Michael Pangia - President and CEO Stan Gallagher - SVP and COO Shaun McFall - SVP Corporate Development Glenn Wiener - IR, GW Communications.

Tim Savageaux - Northland Capital Alex Henderson - Needham Mark Spiegel - Stanphyl Capital Michael Staiger - Odeon Capital.

Good afternoon. My name is Ian, and I will be your conference operator today. At this time, I would like to welcome everyone to the Aviat Networks Fiscal 2019 First Quarter Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session.

[Operator Instructions]. Thank you. Glenn Wiener of Investor Relations, you may begin your conference..

Thank you and welcome to Aviat Networks’ fiscal 2019 first quarter results conference call. We just issued our press release and we’ll shortly post an updated investor presentation on our Web site. In addition, we will be filing our Form 10-Q tomorrow. All documents when posted can be found in the Investor Relations section.

Today, we’ll have prepared remarks from Michael Pangia, President and Chief Executive Officer; and Stan Gallagher, our Chief Operating Officer. Shaun McFall, Senior Vice President of Corporate Development is also with us and will be available during the Q&A portion of this call.

During today’s call, management may make forward-looking statements regarding Aviat’s business, including but not limited to, statements relating to projections of earnings and revenue, business drivers, the timing and capabilities of new products, network expansion by mobile and private network operators, and economic activity in different regions.

These and other forward-looking statements involve assumptions, risks and uncertainties that could cause actual results to differ materially from those statements.

Please note, these forward-looking statements reflect the company’s opinions only as of the date of this call, and the company undertakes no obligation to revise or publicly release the results of any revision of these forward-looking statements in light of new information or future events.

Additionally, during today’s call, management will reference both GAAP and non-GAAP financial measures. Please refer to our press release and financial tables therein, which include a GAAP to non-GAAP reconciliation and other supplemental financial information.

I’d like to thank you all for your interest and support, and we look forward to updating you on our progress. With that, I will now turn the call over to Mike..

Thanks, Glenn, and good afternoon. Overall, I’m pleased with the direction of the company even with some challenges we encountered in the first quarter. We remain on the path of profitable growth and our global competitive position continues to strengthen.

Although our overall results were not as we would have liked, we expect a strong second quarter and we maintain a positive outlook for the remainder of the fiscal year. We continue to see new business opportunities across all verticals and geographies and we’re progressing on several initiatives to leverage our global customer footprint.

And as we continue to execute on our technology roadmap, we’re actively engaging with both current and new customers on enhanced solutions and applications, leveraging our unique expertise in wireless networking. I will quickly recap the quarter and then provide some color on the state of the business.

Stan will follow with a deeper dive into the numbers, and I’ll then come back with some final remarks on our outlook. In the quarter, we grew revenue by almost 8% year-over-year and reported $900,000 in adjusted EBITDA, our eighth consecutive profitable quarter on this basis.

Our Q1 fiscal 2019 revenues of 60.5 million represented our highest first quarter performance over the last three fiscal years. Our international business grew by 30% year-over-year, primarily through increased activity from several of our customers in the APAC region and from some of our smaller customers in Africa.

Additionally, we now have two 10% customers, one from APAC and the other from the Africa region. North America revenue was lower compared with the year-ago quarter due to the timing of customer projects. We expect to see stronger North America revenue starting in the second quarter and over the balance of the fiscal year.

Non-GAAP gross margins of 29.6% were 120 basis points lower than the prior year. This was primarily due to a lower concentration of revenue from North America.

With the projected improvement in our North America business, we expect our second quarter gross margin rates to be significantly better than the first quarter bringing our first half to a more normalized level. Year-over-year, non-GAAP operating expenses increased by approximately 3.7%.

This was expected as we increased our investments in sales, marketing, and R&D. With regard to our market position, I’ve previously spoken about our confidence based on the activity levels we were seeing in several of the international markets coupled with new opportunities emerging in North America. Those sentiments remain.

With our continued focus on achieving our business, operations objectives, we are selectively reinvesting in new products, expanding our services capabilities, and developing new customer relationships and partnerships. Let’s take a closer look at our business in North America.

Activity in our private networks vertical continues to be very encouraging. Last quarter, I referred to several wins in the utility vertical where Aviat serves over 50% of the largest players in the USA. Since then and as detailed in a recent press release dated November 1, 2018, we announced $10 million in new business received from U.S.

utilities so far in the second quarter. This brings us to 19 million in new orders on a year-to-date basis. These orders are comprised of both legacy solutions and new network build outs across the country and from a collection of 65 different utilities.

There are several statewide network opportunities on the horizon driven mainly by requirements for enhanced capabilities for first responder agencies. We believe we are well positioned to win significant new business due to the uniqueness of our solutions and the expertise and support we provide.

One of these large, statewide projects is now moving into final negotiations with a partner we support and we expect project activity to get underway in the relatively near future. We believe we can win one or two more of these larger projects over the next several quarters.

We continue to see steady levels of business from our North American service provider customers, and our newest products are gaining traction for capacity enhancement applications as well as for network expansion.

We expanded our focus into rural broadband and the ISP customer segment areas, and servicing a portion of that market opportunity via our online store. The Aviat store is still in its development as a new channel and we see an attractive incremental opportunity enabled by our new WTM platform. This is one of our growth catalysts moving forward.

Other areas of growth that we are progressing include our solutions for mission critical and disaster recovery work. We have recently been engaged in supporting a Tier 1 network operator in the aftermath of Hurricane Michael.

Our local presence in manufacturing, service,s and logistics management base in Texas allowed us to achieve 24-hour turnaround on equipment requests, which was instrumental in returning cellular service to the Florida Panhandle region.

Additionally, we’re developing proposals for subscription-based lifecycle management and technology refresh services with recurring revenue potential, particularly for our state and local government customers. Moving on to our international business.

Our year-over-year increase in international revenue came from a number of different geographic areas which is good to see. In APAC, we saw a surge with Globe in the Philippines as the company is aggressively extending its geographic LTE coverage and in parallel building network capacity to accommodate rapidly increasing mobile data consumption.

As a result, revenue from Globe surpassed 10% of our total in this quarter. Also in APAC, we rolled out our latest generation of high-capacity trunking solutions with two different customers.

Our WTM 4500 was adopted to provide multi-gigabit medium and long distance connections that are either technically unviable or commercially unattractive to deploy using optical fiber. In Africa, revenue from MTN, our longstanding 10% plus customer, was roughly flat to the year-ago quarter while sales to other customers across the region increased.

We’re also well positioned for new upcoming business awards. In the Middle East, we have supported network construction for enhanced public safety and border security for more than 10 years now.

The precise timing of contract awards are sometimes affected by political issues beyond our control, but we are confident that we will see new business in this region within the fiscal year.

Longevity of our presence in a number of countries enables us to extend our addressable market beyond typical microwave backhaul applications for our service provider customers.

In addition, the service support logistics, management resources we have established can be leveraged to extend our scope of supply into other areas such as power systems and optical networking. We are engaged in discussions to expand in these areas.

As we have selectively increased our investments in sales and business development, we are seeing encouraging opportunities in other market verticals such as public safety and the oil and gas industry similarly to how we operate in North America.

Looking at these markets through a long-term lens, we believe that our footprint gives us significant long-term growth potential. Regarding 5G, as we engage in discussions on a global basis with various service providers, the feedback on our portfolio and roadmap is very positive.

While many issues still need to be standardized, such as spectrum allocations and timing, we can anticipate the need for future network capacity and performance capabilities and are building that into our proposals.

We are investing more R&D resources in the ultra-high capacity microwave and millimeter-wave solutions to meet the future anticipated capacity demand and would begin to rollout new products to the market in the latter part of fiscal year '19.

Our early jump into SCM capability in our products started with the WTM platform and also provide key enabling solutions to simplify and streamline network performance in automation which are common goals across the 5G ecosystem.

We have successfully validated the automatic configuration capabilities in a proof of concept with a leading operator in Europe and see this as an area of real interest to our customers. I’ll turn the call over to Stan now and then will come back with some closing remarks.

Stan?.

Sure. Thanks, Mike. So before I get into more detail on some of the significant financial highlights, let me address one of the business dynamics we continually have to manage, our quarter-to-quarter linearity.

As is become evident in our results over the past several quarters, our business performance is highly dependent on geographic mix and timing of customer projects. This is primarily reflected in our gross margin and in some instances with our cash performance variation.

As for gross margin, we have stated on prior calls that the geographical mix of our business can and does have a significant impact quarter-to-quarter and our North America activities are not as linear relative to international.

As we continue to win new business and grow our North American project portfolio, the unevenness in the timing of revenue and completion of significant milestones may continue to drive variation from a quarterly perspective. But the growth in performance improvement trend when viewed on a trailing 12 months basis remains intact.

This is demonstrated when you look at our last eight quarters. Also in the first fiscal quarter, we experienced higher working capital requirements for some of our larger turnkey projects. As we perform against these projects, a number of them have required an outlay of working capital but not in a linear manner.

Similar to the gross margin variation, our cash position can vary quarter-to-quarter but we anticipate ending the year with a higher cash balance. Now with the financial highlights.

Our fiscal year '19 first quarter revenue of 60.5 million represents a sequential decline of $2 million versus Q4 2018 attributable primarily to lower North American revenue partially offset by increases in international revenue.

From a year-over-year comparison, we saw 7.7% improvement compared to the first quarter of fiscal year '18, and as Mike mentioned, a historically stronger start to the fiscal year in comparison to the past few years.

Both GAAP and non-GAAP gross margins were 29.6% for the fiscal 2019 first quarter as compared to GAAP and non-GAAP gross margins of 30.8% for the comparable fiscal 2018 period, as previously noted, due to a lower concentration of revenue from North America.

Our non-GAAP total operating expenses, excluding restructuring and share-based compensation, were slightly higher in the comparable fiscal 2018 period. The increases were within our expectations and consistent with our commitment to support growth activities in key functions.

Our non-GAAP operating loss of $400,000 was relatively flat year-over-year as was our adjusted EBITDA of $900,000. As noted in the press release, we consumed $9 million of cash during the quarter.

One of the primary drivers of this cash use or roughly half was related to timing issues with a few of our larger customers in the Middle East and Africa for which most of those delayed payments have now been received.

The other driver, as I mentioned earlier regarding linearity, is related to continued growth of our large project business, mainly in North America. If you look at our numbers over the past year, you will see this reflected by growth in our unbilled receivables balance which continued in Q1. These are great projects for us.

They are profitable and generate cash, but they also demand higher upfront working capital often in an uneven fashion as we execute the delivery.

Looking forward throughout the balance of the year and as I mentioned earlier, we expect cash performance to improve as we achieve milestones and completions on several large projects that are in the later stages of implementation. From a full year perspective, we had anticipated an increase of 10% to 15% to our cash position.

We still expect to increase our cash balance on a full fiscal year basis even with the business dynamics on linearity and expected growth in our large project portfolio, although some variation is expected. Moving on to the next highlight. An accounting change from ASC 605 to 606.

Effective the first day of our fiscal 2019 first quarter, we successfully adopted the new ASC 606 revenue recognition standard. We apply the new standard prospectively so there is no impact to our prior year’s financial statements.

The new guidance has a significant impact among other things on the timing of our revenue recognition on equipment shipments, especially related to our two largest customers in Africa and Asia.

With the adoption of this new standard, we previously said that there would be approximately $17 million to $19 million from our revenue backlog as of fiscal 2018 year-end that will never be recognized as future revenue under ASC 606.

Additionally, the net earnings associated with that revenue which we estimate it to be $5 million to $6 million was a benefit to our opening accumulated deficit and that under the old standard would have otherwise flowed through the P&L during FY '19 and beyond.

Our actual loss revenue and impact to accumulated deficit remained within the range we previously disclosed as reflected in our Q1 opening balance. We believe the change to ASC 606 more accurately reflects the operating profile of our business, and I’ll be happy to address any questions related to the impact of ASC 606 during the Q&A.

For further detail on the impact of ASC 606 on our Q1 2019 financial results, please refer to our Form 10-Q to be filed tomorrow. Moving to the balance sheet. Our cash collection cycle is 70 days overall compared to 64 days sequentially.

Our net accounts receivable increased to $50.9 million or $7.8 million on a sequential basis which also impacted our DSOs moving to 77 days compared to 63 days in the prior quarter.

Including unbilled receivables, our DSOs moved higher to 120 days from 83 days in the prior quarter but we expect continued improvement throughout the remainder of the year.

Accounts payable of 33.3 million is up $2.4 million sequentially and our inventory position incorporating the effects of the accounting change is $8.7 million versus $21.3 million in the prior quarter. Inventory turns increased to 17 versus 6.9 in Q4 fiscal year '18.

I want to reiterate that the balance sheet changes are within our expectations due to the accounting change impact. Furthermore, as we move forward in fiscal year '19, it will be easier to compare our performance using the new standard.

In closing, I want to reemphasize my excitement and confidence as we continue to drive the many opportunities for growth and improvement in Aviat. As mentioned on our last call, we firmly believe our valuation relative to our peers is very low, especially when considering fiscal year 2018 results and our fiscal 2019 outlook and results to date.

So we're going to be more proactive in telling the Aviat story. I’ll turn the call back over to Mike now. And again, I look forward to speaking with you in the coming quarters especially as we continue to be active on the Investor Relations front.

Mike?.

Thanks, Stan. As we have discussed, we expect a much stronger second quarter and to finish the first half largely in line with our initial expectations. For our second quarter guidance, we anticipate revenues to be within the range of 61 million to 65 million and gross margins to improve into the mid-30s.

Operating expenses are expected to be marginally higher driven by variable costs. Non-GAAP operating income is expected to be in the range of approximately 2.5 million to 3.5 million and adjusted EBITDA somewhere between 3.5 million to 4.5 million.

We expect an improvement in our cash position from the first quarter of approximately 3 million to 5 million. For the 2019 fiscal year, we’re anticipating revenues to be in the range of 250 million to 260 million representing year-over-year growth of approximately 4% to 7%. Non-GAAP gross margins are expected to be 32% to 33%.

Operating expenses are expected to be in the range of 75 million to 77 million. The modest year-over-year increase is based primarily on the company’s focus on allocating investment dollars towards growth and product development activities.

At the midpoint of the ranges provided, this will result in non-GAAP operating income of approximately 7 million, in line with our prior expectations and adjusted EBITDA of approximately 12.5 million.

And as Stan noted, we also anticipate improvements in working capital and balance sheet metrics and expect to finish the year with an improved cash position. And as we normally do, we’ll provide updates as the year progresses. So in summary, we continue to be on the right track notwithstanding our first quarter.

Our competitive position continues to strengthen and we see multiple opportunities for growth. We will continue to invest in advancing our product platform which has enabled us to grow the top line and expand our customer footprint.

The value creation opportunity continues to expand for us and our shareholders and as a result, we believe the company’s upside value is even greater. We are now ready to open the call for questions.

Operator?.

[Operator Instructions]. Your first question comes from Pete Prakash from Bethesda Investment [ph]. Your line is open..

Hi. I appreciate you taking the call. You answered the first part of the question regarding linearity on the gross margins going up and down. Can you guys talk about, I think over the past year we have heard about some tailwinds with 5G and some of these growth drivers.

When do we expect to kind of get out of this narrow range of revenue on a quarterly basis and start seeing that uptick in growth materialize in the results? Can you just talk about even broadly beyond the current year?.

Yes, I think we’re already starting to see a number of proposals that you need to be 5G ready with respect to the requirements from a backhaul perspective. And we are seeing an increasing number of opportunities relative to both existing and new customers.

As we look at the profile for now and the balance of the year, we expect to see very strong bookings activity as we look at the quarters outwards, and we do anticipate a much stronger revenue or a stronger revenue in the second half relative to the first.

And of course with that momentum in place, I would expect that to continue into the next fiscal year..

Got it. Thank you for that. And then just another question on the share repurchase program.

Any update on that in terms of activity in the past quarter?.

Sure. Let me answer that. This is Stan. So we repurchased 23,579 shares at a weighted average price of $16.55 for about $390,000 last quarter..

Got it. I’ll cede the floor..

Thank you..

Your next question comes from the line of Tim Savageaux of Northland Capital Management. Your line is open..

Hi. Good afternoon. Maybe I could follow up on that 5G question.

If you look – but we’ve seen at least some early indications of strength from suppliers on the base station and IC side that kind of feed into that and whether that’s 5G preparedness or actually 5G is not clear, but I’d love to try and get a better sense of kind of how you see Aviat’s business related to that sort of earlier strength and what kind of timeline you might have? And then within the regions in which you operate, especially on the carrier side, where might you expect to see some of that activity first? And I have a follow up..

Yes, I’m going to ask Shaun to add a few more comments instead of restating what I said earlier, but Shaun if you can give a bit more color..

Yes. I think that we are seeing what we call, I’d say anticipated demand. It comes in the form of how RFPs are presented to us, beginning to reflect capacity requirements for build-outs that could happen in the future.

I’d say at this stage these are not large scale 5G deployments that’s going to come sometime much later, but it’s definitely an area of preparedness..

Yes and just something just to make a comment on some of the markets we’re addressing. We’re seeing a significant uptick in our business, as an example with Globe in the Philippines based on LTE coverage.

So again, as we look at some of the markets that we’re addressing, they’re still in the LTE stage of rollout, 5G has even given us another level of momentum beyond that as an example..

Okay.

And then to follow up, some of those same large base station providers who are actually your competitors on the microwave side, although you wouldn’t know it based on things like recent Capital Markets Days and whatnot where neither microwave nor backhaul got a lot of publicity, but if you can maybe update us on the kind of competitive environment you’re seeing amongst some of the bigger players and if there are any other kind of more point-focused providers in the competitive environment?.

Yes, I can’t – I would say that the competitive landscape continues to be a challenging one, and it always has been and no one expects it to be easier.

Having said that, a lot of those large accounts that we’re occupying a position as a supplier, most of those accounts actually has what we call a generalist or a large player as the other player in the account, and we’re doing a fantastic job of maintaining, in fact growing our position in several of these accounts.

And we would expect that to continue. Being a specialist puts us in a position where we can provide the latest technology and also our skill sets related to support in services and logistics continue to separate us from the pack. So we expect our position in those accounts to continue to grow..

Okay. And last question from me. You mentioned some significant statewide opportunities over on the enterprise side and you actually quantified some of your business that you won on the utilities side.

I wonder if you can perhaps size some of those opportunities maybe relative to what you’re seeing to date in utilities or any other metric you’d care to provide..

Yes, I think the utilities release that we put out has some sizable business associated with some of the larger awards there. The one deal that I was referencing with respect to being towards the tail end of negotiations, and I categorize that as one of our larger opportunities.

When I used the word larger, it’s likely to be in excess of $10 million, let’s just put it kind of at that level for now, which we’re excited about. And the larger the state, obviously then the more impact it would have on the volume.

But those state awards usually are larger in size, and it can also take more than a year to consume with respect to deployments as we’ve seen in the past with larger awards from the state of Colorado and the state of Nevada which both of those awards were double-digit awards..

Great. Thanks. I’ll pass it on..

Thank you..

Your next question comes from the line of Alex Henderson of Needham. Your line is open..

Hi, guys..

Hi..

I was hoping you could talk a little bit about the macro conditions in the emerging markets as a result of the combination of the strong dollar and recent sharp weakness in oil prices? I was wondering if you had any concerns about some of the geographies you’re competing in being tied to those trends and a way that might soften your business.

What level of oil prices might we be concerned about, for instance the African business hitting a way or something of that sort, any risks along those lines?.

Obviously, we’ve been monitoring the situation with respect to Africa along a number of different areas, not just the oil prices. The currency, we’ve obviously had some other challenges within that region to some respect.

And we’ve been – I would say I’ve been pleasantly surprised that the level of business activity that we’ve been seeing and that we continue to see looks very promising. In fact, as we just stated, we actually saw some increase in our business in Africa particularly from some of our smaller accounts.

We’re being a bit more prudent in terms of the guidance we provided for the year as it relates to some of this activity in these markets. But at this point in time I would say the major impact that we’ve seen has been in the area of payments where some of these large customers has taken a little bit more time relative to converting the U.S.

dollars, et cetera. But we are getting paid and we continue to see promise in this part of the world, in the Africa region as well as some of the others that are emerging markets at this point..

Conversely, it seems pretty clear that there’s some of the majors that have been in the rand space you’re seeing a situation where they’re less and less competitive, some of the Japanese players in particular but also I would think Huawei having some challenges around security concerns.

Has that opened up any new accounts or new business opportunities as a result of those players becoming weaker?.

There’s a number of instances actually where in some of these large accounts where we’re providing the microwave for backhaul and one of the large rand players is actually not doing anything in microwave. So from that perspective it looks like we have a very solid situation there.

So, again, I don’t really anticipate anything major there and major changes..

Great. Thanks..

You’re welcome..

Thanks..

Your next question comes from the line of Mark Spiegel of Stanphyl Capital. Your line is open..

My questions have been answered. Thank you..

Your next question comes from the line of Michael Staiger of Odeon Capital. Your line is open..

Hi, guys. Thanks for taking my questions.

You mentioned something to the effect of you’re looking at new markets and just kind of curious because if your forward business in 5G is going to expand, do you have enough time, effort, energy, resources to pursue some of these other markets within the timeframe of 2019 guidance?.

Yes, so when we’re talking about – in many cases when we talk about other markets, a lot of it has to do with our ability to do more for our existing customers. And actually if you take a look at markets like Africa and you take a look at the number of companies that actually have a significant supply in a market like that, you’ll find many.

In fact, if you’d look at the optical side, as an example, you’ll find many that don’t do any business in Africa because it’s not easy to just set up camp there and get rolling. So the fact that we’ve been there for many, many years puts us in a position where we can do more for the seat that we already occupy.

At the same time when it comes to a brand new geography with a brand new customer, we are being selective in our focus there and normally it’s when the operator is actually requesting us to get involved and that’s another example.

And then finally when you take a look at North America as a market, we’ve been focused very much on the larger players at least in relation to the service provider side, including the markets like the WISPs and now we believe that we have the right products with the right approach to be able to address those market opportunities as well..

Great. Thanks..

Your next question comes from the line of Pete Prakash of Bethesda Investment. Your line is open..

Hi. Thanks for the chance for a follow up. I just want to piggyback the question on competitive landscape a little bit related to market share.

If you could just kind of in a brief fashion just talk about the markets you currently serve, are you in a net gain perspective kind of status quo that you’re just building upon existing or do you see deterioration in that? Can you just kind of categorize your situation maybe overall and then the pockets of either strength either in the backhaul space versus public sector, private safety if there’s a distinction there? But it’d just be kind of nice to know – I know one of your competitors talks about slowly gaining share.

Are you guys the result of that or are you guys immune to that or are you guys one of the ones that are participating in that?.

Yes, so first off as we look at the markets that we’re addressing, our position in those markets are strengthening. So when we consider our share position, many times we’re considering it in light of the markets that we’re actually actively addressing. For example, we’re not participating in the Indian market at this point in time.

So any activity that goes on there, we wouldn’t be monitoring per se from that perspective. But right now in the markets that we’re addressing, our positions have strengthened, including areas like private networks in North America where we are winning several accounts where there has been an incumbent in those accounts.

And the accounts that were the incumbent, we’re doing a great job of protecting that installed base. So that’s how we look at our market share position, including the service providers in the U.S. where we’re maintaining our position. And to the extent that we add a new market, we would look at that as share gain as well..

Got it. That is helpful. And then just a follow up in terms of just overall value. You guys referenced the fact that your stock is undervalued. I think there was a period of time when you guys catapulted from like low-single digits or mid-single digits to over 20 for a period of time, that’s kind of stabilized, gone back and forth.

It feels like it wants to break out but it’s just having a hard time.

When you guys think of shareholder value and just kind of your goals aligning those two together, can you just talk about the inflexion point on where you think that that’s going to happen? I know the share repurchase is a good step, the liquidity and getting the volume up is another thing you guys are active there.

Can you just talk about from a fundamental perspective kind of how you see that as you position it to shareholders, what they should expect to see in terms of where they kind of get out of that little tight range?.

Yes, so I think there’s a few things there. I think last year we demonstrated that we could at least maintain our top line even though we had modest growth. It was actually a direction that was in the right direction.

And I think as it relates to our top line, obviously we’d like to show and demonstrate that the top line does have growth in the low to mid-single digits as we’re anticipating.

I think our gross margins as we think about our gross margins, a lot of the additional growth that we’re generating is in some of these international markets where the competitive landscape does not translate into a similar margin as we would see in North America.

So to some extent growth as it relates to international has some dilution effect on that gross margin but we’re doing a great job of maintaining it at a level that is then above the 30s for the most part consistently. And if you’d look back in the history of the company, that in itself is very positive.

But the reality when you take a look at the picture assuming growth, we’ve been able to demonstrate and we’ll continue to demonstrate that we’re seeing improvement in our bottom line whether it’s operating income or whether it’s adjusted EBITDA. And if you take a look at our 12-month trailing results, roughly around $10 million of adjusted EBITDA.

You take a look at the multiples associated with that, pretty low. And then we anticipate, as we’ve stated, somewhere around 12.5 million using the midpoints for this year and that’s a 25% bottom line growth. Then we continue to see the bottom line moving forward in a similar year-over-year improvement.

To the extent that we can get our revenue at a higher growth level, obviously the impact on the leverage effect that that has is significant to us because we don’t anticipate to see our OpEx grow much more in line with what we’re currently spending because there’s still opportunities for us to improve expense in certain areas and to allocate more into the growth-related areas..

Got it. Thank you. That’s helpful. I appreciate it..

You’re welcome..

[Operator Instructions]. Your next question comes from the line of Tim Savageaux of Northland Capital Management. Your line is open..

Hi. Thanks for the follow up. A couple of questions. You got a range of either net new or refreshed products here coming to market. You’ve mentioned a few of them in terms of driving some growth.

Are there any metrics you can give around kind of new product revenue either in terms of percent of total revenue or any growth metrics to help us get a better sense of the impact of those new products? You mentioned overall growth in kind of low to mid-single digits.

But what sort of activity are you seeing on the new product front?.

Yes, so all I can provide for you now is that our new products have led to some of the improvements that we’ve seen in two of the new operators in Asia, as an example. Also, the activity that we’re seeing around preparedness for 5G in these RFPs, our new product set, fits very nicely into those requirements.

And we anticipate with our roadmap and our investments in the millimeter-wave side that that will continue to strengthen. Beyond that, we’ll take your thoughts into consideration as we look at our business moving forward and provide more on the metrics or the color as it makes sense to..

Great. And last one from me. I think you’ve mentioned the optical transport space a couple of times in various contexts. Obviously that’s an alternative from the microwave standpoint, but a potential area of partnership or collaboration for Aviat.

I wonder if you can kind of dig down a little bit on what context you’re looking at the adjacent spaces like that..

Yes, so we’re working already with a select player in this space around some of our segments in terms of collaborating.

Obviously, if you’ve got a customer that has different products from the optical as well as the microwave side, having common management system and looking at things similarly and making sure of the interoperatability there, those are all attributes that can enhance the overall value.

But as I mentioned earlier, we do have a unique position in several geographies that represent tremendous growth opportunities on the optical front. We have end-to-end service capabilities. We have logistics capabilities. We have warehousing capabilities that put us in a position to be able to do more.

Obviously, we wouldn’t expect to see the same margins associated with that part of our business, but that could represent some nice growth for us and that’s the areas we’re looking at.

And in order for us to be doing a great job for our customers, having a collaboration or relationship that had some integration on the product management side would be helpful and that’s what we’re working on..

Okay. Really last one I promise this time.

Is that something you think you can contribute this year from a revenue standpoint?.

The guidance I gave for this year would have little to any of that associated with it at this point in time. What type of timeframe to get something like that up and running for it to be material? It’s difficult to say, but we’ll provide updates on that as we move forward..

Great. Thanks..

Your next question comes from the line of Alex Henderson of Needham. Your line is open..

Yes. Two questions I forgot to ask. The first one is, is there any opportunity for you guys to get involved with the FirstNet deployment which seems like a natural for you guys? And the second one is, obviously Sprint and T-Mobile merger creates some opportunity but also some challenges. DragonWave had been a big player in both of those networks.

It’s now pretty much defunct.

Is there any opportunity for you to participate in them? And when would you think their spending might recover?.

Yes, so we’re a key provider onto the T-Mobile side and our relationship there with T-Mobile actually started out with us getting in as a result of them looking for another alternative, a supplier. And we have been very focused on maintaining a strong position in that account.

And I would expect that when mergers do happen if they happen, if you’ve been an excellent supplier and you got the right technology that should put you into a position where you can see increased value upon a combination and that’s where we see ourselves playing to the extent that that happens, because we have not been a supplier into the Sprint side.

That question related to the consolidation, Shaun if you can provide --.

Before you get off of that, when do you think that the spending might loosen up there? And are you assuming anything in your forecast for it?.

We’re not building anything in relative to the Sprint side of the equation, but we’ve seen steady business with the other provider and we anticipate that to continue..

Good. That helps. Thanks.

Any sense of when they might loosen up post merger?.

Again, we haven’t seen it. The concept you’re raising of being tight as it relates to the one provider, we haven’t seen any. This is regular business for us and we continue to see that going forward..

Okay. Thanks..

Okay. Shaun on the FirstNet question..

Yes, I think there will come a time when we will have a lot of value to that conversation in terms of how coverage gets to be way more extensive across the space that AT&T will cover and provide for FirstNet. In terms of direct spending on the infrastructure, at this time there’s not much to say.

But I think over the long run we would expect to see some opportunities there..

Okay. Thank you..

There are no more questions over the phone lines at this time. I’d turn the call back over to the presenters..

Great. Thank you for your participation today and we look forward to meeting with you. And we’ll be out on the road getting in front of investors in the next quarter and look forward to continuing to provide updates on Aviat Networks. Thank you for your time..

This concludes today’s conference call. You may now disconnect..