June 7, 2017-- In the 2017 Fiscal Year Financial Targets
section, the fifth bullet should read: ...stock-based compensation
is expected to range from $6.0 million to $8.0 million. (instead of
...from $5.0 million to $8.0 million).
The corrected release reads:
COMTECH TELECOMMUNICATIONS CORP. ANNOUNCES
RESULTS FOR THE THIRD QUARTER OF FISCAL 2017 AND FINALIZED ITS
FISCAL 2017 GUIDANCE
June 7, 2017-- Comtech Telecommunications Corp.
(NASDAQ:CMTL) today reported its operating results for the third
fiscal quarter ended April 30, 2017 and finalized its fiscal
2017 guidance.
Fiscal 2017 Third Quarter Highlights
- Net sales for the three months ended
April 30, 2017 were $127.8 million as compared to $124.2 million
for the three months ended April 30, 2016.
- Comtech achieved a company-wide
book-to-bill ratio (a measure defined as bookings divided by net
sales) of 1.06 reflecting strong bookings in its Government
Solutions segment. As of April 30, 2017, the Company had
backlog of $461.3 million, up from $453.3 million as of January 31,
2017.
- GAAP operating income was $10.2 million
and GAAP net income was $4.4 million, or $0.19 per diluted share,
for the three months ended April 30, 2017, as compared to a GAAP
operating loss of $13.4 million and a GAAP net loss of $14.4
million, or $(0.89) per diluted share, for the three months ended
April 30, 2016. During the third quarter of fiscal 2017, the
Company favorably resolved a TCS intellectual property litigation
matter, which resulted in a $2.0 million contribution to GAAP
operating income. Excluding the $2.0 million benefit, GAAP diluted
EPS would have been $0.13 for the three months ended April 30,
2017.
- Adjusted EBITDA (which excludes the
$2.0 million favorable settlement discussed above) was $18.1
million for the three months ended April 30, 2017. Adjusted EBITDA
is a non-GAAP financial measure which is reconciled to the most
directly comparable GAAP financial measure and is more fully
defined in the below table.
- As of April 30, 2017, the Company
had $58.8 million of cash and cash equivalents. During the third
quarter of fiscal 2017, the Company generated cash flows from
operating activities of $18.3 million. In view of the Company's
expectations for continued strong operating cash flows, in June
2017, the Company entered into an amendment of its Secured Credit
Facility, which it expects will result in increased operating and
acquisition flexibility and simplify the calculations of its
financial covenants as compared to the original terms of the
Secured Credit Facility. This amendment is more fully discussed in
a Form 8-K and Form 10-Q filed by the Company with the Securities
and Exchange Commission today.
- In May 2017, the Company announced the
general availability of its Heights™ Dynamic Network Access
Technology ("HEIGHTS"), a potentially revolutionary technology
designed to deliver the most Internet Protocol bits per Hertz (per
satellite network operator) in its class, as well as robust
reliability. To date, customer reaction has been positive, as
reflected in the Company's receipt of orders in the third fiscal
quarter, and the Company has a growing sales funnel of HEIGHTS
opportunities that the Company expects to close.
- The Company believes it is starting to
see benefits from its continuing tactical shift in strategy in its
Government Solutions segment away from bidding on large commodity
service contracts and toward pursuing contracts for its niche
products with higher margins.
In commenting on the Company's performance during the third
quarter of fiscal 2017, Fred Kornberg, President and Chief
Executive Officer, noted: "I am pleased with our third quarter
performance on many fronts as we march toward a strong finish to
what is turning out to be a successful year."
Mr. Kornberg added: "Although we have just started our fiscal
2018 business planning process, we are seeing positive signs across
almost all aspects of our business and believe that fiscal 2018 is
shaping up to be a great year."
2017 Fiscal Year Financial Targets
- The Company has updated its fiscal 2017
revenue target to a range of $550.0 million to $555.0 million. This
new target, which compares to its previous target of $570.0 million
to $580.0 million, largely reflects the Company's updated
assessment of the impact of its tactical shift in strategy in its
Government Solutions segment, a longer sales cycle for its HEIGHTS
products and other product mix changes. The Company's fourth
quarter is expected to benefit from an increase in orders for its
HEIGHTS products; however, given the complexity and sophistication
of the HEIGHTS system and the Company's experience since its launch
of HEIGHTS, the initial sales cycle will be longer than the
Company's prior satellite earth station new product launches. As
such, the Company now anticipates that fiscal 2018 will be the
break-out year for orders and sales of its HEIGHTS products, rather
than the fourth quarter of fiscal 2017.
- The Company updated its GAAP diluted
EPS goal to approximately $0.67 per diluted share (which includes
$0.33 per diluted share related to $12.0 million of favorable TCS
intellectual property litigation settlements).
- The Company firmed up its Adjusted
EBITDA goal to a range of $68.0 million to $70.0 million. The range
reflects updated revenue targets, the benefit of additional cost
reduction actions and the impact of overall favorable changes in
product mix assumptions.
- The Company is pursuing a number of
awards for large multi-million dollar and multi-year contracts.
Although the extent and timing of any of these contract awards is
difficult to predict, the Company expects to receive some of these
awards shortly. Because of uncertainty regarding contract award and
order timing, it is difficult to predict our fourth quarter fiscal
2017 book-to-bill ratio. If some of these large contracts are
awarded and orders are booked in the fourth quarter of fiscal 2017,
consolidated fourth quarter bookings could be almost twice the
level that the Company achieved in its third quarter of fiscal
2017. At the same time, it is possible that the award of these
potential large contracts and related orders may slip into fiscal
2018. In either event, these orders, if booked, are expected to
benefit fiscal 2018 financial results.
- Total annual amortization of
intangibles is expected to range from $22.0 million to $24.0
million, total depreciation expense is expected to range from $14.0
million to $15.0 million and total amortization of stock-based
compensation is expected to range from $6.0 million to $8.0
million.
- Interest expense, on total anticipated
borrowings, is expected to approximate $12.0 million (including
amortization of deferred financing costs). Such interest expense
reflects an expected interest rate ranging from approximately 4.5%
to 5.0%. The Company's actual cash borrowing interest rate (which
excludes the amortization of deferred financing costs) currently
approximates 4.0%.
- The Company's effective income tax rate
(excluding discrete tax items) is expected to approximate
36.0%.
Based on the anticipated timing of shipments and performance
related to orders currently in its backlog, together with
anticipated new orders, the Company expects its consolidated net
sales and Adjusted EBITDA in its fourth quarter to be the highest
of any quarter in fiscal 2017.
Additional information about the Company’s fiscal 2017 guidance
is included in the Company’s third quarter investor presentation
which is located on the Company’s website at www.comtechtel.com.
Conference Call
The Company has scheduled an investor conference call for 8:30
AM (ET) on Thursday June 8, 2017. Investors and the public are
invited to access a live webcast of the conference call from the
Investor Relations section of the Comtech website at
www.comtechtel.com. Alternatively, investors can access the
conference call by dialing (888) 632-3384 (domestic), or (785)
424-1675 (international) and using the conference I.D. "Comtech." A
replay of the conference call will be available for seven days by
dialing (800) 839-5241 or (402) 220-2698. In addition, an updated
investor presentation, including earnings guidance, is available on
the Company's website.
About Comtech
Comtech Telecommunications Corp. designs, develops, produces and
markets innovative products, systems and services for advanced
communications solutions. The Company sells products to a diverse
customer base in the global commercial and government
communications markets.
Cautionary Statement Regarding Forward-Looking
Statements
Certain information in this press release contains
forward-looking statements, including but not limited to,
information relating to the Company's future performance and
financial condition, plans and objectives of the Company's
management and the Company's assumptions regarding such future
performance, financial condition, and plans and objectives that
involve certain significant known and unknown risks and
uncertainties and other factors not under the Company's control
which may cause its actual results, future performance and
financial condition, and achievement of plans and objectives of the
Company's management to be materially different from the results,
performance or other expectations implied by these forward-looking
statements. These factors include, among other things: the
possibility that the expected synergies from the acquisition of
TeleCommunication Systems, Inc. ("TCS") will not be fully realized,
or will not be realized within the anticipated time period; the
possibility of disruption from the acquisition, making it more
difficult to maintain business and operational relationships or
retain key personnel; the risk that the Company will be
unsuccessful in implementing a tactical shift in its Government
Solutions segment away from bidding on large commodity service
contracts and toward pursuing contracts for its niche products with
higher margins; the nature and timing of receipt of, and the
Company's performance on, new or existing orders that can cause
significant fluctuations in net sales and operating results; the
timing and funding of government contracts; adjustments to gross
profits on long-term contracts; risks associated with international
sales; rapid technological change; evolving industry standards; new
product announcements and enhancements, including the risks
associated with the Company's recent launch of HEIGHTS; changing
customer demands; changes in prevailing economic and political
conditions; changes in the price of oil in global markets; changes
in foreign currency exchange rates; risks associated with the
Company's and TCS's legacy legal proceedings, customer claims for
indemnification, and other similar matters; risks associated with
Comtech’s obligations under its Secured Credit Facility, as
amended; risks associated with the Company's large contracts; and
other factors described in this and the Company's other filings
with the SEC.
COMTECH TELECOMMUNICATIONS
CORP.
AND SUBSIDIARIES
Condensed Consolidated Statements of
Operations
(Unaudited)
Three months ended April 30, Nine months ended April 30,
2017 2016 2017 2016 Net sales $ 127,792,000
124,187,000 402,606,000 258,627,000 Cost of sales 75,331,000
72,796,000 244,833,000 149,596,000 Gross
profit 52,461,000 51,391,000 157,773,000
109,031,000 Expenses: Selling, general and
administrative 25,923,000 30,439,000 89,596,000 60,818,000 Research
and development 12,961,000 12,613,000 40,371,000 28,216,000
Amortization of intangibles 5,468,000 4,776,000 17,555,000
7,348,000 Settlement of intellectual property litigation (2,041,000
) — (12,020,000 ) — Acquisition plan expenses — 16,960,000
— 20,689,000 42,311,000 64,788,000
135,502,000 117,071,000 Operating
income (loss) 10,150,000 (13,397,000 ) 22,271,000 (8,040,000 )
Other expenses (income): Interest expense and other
2,761,000 3,473,000 8,938,000 3,621,000 Interest income and other
88,000 (5,000 ) 12,000 (227,000 ) Income
(loss) before provision for (benefit from) income taxes 7,301,000
(16,865,000 ) 13,321,000 (11,434,000 ) Provision for (benefit from)
income taxes 2,884,000 (2,510,000 ) 4,808,000
(994,000 ) Net income (loss) $ 4,417,000 (14,355,000
) 8,513,000 (10,440,000 ) Net income (loss) per
share: Basic $ 0.19 (0.89 ) 0.36 (0.65 ) Diluted $
0.19 (0.89 ) 0.36 (0.65 ) Weighted average
number of common shares outstanding – basic 23,449,000
16,195,000 23,420,000 16,184,000
Weighted average number of common and common equivalent shares
outstanding – diluted 23,503,000 16,195,000
23,449,000 16,184,000 Dividends declared per
issued and outstanding common share as of the applicable dividend
record date $ 0.10 0.30 0.50 0.90
COMTECH TELECOMMUNICATIONS
CORP.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
April 30, 2017 July 31, 2016 (Unaudited) (Audited) Assets
Current assets: Cash and cash equivalents $ 58,817,000 66,805,000
Accounts receivable, net 120,448,000 150,967,000 Inventories, net
67,337,000 71,354,000 Prepaid expenses and other current assets
19,599,000 14,513,000 Total current assets
266,201,000 303,639,000 Property, plant and equipment, net
33,981,000 38,667,000 Goodwill 290,633,000 287,618,000 Intangibles
with finite lives, net 267,139,000 284,694,000 Deferred financing
costs, net 2,765,000 3,309,000 Other assets, net 3,039,000
3,269,000 Total assets $ 863,758,000 921,196,000
Liabilities and Stockholders’ Equity Current
liabilities: Accounts payable $ 27,226,000 33,462,000 Accrued
expenses and other current liabilities 73,844,000 98,034,000
Dividends payable 2,342,000 7,005,000 Customer advances and
deposits 31,326,000 29,665,000 Current portion of long-term debt
14,387,000 11,067,000 Current portion of capital lease obligations
2,689,000 3,592,000 Interest payable 95,000 1,321,000
Total current liabilities 151,909,000 184,146,000
Non-current portion of long-term debt, net 211,509,000 239,969,000
Non-current portion of capital lease obligations 2,185,000
4,021,000 Income taxes payable 2,502,000 2,992,000 Deferred tax
liability, net 14,784,000 9,798,000 Customer advances and deposits,
non-current 8,064,000 5,764,000 Other liabilities 3,150,000
4,105,000 Total liabilities 394,103,000 450,795,000
Commitments and contingencies Stockholders’ equity: Preferred
stock, par value $.10 per share; shares authorized and unissued
2,000,000 — — Common stock, par value $.10 per share; authorized
100,000,000 shares; issued 38,603,033 shares and 38,367,997 shares
at April 30, 2017 and July 31, 2016, respectively 3,860,000
3,837,000 Additional paid-in capital 527,434,000 524,797,000
Retained earnings 380,210,000 383,616,000 911,504,000
912,250,000 Less: Treasury stock, at cost (15,033,317 shares at
April 30, 2017 and July 31, 2016) (441,849,000 ) (441,849,000 )
Total stockholders’ equity 469,655,000 470,401,000
Total liabilities and stockholders’ equity $ 863,758,000
921,196,000
COMTECH TELECOMMUNICATIONS
CORP.
AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures to GAAP Financial
Measures (Unaudited)
Use of Non-GAAP Financial Measures
In order to provide investors with additional information
regarding its financial results, this press release contains
"Non-GAAP financial measures" under the rules of the SEC. The
Company's Adjusted EBITDA is a Non-GAAP measure that represents
earnings before income taxes, interest (income) and other expense,
interest expense, amortization of stock-based compensation,
amortization of intangibles, depreciation expense, acquisition plan
expenses and settlement of intellectual property litigation. The
Company's definition of Adjusted EBITDA may differ from the
definition of EBITDA used by other companies and therefore may not
be comparable to similarly titled measures used by other companies,
including a similarly titled measure previously utilized by TCS.
Adjusted EBITDA is also a measure frequently requested by the
Company's investors and analysts. The Company believes that
investors and analysts may use Adjusted EBITDA, along with other
information contained in its SEC filings, in assessing our
performance and comparability of our results with other companies.
These Non-GAAP financial measures have limitations as an analytical
tool as they exclude the financial impact of transactions necessary
to conduct Comtech’s business, such as the granting of equity
compensation awards, and are not intended to be an alternative to
financial measures prepared in accordance with GAAP. These measures
are adjusted as described in the reconciliation of GAAP to Non-GAAP
in the below table, but these adjustments should not be construed
as an inference that all of these adjustments or costs are unusual,
infrequent or non-recurring. Non-GAAP financial measures should be
considered in addition to, and not as a substitute for or superior
to, financial measures determined in accordance with GAAP.
Investors are advised to carefully review the GAAP financial
results that are disclosed in Comtech’s SEC filings. The Company
has not quantitatively reconciled its fiscal 2017 Adjusted EBITDA
target to the most directly comparable GAAP measure because items
such as stock-based compensation, adjustments to the provision for
income taxes, amortization of intangibles, costs related to its
acquisition plan, settlement of intellectual property litigation
and interest expense are specific items that impact these measures,
have not yet occurred, are out of the Company's control, or cannot
be predicted. For example, quantification of stock-based
compensation expense requires inputs such as the number of shares
granted and market price that are not currently ascertainable.
Accordingly, reconciliations to the Non-GAAP forward looking
metrics are not available without unreasonable effort and such
unavailable reconciling items could significantly impact the
Company's financial results.
Three months ended April 30, Nine months ended April
30, 2017 2016 2017 2016
Reconciliation of
GAAP Net Income (Loss) to Adjusted EBITDA: Net income (loss) $
4,417,000 (14,355,000 ) 8,513,000 (10,440,000 ) Provision for
(benefit from) income taxes 2,884,000 (2,510,000 ) 4,808,000
(994,000 ) Interest (income) and other expense 88,000 (5,000 )
12,000 (227,000 ) Interest expense 2,761,000 3,473,000 8,938,000
3,621,000 Amortization of stock-based compensation 991,000
1,041,000 2,980,000 3,166,000 Amortization of intangibles 5,468,000
4,776,000 17,555,000 7,348,000 Depreciation 3,532,000 3,082,000
10,849,000 6,078,000 Acquisition plan expenses — 16,960,000 —
20,689,000 Settlement of intellectual property litigation
(2,041,000 ) — (12,020,000 ) — Adjusted EBITDA $
18,100,000 12,462,000 41,635,000 29,241,000
ECMTL
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170607006424/en/
Media:Michael D. Porcelain, Senior Vice President and
Chief Financial Officer(631) 962-7103Info@comtechtel.com
Comtech Telecommunications (NASDAQ:CMTL)
Historical Stock Chart
From Mar 2024 to Apr 2024
Comtech Telecommunications (NASDAQ:CMTL)
Historical Stock Chart
From Apr 2023 to Apr 2024