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Comtech Telecommunications Corp. Announces Results for Fiscal 2007 Fourth Quarter and Full Year

September 19, 2007 at 12:00 AM EDT

MELVILLE, N.Y., Sep 19, 2007 (BUSINESS WIRE) --

Comtech Telecommunications Corp. (NASDAQ: CMTL) today reported its operating results for the fourth quarter and fiscal year ended July 31, 2007. Net sales, operating income, EBITDA, net income and diluted earnings per share for the full year were at all time highs.

Net sales for the fourth quarter of fiscal 2007 were $117.8 million compared to $100.2 million for the fourth quarter of fiscal 2006, reflecting growth in the mobile data communications and RF microwave amplifiers segments, partially offset by lower sales in the telecommunications transmission segment.

GAAP net income was $17.1 million, or $0.63 per diluted share, for the three months ended July 31, 2007 compared to $11.8 million, or $0.45 per diluted share, for the three months ended July 31, 2006. Non-GAAP net income, which excludes the amortization of stock-based compensation expense, was $18.5 million, or $0.67 per diluted share, for the three months ended July 31, 2007 as compared to Non-GAAP net income of $12.9 million, or $0.48 per diluted share, for the three months ended July 31, 2006.

Net sales for the twelve months ended July 31, 2007 were $445.7 million, compared to $391.5 million for the twelve months ended July 31, 2006. GAAP net income was $65.2 million, or $2.42 per diluted share, for the twelve months ended July 31, 2007 compared to $45.3 million, or $1.72 per diluted share, for the twelve months ended July 31, 2006. Non-GAAP net income, which excludes the amortization of stock-based compensation expense, was $70.2 million, or $2.57 per diluted share, for the twelve months ended July 31, 2007 as compared to Non-GAAP net income of $49.6 million, or $1.86 per diluted share, for the twelve months ended July 31, 2006.

In commenting on the Company's performance during the fourth quarter of fiscal 2007, Fred Kornberg, President and Chief Executive Officer, noted, "The fourth quarter was an outstanding finish to another record year for Comtech. The fundamentals across all three of our business segments remain solid and we continue to see strong demand for our product and service offerings, as evidenced by the sizable bookings we've received in recent weeks on key programs."

Mr. Kornberg concluded, "As we look forward to fiscal 2008, we are confident that we are well-positioned for another year of record sales and earnings."

Selected Fourth Quarter Fiscal 2007 Financial Metrics and Other Items

-- Bookings for the three and twelve months ended July 31, 2007 were $93.8 million and $388.7 million, respectively, compared to $147.9 million and $424.2 million for the three and twelve months ended July 31, 2006, respectively. Fourth quarter fiscal 2007 satellite earth station bookings returned to levels experienced in the first and second quarters of fiscal 2007. Backlog as of July 31, 2007 was $129.0 million compared to $153.0 million as of April 30, 2007 and $186.0 million as of July 31, 2006.

-- Earnings before interest, taxes, depreciation and amortization ("EBITDA") were $27.2 million and $102.5 million for the three and twelve months ended July 31, 2007, respectively, versus $20.3 million and $78.3 million for the three and twelve months ended July 31, 2006, respectively.

-- Cash provided by operating activities for fiscal 2007 was $89.2 million compared to $44.3 million for fiscal 2006.

-- In our mobile data communications segment, during the fourth quarter of fiscal 2007, we recorded a favorable cumulative gross profit adjustment, which resulted in an increase to operating income of $5.3 million. This adjustment, which is discussed in our Form 10-K filed earlier today, primarily related to the finalization of total contract costs in connection with the completion of the original U.S. Army Movement Tracking System ("MTS") contract. During the fourth quarter of fiscal 2006, we also recorded a favorable cumulative gross profit adjustment on the MTS contract, which resulted in an increase to operating income of $3.3 million.

-- Our effective tax rate was 34.5% in the fourth quarter of fiscal 2007. Our effective tax rate for the fourth quarter and full fiscal year 2007, excluding certain adjustments which are more fully described in our Form 10-K filed earlier today, approximated 35.0%.

-- Amortization of stock-based compensation expense for the three months ended July 31, 2007 and 2006 was $2.1 million and $1.5 million, respectively. Amortization of stock-based compensation expense for the twelve months ended July 31, 2007 and 2006 was $7.4 million and $5.7 million, respectively.

Conference Call

The Company has scheduled an investor conference call for 8:30 AM (ET) on Thursday, September 20, 2007. Investors and the public are invited to access a live webcast of the conference call from the news section of the Comtech web site at www.comtechtel.com. Alternatively, investors can access the conference call by dialing (800) 909-5202 (domestic) or (785) 830-7975 (international) and using the conference I.D. of "Comtech." A replay of the conference call will be available for seven days by dialing (402) 220-1116. 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 or ineffective. 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, 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 timing of receipt of, and the Company's performance on, new 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, 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)                 (Audited)
                Three months ended July 31, Fiscal year ended July 31,
                --------------------------- --------------------------
                    2007          2006         2007          2006
                ------------- ------------- ------------ -------------

Net sales       $117,814,000   100,206,000  445,684,000   391,511,000
Cost of sales     65,319,000    56,413,000  252,389,000   232,210,000
                ------------- ------------- ------------ -------------
 Gross profit     52,495,000    43,793,000  193,295,000   159,301,000
                ------------- ------------- ------------ -------------

Expenses:
 Selling,
  general
  and
  administrative  19,842,000    19,801,000   73,312,000    67,071,000
 Research and
  development      9,646,000     6,942,000   32,469,000    25,834,000
 Amortization of
  intangibles        564,000       669,000    2,592,000     2,465,000
                ------------- ------------- ------------ -------------
                  30,052,000    27,412,000  108,373,000    95,370,000
                ------------- ------------- ------------ -------------

Operating income  22,443,000    16,381,000   84,922,000    63,931,000

Other expense
 (income):
 Interest
  expense            679,000       670,000    2,731,000     2,687,000
 Interest income
  and other       (4,303,000)   (2,839,000) (14,208,000)   (9,243,000)
                ------------- ------------- ------------ -------------

Income before
 provision for
 income taxes     26,067,000    18,550,000   96,399,000    70,487,000
Provision for
 income taxes      8,980,000     6,771,000   31,186,000    25,218,000
                ------------- ------------- ------------ -------------
Net income      $ 17,087,000    11,779,000   65,213,000    45,269,000
                ============= ============= ============ =============

Net income per
 share:
 Basic          $       0.73          0.52         2.81          1.99
                ============= ============= ============ =============
 Diluted        $       0.63          0.45         2.42          1.72
                ============= ============= ============ =============

Weighted average
 number of
 common shares
 outstanding -
 basic            23,508,000    22,830,000   23,178,000    22,753,000
                ============= ============= ============ =============

Weighted average
 number of
 common and
 common
 equivalent
 shares
 outstanding
 assuming
 dilution -
 diluted          27,979,000    27,289,000   27,603,000    27,324,000
                ============= ============= ============ =============

                   COMTECH TELECOMMUNICATIONS CORP.
                           AND SUBSIDIARIES
                Condensed Consolidated Balance Sheets

                                                     July 31,
                                            --------------------------
                                                2007         2006
                                            ------------- ------------
                   Assets                     (Audited)    (Audited)
Current assets:
    Cash and cash equivalents               $342,903,000  251,587,000
    Restricted cash                                    -    1,003,000
    Accounts receivable, net                  73,585,000   70,047,000
    Inventories, net                          61,987,000   61,043,000
    Prepaid expenses and other current
     assets                                    6,734,000    7,178,000
    Deferred tax asset - current               9,380,000    7,591,000
                                            ------------- ------------
                Total current assets         494,589,000  398,449,000

Property, plant and equipment, net            29,282,000   24,732,000
Goodwill                                      24,387,000   22,244,000
Intangibles with finite lives, net             5,717,000    6,855,000
Deferred financing costs, net                  1,903,000    2,449,000
Other assets, net                                464,000      537,000
                                            ------------- ------------
                Total assets                $556,342,000  455,266,000
                                            ============= ============

    Liabilities and Stockholders' Equity
Current liabilities:
    Accounts payable                        $ 26,137,000   28,337,000
    Accrued expenses and other current
     liabilities                              47,332,000   41,230,000
    Customer advances and deposits            20,056,000    3,544,000
    Deferred service revenue                           -    9,896,000
    Current installments of other
     obligations                                 135,000      154,000
    Interest payable                           1,050,000    1,050,000
    Income taxes payable                       2,796,000    5,252,000
                                            ------------- ------------
                Total current liabilities     97,506,000   89,463,000

Convertible senior notes                     105,000,000  105,000,000
Other obligations, less current installments     108,000      243,000
Deferred tax liability - non-current           7,960,000    6,318,000
                                            ------------- ------------
                Total liabilities            210,574,000  201,024,000

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
     24,016,329 shares and 23,052,593 shares
     at July 31, 2007 and 2006, respectively   2,402,000    2,305,000
    Additional paid-in capital               165,703,000  139,487,000
    Retained earnings                        177,848,000  112,635,000
                                            ------------- ------------
                                             345,953,000  254,427,000
      Less:
        Treasury stock (210,937 shares)         (185,000)    (185,000)
                                            ------------- ------------
                    Total stockholders'
                     equity                  345,768,000  254,242,000
                                            ------------- ------------
                    Total liabilities and
                     stockholders' equity   $556,342,000  455,266,000
                                            ============= ============

                   COMTECH TELECOMMUNICATIONS CORP.
                           AND SUBSIDIARIES
   Reconciliation of Non-GAAP Financial Measures to GAAP Financial
                               Measures
                             (Unaudited)

                Three Months Ended July 31, Fiscal year Ended July 31,
                --------------------------- --------------------------
                    2007         2006          2007         2006
                ------------ -------------- ------------ -------------
Reconciliation
 of Non-GAAP Net
 Income To GAAP
 Net Income(1):
  Non-GAAP net
   income       $18,455,000    12,912,000    70,220,000   49,638,000
  Amortization
   of stock-
   based
   compensation  (2,108,000)   (1,469,000)   (7,401,000)  (5,681,000)
  Tax effect of
   stock-based
   compensation
   expense          740,000       336,000     2,394,000    1,312,000
                ------------ -------------- ------------ -------------
 GAAP net income$17,087,000    11,779,000    65,213,000   45,269,000
                ============ ============== ============ =============

Reconciliation
 of Non-GAAP
 Diluted
 Earnings Per
 Share To GAAP
 Diluted
 Earnings Per
 Share(1),(2):
  Non-GAAP
   diluted
   earnings per
   share        $      0.67          0.48          2.57         1.86
  Amortization
   of stock-
   based
   compensation       (0.06)        (0.04)        (0.22)       (0.19)
  Tax effect of
   stock-based
   compensation
   expense             0.02          0.01          0.07         0.05
                ------------ -------------- ------------ -------------
  GAAP diluted
   earnings per
   share        $      0.63          0.45          2.42         1.72
                ============ ============== ============ =============

Reconciliation
 of GAAP Net
 Income to
 EBITDA(3):
  GAAP net
   income       $17,087,000    11,779,000    65,213,000   45,269,000
  Income taxes    8,980,000     6,771,000    31,186,000   25,218,000
  Net interest
   income and
   other         (3,624,000)   (2,169,000)  (11,477,000)  (6,556,000)
  Amortization
   of stock-
   based
   compensation   2,108,000     1,469,000     7,401,000    5,681,000
  Depreciation
   and
   amortization   2,641,000     2,443,000    10,128,000    8,707,000
                ------------ -------------- ------------ -------------
  EBITDA        $27,192,000    20,293,000   102,451,000   78,319,000
                ============ ============== ============ =============

(1) Non-GAAP net income is used by management in assessing the
 Company's operating results. The Company believes that investors and
 analysts may use non-GAAP measures that exclude the amortization of
 stock-based compensation, along with other information contained in
 its SEC filings, in assessing the Company's operating results.

(2) Earnings per share information for the full fiscal year may not
 equal the total of the quarters within the year as a result of
 rounding.

(3) Represents earnings before interest, income taxes, depreciation
 and amortization of intangibles and stock-based compensation. EBITDA
 is a non-GAAP operating metric used by management in assessing the
 Company's operating results and ability to meet debt service
 requirements. 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

SOURCE: Comtech Telecommunications Corp.

Media:
Robert G. Rouse, Executive Vice President
and Chief Operating Officer

Copyright Business Wire 2007

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