Comtech Telecommunications Corp. Announces Results for the First Quarter of Fiscal 2009
MELVILLE, N.Y., Dec 4, 2008 (GlobeNewswire via COMTEX News Network) -- Comtech Telecommunications Corp. (Nasdaq:CMTL) today reported its operating results for the three months ended October 31, 2008.
Net sales for the first quarter of fiscal 2009 were $191.9 million compared to $115.1 million for the first quarter of fiscal 2008, reflecting core organic growth in all three of our segments and incremental sales achieved in connection with the Company's purchase of Radyne Corporation.
GAAP net income was $22.4 million, or $0.80 per diluted share, for the three months ended October 31, 2008 compared to $14.7 million, or $0.54 per diluted share, for the three months ended October 31, 2007. GAAP net income for the three months ended October 31, 2008 has been reduced by a one-time charge of $6.2 million ($0.22 per diluted share) for the amortization of acquired in-process research and development associated with the Radyne acquisition.
Non-GAAP net income for the three months ended October 31, 2008, which excludes the amortization of stock-based compensation expense and amortization of acquired in-process research and development, was $30.2 million, or $1.07 per diluted share, as compared to Non-GAAP net income of $16.5 million, or $0.59 per diluted share, for the three months ended October 31, 2007.
In commenting on the Company's performance during the first quarter of fiscal 2009, Fred Kornberg, President and Chief Executive Officer, stated, "Although general business conditions are more difficult than usual, our first quarter results were outstanding and we are pleased with our strong performance. The execution of our integration and restructuring plans has exceeded our expectations and our ability to execute in these challenging times is a testament to our leadership positions and the successful strategies that we have implemented over the past several years. We continue to expect that fiscal 2009 will be another record year."
Selected Fiscal 2009 First Quarter Financial Metrics and Other Items
* On August 1, 2008 (the beginning of our fiscal year 2009), and as
more fully described in our Form 10-Q filed earlier today, we
purchased Radyne Corporation using a portion of our existing cash
and cash equivalents for a preliminary aggregate purchase price
of approximately $231.7 million (including estimated transaction
costs and payments made for outstanding share-based stock
awards). At October 31, 2008, we had $211.5 million of
unrestricted cash and cash equivalents on hand.
* Bookings for the three months ended October 31, 2008 and 2007
were $158.6 million and $235.0 million, respectively. Backlog as
of October 31, 2008 was $219.1 million compared to $201.1 million
as of July 31, 2008 and $248.9 million as of October 31, 2007.
* Earnings before interest, taxes, depreciation and amortization,
including amortization of acquired in-process research and
development ("EBITDA"), were $50.0 million and $23.9 million for
the three months ended October 31, 2008 and 2007, respectively.
* Net cash provided by operating activities was $2.7 million for
the three months ended October 31, 2008 compared to cash used in
operating activities of $9.7 million for the three months ended
October 31, 2007. The net increase in cash provided by operating
activities was primarily driven by significant increases in net
sales and profits partially offset by an increase in net working
capital requirements during the three months ended October 31,
2008.
* Interest income and other was $1.3 million for the three months
ended October 31, 2008 as compared to $4.4 million for the three
months ended October 31, 2007. The decrease in interest income
was primarily due to the significant reduction in our cash and
cash equivalents as a result of our August 1, 2008 acquisition of
Radyne and the significant year-over-year decline in interest
rates.
* Our effective tax rate was 38.7% and 34.5% in the first quarter
of fiscal 2009 and 2008, respectively. Our effective tax rate for
the three months ended October 31, 2008 reflects the fact that we
recorded an amortization charge of $6.2 million for acquired
in-process research and development, which is non-deductible for
income tax purposes. In addition, we recorded discrete tax
benefits of $0.8 million for the three months ended October 31,
2008, principally relating to the passage of legislation that
included the retroactive extension of the Federal research and
experimentation credit from December 31, 2007 to December
31, 2009. Excluding these items, our estimated effective tax rate
for the three months ended October 31, 2008 was 35.0%.
Conference Call
The Company has scheduled an investor conference call for 8:30 a.m. (ET) on Friday, December 5, 2008. 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) 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) 220-0874. 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.
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, risks associated with the results of ongoing investigations into the Company's compliance with export regulations, risks associated with the Radyne acquisition, 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
October 31,
---------------------------
2008 2007
------------- -------------
Net sales $ 191,915,000 115,055,000
Cost of sales 104,936,000 64,577,000
------------- -------------
Gross profit 86,979,000 50,478,000
------------- -------------
Expenses:
Selling, general and administrative 28,978,000 20,399,000
Research and development 14,125,000 11,041,000
Amortization of acquired in-process
research and development 6,200,000 --
Amortization of intangibles 1,793,000 379,000
------------- -------------
51,096,000 31,819,000
------------- -------------
Operating income 35,883,000 18,659,000
Other expense (income):
Interest expense 666,000 677,000
Interest income and other (1,277,000) (4,447,000)
------------- -------------
Income before provision for income taxes 36,494,000 22,429,000
Provision for income taxes 14,123,000 7,735,000
------------- -------------
Net income $ 22,371,000 14,694,000
============= =============
Net income per share:
Basic $ 0.91 0.61
============= =============
Diluted $ 0.80 0.54
============= =============
Weighted average number of common shares
outstanding - basic 24,586,000 23,924,000
============= =============
Weighted average number of common and
common equivalent shares outstanding
assuming dilution - diluted 28,537,000 28,208,000
============= =============
COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
October 31, July 31,
2008 2008
------------- -------------
Assets (Unaudited) (Audited)
Current assets:
Cash and cash equivalents $ 211,472,000 410,067,000
Accounts receivable, net 113,014,000 70,040,000
Inventories, net 115,116,000 85,966,000
Prepaid expenses and other current
assets 9,758,000 5,891,000
Deferred tax asset 15,986,000 10,026,000
------------- -------------
Total current assets 465,346,000 581,990,000
Property, plant and equipment, net 39,188,000 34,269,000
Goodwill 147,566,000 24,363,000
Intangibles with finite lives, net 60,971,000 7,505,000
Deferred financing costs, net 1,221,000 1,357,000
Other assets, net 645,000 3,636,000
------------- -------------
Total assets $ 714,937,000 653,120,000
============= =============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 33,243,000 31,423,000
Accrued expenses and other current
liabilities 46,537,000 49,671,000
Customer advances and deposits 17,542,000 15,287,000
Current installments of other
obligations 73,000 108,000
Interest payable 525,000 1,050,000
Income taxes payable 7,304,000 --
------------- -------------
Total current liabilities 105,224,000 97,539,000
Convertible senior notes 105,000,000 105,000,000
Other liabilities 2,216,000 --
Income taxes payable 3,404,000 1,909,000
Deferred tax liability 22,907,000 5,870,000
------------- -------------
Total liabilities 238,751,000 210,318,000
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 24,953,198 shares and
24,600,166 shares at October 31,
2008 and July 31, 2008, respectively 2,495,000 2,460,000
Additional paid-in capital 197,224,000 186,246,000
Retained earnings 276,652,000 254,281,000
------------- -------------
476,371,000 442,987,000
Less:
Treasury stock (210,937 shares) (185,000) (185,000)
------------- -------------
Total stockholders' equity 476,186,000 442,802,000
------------- -------------
Total liabilities and
stockholders' equity $ 714,937,000 653,120,000
============= =============
COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures to GAAP
Financial Measures
(Unaudited)
Three Months Ended
October 31,
---------------------------
2008 2007
------------- -------------
Reconciliation of Non-GAAP Net
Income to GAAP Net Income(1):
Non-GAAP net income $ 30,207,000 16,472,000
Amortization of acquired in-process
research and development (6,200,000) --
Amortization of stock-based
compensation (2,418,000) (2,719,000)
Tax effect of stock-based compensation
expense 782,000 941,000
------------- -------------
GAAP net income $ 22,371,000 14,694,000
============= =============
Reconciliation of Non-GAAP Diluted
Earnings Per Share to GAAP Diluted
Earnings Per Share(1):
Non-GAAP diluted earnings per share $ 1.07 0.59
Amortization of acquired in-process
research and development (0.22) --
Amortization of stock-based
compensation (0.08) (0.08)
Tax effect of stock-based compensation
expense 0.03 0.03
------------- -------------
GAAP diluted earnings per share $ 0.80 0.54
============= =============
Reconciliation of GAAP Net Income to
EBITDA(2):
GAAP net income $ 22,371,000 14,694,000
Income taxes 14,123,000 7,735,000
Net interest income and other (611,000) (3,770,000)
Amortization of acquired in-process
research and development 6,200,000 --
Amortization of stock-based
compensation 2,418,000 2,719,000
Depreciation and other amortization 5,466,000 2,491,000
------------- -------------
EBITDA $ 49,967,000 23,869,000
============= =============
(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 acquired in-process research and development and
stock-based compensation, along with other information contained
in its SEC filings, in assessing the Company's operating results.
(2) 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 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.