Comtech Telecommunications Corp. Announces Results for Fiscal 2019 Fourth Quarter and Full Year and Provides Fiscal 2020 Guidance
2019 Fourth Quarter and Fiscal Year Highlights
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Net sales for the fourth quarter of fiscal 2019 were
$176.4 million as compared to$167.4 million achieved during the fourth quarter of fiscal 2018, representing an increase of$9.0 million , or 5.4%. Net sales for fiscal 2019 were$671.8 million as compared to$570.6 million achieved during fiscal 2018, representing a significant increase of$101.2 million , or 17.7%.
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Bookings during fiscal 2019 were
$724.1 million , with a company-wide book-to-bill ratio of 1.08 andComtech finished the year with backlog of$683.0 million . When addingComtech's backlog and the total unfunded value of multi-year contracts thatComtech has actually received and for which it expects future orders, its revenue visibility approximates$1.0 billion .
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On a GAAP basis, fourth quarter fiscal 2019 operating income was
$10.4 million , net income was$6.1 million and earnings per diluted share ("EPS") was$0.25 . As shown in the table below, excluding acquisition plan expenses of$1.3 million or$0.04 per diluted share, Non-GAAP EPS was$0.29 . Fiscal 2019 operating income was$41.4 million , net income was$25.0 million and EPS was$1.03 . As shown in the table below, Non-GAAP EPS in fiscal 2019 was$1.34 .
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Adjusted EBITDA for the fourth quarter of fiscal 2019 was
$28.3 million . Adjusted EBITDA for fiscal 2019 was$93.5 million as compared to the$78.4 million achieved during fiscal 2018, representing a significant increase of$15.1 million , or 19.3%. Adjusted EBITDA is a non-GAAP financial measure which is reconciled to the most directly comparable GAAP financial measure and is more fully defined below.
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During the fourth quarter of fiscal 2019,
Comtech generated strong cash flows from operating activities of$14.2 million . Cash flows from operating activities in fiscal 2019 were$68.0 million .
In commenting on the Company's performance,
Mr. Kornberg further added, “At this point, we have clear visibility, lots of optimism and have strong business momentum. We believe that in an environment of increasing market demand for global voice, video and data usage, customers will increasingly turn to us to fulfill their needs for secure wireless communications. With that wind to our backs, I am confident that
2020 Fiscal Year Financial Targets
Looking forward, the Company has established the following consolidated financial targets:
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Net sales are expected to be in a range of approximately
$710.0 million to $730.0 million with year-over-year growth in bothComtech's Commercial Solutions and Government Solutions segments and the achievement of a consolidated book-to-bill ratio in excess of 1.0.
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Total depreciation expense is expected to approximate
$13.0 million .
-
Total amortization of intangible assets is expected to approximate
$21.0 million .
-
Total amortization of stock-based compensation expense is expected to range from approximately
$12.0 million to $14.0 million .
-
GAAP operating income, as a percentage of net sales, is expected to approximate 7.0% as compared to the 6.2%
Comtech achieved in fiscal 2019.
-
Comtech’s interest expense rate (including amortization of deferred financing costs) is expected to approximate 4.6% with total interest expense of approximately
$7.5 million in fiscal 2020.Comtech's current cash borrowing rate is approximately 4.0%.
-
Comtech's effective income tax rate (excluding discrete tax items) is expected to approximate 23.0%.
-
Adjusted EBITDA is expected to be in a range of approximately
$98.0 million to $102.0 million or approximately 14.0%.
-
Including
Comtech's estimates of first quarter fiscal 2020 acquisition plan expenses of$1.5 million , GAAP EPS is expected to range from$1.30 to $1.45 . Excluding first quarter fiscal 2020 acquisition plan expenses, Non-GAAP EPS is expected to approximate$1.35 to $1.50 .
Like
Except as discussed, the aforementioned fiscal 2020 financial targets do not include the impact of any acquisitions or the impact of any other expense
Additional information about the Company’s fiscal 2020 guidance is included in the Company’s fourth quarter investor presentation which is available on the Company’s website at www.comtechtel.com.
Conference Call
The Company has scheduled an investor conference call for
About
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, among other things: the possibility that the expected synergies from the recent acquisitions will not be fully realized, or will not be realized within the anticipated time periods; the risk that the acquired businesses will not be integrated with
COMTECH TELECOMMUNICATIONS CORP. | |||||||||||||||
AND SUBSIDIARIES | |||||||||||||||
Consolidated Statements of Operations | |||||||||||||||
| (Unaudited) |
| (Audited) | ||||||||||||
| Three months ended July 31, |
| Twelve months ended July 31, | ||||||||||||
| 2019 |
| 2018 |
| 2019 |
| 2018 | ||||||||
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| ||||||||
Net sales | $ | 176,372,000 |
|
| $ | 167,435,000 |
|
| $ | 671,797,000 |
|
| $ | 570,589,000 |
|
Cost of sales | 112,362,000 |
|
| 104,447,000 |
|
| 424,357,000 |
|
| 346,648,000 |
| ||||
Gross profit | 64,010,000 |
|
| 62,988,000 |
|
| 247,440,000 |
|
| 223,941,000 |
| ||||
|
|
|
|
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|
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Expenses: |
|
|
|
|
|
|
| ||||||||
Selling, general and administrative | 31,396,000 |
|
| 27,822,000 |
|
| 128,639,000 |
|
| 113,922,000 |
| ||||
Research and development | 15,743,000 |
|
| 13,906,000 |
|
| 56,407,000 |
|
| 53,869,000 |
| ||||
Amortization of intangibles | 5,207,000 |
|
| 5,269,000 |
|
| 18,320,000 |
|
| 21,075,000 |
| ||||
Settlement of intellectual property litigation | — |
|
| — |
|
| (3,204,000 | ) |
| — |
| ||||
Acquisition plan expenses | 1,259,000 |
|
| — |
|
| 5,871,000 |
|
| — |
| ||||
| 53,605,000 |
|
| 46,997,000 |
|
| 206,033,000 |
|
| 188,866,000 |
| ||||
|
|
|
|
|
|
|
| ||||||||
Operating income | 10,405,000 |
|
| 15,991,000 |
|
| 41,407,000 |
|
| 35,075,000 |
| ||||
|
|
|
|
|
|
|
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Other expenses (income): |
|
|
|
|
|
|
| ||||||||
Interest expense | 2,150,000 |
|
| 2,588,000 |
|
| 9,245,000 |
|
| 10,195,000 |
| ||||
Write-off of deferred financing costs | — |
|
| — |
|
| 3,217,000 |
|
| — |
| ||||
Interest (income) and other | 42,000 |
|
| 65,000 |
|
| 35,000 |
|
| 254,000 |
| ||||
|
|
|
|
|
|
|
| ||||||||
Income before provision for (benefit from) income taxes | 8,213,000 |
|
| 13,338,000 |
|
| 28,910,000 |
|
| 24,626,000 |
| ||||
Provision for (benefit from) income taxes | 2,078,000 |
|
| 5,880,000 |
|
| 3,869,000 |
|
| (5,143,000 | ) | ||||
|
|
|
|
|
|
|
| ||||||||
Net income | $ | 6,135,000 |
|
| $ | 7,458,000 |
|
| $ | 25,041,000 |
|
| $ | 29,769,000 |
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Net income per share: |
|
|
|
|
|
|
| ||||||||
Basic | $ | 0.25 |
|
| $ | 0.31 |
|
| $ | 1.04 |
|
| $ | 1.25 |
|
Diluted | $ | 0.25 |
|
| $ | 0.31 |
|
| $ | 1.03 |
|
| $ | 1.24 |
|
|
|
|
|
|
|
|
| ||||||||
Weighted average number of common shares outstanding – basic | 24,270,000 |
|
| 23,857,000 |
|
| 24,124,000 |
|
| 23,825,000 |
| ||||
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|
|
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|
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Weighted average number of common and common equivalent shares outstanding – diluted | 24,428,000 |
|
| 24,270,000 |
|
| 24,302,000 |
|
| 24,040,000 |
|
COMTECH TELECOMMUNICATIONS CORP. | |||||||
AND SUBSIDIARIES | |||||||
Consolidated Balance Sheets | |||||||
(Audited) | |||||||
| July 31, 2019 |
| July 31, 2018 | ||||
Assets |
|
|
| ||||
Current assets: |
|
|
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Cash and cash equivalents | $ | 45,576,000 |
|
| $ | 43,484,000 |
|
Accounts receivable, net | 145,032,000 |
|
| 147,439,000 |
| ||
Inventories, net | 74,839,000 |
|
| 75,076,000 |
| ||
Prepaid expenses and other current assets | 14,867,000 |
|
| 13,794,000 |
| ||
Total current assets | 280,314,000 |
|
| 279,793,000 |
| ||
Property, plant and equipment, net | 28,026,000 |
|
| 28,987,000 |
| ||
Goodwill | 310,489,000 |
|
| 290,633,000 |
| ||
Intangibles with finite lives, net | 261,890,000 |
|
| 240,796,000 |
| ||
Deferred financing costs, net | 3,128,000 |
|
| 2,205,000 |
| ||
Other assets, net | 3,864,000 |
|
| 2,743,000 |
| ||
Total assets | $ | 887,711,000 |
|
| $ | 845,157,000 |
|
Liabilities and Stockholders’ Equity |
|
|
| ||||
Current liabilities: |
|
|
| ||||
Accounts payable | $ | 24,330,000 |
|
| $ | 43,928,000 |
|
Accrued expenses and other current liabilities | 78,584,000 |
|
| 65,034,000 |
| ||
Dividends payable | 2,406,000 |
|
| 2,356,000 |
| ||
Contract liabilities | 38,682,000 |
|
| 34,452,000 |
| ||
Current portion of long-term debt | — |
|
| 17,211,000 |
| ||
Current portion of capital lease and other obligations | 757,000 |
|
| 1,836,000 |
| ||
Interest payable | 588,000 |
|
| 499,000 |
| ||
Total current liabilities | 145,347,000 |
|
| 165,316,000 |
| ||
Non-current portion of long-term debt, net | 165,000,000 |
|
| 148,087,000 |
| ||
Non-current portion of capital lease and other obligations | — |
|
| 765,000 |
| ||
Income taxes payable | 325,000 |
|
| 2,572,000 |
| ||
Deferred tax liability, net | 12,481,000 |
|
| 10,927,000 |
| ||
Long-term contract liabilities | 10,654,000 |
|
| 7,689,000 |
| ||
Other liabilities | 18,822,000 |
|
| 4,117,000 |
| ||
Total liabilities | 352,629,000 |
|
| 339,473,000 |
| ||
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 39,276,161 shares and 38,860,571 shares at July 31, 2019 and 2018, respectively | 3,928,000 |
|
| 3,886,000 |
| ||
Additional paid-in capital | 552,670,000 |
|
| 538,453,000 |
| ||
Retained earnings | 420,333,000 |
|
| 405,194,000 |
| ||
| 976,931,000 |
|
| 947,533,000 |
| ||
Less: |
|
|
| ||||
Treasury stock, at cost (15,033,317 shares at July 31, 2019 and 2018) | (441,849,000 | ) |
| (441,849,000 | ) | ||
Total stockholders’ equity | 535,082,000 |
|
| 505,684,000 |
| ||
Total liabilities and stockholders’ equity | $ | 887,711,000 |
|
| $ | 845,157,000 |
|
AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures
(Unaudited)
Use of Non-GAAP Financial Measures
In order to provide investors with additional information regarding its financial results, this press release contains "Non-GAAP financial measures" under the rules of the
| Three months ended July 31, |
| Twelve months ended July 31, | ||||||||||
| 2019 |
| 2018 |
| 2019 |
| 2018 | ||||||
|
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Reconciliation of GAAP Net Income to Adjusted EBITDA: |
|
|
|
|
|
|
| ||||||
Net income | $ | 6,135,000 |
|
| 7,458,000 |
|
| $ | 25,041,000 |
|
| 29,769,000 |
|
Provision for (benefit from) income taxes | 2,078,000 |
|
| 5,880,000 |
|
| 3,869,000 |
|
| (5,143,000 | ) | ||
Interest (income) and other | 42,000 |
|
| 65,000 |
|
| 35,000 |
|
| 254,000 |
| ||
Write-off of deferred financing costs | — |
|
| — |
|
| 3,217,000 |
|
| — |
| ||
Interest expense | 2,150,000 |
|
| 2,588,000 |
|
| 9,245,000 |
|
| 10,195,000 |
| ||
Amortization of stock-based compensation | 8,071,000 |
|
| 5,638,000 |
|
| 11,427,000 |
|
| 8,569,000 |
| ||
Amortization of intangibles | 5,207,000 |
|
| 5,269,000 |
|
| 18,320,000 |
|
| 21,075,000 |
| ||
Depreciation | 3,309,000 |
|
| 3,822,000 |
|
| 11,927,000 |
|
| 13,655,000 |
| ||
Estimated contract settlement costs | — |
|
| — |
|
| 6,351,000 |
|
| — |
| ||
Settlement of intellectual property litigation | — |
|
| — |
|
| (3,204,000 | ) |
| — |
| ||
Acquisition plan expenses | 1,259,000 |
|
| — |
|
| 5,871,000 |
|
| — |
| ||
Facility exit costs | — |
|
| — |
|
| 1,373,000 |
|
| — |
| ||
Adjusted EBITDA | $ | 28,251,000 |
|
| 30,720,000 |
|
| $ | 93,472,000 |
|
| 78,374,000 |
|
In addition, a reconciliation of
| July 31, 2019 | ||||||||||||||||||||||
| Three months ended |
| Twelve months ended | ||||||||||||||||||||
|
Operating
|
| Net Income |
|
Net Income per
|
|
Operating
|
| Net Income |
|
Net Income per
| ||||||||||||
Reconciliation of GAAP to Non-GAAP Earnings: |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
GAAP measures, as reported | $ | 10,405,000 |
|
| $ | 6,135,000 |
|
| $ | 0.25 |
|
| $ | 41,407,000 |
|
| $ | 25,041,000 |
|
| $ | 1.03 |
|
Estimated contract settlement costs | — |
|
| — |
|
| — |
|
| 6,351,000 |
|
| 4,874,000 |
|
| 0.20 |
| ||||||
Settlement of intellectual property litigation | — |
|
| — |
|
| — |
|
| (3,204,000 | ) |
| (2,459,000 | ) |
| (0.10 | ) | ||||||
Facility exit costs | — |
|
| — |
|
| — |
|
| 1,373,000 |
|
| 1,054,000 |
|
| 0.04 |
| ||||||
Acquisition plan expenses | 1,259,000 |
|
| 966,000 |
|
| 0.04 |
|
| 5,871,000 |
|
| 4,506,000 |
|
| 0.19 |
| ||||||
Write-off of deferred financing costs | — |
|
| — |
|
| — |
|
| — |
|
| 2,469,000 |
|
| 0.10 |
| ||||||
Net discrete tax expense (benefit) | — |
|
| 116,000 |
|
| — |
|
| — |
|
| (2,875,000 | ) |
| (0.12 | ) | ||||||
Non-GAAP measures | $ | 11,664,000 |
|
| $ | 7,217,000 |
|
| $ | 0.29 |
|
| $ | 51,798,000 |
|
| $ | 32,610,000 |
|
| $ | 1.34 |
|
|
|
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|
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| ||||||||||||
| July 31, 2018 | ||||||||||||||||||||||
| Three months ended |
| Twelve months ended | ||||||||||||||||||||
|
Operating
|
| Net Income |
|
Net Income per
|
|
Operating
|
| Net Income |
|
Net Income per
| ||||||||||||
Reconciliation of GAAP to Non-GAAP Earnings: |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
GAAP measures, as reported | $ | 15,991,000 |
|
| $ | 7,458,000 |
|
| $ | 0.31 |
|
| $ | 35,075,000 |
|
| $ | 29,769,000 |
|
| $ | 1.24 |
|
Net discrete tax expense (benefit) | — |
|
| 2,279,000 |
|
| 0.09 |
|
| — |
|
| (11,792,000 | ) |
| (0.49 | ) | ||||||
Non-GAAP measures | $ | 15,991,000 |
|
| $ | 9,737,000 |
|
| $ | 0.40 |
|
| $ | 35,075,000 |
|
| $ | 17,977,000 |
|
| $ | 0.75 |
|
* Per share amounts may not foot due to rounding.
ECMTL
View source version on businesswire.com: https://www.businesswire.com/news/home/20190924006045/en/
Source:
Media:
Michael D. Porcelain, Senior Vice President and Chief Operating Officer
(631) 962-7000
Info@comtechtel.com