Aviat Networks, Inc. (NASDAQ:AVNW) Q2 2023 Earnings Call Transcript

Pete Smith: Yes. The funnel is the $60 million.

Tim Savageaux: Great. And then last question for me. You mentioned record non-GAAP operating margins, 12.5%. And obviously, you did have some nice revenue upside there in the quarter. But longer term, have you guys given some consideration as to where those — obviously, it’s dependent on gross margins to some degree as well as some revenue growth. But do you have a sense for where operating margins can go over time now that you’ve kind of achieved this recent milestone?

David Gray: Well, I would say that we — our stated milestone is for EBITDA margins to reach 15%. We’re in spending distance, but we’re not quite there yet. I’ll tell you this, we’re heading into our strategic planning season here. So we’ll probably have kind of dust off the playbook there and figure out where we want to be from that standpoint. And we’ll to respond to your question as well to pay specific attention to our operating margins.

Tim Savageaux: Got it. Thanks very much.

Pete Smith: Thanks, Tim.

Operator: Thank you. And our next question comes from the line of Theodore O’Neil from Hill’s Research. Your question, please.

Theodore O’Neill: Thanks very much and congratulations on the good quarter. I appreciate you discussing the inventory turns and the DSOs in the prepared remarks. I was wondering if you could talk about if you’re seeing anything on the inflation side, either improving or not improving?

David Gray: Yeah. It’s been fairly stable, right? I mean we’re still having some instances on select components where we’ll have to pay some expedite fees. But as far as general price increases are concerned, they’ve been few and far between. And actually, we’re trying to push the tide the other way at this point and start realizing some — clawing some of that back that we’ve incurred over the past year, 1.5 years. So more to be seen on that. But for right now, we see the situation is stable.

Theodore O’Neill: And can you give us an update on the new chip you’re building with MaxLinear, some timing on that? And if that chip is going to help with some of the semiconductor allocation issues you’ve got?

Pete Smith: So we’re still in the — we still haven’t given the — when we expect it out, but that project is progressing nicely. We think our investment has helped us get prioritized with respect to access to the modem supply chain, right? And I think a couple of quarters from now, we’ll give definitive time line on when the ship will start to impact our top and bottom lines.

Theodore O’Neill: And will those chips be part of a new product line or will they go into existing products or both?

Pete Smith: Both.

Theodore O’Neill: Okay. All right. Thanks very much.

Pete Smith: Thank you.

Operator: Thank you. And we have a follow-up question, just one moment. The follow-up comes from the line of Scott Searle from ROTH. Your question, please.