Comtech Telecommunications Corp. Announces Results for the First Quarter of Fiscal 2015 and Provides Updated Fiscal 2015 Guidance
MELVILLE, N.Y.--(BUSINESS WIRE)--
December 10, 2014-- Comtech Telecommunications Corp. (NASDAQ: CMTL)
today reported its operating results for the three months ended October
31, 2014.
Net sales for the three months ended October 31, 2014 were $76.4 million
compared to $83.4 million for the three months ended October 31, 2013.
The period-over-period decrease reflects lower net sales in all three of
the Company's operating segments.
GAAP net income was $5.2 million, or $0.32 per diluted share, for the
three months ended October 31, 2014 as compared to $5.3 million, or
$0.28 per diluted share, for the three months ended October 31, 2013.
Excluding expenses of $0.6 million associated with the Company's
strategic alternatives analysis, Non-GAAP net income for the three
months ended October 31, 2014 was $5.6 million, or $0.34 per diluted
share.
The Company also announced that it is tightening its fiscal 2015 revenue
guidance which is now expected to range from $355.0 million to $365.0
million. Despite incurring $0.6 million of expenses associated with the
Company's strategic alternatives analysis, the Company is maintaining
its GAAP diluted earnings per share guidance range of $1.70 to $1.86.
The Company is also maintaining its adjusted EBITDA (as defined in the
below table) guidance which is expected to range from $63.0 million to
$67.0 million.
In commenting on the Company's performance and updated fiscal 2015
business outlook, Fred Kornberg, President and Chief Executive Officer,
stated, "Although market conditions remain challenging, we are pleased
that we posted solid results in the first quarter. While we have become
more cautious, we still expect top and bottom line growth in fiscal
2015."
Selected Fiscal 2015 First Quarter Financial Metrics and Other Items
Backlog as of October 31, 2014 was $149.3 million compared to $133.4
million as of July 31, 2014.
Total bookings for the three months ended October 31, 2014 were $92.3
million compared to $76.5 million for the three months ended October
31, 2013.
Adjusted EBITDA was $13.3 million for the three months ended October
31, 2014, as compared to $14.3 million for the three months ended
October 31, 2013. Adjusted EBITDA is a Non-GAAP financial measure and
is defined in the below table.
The Company's effective income tax rate for the three months ended
October 31, 2014 was 35.0% and is expected to approximate 35.0% for
the twelve months ending July 31, 2015, excluding any potential
discrete tax adjustments or legislative changes.
As of October 31, 2014, the Company had $144.5 million of cash and
cash equivalents which does not reflect the quarterly dividend payment
of $4.9 million that was paid on November 19, 2014.
As of December 9, 2014, the Company is authorized to repurchase
approximately $13.7 million of additional common stock pursuant to its
existing stock repurchase program. During the three months ended
October 31, 2014, the Company did not repurchase any shares of its
common stock.
The Company expects that its fiscal 2015 second quarter financial
results will be similar to the first quarter of fiscal 2015. Growth in
fiscal 2015 will be heavily weighted towards the second half of the
fiscal year, with the fourth quarter of fiscal 2015 being the peak
quarter, by far.
Additional information about the Company's updated fiscal 2015 guidance
is included 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 Thursday, December 11, 2014. 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. of "Comtech." A replay of the conference call will be
available for seven days by dialing (800) 695-2533 or (402) 530-9029. 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 leader in most of 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; 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 large contracts, 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,
2014
2013
Net sales
$
76,391,000
83,368,000
Cost of sales
41,066,000
46,990,000
Gross profit
35,325,000
36,378,000
Expenses:
Selling, general and administrative
15,526,000
16,198,000
Research and development
10,019,000
8,499,000
Amortization of intangibles
1,561,000
1,582,000
27,106,000
26,279,000
Operating income
8,219,000
10,099,000
Other expenses (income):
Interest expense
265,000
2,018,000
Interest income and other
(84,000
)
(273,000
)
Income before provision for income taxes
8,038,000
8,354,000
Provision for income taxes
2,813,000
3,049,000
Net income
$
5,225,000
5,305,000
Net income per share:
Basic
$
0.32
0.32
Diluted
$
0.32
0.28
Weighted average number of common shares outstanding - basic
16,217,000
16,454,000
Weighted average number of common and common equivalent shares
outstanding - diluted
16,513,000
22,698,000
Dividends declared per issued and outstanding common share as of the
applicable dividend record date
$
0.30
0.275
COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
October 31, 2014
July 31, 2014
(Unaudited)
(Audited)
Assets
Current assets:
Cash and cash equivalents
$
144,536,000
154,500,000
Accounts receivable, net
61,327,000
54,887,000
Inventories, net
66,384,000
61,332,000
Prepaid expenses and other current assets
6,585,000
9,947,000
Deferred tax asset, net
9,849,000
10,178,000
Total current assets
288,681,000
290,844,000
Property, plant and equipment, net
17,674,000
18,536,000
Goodwill
137,354,000
137,354,000
Intangibles with finite lives, net
24,659,000
26,220,000
Deferred financing costs, net
—
65,000
Other assets, net
871,000
833,000
Total assets
$
469,239,000
473,852,000
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
$
17,800,000
18,902,000
Accrued expenses and other current liabilities
25,881,000
29,803,000
Dividends payable
4,863,000
4,844,000
Customer advances and deposits
11,212,000
12,610,000
Interest payable
29,000
29,000
Income taxes payable
551,000
—
Total current liabilities
60,336,000
66,188,000
Other liabilities
4,514,000
4,364,000
Income taxes payable
1,661,000
2,743,000
Deferred tax liability, net
4,094,000
3,632,000
Total liabilities
70,605,000
76,927,000
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 31,068,829 shares and 31,016,469 shares at
October 31, 2014 and July 31, 2014, respectively
3,107,000
3,102,000
Additional paid-in capital
422,638,000
421,240,000
Retained earnings
409,749,000
409,443,000
835,494,000
833,785,000
Less:
Treasury stock, at cost (14,857,582 shares at October 31 and July
31, 2014)
(436,860,000
)
(436,860,000
)
Total stockholders' equity
398,634,000
396,925,000
Total liabilities and stockholders' equity
$
469,239,000
473,852,000
COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures to GAAP Financial
Measures
(Unaudited)
Three months ended October 31,
2014
2013
Reconciliation of GAAP Net Income to Adjusted EBITDA(1):
GAAP net income
$
5,225,000
5,305,000
Income taxes
2,813,000
3,049,000
Net interest expense and other
181,000
1,745,000
Amortization of stock-based compensation
1,337,000
947,000
Depreciation and other amortization
3,169,000
3,292,000
Strategic alternatives analysis expenses
585,000
—
Adjusted EBITDA
$
13,310,000
14,338,000
(1)
Represents earnings before interest, income taxes, depreciation and
amortization of intangibles and stock-based compensation and
strategic alternatives analysis expenses. 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