Good afternoon. My name is Stephanie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Aviat Networks Fiscal 2017 Third Quarter Results Conference Call. [Operator Instructions] Thank you. I would now like to turn the call over to Glenn Wiener. Please go ahead, sir.

Thank you, Stephanie. And welcome to all. I'd like to welcome you all to Aviat Networks' Fiscal 2017 Third Quarter Results Conference Call. We filed our Form 10-Q, issued our press release and posted an updated investor presentation on our website. And all documents can be found in the investor relations section. Joining us, today's call will be Michael Pangia, President and Chief Executive Officer; and Ralph Marimon, our Chief Financial Officer. Both will have prepared remarks, and we will then open up the call for questions. 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 the 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. In addition, during today's call, management will be referencing both GAAP and non-GAAP financial measures. Please refer to our press release and financial tables, which include a GAAP to non-GAAP reconciliation and other supplemental financial information. Our call today is being broadcast live over the Internet, and the webcast will be archived on the investor relations page of our website for those who are unable to join us. I'd like to thank you all for your interest and support of Aviat. And with that, I will now turn the call over to Michael.

Thank you, Glenn. For those who have followed us over the past year or so, you know that our focus has been on strengthening our foundation and getting our company on track to generate consistent and sustainable profitability while building our cash position. The model we employed was based on achieving breakeven when revenue is light. And in periods when revenue is stronger, we would be positioned to add significant profits to the bottom line with minimal impact to our cost structure. We have successfully realigned our organization, invested in process excellence. And after the past 18 months of action, we now have the right model. This is reflected in our fiscal 2017 year-to-date results, as we've generated a $13.7 million improvement in non-GAAP operating income versus the prior year. Also on year-to-date basis, adjusted EBITDA of $6.2 million marks a $13.3 million improvement, and our net cash position has increased by $9.4 million. As for the third quarter, we were again profitable on both a non-GAAP operating and net income basis. And we posted adjusted EBITDA of $2 million. We accomplished this on revenue of $58.7 million, which is just below the guidance we provided last quarter. Our Q3 revenue was impacted by some projects which were pushed out of the quarter to future periods, most of which we anticipate will materialize in the first half of fiscal 2018. Our Q3 book-to-bill was slightly under 1. Similar to my comments regarding revenue, some anticipated bookings were pushed out as well. We expect Q4 bookings to be stronger and for the momentum to carry through into fiscal 2018. As I've mentioned previously, given the longer-term sales cycle of private network deals and the binary rate nature of our Private Networks business, it's better to look at bookings over a longer…

Thanks, Mike. And good afternoon. I'd like to add a few comments regarding our income statement and balance sheet, and then Mike will provide brief closing remarks. With respect to revenue, the delays Mike referenced earlier were predominantly with private network customers in North America. Even with this, our North America revenue grew by $2 million or 7.5% when comparing the third quarters on a year-over-year basis and represented approximately 50% of our total. Additionally, year-to-date revenue in North America was up close to $3 million over the same period in fiscal 2016, and our international was down as anticipated. Product revenue comprised 67% of our mix, and services was 33%. We had one 10%-plus customer in the third quarter. Our gross margins continue to track in line with our guidance at just over 30%. As we continue to grow the Private Networks segment, which is anticipated given our bookings, backlog and funnel, there is some further strengthening in the gross margins as we move through fiscal 2018. We continue to manage our costs diligently. And our OpEx was lower in almost all functions of our business, which is reflected in our results during Q3 and in our outlook moving forward. Non-GAAP operating expenses of $17 million represent a reduction of more than 18% compared to the fiscal third quarter last year and a reduction of 6% sequentially. Some R&D costs initially planned for Q3 will now be in Q4, so you will see a sequential increase, but overall we have taken out additional fixed costs and our run rate is substantially lower than at this time last year. Mike has already highlighted the positive story around profitability, so now I'll move on to our balance sheet. Our cash balance at the end of Q3 stood at approximately $40 million,…

Thanks, Ralph. Fiscal 2017 certainly is a significant improvement from fiscal 2016 from a profitability perspective. Our story moving into fiscal 2018 is about growth, as our foundation is stronger. We can scale up quickly without adding a lot of costs, and we have the potential to generate more meaningful profits. Based on our current backlog, funnel and expected bookings, our financial model for fiscal 2018 will be targeting revenue in the range of $250 million to $280 million, which will represent an approximately year-over-year increase of 2% to 8%. We expect to see continued strength in North America and Private Networks globally, and our ability to achieve the higher end of our range will be contingent on winning some larger projects currently visible in our pipeline. We expect stabilization in our international service provider business, with some possible upside based on a recovery in the underinvested emerging markets. Gross margins should continue to trend upwards. And operating expenses should be relatively flat, with some variability based on the top line. We are well positioned to generate an increase in both operating income and adjusted EBITDA for the next fiscal year. As it relates to strategic alternatives. We've had a number of discussions since our last quarterly call. And we continue to pursue all avenues that will enhance our offering, market position and valuation. That has not changed. We have and may from time to time in the future provide information to interested parties. At this time, however, there is nothing further to report. In closing. We've made significant progress. We're profitable. Our balance sheet is stronger, and we're positioned for growth in the coming fiscal year. Operator, we're now ready to open up the call for questions.

[Operator Instructions] Our first question comes from the line of Orin Hirschman with AIGH Investment.

Orin Hirschman from AIGH. So normally you would not -- I don't think it would be typical for you to give out guidance for the next fiscal year if you're not in backlog that lets you feel so confident in the lower end or mid-range of the next guidance.

Yes, definitely. So my confidence in my growth statements related to fiscal year '18 start with the fact that there's been some pushouts, as we articulated earlier, followed by much higher bookings anticipated in our fourth quarter. We have a very strong backlog with multiple projects that are already slated to go to revenue in fiscal year '18. My funnel is growing and large. And last but not least, I have a number of new products which will have an impact on our next fiscal year.

Okay. In terms of the gross margin range, if you take it to a range of a couple of percentage points, what would you give high, low type of guidance?

So I mean that's I would prefer to say that we do expect further improvements from our current level of 30%. We believe that we should be able to track in excess of that. Again, the improvement that we see is going to be based on product mix, volumes and continued efficiencies that we already see visible in our supply chain. And as I mentioned earlier, we also have some new product introductions, which also can enhance our gross margins further.

Okay. If I look at the spending for the next fiscal year, we talked about Q4 was the tail, it's like take the $18 million to $18.5 million non-GAAP per quarter and just annualize it. Will it vary based on the revenue level, meaning if you hit the high end, then expect to spend $18.5 million on average [ before ], versus if you're somewhere between the $250 million and $280 million that you would spend in the lower end? Does that...

Again, I think that we'll be relatively flat year-over-year somewhere in that range. To the extent that we're at the higher end of the range, you're probably going to see spending being higher than flattish. And to the extent that we're at the lower end of the range, then we'll be managing our spending like we always do to be flat; if not, further opportunities to the extent that we see the top line trending downwards. We're very focused on continuing to generate profitability and increase our performance year-over-year on the bottom line.

At this time, we have no further questions. I would like to turn it back over to management.

Thank you so much. I look forward to speaking to everybody soon. Thanks again for your time.

Thank you. This concludes today's conference. You may now disconnect. Speakers, please hold the line.