What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-02-04 compared with 2024-11-05 · 63 added, 51 removed, 116 unchanged (50% of the section changed)

54 unchanged sentences

The fair value of the consideration transferred at the closing of the NEC Transaction was comprised of (i) cash of $32.2 million, and (ii) the issuance of 736,750 shares or $22.3 million of Company common stock.

Aggregate consideration transferred at closing was approximately $54.5 million, which is subject to certain post-closing adjustments.

The Company estimates additional cash consideration of approximately $19.6 million will be transferred to NEC in the second quarter of fiscal 2025, primarily related to settlement of the post-closing working capital adjustment.

The Company funded the cash portion of the NEC Transaction with Term Loan borrowings under its Credit Facility.

Credit Facility and Debt of the Notes for further information.

Aggregate consideration transferred at closing was approximately $54.5 million, which was subject to certain post-closing adjustments.

In the second quarter of fiscal 2025, the Company transferred consideration of $5.8 million to settle a portion of the post-closing working capital adjustment.

The Company estimates additional cash consideration of approximately $13.2 million will be transferred to NEC, primarily related to settlement of the remaining post-closing working capital adjustment.

Operations Review

The market for mobile backhaul continued to be the Company’s primary addressable market segment globally in the first three months of fiscal 2025.

The market for mobile backhaul continued to be the Company’s primary addressable market segment globally in the first six months of fiscal 2025.

In North America, the Company supported 5G and long-term evolution (“LTE”) deployments of its mobile operator customers, public safety network deployments for state and local governments, and private network implementations for utilities and other customers.

14 unchanged sentences

(1) Africa and the Middle East, (2) Europe, and (3) Latin America and Asia Pacific.

Revenue by region for the three months ended September 27, 2024 and September 29, 2023 and the related changes were as follows:

Three Months Ended

(In thousands, except percentages) September 27, 2024 September 29, 2023 $ Change % Change

Revenue by region for the three and six months ended December 27, 2024 and December 29, 2023 and the related changes were as follows:

Three Months Ended Six Months Ended

(In thousands, except percentages) December 27, 2024 December 29, 2023 $ Change % Change December 27, 2024 December 29, 2023 $ Change % Change

North America $ 57,962 $ 50,615 $ 7,347 14.5 % $ 100,187 $ 105,468 $ (5,281) (5.0) %

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Total revenue $ 118,197 $ 93,692 $ 24,505 26.2 % $ 206,626 $ 180,601 $ 26,025 14.4 %

Revenue in North America decreased by $12.6 million during the first quarter of fiscal 2025 compared with the same period of fiscal 2024 primarily due to lower demand from Tier 1 mobile network operators and timing of certain private network projects.

Revenue in Africa and the Middle East increased by $0.5 million during the first quarter of fiscal 2025 compared with the same period of fiscal 2024 primarily due to spending from mobile network operators in the region.

Revenue in Europe increased by $0.3 million during the first quarter of fiscal 2025 compared with the same period of fiscal 2024 primarily due to increased sales to mobile operators in the region.

Revenue in Latin America and Asia Pacific increased by $13.3 million during the first quarter of fiscal 2025 compared with the same period of fiscal 2024 primarily due to contributions resulting from the NEC Transaction.

Three Months Ended

(In thousands, except percentages) September 27, 2024 September 29, 2023 $ Change % Change

Revenue in North America increased by $7.3 million during the second quarter of fiscal 2025 compared with the same period of fiscal 2024 primarily due to increased volume for private network projects.

Revenue in North America decreased by $5.3 million during the first six months of fiscal 2025 compared with the same period of fiscal 2024, primarily due to lower demand from Tier 1 mobile network operators and timing of certain private network projects, partially offset by contributions from the 4RF transaction.

Revenue in Africa and the Middle East decreased by $1.8 million during the second quarter of fiscal 2025 compared with the same period of fiscal 2024.

Revenue in Africa and the Middle East decreased by $1.3 million during the first six months of fiscal 2025 compared with the same period of fiscal 2024.

The decreases for the second quarter and the first six months of fiscal 2025 were primarily due to continued softness in the capital expenditure plans of large mobile operators in the region.

Revenue in Europe increased by $2.8 million during the second quarter of fiscal 2025 compared with the same period of fiscal 2024.

Revenue in Europe increased by $3.1 million during the first six months of fiscal 2025 compared with the same period of fiscal 2024.

The increases for the second quarter and the first six months of fiscal 2025 were primarily due to increased sales to mobile operators in the region driven by volumes from the NEC transaction.

Revenue in Latin America and Asia Pacific increased by $16.2 million during the second quarter of fiscal 2025 compared with the same period of fiscal 2024.

Revenue in Latin America and Asia Pacific increased by $29.5 million during the first six months of fiscal 2025 compared with the same period of fiscal 2024.

The increases were primarily due to contributions resulting from the NEC transaction and higher volumes of projects with mobile operators.

Three Months Ended Six Months Ended

(In thousands, except percentages) December 27, 2024 December 29, 2023 $ Change % Change December 27, 2024 December 29, 2023 $ Change % Change

Product sales $ 82,312 $ 65,021 $ 17,291 26.6 % $ 143,428 $ 124,566 $ 18,862 15.1 %

1 unchanged sentence

Total revenue $ 118,197 $ 93,692 $ 24,505 26.2 % $ 206,626 $ 180,601 $ 26,025 14.4 %

Revenue from product sales increased by 2.6% and revenue from services decreased by 0.2% for the first quarter of fiscal 2025 compared with the same quarter of fiscal 2024 primarily due to the factors discussed above and product sales contribution from the NEC Transaction.

Three Months Ended

(In thousands, except percentages) September 27, 2024 September 29, 2023 $ Change % Change

Revenue from product sales increased by 26.6% and revenue from services increased by 25.2% for the second quarter of fiscal 2025 compared with the same quarter of fiscal 2024.

Revenue from product sales and services increased by 15.1% and 12.8%, respectively for the first six months of fiscal 2025 compared with the same period of fiscal 2024.

The increases were primarily due to the factors discussed above and product sales contribution from the NEC Transaction.

Three Months Ended Six Months Ended

(In thousands, except percentages) December 27, 2024 December 29, 2023 $ Change % Change December 27, 2024 December 29, 2023 $ Change % Change

Revenue $ 118,197 $ 93,692 $ 24,505 26.2 % $ 206,626 $ 180,601 $ 26,025 14.4 %

4 unchanged sentences

Service margin % 37.7 % 28.6 % 38.6 % 28.8 %

Gross margin for the first quarter of fiscal 2025 decreased by $11.4 million compared with the same quarter of fiscal 2024 primarily due to changes in regions and customers and the expected near-term dilution as a result of the NEC Transaction.

Gross margin for the second quarter of fiscal 2025 increased by $4.6 million compared with the same quarter of fiscal 2024 primarily due to sales volume and changes in regions and customers.

Gross margin for the first six months of fiscal

2025 decreased by $6.8 million primarily due to changes in regions and customers and the expected near-term dilution as a result of the NEC Transaction driven from first quarter results.

Research and Development

Three Months Ended

(In thousands, except percentages) September 27, 2024 September 29, 2023 $ Change % Change

Three Months Ended Six Months Ended

(In thousands, except percentages) December 27, 2024 December 29, 2023 $ Change % Change December 27, 2024 December 29, 2023 $ Change % Change

Research and development $ 10,222 $ 8,394 $ 1,828 21.8 % $ 20,630 $ 14,818 $ 5,812 39.2 %

% of revenue 8.6 % 9.0 % 10.0 % 8.2 %

Research and development expenses increased by $4.0 million for the first quarter of fiscal 2025 primarily due to increased product development activities.

Research and development expenses increased by $1.8 million and $5.8 million for the three and six months ended December 27, 2024, respectively, primarily due to development activity related to the NEC transaction.

Selling and Administrative

Three Months Ended

(In thousands, except percentages) September 27, 2024 September 29, 2023 $ Change % Change

Three Months Ended Six Months Ended

(In thousands, except percentages) December 27, 2024 December 29, 2023 $ Change % Change December 27, 2024 December 29, 2023 $ Change % Change

Selling and administrative $ 21,279 $ 22,544 $ (1,265) (5.6) % $ 46,227 $ 41,781 $ 4,446 10.6 %

% of revenue 18.0 % 24.1 % 22.4 % 23.1 %

Selling and administrative expenses increased by $5.7 million for the first quarter of fiscal 2025 compared with the first quarter of fiscal 2024 primarily due to merger and acquisition expenses and additional costs resulting from the NEC Transaction.

Selling and administrative expenses decreased by $1.3 million for the second quarter of fiscal 2025 compared with the second quarter of fiscal 2024 primarily due to lower spending and cost reduction activities.

Selling and administrative expenses increased $4.4 million for the first six months of fiscal 2025 primarily due to merger and acquisition expenses and additional costs resulting from the NEC and 4RF transactions.

Restructuring

Three Months Ended

(In thousands, except percentages) September 27, 2024 September 29, 2023 $ Change % Change

Three Months Ended Six Months Ended

(In thousands, except percentages) December 27, 2024 December 29, 2023 $ Change % Change December 27, 2024 December 29, 2023 $ Change % Change

Restructuring charges $ 1,415 $ 2,000 $ (585) (29.3) % $ 1,415 $ 2,644 $ (1,229) (46.5) %

In the first quarter of fiscal 2025, there were no restructuring charges incurred, compared to $0.6 million in the first quarter of fiscal 2024.

The prior year period includes restructuring charges primarily associated with reductions in workforce to optimize skill sets and align cost structure across the Company.

In the second quarter of fiscal 2025, there were $1.4 million of restructuring charges incurred, primarily associated with reductions in workforce in certain of the Company’s operations to optimize skill sets and align cost structure.

The prior year period includes restructuring charges primarily associated with the NEC Transaction.

The Company’s successfully executed restructuring initiatives have enabled it to restructure specific groups to optimize skill sets and align its organizational structure to execute on strategic deliverables, in addition to aligning cost structure with the core of the business.

Interest Expense, net

Three Months Ended

(In thousands, except percentages) September 27, 2024 September 29, 2023 $ Change % Change

Three Months Ended Six Months Ended

(In thousands, except percentages) December 27, 2024 December 29, 2023 $ Change % Change December 27, 2024 December 29, 2023 $ Change % Change

Interest expense, net $ 1,580 $ 394 $ 1,186 301.0 % $ 2,695 $ 493 $ 2,202 446.7 %

Interest expense, net increased by $1.0 million for the first quarter of fiscal 2025 compared to the first quarter of fiscal 2024 primarily due to interest expense incurred on the Term Loan borrowings used to fund the NEC Transaction in the second quarter of fiscal 2024.

Other Expense, net

Three Months Ended

(In thousands, except percentages) September 27, 2024 September 29, 2023 $ Change % Change

Interest expense, net increased by $1.2 million and $2.2 million for the three and six months ended December 27, 2024, respectively, primarily due to interest expense incurred on incremental Term Loan borrowings compared to the prior year period.

Other Expense, net

Other expense, net decreased by $(0.1) million for the first quarter of fiscal 2025, primarily as a result of foreign exchange rate movement.

Three Months Ended

(In thousands, except percentages) September 27, 2024 September 29, 2023 $ Change % Change

(Loss) income before income taxes $ (17,393) $ 3,989 $ (21,382) (536.0) %

(Benefit from) provision for income taxes $ (5,514) $ 432 $ (5,946) (1,376.4) %

Three Months Ended Six Months Ended

(In thousands, except percentages) December 27, 2024 December 29, 2023 $ Change % Change December 27, 2024 December 29, 2023 $ Change % Change

Other expense (income), net $ 269 $ (637) $ 906 (142.2) % $ 979 $ 165 $ 814 493.3 %

Other expense, net increased by $0.9 million and $0.8 million for the three and six months ended December 27, 2024, respectively, primarily as a result of losses recognized on the extinguishment of debt and foreign exchange rate movement.

Three Months Ended Six Months Ended

(In thousands, except percentages) December 27, 2024 December 29, 2023 $ Change % Change December 27, 2024 December 29, 2023 $ Change % Change

Income (loss) before income taxes $ 6,121 $ 3,632 $ 2,489 68.5 % $ (11,272) $ 7,621 $ (18,893) (247.9) %

Provision for (benefit from) income taxes $ 1,626 $ 1,848 $ (222) (12.0) % $ (3,888) $ 2,280 $ (6,168) (270.5) %

The Company estimates its annual effective tax rate at the end of each quarterly period, and records the tax effect of certain discrete items in the interim period in which they occur, including changes in judgment about uncertain tax positions and deferred tax valuation allowances.

The tax benefit for the first three months of fiscal 2025 was primarily due to tax benefit resulting from year-to-date losses.

The tax expense for the first three months of fiscal 2024 was primarily attributable to tax expense related to U.S.

The tax benefit for the first six months of fiscal 2025 was primarily due to tax benefit resulting from year-to-date losses.

The tax expense for the first six months of fiscal 2024 was primarily attributable to tax expense related to U.S.

and profitable foreign subsidiaries.

1 unchanged sentence

Sources of Cash

As of September 27, 2024, the Company’s total cash and cash equivalents were $51.0 million.

As of December 27, 2024, the Company’s total cash and cash equivalents were $52.6 million.

Approximately $21.6 million was held in the United States.

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Operating cash flows is presented as net (loss) income adjusted for certain non-cash items and changes in operating assets and liabilities.

Net cash (used in) provided by operating activities was $(27.2) million for the first three months of fiscal 2025, compared with $14.0 million in the prior year.

Net cash (used in) provided by operating activities was $(6.4) million for the first six months of fiscal 2025, compared with $6.9 million in the prior year.

The $(13.3) million decrease is primarily attributable to increases in working capital and decreased earnings compared to the prior year.

Investing Activities

Net cash used in investing activities was $21.2 million for the first three months of fiscal 2025, compared to $0.7 million in the prior year.

The $20.5 million increase is primarily due to payments associated with the acquisition of 4RF.

Net cash used in investing activities was $23.5 million for the first six months of fiscal 2025, compared to $33.5 million in the prior year.

The $10.1 million decrease is primarily due to higher acquisition payments in the prior year associated with the NEC Transaction.

Financing Activities

Financing cash flows consist primarily of borrowings and repayments under the Company’s Credit Facility and proceeds from the exercise of employee stock options.

Net cash provided by financing activities was $34.3 million for the first three months of fiscal 2025, compared with $0.2 million in the prior year.

The $34.1 million increase is primarily due to the $35.0 million of borrowings on the Company’s Revolver.

As of September 27, 2024, the Company’s principal sources of liquidity consisted of $51.0 million in cash and cash equivalents, $0.7 million of available credit under its Credit Facility, and future collections of receivables from customers.

On October 18, 2024, the Company amended its Credit Facility which increased the borrowing capacity to $75.0 million for each of the Term Loan and Revolver facilities.

Net cash provided by financing activities was $18.6 million for the first six months of fiscal 2025, compared with $50.3 million in the prior year.

The $(31.7) million decrease is primarily due to reduced Term Loan borrowings compared to the prior year as the prior year period included the $50.0 million of Term Loan borrowings primarily used to fund the NEC Transaction.

As of December 27, 2024, the Company’s principal sources of liquidity consisted of $52.6 million in cash and cash equivalents, $66.7 million of available credit under its Credit Facility, and future collections of receivables from customers.

In the first quarter of fiscal 2025, the Company amended its Credit Facility which increased the borrowing capacity to $75.0 million for each of the Term Loan and Revolver facilities.

The Company regularly requires letters of credit from certain customers, and, from time to time, these letters of credit are discounted without recourse shortly after shipment occurs in order to meet immediate liquidity requirements and to reduce its credit and sovereign risk.

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In addition, the Company believes these sources of liquidity will be sufficient to provide for its anticipated requirements and plans for cash beyond the next 12 months.

The Company borrowed $35.0 million against the Revolver during the first three months of fiscal 2025.

As of September 27, 2024, the Company had $48.8 million outstanding under its Term Loan and $35.0 million outstanding under its Revolver and was in compliance with all financial covenants contained in the Credit Facility.

The Company borrowed and repaid $35.0 million against the Revolver during the first six months of fiscal 2025.

As of December 27, 2024, the Company had $75.0 million outstanding under its Term Loan and no borrowings outstanding under its Revolver and was in compliance with all financial covenants contained in the Credit Facility.

Critical Accounting Estimates

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis