Giga-tronics Incorporated
Q4 2021 Earnings Call Transcript
Published:
- Operator:
- Welcome to the Giga-tronics' Fourth Quarter and Fiscal 2021 yearend results. At this time, all participants are in a listen-only mode. Later, we will conduct a quarter-over-quarter session. Please note that this conference is being recorded. I will now turn the call over to John Regazzi. Sir, you may begin.
- John Regazzi:
- Thank you. Good afternoon, and thank you for joining our fiscal 2021 and fourth quarter earnings call. I'm John Regazzi, the company's CEO, and I'm joined today by Dr. Lutz Henckels, our Executive VP, CFO and Chief Operating Officer. Before we begin, I need to remind everyone that this conference call may include forward-looking statements including statements about future results of operations and margins, future orders, growth and shipments. Actual results may differ significantly due to risks and uncertainties, such as delays with manufacturing and orders for our products and services, receipt or timing of future orders, cancellations or deferrals of existing orders, the company's capital needs, the trading of our common stock and the volatility in the market price of our common stock, results of pending or threatened litigation and general market conditions.
- Lutz Henckels:
- Thank you, John. Welcome to our fourth quarter fiscal 2021 conference call. With the fiscal year ended, I think this is the right time to review our progress and our plans going forward. As you know, we have two businesses, the sole source recurring revenue filter business, which delivered $9.4 million in revenue last fiscal year and the RADAR Electronic Warfare test business, which we expected to double every year, but did not do so last fiscal year. It is this second business that has not performed to our expectations. The question is why and what are we doing about it? Clearly, the pandemic had a major impact on our fiscal 2021 performance, because we could not travel to the military basis. The military bases were closed to any visitors and without entering the secret labs of military basis and discussing the secret -- secret pain points faced by electronic warfare managers, we had trouble getting orders, but that is not the whole story. Standing back and looking at the longer term evolution of our Radar Electronic Warfare test business, we started out in this business several years ago, selling a microwave sub system. Subsystem is very unique, because it is architected like a radar but built as a test system. Early on, the customers saw true value in our unique test system approach but at the same time, we experienced the fact that the market for subsystems is very small and that customers are looking for complete solutions rather than a piece of a solution. That brought us to the second phase of our RADAR Electronic Warfare test business, where we embarked on developing the digital to our microwave subsystem. We architected the front end in such a way that it can easily be adapted to meet specific customer needs. We successfully sold over $10 million of these complete solutions to military labs and to prime contractors, over the past few years. But, we learned that to penetrate this lab market is a slow process because the existing incumbent solutions offer extensive test capabilities with a record of success built over many years. Even at a much lower cost and these noble features that we have, it will take time to displace the incumbent or by cumbersome installations. We are confident we will get there and we are making progress, but it will take time.
- Operator:
- Our first question comes from Walter Bellinger from Loan Town Capital. Your line is now open.
- UnidentifiedAnalyst:
- Hey guys, thanks for taking my questions. So, how should we think about the Microwave Filter business for this fiscal year? Do you expect revenues to be in the $7 to $9 million range?
- Lutz Henckels:
- We expect better than that. As I mentioned, it's a business that's growing and so if it was $9 million that would be much in the low end.
- UnidentifiedAnalyst:
- Okay. And then, so you've continued to invest in engineering. Could you provide some insight into what enhancements you're making to the technology?
- Lutz Henckels:
- Okay. Clearly we don't want to necessarily tell our competitors exactly what we are doing, but I mentioned to you the threat emulation product, and we constantly improve upon it, especially in terms of absolute performance of bandwidth. But we don't want to unnecessarily divulge exactly what we are doing. We're also coming out with a new product that combines multiple capabilities that we have developed, including threat emulation and including what we call playback and then of what we call receiving. And so we -- coming out with new products and improve existing products and hiring people do so.
- UnidentifiedAnalyst:
- Okay, great. And I just have one more question. Could you provide like a little bit more insight into the size of the range market for you?
- Lutz Henckels:
- Okay. I mean, as I explained, targeting multiple programs. We're involved already in two programs. We expect to get at least three or four more and each program in principle. So, when you have to -- you have to think about it. Maybe, I need to back up a little bit, and that is what is it that we are doing on the range? We are trying to recreate what would be called an integrated air defense system that's consists of multiple radars that are networked together. And so, our system, one system equals to four radars and in addition to that, it generates a better field background. And we can do a lot more than what the installation is, which is a single waiter, very expensive and very cumbersome. We can also generate what we call white signals that are unclassified signals or classified signals.
- UnidentifiedAnalyst:
- Okay, great. Well, that's it for me. Thanks a lot and best of luck.
- Operator:
- Presenters, at this time, I show no further questions in queue. I will turn the call back to Mr. Henkels for closing comments.
- Lutz Henckels:
- Okay. Thank you. So in closing yes, the pandemic impacted us in fiscal 2021, but with the pandemic mostly behind us, we believe that we are on track to deliver a strong fiscal 2022. Our Microsoft filter business, our rock is delivering 8% growth and the question was, is it the being $7 to $9 million? The low end should be no lower than $9 million. Our Radar Electronic Warfare business demonstrated a strong market interest for our new products for new customers, especially from the implication of pilot training and field testing. So we are confident in our ability to achieve double-digit annual gross and with it to deliver higher gross margins. Thank you.
- Operator:
- Thank you, ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.