EX-99.1 3 d73805_ex99-1.htm PRESS RELEASE

Exhibit 99.1

Media Contacts:
Robert G. Rouse, Executive Vice President and Chief Operating Officer
Jerome Kapelus, Senior Vice President, Strategy and Business Development
(631) 962-7000
Info@comtechtel.com

COMTECH TELECOMMUNICATIONS CORP. ANNOUNCES
RESULTS FOR THE SECOND QUARTER OF FISCAL 2008

Melville, New York – March 5, 2008 – Comtech Telecommunications Corp. (NASDAQ: CMTL) today reported its operating results for the three months ended January 31, 2008. Net sales for the second quarter of fiscal 2008 were $152.0 million compared to $111.4 million in the second quarter of fiscal 2007, reflecting significant growth in the mobile data communications and RF microwave amplifiers segments, partially offset by lower net sales in the telecommunications transmission segment.

GAAP net income was $25.5 million, or $0.91 per diluted share, for the three months ended January 31, 2008 compared to $18.2 million, or $0.68 per diluted share, for the three months ended January 31, 2007. Non-GAAP net income, which excludes the amortization of stock-based compensation expense, was $27.1 million, or $0.96 per diluted share, for the three months ended January 31, 2008 as compared to Non-GAAP net income of $19.1 million, or $0.70 per diluted share, for the three months ended January 31, 2007.

Net sales for the six months ended January 31, 2008 were $267.1 million compared to $208.5 million for the six months ended January 31, 2007. GAAP net income was $40.2 million, or $1.45 per diluted share, for the six months ended January 31, 2008 compared to $29.0 million, or $1.09 per diluted share, for the six months ended January 31, 2007. Non-GAAP net income, which excludes the amortization of stock-based compensation expense, was $43.6 million, or $1.56 per diluted share, for the six months ended January 31, 2008 as compared to Non-GAAP net income of $31.3 million, or $1.15 per diluted share, for the six months ended January 31, 2007.

In commenting on the Company’s performance during the second quarter of fiscal 2008, Fred Kornberg, President and Chief Executive Officer of Comtech Telecommunications Corp., said, “I am pleased to announce the strongest quarterly performance in our Company’s history. We achieved record quarterly revenues and earnings per share.”

Mr. Kornberg added, “Based on our outstanding results for the first half of the year, we are confident that fiscal 2008 will be another record year.”

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          Selected Second Quarter Fiscal 2008 Financial Metrics and Other Items

 

 

 

 

Bookings for the three and six months ended January 31, 2008 were $122.3 million and $357.3 million, respectively, compared to $104.5 million and $226.0 million for the three and six months ended January 31, 2007, respectively. Backlog as of January 31, 2008 was $219.2 million compared to  $129.0 million as of July 31, 2007.

 

 

 

 

Earnings before interest, taxes, depreciation and amortization (EBITDA) were $40.7 million and $64.6 million for the three and six months ended January 31, 2008, respectively, versus $27.3 million and $46.5 million for the three and six months ended January 31, 2007, respectively.

 

 

 

 

Cash used in operating activities for the first six months of fiscal 2008 was $1.0 million, primarily reflecting an increase in working capital requirements associated with the significant increase in sales activity across the Company. The increase in working capital requirements (primarily for accounts receivable and inventory) was driven by the timing of shipments and the related collection of cash from customers, as well as the necessary investments in inventory in support of current backlog that is expected to be recognized as revenue during the second half of fiscal 2008.


Conference Call
The Company has scheduled an investor conference call for 8:30 AM (ET) on Thursday, March 6, 2008. Investors and the public are invited to access a live webcast of the conference call from the news 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) 530-9027. 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 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 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, 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 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 subpoena from the U.S. Immigration and Customs Enforcement branch of the Department of Homeland Security, and other factors described in the Company’s filings with the Securities and Exchange Commission.

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COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended January 31,

 

Six months ended January 31,

 

 

 


 


 

 

 

2008

 

2007

 

2008

 

2007

 

 

 


 


 


 


 

 

Net sales

 

$

152,030,000

 

 

111,383,000

 

 

267,085,000

 

 

208,453,000

 

Cost of sales

 

 

85,705,000

 

 

61,533,000

 

 

150,282,000

 

 

119,228,000

 

 

 



 



 



 



 

Gross profit

 

 

66,325,000

 

 

49,850,000

 

 

116,803,000

 

 

89,225,000

 

 

 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

21,304,000

 

 

18,257,000

 

 

41,703,000

 

 

34,844,000

 

Research and development

 

 

9,140,000

 

 

7,616,000

 

 

20,181,000

 

 

14,773,000

 

Amortization of intangibles

 

 

434,000

 

 

679,000

 

 

813,000

 

 

1,328,000

 

 

 



 



 



 



 

 

 

 

30,878,000

 

 

26,552,000

 

 

62,697,000

 

 

50,945,000

 

 

 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

35,447,000

 

 

23,298,000

 

 

54,106,000

 

 

38,280,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other expense (income):

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

670,000

 

 

672,000

 

 

1,347,000

 

 

1,367,000

 

Interest income and other

 

 

(4,095,000

)

 

(3,315,000

)

 

(8,542,000

)

 

(6,490,000

)

 

 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

 

38,872,000

 

 

25,941,000

 

 

61,301,000

 

 

43,403,000

 

Provision for income taxes

 

 

13,403,000

 

 

7,770,000

 

 

21,138,000

 

 

14,405,000

 

 

 



 



 



 



 

Net income

 

$

25,469,000

 

 

18,171,000

 

 

40,163,000

 

 

28,998,000

 

 

 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.06

 

 

0.79

 

 

1.67

 

 

1.26

 

 

 



 



 



 



 

Diluted

 

$

0.91

 

 

0.68

 

 

1.45

 

 

1.09

 

 

 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding – basic

 

 

24,099,000

 

 

23,095,000

 

 

24,012,000

 

 

23,022,000

 

 

 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common and common equivalent shares outstanding assuming dilution – diluted

 

 

28,303,000

 

 

27,491,000

 

 

28,256,000

 

 

27,440,000

 

 

 



 



 



 



 

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COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets

 

 

 

 

 

 

 

 

 

 

January 31,
2008

      

July 31,
2007

 

 

 


 


 

 

 

(Unaudited)

 

 

 

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

 340,938,000

 

 

342,903,000

 

Accounts receivable, net

 

 

112,376,000

 

 

73,585,000

 

Inventories, net

 

 

77,743,000

 

 

61,987,000

 

Prepaid expenses and other current assets

 

 

7,246,000

 

 

6,734,000

 

Deferred tax asset – current

 

 

9,657,000

 

 

9,380,000

 

 

 



 



 

Total current assets

 

 

547,960,000

 

 

494,589,000

 

 

 

 

 

 

 

 

 

Property, plant and equipment, net

 

 

31,297,000

 

 

29,282,000

 

Goodwill

 

 

24,363,000

 

 

24,387,000

 

Intangibles with finite lives, net

 

 

5,823,000

 

 

5,717,000

 

Deferred financing costs, net

 

 

1,630,000

 

 

1,903,000

 

Other assets, net

 

 

395,000

 

 

464,000

 

 

 



 



 

Total assets

 

$

611,468,000

 

 

556,342,000

 

 

 



 



 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

 

$

27,920,000

 

 

26,137,000

 

Accrued expenses and other current liabilities

 

 

43,142,000

 

 

47,332,000

 

Customer advances and deposits

 

 

24,066,000

 

 

20,056,000

 

Current installments of other obligations

 

 

140,000

 

 

135,000

 

Interest payable

 

 

1,050,000

 

 

1,050,000

 

Income taxes payable – current

 

 

1,819,000

 

 

2,796,000

 

 

 



 



 

Total current liabilities

 

 

98,137,000

 

 

97,506,000

 

 

 

 

 

 

 

 

 

Convertible senior notes

 

 

105,000,000

 

 

105,000,000

 

Other obligations, less current installments

 

 

37,000

 

 

108,000

 

Income taxes payable – non-current

 

 

3,018,000

 

 

 

Deferred tax liability – non-current

 

 

8,140,000

 

 

7,960,000

 

 

 



 



 

Total liabilities

 

 

214,332,000

 

 

210,574,000

 

 

 

 

 

 

 

 

 

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 24,424,127 shares and 24,016,329 shares at
January 31, 2008 and July 31, 2007, respectively

 

 

2,442,000

 

 

2,402,000

 

Additional paid-in capital

 

 

176,868,000

 

 

165,703,000

 

Retained earnings

 

 

218,011,000

 

 

177,848,000

 

 

 



 



 

 

 

 

397,321,000

 

 

345,953,000

 

Less:

 

 

 

 

 

 

 

Treasury stock (210,937) shares

 

 

(185,000

)

 

(185,000

)

 

 



 



 

Total stockholders’ equity

 

 

397,136,000

 

 

345,768,000

 

 

 



 



 

Total liabilities and stockholders’ equity

 

$

611,468,000

 

 

556,342,000

 

 

 



 



 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended January 31,

 

Six Months Ended January 31,

 

 

 


 


 

 

 

2008

 

2007

 

2008

 

2007

 

 

 


 


 


 


 

Reconciliation of Non-GAAP Net Income To
GAAP Net Income(1):

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP net income

 

$

27,133,000

 

 

19,129,000

 

 

43,605,000

 

 

31,271,000

 

Amortization of stock-based compensation

 

 

(2,552,000

)   

 

(1,537,000

)   

 

(5,271,000

)   

 

(3,347,000

)

Tax effect of stock-based compensation expense

 

 

888,000

 

 

579,000

 

 

1,829,000

 

 

1,074,000

 

 

 



 



 



 



 

GAAP net income

 

$

25,469,000

 

 

18,171,000

 

 

40,163,000

 

 

28,998,000

 

 

 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Diluted Earnings Per Share To GAAP Diluted Earnings Per Share(1):

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP diluted earnings per share

 

$

0.96

 

 

0.70

 

 

1.56

 

 

1.15

 

Amortization of stock-based compensation

 

 

(0.08

)

 

(0.04

)

 

(0.16

)

 

(0.10

)

Tax effect of stock-based compensation expense

 

 

0.03

 

 

0.02

 

 

0.05

 

 

0.04

 

 

 



 



 



 



 

GAAP diluted earnings per share

 

$

0.91

 

 

0.68

 

 

1.45

 

 

1.09

 

 

 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of GAAP Net Income to EBITDA(2):

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP net income

 

$

25,469,000

 

 

18,171,000

 

 

40,163,000

 

 

28,998,000

 

Income taxes

 

 

13,403,000

 

 

7,770,000

 

 

21,138,000

 

 

14,405,000

 

Net interest income and other

 

 

(3,425,000

)

 

(2,643,000

)

 

(7,195,000

)

 

(5,123,000

)

Amortization of stock-based compensation

 

 

2,552,000

 

 

1,537,000

 

 

5,271,000

 

 

3,347,000

 

Depreciation and amortization

 

 

2,693,000

 

 

2,469,000

 

 

5,184,000

 

 

4,886,000

 

 

 



 



 



 



 

EBITDA

 

$

40,692,000

 

 

27,304,000

 

 

64,561,000

 

 

46,513,000

 

 

 



 



 



 



 


 

 

(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 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 and stock-based compensation. 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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