MELVILLE, N.Y., March 9, 2009 (GLOBE NEWSWIRE) -- Comtech Telecommunications Corp. (Nasdaq:CMTL) today reported its operating results for the three and six months ended January 31, 2009.
Net sales for the second quarter of fiscal 2009 were $143.9 million compared to $152.0 million for the second quarter of fiscal 2008, reflecting incremental sales in all three of our business segments associated with the Radyne acquisition and core organic growth in our telecommunications transmission and RF microwave amplifiers segments, all of which was offset by an expected significant decrease in net sales in our mobile data communications segment.
GAAP net income was $12.8 million, or $0.46 per diluted share, for the three months ended January 31, 2009 compared to $25.5 million, or $0.91 per diluted share, for the three months ended January 31, 2008. Non-GAAP net income for the three months ended January 31, 2009, which excludes the amortization of stock-based compensation expense, was $14.3 million, or $0.51 per diluted share, as compared to Non-GAAP net income of $27.1 million, or $0.96 per diluted share, for the three months ended January 31, 2008.
Net sales for the six months ended January 31, 2009 were $335.8 million compared to $267.1 million for the six months ended January 31, 2008. GAAP net income was $35.2 million, or $1.26 per diluted share, for the six months ended January 31, 2009 compared to $40.2 million, or $1.45 per diluted share, for the six months ended January 31, 2008. GAAP net income for the six months ended January 31, 2009 has been reduced by a one-time charge of $6.2 million ($0.22 per diluted share) for the amortization of acquired in-process research and development associated with the Radyne acquisition. Non-GAAP net income for the six months ended January 31, 2009, which excludes the amortization of stock-based compensation expense and amortization of acquired in-process research and development, was $44.5 million, or $1.58 per diluted share, as compared to Non-GAAP net income of $43.6 million, or $1.56 per diluted share, for the six months ended January 31, 2008.
In commenting on the Company's performance during the second quarter of fiscal 2009, Fred Kornberg, President and Chief Executive Officer, stated, "Despite difficult market conditions, our second quarter results were in-line with our expectations. We continue to benefit from our strong leadership positions in the markets we serve, the differentiated and compelling value of our products, and the benefits we are generating from the Radyne acquisition."
Mr. Kornberg added, "Although business conditions are much more challenging than they were just a few months ago, we believe our overall business momentum will continue and drive growth into fiscal 2010."
Selected Fiscal 2009 Second Quarter Financial Metrics and Other Items
* Bookings for the three and six months ended January 31, 2009 were a
record $386.9 million and $545.5 million, respectively, compared to
$122.3 million and $357.3 million for the three and six months
ended January 31, 2008, respectively. Backlog as of January 31,
2009 was $462.1 million compared to $201.1 million as of July 31,
2008 and $219.2 million as of January 31, 2008.
* Earnings before interest, taxes, depreciation and amortization,
including amortization of acquired in-process research and
development ("EBITDA"), were $27.1 million and $77.1 million for
the three and six months ended January 31, 2009, respectively,
versus $40.7 million and $64.6 million for the three and six months
ended January 31, 2008, respectively.
* Net cash provided by operating activities was $24.4 million for the
six months ended January 31, 2009 compared to net cash used in
operating activities of $1.0 million for the six months ended
January 31, 2008. The net increase in cash provided by operating
activities was primarily driven by a significant decrease in net
working capital requirements during the six months ended January
31, 2009 as compared to the six months ended January 31, 2008.
* Interest income and other was $0.6 million and $1.9 million for the
three and six months ended January 31, 2009, respectively, as
compared to $4.1 million and $8.5 million for the three and six
months ended January 31, 2008, respectively. The decrease in
interest income was primarily due to the significant reduction in
our cash and cash equivalents primarily driven by payments relating
to the August 1, 2008 acquisition of Radyne and the significant
period-over-period decline in interest rates.
* As of February 12, 2009, all of our outstanding $105.0 million 2.0%
Convertible Senior Notes were fully converted by noteholders into
an aggregate of 3,333,327 shares of our common stock, plus cash in
lieu of fractional shares. As such, we currently have no long-term
debt.
* Our effective tax rate for the three months ended January 31, 2009
and 2008 reflects discrete tax benefits of $0.3 million and $0.2
million, respectively. Excluding discrete items in both periods,
our estimated effective tax rate for the three months ended January
31, 2009 was 34.5% as compared to 34.75% for the three months ended
January 31, 2008. This decrease is primarily attributable to the
retroactive extension of the Federal research and experimentation
credit from December 31, 2007 through December 31, 2009. Our
effective tax rate for fiscal 2009, excluding the amortization of
acquired in-process research and development and the discrete tax
benefits recorded, is expected to approximate 34.5%.
Conference Call
The Company has scheduled an investor conference call for 8:30 AM (ET) on Tuesday, March 10, 2009. 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 (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) 220-0874. 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 market 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 results of ongoing investigations into the Company's compliance with export regulations, risks associated with the Radyne acquisition, risks associated with the Department of Defense subpoenas, 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 Six months ended
January 31, January 31,
------------------------- -------------------------
2009 2008 2009 2008
------------ ------------ ------------ ------------
Net sales $143,886,000 152,030,000 335,801,000 267,085,000
Cost of sales 84,409,000 85,705,000 189,345,000 150,282,000
------------ ------------ ------------ ------------
Gross profit 59,477,000 66,325,000 146,456,000 116,803,000
------------ ------------ ------------ ------------
Expenses:
Selling,
general and
administrative 25,969,000 21,304,000 54,947,000 41,703,000
Research and
development 12,522,000 9,140,000 26,647,000 20,181,000
Amortization
of acquired
in-process
research and
development -- -- 6,200,000 --
Amortization
of
intangibles 1,796,000 434,000 3,589,000 813,000
------------ ------------ ------------ ------------
40,287,000 30,878,000 91,383,000 62,697,000
------------ ------------ ------------ ------------
Operating income 19,190,000 35,447,000 55,073,000 54,106,000
Other expenses
(income):
Interest
expense 711,000 670,000 1,377,000 1,347,000
Interest
income and
other (626,000) (4,095,000) (1,903,000) (8,542,000)
------------ ------------ ------------ ------------
Income before
provision for
income taxes 19,105,000 38,872,000 55,599,000 61,301,000
Provision for
income taxes 6,265,000 13,403,000 20,388,000 21,138,000
------------ ------------ ------------ ------------
Net income $ 12,840,000 25,469,000 35,211,000 40,163,000
============ ========== =========== ==========
Net income per
share:
Basic $ 0.52 1.06 1.43 1.67
============ ============ ============ ============
Diluted $ 0.46 0.91 1.26 1.45
============ ============ ============ ============
Weighted
average number
of common
shares
outstanding -
basic 24,759,000 24,099,000 24,673,000 24,012,000
============ ============ ============ ============
Weighted
average number
of common and
common
equivalent
shares
outstanding
assuming
dilution -
diluted 28,633,000 28,303,000 28,585,000 28,256,000
============ ============ ============ ============
COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
January 31, July 31,
2009 2008
------------ ------------
Assets (Unaudited) (Audited)
Current assets:
Cash and cash equivalents $232,207,000 410,067,000
Accounts receivable, net 95,672,000 70,040,000
Inventories, net 111,622,000 85,966,000
Prepaid expenses and other current
assets 12,041,000 5,891,000
Deferred tax asset 17,297,000 10,026,000
------------ ------------
Total current assets 468,839,000 581,990,000
Property, plant and equipment, net 39,433,000 34,269,000
Goodwill 147,677,000 24,363,000
Intangibles with finite lives, net 59,275,000 7,505,000
Deferred financing costs, net 1,080,000 1,357,000
Other assets, net 708,000 3,636,000
------------ ------------
Total assets $717,012,000 653,120,000
============ ============
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable $ 22,588,000 31,423,000
Accrued expenses and other current
liabilities 48,238,000 49,671,000
Customer advances and deposits 17,514,000 15,287,000
Current installments of other
obligations 37,000 108,000
Interest payable 1,050,000 1,050,000
------------ ------------
Total current liabilities 89,427,000 97,539,000
Convertible senior notes 104,616,000 105,000,000
Other liabilities 2,480,000 --
Income taxes payable 3,714,000 1,909,000
Deferred tax liability 22,464,000 5,870,000
------------ ------------
Total liabilities 222,701,000 210,318,000
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
25,017,923 shares and 24,600,166
shares at January 31, 2009 and
July 31, 2008, respectively 2,502,000 2,460,000
Additional paid-in capital 202,502,000 186,246,000
Retained earnings 289,492,000 254,281,000
------------ ------------
494,496,000 442,987,000
Less:
Treasury stock (210,937 shares) (185,000) (185,000)
------------ ------------
Total stockholders' equity 494,311,000 442,802,000
------------ ------------
Total liabilities and
stockholders' equity $717,012,000 653,120,000
============ ============
COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures to GAAP Financial
Measures
(Unaudited)
Three Months Ended Six Months Ended
January 31, January 31,
------------------------- -------------------------
2009 2008 2009 2008
------------ ------------ ------------ ------------
Reconciliation
of Non-GAAP
Net Income to
GAAP Net
Income(1):
Non-GAAP net
income $ 14,294,000 27,133,000 44,501,000 43,605,000
Amortization
of acquired
in-process
research and
development -- -- (6,200,000) --
Amortization
of stock-
based
compensation (2,292,000) (2,552,000) (4,710,000) (5,271,000)
Tax effect of
stock-based
compensation
expense 838,000 888,000 1,620,000 1,829,000
------------ ------------ ------------ ------------
GAAP net
income $ 12,840,000 25,469,000 35,211,000 40,163,000
============ ============ ============ ============
Reconciliation
of Non-GAAP
Diluted
Earnings Per
Share to GAAP
Diluted
Earnings
Per Share(1):
Non-GAAP
diluted
earnings
per share $ 0.51 0.96 1.58 1.56
Amortization
of acquired
in-process
research and
development -- -- (0.22) --
Amortization
of stock-
based
compensation (0.08) (0.08) (0.16) (0.16)
Tax effect of
stock-based
compensation
expense 0.03 0.03 0.06 0.05
------------ ------------ ------------ ------------
GAAP diluted
earnings per
share $ 0.46 0.91 1.26 1.45
============ ============ ============ ============
Reconciliation
of GAAP Net
Income to
EBITDA(2):
GAAP net
income $ 12,840,000 25,469,000 35,211,000 40,163,000
Income taxes 6,265,000 13,403,000 20,388,000 21,138,000
Net interest
expense
(income) and
other 85,000 (3,425,000) (526,000) (7,195,000)
Amortization
of acquired
in-process
research and
development -- -- 6,200,000 --
Amortization
of stock-
based
compensation 2,292,000 2,552,000 4,710,000 5,271,000
Depreciation
and other
amortization 5,608,000 2,693,000 11,074,000 5,184,000
------------ ------------ ------------ ------------
EBITDA $ 27,090,000 40,692,000 77,057,000 64,561,000
============ ============ ============ ============
(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 acquired in-process research and development and
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, stock-based compensation and
acquired in-process research and development. 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