Comtech Telecommunications Corp. Announces Results for the Third Quarter of Fiscal 2014 and Provides Updated Fiscal 2014 Guidance
MELVILLE, N.Y.--(BUSINESS WIRE)--
June 5, 2014--Comtech Telecommunications Corp. (NASDAQ:CMTL) today
reported its operating results for the three and nine months ended April
30, 2014.
Net sales for the third quarter of fiscal 2014 were $88.9 million
compared to $69.9 million for the third quarter of fiscal 2013. The
period-over-period 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. GAAP net income was $5.9 million, or $0.32 per diluted share,
for the third quarter of fiscal 2014 as compared to $2.9 million, or
$0.17 per diluted share, for the third quarter of fiscal 2013.
Net sales for the nine months ended April 30, 2014 were $257.8 million
compared to $235.4 million for the nine months ended April 30, 2013.
GAAP net income was $17.2 million, or $0.92 per diluted share, for the
nine months ended April 30, 2014 as compared to $12.7 million, or $0.69
per diluted share, for the nine months ended April 30, 2013.
Based on the Company's year-to-date results and anticipated fourth
quarter performance, the Company is updating its fiscal 2014 guidance.
Fiscal 2014 revenue is now expected to range from $342.0 million to
$346.0 million, adjusted EBITDA, as defined in the below table, is now
expected to be in the range of $58.0 million to $60.0 million and GAAP
diluted earnings per share is now expected to be in the range of $1.25
to $1.30.
In commenting on the Company's performance and updated fiscal 2014
business outlook, Fred Kornberg, President and Chief Executive Officer,
stated, "We are extremely pleased with our solid third quarter financial
results. Our business looks like it is firming up and our outlook for
fiscal 2014 has improved."
Mr. Kornberg added, "We are excited about the many large growth
opportunities we see and are increasingly optimistic that, as we look to
next year, fiscal 2015 will be another year of growth on both the top
and bottom lines."
Selected Fiscal 2014 Third Quarter Financial Metrics and Other Items
Backlog as of April 30, 2014 was $160.7 million compared to $168.0
million as of January 31, 2014.
Total bookings for the three and nine months ended April 30, 2014 were
$81.6 million and $228.8 million, respectively, compared to $73.6
million and $211.5 million for the three and nine months ended April
30, 2013, respectively.
Adjusted EBITDA was $14.8 million and $44.6 million for the three and
nine months ended April 30, 2014, respectively, as compared to $9.6
million and $38.2 million for the three and nine months ended April
30, 2013, 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, 2014 was 33.5%, which reflects a discrete tax benefit of
approximately $0.3 million. The Company's effective income tax rate
for the twelve months ending July 31, 2014 is expected to approximate
36.5%, excluding any discrete tax adjustments.
During the three months ended April 30, 2014, the Company repurchased
915,311 shares of its common stock in open-market transactions with an
average price per share of $31.70 and at an aggregate cost of $29.0
million (including transaction costs).
As of April 30, 2014, the Company had $295.0 million of cash and cash
equivalents and $191.5 million principal amount of its 3.0%
convertible senior notes outstanding. However, subsequently, the
Company utilized a portion of its cash and cash equivalents to: (i)
redeem and repurchase $150.0 million principal amount of its 3.0%
convertible senior notes (with the remaining $41.5 million principal
amount converted into shares of the Company's common stock); (ii)
repurchase $12.0 million of its common stock; and (iii) make a
quarterly cash dividend payment of $4.9 million on May 30, 2014. After
accounting solely for the aforementioned items, the Company has
approximately $128.0 million of cash and cash equivalents and expects
to generate significant positive cash flows from operations during the
fourth quarter of fiscal 2014.
As of June 4, 2014, the Company can repurchase approximately $14.3
million of additional common stock pursuant to its stock repurchase
program and, after considering the impact of the conversion of a
portion of its 3.0% convertible senior notes into shares of common
stock, and stock repurchases subsequent to April 30, 2014, the Company
currently has approximately 16,000,000 common shares outstanding.
Additional
information about the Company's updated fiscal 2014 guidance is
included 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 6, 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) 839-5125 or (402) 220-1502. 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; 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; 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,
2014
2013
2014
2013
Net sales
$
88,905,000
69,856,000
257,772,000
235,386,000
Cost of sales
50,559,000
38,429,000
145,679,000
129,916,000
Gross profit
38,346,000
31,427,000
112,093,000
105,470,000
Expenses:
Selling, general and administrative
17,320,000
15,374,000
49,867,000
47,617,000
Research and development
8,899,000
9,080,000
25,664,000
28,407,000
Amortization of intangibles
1,560,000
1,582,000
4,724,000
4,746,000
27,779,000
26,036,000
80,255,000
80,770,000
Operating income
10,567,000
5,391,000
31,838,000
24,700,000
Other expenses (income):
Interest expense
1,993,000
2,009,000
6,009,000
6,150,000
Interest income and other
(256,000
)
(287,000
)
(757,000
)
(878,000
)
Income before provision for income taxes
8,830,000
3,669,000
26,586,000
19,428,000
Provision for income taxes
2,955,000
817,000
9,423,000
6,776,000
Net income
$
5,875,000
2,852,000
17,163,000
12,652,000
Net income per share:
Basic
$
0.39
0.17
1.08
0.74
Diluted
$
0.32
0.17
0.92
0.69
Weighted average number of common shares outstanding - basic
15,200,000
16,731,000
15,882,000
17,141,000
Weighted average number of common and common equivalent shares outstanding
- diluted
21,764,000
16,827,000
22,324,000
23,221,000
Dividends declared per issued and outstanding common share as
of the applicable dividend record date
$
0.30
0.275
0.875
0.825
COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
April 30, 2014
July 31, 2013
(Unaudited)
(Audited)
Assets
Current assets:
Cash and cash equivalents
$
295,033,000
356,642,000
Accounts receivable, net
65,024,000
49,915,000
Inventories, net
68,316,000
65,482,000
Prepaid expenses and other current assets
8,734,000
7,428,000
Deferred tax asset, net
10,585,000
10,184,000
Total current assets
447,692,000
489,651,000
Property, plant and equipment, net
19,820,000
20,333,000
Goodwill
137,354,000
137,354,000
Intangibles with finite lives, net
27,781,000
32,505,000
Deferred financing costs, net
139,000
1,093,000
Other assets, net
819,000
879,000
Total assets
$
633,605,000
681,815,000
Liabilities and Stockholders' Equity
Current liabilities:
Convertible senior notes, current
$
191,499,000
200,000,000
Accounts payable
16,346,000
18,390,000
Accrued expenses and other current liabilities
29,357,000
29,892,000
Dividends payable
4,513,000
4,531,000
Customer advances and deposits
18,041,000
14,749,000
Interest payable
2,902,000
1,529,000
Income taxes payable
8,000
—
Total current liabilities
262,666,000
269,091,000
Other liabilities
4,256,000
3,958,000
Income taxes payable
2,886,000
2,963,000
Deferred tax liability, net
1,148,000
1,741,000
Total liabilities
270,956,000
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 29,503,570 shares and 29,066,792 shares at
April 30, 2014 and July 31, 2013, respectively
2,950,000
2,907,000
Additional paid-in capital
377,239,000
363,888,000
Retained earnings
406,713,000
403,398,000
786,902,000
770,193,000
Less:
Treasury stock, at cost (14,459,804 shares and 12,608,501 shares at April
30, 2014 and July 31, 2013, respectively)
(424,253,000
)
(366,131,000
)
Total stockholders' equity
362,649,000
404,062,000
Total liabilities and stockholders' equity
$
633,605,000
681,815,000
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,
2014
2013
2014
2013
Reconciliation of GAAP Net Income to Adjusted EBITDA(1):
GAAP net income
$
5,875,000
2,852,000
17,163,000
12,652,000
Income taxes
2,955,000
817,000
9,423,000
6,776,000
Net interest expense and other
1,737,000
1,722,000
5,252,000
5,272,000
Amortization of stock-based compensation
1,070,000
694,000
3,086,000
2,245,000
Depreciation and other amortization
3,210,000
3,522,000
9,757,000
10,705,000
Restructuring (benefit) charges related to the wind-down of
microsatellite product line
(56,000
)
—
(56,000
)
569,000
Adjusted EBITDA
$
14,791,000
9,607,000
44,625,000
38,219,000
(1)
Represents earnings before interest, income taxes, depreciation and
amortization of intangibles and stock-based compensation 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