Comtech Telecommunications Corp. Announces Results for Fiscal 2013 Fourth Quarter and Full Year and Provides Initial Fiscal 2014 Guidance
MELVILLE, N.Y.--(BUSINESS WIRE)--
October 3, 2013 -- Comtech Telecommunications Corp. (NASDAQ:CMTL) today
reported its operating results for the fourth quarter and fiscal year
ended July 31, 2013.
Net sales for the fourth quarter and full year of fiscal 2013 were $84.4
million and $319.8 million, respectively, as compared to $112.8 million
and $425.1 million for the same periods in fiscal 2012. The fourth
quarter and full year decrease reflects lower net sales in all of the
Company's operating segments, most notably its mobile data
communications segment.
The Company reported GAAP diluted EPS of $0.28 and $0.97 for the fourth
quarter and full fiscal year ended July 31, 2013, respectively, as
compared to $0.38 and $1.42 for the comparative periods in fiscal 2012.
The Company also announced initial financial guidance for its July 31,
2014 fiscal year. The Company projects that sales for fiscal 2014 will
be between $320.0 million and $340.0 million. GAAP diluted EPS is
expected to be between $1.07 and $1.19. Adjusted EBITDA for fiscal 2014
is expected to be in the range of $53.0 million to $57.0 million.
In commenting on the Company's fiscal 2013 performance and fiscal 2014
business outlook, Fred Kornberg, President and Chief Executive Officer,
stated, "Fiscal 2013 ended on a positive note. The fourth quarter was
the highest quarter of bookings during the year and we ended the year
with solid backlog. As we look to fiscal 2014, we have seen signs of
stabilization in certain of our end-markets and believe that we will
achieve modest sales and operating income growth. Most importantly, we
believe we are well-positioned for further growth when global business
conditions meaningfully improve."
Selected Fiscal 2013 Fourth Quarter and Full Year Financial Metrics
and Other Items
Backlog as of July 31, 2013 was $189.7 million compared to $153.9
million as of July 31, 2012.
Total bookings for the three and twelve months ended July 31, 2013
were $144.0 million and $355.6 million, respectively, compared to
$129.3 million and $434.0 million for the three and twelve months
ended July 31, 2012, respectively.
Adjusted EBITDA was $14.0 million and $52.2 million for the three and
twelve months ended July 31, 2013, respectively, as compared to $21.6
million and $76.2 million for the three and twelve months ended July
31, 2012, respectively. Adjusted EBITDA is a Non-GAAP financial
measure and is defined in the below table.
The Company's effective income tax rate in the fourth quarter of
fiscal 2013 was 36.1%, which includes a net discrete tax expense of
less than $0.1 million. The Company's effective income tax rate of
35.2% for the twelve months ended July 31, 2013 reflects a net
discrete tax benefit of $0.2 million. The Company's effective income
tax rate, excluding discrete tax items in fiscal 2013, was 36.0% and
this rate is expected to increase to approximately 36.5% in fiscal
2014.
At July 31, 2013, the Company had $356.6 million of cash and cash
equivalents which does not reflect the quarterly dividend payment of
$4.5 million that was paid on August 20, 2013.
During the three months ended July 31, 2013, the Company repurchased
104,149 shares of its common stock at an aggregate cost of
approximately $2.7 million (including transaction costs). Since
establishing the Company's first repurchase program on September 23,
2010, the Company has repurchased a total of 12,397,564 shares of
common stock for approximately $365.9 million (including transaction
costs). The Company can make additional repurchases of up to $34.3
million pursuant to its existing $50.0 million stock repurchase
program.
The Company's 3.0% convertible senior notes are reflected as a current
liability in its consolidated balance sheet at July 31, 2013, as it is
possible that the holders of the notes may require the Company to
repurchase some or all of the outstanding notes on May 1, 2014.
In October 2013 (the first quarter of the Company's fiscal 2014) the
Company sold certain of its Sensor Enabled Notification System
("SENS") technology and products, including certain intellectual
property, to one of its customers for approximately $2.0 million.
Additional information about the Company's updated fiscal 2014
guidance is included in the Company's fourth 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, October 4, 2013. 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) 723-5782 or (402) 220-2663. 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; the extent and length of the current U.S.
government partial shutdown; 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 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)
(Audited)
Three months ended July 31,
Twelve months ended July 31,
2013
2012
2013
2012
Net sales
$
84,411,000
112,775,000
319,797,000
425,070,000
Cost of sales
49,051,000
63,640,000
178,967,000
241,561,000
Gross profit
35,360,000
49,135,000
140,830,000
183,509,000
Expenses:
Selling, general and administrative
15,648,000
23,357,000
63,265,000
87,106,000
Research and development
8,341,000
9,880,000
36,748,000
38,489,000
Amortization of intangibles
1,582,000
1,600,000
6,328,000
6,637,000
25,571,000
34,837,000
106,341,000
132,232,000
Operating income
9,789,000
14,298,000
34,489,000
51,277,000
Other expenses (income):
Interest expense
2,013,000
2,311,000
8,163,000
8,832,000
Interest income and other
(289,000
)
(295,000
)
(1,167,000
)
(1,595,000
)
Income before provision for income taxes
8,065,000
12,282,000
27,493,000
44,040,000
Provision for income taxes
2,909,000
4,354,000
9,685,000
11,624,000
Net income
$
5,156,000
7,928,000
17,808,000
32,416,000
Net income per share:
Basic
$
0.31
0.45
1.05
1.62
Diluted
$
0.28
0.38
0.97
1.42
Weighted average number of common shares outstanding — basic
16,434,000
17,756,000
16,963,000
19,995,000
Weighted average number of common and common equivalent shares
outstanding — diluted
22,620,000
23,777,000
23,064,000
25,991,000
Dividends declared per issued and outstanding common share as of the
applicable dividend record date
$
0.275
0.275
1.10
1.10
COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Audited)
July 31, 2013
July 31, 2012
Assets
Current assets:
Cash and cash equivalents
$
356,642,000
367,894,000
Accounts receivable, net
49,915,000
56,242,000
Inventories, net
65,482,000
72,361,000
Prepaid expenses and other current assets
7,428,000
8,196,000
Deferred tax asset, net
10,184,000
12,183,000
Total current assets
489,651,000
516,876,000
Property, plant and equipment, net
20,333,000
22,832,000
Goodwill
137,354,000
137,354,000
Intangibles with finite lives, net
32,505,000
38,833,000
Deferred tax asset, net, non-current
—
438,000
Deferred financing costs, net
1,093,000
2,487,000
Other assets, net
879,000
958,000
Total assets
$
681,815,000
719,778,000
Liabilities and Stockholders' Equity
Current liabilities:
Convertible senior notes, current
$
200,000,000
—
Accounts payable
18,390,000
20,967,000
Accrued expenses and other current liabilities
29,892,000
40,870,000
Dividends payable
4,531,000
4,773,000
Customer advances and deposits
14,749,000
14,516,000
Interest payable
1,529,000
1,529,000
Total current liabilities
269,091,000
82,655,000
Convertible senior notes, non-current
—
200,000,000
Other liabilities
3,958,000
5,098,000
Income taxes payable
2,963,000
2,624,000
Deferred tax liability
1,741,000
—
Total liabilities
277,753,000
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 29,066,792 shares and 28,931,679 shares at July 31,
2013 and July 31, 2012, respectively
2,907,000
2,893,000
Additional paid-in capital
363,888,000
361,458,000
Retained earnings
403,398,000
404,227,000
770,193,000
768,578,000
Less:
Treasury stock, at cost (12,608,501 shares and 11,564,059 shares at
July 31, 2013 and July 31, 2012, respectively)
(366,131,000
)
(339,177,000
)
Total stockholders' equity
404,062,000
429,401,000
Total liabilities and stockholders' equity
$
681,815,000
719,778,000
COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures to GAAP Financial
Measures
(Unaudited)
Three Months Ended July 31,
Twelve Months Ended July 31,
2013
2012
2013
2012
Reconciliation of GAAP Net Income to Adjusted EBITDA(1):
GAAP net income
$
5,156,000
7,928,000
17,808,000
32,416,000
Income taxes
2,909,000
4,354,000
9,685,000
11,624,000
Net interest expense and other
1,724,000
2,016,000
6,996,000
7,237,000
Amortization of stock-based compensation
885,000
854,000
3,130,000
3,572,000
Depreciation and other amortization
3,460,000
3,906,000
14,165,000
16,162,000
Restructuring charges related to the wind-down of microsatellite
product line
(111,000
)
2,577,000
458,000
2,577,000
Costs related to withdrawn fiscal 2011 contested proxy solicitation
—
—
—
2,638,000
Adjusted EBITDA
$
14,023,000
21,635,000
52,242,000
76,226,000
(1)
Represents earnings before interest, income taxes, depreciation
and amortization of intangibles and stock-based compensation,
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