Comtech Telecommunications Corp. Announces Results for the
Second Quarter of Fiscal 2010 and Updates Revenue and EPS
Guidance for Fiscal 2010
GlobeNewswire
2010-03-04
MELVILLE, N.Y., March 3, 2010 (GLOBE NEWSWIRE) -- Comtech
Telecommunications Corp. (Nasdaq:CMTL) today reported its operating
results for the three and six months ended January 31, 2010.
Net sales for the second quarter of fiscal 2010 were $171.1 million
compared to $143.9 million for the second quarter of fiscal 2009. The
period-over-period increase in net sales is attributable to higher
sales, as anticipated, in our mobile data communications segment,
offset, in part, by lower sales in both our telecommunications
transmission and RF microwave amplifiers segments.
GAAP net income was $16.3 million, or $0.51 per diluted share, for the
second quarter of fiscal 2010 compared to $12.1 million, or $0.46 per
diluted share, for the second quarter of fiscal 2009.
Net sales for the six months ended January 31, 2010 were $304.9 million
compared to $335.8 million for the six months ended January 31, 2009.
The period-over-period decrease in net sales is attributable to lower
sales, as anticipated in both our telecommunications transmission and
RF microwave amplifiers segments, partially offset by an increase in
sales in our mobile data communications segment.
GAAP net income was $25.4 million, or $0.81 per diluted share, for the
six months ended January 31, 2010 compared to $33.7 million, or $1.26
per diluted share, for the six months ended January 31, 2009.
During the second quarter of fiscal 2010, the Company's third-party
supplier of new MTS ruggedized computers and certain related
accessories continued to experience production and technical issues.
These issues, which are ongoing, resulted in shipping and related
deployment delays to the U.S. Army, which impacted the Company's second
quarter results. Based on the third-party supplier's revised delivery
schedule provided to Comtech yesterday, the Company expects that
approximately $90.0 million to $100.0 million of orders in its backlog
previously expected to ship in fiscal 2010 will now ship in fiscal
2011. Based on the Company's year to date results and the impact of the
aforementioned shift of revenue, the Company now expects fiscal 2010
revenue to approximate $740.0 million to $760.0 million and its fiscal
2010 diluted earnings per share to approximate $1.85 to $1.95.
In commenting on the Company's performance, and updated revenue and EPS
guidance, Fred Kornberg, President and Chief Executive Officer, stated,
"Although we are disappointed that our third-party supplier continues
to experience production-related issues, our second quarter results for
fiscal 2010 were solid and we continue to believe that fiscal 2010 will
be another year of record revenues and that our operating income will
significantly increase as compared to fiscal 2009."
Mr. Kornberg added, "Our market leadership positions are firmly intact
and we continue to invest for the eventual economic recovery. We see
some signs that global business conditions are slowly improving and we
believe that this will bode well for us in fiscal 2011. Additionally,
with over $514.2 million of cash and cash equivalents, we are
well-positioned to achieve our strategic goal of executing key
acquisitions that will supplement our expected organic growth as well
as diversify our business."
Selected Fiscal 2010 Second Quarter Financial Metrics and Other Items
-- Backlog as of January 31, 2010 was $446.8 million compared to $549.8
million as of July 31, 2009 and $462.1 million as of January 31, 2009.
Bookings for the three and six months ended January 31, 2010 were $82.3
million and $202.9 million, respectively, compared to $386.9 million and
$545.5 million for the three and six months ended January 31, 2009,
respectively.
-- Earnings before interest, taxes, depreciation and amortization,
including amortization of acquired in-process research and development
("EBITDA"), was $33.7 million and $55.1 million for the three and six
months ended January 31, 2010, respectively, versus $27.1 million and
$77.1 million for the three and six months ended January 31, 2009,
respectively.
-- At January 31, 2010, the Company had $514.2 million of cash and cash
equivalents. Net cash provided by operating activities was $28.0 million
for the six months ended January 31, 2010 compared to $24.4 million for
the six months ended January 31, 2009.
-- As further discussed in the Company's Form 10-Q filed earlier today, on
August 1, 2009, although the Company's 2.0% convertible senior notes
were no longer outstanding, it was required to retroactively adjust the
historical reporting relating to its 2.0% convertible senior notes in
accordance with FASB ASC 470-20, "Debt - Debt with Conversion and Other
Options." The retroactive adjustment did not impact the Company's
diluted earnings per share for the three and six months ended January
31, 2009.
Conference Call
The Company has scheduled an investor conference call for 8:30 AM (ET)
on Thursday, March 4, 2010. Investors and the public are invited to
access a live webcast of the conference call from the investor
relations section of the Comtech web site at www.comtechtel.com.
Alternatively, investors can access the conference call by dialing
(800) 862-9098 (domestic) or (785) 424-1051 (international) and using
the conference I.D. of "Comtech." A replay of the conference call will
be available for seven days by dialing (402) 220-0871. In addition, an
updated investor presentation, including earnings guidance, will be
available on our web site shortly after the conference call.
About Comtech
Comtech Telecommunications Corp. designs, develops, produces and
markets innovative products, systems and services for advanced
communications solutions. The Company believes many of its solutions
play a vital role in providing or enhancing communication capabilities
when terrestrial communications infrastructure is unavailable,
inefficient or too expensive. The Company conducts business through
three complementary segments: telecommunications transmission, mobile
data communications and RF microwave amplifiers. The Company sells
products to a diverse customer base in the global commercial and
government communications markets. The Company believes it is a market
leader in the market segments that it serves.
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 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 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, frequent new product
announcements and enhancements, changing customer demands, changes in
prevailing economic and political conditions, risks associated with the
results of ongoing investigations into the Company's compliance with
export regulations, risks associated with the Radyne acquisition, risks
associated with the Company's legal proceedings and other matters,
risks associated with the Company's recent MTS orders, risks associated
with the Company's MTS and BFT contracts, risks associated with the
Company's obligations under its revolving credit facility, and other
factors described in the Company's filings with the Securities and
Exchange Commission.
COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
Three months ended Six months ended
January 31, January 31,
------------------------- ------------------------
2010 2009 2010 2009
------------ ----------- ----------- -----------
(as (as
adjusted) adjusted)
Net sales $171,132,000 143,886,000 304,948,000 335,801,000
Cost of sales 107,631,000 84,409,000 191,673,000 189,345,000
------------ ----------- ----------- -----------
Gross profit 63,501,000 59,477,000 113,275,000 146,456,000
------------ ----------- ----------- -----------
Expenses:
Selling, general and
administrative 22,909,000 25,969,000 44,628,000 54,947,000
Research and development 11,431,000 12,522,000 22,755,000 26,647,000
Amortization of acquired
in-process
research and development -- -- -- 6,200,000
Amortization of intangibles 1,765,000 1,796,000 3,529,000 3,589,000
------------ ----------- ----------- -----------
36,105,000 40,287,000 70,912,000 91,383,000
------------ ----------- ----------- -----------
Operating income 27,396,000 19,190,000 42,363,000 55,073,000
Other expenses (income):
Interest expense 1,966,000 1,894,000 3,933,000 3,719,000
Interest income and other (178,000) (626,000) (413,000) (1,903,000)
------------ ----------- ----------- -----------
Income before provision for
income taxes 25,608,000 17,922,000 38,843,000 53,257,000
Provision for income taxes 9,275,000 5,826,000 13,478,000 19,520,000
------------ ----------- ----------- -----------
Net income $16,333,000 12,096,000 25,365,000 33,737,000
============ =========== =========== ===========
Net income per share:
Basic $0.58 0.49 0.90 1.37
============ =========== =========== ===========
Diluted $0.51 0.46 0.81 1.26
============ =========== =========== ===========
Weighted average number of
common shares
outstanding -- basic 28,250,000 24,759,000 28,236,000 24,673,000
============ =========== =========== ===========
Weighted average number of
common and
common equivalent shares
outstanding -- diluted 34,080,000 28,633,000 34,069,000 28,585,000
============ =========== =========== ===========
COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
January 31, July 31,
2010 2009
------------ -----------
Assets (Unaudited) (Audited)
(as
adjusted)
Current assets:
Cash and cash equivalents $514,155,000 485,450,000
Accounts receivable, net 100,828,000 79,477,000
Inventories, net 90,420,000 95,597,000
Prepaid expenses and other
current assets 7,430,000 13,398,000
Deferred tax asset 14,073,000 15,129,000
------------ -----------
Total current assets 726,906,000 689,051,000
Property, plant and equipment,
net 35,348,000 38,486,000
Goodwill 149,253,000 149,253,000
Intangibles with finite lives,
net 51,856,000 55,272,000
Deferred financing costs, net 5,368,000 6,053,000
Other assets, net 1,284,000 556,000
------------ -----------
Total assets $970,015,000 938,671,000
============ ===========
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable $33,631,000 19,233,000
Accrued expenses and other
current liabilities 41,539,000 51,741,000
Customer advances and
deposits 11,186,000 19,571,000
Interest payable 1,531,000 1,418,000
Income taxes payable 6,290,000 563,000
------------ -----------
Total current liabilities 94,177,000 92,526,000
Convertible senior notes 200,000,000 200,000,000
Other liabilities 2,325,000 2,283,000
Income taxes payable 5,363,000 4,267,000
Deferred tax liability 8,246,000 10,466,000
------------ -----------
Total liabilities 310,111,000 309,542,000
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 28,482,155
shares
and 28,390,855 shares at
January 31, 2010 and July
31, 2009, respectively 2,848,000 2,839,000
Additional paid-in capital 341,057,000 335,656,000
Retained earnings 316,184,000 290,819,000
------------ -----------
660,089,000 629,314,000
Less:
Treasury stock (210,937
shares) (185,000) (185,000)
------------ -----------
Total stockholders' equity 659,904,000 629,129,000
------------ -----------
Total liabilities and
stockholders' equity $970,015,000 938,671,000
============ ===========
COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures
(Unaudited)
Three Months Ended Six Months Ended
January 31, January 31,
----------------------- ----------------------
2010 2009 2010 2009
----------- ---------- ---------- ----------
(as (as
adjusted) adjusted)
Reconciliation of GAAP Net Income to
EBITDA(1):
GAAP net income $16,333,000 12,096,000 25,365,000 33,737,000
Income taxes 9,275,000 5,826,000 13,478,000 19,520,000
Net interest expense (income) and other 1,788,000 1,268,000 3,520,000 1,816,000
Amortization of acquired in-process
research and development -- -- -- 6,200,000
Amortization of stock-based
compensation 1,650,000 2,292,000 3,426,000 4,710,000
Depreciation and other amortization 4,683,000 5,608,000 9,349,000 11,074,000
----------- ---------- ---------- ----------
EBITDA $33,729,000 27,090,000 55,138,000 77,057,000
=========== ========== ========== ==========
(1) Represents earnings before interest, income taxes, depreciation and amortization of intangibles, stock-based
compensation and acquired in-process research and development. EBITDA is a non-GAAP operating metric used by management
in assessing the Company's operating results. The Company's definition of EBITDA may differ from the definition of
EBITDA used by other companies and may not be comparable to similarly titled measures used by other companies. EBITDA
is also a measure frequently requested by the Company's investors and analysts. The Company believes that investors and
analysts may use EBITDA, along with other information contained in its SEC filings, in assessing its ability to
generate cash flow and service debt.
ECMTL
CONTACT: Comtech Telecommunications Corp.
Michael D. Porcelain, Senior Vice President and
Chief Financial Officer
Jerome Kapelus, Senior Vice President,
Strategy and Business Development
(631) 962-7000
Info@comtechtel.com
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