Comtech Telecommunications Corp. Announces Results for the Third Quarter of Fiscal 2005
June 8, 2005 at 6:00 AM EDT
MELVILLE, N.Y., Jun 08, 2005 (BUSINESS WIRE) -- Comtech Telecommunications Corp. (Nasdaq: CMTL) today reported results for the third quarter of fiscal 2005. Sales, operating profit, EBITDA, net income and diluted earnings per share were higher than the Company's third quarter guidance and at a level in the Company's history second only to the previous quarter.
Net sales for the three months ended April 30, 2005 were $75.4 million compared to $51.2 million for the three months ended April 30, 2004. Strong increases in sales were experienced in all three business segments. Net income of $8.4 million, or $0.32 per diluted share, for the three months ended April 30, 2005 far exceeded the $4.8 million, or $0.20 per diluted share, for the three months ended April 30, 2004.
Net sales for the nine months ended April 30, 2005 were $209.6 million compared to $164.3 million for the nine months ended April 30, 2004. Net income for the nine months ended April 30, 2005 was $25.6 million, or $1.00 per diluted share, versus $15.7 million, or $0.67 per diluted share, for the nine months ended April 30, 2004.
Earnings before interest, taxes, depreciation and amortization (EBITDA) were $12.6 million and $9.0 million for the three months ended April 30, 2005 and 2004, respectively. For the nine months ended April 30, 2005 and 2004, EBITDA was $41.5 million and $28.1 million, respectively. Cash flows from operating activities were an impressive $49.5 million for the nine months ended April 30, 2005.
Backlog as of April 30, 2005 remained strong at $153.6 million compared to $83.5 million as of July 31, 2004. Bookings for the three and nine months ended April 30, 2005 were $70.0 million and $279.6 million, respectively.
In commenting on the Company's performance during the third quarter of fiscal 2005, Fred Kornberg, President and Chief Executive Officer, noted, "The third quarter was yet another strong showing in a sustained period of outstanding performance by Comtech. The strength has been experienced across all three of our business segments. All but a small portion of our growth has been organic -- driven by our significant investments in technology and research and development which have translated into well-entrenched leadership positions in high growth markets and participation in high growth programs."
Mr. Kornberg added, "During the quarter, the Company completed a 3-for-2 stock split which we believe enhances the liquidity in the market for our shares and makes our shares more accessible to individual and institutional investors."
Mr. Kornberg concluded, "Anchored by the performance during the first nine months, fiscal 2005 is expected to be another record year for us on the top and bottom lines by a wide margin. As we complete fiscal 2005 and look into fiscal 2006, we remain optimistic that fiscal 2006 will be yet another record year for Comtech."
Comtech Telecommunications Corp. designs, develops, produces and markets innovative products, systems and services for advanced communications solutions. The Company conducts its business through three complementary segments: telecommunications transmission, mobile data communications and RF microwave amplifiers. The Company offers niche products, systems and services where it believes it has technological, engineering, systems design or other expertise that differentiate its product offerings.
The Company has scheduled an investor conference call for 11:30 AM (ET) on Wednesday, June 8, 2005. Investors and the public are invited to access a live webcast of the conference call from the news section of the Comtech web site, www.comtechtel.com. Alternatively, investors can access the conference call by dialing (800) 905-0392 (domestic), or (785) 832-0201 (international) and using the conference I.D. of "Comtech." A replay of the conference call will be available for seven days by dialing (402) 220-2677. In addition, an updated investor presentation, including updated earnings guidance, will be available on our web site shortly after the conference call.
Certain information in this press release contains forward-looking statements, including but not limited to, information relating to the future performance and financial condition of the Company, the plans and objectives of the Company's management and the Company's assumptions regarding such performance and plans that are forward-looking in nature and involve certain significant risks and uncertainties. Actual results could differ materially from such forward-looking information. The Company's Securities and Exchange Commission filings identify many such risks and uncertainties, which include the following:
-- Our operating results being difficult to forecast and subject to volatility;
-- Our inability to maintain our government business;
-- Our inability to keep pace with technological changes;
-- Our dependence on international sales;
-- The impact of a domestic or foreign economic slow-down and reduction in telecommunications equipment and systems spending on the demand for our products, systems and services;
-- Our mobile data communications business being subject to unique risks;
-- Our backlog being subject to cancellation or modification;
-- Our dependence on component availability, subcontractor availability and performance by key suppliers;
-- Our fixed price contracts being subject to risk;
-- The impact of adverse regulatory changes on our ability to sell products, systems and services;
-- The impact of prevailing economic and political conditions on our businesses;
-- Whether we can successfully integrate and assimilate the operations of acquired businesses;
-- The impact of the loss of key technical or management personnel;
-- The highly competitive nature of our markets;
-- Our inability to protect our proprietary technology;
-- Our operations being subject to environmental regulation;
-- The impact of recently enacted and proposed changes in securities laws and regulations on our costs;
-- The impact of terrorist attacks and threats, and government responses thereto, and threats of war on our businesses;
-- Our inability to satisfy our debt obligations, including the recently issued convertible senior notes;
-- The inability to effectuate a change in control of the Company due to provisions in its certificate of incorporation and by-laws, stockholders' rights plan and Delaware law;
-- Our stock price being volatile; and
-- Our current intention not to declare or pay any cash dividends.
COMTECH TELECOMMUNICATIONS CORP.
Consolidated Statements of Operations
(Unaudited)
Three months ended Nine months ended
April 30, April 30,
2005 2004 2005 2004
----------- ---------- ----------- -----------
Net sales $75,388,000 51,244,000 209,597,000 164,334,000
Cost of sales 45,910,000 30,635,000 120,708,000 102,132,000
----------- ---------- ----------- -----------
Gross profit 29,478,000 20,609,000 88,889,000 62,202,000
----------- ---------- ----------- -----------
Expenses:
Selling, general
and administrative 12,855,000 8,775,000 36,112,000 26,153,000
Research and
development 5,325,000 3,993,000 15,175,000 11,198,000
Amortization of
intangibles 597,000 499,000 1,734,000 1,498,000
----------- ---------- ----------- -----------
18,777,000 13,267,000 53,021,000 38,849,000
----------- ---------- ----------- -----------
Operating income 10,701,000 7,342,000 35,868,000 23,353,000
Other expense
(income):
Interest expense 669,000 675,000 2,005,000 750,000
Interest income (1,191,000) (324,000) (2,739,000) (543,000)
----------- ---------- ----------- -----------
Income before
provision for
income taxes 11,223,000 6,991,000 36,602,000 23,146,000
Provision for
income taxes 2,851,000 2,238,000 10,972,000 7,407,000
----------- ---------- ----------- -----------
Net income $ 8,372,000 4,753,000 25,630,000 15,739,000
=========== ========== =========== ===========
Net income per share
Basic $ 0.39 0.22 1.19 0.75
=========== ========== =========== ===========
Diluted $ 0.32 0.20 1.00 0.67
=========== ========== =========== ===========
Weighted average
number of common
shares outstanding
- basic 21,666,000 21,326,000 21,505,000 21,125,000
=========== ========== =========== ===========
Weighted average
number of common and
common equivalent
shares outstanding
assuming dilution
- diluted 27,327,000 26,439,000 26,936,000 24,329,000
=========== ========== =========== ===========
EBITDA(1)
Reconciliation of net
income to EBITDA:
Net income $ 8,372,000 4,753,000 25,630,000 15,739,000
Income taxes 2,851,000 2,238,000 10,972,000 7,407,000
Net interest
expense (income) (522,000) 351,000 (734,000) 207,000
Depreciation and
amortization 1,943,000 1,614,000 5,609,000 4,738,000
----------- ---------- ----------- -----------
EBITDA $12,644,000 8,956,000 41,477,000 28,091,000
=========== ========== =========== ===========
(1) Represents earnings before interest, income taxes,
depreciation and amortization. EBITDA is a non-GAAP operating
metric used by management in assessing the Company's operating
results and ability to meet its debt service requirements.
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.
COMTECH TELECOMMUNICATIONS CORP.
Consolidated Balance Sheets
April 30, July 31,
2005 2004
------------- -------------
Assets (Unaudited)
Current assets:
Cash and cash equivalents $ 205,250,000 163,292,000
Restricted cash 1,044,000 4,054,000
Accounts receivable, net 38,229,000 43,002,000
Inventories, net 45,455,000 39,758,000
Prepaid expenses and other current
assets 3,896,000 1,817,000
Deferred tax assets - current 6,501,000 6,501,000
------------- -------------
Total current assets 300,375,000 258,424,000
Property, plant and equipment, net 17,337,000 14,652,000
Goodwill 22,322,000 18,721,000
Intangibles with definite lives, net 9,716,000 10,706,000
Deferred financing costs, net 3,131,000 3,541,000
Other assets, net 365,000 346,000
------------- -------------
Total assets $ 353,246,000 306,390,000
============= =============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 23,307,000 9,566,000
Accrued expenses 27,660,000 20,515,000
Customer advances and deposits 6,751,000 7,290,000
Deferred service revenue 9,222,000 13,716,000
Current installments of other
obligations 234,000 234,000
Interest payable 525,000 1,073,000
Income taxes payable 4,699,000 4,812,000
------------- -------------
Total current liabilities 72,398,000 57,206,000
Convertible senior notes 105,000,000 105,000,000
Other obligations, less current
installments 457,000 158,000
Deferred tax liabilities - non-current 4,908,000 1,628,000
------------- -------------
Total liabilities 182,763,000 163,992,000
Stockholders' equity:
Preferred stock, par value $.10 per
share; shares authorized and
unissued 2,000,000 - -
Common stock, par value $.10 per
share; authorized 30,000,000 shares;
issued 21,907,379 shares at April 30,
2005 and 21,557,002 shares at
July 31, 2004 2,191,000 2,156,000
Additional paid-in capital 112,136,000 109,716,000
Retained earnings 56,341,000 30,711,000
------------- -------------
170,668,000 142,583,000
Less:
Treasury stock (210,937 shares) (185,000) (185,000)
------------- -------------
Total stockholders' equity 170,483,000 142,398,000
------------- -------------
Total liabilities and
stockholders' equity $ 353,246,000 306,390,000
============= =============
Commitments and contingencies
ECMTL
SOURCE: Comtech Telecommunications Corp.
Comtech Telecommunications Corp.
Fred Kornberg or Robert G. Rouse, 631-777-8900
Info@comtechtel.com