Comtech Telecommunications Corp. Announces Results for the First Quarter of Fiscal 2013 and Provides Updated Fiscal 2013 Guidance
MELVILLE, N.Y.--(BUSINESS WIRE)--
December 6, 2012--Comtech Telecommunications Corp. (NASDAQ: CMTL)
today reported its operating results for the first quarter ended October
31, 2012.
Net sales for the first quarter of fiscal 2013 were $91.0 million
compared to $113.4 million for the first quarter of fiscal 2012. The
period-over-period decrease in net sales is primarily due to lower net
sales, as expected, in the Company's mobile data communications segment.
GAAP net income was $7.4 million, or $0.36 per diluted share, for the
first quarter of fiscal 2013 as compared to $12.6 million, or $0.47 per
diluted share, for the first quarter of fiscal 2012.
Adjusted EBITDA was $18.5 million for the first quarter of fiscal 2013,
as compared to $23.4 million for the comparative period in fiscal 2012.
The Company also provided updated fiscal 2013 guidance. Fiscal 2013
revenue is now expected to range from $350.0 million to $365.0 million
and GAAP diluted earnings per share is now expected to be between $1.26
and $1.34. Adjusted EBITDA for fiscal 2013 is now expected to be in the
range of $65.0 million to $68.0 million.
In commenting on the Company's performance and business outlook, Fred
Kornberg, President and Chief Executive Officer, stated, "Despite
difficult market conditions, we are pleased with our first quarter
results and the strong cash flows generated from our business."
Mr. Kornberg added, "Although our long term growth plans have not
changed, we believe that the U.S. government's failure to resolve the
"fiscal cliff" has resulted in increased uncertainty throughout our
customer base. As such, we have adjusted our fiscal 2013 business
outlook and updated our guidance accordingly."
Selected Fiscal 2013 First Quarter Financial Metrics and Other Items
Backlog as of October 31, 2012 was $133.3 million compared to $153.9
million as of July 31, 2012.
Total bookings for the three months ended October 31, 2012 were $70.4
million compared to $95.4 million for the three months ended October
31, 2011.
The Company's first quarter results for fiscal 2013 include a pre-tax
benefit of $2.4 million related to a change in fair value of the
earn-out liability associated with the Company's acquisition of
Stampede Technologies, Inc., and also include a pre-tax net charge of
$0.8 million related to a restructuring plan to wind-down the
microsatellite product line of the Company's mobile data
communications segment.
The Company's first quarter results for fiscal 2012 included a pre-tax
benefit of $5.6 million associated with the finalization of pricing
and the related increased funding award for certain U.S. Army Movement
Tracking System ("MTS") and Blue Force Tracking-1 ("BFT-1") orders and
also included a pre-tax expense of $2.6 million associated with costs
related to a withdrawn fiscal 2011 contested proxy solicitation.
Adjusted EBITDA was $18.5 million for the three months ended October
31, 2012, as compared to $23.4 million for the three months ended
October 31, 2011. Adjusted EBITDA is a Non-GAAP financial measure and
is defined in the below table.
The Company's effective income tax rate in the first quarter of fiscal
2013 was 35.5%, and does not include any benefit associated with the
federal research and experimentation credit which expired on December
31, 2011. The Company's effective income tax rate for the twelve
months ending July 31, 2013 is expected to approximate 35.5%,
excluding any potential discrete tax adjustments. The increase in the
Company's estimated fiscal 2013 effective tax rate as compared to the
Company's previously expected rate of 34.5% is principally
attributable to expected product and geographical mix changes in its
updated fiscal 2013 business outlook.
At October 31, 2012, the Company had $374.5 million of cash and cash
equivalents, which does not reflect a quarterly dividend payment of
$4.8 million that was paid on November 20, 2012.
As separately announced today, the Company's Board of Directors
authorized a new $50.0 million stock repurchase program, which will be
effective upon the completion of the Company's current $250.0 million
stock repurchase program, of which $11.3 million remains available for
stock repurchases. Together with the new $50.0 million stock
repurchase program, the Company is authorized to repurchase up to an
additional $61.3 million of its common stock.
The Company does not normally provide quarterly guidance. However,
since second quarter sales and earnings per share are expected to be
significantly lower compared to the other quarters in fiscal 2013, the
Company notes that (i) sales in the second quarter of fiscal 2013 are
expected to be approximately 15.0% lower than first quarter sales and
(ii) diluted GAAP earnings per share for the second quarter are
expected to be between $0.10 and $0.12.
Additional information about the Company's updated fiscal 2013
guidance is contained in the Company's first 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, December 7, 2012. 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)
952-1908 (domestic), or (785) 424-1827 (international) and using the
conference I.D. of "Comtech." A replay of the conference call will be
available for seven days by dialing (800) 374-1216 or (402) 220-0681. 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 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, 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 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, 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; frequent new product
announcements and enhancements; changing customer demands; changes in
prevailing economic and political conditions; risks associated with the
Company's legal proceedings and other matters; risks associated with
certain U.S. government investigations; risks associated with the
Company's BFT-1 contracts, including its ongoing negotiations with the
U.S. Army regarding pricing for the engineering services, program
management and satellite network operations, and the post-award audit of
its original BFT-1 contract; 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 October 31,
2012
2011
Net sales
$
90,953,000
113,361,000
Cost of sales
49,150,000
62,081,000
Gross profit
41,803,000
51,280,000
Expenses:
Selling, general and administrative
16,810,000
24,118,000
Research and development
10,049,000
9,684,000
Amortization of intangibles
1,582,000
1,719,000
28,441,000
35,521,000
Operating income
13,362,000
15,759,000
Other expenses (income):
Interest expense
2,111,000
2,146,000
Interest income and other
(276,000
)
(496,000
)
Income before provision for income taxes
11,527,000
14,109,000
Provision for income taxes
4,092,000
1,508,000
Net income
$
7,435,000
12,601,000
Net income per share:
Basic
$
0.43
0.54
Diluted
$
0.36
0.47
Weighted average number of common shares outstanding — basic
17,379,000
23,257,000
Weighted average number of common and common equivalent shares outstanding
— diluted
23,444,000
29,147,000
Dividends declared per issued and outstanding common share as of
the applicable dividend record date
$
0.275
0.275
COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
October 31, 2012
July 31, 2012
Assets
(Unaudited)
(Audited)
Current assets:
Cash and cash equivalents
$
374,506,000
367,894,000
Accounts receivable, net
46,927,000
56,242,000
Inventories, net
68,648,000
72,361,000
Prepaid expenses and other current assets
5,645,000
8,196,000
Deferred tax asset, net
10,269,000
12,183,000
Total current assets
505,995,000
516,876,000
Property, plant and equipment, net
21,861,000
22,832,000
Goodwill
137,354,000
137,354,000
Intangibles with finite lives, net
37,251,000
38,833,000
Deferred tax asset, net, non-current
-
438,000
Deferred financing costs, net
2,135,000
2,487,000
Other assets, net
998,000
958,000
Total assets
$
705,594,000
719,778,000
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
$
14,210,000
20,967,000
Accrued expenses and other current liabilities
33,088,000
40,870,000
Dividends payable
4,784,000
4,773,000
Customer advances and deposits
11,930,000
14,516,000
Interest payable
3,029,000
1,529,000
Income taxes payable
13,000
-
Total current liabilities
67,054,000
82,655,000
Convertible senior notes
200,000,000
200,000,000
Other liabilities
3,741,000
5,098,000
Income taxes payable
2,725,000
2,624,000
Deferred tax liability, net
1,598,000
-
Total liabilities
275,118,000
290,377,000
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 28,958,428 shares and 28,931,679 shares at
October 31, 2012 and July 31, 2012, respectively
2,896,000
2,893,000
Additional paid-in capital
359,879,000
361,458,000
Retained earnings
406,878,000
404,227,000
769,653,000
768,578,000
Less:
Treasury stock, at cost (11,564,059 shares)
(339,177,000
)
(339,177,000
)
Total stockholders' equity
430,476,000
429,401,000
Total liabilities and stockholders' equity
$
705,594,000
719,778,000
COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures to GAAP Financial
Measures
(Unaudited)
Three Months Ended October 31,
2012
2011
Reconciliation of GAAP Net Income to Adjusted EBITDA(1):
GAAP net income
$
7,435,000
12,601,000
Income taxes
4,092,000
1,508,000
Net interest expense and other
1,835,000
1,650,000
Amortization of stock-based compensation
745,000
873,000
Depreciation and other amortization
3,607,000
4,139,000
Restructuring charges related to the wind-down of microsatellite product
line
822,000
-
Costs related to withdrawn fiscal 2011 contested proxy solicitation
-
2,638,000
Adjusted EBITDA
$
18,536,000
23,409,000
(1)
Represents earnings before interest, income taxes, depreciation
and amortization of intangibles and stock-based compensation and
restructuring charges related to the wind-down of the
microsatellite product line of the Company's mobile data
communications segment and costs related to a withdrawn fiscal
2011 contested proxy solicitation. 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 filings, in assessing its ability
to generate cash flow and service debt.
ECMTL
Media: Michael D. Porcelain, Senior Vice President and Chief
Financial Officer 631-962-7000 Info@comtechtel.com