October 4, 2021 ? Comtech Telecommunications Corp. (NASDAQ: CMTL) today reported its operating results for the fourth quarter and fiscal year ended July 31, 2021. The Company also provided its initial financial targets for fiscal 2022 and announced a senior leadership transition.
Fiscal 2021 Fourth Quarter Highlights
Fiscal 2021 Highlights
Commenting on the Company's fourth quarter fiscal 2021 performance, Fred Kornberg, Chairman of the Board and Chief Executive Officer, stated, "Our fiscal 2021 results demonstrate our success in executing our strategic plan, the strong market leadership positions we have, and the resilience of our business. We navigated challenging market conditions and delivered strong financial performance, with significant year-over-year bookings and backlog growth. We have visibility to over $1.1 billion of future revenue, and that does not include opportunities associated with our new large next-generation satellite technologies customer, which could amount to several hundreds of millions of dollars of incremental future revenue. Adding to our strength, we won over $200.0 million of new NG-911 contract awards that we believe can provide years of recurring revenue. Our achievements and prospects confirm that we have the right strategy, team and focus to create long-term value for our shareholders for many years ahead."
Initial Financial Targets For Fiscal 2022
With COVID-19 continuing to impact global markets and supply chains, reliable forecasting remains challenging. Against that background, Comtech offers the following views on fiscal 2022:
Senior Leadership Transition
Earlier today, as more fully described in a separate press release, Comtech also announced that its Board of Directors has appointed Michael D. Porcelain, Comtech's President and Chief Operating Officer, to be Chief Executive Officer, taking over from Fred Kornberg after a short transition period. The change of leadership is expected to occur by the end of calendar 2021, at which point Mr. Porcelain will also join Comtech's Board of Directors and also continue as President. Mr. Kornberg will serve as non-executive Chairman of the Board and is expected to take on a technology advisory role.
Conference Call
An updated investor presentation, including earnings guidance, is available on the Company's website. The Company has scheduled an investor conference call for 4:30 PM (ET) on Monday, October 4, 2021. 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 (800) 895-3361 (domestic), or (785) 424-1062 (international) and using the conference I.D. "Comtech." A replay of the conference call will be available for seven days by dialing (800) 839-4199 or (402) 220-2989.
About Comtech
Comtech Telecommunications Corp. is a leading global provider of next-generation 911 emergency systems and secure wireless communications technologies to commercial and government customers around the world. Headquartered in Melville, New York and with a passion for customer success, Comtech designs, develops, produces and markets advanced and secure wireless solutions. For more information, please visit www.comtechtel.com.
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 and benefits from recent acquisitions will not be fully realized, or will not be realized within the anticipated time periods; the risk that the acquired businesses will not be integrated with the Company successfully; the possibility of disruption from recent acquisitions, 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; changing customer demands and or procurement strategies; 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 legal proceedings, customer claims for indemnification, and other similar matters; risks associated with the Company's obligations under its Credit Facility; risks associated with the Company's large contracts; risks associated with the COVID-19 pandemic and related supply chain disruptions; and other factors described in this and the Company's other filings with the Securities and Exchange Commission.
COMTECH TELECOMMUNICATIONS CORP.
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(Unaudited) |
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(Audited) |
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Three months ended July 31, |
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Twelve months ended July 31, |
||||||||||||
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||
|
|
|
|
|
|
|
|
||||||||
Net sales |
$ |
145,809,000 |
|
|
$ |
149,673,000 |
|
|
$ |
581,695,000 |
|
|
$ |
616,715,000 |
|
Cost of sales |
90,755,000 |
|
|
100,010,000 |
|
|
367,737,000 |
|
|
389,882,000 |
|
||||
Gross profit |
55,054,000 |
|
|
49,663,000 |
|
|
213,958,000 |
|
|
226,833,000 |
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|
|
|
|
|
|
||||||||
Expenses: |
|
|
|
|
|
|
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||||||||
Selling, general and administrative |
27,797,000 |
|
|
23,592,000 |
|
|
111,796,000 |
|
|
117,130,000 |
|
||||
Research and development |
11,757,000 |
|
|
11,255,000 |
|
|
49,148,000 |
|
|
52,180,000 |
|
||||
Amortization of intangibles |
5,349,000 |
|
|
5,643,000 |
|
|
21,020,000 |
|
|
21,595,000 |
|
||||
Acquisition plan expenses |
485,000 |
|
|
6,357,000 |
|
|
100,292,000 |
|
|
20,754,000 |
|
||||
|
45,388,000 |
|
|
46,847,000 |
|
|
282,256,000 |
|
|
211,659,000 |
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating income (loss) |
9,666,000 |
|
|
2,816,000 |
|
|
(68,298,000) |
|
|
15,174,000 |
|
||||
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|
|
|
|
|
|
|
||||||||
Other expenses (income): |
|
|
|
|
|
|
|
||||||||
Interest expense |
1,588,000 |
|
|
1,130,000 |
|
|
6,821,000 |
|
|
6,054,000 |
|
||||
Interest (income) and other |
137,000 |
|
|
(227,000) |
|
|
(139,000) |
|
|
(190,000) |
|
||||
|
|
|
|
|
|
|
|
||||||||
Income (loss) before provision for (benefit from) income taxes |
7,941,000 |
|
|
1,913,000 |
|
|
(74,980,000) |
|
|
9,310,000 |
|
||||
Provision for (benefit from) income taxes |
578,000 |
|
|
787,000 |
|
|
(1,500,000) |
|
|
2,290,000 |
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income (loss) |
$ |
7,363,000 |
|
|
$ |
1,126,000 |
|
|
$ |
(73,480,000) |
|
|
$ |
7,020,000 |
|
|
|
|
|
|
|
|
|
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Net income (loss) per share: |
|
|
|
|
|
|
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||||||||
Basic |
$ |
0.28 |
|
|
$ |
0.05 |
|
|
$ |
(2.86) |
|
|
$ |
0.28 |
|
Diluted |
$ |
0.28 |
|
|
$ |
0.04 |
|
|
$ |
(2.86) |
|
|
$ |
0.28 |
|
|
|
|
|
|
|
|
|
||||||||
Weighted average number of common shares outstanding ? basic |
26,194,000 |
|
|
25,001,000 |
|
|
25,685,000 |
|
|
24,798,000 |
|
||||
|
|
|
|
|
|
|
|
||||||||
Weighted average number of common and common equivalent shares outstanding ? diluted |
26,586,000 |
|
|
25,060,000 |
|
|
25,685,000 |
|
|
24,899,000 |
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|
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COMTECH TELECOMMUNICATIONS CORP.
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July 31, 2021 |
|
July 31, 2020 |
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Assets |
|
|
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||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
30,861,000 |
|
|
$ |
47,878,000 |
|
Accounts receivable, net |
158,110,000 |
|
|
126,816,000 |
|
||
Inventories, net |
80,358,000 |
|
|
82,302,000 |
|
||
Prepaid expenses and other current assets |
18,167,000 |
|
|
20,101,000 |
|
||
Total current assets |
287,496,000 |
|
|
277,097,000 |
|
||
Property, plant and equipment, net |
35,286,000 |
|
|
27,037,000 |
|
||
Operating lease right-of-use assets, net |
44,486,000 |
|
|
30,033,000 |
|
||
Goodwill |
347,698,000 |
|
|
330,519,000 |
|
||
Intangibles with finite lives, net |
268,699,000 |
|
|
258,019,000 |
|
||
Deferred financing costs, net |
1,824,000 |
|
|
2,391,000 |
|
||
Other assets, net |
7,622,000 |
|
|
4,551,000 |
|
||
Total assets |
$ |
993,111,000 |
|
|
$ |
929,647,000 |
|
Liabilities and Stockholders' Equity |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Accounts payable |
$ |
36,193,000 |
|
|
$ |
23,423,000 |
|
Accrued expenses and other current liabilities |
89,601,000 |
|
|
85,161,000 |
|
||
Operating lease liabilities, current |
8,841,000 |
|
|
8,247,000 |
|
||
Dividends payable |
2,601,000 |
|
|
2,468,000 |
|
||
Contract liabilities |
66,130,000 |
|
|
40,250,000 |
|
||
Interest payable |
195,000 |
|
|
163,000 |
|
||
Total current liabilities |
203,561,000 |
|
|
159,712,000 |
|
||
Non-current portion of long-term debt, net |
201,000,000 |
|
|
149,500,000 |
|
||
Operating lease liabilities, non-current |
39,569,000 |
|
|
24,109,000 |
|
||
Income taxes payable |
2,717,000 |
|
|
1,963,000 |
|
||
Deferred tax liability, net |
21,230,000 |
|
|
17,637,000 |
|
||
Long-term contract liabilities |
9,808,000 |
|
|
9,596,000 |
|
||
Other liabilities |
14,507,000 |
|
|
17,831,000 |
|
||
Total liabilities |
492,392,000 |
|
|
380,348,000 |
|
||
Commitments and contingencies |
|
|
|
||||
Stockholders' equity: |
|
|
|
||||
Preferred stock, par value $.10 per share; shares authorized and unissued 2,000,000 |
? |
|
|
? |
|
||
Common stock, par value $0.10 per share; authorized 100,000,000 shares; issued 41,281,812 and 39,924,439 shares at July 31, 2021 and 2020, respectively |
4,128,000 |
|
|
3,992,000 |
|
||
Additional paid-in capital |
605,439,000 |
|
|
569,891,000 |
|
||
Retained earnings |
333,001,000 |
|
|
417,265,000 |
|
||
|
942,568,000 |
|
|
991,148,000 |
|
||
Less: |
|
|
|
||||
Treasury stock, at cost (15,033,317 shares at July 31, 2021 and 2020) |
(441,849,000) |
|
|
(441,849,000) |
|
||
Total stockholders' equity |
500,719,000 |
|
|
549,299,000 |
|
||
Total liabilities and stockholders' equity |
$ |
993,111,000 |
|
|
$ |
929,647,000 |
|
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 (loss) before income taxes, interest (income) and other, write-off of deferred financing costs, interest expense, amortization of stock-based compensation, amortization of intangible assets, depreciation expense, estimated contract settlement costs, settlement of intellectual property litigation, acquisition plan expenses, restructuring costs, COVID-19 related costs, strategic emerging technology costs (for next-generation satellite technology), facility exit costs, strategic alternatives analysis expenses, and other. 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. 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 the Company's performance and comparability of its results with other companies. The Company's Non-GAAP measures for consolidated operating income, net income and net income per diluted share reflect the GAAP measures as reported, adjusted for certain items as discussed below. These Non-GAAP financial measures have limitations as an analytical tool as they exclude the financial impact of transactions necessary to conduct the Company'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 tables, 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 the Company's SEC filings. The Company has not quantitatively reconciled its fiscal 2022 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, interest expense and estimated proxy solicitation related costs, which 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 July 31, |
|
Twelve months ended July 31, |
||||||||||
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||
Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA: |
|
|
|
|
|
|
|
||||||
Net income (loss) |
$ |
7,363,000 |
|
|
1,126,000 |
|
|
$ |
(73,480,000) |
|
|
7,020,000 |
|
Provision for (benefit from) income taxes |
578,000 |
|
|
787,000 |
|
|
(1,500,000) |
|
|
2,290,000 |
|
||
Interest (income) and other |
137,000 |
|
|
(227,000) |
|
|
(139,000) |
|
|
(190,000) |
|
||
Interest expense |
1,588,000 |
|
|
1,130,000 |
|
|
6,821,000 |
|
|
6,054,000 |
|
||
Amortization of stock-based compensation |
6,793,000 |
|
|
6,177,000 |
|
|
9,983,000 |
|
|
9,275,000 |
|
||
Amortization of intangibles |
5,349,000 |
|
|
5,643,000 |
|
|
21,020,000 |
|
|
21,595,000 |
|
||
Depreciation |
2,096,000 |
|
|
2,539,000 |
|
|
9,379,000 |
|
|
10,561,000 |
|
||
Estimated contract settlement costs |
? |
|
|
? |
|
|
? |
|
|
444,000 |
|
||
Acquisition plan expenses |
485,000 |
|
|
6,357,000 |
|
|
100,292,000 |
|
|
20,754,000 |
|
||
Restructuring costs |
1,587,000 |
|
|
? |
|
|
2,782,000 |
|
|
? |
|
||
COVID-19 related costs |
470,000 |
|
|
? |
|
|
1,046,000 |
|
|
? |
|
||
Strategic emerging technology costs |
? |
|
|
? |
|
|
315,000 |
|
|
? |
|
||
Adjusted EBITDA |
$ |
26,446,000 |
|
|
23,532,000 |
|
|
$ |
76,519,000 |
|
|
77,803,000 |
|
In addition, a reconciliation of Comtech's GAAP consolidated operating income, net income and net income per diluted share to the corresponding non-GAAP measures is shown in the tables below for the three and twelve months ended July 31, 2021 and 2020:
|
July 31, 2021 |
||||||||||||||||||||||
|
Three months ended |
|
Twelve months ended |
||||||||||||||||||||
|
Operating
|
|
Net Income |
|
Net Income
|
|
Operating
|
|
Net (Loss)
|
|
Net (Loss)
|
||||||||||||
Reconciliation of GAAP to Non-GAAP Earnings: |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
GAAP measures, as reported |
$ |
9,666,000 |
|
|
$ |
7,363,000 |
|
|
$ |
0.28 |
|
|
$ |
(68,298,000) |
|
|
$ |
(73,480,000) |
|
|
$ |
(2.86) |
|
Acquisition plan expenses |
485,000 |
|
|
(3,106,000) |
|
|
(0.12) |
|
|
100,292,000 |
|
|
93,273,000 |
|
|
3.60 |
|
||||||
Restructuring costs |
1,587,000 |
|
|
1,074,000 |
|
|
0.04 |
|
|
2,782,000 |
|
|
2,132,000 |
|
|
0.08 |
|
||||||
COVID-19 related costs |
470,000 |
|
|
337,000 |
|
|
0.01 |
|
|
1,046,000 |
|
|
847,000 |
|
|
0.03 |
|
||||||
Strategic emerging technology costs |
? |
|
|
(24,000) |
|
|
? |
|
|
315,000 |
|
|
255,000 |
|
|
0.01 |
|
||||||
Interest expense |
? |
|
|
(133,000) |
|
|
(0.01) |
|
|
? |
|
|
910,000 |
|
|
0.04 |
|
||||||
Net discrete tax expense (benefit) |
? |
|
|
697,000 |
|
|
0.03 |
|
|
? |
|
|
(1,575,000) |
|
|
(0.06) |
|
||||||
Non-GAAP measures |
$ |
12,208,000 |
|
|
$ |
6,208,000 |
|
|
$ |
0.23 |
|
|
$ |
36,137,000 |
|
|
$ |
22,362,000 |
|
|
$ |
0.86 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
July 31, 2020 |
||||||||||||||||||||||
|
Three months ended |
|
Twelve months ended |
||||||||||||||||||||
|
Operating
|
|
Net Income |
|
Net Income
|
|
Operating
|
|
Net Income |
|
Net Income per
|
||||||||||||
Reconciliation of GAAP to Non-GAAP Earnings: |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
GAAP measures, as reported |
$ |
2,816,000 |
|
|
$ |
1,126,000 |
|
|
$ |
0.04 |
|
|
$ |
15,174,000 |
|
|
$ |
7,020,000 |
|
|
$ |
0.28 |
|
Estimated contract settlement costs |
? |
|
|
? |
|
|
? |
|
|
444,000 |
|
|
280,000 |
|
|
0.01 |
|
||||||
Acquisition plan expenses |
6,357,000 |
|
|
4,005,000 |
|
|
$ |
0.16 |
|
|
20,754,000 |
|
|
13,075,000 |
|
|
0.53 |
|
|||||
Net discrete tax expense (benefit) |
? |
|
|
79,000 |
|
|
? |
|
|
? |
|
|
(1,155,000) |
|
|
(0.05) |
|
||||||
Non-GAAP measures |
$ |
9,173,000 |
|
|
$ |
5,210,000 |
|
|
$ |
0.21 |
|
|
$ |
36,372,000 |
|
|
$ |
19,220,000 |
|
|
$ |
0.77 |
|
Per share amounts may not foot due to rounding. Non-GAAP net income and EPS reflect non-GAAP provisions for income taxes based on full year results, as adjusted for the non-GAAP reconciling items included in the tables above. The Company evaluates its non-GAAP effective income tax rate on an ongoing basis, and it can change from time to time. The Company's non-GAAP effective income tax rate can differ materially from its GAAP effective income tax rate. In addition, due to the GAAP net loss, non-GAAP EPS adjustments for the fiscal year ended July 31, 2021 were computed using 25,885,000 weighted average diluted shares outstanding during the respective period.
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