Earnings Call Transcript - AVNW Q2 2022

Operator, Operator

Thank you and welcome to Aviat Networks' second quarter fiscal 2022 results conference call and webcast. You can find our Form 10-Q, 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 in approximately two hours. With me today are Pete Smith, Aviat’s President and CEO, who will begin with opening remarks on the Company’s fiscal second quarter, followed by David Gray, our CFO, who will review the financial results for the quarter and first half of fiscal 2022. Pete will then provide closing remarks on Aviat’s strategy and outlook, followed by Q&A. 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 financial projections, business drivers, new products and expansions, the impact of COVID-19, 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 statements made on this call can be found in our annual report on Form 10-K filed with the SEC on August 25, 2021. 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’d like to turn the call over to Aviat’s President and CEO, Pete Smith. Pete?

Pete Smith, CEO

Thanks, Keith, and good afternoon, everyone. Thanks for joining us to review a successful quarter. The Company continued to execute on our key long-term focus areas of growth, margin expansion, and meaningful bottom-line improvements, despite continued supply chain and inflationary challenges. The Aviat team's commitment resulted in revenue of $77.9 million, the highest quarterly revenue since Q1 of fiscal year 2016, driven by international growth of 25% versus last year, EBITDA margins of 13%, continued rock-solid balance sheet and liquidity position, and increased pace of share buybacks. These results would not have been possible without the tireless dedication and execution of our operations team, engineering team, and supplier partners in an incredibly challenging environment. Because supply chain has dominated the conversation over the past 12 plus months, let's address the environment from Aviat’s perspective. We experienced fewer supply interruptions, but we still encountered interruptions, lead times did not improve, but fortunately, there were no high push-outs. This is a sign of stabilization. The semiconductor allocation environment remains. We have invested to design out the most problematic suppliers. We remain subject to the risk of a supplier push-out and decommit late in the quarter. The most significant question, when does the supply environment get better? This is difficult to predict, but we feel that the environment will moderate in the April to June timeframe, and most, hopefully all of the supply chain problems are behind us at the end of December. Now, let's move to the key highlights of the second quarter, which include our Multiband XD launch; high availability routing software; and factory acceptance test success. Strong demand environment, led to RDOF, the infrastructure bill, and spectrum auctions, EMEA growth, share buybacks. In the quarter, Aviat released a new enhancement to our multiband product line, Multiband XD or Extended Distance. It increases the reach of 10 gigabits per second links over distances up to 20 kilometers to support 5G and rural broadband applications. To achieve comparable performance, competitive multiband solutions require up to 4 times the hardware, making them costly and impractical for tower deployments, leaving high-cost fiber as the only option. Now, with Multiband XD, operators can significantly lower their total cost of ownership by up to 90% when compared to fiber alternatives. Simply, this innovation makes Aviat more competitive versus fiber. In the previous quarter, Aviat announced the release of our new high-availability routing software to improve the reliability of critical networks of all kinds. This quarter, we passed a significant milestone with the successful completion of factory acceptance testing with a large U.S. state customer. We replicated the entire state network in our facility in Austin, Texas, and subjected the system to real-world stress and performance testing; the software performed flawlessly. Aviat is one of only a few vendors offering high availability routing, and we have a rapidly growing pipeline of deals for this new software. This opens an additional $300 million market opportunity for Aviat. The environment for Aviat’s offerings continued to improve. Let's touch on the Rural Digital Opportunity Fund, the infrastructure bill, and the recent spectrum auction. We remain well positioned for the rollout of the Rural Digital Opportunity Fund or RDOF. As we track the RDOF winners, Aviat customers are earmarked for more than $3 billion of funding. In the quarter, we announced a new customer, Wisper Internet, in this space. In November 2021, the U.S. passed the Bipartisan Infrastructure Legislation, which appropriates $65 billion for broadband infrastructure deployment. As a U.S. company, Aviat is well-positioned to participate in serving the 42 million Americans who lack contemporary bandwidth. The FCC recently completed a $22 billion auction known as Auction 110 for the 3.45 to 3.55 gigahertz spectrum. The second biggest winner was Dish, our previously announced customer. As this spectrum is utilized, Aviat's backhaul business will be positively impacted. Our international growth of 25% was driven by our Europe and Africa regions. In previous earnings calls, we discussed improvements in the team and leadership. We have our first proof point internationally where selling on value and Aviat’s differentiation works. Some highlights include a win with an important Southeastern European mobile operator and momentum with a UK private network customer. We see the preparations for several 5G deployments in Africa, and we believe our portfolio has the best value proposition on the market for 5G in Africa. This preparation work suggests the future development of a favorable 5G demand environment. We accelerated the pace of share buybacks during Q2, repurchasing almost $2 million of Aviat’s stock and exhausting the previous Board authorization. As announced, the Board authorized a further $10 million share repurchase plan, and we anticipate executing on the new plan opportunistically in the subsequent quarters. Before turning the call over to David, let me provide a couple of additional observations and insights. First, this was a very good quarter and first half of our fiscal year. We remain focused and continue to execute, and those collective efforts are reflected in our financial and operational results. We've continued to demonstrate our ability to grow and to take share of demand. Looking forward, we see three significant drivers: 5G, private networks, and rural broadband, and we believe we are well positioned to capture significant opportunities with our differentiated products, software, and services offerings. With that, let me turn the call over to David to review our financials before coming back for some final comments.

David Gray, CFO

Thank you, Pete, and good afternoon, everyone. During my remarks today, I will review some of the key second quarter and first half fiscal 2022 financial highlights. Noting our detailed financials can be found in our 10-Q and press release, both of which were filed this afternoon. As a reminder, all comparisons discussed today are between the second quarter of fiscal 2022 and the second quarter of fiscal 2021 unless noted otherwise. For the second quarter, we reported total revenues of $77.9 million, as compared to $70.5 million for the same period last year, an increase of $7.4 million or 10.4%, driven by international sales growth and continued strength in U.S. private networks. Sequentially, revenue increased by $4.7 million or 6.4%. As Pete mentioned, our total revenue for the second quarter was the highest since our first quarter of fiscal 2016. North America, which comprised 66% of total revenue for the second quarter, was $51.0 million, an increase of $1.9 million or 3.8% from the same period last year, driven primarily by our private networks business. International revenue was $26.8 million for the quarter, an increase of $5.4 million or 25.5% from the same period last year. We are again pleased that our backlog continues to remain above $200 million, even after recognizing our highest quarterly revenues in over six years, because of our innovative and differentiated product portfolio. Gross margins for the quarter were 36.2% and 36.3% on a GAAP and non-GAAP basis, as compared to 38.2% and 38.3% in the prior year. Gross margins remained under pressure from inflationary headwinds and expedite costs related to supply chain disruptions, but improved sequentially from Q1 by 60 basis points. This is consistent with our prior earnings commentary, where we noted that price actions to offset inflation would gain momentum as the year progressed. Second quarter GAAP operating expenses were $19.9 million and second quarter non-GAAP operating expenses, which exclude the impact of restructuring charges and share-based compensation, were $19.2 million. GAAP and non-GAAP OpEx were $0.8 million and $0.9 million higher than the prior year respectively. The increase was driven by higher R&D costs incurred to complete the design out of problematic vendors, as well as higher commissions in line with strong orders and sales. Second quarter GAAP net income was $5.7 million compared to $6.6 million last year. The decline was wholly attributable to a $1.8 million higher GAAP tax provision in the current quarter, which was from the release of the U.S. deferred tax asset valuation allowance as reported in our fiscal Q3 2021 results. As a reminder, the increase in tax provision year-over-year will not increase our cash taxes paid. The Company has over $500 million of NOLs that will continue to generate shareholder value via minimal cash tax payments for the foreseeable future. Second quarter non-GAAP net income, which excludes restructuring charges, share-based comp, and non-cash tax provision, was $8.5 million compared to $8.4 million for the same period last year. Second quarter non-GAAP EPS came in at $0.71 per share, compared to $0.74 per share for the same period last year. Adjusted EBITDA for the second quarter was $10.1 million, which was flat to the prior year. Adjusted EBITDA margins were 13.1% for the quarter. Moving on to the balance sheet. Our cash and cash equivalents at the end of the second quarter were $42.3 million. We continue to have no debt. During Q2, we continued to increase investment in working capital to facilitate higher sales growth and protect ourselves from supply chain disruptions. Our strong balance sheet permits us to amass component supply and invest in international growth projects. As a result, accounts receivable and unbilled receivables grew by $12.9 million in the quarter. Additionally, higher international growth typically has longer payment terms than North American customers. It also grew by $2.5 million in the quarter as we added more supply chain buffer stock. AR and inventory growth was only partially offset by current liabilities, which grew by $4.0 million in the quarter. As a result of these notable increases and $2 million of stock buybacks in the quarter, net cash decreased sequentially from the first quarter by $5.0 million and by $0.7 million from Q2 of the prior year. We expect this working capital dynamic to moderate in subsequent quarters, returning us to strong positive cash generation. Regardless, our balance sheet remains very solid, leaving us well positioned to execute our long-term plans. With that, I will turn it back to Pete for some final comments.

Pete Smith, CEO

Thanks, David. Just a few additional comments before opening up for Q&A. I'm extremely proud of the entire Aviat team for their significant contributions to our results for the second quarter of fiscal year 2022. We continue to execute well, given the constrained supply situation and inflationary environment. Despite these challenges, based on our first half performance, we are raising our full-year guidance as follows: Revenue for fiscal year 2022 to be in the range of $290 million to $298 million, and adjusted EBITDA to be in the range of $37 million to $39 million. Providing our customers with the most advanced, reliable, and best total cost of ownership systems for mission-critical work, and our shareholders with profitable growth remains our goal. With that, operator, open it up for questions.

Operator, Operator

And our first question will come from Scott Searle with Roth Capital.

Scott Searle, Analyst

Hey. Good afternoon. Thanks for taking my questions. Nice job on the quarter. Very difficult operating environment. Maybe just to dive in quickly on the guidance for the fiscal year; it looks like it would probably imply that you are down a little bit sequentially into the March quarter, typical seasonality. Is that how we should be thinking of it, above consensus expectations, but down a little bit sequentially from the December results?

Pete Smith, CEO

Yes. So, we’ve talked in the past about seasonality. Some years there is seasonality and some not; being a project-based business. And what drives the seasonality when we have it is year-end buying principally from our government customers, and we certainly had that this year.

Scott Searle, Analyst

Okay. And, maybe to dive in on the software component, I think you indicated about a $300 million TAM on that front. I wonder if you could expand on that a little bit in terms of software contribution maybe near-term and how you start to penetrate that opportunity.

Pete Smith, CEO

We have high availability routing software for a state network, and that project has been successful. We mentioned that this has a total addressable market of $300 million, which we will aim to capture through sales of microwave radio routers and embedded software. Now that we have demonstrated our capabilities, our sales pipeline is beginning to expand. When we sell the embedded routing software, it will be included as part of a package with the hardware. Regarding our overall software offerings, we prefer not to separate the embedded software as a standalone product because it can only be sold alongside hardware. Additionally, we do have our FAS, which is standalone software that has positively impacted our margins in recent years, but it is not substantial enough to warrant a separate reporting. Does that clarify things?

Scott Searle, Analyst

Great. Perfect. And maybe if I could jump in on the RDOF front. It sounds like some of these RDOF deployments are starting to get underway. I think to-date you've seen very little, if any contribution. I think you articulated a $3 billion opportunity with existing customers. How do you expect that to flow in? And then, if you could, as well, the infrastructure bill. It seems like it's coming behind it. There's some politics probably in terms of the allocations and timelines there. But, there’s been a big push in terms of American-made, and you guys certainly fit that bill. So I guess, how does RDOF kind of flow into the current calendar year and where do we start to see the benefits from the infrastructure bill starting to kick in?

Pete Smith, CEO

We are not currently aware of any RDOF spending involving Aviat, so that potential is still ahead of us. Our best estimate for when we might see an impact from RDOF is during the latter half of this calendar year. Everything is on the horizon. Regarding the infrastructure bill associated with H.R.3684, there are four steps for implementation. First, the FCC needs to update their maps, which we anticipate will happen in the summer of this year. Next, the Commerce Department is establishing a process for states to apply, with applications expected in May 2022. After that, states will create their submission plans, which will then be reviewed and approved by the Commerce Department. We expect that the funding will begin to make an impact by the end of 2022 or the beginning of 2023.

Scott Searle, Analyst

International had a great quarter, with growth of 25% year-over-year. Geographically, Latin America and the Middle East and Africa performed well. Are you gaining from Huawei's reductions in presence? Additionally, there are significant opportunities in Europe, although the results haven't reflected that yet. When do we anticipate Europe to begin contributing? Thank you.

Pete Smith, CEO

So, when we report our segments, Europe is up, driven principally by the private network in the UK, but secondly, we did have some good growth in the Europe region, driven by Huawei share gain. That was the Southeastern Europe network operator. And then, thirdly, on Africa, we are seeing some share gain from Huawei. And what we're finding is that the 5G, a lot of our business in Africa this quarter was around 5G deployment. So, getting the sites prepped and getting demos done. So, we think that that's going to bode well for the Africa region going forward.

Operator, Operator

Our next question will come from Dave Kang with B. Riley.

Dave Kang, Analyst

Thank you. Good afternoon. I guess, my first question is, I believe you said, regarding the supply chain situation, that it should start to ease post June. So, how should we think about gross margin in the calendar's second half? Does it go back to like 38% or so? Can you just provide some more color on what to expect?

David Gray, CFO

I want to confirm that we remain on course with our previous statements regarding our pricing strategy effectively countering the cost increases we have experienced by the fourth quarter of this year. As we look ahead to that quarter and beyond, we anticipate that the overall impact of inflation will still be somewhat dilutive. Although our pricing adjustments will balance out the costs on a dollar-for-dollar basis, it will also increase the denominator while keeping the numerator constant, which will have some effect. However, we expect that as momentum builds, we will maintain our pricing advantages and begin to see improved contributions to our gross margin.

Pete Smith, CEO

It will take some time before we provide guidance for fiscal year '23. We need to balance our progress on software and innovative new products with international growth. An important point is that we still expect to return to cost price parity between April and June. After that, our margin improvements will depend on our product mix and increasing software and innovation.

Dave Kang, Analyst

My second question is about the various trials you mentioned from last year that you expect will go into production this year. Can you provide an update or some specific data points on how many trials you conducted and how many you anticipate going into production this year?

Pete Smith, CEO

I'm having a bit of difficulty clearly articulating what I meant by the trials, but let me share the one I'm ready to discuss. We've talked extensively about Multiband XD, our new product that has unlocked another $50 million of total addressable market compared to fiber. We are currently in two trials with lead customers. Regarding the high availability software, we passed the factory acceptance testing with a state network customer and have sold that to about half a dozen other customers. In terms of the pipeline for the high availability routing software, we have an additional 5 to 10 customers lined up. When we evaluate our pipeline, we categorize it by our innovative products. To respond directly to your question about Multiband XD, we have two customers in trials, and for the high availability routing software, we have more customers with around half a dozen ready for trials.

Dave Kang, Analyst

And my last question is on OpEx. It was up approximately $1 million sequentially to $30 million. Excuse me, SG&A. How should we think about OpEx going forward?

David Gray, CFO

Well, I think it's safe to say that we believe that our Q2 is probably the high watermark for OpEx in this fiscal year. Some of those extra expenses that we noted in the earlier comments should not recur, so they should moderate somewhat in the back half. That'll also be balanced against some modest seasonality that typically exists in our OpEx, but it should fall back a little bit and be more in line with what we've seen in previous years.

Operator, Operator

And our next question will come from Tim Savageaux with Northland Capital Markets.

Tim Savageaux, Analyst

Trying to think about how to frame this question. I guess, I'll start kind of with a gross margin approach. And mix, U.S. versus international is typically an important factor. And so, I want to think about that both short-term and long-term. The quarter you just reported, I think you were able to increase gross margins on what you said 60 bps, despite a much higher international mix. So, I guess, question one, how did you do that? And David, I wonder if you could specifically frame the supply impact on that, whether that's a couple of hundred basis points or what have you? And then, longer-term, a lot of what you're talking about opportunity-wise appears pretty U.S. focused, right, RDOF, Dish, others, state level. And so, should we think about that U.S. mix increasing and bringing gross margins up with it or are there other dynamics at play here as we go through the rest of the year?

David Gray, CFO

Okay. I'll speak to the gross margin first and then Pete can take the international versus domestic mix. So, for the quarter, the cost increases impacted our margins by roughly 340 basis points negatively. That was offset partially by our price recovery actions that added about 230 basis points; that's about 2 times what we reported in our first quarter. And then, you're right, the international strength did have a bit of a dilutive effect by about 80 to 90 basis points in the quarter. So, that kind of is a walk year-over-year from a margin perspective. And then, again, continue to expect the pricing actions to gain traction in the future quarters to help to offset those inflationary pressures that we've seen.

Pete Smith, CEO

So, Tim, on the mix, right, we said that our long-term target gross margin is 40%. And the way we were planning on getting there was through hardware innovation and software. And as we've gotten traction with the international team, we think that there is a good growth opportunity there that we are digging into, but we have our first proof point. I think your question is when RDOF kicks in and the infrastructure fund kicks in, will that drive more growth in the U.S. side? Yes, that is more margin accretive. So, I gave my best estimates on when that funding will hit. And we want to keep our regional mix model the same, two-thirds North America and one-third the rest of the world. And we will revisit that as that funding starts to flow. But there is no denying that when it does, it'll be margin accretive for us.

Operator, Operator

Do you have any further questions? I am sorry. Go ahead.

Tim Savageaux, Analyst

That was a really interesting question. Staying on the topic of RDOF, you mentioned that you received awards backed by $3 billion. Historically, I've heard you estimate a total addressable market range for Aviat between 2% and 4%, considering the network build cost or those awards. As you gain more experience with these deals and win more of them, do you still find that range reasonable? Is there any inclination towards the higher or lower end, or do you have any general updates on your market opportunity from those?

David Gray, CFO

Yes, I would say we’re the same. The reason we mentioned the $3 billion figure is that in response to a previous question about the opportunity represented by your winners, it came out to $3 billion. We maintain the 2% to 4% estimate for the funding allocated to microwave. In our investor presentation, we believe we have a 38% market share, and I wouldn’t say that has significantly changed. So, as you consider our potential upside with the RDOF funding, I would say those numbers remain consistent.

Tim Savageaux, Analyst

Great. That $3 billion figure represents the total amount awarded to fixed wireless carriers. Is this purely coincidental, or is there something noteworthy about it?

Pete Smith, CEO

Let me check if that’s a coincidence or fact. I didn't do that completely, but we'll get back to you on that. We’ve got to be pretty close to winning them all.

Tim Savageaux, Analyst

Yes. Well, I'm just saying your share sounds anecdotally higher than 38, but it really hasn't started to roll yet. And I figured there was limited impact looking at the flat sequential U.S. numbers from RDOF. As you look at the state level, I don't know if you're seeing any funding or opportunities, not for state networks but coming out of state-level funding. And I'd ask you the same question on Dish in terms of it doesn't seem like that started to be material yet. What's your expected timing on that?

Pete Smith, CEO

Yes. I think the state funding environment is pretty stable and the positive catalyst is the infrastructure fund. And then, there's one bit of legislation that I don't know that we fully understand what the conversion of the leftover CARES money. That could be a positive catalyst, but we don't know specifically about that. And then on Dish, it hasn't been material, but we're seeing signs that it will have some positive impact, let's say in Q4 of our fiscal year.

Operator, Operator

Thank you. And our next question will come from Theodore O'Neill with Litchfield Hills Research.

Theodore O'Neill, Analyst

Yes. Congratulations on the quarter. I have a couple of questions for you. Could sales have been higher if you hadn't experienced supply chain issues during the quarter? If so, do those potential sales losses occur later or do they usually get taken up by competitors?

Pete Smith, CEO

I'm pleased to report that we didn't miss any demand due to supply chain issues in the quarter. In the past couple of quarters, we mentioned we had missed $1 million or $2 million, but our supply chain team performed well, and we didn't miss any demand. This is the first time that's happened in three or four or more quarters. So, this indicates that the environment is stabilizing, and hopefully, the supply environment is moderating.

Theodore O'Neill, Analyst

And Pete, on the last quarter, you said that you are now supplying 15 of the top-30 rural digital opportunity fund winners and are in advanced discussions with 5 of the other top-30. How is that going?

Pete Smith, CEO

Yes, I would say we've gotten one out of the five, so we're aiming for 16 of the top 30.

Theodore O'Neill, Analyst

It was mentioned earlier that sales in the Africa and Middle East segment increased by 30% sequentially, and they have been flat for many quarters. When we consider our projections, should we expect that this will remain stable at the new level, or how should we approach that?

Pete Smith, CEO

We had an exceptional second quarter. While our North America business did not grow as much, our international business experienced stronger growth. In terms of our revised revenue guidance, we suggest using a two-thirds North America and one-third international split. On the Africa side, as we complete our 5G preparations, we anticipate a positive impact later this year. However, we maintain the expectation of a two-thirds North America and one-third international growth, and we aim for both segments to expand. That's where we currently stand. It's a good question.

Operator, Operator

And our next question will come from Aaron Martin with AIGH Investment Partners.

Aaron Martin, Analyst

Hi everyone. Congratulations on a strong quarter, and I appreciate the ongoing efforts with the buyback. Regarding the accounts receivable, was the increase linked to the revenue shift internationally, or was there something else contributing to that? It's been a nice steady increase.

David Gray, CFO

Yes, this quarter's performance was mainly driven by international growth when analyzing our accounts receivable by region. This growth is a significant factor, alongside the longer payment terms we typically have with international customers. These are the primary contributors, and we anticipate these trends will normalize in the coming quarters.

Aaron Martin, Analyst

And then, I think you talked about the backlog flipping over $200 million; was it up sequentially?

Pete Smith, CEO

So, we don't break out backlog on a quarterly basis because of the project nature. The other thing we would add to give you a little more insight is our book-to-bill ratio remains above 1.

Aaron Martin, Analyst

Okay. Regarding the higher backlog, is any of that due to longer lead times and customers needing to order further in advance, or does it truly reflect actual demand?

Pete Smith, CEO

So, our private network business is long cycle. So, we don't see very much acceleration of demand in that segment. And we certainly haven't seen the mobile network operator space. So, if that's going on, we’re not aware of it. So, I wouldn't say we have any acceleration of demand. So, it's really true demand.

Aaron Martin, Analyst

Got it. As I think about growth over the next 6, 12, 24 months, what's a more important driving factor? Is it rural broadband? Is it 5G rollouts really happening? What are the bigger factors in terms of whether the growth will show up and how strong it will be for you guys over that time frame?

Pete Smith, CEO

We have three key drivers to focus on. Private networks, which account for about two-thirds of our business, is very important and is expected to continue growing steadily. When the infrastructure fund is implemented, it should further boost our growth. Rural broadband is also expected to drive growth, and we believe we are just beginning with 5G. We are pleased to see progress, especially in Africa, which will contribute to our growth. While private networks are crucial for the core of the company, the advancements in 5G and rural broadband are likely to lead to significant growth in the next one to two years.

Aaron Martin, Analyst

Got it. You mentioned that customers are very enthusiastic about the multiband release, which is expected to enable a $300 million market expansion for you. Can you provide some details about your initial testing? Have you received any orders yet for the multiband, and can you quantify the early rollout of that product?

Pete Smith, CEO

The $300 million market expansion is due to our high availability routing software. The Multiband XD enhances the competitiveness of our microwave radios against fiber. We believe this creates an additional $50 million market opportunity, which would be a gain in market share over fiber. Currently, we are conducting trials with two major customers, who are using fiber. As the link distances increase, the total cost of owning fiber rises significantly, especially in challenging terrains like mountainous areas or island nations. We believe this enhances the value of our microwave solution, and we are excited to have two important customers in testing phases.

Aaron Martin, Analyst

Okay. Can you update us on the new 10 gig very long distance radio? Are customers interested in the additional capabilities or are they just trying to catch up? What can you tell us about its acceptance?

Pete Smith, CEO

So, the 10 gig radio and Multiband XD are the same. So, that comment is related to the Multiband XD radio.

Operator, Operator

Thank you. And that does conclude the question-answer session. I now turn the conference back over to Mr. Pete Smith for any additional or closing remarks.

Pete Smith, CEO

I'd like to thank everyone for your support and attention and interest in Aviat. Everybody stay safe and healthy. We're looking forward to giving you an update on our progress in 90 days. Thanks, everyone.

Operator, Operator

Thank you. And that does conclude today's conference. We do thank you for your participation. Have an excellent day.