Comtech Telecommunications Corp. Announces Results for Fiscal 2012 Fourth Quarter and Full Year and Provides Initial Fiscal 2013 Guidance
MELVILLE, N.Y.--(BUSINESS WIRE)--
September 26, 2012--Comtech Telecommunications Corp. (NASDAQ: CMTL)
today reported its operating results for the fourth quarter and fiscal
year ended July 31, 2012.
Net sales for the fourth quarter and full year of fiscal 2012 were
$112.8 million and $425.1 million, respectively, as compared to $140.3
million and $612.4 million for the same periods in fiscal 2011. The
fourth quarter and full year decrease in sales is primarily due to lower
net sales, as expected, in the Company's mobile data communications
segment which was due to lower MTS and BFT-1 sales to the U.S. Army.
Excluding $2.6 million of charges and expenses associated with a
restructuring plan to wind-down the Company's mobile data communications
segment's microsatellite product line and $2.6 million of costs incurred
in the first quarter of fiscal 2012 related to a withdrawn fiscal 2011
contested proxy solicitation, the Company reported Non-GAAP diluted
earnings per share ("EPS") of $0.45 and $1.55 for the fourth quarter and
full fiscal year ended July 31, 2012, respectively. GAAP diluted EPS was
$0.38 and $1.42 for the fourth quarter and full fiscal year ended July
31, 2012, respectively, as compared to $0.42 and $2.22 for the
comparative periods in fiscal 2011.
Adjusted EBITDA was $21.6 million and $76.2 million for the fourth
quarter of fiscal 2012 and the full fiscal year ended July 31, 2012,
respectively.
The Company also announced initial financial guidance for its July 31,
2013 fiscal year. The Company projects that sales for fiscal 2013 will
be between $375.0 million and $395.0 million, which assumes virtually no
revenue generated from its microsatellite product line. GAAP diluted EPS
is expected to be between $1.40 and $1.50 and includes additional
microsatellite product line restructuring charges of approximately $1.0
million, which are expected to be recorded in the first quarter.
Adjusted EBITDA for fiscal 2013 is expected to be in the range of $70.0
million to $74.0 million.
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
fourth quarter and achieved our highest level of quarterly bookings in
fiscal 2012."
Mr. Kornberg added, "We enter fiscal 2013 with optimism and we continue
to take steps to focus on our core businesses and to appropriately
respond to the ever-changing business environment."
Selected Fiscal 2012 Fourth Quarter and Full Year Financial Metrics
and Other Items
Backlog as of July 31, 2012 was $153.9 million compared to $145.0
million as of July 31, 2011.
Total bookings for the three and twelve months ended July 31, 2012
were $129.3 million and $434.0 million, respectively, compared to
$89.1 million and $419.3 million for the three and twelve months ended
July 31, 2011, respectively.
During the fourth quarter of fiscal 2012, due to ongoing and
anticipated future pressure on our U.S. government customer to reduce
its spending, the Company adopted a restructuring plan to wind-down
its mobile data communications segment's microsatellite product line.
In connection with this plan, the Company recorded a pre-tax
restructuring charge of $2.6 million (of which $0.7 million relates to
accelerated depreciation of fixed assets that will no longer be used).
The Company expects to record approximately $1.0 million of additional
restructuring charges and expenses during the first quarter of fiscal
2013.
Adjusted EBITDA was $21.6 million and $76.2 million for the three and
twelve months ended July 31, 2012, respectively, as compared to $27.8
million and $135.5 million for the three and twelve months ended July
31, 2011, 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 2012 was 35.5%, which includes a net discrete tax expense of
approximately $0.1 million. The Company's effective income tax rate of
26.4% for the twelve months ended July 31, 2012 reflects a net
discrete tax benefit of $3.8 million. The Company's effective income
tax rate for the twelve months ending July 31, 2013 is expected to
approximate 34.5%, excluding any discrete tax adjustments.
At July 31, 2012, the Company had $367.9 million of cash and cash
equivalents which does not reflect a quarterly dividend payment of
$4.8 million which was paid on August 20, 2012. During the twelve
months ended July 31, 2012, the Company paid cash dividends of $22.6
million to its stockholders.
During the twelve months ended July 31, 2012, the Company repurchased
7,055,614 shares of its common stock at an aggregate cost of
approximately $217.4 million (including transaction costs). Since
establishing the Company's first repurchase program on September 23,
2010, the Company has purchased a total of 11,353,122 shares of common
stock for approximately $339.0 million (including transaction costs).
The Company can make additional repurchases of up to $11.3 million
pursuant to its existing $250.0 million repurchase program.
Additional information about the Company's fiscal 2013 guidance is
contained 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 Thursday, September 27, 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)
894-5910 (domestic), or (785) 424-1052 (international) and using the
conference I.D. of "Comtech." A replay of the conference call will be
available for seven days by dialing (800) 723-0520 or (402) 220-2653. 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
certain U.S. government investigations; 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.
COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
Three months ended July 31,
2012
2011
Microsatellite
Product Line
Restructuring
Non-GAAP
Adjustments
GAAP
GAAP
Net sales
$
112,775,000
-
112,775,000
140,327,000
Cost of sales
62,370,000
1,270,000
63,640,000
81,396,000
Gross profit
50,405,000
(1,270,000
)
49,135,000
58,931,000
Expenses:
Selling, general and administrative
22,050,000
1,307,000
23,357,000
24,399,000
Research and development
9,880,000
-
9,880,000
11,970,000
Amortization of intangibles
1,600,000
-
1,600,000
2,027,000
33,530,000
1,307,000
34,837,000
38,396,000
Operating income (loss)
16,875,000
(2,577,000
)
14,298,000
20,535,000
Other expenses (income):
Interest expense
2,311,000
-
2,311,000
2,127,000
Interest income and other
(295,000
)
-
(295,000
)
(544,000
)
Income (loss) before provision for income taxes
14,859,000
(2,577,000
)
12,282,000
18,952,000
Provision for (benefit from) income taxes
5,256,000
(902,000
)
4,354,000
7,064,000
Net income (loss)
$
9,603,000
(1,675,000
)
7,928,000
11,888,000
Net income (loss) per share:
Basic
$
0.54
(0.09
)
0.45
0.47
Diluted
$
0.45
(0.07
)
0.38
0.42
Weighted average number of common shares outstanding — basic
17,756,000
17,756,000
17,756,000
25,454,000
Weighted average number of common and common equivalent shares
outstanding — diluted
23,777,000
23,777,000
23,777,000
31,300,000
Dividends declared per issued and outstanding common share as of the
applicable dividend record date
$
0.275
0.275
0.25
COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Condensed Consolidated Statements of Operations, continued
Twelve months ended July 31,
2012
2011
Microsatellite
Product Line
Restructuring and
Proxy Costs
Non-GAAP
Adjustments
GAAP
GAAP
(Unaudited)
(Unaudited)
(Audited)
(Audited)
Net sales
$
425,070,000
-
425,070,000
612,379,000
Cost of sales
240,291,000
1,270,000
241,561,000
371,333,000
Gross profit
184,779,000
(1,270,000
)
183,509,000
241,046,000
Expenses:
Selling, general and administrative
83,161,000
3,945,000
87,106,000
94,141,000
Research and development
38,489,000
-
38,489,000
43,516,000
Amortization of intangibles
6,637,000
-
6,637,000
8,091,000
Merger termination fee, net
-
-
-
(12,500,000
)
128,287,000
3,945,000
132,232,000
133,248,000
Operating income (loss)
56,492,000
(5,215,000
)
51,277,000
107,798,000
Other expenses (income):
Interest expense
8,832,000
-
8,832,000
8,415,000
Interest income and other
(1,595,000
)
-
(1,595,000
)
(2,421,000
)
Income (loss) before provision for income taxes
49,255,000
(5,215,000
)
44,040,000
101,804,000
Provision for (benefit from) income taxes
13,449,000
(1,825,000
)
11,624,000
33,909,000
Net income (loss)
$
35,806,000
(3,390,000
)
32,416,000
67,895,000
Net income (loss) per share:
Basic
$
1.79
(0.17
)
1.62
2.53
Diluted
$
1.55
(0.13
)
1.42
2.22
Weighted average number of common shares outstanding — basic
19,995,000
19,995,000
19,995,000
26,842,000
Weighted average number of common and common equivalent shares
outstanding — diluted
25,991,000
25,991,000
25,991,000
32,623,000
Dividends declared per issued and outstanding common share as of the
applicable dividend record date
$
1.10
1.10
1.00
COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Audited)
July 31, 2012
July 31, 2011
Assets
Current assets:
Cash and cash equivalents
$
367,894,000
558,804,000
Accounts receivable, net
56,242,000
70,801,000
Inventories, net
72,361,000
74,661,000
Prepaid expenses and other current assets
8,196,000
7,270,000
Deferred tax asset, net
12,183,000
11,529,000
Total current assets
516,876,000
723,065,000
Property, plant and equipment, net
22,832,000
26,638,000
Goodwill
137,354,000
137,354,000
Intangibles with finite lives, net
38,833,000
45,470,000
Deferred tax asset, net, non-current
438,000
-
Deferred financing costs, net
2,487,000
3,823,000
Other assets, net
958,000
1,159,000
Total assets
$
719,778,000
937,509,000
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
$
20,967,000
23,501,000
Accrued expenses and other current liabilities
40,870,000
49,858,000
Dividends payable
4,773,000
6,100,000
Customer advances and deposits
14,516,000
11,011,000
Interest payable
1,529,000
1,531,000
Income taxes payable
-
4,056,000
Total current liabilities
82,655,000
96,057,000
Convertible senior notes
200,000,000
200,000,000
Other liabilities
5,098,000
6,360,000
Income taxes payable
2,624,000
3,811,000
Deferred tax liability
-
2,101,000
Total liabilities
290,377,000
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 28,931,679 shares and 28,731,265 shares at July 31,
2012 and July 31, 2011, respectively
2,893,000
2,873,000
Additional paid-in capital
361,458,000
355,001,000
Retained earnings
404,227,000
393,109,000
768,578,000
750,983,000
Less:
Treasury stock, at cost (11,564,059 shares and 4,508,445 shares at
July 31, 2012 and July 31, 2011, respectively)
(339,177,000
)
(121,803,000
)
Total stockholders' equity
429,401,000
629,180,000
Total liabilities and stockholders' equity
$
719,778,000
937,509,000
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,
2012
2011
2012
2011
Reconciliation of GAAP Net Income to Adjusted EBITDA(1):
GAAP net income
$
7,928,000
11,888,000
32,416,000
67,895,000
Income taxes
4,354,000
7,064,000
11,624,000
33,909,000
Net interest expense and other
2,016,000
1,583,000
7,237,000
5,994,000
Amortization of stock-based compensation
854,000
1,380,000
3,572,000
5,357,000
Depreciation and other amortization
3,906,000
5,928,000
16,162,000
22,344,000
Accelerated depreciation expense related to the wind-down of
microsatellite product line
680,000
-
680,000
-
Other restructuring charges related to the wind-down of
microsatellite product line
1,897,000
-
1,897,000
-
Costs related to withdrawn fiscal 2011 contested proxy solicitation
-
-
2,638,000
-
Adjusted EBITDA
$
21,635,000
27,843,000
76,226,000
135,499,000
(1)
Represents earnings before interest, income taxes, depreciation and
amortization of intangibles and stock-based compensation,
accelerated depreciation expense and other restructuring charges
related to the wind-down of the Company's mobile data communications
segment's microsatellite product line 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