One of the strongest: a company’s legacy is measured by its impact on the world, not its financial returns.

“Making a profit is the lifeblood of a business,” he told me in Las Vegas, backstage at the Great Place to Work For All Summit. “But the success of the business is not just measured in how much money you make — it’s in the impact that you make.”

Burke said he couldn’t speak for other companies, since he’s “been playing for the same team for 42 years,” but when he looks out at corporate America, he said, “there’s been a decay in the purpose of companies over the last 25 years.” And then he got historically minded. “If you go back, an economist once said that making a profit is the only responsibility of a company … and that’s not Trek.”

(The actual quote was published in a New York Times op-ed in 1970 as the great University of Chicago economist Milton Friedman wrote: “There is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”)

Just consider, Burke said, what Trek has done for women’s cycling.

The women’s cycling moment

In 2018, he recalled, someone walked into his office and told him how women’s professional cycling teams were actually treated: flown in the night before races, competing on secondhand bikes, earning almost nothing. Burke vowed to add a full-scale women’s team from that day onward.

From that day onward, Burke said, Trek treated its women athletes the same as its men — same bikes, same resources, same investment. The team won nearly everything for three years running. And then, Burke said, something bigger happened: every other major team in professional cycling followed suit. “No Trek, no change in women’s cycling,” he said flatly. “Milton Friedman wouldn’t have approved that decision. If he was on the board, he would not have approved it.”

It’s the kind of story Burke returns to when people ask what Trek’s 50th anniversary is really about. The company is marking the occasion with a coffee-table book cataloging 50 ways it has changed the world and a 43-minute documentary premiering June 18 at the Orpheum Theatre in Madison, Wisconsin, with author Jim Collins in attendance. “What I’m most proud of at Trek is how we’ve changed the world, not what the financial results have been. When I’m gone, I don’t think anyone’s gonna make note of that.”

Riding through the bust

Trek’s current headwinds are real. After a COVID-era demand explosion that strained supply chains and pushed bikes off shelves faster than they could be built, the market reversed sharply — and Trek has been working through excess inventory and restructuring pressure ever since. The company, which generates roughly $2 billion in annual revenue and employs more than 5,000 people globally, has faced layoffs and product line reductions as it recalibrates.

But even in the downturn, Trek has been rapidly moving up the Fortune 100 Best Companies to Work For list — No. 42 in 2026, up from its first appearance at No. 94 in 2023. (It was actually No. 4 on the best places to work in retail.)

Burke said he sees the two things as connected rather than contradictory. The survey, he told Great Place to Work CEO Michael C. Bush, “is the centerpiece of how we run HR.” And the best time to take its temperature, he argued, is when things aren’t going well.

Gen Z doesn’t exist

Burke’s contrarianism extends well beyond corporate purpose. When asked what advice he would give to Gen Z workers, he nearly exploded. Burke is a no-nonsense Midwesterner, and he insisted that work has always been work, just like when he got his first job, diving ponds at a Wisconsin golf course to pick balls up off the soggy bottom.

“There’s no such thing as Gen Z,” he told me. “All this generational stuff is overblown. If you go back and study the last 100 years of what’s made successful people, it’s all the same.” He recalled being in Germany in the late 1980s as the Berlin Wall fell, listening to older Germans lament that the younger generation was lazy. “That’s what they’re saying today in America, is Gen Z doesn’t work. It’s like, that’s true. People want to be successful at work.”

“Every generation has probably had its quirks,” he allowed, but people have always had to work hard to get ahead, and that has never changed. “That doesn’t work today and it didn’t work 20 years ago. It didn’t work 50 years ago.”

A late convert to AI

On artificial intelligence, Burke said he arrived late — but he’s convinced it’s not hype. For most of the past few years, it felt abstract. His IT director kept telling him something big was coming, but the tangible applications weren’t obvious. Then, about six months ago, something clicked.

“Holy shit,” is how Burke describes the moment. “Look at what can actually be done.”

He said he thinks AI’s adoption curve will make the internet and the iPhone look gradual. “The internet affected business like this,” he said, gesturing slowly. “The iPhone, maybe a little steeper.” Then his hand shot up. “AI — I don’t know if society’s ready. But we’re going to find out, because it’s unleashed. And you’re going to know here pretty quick.”

Trek, by Burke’s own accounting, is not ready. He placed the company at 13 out of 100 for AI readiness relative to its peers, but his eyes bugged out when I told him that didn’t sound like a good rating. “Thirteen is good! It’s a great rating,” Burke said. “One of the things we do best as a company is take a concept and spread it throughout the company.” He said he’s tried to build a culture at Trek that “confronts the brutal facts,” moves fast, and always seeks to learn. When people tell him he’s wrong, he said, he gets curious. “I’m more interested in how we improve. I’m not interested in proving that we’re right.”

Burke said his office has two massive whiteboards and he spends his day framing puzzles for himself and his staff, “and getting the smartest people in the company to solve the puzzles. That’s how I spend my time.”

The phone is the problem

Burke’s embrace of AI exists in sharp tension with a deep, personal hostility toward smartphones. His conversion on that front came from an unlikely source: a chance meeting with Dr. Richard Davidson, the University of Wisconsin-Madison neuroscientist and founder of the Healthy Minds Center, who has spent decades studying mental health and the meaning of happiness. Burke said he was ashamed because he tried to postpone the meeting, thinking he was too busy. His assistant overruled him. “She goes, ‘You know, that meeting with Dr. Richie is Wednesday, and you will be there.’”

As he got to know Davidson, he learned of a remarkable life story: graduating from high school at 14, then NYU at 16, then a PhD from Harvard by 21 years old, and a later meeting with the Dalai Lama, who told him, “Richie, your mission in life is to bring joy to the world.”

“Now I’m kind of slithering under the table as I blew this guy off,” Burke told me in his typically blunt fashion. But he had a question for Davidson: he asked where mental health in America stood today, on a scale of 100, relative to 1984. Davidson’s answer: 23, down from 100 in 1984. “It’s in the toilet. Unbelievable.” The culprit, Davidson said, was the phone.

Consider the Masters golf tournament, Burke said, one of the last major public events where phones are banned from the grounds. “What’s everybody doing? They have a smile on their face. Nobody’s trying to take a picture of somebody else. No selfies. They’re talking to each other.” He estimated the happiness level is three times what it is at a comparable phone-permitted event. “It’s the greatest experiment in the world.”

‘We’ve Pissed Off Just About Everybody’

Burke is not a politician and does not want to be one. He served on the President’s Council on Physical Fitness under George W. Bush and has written three books about American civic life, but describes himself as neither Republican nor Democrat. What he is, unmistakably, is frustrated.

The $39 trillion national debt strikes him as a moral failure as much as a fiscal one. “Somebody’s all proud they just came out with a $1.5 trillion defense budget,” he said. “You shouldn’t be proud. You should be embarrassed. We can’t afford a $1.5 trillion [budget]. Why not make it two-and-a-half [trillion dollars]? Well, you can’t make it two-and-a-half because you can’t afford it … the answer is no. We’re 5% of the world’s population, and we spend 38% of the world’s defense dollars. It makes no sense.”

On trade and geopolitics, Burke was equally unsparing. Trek manufactures globally and has navigated years of tariff disruptions, but it framed America’s current isolation as something deeper than a supply chain headache. “To accomplish things in life, you need to have friends. To accomplish things as a country, you need to have friends. And we’ve pissed off just about everybody.” He ticked through the list: Canada, Europe, Japan, South Korea, Australia. “I can’t tell you why we’re pissed off at Canada,” he said. “I genuinely cannot tell you.”

The root problem, in his view, is a leadership class that has confused self-preservation with public service. “We elect leaders whose primary motivation is not the success of the United States — it’s to perpetuate their own jobs. And it’s embarrassing. It is absolutely embarrassing.”

52 books, 1,100 lessons

Burke said he reads 52 books a year, almost exclusively nonfiction. His reading system, refined over the past four years, is rigorous. He reads the first sentence of every paragraph. If it grabs him, he reads the rest. If it doesn’t, he moves on. “I’ve never read a bad sentence to start a paragraph which turns into a good paragraph,” he said. “Doesn’t happen.” (While this might imply that he’s a skimmer or speed reader, this method suggests that he starts roughly 100 books a year, and only finished around 50.)

When he finishes a book, he goes back through his underlines and enters only the lessons he wants to carry for the rest of his life into a personal spreadsheet — now more than 1,100 entries deep. The system was inspired by Jim Collins, who visited Trek in 2018 and suggested writing down one lesson per book. Burke took it further. The impetus was a bike ride with his wife, during which she asked him to summarize the lessons from one of his favorite books, Simon Sinek’s The Infinite Game. His answer, he recalled, was “lame. Really bad retention.” He went home, reread the book, underlined it, and built the spreadsheet.

Current reading: The Algorithm, about a former Elon Musk lieutenant now on the board of General Motors, focused on simplification and speed — themes Burke is applying directly to Trek’s supply chain overhaul, which benchmarks Toyota and aims to triple the company’s operational efficiency score by 2028.

Still learning, still moving

For all his impatience with American institutions — corporate, political, technological — Burke’s worldview is ultimately an optimistic one, grounded less in ideology than in a belief that self-improvement is always available to anyone willing to do the work.

At Trek, he said, the lesson applies to the company as much as any individual in it: focus on what you can control, confront the brutal facts, and keep moving. “85% of the opportunities in the business,” he said, citing The Founder’s Mentality, “are within their four walls. And sometimes you get a lot of people who want to look out the window instead of looking in the mirror, 85% of the opportunities in the business are looking in the mirror.”

Date

Monday, May 4, 2026 at 5 p.m. ET

Call participants

• President and Chief Executive Officer — Peter Smith
• Chief Financial Officer — Andrew Schmidt
• Chief Accounting Officer — Jonanna Mikulenka

Takeaways

• Total revenue — $100.0 million, reflecting a decline from $112.6 million in the prior year period, with management citing $9 million in project pushouts and demand shifts at several Tier 1 customers due to the Middle East conflict.
• Gross margin — 29.3% GAAP and 29.4% non-GAAP, both below last year’s 34.9% and 35.8%, respectively, attributed to volume, regional, and product mix factors.
• Adjusted EBITDA — $4.4 million (4.4% of revenue), down from the previous year’s level, with margin declines linked primarily to the aforementioned third-quarter revenue timing and mix challenges.
• Non-GAAP EPS — $0.06, indicating positive earnings on an adjusted basis, while GAAP loss per share was $0.16.
• Operating income — $0.9 million GAAP and $3 million non-GAAP, down from $9.3 million GAAP and $13 million non-GAAP in the prior year, as reported by Schmidt.
• Inventory reduction — Sequential decline of $4.0 million in inventories, contributing to working capital normalization.
• Book-to-bill ratio — Maintained above 1.0 on a trailing twelve-month basis, according to Smith.
• Cash and debt — $78.1 million in cash and marketable securities, $104.3 million in outstanding debt, resulting in net debt of $26.1 million.
• Regional revenue mix — North America contributed 46.2% ($46.2 million) and international segments 53.8% ($53.8 million) of total revenue this quarter.
• Utility segment — Now nearing 10% of total business, with management stating a strong growth pipeline aligned to broader U.S. grid modernization and AI-related demand.
• MDU opportunity — Live deployments underway in more than five markets; Smith stated, “we would be comfortable saying it’s an eight-figure opportunity in fiscal year ’27,” with more precise estimates forthcoming after year end.
• BEAD program positioning — Management anticipates purchase orders tied to the Broadband Equity Access and Deployment (BEAD) program “should begin in mid- to late calendar 2026,” with Aviat’s opportunity dependent on allocation to fixed wireless access, estimated by Aviat as “between 10% and 15%” of awarded funds.
• Aprisa LTE router — Smith described the Aprisa platform and LTE router business as on pace for “over 50% bookings growth this fiscal year,” with initial public safety orders received in the U.S., Europe, and Latin America.
• Expense management — GAAP operating expense reduced to $28.3 million versus $30 million one year ago; non-GAAP operating expense fell to $26.4 million.
• Share repurchases — Approximately 20,000 shares repurchased for $0.5 million during the quarter.
• Fiscal 2026 guidance — Raised to $428 million-$440 million revenue and $35 million-$40 million adjusted EBITDA for the full year.
• NOLs and deferred tax assets — Aviat retains over $450 million in net operating losses, “generating shareholder value via minimal cash tax payments for the foreseeable future.” Schmidt stated, “there is a reasonable possibility that within the next few quarters, we will be able to release a significant portion of the [foreign] valuation allowance,” implying a potential one-time GAAP income uplift.

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Risks

• Smith explicitly stated, “Quarterly results were impacted by the conflict in the Middle East, where we saw certain project pushouts and unfavorable end-of-quarter demand shifts in several Tier 1 customers totaling approximately $9 million in revenue.”
• Peter Smith noted, “The lower adjusted EBITDA margin this period was driven primarily by the unfavorable timing of Q3 revenues previously discussed,” and added that “the challenge is timing related.”
• Smith emphasized continued environment-driven caution in guidance: “we want to not have the difficulty in achieving the expectations we set at the end of the June quarter. So that’s why there’s the range.”
• Freight cost inflation was described by Smith: “in the recently concluded quarter, there was some freight inflation. And going forward, we’ll adjust our freight prices as well.”

Summary

Aviat Networks (AVNW 33.35%) explicitly reported a revenue decline, tying the shortfall to $9 million in project pushouts from Tier 1 customers due to the Middle East conflict. Profitability metrics, including gross margin and adjusted EBITDA, also trended downward, attributed directly to lower volumes and adverse product mix. Management provided clear guidance for the full year, with expectations for revenue between $428 million-$440 million and adjusted EBITDA of $35 million-$40 million, stating normalization is anticipated in the fourth quarter. The call highlighted significant new revenue prospects in multi-dwelling units, U.S. utilities, and public safety, alongside positioning for BEAD program funding, with management indicating these drivers could lead to materially higher revenue in fiscal year 2027. Share repurchases, working capital improvements, and a possible upcoming release of foreign deferred tax allowances were also cited as supportive of longer-term value creation.

• Smith stated Aviat holds a “favored position as the supplier of choice” in MDU deployments, with live projects currently underway and a measurable ramp expected in fiscal 2027.
• Management asserted that North American gross margins remain healthy: “Again, pricing is in good shape. We just have to get back to expected volumes.”
• “Utilities will deploy $1.4 trillion on capital spending plans over the next five years,” Smith referenced, positioning Aviat’s network offerings as essential for grid modernization, substation monitoring, and wildfire detection.
• Forty-six of fifty-six U.S. states and territories have executed final BEAD award agreements; Aviat’s BEAD-related revenue ramp is most likely in calendar 2027, according to direct customer feedback cited by Smith.
• Product introductions, such as bringing the all-indoor radio to international markets and Pasolink radios to North America in fiscal 2027, represent further addressable market expansion exceeding $250 million, per Smith’s remarks.
• Smith confirmed “no more Aviat technical milestones” are required for current MDU projects, with the focus shifting to customer ramp and next-generation product delivery over the next six to nine months.
• Smith described Aviat’s Build America, Buy America credentials and domestic manufacturing footprint as valuable in supporting rural broadband and utility demand, reinforced by recent national policy focus.

Industry glossary

• MDU (Multi-Dwelling Unit): A business segment focused on wireless connectivity solutions for apartment buildings or similar residential complexes, often involving large-scale deployments for Tier 1 service providers.
• BEAD (Broadband Equity Access and Deployment Program): A U.S. federal program allocating funding to expand broadband access, with funds awarded to states and territories for infrastructure buildout, including fixed wireless projects.
• Aprisa: Aviat’s branded platform for LTE routers and software-enabled transmission systems, targeting utilities, public safety, and industrial communications.
• Book-to-bill ratio: The ratio of new customer orders received to units shipped and billed in the same period; values above 1.0 indicate a pipeline that supports future revenue growth.
• NOL (Net operating loss): The accumulated losses from prior periods, which can be used to reduce taxable income in the future, providing ongoing tax benefits.

Full Conference Call Transcript

Pete Smith, Aviat’s President and CEO, who will begin with opening remarks on the company’s fiscal quarter, followed by Andy Schmidt, CFO, to review the financial results for the quarter. Pete will then provide closing remarks on Aviat’s strategy and outlook, followed by a question-and-answer session. Jonanna Mikulenka, Aviat’s Chief Accounting Officer, is also with us on the call. 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 fiscal guidance, financial projections, business drivers, new products and expansions 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 the statements expressed or implied on this call can be found in our most recent filings with the SEC. 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 would like to turn the call over to Aviat’s President and CEO, Pete Smith. Pete?

Peter Smith: Thanks, Andrew, and good afternoon. Let’s review the highlights from the third quarter. Total revenues of $100.0 million, adjusted EBITDA of $4.4 million, non-GAAP EPS of $0.06, lowered inventories by $4.0 million versus the December quarter, maintained a trailing 12-month book-to-bill ratio greater than 1.0. Quarterly results were impacted by the conflict in the Middle East, where we saw certain project pushouts and unfavorable end-of-quarter demand shifts in several Tier 1 customers totaling approximately $9 million in revenue. Now let me talk more about our end markets and key developments.

In the U.S., we see reason for optimism in the quarters ahead as we gain increased visibility on timing of our multi-dwelling unit or MDU opportunity. growing demand from utilities as they invest to meet increased power demand from artificial intelligence build-outs and the nearing arrival of the Broadband Equity Access and Deployment or BEAD program. On the MDU, we have increased confidence in the level of commitment to this project from our Tier 1 customer, and we believe that we have secured a favored position as the supplier of choice. This is translating to increased visibility on timing for the markets we have won and opening the door to additional market areas for deployment.

For the projects in progress, we have installations occurring now and through the rest of Q4. These are still relatively small, and we expect a larger step-up during fiscal 2027. As the Aviat installations progress and we compete for additional markets related to the MDU opportunity, we are seeing more prospects to provide services and other value-added solutions to our Tier 1 customer. Overall, we are feeling better about this opportunity today than at any other previous point and believe we will have meaningful revenue contribution from this project in fiscal year 2027. Further, we have validated our next-generation offering in this area. Should subscriber growth materialize, we anticipate demand for this next-gen product in fiscal year 2028.

Private networks remain Aviat’s largest segment today. And within private networks, utilities are Aviat’s second largest customer group in this segment. Aviat has been strategically focused on growing our presence and offerings with utilities over the last several years with product innovations like our ultra-high-powered 11 gigahertz radio and the 2024 acquisition of 4RF. Even prior to the demand brought on by artificial intelligence and data center build-outs, there was a growing need for increased investment in America’s grid from a modernization and reliability standpoint. Today, the outlook for Aviat and utilities is quite robust. Recent industry reports suggest that utilities will deploy $1.4 trillion on capital spending plans over the next 5 years.

This forecast is up over 20% versus a year ago. Approximately half of this spend will go towards transmission and distribution, where Aviat’s network hardware is critical for smart grid connectivity and management. substation monitoring and security, crew communications and wildfire detection. Power generation has become the primary constraint and a fundamental determinant of growth for artificial intelligence or AI. This build-out of the grid lifts the importance of mission-critical communication and Aviat is well positioned to capture increasing share of demand in this market. The utility segment is approaching 10% of our overall business.

Our funnel of opportunity is strong and the discussions we are having with many of the largest utilities in the U.S. signals that this growth opportunity will remain for several years ahead. Lastly, on the BEAD program, our customers continue to signal that purchase orders related to the program should begin in mid- to late calendar 2026. This is consistent with the message we have told investors for approximately a year now. However, as final approvals are made, the set of opportunities is beginning to take shape. 46 of the 56 states and territories have signed their final award agreement. The total funding for the approved deployment spend to date is approximately $20 billion.

The size of Aviat’s opportunity depends on the allocation of BEAD funds towards fixed wireless access, which in our estimation stands between 10% and 15% of the award dollars. The allocation of funds to wireless has been increasing over time. Feedback from four of our wireless Internet service provider customers who have all won BEAD deployment projects signal that calendar 2027 will likely see the largest ramp purchase orders for Aviat. But we still remain very early in the fund deployment life cycle, and we’ll provide updates as available.

Aviat stands at the ready to assist all of its customers with BEAD opportunities, thanks to its Build America Buy America certifications, our e-commerce Aviat store presence and our leading position in serving rural broadband needs. Apart from these growth drivers, we have invested in our road map. We’ve taken our North American all-indoor radio to international markets. We are also bringing Pasolink radios to North America in early fiscal 2027. Both these represent installed base opportunities for an addressable market of over $250 million. I will now turn the call over to Andy to go through the financial results.

Andrew Schmidt: Thanks, Pete, and good afternoon, everyone. Before going through the financial results, I’d like to briefly introduce Jonanna Mikulenka, who joined Aviat in January as our Chief Accounting Officer. She brings with her over 30 years of accounting experience, including previously serving as Chief Accounting Officer and Corporate Controller at other public companies. She is already making a great impact to the overall Aviat team and will help us to achieve our goals. Welcome, Jonanna. Now I’ll review some of our key fiscal 2026 third quarter results.

Please note that our detailed financials can be found in our press release and all comparisons discussed are between the third quarter of fiscal year 2026 and the third quarter of fiscal year 2025, unless otherwise noted. For the third quarter, we reported total revenues of $100 million as compared to $112.6 million for the same period last year. Revenues for the 9-month period were $318.8 million versus $319.3 million for the year ago 9-month period. North America, which comprised 46.2% of our total revenues for the quarter was $46.2 million. International revenues, which made up 53.8% of total revenues were $53.8 million for the quarter.

On a year-to-date basis, North American revenues were $151.7 million, up by $2.1 million or 1.4% versus the same period last year. International revenues were $167.1 million in the first 9 months of fiscal 2026 as compared to $169.7 million in the first 9 months of fiscal 2025. Gross margins in the third quarter were 29.3% on a GAAP basis and 29.4% on a non-GAAP basis. This compares to 34.9% GAAP and 35.8% non-GAAP in prior year periods. The change in gross margins is primarily due to volume, regional and product mix in the quarter as compared to the year ago period. For the first 9 months of fiscal 2026, gross margins were consistent with the prior year.

Gross margins were 31.7% on a GAAP basis, 32.1% on a non-GAAP basis. This compares to 31.3% GAAP and 32.1% non-GAAP versus the period last year. In regard to operating expense, we continue to work on opportunities to increase process efficiencies to drive down our expense. Third quarter GAAP operating expense were $28.3 million, down versus $30 million in the year ago period. Non-GAAP operating expense, which exclude the impact of restructuring charges, share-based compensation and deal costs, were $26.4 million or $0.8 million lower than the year ago period. Third quarter operating income was $0.9 million on a GAAP basis and $3 million on a non-GAAP basis.

This compares to $9.3 million GAAP and $13 million non-GAAP in the year ago period. For the 9-month period, GAAP operating income was $13.4 million, up $11.7 million versus the first 9 months of last fiscal year. Year-to-date non-GAAP operating income was $20.5 million, up $4.4 million or 27.6% versus the year ago period. The third quarter tax provision was $0.2 million. As a reminder, as of fiscal 2025 year-end, the company has over $450 million of net operating losses or NOLs that will continue to generate shareholder value via minimal cash tax payments for the foreseeable future.

As it relates to the valuation allowance against some of our foreign deferred tax assets, we believe that there is a reasonable possibility that within the next few quarters, we will be able to release a significant portion of the valuation allowance. This is good news for Aviat shareholders. The potential release of the valuation allowance is due to increased and sustained profitability in our international entities, thanks to revenue growth and cost management. Similar to when Aviat released its valuation allowance in the U.S. approximately 5 years ago, this will create a onetime GAAP income benefit to the company in the quarter the release occurs.

While exact timing of this release is uncertain, it is reasonable that it could occur at some point in the next four quarters. Continuing, third quarter GAAP net loss was $2.1 million and non-GAAP net income was a positive $0.7 million, which excludes restructuring charges, share-based compensation, M&A-related and other nonrecurring expenses and noncash — and also the noncash tax provision. Third quarter GAAP loss per share was $0.16 on a fully diluted basis and non-GAAP earnings per share came out at a positive $0.06 on a fully diluted basis. Adjusted EBITDA for the third quarter was $4.4 million or 4.4% of revenues.

For the 9-month year-to-date period, adjusted EBITDA was $24.8 million, an improvement of $2.8 million or 12.5% versus the comparable period last year. The lower adjusted EBITDA margin this period was driven primarily by the unfavorable timing of Q3 revenues previously discussed, which was partially offset by improving operating expense performance. We expect a seasonally strong Q4 revenue, which will drive EBITDA margins back to expected levels. Moving on to the balance sheet. Our cash and marketable securities at the end of the third quarter were $78.1 million. Our outstanding debt was $104.3 million, bringing the net debt position to $26.1 million. Aviat made continued improvements in its balance sheet this quarter.

Unbilled receivables were lowered for the second consecutive quarter. The third quarter balance was $5.4 million lower compared to the fiscal 2026 second quarter ending balance. This brings our total unbilled receivables balance to $85.3 million. When compared against our short- and long-term advanced payments and unearned revenue balance of $77.6 million, the net of the two balances is $7.7 million. We would consider this to be in the normal range of where these two balances would net out. Inventories were also lower sequentially in the quarter by $4 million. Cash in the quarter was partially used to pay down accounts payable, which was lowered by $33.3 million sequentially.

This progress in normalizing working capital strengthens Aviat’s ability to use its balance sheet to further its growth opportunities. Lastly, Aviat repurchased approximately 20,000 shares in the quarter for $0.5 million. With that, I’ll turn it back to Pete for some final comments. Pete?

Peter Smith: Thanks, Andy. I will now provide an update on our fiscal 2026 guidance. Based on our year-to-date results and our current outlook for the fourth quarter, inclusive of the war-induced pushouts, we will continue to address our expense base, and we’ll continue to pursue cost savings initiatives. We’re updating our fiscal 2026 guidance to be full year revenues to be in the range of $428 million to $440 million, full year adjusted EBITDA to be in the range of $35 million to $40 million. Our Q3 challenge started at the beginning of March, and the challenge is timing related.

Despite this temporary setback, we see normalization of demand in Q4 and are highly encouraged by the progress of our growth initiatives and the potential impact on FY ’27. With that, operator, let’s open it up for questions.

Operator: [Operator Instructions] Our first question comes from the line of Jaeson Schmidt of Lake Street.

Jaeson Schmidt: Pete, I just want to start with that $9 million in pushouts. Do you expect to recognize those orders here in Q4?

Peter Smith: So I think some of them — and look, we want to be conservative with respect to — it looks like though there is more conflict today. I would say some of that has already shipped. And we’re just at the in the March time frame, some of the Tier 1s got conservative, and we just want to be careful about potential repeat. So that’s why we guided the way we did. I can definitively say some of that has already shipped in the first 2 weeks of the current quarter.

Jaeson Schmidt: Okay. That’s helpful. And then looking at the MDU opportunity, it definitely sounds like you guys are making great traction there. Can you remind us how we should think about the size of this opportunity?

Peter Smith: Yes. Let me just give a little more flavor. So we have live deployments in more than five markets. All of those markets are open for sale. The size of the opportunity is going to be tied to the all-important number of subscribers that sign up. Early indications are favorable. We see with those deployments an opportunity for additional services and insight and work we would be comfortable saying it’s an 8-figure opportunity in fiscal year ’27. Now the problem with that is 8 figures goes from $10 million to $99 million. I think that’s where we’re comfortable saying $8 million.

And over the next 2 months or 3 months, we think we can be more exacting in how big of that opportunity. It’s the most exciting growth program in Aviat, and we’re totally focused. We’ll say 8 figures for now. And I would say that when we get through our year-end and we incorporate this into FY ’27 guidance, we can be more specific and give you a more narrow range, Jaeson.

Jaeson Schmidt: Okay. That’s fair. And then just last one for me, and I’ll jump back in the queue. Last quarter, you highlighted some nice traction with your LTE router. Just curious where that pipeline is today and what you’ve seen over this past quarter?

Peter Smith: Yes. So our upgrade on the Aprisa LTE router, we feel really good about it. We’re on track for the overall Aprisa business to exceed 50% bookings growth this fiscal year. We’re also starting to attach incremental software and accessories to our product sales. We’re seeing expansion across all segments including utilities, oil and gas, public safety and all geographies with strength in North America and Europe. The police applications are small but growing, and we’ve received initial orders in public safety in the U.S., Europe and Latin America. That was a — the platform for this is a small — it was a small acquisition. So it’s a small base, but it’s growing.

And to put this in context, microwave backhaul is, let’s call it, a slow growth market when something like the Middle East conflict happens, it’s tough, and we really feel our growth program in fixed wireless access around MDU, the Aprisa platform for public safety and utilities. These are the things that are going to permit us in FY ’27 to outgrow the microwave market.

Operator: Our next question comes from the line of Scott Searle of ROTH Capital Partners.

Scott Searle: Pete, maybe just to dive in, in terms of the guidance, it sounds like we had $9 million of pushout, some of which has shipped already into the fourth quarter, but it’s still a pretty wide variance out there of $109 million to around $121 million. I’m wondering if you could give us some of the puts and takes. It sounds like the Mid East continues to be a little bit of a headwind there. But I’m kind of wondering what you see at the higher end of the range and the lower end of the range. And as part of that, the gross margin, it sounds like that starts to recover with some utilization.

But I wonder if you could clarify a little bit more. It sounds like you’re talking about it returning more to normal levels. I just want to clarify, is that 32%, 33% that we should be thinking about? And I had a couple of follow-ups.

Peter Smith: All right. Go ahead.

Andrew Schmidt: Scott, this is Andy. Good to hear from you. I’ll just start with the gross margin part. You’re exactly right. Our year-to-date gross margin, 32% plus. Once we get back to normal volumes, Q4 is our best quarter seasonally. So we expect to have a good Q4. Once we’re back at normal volumes, you’re going to see, again, expected performance in gross margin. And just to reiterate, we — we didn’t see gross margins drop due to price compression, not at all. Again, pricing is in good shape. We just have to get back to expected volumes.

Peter Smith: Okay. And then with the range, so we want to — and let’s say, we have the same end of quarter dynamics where Tier 1s push out and we’re not able to get stuff into the Middle East. And today, in India, they said they had a jet fuel. So we’re hedging on that. So that’s why there’s the range. And just for a company at our scale, it’s harder to deal with these risks, and we want to not have the difficulty in achieving the expectations we set at the end of the June quarter. So that’s why there’s the range.

We — obviously, we want to do as well as we can to be — to deliver on the higher end, but we want to be conservative and acknowledge the environment as it is.

Scott Searle: Maybe a couple of quick follow-ups for Andy, just in terms of the gross margins in terms of how you’re managing memory and incremental freight costs now. So are you still comfortable with maintaining that gross margin outlook given the current pricing environment that we’re seeing there? And maybe a quick follow-up on the balance sheet as well. Small improvements again this quarter. I’m wondering if there’s a longer-term target that you could give us in terms of expected free cash flow that you’d be able to generate in terms of working down DSOs and improving inventory turns?

Andrew Schmidt: Sure. So I’ll start with the gross margin. And to your point, you bring up the usual suspects in terms of, let’s call it, inflationary items. Again, this company works very diligently in terms of offsets to inflationary items. So again, that comes down to negotiating power in terms of commodities, all the way down to utilization, let’s say, in terms of our efficiencies internally. So again, we work diligently in terms of looking for offsets to normal inflation items you might hear from your other coverage universe.

In terms of balance sheet, yes, we still see a lot of greenfield opportunities in terms of addressing both our accounts receivable, accounts receivable and terms of aged accounts are really next on our barometer. We expect unbilled to continue to come down. We have good traction two quarters in a row, which means we’ve cracked the nut in terms of the equation on how to attack that. That’s good. We expect inventories to continue to improve. It all drives basically cash flow that should exceed adjusted EBITDA. So that’s what we’re shooting for. And we see clear daylight in terms of next number of quarters continuing this trend. We don’t expect it to end.

Scott Searle: And if I could just — sorry…

Peter Smith: Well, Scott, did you want the memory and freight stuff or…

Scott Searle: Yes, please.

Peter Smith: So memory in microwave radios is a small part of the BOM. We were in a good inventory position. We could see probably 2 quarters out there being a little bit of inflation. We will work to offset that with respect to price. I would say in the recently concluded quarter, there was some freight inflation. And going forward, we’ll adjust our freight prices as well. So that’s to answer the inflation part of your question. Memory is small.

And then if you want to think about what we see in supply and demand in components, I can imagine a couple of quarters out that trailing edge CPUs enter the dialogue that is occurring with memory, but that hasn’t — does not impact us yet. And we will probably buy ahead on CPUs where the trailing of CPUs where it makes sense.

Scott Searle: And Pete, if I could, two just larger, more macro kind of follow-ups, if you will. Nokia, there have been hearing out there that in terms of their time line and expected divestiture of the wireless transmission business that’s creating some opportunities for other vendors in Europe and elsewhere. I’m wondering what you’re seeing on that front. And also, I’ve gotten some questions as it relates to Nokia’s FWA business being sold to Inseego, how that impacts you? And secondly, just in terms of the MDU opportunity, are there any other technical milestones that you need to hit at this point? Or are we good and we’re just kind of waiting for the MDU customer to start to ramp?

Peter Smith: Yes. There’s no more Aviat technical milestones, right? However, let’s say, in the next 6 months to 9 months, we need to deliver the next-generation project or product configuration, and we’re on track for that. And really, right now, it’s working out our fixed wireless with the customers’ back office and everything else that’s in the overall stack in delivering fixed wireless to apartment buildings. So we feel really good. And we think that our microwave system engineering is really winning the day versus the competition there.

The — with respect to what Nokia announced on Capital Markets Day back in November of 2025, I think the playing field is level between everyone who is listening on the call that, that announcement has happened, and we know very little beyond that. The Inseego purchase of fixed wireless access would suggest that Nokia is executing on the announcement that they made in the back of November, but I don’t have anything further to add with respect to their intent to execute on the microwave portion. And the other part of your question is what is it doing in the competitive landscape? I think I don’t know if and when it will come for sale.

I would say Aviat and Aviat’s competitors are very engaged in developing alternatives should that property be trade or should that property become, let’s say, neglected within the portfolio of Nokia. So I don’t know what’s going to happen with respect to the sale. I do know that we and our competitors are active in terms of trying to make sure that the customer base has microwave solutions.

Operator: [Operator Instructions] Our next question comes from the line of Theodore O’Neill of Litchfield Hills Research.

Theodore O’Neill: Pete, just a follow-up on a previous answer. You mentioned that issue in India was related to jet fuel. And I was wondering, are these issues related to simply you or your customers getting around? Or is it trying to avoid a conflict zone?

Peter Smith: It’s not — it’s trying to move stuff. You need to have jet fuel to move, and that’s — the comment about freight inflation is tied to the construction and supply of jet fuel, and that was a headline I wrote from India. But where does it really show up is it shows up in our freight costs.

Theodore O’Neill: Okay. And my other question is, there was an executive order about the Defense Production Act amended for the grid infrastructure. And I was wondering if that is going to drive some private network business at the utilities. And by extension, if that would also drive some private network business to the AI data centers?

Peter Smith: Okay. I think — yes, so the Defense Product Act, it was recently a presidential executive order to push the modernization of the grid. I don’t believe that, that was for data center or AI. It was just because the country has not focused enough on the core grid and reducing bottlenecks and the grid expansion and resilience. And what we see from that is it didn’t call out microwave or critical communications. But as the modernization push happens, we see an increased ramp in grid builds. Our pipeline of utility opportunities is increasing. And as the utility yard gets bigger, the need to extend the microwave coverage goes up.

Then also in that executive order, there was a focus on national defense and foreign supply risks. We are Build America, Buy America compliant. We’re the only microwave company headquartered in North America. Our utility business is approaching slightly under 10%. So we think that this national focus is going to pay dividends for us going forward.

Operator: I would now like to turn the conference back to Pete Smith for closing remarks. Sir?

Peter Smith: Okay, yes. I’d like to thank everybody for joining. The Middle East conflict was certainly a drag on demand and margins. We are very excited about our growth programs. We feel like they’re on the brink of making meaningful impacts, and we look forward to seeing that particularly in FY ’27. And then finally, we see — we’re coming up to our fiscal year-end, and we look forward to giving you an update on the full year and the path forward for FY ’27 with MDU, with BEAD, with the utility and other Aprisa platforms. Thank you, everyone.

Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.