emerging as key bottlenecks to AI infrastructure deployment.

This build-out requires secure, highly reliable communication networks to connect and manage grid assets. Aviat participates here thanks to our portfolio of industry-leading solutions geared towards utilities: our microwave radio portfolio, Aprisa SCADA radios, and LTE/5G routers, combined with our network management software and our health assurance and frequency assurance offerings, provides utilities a one-stop shop for its network connectivity build-out and management needs.

With the SpaceX IPO and the announcement of a potential fourth cellular network in the US, there is a significant amount of investor interest in Low Earth Orbit, or LEO, networks. We believe that there is a valuable niche to fill in the communication space, specifically around nomadic or very remote locations.

Therefore, we see the technology as being complementary and not necessarily competitive with Aviat. We see the following for LEO and Aviat: 1.

Aviat's core business is largely unthreatened. 2.

There is an idea of SpaceX building out a terrestrial network. While the architecture of that conceptual network is not fully formed, should this materialize, Aviat is well positioned if and when the architecture requires terrestrial backhaul.

3. Most exciting is the new functionality that LEO brings.

LEO offers redundant communications. This is most valued by private network customers, and we are seeing opportunities for Aviat through integration with microwave and cellular router solutions.

For microwave networks, satellite provides a low-cost, easy-to-deploy backup path for critical remote sites. For cellular routers in public safety and fleet applications, satellite fills LTE and 5G coverage gaps with automatic failover.

In both cases, Aviat's opportunity is to deliver an integrated solution that improves resilience while simplifying deployment, management, and operations for our customers. Aviat's customers are engaged in trials to demonstrate the value proposition of this redundancy.

Please see slide 11 in our investor presentation to get a picture of the ongoing trials and connectivity solution we bring. Moving on to international, Aviat's business has seen particular traction in the EMEA region, where revenues were up 53% in the fourth quarter and up 33% for all of fiscal 2026.

This growth has been driven in part by recent international private network wins, including with defense customers, including B-LINC Net, as well as energy firms. As we pursue more such private network business, we see this segment is growing a growing portion of our international business in the future.

Moving on to supply chain. Like others in the technology hardware space, Aviat has not been immune from component shortages and cost inflation.

Specifically, we are most focused on securing supply for memory, printed circuit boards (or PCBs), capacitors, and FPGAs. We will be opening the playbook we used during COVID supply chain crisis to secure favorable placement and allocations among our suppliers.

Although Aviat has been able to manage through these current allocations and shortages with our inventory and safety stock, we have also had some some headwinds to our gross margins from component cost inflation. We plan to pass along these price increases to our customers to help offset these rising costs.

With that, I will now turn the call over to Andy to go through the financial results.

Thanks, Pete. I will review some of the key fiscal year 2026 and fourth quarter results.

Please note that our detailed financials can be found in our press release, and all comparisons discussed are between fourth quarter fiscal year '26 and fourth quarter fiscal year '25, unless otherwise noted. For the fourth quarter, we reported total revenue of $120.9 million as compared to $115.3 million for the same period last year, an increase of 4.8%.

Revenues for the 12-month period were $439.7 million versus $434.6 million for the year-ago 12-month period. North America, which comprised 56.5% of our total revenues for the quarter, was $68.3 million.

This was up $10.3 million, or 17.8%, versus the year-ago period. These results were complemented by a limited set of deployments for a North American-based MDU project in the quarter.

International revenues, which made up 43.5% of total revenues, were $52.6 million for the quarter. For fiscal 2026, North American revenues were $220 million, up 6% versus fiscal year '25.

International revenues were $219.6 million in fiscal '26, compared to $227 million in fiscal '25. EMEA showed solid results for fiscal '26, while APAC stabilized.

We feel our international business overall is poised for growth in fiscal 2027. Gross margins in the fourth quarter were 30.8% on a GAAP basis and 30.9% on a non-GAAP basis.

This compares to 34.2% GAAP and 34.7% non-GAAP in the prior year. The year-over-year change in gross margin is typically due to volumes, regional and product mix, on.

That said, as Pete noted earlier, our current-period gross margin was negatively affected by component shortages and associated price inflation. For fiscal 2026, gross margins were 31.5% on a GAAP basis and 31.8% on a non-GAAP basis.

This compares to 32.1% GAAP and 32.8% non-GAAP in fiscal '25. Fourth quarter GAAP operating expenses were $31.4 million.

Non-GAAP operating expenses, which exclude the impact of restructuring charges, share-based compensation, and other costs, were $27.3 million. For fiscal '26, GAAP operating expenses were $119.1 million, and non-GAAP operating expenses were $109.2 million.

This is versus $128.9 million GAAP and $113.5 million non-GAAP in fiscal '25, a decrease of $9.8 million and $4.3 million respectively. This is the result of the entire management team diligently managing costs, continuously reviewing corporate needs, and driving process efficiency efforts.

Fourth quarter operating income was $5.8 million on a GAAP basis and $10 million on a non-GAAP basis. This compares to $8.9 million GAAP and $12.9 million non-GAAP in the year-ago period.

For fiscal '26, GAAP operating income was $19.2 million, up $8.7 million versus the last fiscal year. Fiscal 2026 non-GAAP operating income was $30.6 million, up $1.5 million or 5.2% versus the last fiscal year.

The fourth quarter non-GAAP tax benefit was $0.5 million. As a reminder, as of fiscal 2026 year-end, the company has over $420 million of net operating losses, or NOLs, that will continue to generate shareholder value via minimal cash tax payments for the foreseeable future.

Fourth quarter GAAP net loss was $1.3 million, and non-GAAP net income was a positive $8.3 million, which excludes restructuring charges, depreciation and amortization, share-based compensation, interest and other income, other non-recurring expenses, and a non-cash tax provision. Fourth quarter GAAP loss per share was 10 cents on a fully diluted basis, and non-GAAP earnings per share came in at a positive 64 cents on a fully diluted basis.

Adjusted EBITDA for the fourth quarter was $11.9 million or 9.8% of revenues. For the fiscal year, adjusted EBITDA was $36.7 million.

Moving on to the balance sheet. Our cash and marketable securities at the end of the fourth quarter were $72.8 million.

Our outstanding debt was $97 million, bringing the net debt position to $24.2 million. Aviat made continued improvements in its balance sheet.

Unbilled receivables were lower for the third consecutive quarter. The fourth quarter balance was $3.1 million lower compared to the fiscal 2026 third quarter ending balance.

This brings our total unbilled receivables balance to $82.1 million. Inventories were also lower sequentially by $3.6 million, bringing our inventory balance to $69 million.

For the full fiscal year, Aviat generated cash from operations of $13.6 million. Combined with the other balance sheet improvements, this is good progress for shareholders.

Other points to make: Aviat used $2.2 million to repurchase approximately 131,000 shares in the quarter at an average price of $16.55 per share. Finally, we are pleased to share that in the context of our control environment, we have fully remediated our past five material weaknesses.

Rest assured, Aviat's core value of continuous improvement is still in play, and we will continue to work to further strengthen our foundation. With that, I'll turn it back to Pete for some final comments.

Thanks, Andy. Regarding our fiscal 2027 guidance, we are establishing our outlook as follows: full year revenues to be in the range of $455 to $470 million; full year adjusted EBITDA to be in the range of $50 to $55 million.

Note that our guidance is full fiscal year. Some additional color on seasonality.

Based on our backlog and current outlook, the first quarter will be the foundation on which Aviat's revenue builds throughout fiscal 2027. Additionally, we expect the second half of fiscal 2027 to have higher overall revenues versus the first half of fiscal 2027.

See slide 23 in the investor presentation for a view of the seasonality Aviat has typically experienced and for use in your models. With that, operator, let's open it up for questions.

Hey, good morning. Thanks for taking the questions.

Nice job on the quarter. Also nice to see the balance sheet improvements and the clean up of the material weaknesses.

Hey, maybe just to dive in, um wondered if you could give us an idea the breakdown in North America between um carrier uh contribution and private networks? Then specifically looking into uh the uh September quarter and how we ramp up from an MDU contribution standpoint, Pete, how is that shaping up just in terms of uh the context of of how we should think about the flow of that into the course of fiscal '27?

Um so so, we

we ended the year with record backlog, up 14%. A lot of that was work throughout the year that landed in the the May, June time frame.

There's this um pervasive component availability. When we said in the script that the, Q1 is going to be a foundation, we think uh given the timing of our of our of our wins, and given the supply chain ramp-up, we think uh if you put a revenue profile together, um Q Q1 will be um uh the lowest, uh Q2 and Q4 will be uh peaks, and Q3 should be higher than than Q1.

Then uh with respect to the um over overall, um I have the I don't have the US breakdown in front of me, but we're we're about uh 45% uh private networks, uh 55% serv- service providers or mobile network operators. I I think that the I'll give a qualitative statement.

I would say the US has more private networks uh than the the overall Aviat, I think that gives you gives you a vector on on that, Scott.

Okay. Thank you.

Uh Pete, just to clarify though, on the MDU front, do you expect contribution in the September quarter or is there a lot of uh pre-deployment activity ongoing, more engineering and otherwise, and we should expect the ramp-up into the the second half of the year or second quarter?

Yeah. We think the ramp-up is going to occur in second quarter.

There There's a chance that um we get some in the uh in the September uh quarter. Let me just give a little more uh color on this.

We um we completed um more proof of concepts in a variety of markets, and we we believe that the customer has moved us ahead in the uh supplier pecking order where we we think we're um established as the preferred uh vendor. Um what we really need to do is get that site readiness uh over the hump in the September quarter, uh get all of our components on order, and enjoy the win in the December quarter.

Great. Thank you.

Two other quick ones if I could. Just on the uh the satellite LEO opportunity, I'm wondering if you're actually starting to see interest and contribution today?

It seems like there's a lot of activity, but I'm wondering, what you're factoring into that fiscal '27 guidance at at this point in time? Then second, gross margins, um, some component headwinds on that front.

I'm wondering how you're thinking about that in terms of fiscal '27 broadly speaking. Is there some expansion in gross margin opportunities given some incremental scale and product mix, or are you still seeing some headwinds on the component front?

Thanks.

Sure, Scott. Um this is this is Andy.

Great to hear from you. Um yeah, in terms of gross margins, uh as Pete commented on revenue, Q1's going to be our building block, and we go up from there.

We is, let's call it, the the [laughter] foundation or lowest part of the year. Um, it's going to be affected by lower volume, of course.

Pete did talk to in his prepared remarks uh strategies that we're deploying to offset the component inflation, if you will. Um those are going to be more uh realized in Q2 and going forward, not in Q1.

Uh, but again, we do have plans, and then we expect Q2, 3, and 4 to have more upward pressure on gross margin.

There's no LEO in the guide.

Great. Uh uh congrats on the uh on the solid quarter.

Um I I'm wondering if if you could give us an update uh on your um large European competitor who's exiting their microwave business. Um we we believe by the end of this calendar year.

Um a- are you seeing any uh business benefits uh from from that currently and and would you anticipate uh or seeing increased dialogue that you think will benefit uh you in your next fiscal year?

Yeah. Uh, a competitor of our European competitor uh has communicated that uh their pipeline of opportunities is improving uh, and I would say suggest that the same thing is transpiring uh with us.

The to convert a um a microwave network, it's a, 6- to 18-month uh proposition, and uh the good news for the good news for us was the announcement was made uh November of 2025, and immediately after that, I think Aviat and all of our uh non-for-sale competitors uh created a uh a pipeline and are pursuing that. I would say we've had kind of normal course of business wins, um and prob- I would say that our competitors have probably had that as well where uh networks get exchanged a- at a low level.

I think the possibility for this uh um to improve is probably in the March and uh June quarters for for Aviat, as well as the uh uh the competitors that have been, working over the l- what will be a period of a a year, year and a half, to to convert that the uncertainty uh to to wins.

Perfect. Thank you.

Then a- as it relates to um, BEAD, um is is there it's been a a lot of fluctuations of uh of people tied to that and and just wondering what your current thoughts. Um I think before um we thought maybe some things would start in fiscal year '27, but really had more of a multiyear outlook.

Uh I'm just wondering if there's any update on your current thoughts there?

Yeah. Uh, in front of me, we we've got quotes out to our customers.

We're working uh to to turn the those quotes into uh business. Uh so so it's becoming uh tactical rather than theoretical, and I would also say that we still believe it to be a a three-year uh impact, and we our estimate is in the December quarter uh it should have uh the first um real impact to our um to our revenue.

Fantastic. Then lastly, um regarding um um your uh uh belief that you're the preferred vendor um and and showing proof of concepts of different, applications um on on on the MDU ramp, uh appreciate the $25 to $30 million significant order in hand.

Um should we anticipate that there could be more um significant orders as we go through fiscal year '27, or is that yet too early?

I I don't want you to anticipate, but there could be. How about that?

[Laughter] Trying to split it split the middle there. It it's a fair question, and we're hopeful.

Uh let's not put it in the model, but that's what we're working towards. Uh

fantastic. No other questions.

Thanks, guys, for taking my questions. Uh just following up on Christian's last question on the MDU opportunity and potential for more orders, can you help us size the potential of follow-on orders or how are you looking at this opportunity sort of in the intermediate term here?

Yeah. I I think um, what's really critical to driving the size of the opportunity is subscriber um subscriber growth, and we're in the early um the early early innings of the subscriber growth.

The more subscribers that come online for this Tier 1, uh the bigger the opportunity. For for, the last time um we we talked, we sized this as an eight-figure opportunity, and we put that in our um in our 8-K during our our quiet period, we would say that um that just that we think it's going to get bigger.

Then the next question is does it uh cross the barrier for nine figures? Um I don't know if I think the total annual opportunity uh is in the the $100 million uh neighborhood, how the that and that's predicated on: one, uh the customer achieving their subscribers' growth metrics; and two, our share versus the uh competitive share.

If you want to look at this as what could it be, what could it all be, I would say we hit the $100 million figure. The precursors to that are Now, the market the market opportunity hits the $100 million level.

Uh how that parses out between Aviat and the competition uh is looking more favorable, but I don't I don't see in any situation where we'd be sole source. Um and then uh what's probably more important is how many subscribers come on to those uh those MDU uh units.

That's really helpful. Then just as a follow-up, can you update us on the Aprisa router funnel and what you're seeing and expectations for fiscal '27?

Uh so,

we're not going to break out guidance uh specifically for Aprisa. Um the Aprisa business uh on the utility front, which is why we bought it and uh continue um um to enjoy it, is performing well.

Uh we've talked in the past about the LTE uh router and basically putting um this router into uh uh public safety or police cars. What I can say is that we have initial orders in the US, Europe, and Latin America.

Uh it's still relatively small, and there's a long uh lead-site um a long kind of runway to get um government agencies into the purchasing funnel. Uh but I would also say that our um our performance in the mobile cellular router sector is we're going up against uh Cradlepoint, and the reason we have those initial orders and uh significant engagements is because we have a compelling value proposition that customers like, and it's it's just going to take time, but we believe that it will happen.

Gotcha. Thanks a lot, guys.

Thank you.

good morning. Thank you.

Uh first question is um just wondering um how much uh regarding that, Middle East uh projects that were delayed last quarter, how much of uh that was captured uh in the fourth quarter?

Yeah. I I think uh most of it, Dave.

Most of it was recaptured.

Got it. Did that mix also played into that gross margin?

Uh I know you talked about supply chain headwind, but also um the mix?

Primarily the uh uh component inflation has has affected this quarter. Mix is pretty much representative.

As said in prepared remarks, Americas were about 56.5%, which is, fairly typical.

Yeah. Just to add to that, Dave, right?

The uh the nature of the inflation component environment is sometimes there's spot markets, sometimes it's um, prices go up even after you make the uh order, and in the next um few weeks, we're going to go out uh to our customers for for more price. Unfortunately, the nature of the inflation is it it's a little more abrupt than uh typical, we got uh impacted by that abruptness, and we're going to work to offset those that inflation.

I think we should get some improvement in [cough] in the December quarter, and then the back half, it should be better still.

By second half, can we expect, like mid-30s um in terms of gross margin expectations? Um that

that would be uh as- aspirational. Uh a lot of the growth, again, is coming out of uh MDU, as we've talked to, and these other markets.

That has pretty much um what we call more of a middle of our uh product strategy uh profile. Again, we ended the year at about 32%.

That's a safe harbor in terms of how we operate, just looking at historical. Uh again, as we as Pete talked to these different strategies, we expect some upward pressure, so that's good.

Um but uh I wouldn't I wouldn't necessarily go as high as what you're suggesting, as we speak today.

Got it. My last question is um uh regarding your fiscal '27 revenue outlook, just wondering uh is any BEAD uh factored into that outlook?

A small a small amount, Dave. Rela- Relatively conservative, if BEAD kicks in, uh we will we will revisit the guidance.

Got it. Thank you.

Thank you, and congratulations on a good quarter. Uh I want to also follow up on the MDU opportunity.

Uh can you tell us, I'm I'm sure you can't mention them by name, but can you tell us about the type of customers that are driving the MDU opportunity?

We've uh disclosed and a lot of industry folks uh We've disclosed that it's a US Tier Tier 1 uh that has access to 39 GHz uh spectrum, so that that narrows it down, and the field installers have leaked this, but we're it's not for us to to disclose. Their customers' customers are apartment uh uh apartment dwellers um that um typically, the profile is they skew younger, lots of remote uh work from home that uh require uh band- bandwidth beyond what's uh economically delivered today.

Okay. Pete, last quarter, you talked about war-induced pushouts of about $9 million.

Uh you already said that part of that had come in in Q4. Did that Did it all make in, or are you still experiencing some kind of war-induced issues out there?

Uh

actually uh, the the customer was not Ooredoo, um but that was in the the Middle East, uh war-induced uh issue, and we would say that there's steady state, that that problem has reversed, and um I would say our our demand in that customer base and our supply is at steady state.

Okay. Uh, finally, on the on the range of revenue guidance, th- there's a range of $15 million.

Can you Can you talk about what uh sort of what would make it, uh, at the high end or the low end of that, sort of the give and take in that?

Yeah. I I'd like to talk about how to make it to get to the higher end.

Uh more MDUs, and how does that 1 is more subscriber growth; 2, uh share gain versus the competition. 2 is, [cough] our de minimis uh modeling of BEAD.

Uh so if BEAD kicks in the way we've wished it would have kicked in over the last five years, then then we will revisit guidance. Then um 3 would be uh private networks.

Christian asked a question about the competitive dynamics in private networks. We think we're well positioned if some of those uh convert or if private networks uh the Aprisa LTE router opportunity is in there.

Um if either of those two things happen, that'll uh pop up our um uh our private network. Then, lastly, uh we see some uh given the competitive dynamics uh globally, we we have more Tier 1 interest than normal, new Tier 1s.

That that would be the fourth uh potential lever to move us from let's say the midpoint uh to the high end.

We have

we have four possibilities. There Yep.

Thank you, Theo.

Okay. Thanks, Pete.

Great. Thank you for taking my question.

Hey, Andy and Pete. Nice Nice close to the year.

Regarding the historical revenue patterns uh at 48 to 52% for the back half of the year for your guidance for next year, are you looking at something like more towards the range of 40/60, or could it be more pronounced than that?

Hey, Russ. This is Andrew Fredrickson.

Uh, yeah. I so we mentioned that that back the second half of the year would be a little bit more uh back-half-weighted.

Um, I would think you could think about it uh incrementally more than than maybe where it's been historically, maybe it's something closer to 45/55. Um, but we'll we'll certainly continue to keep you updated as we advance through the year.

If you look at the investor slide number 23 uh in our investor presentation, we have historical, numbers over the last couple of of fiscal years. I would say, at a minimum, that's a a good uh kind of guidance level from uh a seasonality perspective.

Um, but again, maybe maybe you add a couple more percentage points uh in the back half.

Yeah. Slide Slide 23 is the model uh that we're signing up to.

Sounds good. Then regarding the M- MDU opportunity, understand that it's it's hinging on on the subscriber growth there.

Just curious if the number of of markets that you're operating there has has grown or or sustained from from what you've talked about in the previous quarter?

I think I think we're um slated or are in 25 25 markets. If, we roll back the clock, we were, 1, 7, 11 to 13.

Now I I think we're approaching the uh 25-market uh level.

That's great. Thanks.

It's an exciting time for Aviat. Thanks everyone for joining.

We look forward forward to again updating you in November. Thanks.