Aviat Networks issued the following announcement on June 25.
Aviat Networks, Inc. (NASDAQ: AVNW), ("Aviat Networks" or the "Company"), the leading expert in microwave networking solutions, today announced the appointment of Stan Gallagher as Chief Operating Officer, a newly created executive leadership position. Mr. Gallagher will also assume the role of Principal Financial Officer of the Company. The Company also unveiled today its new organizational structure which coincides with this appointment, along with some of the anticipated financial and operational benefits. Aviat will be centralizing back-office functions and aligning resources by geography to both lower its expense structure and capitalize on the anticipated growth in the coming years both in North America and internationally.
Mr. Gallagher joins Aviat with over 30 years of experience in various aspects of operations leadership and management consulting. For the past three years, as Director of Operational Excellence and Supply Chain Management with a leading management consulting firm, Synergetics Installations Worldwide, Inc. ("Synergetics"), he was heavily engaged in the Company's turnaround, developing strategies to drive efficiencies throughout the Company's global footprint. Over this period, through operational excellence, Lean Six Sigma and various programs to enhance sourcing and supply chain management, Aviat Networks has seen its non-GAAP operating expenses decline by over 25%, its non-GAAP gross margins improve by over 650 basis points, and a return to profitability. Much of the Company's success has been driven by a commitment to and successful execution of process excellence activities.
Commenting on today's appointment, Michael Pangia, President and Chief Executive Officer of Aviat Networks stated, "We are very excited to have Stan formally join our team, especially now as we move into growth mode and drive further enhancements to our business. We approach fiscal 2019 with an improving market outlook, significant opportunities to grow with our existing customers and expand into new accounts and improve our bottom-line performance."
In conjunction with its realignment, the Company anticipates it will incur one-time restructuring charges of approximately $3.0 million and approximately $0.5 million in share-based compensation, the majority of which are expected to be incurred in the fiscal 2018 fourth quarter and first half of fiscal 2019. Additionally, the Company anticipates it will generate approximately $1.2 million in savings in fiscal 2019, the majority of which will be allocated to support growth-related initiatives. In addition to net headcount reductions, savings and efficiencies will be realized through increased use of automation and aggregating and consolidating back-office support functions. In fiscal 2020, the Company expects to generate annual savings of $3.2 million, while being in a stronger position to drive both top- and bottom-line performance.
Since 2010, Mr. Gallagher has served as a management consultant, leveraging his past expertise to support companies across various industries and in several operational and financial capacities. In recent years, he has specialized in the technology sector, working with a $16 billion IT services company, a $3.4 billion security services company and, most recently, with Aviat Networks. Throughout these multi-year engagements, with a clear focus on operational excellence, he helped to enhance financial performance and reporting capabilities, driven organizational redesign and change management programs, overseen Lean Six Sigma programs, and helped redesign operational footprints, including facilities management, IT and automation, sourcing, procurement, and overall supply chain management.
Mr. Gallagher began his career with General Electric ("GE"), where he held executive operational and leadership positions for several GE divisions. During his tenure at GE, he developed a broad portfolio of experience including supply chain management, strategic sourcing, supplier and business development, facilities management, import/export logistics, compliance, quality, global tax strategy, and Six Sigma program management. He left GE in 2007 and became Vice President & Corporate Officer – Global Strategic Sourcing for Masonite International, Inc. Mr. Gallagher received his BSME in Mechanical Engineering from North Carolina State University.
Coinciding with Mr. Gallagher's appointment, the Company also announced today that it has begun executing the next phase of its corporate realignment. Aviat Networks will be centralizing operations, finance, IT, and business process engineering under the stewardship of the COO. These departments will come together to provide shared services on a geographic basis to enhance its market focus and effectiveness. Additionally, the Company announced today that its Chief Financial Officer Ralph Marimon will leave the Company in July 2018. The Company does not intend to conduct a search for a new CFO as the finance team will report into the COO and all SEC reporting functions will remain intact.
Mr. Pangia continued, "First, I would like to extend my sincere appreciation to Ralph for his significant contributions throughout the past few years. He has been a valuable member of our team and I wish him nothing but the best as he begins the next chapter in his life. With the growth prospects ahead of us, we are realigning resources geographically to be in a stronger position to support our customers and grow market share. This new geographic focus should enable us to solidify growth prospects, strengthen core business competencies, and lower fixed costs. Simultaneously, we will be accelerating technology innovation, strengthening and expanding global partnerships, and building out our global services capabilities. We remain well positioned to drive shareholder value in both the near- and long-term."
Additional information can be found in the Company's Form 8-K which was filed with the Securities and Exchange Commission.
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