Comtech Telecommunications Corp. Announces Results for the Third Quarter of Fiscal 2013 and Provides Updated Fiscal 2013 Guidance
MELVILLE, N.Y.--(BUSINESS WIRE)--
June 6, 2013 -- Comtech Telecommunications Corp. (NASDAQ: CMTL) today
reported its operating results for the three and nine months ended April
30, 2013.
Net sales for the third quarter of fiscal 2013 were $69.9 million
compared to $99.8 million for the third quarter of fiscal 2012. The
period-over-period decrease in net sales is due to lower net sales in
our mobile data communications and RF microwave amplifiers segments and,
to a much lesser extent, our telecommunications transmission segment.
GAAP net income was $2.9 million, or $0.17 per diluted share, for the
third quarter of fiscal 2013 as compared to $6.1 million, or $0.29 per
diluted share, for the third quarter of fiscal 2012.
Net sales for the nine months ended April 30, 2013 were $235.4 million
compared to $312.3 million for the nine months ended April 30, 2012.
GAAP net income was $12.7 million, or $0.69 per diluted share, for the
nine months ended April 30, 2013 as compared to $24.5 million, or $1.04
per diluted share, for the nine months ended April 30, 2012.
The Company also announced that it is updating its fiscal 2013 revenue
guidance to a range of $310.0 million to $320.0 million and its fiscal
2013 GAAP diluted earnings per share guidance to a range of $0.86 to
$0.92. Adjusted EBITDA for fiscal 2013 is expected to be between $49.0
million and $51.0 million. The updated diluted earnings per share
guidance reflects the impact of the Company's repurchases of common
stock through June 5, 2013.
In commenting on the Company's performance and updated fiscal 2013
guidance, Fred Kornberg, President and Chief Executive Officer, stated,
"Despite difficult market conditions, we are pleased with our overall
third quarter results, particularly the receipt of several strategically
important new contracts. For the first time this fiscal year, our
quarterly book-to-bill ratio exceeded 1.0, and we expect the same to be
the case in the fourth quarter."
Mr. Kornberg added, "We are excited about our long-term business
prospects and we are confident that we are on the right path to achieve
revenue and earnings growth in fiscal 2014."
Selected Fiscal 2013 Third Quarter Financial Metrics and Other Items
Backlog as of April 30, 2013 was $130.1 million compared to $126.4
million as of January 31, 2013.
Total bookings for the three and nine months ended April 30, 2013 were
$73.6 million and $211.5 million, respectively, compared to $110.9
million and $304.7 million for the three and nine months ended April
30, 2012, respectively.
Adjusted EBITDA was $9.6 million and $38.2 million for the three and
nine months ended April 30, 2013, respectively, as compared to $15.4
million and $54.6 million for the three and nine months ended April
30, 2012, respectively. Adjusted EBITDA is a Non-GAAP financial
measure and is defined in the below table.
The Company's effective income tax rate for the three months ended
April 30, 2013 was 22.3%, which reflects a discrete tax benefit of
approximately $0.5 million. The Company's effective income tax rate
for the twelve months ending July 31, 2013 is expected to approximate
35.5%, excluding discrete tax adjustments.
During the three months ended April 30, 2013, the Company repurchased
542,495 shares of its common stock at an aggregate cost of
approximately $13.8 million (including transaction costs).
At April 30, 2013, the Company had $342.2 million of cash and cash
equivalents which does not reflect the subsequent repurchase of an
additional 95,888 shares of the Company's common stock for an
aggregate cost of approximately $2.5 million (including transaction
costs) from May 1, 2013 through June 5, 2013 or the quarterly dividend
payment of $4.5 million which was paid on May 21, 2013. Since
establishing the Company's first repurchase program on September 23,
2010, the Company has repurchased a total of 12,389,303 shares of
common stock for approximately $365.7 million (including transaction
costs). The Company can make additional repurchases of up to $34.6
million pursuant to its existing $50.0 million stock repurchase
program.
Additional information about the Company's updated fiscal 2013
guidance is contained in the Company's third 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, June 7, 2013. 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) 283-4593 or (402) 220-0872. 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 contracts and the post-award audit of its original 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 April 30,
Nine months ended April 30,
2013
2012
2013
2012
Net sales
$
69,856,000
99,793,000
235,386,000
312,295,000
Cost of sales
38,429,000
58,115,000
129,916,000
177,921,000
Gross profit
31,427,000
41,678,000
105,470,000
134,374,000
Expenses:
Selling, general and administrative
15,374,000
20,005,000
47,617,000
63,749,000
Research and development
9,080,000
9,481,000
28,407,000
28,609,000
Amortization of intangibles
1,582,000
1,626,000
4,746,000
5,037,000
26,036,000
31,112,000
80,770,000
97,395,000
Operating income
5,391,000
10,566,000
24,700,000
36,979,000
Other expenses (income):
Interest expense
2,009,000
2,192,000
6,150,000
6,521,000
Interest income and other
(287,000
)
(370,000
)
(878,000
)
(1,300,000
)
Income before provision for income taxes
3,669,000
8,744,000
19,428,000
31,758,000
Provision for income taxes
817,000
2,678,000
6,776,000
7,270,000
Net income
$
2,852,000
6,066,000
12,652,000
24,488,000
Net income per share:
Basic
$
0.17
0.32
0.74
1.18
Diluted
$
0.17
0.29
0.69
1.04
Weighted average number of common shares outstanding — basic
16,731,000
18,853,000
17,141,000
20,746,000
Weighted average number of common and common equivalent shares
outstanding — diluted
16,827,000
24,910,000
23,221,000
26,724,000
Dividends declared per issued and outstanding common share as of the
applicable dividend record date
$
0.275
0.275
0.825
0.825
COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
April 30, 2013
July 31, 2012
Assets
(Unaudited)
(Audited)
Current assets:
Cash and cash equivalents
$
342,197,000
367,894,000
Accounts receivable, net
47,904,000
56,242,000
Inventories, net
71,101,000
72,361,000
Prepaid expenses and other current assets
10,737,000
8,196,000
Deferred tax asset, net
9,780,000
12,183,000
Total current assets
481,719,000
516,876,000
Property, plant and equipment, net
20,858,000
22,832,000
Goodwill
137,354,000
137,354,000
Intangibles with finite lives, net
34,087,000
38,833,000
Deferred tax asset, net, non-current
-
438,000
Deferred financing costs, net
1,450,000
2,487,000
Other assets, net
894,000
958,000
Total assets
$
676,362,000
719,778,000
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
$
12,149,000
20,967,000
Accrued expenses and other current liabilities
30,641,000
40,870,000
Dividends payable
4,544,000
4,773,000
Customer advances and deposits
13,432,000
14,516,000
Interest payable
3,029,000
1,529,000
Total current liabilities
63,795,000
82,655,000
Convertible senior notes
200,000,000
200,000,000
Other liabilities
3,883,000
5,098,000
Income taxes payable
3,266,000
2,624,000
Deferred tax liability, net
1,184,000
-
Total liabilities
272,128,000
290,377,000
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 28,996,237 shares and 28,931,679 shares at April 30,
2013 and July 31, 2012, respectively
2,900,000
2,893,000
Additional paid-in capital
361,970,000
361,458,000
Retained earnings
402,773,000
404,227,000
767,643,000
768,578,000
Less:
Treasury stock, at cost (12,504,352 shares and 11,564,059 shares at
April 30, 2013 and July 31, 2012, respectively)
(363,409,000
)
(339,177,000
)
Total stockholders' equity
404,234,000
429,401,000
Total liabilities and stockholders' equity
$
676,362,000
719,778,000
COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures to GAAP Financial
Measures
(Unaudited)
Three Months Ended April 30,
Nine Months Ended April 30,
2013
2012
2013
2012
Reconciliation of GAAP Net Income to Adjusted EBITDA(1):
GAAP net income
$
2,852,000
6,066,000
12,652,000
24,488,000
Income taxes
817,000
2,678,000
6,776,000
7,270,000
Net interest expense and other
1,722,000
1,822,000
5,272,000
5,221,000
Amortization of stock-based compensation
694,000
809,000
2,245,000
2,718,000
Depreciation and other amortization
3,522,000
4,064,000
10,705,000
12,256,000
Restructuring charges related to the wind-down of microsatellite
product line
-
-
569,000
-
Costs related to withdrawn fiscal 2011 contested proxy solicitation
-
-
-
2,638,000
Adjusted EBITDA
$
9,607,000
15,439,000
38,219,000
54,591,000
(1)
Represents earnings before interest, income taxes, depreciation and
amortization of intangibles and stock-based compensation,
restructuring charges related to the wind-down of the microsatellite
product line of the Company's mobile data communications segment 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