Comtech Telecommunications Corp. Announces Second Quarter Results for Fiscal 2004
MELVILLE, N.Y., Mar 10, 2004 (BUSINESS WIRE) -- Comtech Telecommunications Corp. (Nasdaq: CMTL) today reported its results for the three months ended January 31, 2004. Net sales for the three months ended January 31, 2004 were $56.8 million compared to $42.3 million for the three months ended January 31, 2003.
Net income was $5.2 million, or 34 cents per diluted share, and $1.9 million, or 16 cents per diluted share, for the three months ended January 31, 2004 and 2003, respectively. Earnings before interest, income taxes, depreciation and amortization (EBITDA) increased from $4.9 million for the three months ended January 31, 2003 to $9.2 million for the three months ended January 31, 2004.
Net sales for the six months ended January 31, 2004 were $113.1 million compared to $73.6 million for the six months ended January 31, 2003. Net income was $11.0 million, or 71 cents per diluted share, and $2.7 million, or 23 cents per diluted share, for the six months ended January 31, 2004 and 2003, respectively. EBITDA increased from $8.3 million for the six months ended January 31, 2003 to $19.1 million for the six months ended January 31, 2004.
Backlog as of January 31, 2004 was $97.1 million compared to $87.9 million last year and $99.0 million as of October 31, 2003.
In commenting on the Company's performance during the second quarter of fiscal 2004, Fred Kornberg, President and Chief Executive Officer of Comtech Telecommunications Corp., observed that, "The second quarter of fiscal 2004 was yet another strong showing for Comtech and fiscal 2004 is shaping up to be another record year for our Company. The second quarter was favorably impacted by the timing of anticipated U.S. Army orders in our mobile data communications segment."
Mr. Kornberg added, "In addition to the strong operating results for the quarter, we are equally excited about our convertible senior notes offering which closed in late January. The notes, which bear interest at 2%, leave us with $148 million of cash to continue to implement our growth plans, including potential acquisitions."
Comtech Telecommunications Corp. designs, develops, produces and markets innovative products, systems and services for advanced communications solutions addressing commercial and government markets. The Company conducts its business through three complementary segments: telecommunications transmission, mobile data communications and RF microwave amplifiers. The Company offers specialized products, systems and services where it believes it has technological, engineering, systems design or other expertise that differentiate its product offerings.
The Company has scheduled an investor conference call for 11:30 AM (ET) on Wednesday, March 10, 2004. 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) 245-3043 (domestic), or (785) 832-1508 (international) and using the conference I.D. of "Comtech." A replay of the conference call will be available for seven days by dialing (402) 220-4235. In addition, an updated investor presentation, including earnings guidance, will be available on our web site shortly after the conference call.
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:
-- Our operating results being difficult to forecast and subject
to volatility;
-- Our inability to maintain our government business;
-- Our inability to keep pace with technological changes;
-- Our dependence on international sales;
-- The impact of a continued domestic and foreign economic
slow-down and reduction in telecommunications equipment and
systems spending on the demand for our products, systems and
services;
-- Our mobile data communications business being in an early
stage;
-- Our backlog being subject to cancellation or modification;
-- Our dependence on component availability, subcontractor
availability and performance by key suppliers;
-- Our fixed price contracts being subject to risk;
-- The impact of adverse regulatory changes on our ability to
sell products, systems and services;
-- The impact of prevailing economic and political conditions on
our businesses;
-- Whether we can successfully integrate and assimilate the
operations of acquired businesses;
-- The impact of the loss of key technical or management
personnel;
-- The highly competitive nature of our markets;
-- Our inability to protect our proprietary technology;
-- Our operations being subject to environmental regulation;
-- The impact of recently enacted and proposed changes in
securities laws and regulations on our costs;
-- The impact of terrorist attacks and threats, and government
responses thereto, and threats of war on our businesses; and
-- Our inability to satisfy our debt obligations, including the
recently issued convertible senior notes.
COMTECH TELECOMMUNICATIONS CORP.
Consolidated Statements of Operations
(Unaudited)
Three months ended Six months ended
January 31, January 31,
------------------------------------------ --------------------------
2004 2003 2004 2003
------------------------------------------ --------------------------
Net sales $56,794,000 42,326,000 113,090,000 73,599,000
Cost of sales 36,181,000 28,783,000 71,497,000 48,379,000
----------------------------------------------------
Gross profit 20,613,000 13,543,000 41,593,000 25,220,000
----------------------------------------------------
Expenses:
Selling,
general and
administrative 8,804,000 6,372,000 17,378,000 12,700,000
Research and
development 3,664,000 3,296,000 7,205,000 6,312,000
Amortization of
intangibles 499,000 526,000 999,000 1,052,000
----------------------------------------------------
12,967,000 10,194,000 25,582,000 20,064,000
----------------------------------------------------
Operating income 7,646,000 3,349,000 16,011,000 5,156,000
Other expense
(income):
Interest
expense 51,000 686,000 75,000 1,377,000
Interest income (114,000) (62,000) (219,000) (121,000)
----------------------------------------------------
Income before
provision for
income taxes 7,709,000 2,725,000 16,155,000 3,900,000
Provision for
income taxes 2,466,000 872,000 5,169,000 1,248,000
----------------------------------------------------
Net income $ 5,243,000 1,853,000 10,986,000 2,652,000
====================================================
Net income per
share:
Basic $ 0.37 0.16 0.78 0.24
====================================================
Diluted $ 0.34 0.16 0.71 0.23
====================================================
Weighted average
number of common
shares
outstanding-
basic 14,080,000 11,304,000 14,017,000 11,285,000
Potential dilutive
common shares 1,468,000 584,000 1,438,000 489,000
----------------------------------------------------
Weighted average
number of common
and common
equivalent
shares
outstanding
assuming
dilution
- diluted 15,548,000 11,888,000 15,455,000 11,774,000
====================================================
EBITDA (1) $9,208,000 4,918,000 19,135,000 8,264,000
=========================== ==========================
Reconciliation of
net income to
EBITDA:
Net income $5,243,000 1,853,000 10,986,000 2,652,000
Income taxes 2,466,000 872,000 5,169,000 1,248,000
Net interest
expense
(income) (63,000) 624,000 (144,000) 1,256,000
Depreciation
and
amortization 1,562,000 1,569,000 3,124,000 3,108,000
---------------------------------------------------
EBITDA $9,208,000 4,918,000 19,135,000 8,264,000
===================================================
(1) Represents earnings before interest, income taxes, depreciation
and amortization. EBITDA is a non-GAAP operating metric used by
management in assessing the Company's operating results and
ability to meet debt service requirements. EBITDA is also a
measure frequently requested by the Company's investors and
analysts. The Company believes that investors and analysts may use
EBITDA, along with other information contained in its SEC filings,
in assessing its ability to generate cash flow and service debt.
COMTECH TELECOMMUNICATIONS CORP.
Consolidated Balance Sheets
January 31, July 31,
2004 2003
-------------------------
Assets (Unaudited)
Current assets:
Cash and cash equivalents $148,224,000 48,617,000
Restricted cash 4,196,000 4,288,000
Accounts receivable, less allowance for
doubtful accounts of $741,000
at January 31, 2004 and $912,000 at
July 31, 2003 47,726,000 26,696,000
Inventories, net 31,771,000 34,048,000
Prepaid expenses and other current assets 2,858,000 1,742,000
Deferred tax asset - current 5,699,000 5,699,000
-------------------------
Total current assets 240,474,000 121,090,000
Property, plant and equipment, net 12,559,000 12,328,000
Goodwill and other intangibles with
indefinite lives 17,726,000 17,726,000
Intangibles with definite lives, net of
accumulated amortization of
$5,719,000 at January 31, 2004 and
$4,720,000 at July 31, 2003 10,354,000 11,353,000
Deferred financing costs, net 3,814,000 -
Other assets, net 392,000 390,000
Deferred tax asset - non-current 1,363,000 1,363,000
-------------------------
Total assets $286,682,000 164,250,000
=========================
Liabilities and Stockholders'
Equity
Current liabilities:
Current installments of capital lease
obligations $ 520,000 899,000
Accounts payable 13,972,000 11,527,000
Accrued expenses and other current
liabilities 15,302,000 13,267,000
Customer advances and deposits 2,894,000 2,491,000
Deferred service revenue 12,750,000 11,160,000
Interest payable 29,000 -
Income taxes payable 4,779,000 6,945,000
-------------------------
Total current liabilities 50,246,000 46,289,000
Convertible senior notes 105,000,000 -
Capital lease obligations, less current
installments 254,000 393,000
-------------------------
Total liabilities 155,500,000 46,682,000
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 14,348,809 shares at
January 31, 2004 and 14,020,769
shares at July 31, 2003 1,435,000 1,402,000
Additional paid-in capital 110,158,000 107,573,000
Retained earnings 19,870,000 8,884,000
-------------------------
131,463,000 117,859,000
Less:
Treasury stock (140,625 shares) (185,000) (185,000)
Deferred compensation (96,000) (106,000)
-------------------------
Total stockholders' equity 131,182,000 117,568,000
-------------------------
Total liabilities and
stockholders' equity $286,682,000 164,250,000
=========================
Commitments and contingencies
ECMTL
SOURCE: Comtech Telecommunications Corp.
Comtech Telecommunications Corp.
Media Contacts:
Fred Kornberg or Robert G. Rouse
631-777-8900
Info@comtechtel.com
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