Comtech Telecommunications Corp. Announces Results for the Third Quarter of Fiscal 2012 and Provides Updated Fiscal 2012 Guidance
MELVILLE, N.Y.--(BUSINESS WIRE)--
June 7, 2012--Comtech Telecommunications Corp. (NASDAQ: CMTL)
today reported its operating results for the three and nine months ended
April 30, 2012.
Net sales for the third quarter of fiscal 2012 were $99.8 million
compared to $131.1 million for the third quarter of fiscal 2011. The
period-over-period decrease in net sales is due to lower sales in both
the Company's telecommunications transmission and mobile data
communications segments, partially offset by higher sales in the
Company's RF microwave amplifiers segment. GAAP net income was $6.1
million, or $0.29 per diluted share, for the third quarter of fiscal
2012 compared to $14.3 million, or $0.47 per diluted share, for the
third quarter of fiscal 2011.
Net sales for the nine months ended April 30, 2012 were $312.3 million
compared to $472.1 million for the nine months ended April 30, 2011.
GAAP net income was $24.5 million, or $1.04 per diluted share, for the
nine months ended April 30, 2012 compared to $56.0 million, or $1.79 per
diluted share, for the nine months ended April 30, 2011.
The Company also announced that it is tightening its fiscal 2012 revenue
and Adjusted EBITDA guidance and increasing its diluted earnings per
share guidance. The Company now expects its fiscal 2012: (i) revenue to
range from $420.0 million to $425.0 million, (ii) Adjusted EBITDA to
range from $73.0 million to $76.0 million and (iii) diluted earnings per
share to range from $1.40 to $1.48. The updated diluted earnings per
share guidance reflects the impact of the Company's repurchases of its
common stock through June 6, 2012.
In commenting on the Company's performance and business outlook, Fred
Kornberg, President and Chief Executive Officer, stated, "Although
market conditions remain challenging, we posted solid results in the
third quarter. During the quarter, we achieved our highest level of
quarterly bookings in fiscal 2012 and continue to focus on our long-term
growth plans."
Selected Fiscal 2012 Third Quarter Financial Metrics and Other Items
Backlog as of April 30, 2012 was $137.4 million compared to $126.3
million as of January 31, 2012.
Total bookings for the three and nine months ended April 30, 2012 were
$110.9 million and $304.7 million, respectively, compared to $127.7
million and $330.2 million for the three and nine months ended April
30, 2011, respectively.
Earnings before interest, taxes, depreciation and amortization
(including amortization of intangibles and stock-based compensation)
and costs related to a withdrawn fiscal 2011 contested proxy
solicitation ("Adjusted EBITDA") was $15.4 million and $54.6 million
for the three and nine months ended April 30, 2012, respectively, as
compared to $28.9 million and $107.7 million for the three and nine
months ended April 30, 2011, respectively.
The Company's income tax provision for the three months ended April
30, 2012 reflects a net discrete tax benefit of $0.4 million. The
Company's effective income tax rate for the twelve months ending July
31, 2012 is expected to approximate 35.0%, excluding any discrete tax
adjustments.
At April 30, 2012, the Company had $367.6 million of cash and cash
equivalents which does not reflect the subsequent (i) repurchase of an
additional 433,892 shares of the Company's common stock for an
aggregate cost of approximately $13.0 million (including transaction
costs) from May 1, 2012 through June 6, 2012; (ii) quarterly dividend
payment of $5.1 million which was paid on May 22, 2012; or (iii) May
2012 collection of $10.0 million of intellectual property license fees
from the U.S. Army.
During the nine months ended April 30, 2012, the Company repurchased
6,054,022 shares of its common stock at an aggregate cost of
approximately $188.1 million (including transaction costs). From May
1, 2012 through June 6, 2012, the Company repurchased an additional
433,892 shares at an aggregate cost of approximately $13.0 million
(including transaction costs). Since the establishment of the
Company's repurchase programs, it has purchased a total of 10,785,422
shares of common stock for approximately $322.7 million (including
transaction costs). The Company can make additional repurchases of up
to $27.6 million pursuant to its existing $250.0 million repurchase
program.
During the three months ended April 30, 2012, the Company paid $5.4
million of cash dividends to its stockholders.
Additional information about the Company's updated fiscal 2012
guidance is contained in the Company's Third 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, June 8, 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 (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 (800) 723-0389 or (402) 220-2647. 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 the
Company's BFT-1 contract, including its ongoing negotiations with the
U.S. Army regarding pricing for the engineering services, program
management and satellite network operations under its sustainment
contract awarded in March 2012, and the post-award audit of its 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 ("SEC").
COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
Three months ended April 30,
Nine months ended April 30,
2012
2011
2012
2011
Net sales
$
99,793,000
131,081,000
312,295,000
472,052,000
Cost of sales
58,115,000
74,110,000
177,921,000
289,937,000
Gross profit
41,678,000
56,971,000
134,374,000
182,115,000
Expenses:
Selling, general and administrative
20,005,000
22,552,000
63,749,000
69,742,000
Research and development
9,481,000
10,328,000
28,609,000
31,546,000
Amortization of intangibles
1,626,000
2,173,000
5,037,000
6,064,000
Merger termination fee, net
-
-
-
(12,500,000
)
31,112,000
35,053,000
97,395,000
94,852,000
Operating income
10,566,000
21,918,000
36,979,000
87,263,000
Other expenses (income):
Interest expense
2,192,000
2,135,000
6,521,000
6,288,000
Interest income and other
(370,000
)
(557,000
)
(1,300,000
)
(1,877,000
)
Income before provision for income taxes
8,744,000
20,340,000
31,758,000
82,852,000
Provision for income taxes
2,678,000
6,085,000
7,270,000
26,845,000
Net income
$
6,066,000
14,255,000
24,488,000
56,007,000
Net income per share:
Basic
$
0.32
0.54
1.18
2.05
Diluted
$
0.29
0.47
1.04
1.79
Weighted average number of common shares outstanding — basic
18,853,000
26,577,000
20,746,000
27,310,000
Weighted average number of common and common equivalent shares
outstanding — diluted
24,910,000
32,378,000
26,724,000
33,069,000
Dividends declared per issued and outstanding common share as of the
applicable dividend record date
$
0.275
0.25
0.825
0.75
COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
April 30, 2012
July 31, 2011
Assets
(Unaudited)
(Audited)
Current assets:
Cash and cash equivalents
$
367,649,000
558,804,000
Accounts receivable, net
73,009,000
70,801,000
Inventories, net
76,664,000
74,661,000
Prepaid expenses and other current assets
10,248,000
7,270,000
Deferred tax asset, net
12,983,000
11,529,000
Total current assets
540,553,000
723,065,000
Property, plant and equipment, net
23,879,000
26,638,000
Goodwill
137,354,000
137,354,000
Intangibles with finite lives, net
40,433,000
45,470,000
Deferred financing costs, net
2,947,000
3,823,000
Other assets, net
1,194,000
1,159,000
Total assets
$
746,360,000
937,509,000
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
$
18,363,000
23,501,000
Accrued expenses and other current liabilities
38,505,000
49,858,000
Dividends payable
5,071,000
6,100,000
Customer advances and deposits
17,151,000
11,011,000
Interest payable
3,044,000
1,531,000
Income taxes payable
-
4,056,000
Total current liabilities
82,134,000
96,057,000
Convertible senior notes
200,000,000
200,000,000
Other liabilities
5,581,000
6,360,000
Income taxes payable
3,297,000
3,811,000
Deferred tax liability
1,041,000
2,101,000
Total liabilities
292,053,000
308,329,000
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 28,905,281 shares and 28,731,265 shares at April 30,
2012 and July 31, 2011, respectively
2,891,000
2,873,000
Additional paid-in capital
360,208,000
355,001,000
Retained earnings
401,072,000
393,109,000
764,171,000
750,983,000
Less:
Treasury stock, at cost (10,562,467 shares and 4,508,445 shares at
April 30, 2012 and July 31, 2011, respectively)
(309,864,000
)
(121,803,000
)
Total stockholders' equity
454,307,000
629,180,000
Total liabilities and stockholders' equity
$
746,360,000
937,509,000
COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures to GAAP Financial
Measures
(Unaudited)
Three Months Ended April 30,
Nine months Ended April 30,
2012
2011
2012
2011
Reconciliation of GAAP Net Income to Adjusted EBITDA(1):
GAAP net income
$
6,066,000
14,255,000
24,488,000
56,007,000
Income taxes
2,678,000
6,085,000
7,270,000
26,845,000
Net interest expense and other
1,822,000
1,578,000
5,221,000
4,411,000
Amortization of stock-based compensation
809,000
1,118,000
2,718,000
3,977,000
Depreciation and other amortization
4,064,000
5,905,000
12,256,000
16,416,000
Costs related to withdrawn fiscal 2011 contested proxy solicitation
-
-
2,638,000
-
Adjusted EBITDA
$
15,439,000
28,941,000
54,591,000
107,656,000
(1)
Represents earnings before interest, income taxes, depreciation and
amortization of intangibles, stock-based compensation 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
Michael D. Porcelain, Senior Vice President and Chief Financial Officer 631-962-7000 Info@comtechtel.com