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Comtech Telecommunications Corp. Announces Results for Fiscal 2014 Fourth Quarter and Full Year and Provides Initial Fiscal 2015 Guidance

October 9, 2014 at 4:13 PM EDT

MELVILLE, N.Y.--(BUSINESS WIRE)-- October 9, 2014--Comtech Telecommunications Corp. (NASDAQ:CMTL) today reported its operating results for the fourth quarter and fiscal year ended July 31, 2014.

Net sales for the fourth quarter and full year of fiscal 2014 were $89.4 million and $347.2 million, respectively, as compared to $84.4 million and $319.8 million for the same periods in fiscal 2013. The year-over-year increase reflects higher sales in the Company's telecommunications transmission and RF microwave amplifiers segments, partially offset by lower sales in its mobile data communications segment.

The Company reported GAAP diluted EPS of $0.48 and $1.37 for the fourth quarter and full fiscal year ended July 31, 2014, respectively, as compared to $0.28 and $0.97 for the comparative periods in fiscal 2013.

The Company also announced initial financial guidance for its July 31, 2015 fiscal year. The Company projects that sales for fiscal 2015 will be between $355.0 million and $370.0 million. GAAP diluted EPS is expected to be between $1.70 and $1.86. Adjusted EBITDA for fiscal 2015 is expected to be in the range of $63.0 million to $67.0 million.

In commenting on the Company's fiscal 2014 performance and fiscal 2015 business outlook, Fred Kornberg, President and Chief Executive Officer, stated, "We are extremely pleased with our financial results in fiscal 2014. As we look to fiscal 2015, we see momentum continuing and expect that fiscal 2015 will be a year of growth, both on the top and bottom lines."

Selected Fiscal 2014 Fourth Quarter and Full Year Financial Metrics and Other Items

  • Backlog as of July 31, 2014 was $133.4 million compared to $189.7 million as of July 31, 2013.
  • Total bookings for the three and twelve months ended July 31, 2014 were $62.1 million and $290.9 million, respectively, compared to $144.0 million and $355.6 million for the three and twelve months ended July 31, 2013, respectively.
  • Adjusted EBITDA was $16.7 million and $61.3 million for the three and twelve months ended July 31, 2014, respectively, as compared to $14.0 million and $52.2 million for the three and twelve months ended July 31, 2013, 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 2014 was 33.0%, which includes a net discrete tax benefit of $0.3 million. The Company's effective income tax rate of 34.7% for the twelve months ended July 31, 2014 reflects a net discrete tax benefit of $0.3 million. The Company's effective income tax rate, excluding discrete tax items in fiscal 2014, was 35.5% and this rate is expected to decrease to approximately 35.0% in fiscal 2015.
  • During the three months ended July 31, 2014, the Company repurchased 397,778 shares of its common stock in open-market transactions with an average price per share of $31.69 and at an aggregate cost of $12.6 million (including transaction costs).
  • In fiscal 2014, $150.0 million principal amount of the Company's 3.0% convertible senior notes were redeemed or repurchased for cash and $50.0 million principal amount were converted by the holders into 1,570,904 shares of the Company's common stock. As of July 31, 2014, none of the Company's 3.0% convertible senior notes remain outstanding.
  • As of July 31, 2014, the Company had $154.5 million of cash and cash equivalents which does not reflect the quarterly dividend payment of $4.8 million that was paid on August 19, 2014.
  • As of October 8, 2014, the Company can repurchase approximately $13.7 million of additional common stock pursuant to its stock repurchase program.
  • The Company's fiscal 2015 initial financial guidance does not include any expenses or impact associated with the Company's ongoing strategic alternative analysis.

Additional information about the Company's fiscal 2015 guidance is included 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 Friday, October 10, 2014. 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) 952-1906 (domestic), or (785) 424-1825 (international) and using the conference I.D. of "Comtech." A replay of the conference call will be available for seven days by dialing (800) 723-1517 or (402) 220-2659. 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 leader in most of the market segments that it serves.

Cautionary Statement Regarding Forward-Looking Statements

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 large contracts; risks associated with the Company's obligations under its revolving credit facility; risks associated with the Company's current exploration of strategic alternatives, and other factors described in the Company's filings with the Securities and Exchange Commission.

   

COMTECH TELECOMMUNICATIONS CORP.

AND SUBSIDIARIES

Consolidated Statements of Operations

 
(Unaudited) (Audited)
Three months ended July 31, Twelve months ended July 31,
2014     2013   2014     2013  
 
Net sales $ 89,378,000 84,411,000 347,150,000 319,797,000
Cost of sales 50,033,000   49,051,000   195,712,000   178,967,000  
Gross profit 39,345,000   35,360,000   151,438,000   140,830,000  
 
Expenses:
Selling, general and administrative 17,280,000 15,648,000 67,147,000 63,265,000
Research and development 8,444,000 8,341,000 34,108,000 36,748,000
Amortization of intangibles 1,561,000   1,582,000   6,285,000   6,328,000  
27,285,000   25,571,000   107,540,000   106,341,000  
 
Operating income 12,060,000 9,789,000 43,898,000 34,489,000
 
Other expenses (income):
Interest expense 295,000 2,013,000 6,304,000 8,163,000
Interest income and other (156,000 ) (289,000 ) (913,000 ) (1,167,000 )
 
Income before provision for income taxes 11,921,000 8,065,000 38,507,000 27,493,000
Provision for income taxes 3,933,000   2,909,000   13,356,000   9,685,000  
 
Net income $ 7,988,000   5,156,000   25,151,000   17,808,000  
 
Net income per share:
Basic $ 0.50   0.31   1.58   1.05  
Diluted $ 0.48   0.28   1.37   0.97  
 
Weighted average number of common shares outstanding - basic 16,124,000   16,434,000   15,943,000   16,963,000  
 
Weighted average number of common and common equivalent shares outstanding - diluted 16,671,000   22,620,000   20,906,000   23,064,000  
 
Dividends declared per issued and outstanding common share as of the applicable dividend record date $ 0.30   0.275   1.175   1.10  
 
   
COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES

Consolidated Balance Sheets

(Audited)

 
July 31, 2014 July 31, 2013
Assets
Current assets:
Cash and cash equivalents $ 154,500,000 356,642,000
Accounts receivable, net 54,887,000 49,915,000
Inventories, net 61,332,000 65,482,000
Prepaid expenses and other current assets 9,947,000 7,428,000
Deferred tax asset, net 10,178,000   10,184,000  
Total current assets 290,844,000 489,651,000
 
Property, plant and equipment, net 18,536,000 20,333,000
Goodwill 137,354,000 137,354,000
Intangibles with finite lives, net 26,220,000 32,505,000
Deferred financing costs, net 65,000 1,093,000
Other assets, net 833,000   879,000  
Total assets $ 473,852,000   681,815,000  
 
Liabilities and Stockholders' Equity
Current liabilities:
Convertible senior notes, current $ 200,000,000
Accounts payable 18,902,000 18,390,000
Accrued expenses and other current liabilities 29,803,000 29,892,000
Dividends payable 4,844,000 4,531,000
Customer advances and deposits 12,610,000 14,749,000
Interest payable 29,000   1,529,000  
Total current liabilities 66,188,000 269,091,000
 
Other liabilities 4,364,000 3,958,000
Income taxes payable 2,743,000 2,963,000
Deferred tax liability, net 3,632,000   1,741,000  
Total liabilities 76,927,000 277,753,000
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 31,016,469 shares and 29,066,792 shares at July 31, 2014 and 2013, respectively

3,102,000 2,907,000
Additional paid-in capital 421,240,000 363,888,000
Retained earnings 409,443,000   403,398,000  
833,785,000 770,193,000
Less:
Treasury stock, at cost (14,857,582 shares and 12,608,501 shares at July 31, 2014 and 2013, respectively) (436,860,000 ) (366,131,000 )
Total stockholders' equity 396,925,000   404,062,000  
Total liabilities and stockholders' equity $ 473,852,000   681,815,000  
 
   
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,
2014     2013   2014     2013
 
Reconciliation of GAAP Net Income to Adjusted EBITDA(1):

GAAP net income

$ 7,988,000 5,156,000 25,151,000 17,808,000

Income taxes

3,933,000 2,909,000 13,356,000 9,685,000

Net interest expense and other

139,000 1,724,000 5,391,000 6,996,000

Amortization of stock-based compensation

1,177,000 885,000 4,263,000 3,130,000

Depreciation and other amortization

3,249,000 3,460,000 13,006,000 14,165,000

Strategic process expenses

225,000 225,000

Restructuring (benefit) charges related to the wind-down of microsatellite product line

  (111,000 ) (56,000 ) 458,000

Adjusted EBITDA

$ 16,711,000   14,023,000   61,336,000   52,242,000
 
(1)   Represents earnings before interest, income taxes, depreciation and amortization of intangibles and stock-based compensation, strategic process expenses and restructuring (benefits) 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

Source: Comtech Telecommunications Corp.

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