FORM 8-K |
December 6, 2017 | 0-7928 | |
Date of Report (Date of earliest event reported) | Commission File Number |
(Exact name of registrant as specified in its charter) |
Delaware | 11-2139466 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
68 South Service Road, Suite 230 Melville, New York 11747 | ||
(Address of Principal Executive Offices) (Zip Code) | ||
(631) 962-7000 | ||
(Registrant’s telephone number, including area code) |
Exhibit Number | Description |
By: | /s/ Michael D. Porcelain Name: Michael D. Porcelain Title: Senior Vice President and |
• | Net sales were $121.6 million. |
• | Bookings were $165.7 million and Comtech achieved a company-wide book-to-bill ratio (a measure defined as bookings divided by net sales) of 1.36. |
• | As of October 31, 2017, the Company had backlog of $490.4 million. |
• | GAAP operating income was $0.2 million and GAAP net loss was $1.7 million, or $0.07 per diluted share. Comtech’s first quarter 2018 financial results do not include the benefit of $2.5 million of BFT-1 intellectual property license fees that Comtech earned in the first quarter of fiscal 2017 supporting the U.S. Army’s Blue Force Tracking Program. |
• | Adjusted EBITDA was $9.6 million for the three months ended October 31, 2017. Adjusted EBITDA is a non-GAAP financial measure which is reconciled to the most directly comparable GAAP financial measure and is more fully defined in the below table. |
• | Comtech generated cash flows from operating activities of $6.5 million. |
• | Comtech paid cash dividends of $2.5 million to its common stockholders. |
• | As of October 31, 2017, the Company had $42.5 million of cash and cash equivalents. |
• | Comtech is still targeting a revenue goal with a range of approximately $550.0 million to $575.0 million. |
• | Comtech is increasing its GAAP diluted EPS goal to a new range of $0.44 to $0.46, as compared to a prior range of $0.41 to $0.44. |
• | Comtech is increasing its Adjusted EBITDA goal to a new range of $69.0 million to $73.0 million, as compared to a prior range of $68.0 million to $72.0 million. If order flow remains strong and Comtech is able to achieve all of its fiscal 2018 business goals, it is possible that Adjusted EBITDA in fiscal 2018 could exceed the $70.7 million it achieved in fiscal 2017. |
• | In line with Comtech’s original 2018 Fiscal Year Financial Targets, given the straight-line amortization expense associated with intangible assets with finite lives, on a GAAP basis, Comtech expects to report an operating loss and net loss in the second quarter of fiscal 2018, with each of the third and fourth quarters of fiscal 2018 achieving operating income and net income. |
• | Based on the anticipated timing of shipments and performance related to orders currently in its backlog and the timing of expected new orders, net sales for the second quarter of fiscal 2018 are expected to be slightly higher than the level Comtech achieved in its most recent fiscal quarter but lower than its second quarter of fiscal 2017. Adjusted EBITDA for Comtech’s second quarter of fiscal 2018 is expected to approximate the $9.6 million it achieved in its first quarter of fiscal 2018. |
• | Comtech’s fourth quarter of fiscal 2018 is expected to be the peak quarter - by far - for consolidated net sales, GAAP operating income, GAAP net income and Adjusted EBITDA. |
• | Comtech’s 2018 Fiscal Year Financial Targets do not include $6.7 million of BFT-1 intellectual property license fees that Comtech earned in fiscal 2017 supporting the U.S. Army’s Blue Force Tracking Program. |
Three months ended October 31, | |||||||
2017 | 2016 | ||||||
Net sales | $ | 121,569,000 | $ | 135,786,000 | |||
Cost of sales | 73,853,000 | 83,678,000 | |||||
Gross profit | 47,716,000 | 52,108,000 | |||||
Expenses: | |||||||
Selling, general and administrative | 28,475,000 | 32,685,000 | |||||
Research and development | 13,750,000 | 14,096,000 | |||||
Amortization of intangibles | 5,269,000 | 6,055,000 | |||||
47,494,000 | 52,836,000 | ||||||
Operating income (loss) | 222,000 | (728,000 | ) | ||||
Other expenses (income): | |||||||
Interest expense | 2,588,000 | 3,325,000 | |||||
Interest (income) and other | 39,000 | (2,000 | ) | ||||
Loss before benefit from income taxes | (2,405,000 | ) | (4,051,000 | ) | |||
Benefit from income taxes | (745,000 | ) | (1,562,000 | ) | |||
Net loss | $ | (1,660,000 | ) | $ | (2,489,000 | ) | |
Net loss per share: | |||||||
Basic | $ | (0.07 | ) | $ | (0.11 | ) | |
Diluted | $ | (0.07 | ) | $ | (0.11 | ) | |
Weighted average number of common shares outstanding – basic | 23,797,000 | 23,385,000 | |||||
Weighted average number of common and common equivalent shares outstanding – diluted | 23,797,000 | 23,385,000 | |||||
Dividends declared per issued and outstanding common share as of the applicable dividend record date | $ | 0.10 | $ | 0.30 |
October 31, 2017 | July 31, 2017 | |||||
(Unaudited) | (Audited) | |||||
Assets | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 42,507,000 | 41,844,000 | |||
Accounts receivable, net | 113,943,000 | 124,962,000 | ||||
Inventories, net | 70,191,000 | 60,603,000 | ||||
Prepaid expenses and other current assets | 15,302,000 | 13,635,000 | ||||
Total current assets | 241,943,000 | 241,044,000 | ||||
Property, plant and equipment, net | 31,401,000 | 32,847,000 | ||||
Goodwill | 290,633,000 | 290,633,000 | ||||
Intangibles with finite lives, net | 256,602,000 | 261,871,000 | ||||
Deferred financing costs, net | 2,850,000 | 3,065,000 | ||||
Other assets, net | 2,803,000 | 2,603,000 | ||||
Total assets | $ | 826,232,000 | 832,063,000 | |||
Liabilities and Stockholders’ Equity | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 30,512,000 | 29,402,000 | |||
Accrued expenses and other current liabilities | 63,103,000 | 68,610,000 | ||||
Dividends payable | 2,351,000 | 2,343,000 | ||||
Customer advances and deposits | 22,668,000 | 25,771,000 | ||||
Current portion of long-term debt | 16,135,000 | 15,494,000 | ||||
Current portion of capital lease obligations | 2,064,000 | 2,309,000 | ||||
Interest payable | 69,000 | 282,000 | ||||
Total current liabilities | 136,902,000 | 144,211,000 | ||||
Non-current portion of long-term debt, net | 175,193,000 | 176,228,000 | ||||
Non-current portion of capital lease obligations | 1,293,000 | 1,771,000 | ||||
Income taxes payable | 2,550,000 | 2,515,000 | ||||
Deferred tax liability, net | 20,024,000 | 17,306,000 | ||||
Customer advances and deposits, non-current | 8,695,000 | 7,227,000 | ||||
Other liabilities | 5,556,000 | 2,655,000 | ||||
Total liabilities | 350,213,000 | 351,913,000 | ||||
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 38,640,511 shares and 38,619,467 shares at October 31, 2017 and July 31, 2017, respectively | 3,864,000 | 3,862,000 | ||||
Additional paid-in capital | 532,940,000 | 533,001,000 | ||||
Retained earnings | 381,064,000 | 385,136,000 | ||||
917,868,000 | 921,999,000 | |||||
Less: | ||||||
Treasury stock, at cost (15,033,317 shares at October 31, 2017 and July 31, 2017) | (441,849,000 | ) | (441,849,000 | ) | ||
Total stockholders’ equity | 476,019,000 | 480,150,000 | ||||
Total liabilities and stockholders’ equity | $ | 826,232,000 | 832,063,000 |
Three months ended October 31, | Fiscal Year | |||||||||
2017 | 2016 | 2017 | ||||||||
Reconciliation of GAAP Net (Loss) Income to Adjusted EBITDA: | ||||||||||
Net (loss) income | $ | (1,660,000 | ) | (2,489,000 | ) | $ | 15,827,000 | |||
(Benefit from) provision for income taxes | (745,000 | ) | (1,562,000 | ) | 9,654,000 | |||||
Interest (income) and other expense | 39,000 | (2,000 | ) | (68,000 | ) | |||||
Interest expense | 2,588,000 | 3,325,000 | 11,629,000 | |||||||
Amortization of stock-based compensation | 747,000 | 970,000 | 8,506,000 | |||||||
Amortization of intangibles | 5,269,000 | 6,055,000 | 22,823,000 | |||||||
Depreciation | 3,346,000 | 3,749,000 | 14,354,000 | |||||||
Settlement of intellectual property litigation | — | — | (12,020,000 | ) | ||||||
Adjusted EBITDA | $ | 9,584,000 | 10,046,000 | $ | 70,705,000 |