Comtech Telecommunications Corp. Announces Results for Fiscal 2015 Fourth Quarter and Full Year and Provides Initial Fiscal 2016 Guidance
MELVILLE, N.Y.--(BUSINESS WIRE)--
September 28, 2015-- Comtech Telecommunications Corp. (NASDAQ:CMTL)
today reported its operating results for the fourth quarter and fiscal
year ended July 31, 2015.
Net sales for the three months ended July 31, 2015 were $77.5 million
compared to $89.4 million for the three months ended July 31, 2014. The
year-over-year decrease reflects lower net sales in the Company's
telecommunications transmission and mobile data communications segments,
partially offset by higher net sales in its RF microwave amplifiers
segment. GAAP net income was $5.5 million, or $0.34 per diluted share,
for the three months ended July 31, 2015 as compared to $8.0 million, or
$0.48 per diluted share, for the three months ended July 31, 2014.
Net sales for the fiscal year ended July 31, 2015 were $307.3 million
compared to $347.2 million for the fiscal year ended July 31, 2014. The
year-over-year decrease reflects lower net sales in the Company's
telecommunications transmission and mobile data communications segments,
partially offset by higher net sales in its RF microwave amplifiers
segment. GAAP net income was $23.2 million, or $1.42 per diluted share,
for the fiscal year ended July 31, 2015 as compared to $25.2 million, or
$1.37 per diluted share, for the fiscal year ended July 31, 2014.
The Company also announced that it expects consolidated net sales and
operating income in fiscal 2016 to be similar to the levels it achieved
in fiscal 2015. The Company projects that sales for fiscal 2016 will be
between $300.0 million and $310.0 million. GAAP diluted EPS is expected
to be between $1.34 and $1.50. Adjusted EBITDA for fiscal 2016 is
expected to be in the range of $50.0 million to $54.0 million.
In commenting on the Company's fiscal 2015 performance and fiscal 2016
business outlook, Dr. Stanton Sloane, President and Chief Executive
Officer, stated, "Our fiscal 2015 performance reflects the fact that
many of our international customers have been impacted by the strength
of the U.S. dollar and by the plunge in oil prices."
Dr. Sloane added, "As we look to fiscal 2016, we do not believe that
market conditions will meaningfully improve. We continue to implement
certain organizational changes including expanding our marketing and
business development functions in order to position us for growth when
end market conditions for our customers improve."
Selected Fiscal 2015 Fourth Quarter and Full Year Financial Metrics
and Other Items
Backlog as of July 31, 2015 was $117.7 million compared to $133.4
million as of July 31, 2014.
Total bookings for the three and twelve months ended July 31, 2015
were $65.2 million and $291.6 million, respectively, compared to $62.1
million and $290.9 million for the three and twelve months ended
July 31, 2014, respectively.
Adjusted EBITDA was $12.0 million and $51.8 million for the three and
twelve months ended July 31, 2015, respectively, as compared to $16.7
million and $61.3 million for the three and twelve months ended
July 31, 2014, 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 2015 was 32.6%, which includes a net discrete tax benefit of
approximately $0.2 million. The Company's effective income tax rate of
31.6% for the twelve months ended July 31, 2015 reflects a net
discrete tax benefit of approximately $1.0 million. The Company's
effective income tax rate, excluding discrete tax items in fiscal
2015, was 34.5%.
During the twelve months ended July 31, 2015, the Company repurchased
175,735 shares of its common stock in open-market transactions with an
average price per share of $28.39 and at an aggregate cost of $5.0
million (including transaction costs). As of September 25, 2015, the
Company is authorized to repurchase approximately $8.7 million of
additional common stock pursuant to its existing stock repurchase
program. There were no repurchases of common stock during the three
months ended July 31, 2015.
As of July 31, 2015, the Company had $151.0 million of cash and cash
equivalents which does not reflect the quarterly dividend payment of
$4.8 million that was paid on August 18, 2015.
As discussed further in the Company's Annual Report on Form 10-K filed
with the Securities and Exchange Commission today, the Company's
President and Chief Executive Officer continues to perform an
assessment of operations to determine whether or not a different
approach may enhance our business, increase operational efficiencies
and help us grow successfully. This assessment is ongoing and may
result in future one-time charges which are not reflected in the
Company's updated fiscal 2016 earnings guidance.
Additional information about the Company's fiscal 2016 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 Tuesday, September 29, 2015. 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. "Comtech." A replay of the conference call will be
available for seven days by dialing (800) 839-3742 or (402) 220-2979. 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 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.
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; changes in the price of
oil in global markets; changes in foreign currency exchange rates; risks
associated with the Company's legal proceedings and other matters; risks
associated with U.S. government investigations; risks associated with
the Company's large contracts, 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,
2015
2014
2015
2014
Net sales
$
77,463,000
89,378,000
307,289,000
347,150,000
Cost of sales
44,087,000
50,033,000
168,405,000
195,712,000
Gross profit
33,376,000
39,345,000
138,884,000
151,438,000
Expenses:
Selling, general and administrative
16,123,000
17,280,000
62,680,000
67,147,000
Research and development
7,649,000
8,444,000
35,916,000
34,108,000
Amortization of intangibles
1,529,000
1,561,000
6,211,000
6,285,000
25,301,000
27,285,000
104,807,000
107,540,000
Operating income
8,075,000
12,060,000
34,077,000
43,898,000
Other expenses (income):
Interest expense
73,000
295,000
479,000
6,304,000
Interest income and other
(124,000
)
(156,000
)
(405,000
)
(913,000
)
Income before provision for income
taxes
8,126,000
11,921,000
34,003,000
38,507,000
Provision for income taxes
2,651,000
3,933,000
10,758,000
13,356,000
Net income
$
5,475,000
7,988,000
23,245,000
25,151,000
Net income per share:
Basic
$
0.34
0.50
1.43
1.58
Diluted
$
0.34
0.48
1.42
1.37
Weighted average number of common
shares outstanding - basic
16,153,000
16,124,000
16,203,000
15,943,000
Weighted average number of common
and common equivalent shares
outstanding - diluted
16,277,000
16,671,000
16,418,000
20,906,000
Dividends declared per issued and
outstanding common share as of the
applicable dividend record date
$
0.30
0.30
1.20
1.175
COMTECH TELECOMMUNICATIONS CORP. AND SUBSIDIARIES
Consolidated Balance Sheets
(Audited)
July 31, 2015
July 31, 2014
Assets
Current assets:
Cash and cash equivalents
$
150,953,000
154,500,000
Accounts receivable, net
69,255,000
54,887,000
Inventories, net
62,068,000
61,332,000
Prepaid expenses and other current assets
7,396,000
9,947,000
Deferred tax asset, net
11,084,000
10,178,000
Total current assets
300,756,000
290,844,000
Property, plant and equipment, net
15,370,000
18,536,000
Goodwill
137,354,000
137,354,000
Intangibles with finite lives, net
20,009,000
26,220,000
Deferred financing costs, net
—
65,000
Other assets, net
388,000
833,000
Total assets
$
473,877,000
473,852,000
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
$
15,708,000
18,902,000
Accrued expenses and other current liabilities
29,470,000
29,803,000
Dividends payable
4,839,000
4,844,000
Customer advances and deposits
14,320,000
12,610,000
Interest payable
—
29,000
Total current liabilities
64,337,000
66,188,000
Other liabilities
3,633,000
4,364,000
Income taxes payable
1,573,000
2,743,000
Deferred tax liability, net
2,925,000
3,632,000
Total liabilities
72,468,000
76,927,000
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 31,165,401 shares and 31,016,469 shares at July 31, 2015 and
2014, respectively
3,117,000
3,102,000
Additional paid-in capital
427,083,000
421,240,000
Retained earnings
413,058,000
409,443,000
843,258,000
833,785,000
Less:
Treasury stock, at cost (15,033,317 shares and 14,857,582 shares at
July 31, 2015 and 2014, respectively)
(441,849,000
)
(436,860,000
)
Total stockholders' equity
401,409,000
396,925,000
Total liabilities and stockholders' equity
$
473,877,000
473,852,000
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,
2015
2014
2015
2014
Reconciliation of GAAP Net Income to
Adjusted EBITDA((1)):
GAAP net income
$
5,475,000
7,988,000
23,245,000
25,151,000
Income taxes
2,651,000
3,933,000
10,758,000
13,356,000
Net interest (income) expense and other
(51,000
)
139,000
74,000
5,391,000
Amortization of stock-based compensation
721,000
1,177,000
4,363,000
4,263,000
Depreciation and other amortization
3,158,000
3,249,000
12,736,000
13,006,000
Strategic alternatives analysis expenses
—
225,000
585,000
225,000
Restructuring benefit related to the wind-down
of microsatellite product line
—
—
—
(56,000
)
Adjusted EBITDA
$
11,954,000
16,711,000
51,761,000
61,336,000
(1)
Represents earnings before interest, income taxes, depreciation and
amortization of intangibles and stock-based compensation, strategic
alternatives analysis expenses and restructuring benefits 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.