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Comtech Telecommunications Corp. Announces Results for the Third Quarter of Fiscal 2009

June 3, 2009 at 12:00 AM EDT

MELVILLE, N.Y., Jun 3, 2009 (GlobeNewswire via COMTEX News Network) -- Comtech Telecommunications Corp. (Nasdaq:CMTL) today reported its operating results for the three and nine months ended April 30, 2009.

Net sales for the third quarter of fiscal 2009 were $128.5 million compared to $138.1 million for the third quarter of fiscal 2008, reflecting growth in both our telecommunications transmission and our RF microwave amplifiers segments, all of which was offset by a significant decrease of sales in our mobile data communications segment. The anticipated decline in sales in our mobile data communications segment is attributable to the fact that a large majority of our current record backlog is expected to ship in fiscal 2010. All three of our business segments benefited from incremental sales associated with our Radyne acquisition.

GAAP net income was $8.2 million, or $0.29 per diluted share, for the three months ended April 30, 2009 compared to $19.3 million, or $0.70 per diluted share, for the three months ended April 30, 2008. Non-GAAP net income for the three months ended April 30, 2009, which excludes the amortization of stock-based compensation expense, was $9.8 million, or $0.34 per diluted share, as compared to Non-GAAP net income of $21.0 million, or $0.76 per diluted share, for the three months ended April 30, 2008.

Net sales for the nine months ended April 30, 2009 were $464.3 million compared to $405.2 million for the nine months ended April 30, 2008. GAAP net income was $43.4 million, or $1.55 per diluted share, for the nine months ended April 30, 2009 compared to $59.5 million, or $2.15 per diluted share, for the nine months ended April 30, 2008. GAAP net income for the nine months ended April 30, 2009 has been reduced by a one-time charge of $6.2 million ($0.22 per diluted share) for the amortization of acquired in-process research and development associated with the Radyne acquisition. Non-GAAP net income for the nine months ended April 30, 2009, which excludes the amortization of stock-based compensation expense and amortization of acquired in-process research and development, was $54.3 million, or $1.93 per diluted share, as compared to Non-GAAP net income of $64.6 million, or $2.31 per diluted share, for the nine months ended April 30, 2008.

In commenting on the Company's performance during the third quarter of fiscal 2009, Fred Kornberg, President and Chief Executive Officer, stated, "Although we have not been immune to challenging market conditions, we are seeing early signs of end-market stabilization and improved order flow. Our performance during this quarter demonstrates our market leadership positions. We continue to anticipate record sales in fiscal 2009 even though our fourth quarter of fiscal 2009 results are expected to be impacted by short-term delivery delays by the supplier of our new MTS computers. These computers are now expected to begin shipping in fiscal 2010."

Mr. Kornberg added, "With record backlog of $591.1 million and deployable cash of $449.2 million, I am increasingly optimistic that fiscal 2010 will be a strong year for Comtech, and believe that we are well-positioned to navigate through the most challenging global economy in decades. We continue to be focused on both executing our business strategies and continuing to position ourselves for additional growth when the economy recovers."

Selected Fiscal 2009 Third Quarter Financial Metrics and Other Items


 * Backlog as of April 30, 2009 is a record $591.1 million compared to
   $201.1 million as of July 31, 2008 and $185.9 million as of April
   30, 2008.  Bookings for the three months ended April 30, 2009 were
   $257.5 million, and for the nine months ended April 30, 2009 were a
   record of $803.0 million compared to $104.8 million and $462.1
   million for the three and nine months ended April 30, 2008,
   respectively.

 * Earnings before interest, taxes, depreciation and amortization,
   including amortization of acquired in-process research and
   development ("EBITDA"), were $18.4 million and $95.5 million for
   the three and nine months ended April 30, 2009, respectively,
   versus $33.2 million and $97.8 million for the three and nine
   months ended April 30, 2008, respectively.

 * As of April 30, 2009, the Company had $255.2 million of cash and
   cash equivalents. Net cash provided by operating activities was
   $49.6 million for the nine months ended April 30, 2009 compared to
   $22.1 million for the nine months ended April 30, 2008. The net
   increase in cash provided by operating activities was primarily
   driven by a significant decrease in net working capital
   requirements during the nine months ended April 30, 2009 as
   compared to the nine months ended April 30, 2008.

 * On May 8, 2009, the Company received net proceeds of $194.0 million
   related to the issuance of $200.0 million of 3.0% convertible
   senior notes. As a result, the Company has approximately $449.2
   million of cash entering the fourth quarter of fiscal 2009. All of
   the Company's previously issued $105.0 million 2.0% convertible
   senior notes were fully converted by noteholders as of February 12,
   2009 into an aggregate of 3,333,327 shares of the Company's common
   stock, plus cash in lieu of fractional shares.

 * Our provision for income taxes for three months ended April 30,
   2009 includes a benefit of $0.3 million due to a change in our
   estimated fiscal 2009 effective tax rate and discrete tax benefits
   of $0.2 million.

Conference Call

The Company has scheduled an investor conference call for 8:30 AM (ET) on Thursday, June 4, 2009. 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) 862-9098 (domestic) or (785) 424-1051 (international) and using the conference I.D. of "Comtech." A replay of the conference call will be available for seven days by dialing (402) 220-7227. In addition, an updated investor presentation, including earnings guidance, will be available on our web site shortly after the conference call.

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 or ineffective. The Company conducts business through three complementary segments: telecommunications transmission, mobile data communications and RF microwave amplifiers. 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.

Cautionary Statement Regarding Forward-Looking Statements

Certain information in this press release contains forward-looking statements, including but not limited to, information relating to our 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 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 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 results of ongoing investigations into the Company's compliance with export regulations, risks associated with the Radyne acquisition, risks associated with the Department of Defense subpoenas, risks associated with our recent MTS orders, 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           Nine months ended
                        April 30,                   April 30,
               --------------------------- ---------------------------
                   2009           2008          2009          2008
               ------------- ------------- ------------- -------------

 Net sales     $128,545,000   138,068,000   464,346,000   405,153,000
 Cost of sales   81,040,000    77,536,000   270,385,000   227,818,000
               ------------- ------------- ------------- -------------
   Gross profit  47,505,000    60,532,000   193,961,000   177,335,000
               ------------- ------------- ------------- -------------

 Expenses:
   Selling,
    general and
    administra-
    tive         23,062,000    22,032,000    78,009,000    63,735,000
   Research and
    development  11,410,000    10,252,000    38,057,000    30,433,000
   Amortization
    of acquired
    in-process
    research
    and develo-
    pment                --            --     6,200,000            --
   Amortization
    of intangi-
    bles          1,805,000       433,000     5,394,000     1,246,000
               ------------- ------------- ------------- -------------
                 36,277,000    32,717,000   127,660,000    95,414,000
               ------------- ------------- ------------- -------------

 Operating
  income         11,228,000    27,815,000    66,301,000    81,921,000

 Other expenses
  (income):
   Interest
    expense          41,000       668,000     1,418,000     2,015,000
   Interest
    income and
    other          (404,000)   (3,080,000)   (2,307,000)  (11,622,000)
               ------------- ------------- ------------- -------------

 Income before
  provision for
  income taxes   11,591,000    30,227,000    67,190,000    91,528,000
 Provision for
  income taxes    3,422,000    10,922,000    23,810,000    32,060,000
               ------------- ------------- ------------- -------------

 Net income    $  8,169,000    19,305,000    43,380,000    59,468,000
               ============= ============= ============= =============

 Net income per
  share:
   Basic       $       0.29          0.80          1.69          2.47
               ============= ============= ============= =============
   Diluted     $       0.29          0.70          1.55          2.15
               ============= ============= ============= =============

 Weighted
  average
  number of
  common shares
  outstanding -
  basic          27,779,000    24,224,000    25,708,000    24,082,000
               ============= ============= ============= =============

 Weighted
  average
  number of
  common and
  common equi-
  valent shares
  outstanding
  assuming
  dilution -
  diluted        28,452,000    28,220,000    28,540,000    28,244,000
               ============= ============= ============= =============


                   COMTECH TELECOMMUNICATIONS CORP.
                           AND SUBSIDIARIES
                Condensed Consolidated Balance Sheets

                                              April 30,     July 31,
                                                2009          2008
                                           ------------- -------------
                         Assets             (Unaudited)    (Audited)
 Current assets:
   Cash and cash equivalents               $255,180,000   410,067,000
   Accounts receivable, net                  87,602,000    70,040,000
   Inventories, net                         102,069,000    85,966,000
   Prepaid expenses and other current
    assets                                   18,882,000     5,891,000
   Deferred tax asset                        16,808,000    10,026,000
                                           ------------- -------------
               Total current assets         480,541,000   581,990,000

 Property, plant and equipment, net          38,968,000    34,269,000
 Goodwill                                   147,134,000    24,363,000
 Intangibles with finite lives, net          57,470,000     7,505,000
 Deferred financing costs, net                       --     1,357,000
 Other assets, net                              598,000     3,636,000
                                           ------------- -------------
               Total assets                $724,711,000   653,120,000
                                           ============= =============

               Liabilities and
                Stockholders' Equity

 Current liabilities:
   Accounts payable                        $ 20,173,000    31,423,000
   Accrued expenses and other current
    liabilities                              49,303,000    49,671,000
   Customer advances and deposits            16,487,000    15,287,000
   Current installments of other
    obligations                                      --       108,000
   Interest payable                                  --     1,050,000
                                           ------------- -------------
               Total current liabilities     85,963,000    97,539,000

 Convertible senior notes                            --   105,000,000
 Other liabilities                            2,211,000            --
 Income taxes payable                         3,532,000     1,909,000
 Deferred tax liability                      12,641,000     5,870,000
                                           ------------- -------------
               Total liabilities            104,347,000   210,318,000

 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
    28,363,156 shares and 24,600,166 shares
    at April 30, 2009 and July 31, 2008,
    respectively                              2,836,000     2,460,000
   Additional paid-in capital               320,052,000   186,246,000
   Retained earnings                        297,661,000   254,281,000
                                           ------------- -------------
                                            620,549,000   442,987,000
     Less:
      Treasury stock (210,937 shares)          (185,000)     (185,000)
                                           ------------- -------------
               Total stockholders' equity   620,364,000   442,802,000
                                           ------------- -------------
               Total liabilities and
                stockholders' equity       $724,711,000   653,120,000
                                           ============= =============


                   COMTECH TELECOMMUNICATIONS CORP.
                           AND SUBSIDIARIES
         Reconciliation of Non-GAAP Financial Measures to GAAP
                          Financial Measures
                              (Unaudited)

                   Three Months Ended           Nine months Ended
                        April 30,                   April 30,
               --------------------------- ---------------------------
                    2009          2008          2009          2008
               ------------- ------------- ------------- -------------
 Reconciliation
  of Non-GAAP
  Net Income to
  GAAP Net
  Income(1):
   Non-GAAP net
   income      $  9,761,000    21,022,000    54,262,000    64,627,000
   Amortization
    of acquired
    in-process
    research
    and develo-
    pment                --            --    (6,200,000)           --
   Amortization
    of stock-
    based com-
    pensation    (2,339,000)   (2,579,000)   (7,049,000)   (7,850,000)
   Tax effect
    of stock-
    based com-
    pensation
    expense         747,000       862,000     2,367,000     2,691,000
               ------------- ------------- ------------- -------------
   GAAP net
    income     $  8,169,000    19,305,000    43,380,000    59,468,000
               ============= ============= ============= =============

 Reconciliation
  of Non-GAAP
  Diluted
  Earnings Per
  Share to GAAP
  Diluted
  Earnings  Per
  Share(1):
   Non-GAAP
    diluted
    earnings
    per share  $       0.34          0.76          1.93         2.31
   Amortization
    of acquired
    in-process
    research
    and develo-
    pment                --            --         (0.22)          --
   Amortization
    of stock-
    based com-
    pensation         (0.08)        (0.09)        (0.24)       (0.25)
   Tax effect
    of stock-
    based com-
    pensation
    expense            0.03          0.03          0.08         0.09
               ------------- ------------- ------------- -------------
   GAAP diluted
    earnings
    per share  $       0.29          0.70          1.55         2.15
               ============= ============= ============= =============

 Reconciliation
  of GAAP Net
  Income  to
  EBITDA(2):
   GAAP net
    income     $  8,169,000    19,305,000    43,380,000    59,468,000
   Income taxes   3,422,000    10,922,000    23,810,000    32,060,000
   Net interest
    expense
    (income)
    and other      (363,000)   (2,412,000)     (889,000)   (9,607,000)
   Amortization
    of acquired
    in-process
    research
    and develo-
    pment                --            --     6,200,000            --
   Amortization
    of stock-
    based com-
    pensation     2,339,000     2,579,000     7,049,000     7,850,000
   Depreciation
    and other
    amortiza-
    tion          4,856,000     2,800,000    15,930,000     7,984,000
               ------------- ------------- ------------- -------------
   EBITDA      $ 18,423,000    33,194,000    95,480,000    97,755,000
               ============= ============= ============= =============

 1) Non-GAAP net income is used by management in assessing the
    Company's operating results.  The Company believes that investors
    and analysts may use non-GAAP measures that exclude the
    amortization of acquired in-process research and development and
    stock-based compensation, along with other information contained
    in its SEC filings, in assessing the Company's operating results.

 2) Represents earnings before interest, income taxes, depreciation
    and amortization of intangibles, stock-based compensation and
    acquired in-process research and development. EBITDA is a non-GAAP
    operating metric used by management in assessing the Company's
    operating results and ability to meet debt service requirements.
    The Company's definition of 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.  EBITDA is also
    a measure frequently requested by the Company's investors and
    analysts. The Company believes that investors and analysts may use
    EBITDA, along with other information contained in its SEC filings,
    in assessing its ability to generate cash flow and service debt.

ECMTL

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SOURCE: Comtech Telecommunications Corp.

Comtech Telecommunications Corp.
          Media Contacts:
          Michael D. Porcelain, Senior Vice President and 
           Chief Financial Officer
          

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