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Comtech Telecommunications Corp. Announces Second Quarter Results for Fiscal 2003

March 12, 2003 at 12:00 AM EST
Comtech Telecommunications Corp. Announces Second Quarter Results for Fiscal 2003 MELVILLE, N.Y.--(BUSINESS WIRE)--March 12, 2003--Comtech Telecommunications Corp. (Nasdaq: CMTL)
  • Sales increase by 39% to $42.3 million from prior year second quarter sales of $30.5 million
  • EBITDA increases by 145% from $2.0 million to $4.9 million
  • Diluted earnings per share increase from 2 cents to 23 cents

Comtech Telecommunications Corp. (Nasdaq: CMTL) today reported its results for the three months ended January 31, 2003.

Net sales for the three months ended January 31, 2003 were $42.3 million compared to $30.5 million for the three months ended January 31, 2002. For sequential comparison purposes, sales for the three months ended October 31, 2002 were $31.3 million.

Earnings before interest, income taxes, depreciation and amortization (EBITDA) increased from $2.0 million for the three months ended January 31, 2002 to $4.9 million for the three months ended January 31, 2003. Net income was $1.9 million, or 23 cents per diluted share, and $148,000, or 2 cents per diluted share, for the three month periods ended January 31, 2003 and 2002, respectively.

Net sales for the six months ended January 31, 2003 were $73.6 million compared to $61.6 million for the six months ended January 31, 2002. EBITDA increased from $5.6 million for the six months ended January 31, 2002 to $8.3 million for the six months ended January 31, 2003. Net income was $2.7 million, or 34 cents per diluted share, and $1.1 million, or 13 cents per diluted share, for the six months ended January 31, 2003 and 2002, respectively.

Backlog as of January 31, 2003 was $87.9 million compared to $49.0 million last year and $85.5 million as of October 31, 2002.

In commenting on the Company's performance during the second quarter of fiscal 2003, Fred Kornberg, President and Chief Executive Officer of Comtech Telecommunications Corp., observed that, "the significant increase in sales on both a year-to-year and sequential basis is largely the result of record revenues in our mobile data communications services segment. These record revenues were due to higher sales of our Movement Tracking System to the U.S. Army and sales relating to an order from a major U.S. prime contractor that is providing a battle command location and messaging application to the U.S. Army."

Mr. Kornberg added, "This increase in sales, combined with continued solid performances in our other segments, resulted in an impressive increase in diluted earnings per share from 2 cents in the second quarter of fiscal 2002 to 23 cents in the second quarter of fiscal 2003."

Comtech Telecommunications Corp. is an innovative player in domestic and global high-technology markets. Through its operating units, Comtech pursues opportunities in three interrelated market segments: telecommunications transmission, RF microwave amplifiers, and mobile data communications services. In each of these segments, growth has been driven by increasing demand for telecommunications infrastructure and network and messaging services. The Company's specialties include the design and manufacture of advanced products and networks used for transmission of voice, data and video using satellite, over-the-horizon microwave, terrestrial line-of-sight and other wireless communications systems. More than 300 distinct Comtech products are in service in more than 100 countries.

The Company has scheduled an investor conference call for 11:30 AM (ET) on Wednesday, March 12, 2003. Investors and the public are invited to access a live webcast of the conference call from the news section of the Comtech web site, www.comtechtel.com. A replay of the webcast will be available at the same location for 30 days following the conference call. Alternatively, investors can access the conference call by dialing (800) 451-7724 (domestic), or (785) 832-1077 (international) and using the conference I.D. of "Comtech."

Certain information in this press release contains forward-looking statements, including but not limited to, information relating to the future performance and financial condition of the Company, the plans and objectives of the Company's management and the Company's assumptions regarding such performance and plans that are forward-looking in nature and involve certain significant risks and uncertainties. Actual results could differ materially from such forward-looking information. The Company's Securities and Exchange Commission filings identify many such risks and uncertainties, which include the following:

  • the impact of a continued domestic and foreign economic slow-down on the demand for our products and services, particularly in the telecommunications industry;
  • risks associated with our mobile data communications business being in an early stage;
  • our potential inability to keep pace with rapid technological changes;
  • our backlog being subject to customer cancellation or modification;
  • our sales to the U.S. government being subject to funding, deployment and other risks;
  • our fixed price contracts being subject to risks;
  • our dependence on component availability, subcontractor availability and performance by key suppliers;
  • the highly competitive nature of our markets;
  • our dependence on international sales;
  • the adverse effect on demand for our products and services that would be caused by a decrease in the value of foreign currencies relative to the U.S. dollar;
  • the potential entry of new competitors in all of our segments;
  • uncertainty whether the satellite communications industry or infrastructure will continue to develop and the market will grow;
  • uncertainty whether the Internet will continue to grow in international markets;
  • the potential impact of increased competition on prices, profit margins and market share for the Company's products and services;
  • the availability of satellite capacity on a leased basis needed to provide the necessary global coverage for our mobile data communications services;
  • whether we can successfully implement our satellite mobile data communications services and achieve recurring revenues for such services; and
  • whether we can successfully combine and assimilate the operations of acquired businesses and product lines.

                        
                              COMTECH TELECOMMUNICATIONS CORP.
                           Consolidated Statements of Operations
                                      (Unaudited)


                        Three Months Ended       Six Months Ended
                            January 31,              January 31,
                     -----------------------  -----------------------
                         2003        2002        2003         2002
                     -----------------------  -----------------------

Net sales            $42,326,000  30,525,000   73,599,000  61,570,000
Cost of sales         28,783,000   21,406,00   48,379,000  41,646,000
                     -----------------------  -----------------------
      Gross  profit   13,543,000   9,119,000   25,220,000  19,924,000
                     -----------------------  -----------------------

Expenses:
 Selling, general
  and administrative   6,372,000   5,304,000   12,700,000  10,877,000
 Research and
  development          3,296,000   2,712,000    6,312,000   5,360,000
 Amortization
  of intangibles         526,000     370,000    1,052,000     731,000
                     -----------  ----------  ----------- -----------
                      10,194,000   8,386,000   20,064,000  16,968,000
                     -----------  ----------  ----------- -----------

Operating income       3,349,000     733,000    5,156,000   2,956,000

Other
 expense (income):
   Interest expense      686,000     683,000    1,377,000   1,656,000
   Interest income       (62,000)    (98,000)    (121,000)   (280,000)
                     -----------   ---------  -----------  ----------
Income before
 provision for
  income taxes         2,725,000     148,000    3,900,000   1,580,000
Provision for
 income taxes            872,000           -    1,248,000     530,000
                     -----------   ---------  -----------  ----------
       Net income     $1,853,000     148,000    2,652,000   1,050,000
                     ===========   =========  ===========  ==========

Net income per share:
   Basic                   $0.25        0.02         0.35        0.14
   Diluted                 $0.23        0.02         0.34        0.13

Weighted average
 number of
 common shares
 outstanding
 - basic computation   7,536,000   7,440,000    7,523,000   7,439,000
Potential dilutive
 common shares           389,000     453,000      326,000     499,000
                     -----------   ---------  -----------  ----------
Weighted average
 number of common
 and common
 equivalent shares
 outstanding assuming
 dilution -
 diluted computation   7,925,000   7,893,000    7,849,000   7,938,000
                     ===========   =========  ===========  ==========

EBITDA  (1)           $4,918,000   2,037,000    8,264,000   5,602,000
                     ===========   =========  ===========  ==========

Reconciliation of
 net income
 to EBITDA:
  Net income          $1,853,000     148,000    2,652,000   1,050,000
  Income taxes           872,000         -      1,248,000     530,000
  Net interest expense   624,000     585,000    1,256,000   1,376,000
  Depreciation
   and amortization    1,569,000   1,304,000    3,108,000   2,646,000
                     -----------   ---------  -----------  ----------
  EBITDA              $4,918,000   2,037,000    8,264,000   5,602,000
                     ===========   =========  ===========  ==========
(1) Represents earnings before interest, income taxes, depreciation and amortization.

                   COMTECH TELECOMMUNICATIONS CORP.

                      Consolidated Balance Sheets


                                             January 31,      July 31,
                                               2003            2002
                                            (Unaudited)      (Audited)
----------------------------------------------------------------------
                      Assets
Current assets:
   Cash and cash equivalents                  $27,301,000  15,510,000
   Accounts receivable, net                    33,833,000  27,435,000
   Inventories, net                            28,153,000  33,996,000
   Prepaid expenses and
    other current assets                        1,405,000   1,407,000
   Deferred tax asset - current                 2,492,000   2,492,000
                                             -------------------------
       Total current assets                    93,184,000  80,840,000

   Property, plant and equipment, net          11,882,000  11,889,000
   Goodwill and other intangibles
    with indefinite lives                      17,726,000  17,726,000
   Other intangibles with
    definite lives, net                        11,925,000  12,902,000
   Other assets, net                              497,000     661,000
   Deferred tax asset - non-current             2,568,000   2,568,000
                                             -------------------------
        Total assets                         $137,782,000 126,586,000
                                             =========================

       Liabilities and Stockholders' Equity

Current liabilities:
   Current installments of long-term debt      $1,983,000           -
   Current installments of capital
    lease obligations                           1,043,000   1,062,000
   Accounts payable                             9,895,000   9,529,000
   Accrued expenses and other
    current liabilities                         9,776,000   9,686,000
   Customer advances and deposits               8,373,000   2,173,000
   Deferred service revenue                     5,048,000   4,343,000
   Income taxes payable                         3,798,000   2,470,000
                                             -------------------------
       Total current liabilities               39,916,000  29,263,000

   Long-term debt, less
    current installments                       26,700,000  28,683,000
   Capital lease obligations,
    less current installments                     779,000   1,294,000
   Other long-term liabilities                      4,000      58,000
                                             -------------------------
       Total liabilities                       67,399,000  59,298,000

Stockholders' equity:
    Preferred stock, par value $.10 per
     share; shares authorized and
       unissued 2,000,000                               -           -
    Common stock, par value $.10 per share;
     authorized 30,000,000 shares, issued
      7,656,387 shares at January 31, 2003
        and 7,602,921 shares
         at July 31, 2002                         766,000     760,000
    Additional paid-in capital                 68,182,000  67,883,000
    Retained earnings (accumulated deficit)     1,827,000    (825,000)
                                             -------------------------
                                               70,775,000  67,818,000
    Less:
        Treasury stock (93,750 shares)           (185,000)   (185,000)
        Deferred compensation                    (207,000)   (345,000)
                                             -------------------------
       Total stockholders' equity              70,383,000  67,288,000
                                             -------------------------
       Total liabilities and
        stockholders' equity                 $137,782,000 126,586,000
                                             =========================
Commitments and contingencies

ECMTL


Contact:
     Comtech Telecommunications Corp., Melville
     Media Contacts:
     Fred Kornberg or Robert G. Rouse
     631/777-8900
     www.comtechtel.com
     Info@comtechtel.com