[June 04, 2015] |
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Comtech Telecommunications Corp. Announces Results for the Third Quarter of Fiscal 2015 and Provides Updated Fiscal 2015 Guidance
June 4, 2015-- Comtech Telecommunications (News - Alert) Corp. (NASDAQ:CMTL) today
reported its operating results for the three and nine months ended April
30, 2015.
Net sales for the three months ended April 30, 2015 were $71.6 million
compared to $88.9 million for the three months ended April 30, 2014. The
period-over-period decrease reflects lower net sales in the Company's
telecommunications transmission and RF microwave amplifier segments,
partially offset by higher net sales in its mobile data communications
segment. GAAP net income was $5.0 million, or $0.30 per diluted share,
for the three months ended April 30, 2015 as compared to $5.9 million,
or $0.32 per diluted share, for the three months ended April 30, 2014.
Net sales for the nine months ended April 30, 2015 were $229.8 million
compared to $257.8 million for the nine months ended April 30, 2014. The
period-over-period decrease reflects lower net sales in all three of the
Company's operating segments. GAAP net income was $17.8 million, or
$1.08 per diluted share, for the nine months ended April 30, 2015 as
compared to $17.2 million, or $0.92 per diluted share, for the nine
months ended April 30, 2014.
Based on the Company's year-to-date results and anticipated fourth
quarter performance, the Company is updating its fiscal 2015 guidance.
Fiscal 2015 revenue is now expected to range from $310.0 million to
$314.0 million, adjusted EBITDA, as defined in the table below, is now
expected to be in the range of $52.0 million to $56.0 million and GAAP
diluted earnings per share is now expected to be in the range of $1.38
to $1.54.
In commenting on the Company's performance and updated fiscal 2015
business outlook, Dr. Stanton Sloane, President and Chief Executive
Officer, stated, "Against a backdrop of difficult market conditions, we
continue to execute our business strategies and I remain convinced that
Comtech is on the right path to growth."
Dr. Sloane added, "During the quarter, we initiated certain
organizational changes and cost reduction actions, which I believe will
improve our operating efficiencies. At the same time, we have expanded
our corporate marketing and business development function to enhance our
focus on existing and untapped market opportunities. I believe all of
these actions will result in demonstrable returns down the road and help
us better serve our customers."
Selected Fiscal 2015 Third Quarter Financial Metrics and Other Items
-
Backlog as of April 30, 2015 was $130.0 million compared to $129.4
million as of January 31, 2015.
-
Total bookings for the three and nine months ended April 30, 2015 were
$72.2 million and $226.4 million, respectively, compared to $81.6
million and $228.8 million for the three and nine months ended April
30, 2014, respectively.
-
Adjusted EBITDA was $11.6 million and $39.8 million for the three and
nine months ended April 30, 2015, respectively, as compared to $14.8
million and $44.6 million for the three and nine months ended April
30, 2014, respectively. Adjusted EBITDA is a Non-GAAP financial
measure and is defined in the below table.
-
Our effective tax rate for the three months ended April 30, 2015
reflects a discrete tax benefit of approximately $0.3 million,
principally related to the reversal of tax contingencies no longer
required due to the expiration of applicable statutes of limitation.
Excluding the impact of any discrete tax items, the Company's fiscal
2015 estimated effective tax rate is expected to approximate 34.75%.
-
During the three months ended April 30, 2015, the Company repurchased
175,735 shares of its common stock in open-market transactions with an
average price per share of $28.39 and at an aggregate cost of $5.0
million (including transaction costs). As of June 3, 2015, the Company
is authorized to repurchase approximately $8.7 million of additional
common stock pursuant to its existing stock repurchase program.
-
As of April 30, 2015, the Company had $142.0 million of cash and cash
equivalents which does not reflect the quarterly dividend of $4.8
million that was paid on May 21, 2015.
-
As discussed further in the Company's Quarterly Report on Form 10-Q
filed with the Securities and Exchange Commission today, the Company's
President and Chief Executive Officer initiated an assessment of its
operations to determine if changes in the Company's business or
operations would help it better serve its customers and potentially
reduce annual operating expenses. This assessment is ongoing and may
result in future one-time charges which are not reflected in the
Company's updated fiscal 2015 earnings guidance.
Additional information about the Company's updated fiscal 2015 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 Friday, June 5, 2015. 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 (866)
952-1906 (domestic), or (785) 424-1825 (international) and using the
conference I.D. "Comtech." A replay of the conference call will be
available for seven days by dialing (800) 839-1180 or (402) 220-0400. In
addition, an updated investor presentation, including earnings guidance,
is available on the Company's web site.
About Comtech
Comtech Telecommunications Corp. designs, develops, produces and markets
innovative products, systems and services for advanced communications
solutions. The Company's 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, RF microwave amplifiers and mobile data
communications. The Company sells products to a diverse customer base in
the global commercial and government communications markets. The Company
believes it is a leader in most of 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 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 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; 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 and other matters; risks
associated with U.S. government investigations; risks associated with
the Company's large contracts, and other factors described in the
Company's filings with the Securities and Exchange Commission.
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COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
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Three months ended April 30,
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Nine months ended April 30,
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2015
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2014
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2015
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2014
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Net sales
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$
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71,633,000
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88,905,000
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229,826,000
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257,772,000
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Cost of sales
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39,325,000
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50,559,000
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124,318,000
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145,679,000
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Gross profit
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32,308,000
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38,346,000
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105,508,000
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112,093,000
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Expenses:
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Selling, general and administrative
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15,005,000
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17,320,000
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46,557,000
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49,867,000
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Research and development
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8,582,000
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8,899,000
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28,267,000
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25,664,000
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Amortization of intangibles
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1,561,000
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1,560,000
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4,682,000
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4,724,000
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25,148,000
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27,779,000
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79,506,000
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80,255,000
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Operating income
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7,160,000
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10,567,000
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26,002,000
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31,838,000
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Other expenses (income):
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Interest expense
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72,000
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1,993,000
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406,000
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6,009,000
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Interest income and other
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(107,000
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)
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(256,000
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)
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(281,000
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)
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(757,000
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)
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Income before provision for income taxes
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7,195,000
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8,830,000
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25,877,000
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26,586,000
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Provision for income taxes
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2,235,000
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2,955,000
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8,107,000
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9,423,000
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Net income
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$
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4,960,000
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5,875,000
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17,770,000
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17,163,000
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Net income per share:
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Basic
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$
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0.31
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0.39
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1.10
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1.08
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Diluted
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$
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0.30
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0.32
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1.08
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0.92
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Weighted average number of common
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shares outstanding - basic
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16,202,000
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15,200,000
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16,220,000
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15,882,000
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Weighted average number of common
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and common equivalent shares
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outstanding - diluted
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16,382,000
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21,764,000
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16,468,000
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22,324,000
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Dividends declared per issued and
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outstanding common share as of the
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applicable dividend record date
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$
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0.30
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0.30
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0.90
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0.875
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COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
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April 30, 2015
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July 31, 2014
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Assets
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Current assets:
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Cash and cash equivalents
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$
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142,044,000
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154,500,000
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Accounts receivable, net
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67,621,000
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54,887,000
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Inventories, net
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68,252,000
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61,332,000
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Prepaid expenses and other current assets
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9,754,000
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9,947,000
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Deferred tax asset, net
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9,889,000
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10,178,000
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Total current assets
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297,560,000
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290,844,000
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Property, plant and equipment, net
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16,470,000
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18,536,000
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Goodwill
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137,354,000
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137,354,000
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Intangibles with finite lives, net
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21,538,000
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26,220,000
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Deferred financing costs, net
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-
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65,000
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Other assets, net
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873,000
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833,000
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Total assets
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$
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473,795,000
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473,852,000
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Liabilities and Stockholders' Equity
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Current liabilities:
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Accounts payable
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$
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15,020,000
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18,902,000
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Accrued expenses and other current liabilities
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27,075,000
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29,803,000
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Dividends payable
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4,835,000
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4,844,000
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Customer advances and deposits
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17,826,000
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12,610,000
|
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Interest payable
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-
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29,000
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Total current liabilities
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64,756,000
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66,188,000
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Other liabilities
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3,916,000
|
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4,364,000
|
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Income taxes payable
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1,778,000
|
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2,743,000
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Deferred tax liability, net
|
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3,347,000
|
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3,632,000
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Total liabilities
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73,797,000
|
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76,927,000
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Commitments and contingencies
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Stockholders' equity:
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Preferred stock, par value $.10 per share; shares authorized and
unissued 2,000,000
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-
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-
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Common stock, par value $.10 per share; authorized 100,000,000
shares;
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issued 31,151,557 shares and 31,016,469 shares at April 30, 2015 and
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July 31, 2014, respectively
|
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3,115,000
|
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3,102,000
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Additional paid-in capital
|
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|
|
426,255,000
|
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|
421,240,000
|
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Retained earnings
|
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|
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412,477,000
|
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409,443,000
|
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|
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841,847,000
|
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|
833,785,000
|
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Less:
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Treasury stock, at cost (15,033,317 shares and 14,857,582 shares at
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April 30, 2015 and July 31, 2014, respectively)
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(441,849,000
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)
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(436,860,000
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)
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Total stockholders' equity
|
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399,998,000
|
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|
396,925,000
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Total liabilities and stockholders' equity
|
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$
|
473,795,000
|
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473,852,000
|
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COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures to GAAP Financial
Measures
(Unaudited)
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Three months ended April 30,
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Nine months ended April 30,
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|
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2015
|
|
2014
|
|
2015
|
|
2014
|
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Reconciliation of GAAP Net Income to
|
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Adjusted EBITDA(1):
|
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|
|
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|
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GAAP net income
|
|
|
|
$
|
4,960,000
|
|
|
5,875,000
|
|
|
17,770,000
|
|
|
17,163,000
|
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Income taxes
|
|
|
|
2,235,000
|
|
|
2,955,000
|
|
|
8,107,000
|
|
|
9,423,000
|
|
Net interest (income) expense and other
|
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|
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(35,000
|
)
|
|
1,737,000
|
|
|
125,000
|
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|
5,252,000
|
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Amortization of stock-based compensation
|
|
|
|
1,244,000
|
|
|
1,070,000
|
|
|
3,642,000
|
|
|
3,086,000
|
|
Depreciation and other amortization
|
|
|
|
3,227,000
|
|
|
3,210,000
|
|
|
9,578,000
|
|
|
9,757,000
|
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Strategic alternatives analysis expenses
|
|
|
|
-
|
|
|
-
|
|
|
585,000
|
|
|
-
|
|
Restructuring benefit related to the wind-down of microsatellite
product line
|
|
|
|
-
|
|
|
(56,000
|
)
|
|
-
|
|
|
(56,000
|
)
|
Adjusted EBITDA
|
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|
|
$
|
11,631,000
|
|
|
14,791,000
|
|
|
39,807,000
|
|
|
44,625,000
|
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|
|
|
|
|
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(1)
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Represents earnings before interest, income taxes, depreciation and
amortization of intangibles and stock-based compensation, strategic
alternatives analysis expenses and restructuring benefits related to
the wind-down of the microsatellite product line of the Company's
mobile data communications segment. Adjusted EBITDA is a non-GAAP
operating metric used by management in assessing the Company's
operating results. The Company's definition of Adjusted 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. 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 (News - Alert) filings, in assessing its ability
to generate cash flow and service debt.
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ECMTL
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