Giga-tronics Incorporated

John Regazzi - Co-CEO, CTO & Director Temi Oduozor - Principal Accounting & Financial Officer and Corporate Controller

Thanks, Richard. Hello, everyone, and thanks for joining our quarterly earnings conference call.

I'm Temi Oduozor, and I am joined today by our co-CEOs, John Regazzi and Suresh Nair. Before we begin, I need to remind everyone that this conference call contains forward-looking statements concerning operating performance, future orders, long-term growth and shipments.

Actual results may differ significantly due to risks and uncertainties such as delays with manufacturing and orders for our new ASG, receipt of timing for future orders, cancellation or deferrals of existing orders, the company's potential need for additional financing, uncertainty as to the company's ability to continue as a going concern, the volatility in the stock market and the stock price of our common stock, results of pending or threatened litigation and general market conditions. For further discussion, see our most recent annual form -- report on Form 10-K for the year ended March 25, 2017, Part I, under the heading Risk Factors and Part II, under the heading Management Discussion and Analysis of Financial Conditions and Results of Operations.

With those reminders in place, I would now pass the call on to John. John?

Thank you, Temi. Good afternoon, and thank you for joining our quarterly earnings conference call.

I'll report a summary of the results, and then a couple of brief remarks before opening the call to questions. Today, the company is reporting net sales of $2.2 million for its fiscal second quarter ended September 30, 2017, a 49% decrease as compared to $4.4 million for the second quarter of last year.

Net sales for the 6-month period ended -- ending September 30, 2017, were $4.2 million, a decrease of 46% compared to $7.8 million for the 6-month period ended September 2016. The decrease in net sales for both periods was primarily due to delayed bookings of follow-on YIG filter orders and the lack of new orders for the Advanced Signal Generators.

Although we have subsequently received the fiscal -- sorry, the YIG filter order, we don't expect to see revenues from it until fourth quarter of the current fiscal year. Revenue from the Advanced Signal Generator Point Mugu order that was booked in Q2 will be recognized in the third quarter.

Net loss for the second quarter of fiscal '18 was $1.1 million or $0.11 per fully diluted common share. This represents a slight improvement over Q1 of this year because of cost-containment efforts that we have been underway.

This net loss in the second quarter compares to the second quarter of last year of $396,000 or $0.04 per fully diluted common share. Net loss for the 6-month period ended September 30 was $2.3 million or $0.24 per fully diluted common share.

This compares to a net loss of $498,000 or $0.05 per fully diluted common share for the 6-month period ended September of last year. The increase in net loss for the second quarter of this fiscal year compared to the same year -- prior year was primarily due to our lower net sales.

And the increase in net loss for the 6-month period was primarily due to the lower net sales in fiscal '18 as well as the $802,000 gain associated with the sale of the Switch product line in the first quarter of fiscal '17. We ended the quarter with approximately $14.5 million in backlog, primarily due to the receipt of the two large orders that we previously announced, the Navy orders for $1.7 million, which was announced in August for the Advanced Signal Generator system; and more recently the $4.9 million order from the prime contractor for YIG RADAR filters that was announced in early October.

We anticipate that all of the new orders will help improve our operational performance in the second half of this fiscal year. Over the past two quarters, we have focused our engineering efforts in addressing the performance issues associated with the Advanced Signal Generator platform, and it now appears -- and it now meets the expectations of all of our customers.

In addition, we have been focusing our sales efforts on prime contractors who perform their own system integration. Finally, we have settled our dispute with Spanawave, and it allows us now to look at options with the signal generator product line, potentially divesting that product line as well.

So with that, I'd like to open the call for questions.

Okay, Richard. Thank you.

Well, with no questions, I'd like to thank everybody for joining the call this afternoon, and have a good evening.