Comtech Telecommunications Corp. Announces Results for the First Quarter of Fiscal 2014 and Provides Updated Fiscal 2014 Guidance
MELVILLE, N.Y.--(BUSINESS WIRE)--
December 9, 2013 -- Comtech Telecommunications Corp. (NASDAQ: CMTL)
today reported its operating results for the first quarter ended October
31, 2013.
Net sales for the first quarter of fiscal 2014 were $83.4 million
compared to $91.0 million for the first quarter of fiscal 2013. The
period-over-period decrease reflects lower net sales in the Company's RF
microwave amplifiers and mobile data communications segments, partially
offset by higher sales in its telecommunications transmission segment.
GAAP net income was $5.3 million, or $0.28 per diluted share, for the
first quarter of fiscal 2014 as compared to $7.4 million, or $0.36 per
diluted share, for the first quarter of fiscal 2013.
Adjusted EBITDA was $14.3 million for the first quarter of fiscal 2014,
as compared to $18.5 million for the comparative period in fiscal 2013.
The Company also provided updated guidance. Fiscal 2014 revenue guidance
is now expected to range from $325.0 million to $345.0 million and GAAP
diluted earnings per share is now expected to be between $1.12 and
$1.25. Adjusted EBITDA for fiscal 2014 is now expected to be in the
range of $55.0 million to $59.0 million.
In commenting on the Company's performance and updated fiscal 2014
business outlook, Fred Kornberg, President and Chief Executive Officer,
stated, "Throughout the first quarter of fiscal 2014, we continued to
see the signs of stabilization that we observed in certain of our
end-markets during the last quarter of our fiscal 2013. We are pleased
with our first quarter results and we believe that certain of our end
markets may be improving."
Selected Fiscal 2014 First Quarter Financial Metrics and Other Items
Backlog as of October 31, 2013 was $182.8 million compared to $189.7
million as of July 31, 2013.
Total bookings for the three months ended October 31, 2013 were $76.5
million compared to $70.4 million for the three months ended October
31, 2012.
Adjusted EBITDA was $14.3 million for the three months ended October
31, 2013 as compared to $18.5 million for the three months ended
October 31, 2012. Adjusted EBITDA is a Non-GAAP financial measure and
is defined in the below table.
The Company's effective income tax rate in the first quarter of fiscal
2014 was 36.5%, which does not assume that the federal research and
experimentation credit will be extended past December 31, 2013. The
Company's effective income tax rate for the twelve months ending July
31, 2014 is expected to approximate 36.5%, excluding any potential
discrete tax adjustments.
At October 31, 2013, the Company had $346.6 million of cash and cash
equivalents.
During the three months ended October 31, 2013, the Company
repurchased 124,753 shares of its common stock at an aggregate cost of
approximately $3.6 million (including transaction costs). Since
establishing the Company's first repurchase program on September 23,
2010, the Company has repurchased a total of 12,845,030 shares of
common stock for approximately $379.5 million (including transaction
costs), including 322,713 shares of common stock at an aggregate cost
of approximately $10.0 million (including transaction costs)
repurchased during the period November 1, 2013 through December 6,
2013. The Company can make additional repurchases of up to
approximately $71.0 million pursuant to its existing stock repurchase
program which, effective December 9, 2013, has been increased from
$50.0 million to $100.0 million.
The Company's 3.0% convertible senior notes are reflected as a current
liability in its condensed consolidated balance sheet at October 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.
Additional information about the Company's updated fiscal 2014
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 Tuesday, December 10, 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)
952-7532 (domestic), or (785) 424-1834 (international) and using the
conference I.D. of "Comtech." A replay of the conference call will be
available for seven days by dialing (800) 283-4799 or (402) 220-0860. 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; 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)
Three months ended October,
2013
2012
Net sales
$
83,368,000
90,953,000
Cost of sales
46,990,000
49,150,000
Gross profit
36,378,000
41,803,000
Expenses:
Selling, general and administrative
16,198,000
16,810,000
Research and development
8,499,000
10,049,000
Amortization of intangibles
1,582,000
1,582,000
26,279,000
28,441,000
Operating income
10,099,000
13,362,000
Other expenses (income):
Interest expense
2,018,000
2,111,000
Interest income and other
(273,000
)
(276,000
)
Income before provision for income taxes
8,354,000
11,527,000
Provision for income taxes
3,049,000
4,092,000
Net income
$
5,305,000
7,435,000
Net income per share:
Basic
$
0.32
0.43
Diluted
$
0.28
0.36
Weighted average number of common shares outstanding — basic
16,454,000
17,379,000
Weighted average number of common and common equivalent shares
outstanding — diluted
22,698,000
23,444,000
Dividends declared per issued and outstanding common share as of the
applicable dividend record date
$
0.275
0.275
COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
October 31, 2013
July 31, 2013
(Unaudited)
(Audited)
Assets
Current assets:
Cash and cash equivalents
$
346,553,000
356,642,000
Accounts receivable, net
62,020,000
49,915,000
Inventories, net
69,032,000
65,482,000
Prepaid expenses and other current assets
5,320,000
7,428,000
Deferred tax asset, net
10,135,000
10,184,000
Total current assets
493,060,000
489,651,000
Property, plant and equipment, net
19,620,000
20,333,000
Goodwill
137,354,000
137,354,000
Intangibles with finite lives, net
30,923,000
32,505,000
Deferred financing costs, net
736,000
1,093,000
Other assets, net
882,000
879,000
Total assets
$
682,575,000
681,815,000
Liabilities and Stockholders' Equity
Current liabilities:
Convertible senior notes, current
$
200,000,000
200,000,000
Accounts payable
17,111,000
18,390,000
Accrued expenses and other current liabilities
26,183,000
29,892,000
Dividends payable
4,529,000
4,531,000
Customer advances and deposits
19,636,000
14,749,000
Interest payable
3,029,000
1,529,000
Income taxes payable
1,674,000
—
Total current liabilities
272,162,000
269,091,000
Other liabilities
4,064,000
3,958,000
Income taxes payable
3,068,000
2,963,000
Deferred tax liability, net
2,614,000
1,741,000
Total liabilities
281,908,000
277,753,000
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 29,084,683 shares and 29,066,792 shares at October
31, 2013 and July 31, 2013, respectively
2,908,000
2,907,000
Additional paid-in capital
363,327,000
363,888,000
Retained earnings
404,148,000
403,398,000
770,383,000
770,193,000
Less:
Treasury stock, at cost (12,733,254 shares and 12,608,501 shares at
October 31, 2013 and July 31, 2013, respectively)
(369,716,000
)
(366,131,000
)
Total stockholders' equity
400,667,000
404,062,000
Total liabilities and stockholders' equity
$
682,575,000
681,815,000
COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures to GAAP Financial
Measures
(Unaudited)
Three Months Ended October 31,
2013
2012
Reconciliation of GAAP Net Income to Adjusted EBITDA(1):
GAAP net income
$
5,305,000
7,435,000
Income taxes
3,049,000
4,092,000
Net interest expense and other
1,745,000
1,835,000
Amortization of stock-based compensation
947,000
745,000
Depreciation and other amortization
3,292,000
3,607,000
Restructuring charges related to the wind-down of microsatellite
product line
—
822,000
Adjusted EBITDA
$
14,338,000
18,536,000
(1) Represents earnings before interest, income taxes, depreciation and
amortization of intangibles and stock-based compensation and
restructuring charges related to the wind-down of the microsatellite
product line of the Company's mobile data communications segment.
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