MELVILLE, N.Y., Sept. 23, 2009 (GLOBE NEWSWIRE) -- Comtech Telecommunications Corp. (Nasdaq:CMTL) today reported its operating results for the fourth quarter and fiscal year ended July 31, 2009.
Fourth Quarter 2009
Net sales for the fourth quarter of fiscal 2009 were $122.0 million compared to $126.5 million for the fourth quarter of fiscal 2008. Net sales significantly benefited from incremental sales associated with our acquisition of Radyne which positively impacted both our telecommunications transmission and RF microwave amplifiers segments. As expected, this increase was offset by a shift of revenue in our mobile data communications segment from fiscal 2009 to fiscal 2010. This shift resulted from the receipt, as previously announced in January 2009, of the single largest order in our Company's history that, based on the U.S. Army's request, is expected to substantially ship in fiscal 2010.
GAAP net income was $6.2 million, or $0.21 per diluted share, for the fourth quarter of fiscal 2009 compared to $17.0 million, or $0.61 per diluted share, for the fourth quarter of fiscal 2008. Our GAAP diluted earnings per share of $0.21 includes a pre-tax charge of approximately $2.0 million related to previously announced cost reduction actions related to two small product lines that we initiated during the fourth quarter of fiscal 2009. Non-GAAP net income for the fourth quarter of fiscal 2009, which includes the pre-tax charge of $2.0 million but excludes the amortization of stock-based compensation expense, was $7.9 million, or $0.26 per diluted share, as compared to Non-GAAP net income of $18.8 million, or $0.67 per diluted share, for the fourth quarter of fiscal 2008.
Fiscal 2009
Net sales for fiscal 2009 were $586.4 million compared to $531.6 million for fiscal 2008. The year-over-year increase in net sales is primarily attributable to our acquisition of Radyne which significantly benefited both our telecommunications transmission and RF microwave amplifiers segments. As noted above, sales in our mobile data communications segment decreased due to a shift of revenue from fiscal 2009 to fiscal 2010.
GAAP net income was $49.6 million, or $1.73 per diluted share, for fiscal 2009 compared to $76.4 million, or $2.76 per diluted share, for fiscal 2008. GAAP net income for fiscal 2009 includes pre-tax charges of $6.2 million related to the immediate amortization of acquired in-process research and development associated with the Radyne acquisition and $2.0 million related to the above mentioned cost reduction actions. Non-GAAP net income for fiscal 2009, which includes the pre-tax charge of $2.0 million but excludes the amortization of stock-based compensation expense and amortization of acquired in-process research and development, was $62.1 million, or $2.14 per diluted share, as compared to Non-GAAP net income of $83.4 million, or $2.98 per diluted share, for fiscal 2008.
In commenting on the Company's performance, Fred Kornberg, President and Chief Executive Officer, stated, "We believe that the fourth quarter may represent a bottoming out and that cost reductions implemented in fiscal 2009 will continue to benefit us as we focus on important commercial and U.S. government opportunities that we see ahead."
Mr. Kornberg added, "We entered fiscal 2010 with almost $550.0 million in backlog and with the confident expectation that fiscal 2010 will be a year of record revenues and strong EPS growth. Additionally, with over $485.5 million in cash, we have the clear capacity to execute when our ongoing efforts identify appropriate acquisitions that enhance our organic growth or further diversify our business. In short, we are quite pleased with our positioning both in terms of where we are and what lies ahead of us."
Selected Fiscal 2009 Fourth Quarter Financial Metrics and Other Items
* Backlog as of July 31, 2009 was $549.8 million compared to $201.1
million as of July 31, 2008. Bookings for the three months ended
July 31, 2009 were $80.8 million, and for the twelve months ended
July 31, 2009 were a record of $883.8 million compared to $141.7
million and $603.7 million for the fourth quarter and fiscal year
ended July 31, 2008, respectively.
* Earnings before interest, taxes, depreciation and amortization,
including amortization of acquired in-process research and
development ("EBITDA"), were $18.8 million and $114.3 million for
the fourth quarter and fiscal year ended July 31, 2009,
respectively, versus $30.6 million and $128.3 million for the
fourth quarter and fiscal year ended July 31, 2008, respectively.
* In the fourth quarter of fiscal 2009, operating income in our
telecommunications transmission segment was reduced by
approximately $2.0 million, including a charge to cost of sales
of $1.2 million related to the write-down of inventory to net
realizable value, associated with our decision to no longer offer
video encoder and decoder products or market fiberglass antennas
to commercial broadcast customers.
* At July 31, 2009, the Company had $485.5 million of cash and cash
equivalents. Net cash provided by operating activities was $88.5
million for the twelve months ended July 31, 2009 compared to
$77.8 million for the twelve months ended July 31, 2008. Included
in cash and cash equivalents are the net proceeds related to the
issuance, on May 8, 2009, of $200.0 million of our 3.0%
convertible senior notes.
* As discussed further in our Form 10-K that was filed earlier
today, although our 2.0% convertible senior notes are no longer
outstanding, pursuant to our adoption, on August 1, 2009, of FSP
Accounting Principles Board 14-1, "Accounting for Convertible
Debt Instruments That May Be Settled in Cash upon Conversion
(Including Partial Cash Settlement)," we are required to adjust
and retroactively present certain historical consolidated
financial data and certain consolidated financial statements for
fiscal 2005 through fiscal 2009. This historical information will
be retroactively presented in a Form 8-K to be filed with the SEC
during the first quarter of fiscal 2010. Early adoption was
prohibited. The adoption of this new accounting principle has no
effect on our 3.0% convertible senior notes because holders of
the Company's 3.0% convertible senior notes can only receive
stock upon conversion.
Conference Call
The Company has scheduled an investor conference call for 8:30 AM (ET) on Thursday, September 24, 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) 220-2553. 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, inefficient or too expensive. 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 our 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 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, 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, risks associated with our other legal matters, risks associated with our recent MTS orders, risks associated with our MTS and BFT contracts, 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) (Audited)
Three months Twelve months
ended July 31, ended July 31,
-------------------------- -------------------------
2009 2008 2009 2008
------------- ------------ ------------ ------------
Net sales $122,026,000 126,474,000 586,372,000 531,627,000
Cost of sales 75,087,000 68,869,000 345,472,000 296,687,000
------------- ------------ ------------ ------------
Gross profit 46,939,000 57,605,000 240,900,000 234,940,000
------------- ------------ ------------ ------------
Expenses:
Selling,
general and
admini-
strative 22,162,000 22,232,000 100,171,000 85,967,000
Research and
development 11,953,000 10,039,000 50,010,000 40,472,000
Amortization
of acquired
in-process
research
and
development -- -- 6,200,000 --
Amortization
of
intangibles 2,198,000 464,000 7,592,000 1,710,000
------------- ------------ ------------ ------------
36,313,000 32,735,000 163,973,000 128,149,000
------------- ------------ ------------ ------------
Operating
income 10,626,000 24,870,000 76,927,000 106,791,000
Other expenses
(income):
Interest
expense 1,749,000 668,000 3,167,000 2,683,000
Interest
income and
other (431,000) (2,443,000) (2,738,000) (14,065,000)
------------- ------------ ------------ ------------
Income before
provision for
income taxes 9,308,000 26,645,000 76,498,000 118,173,000
Provision for
income taxes 3,130,000 9,680,000 26,940,000 41,740,000
------------- ------------ ------------ ------------
Net income $ 6,178,000 16,965,000 49,558,000 76,433,000
============= ============ ============ ============
Net income
per share:
Basic $ 0.22 0.70 1.88 3.17
============= ============ ============ ============
Diluted $ 0.21 0.61 1.73 2.76
============= ============ ============ ============
Weighted
average
number of
common shares
outstanding -
basic 28,160,000 24,306,000 26,321,000 24,138,000
============= ============ ============ ============
Weighted
average
number of
common and
common
equivalent
shares
outstanding -
diluted 33,549,000 28,381,000 29,793,000 28,278,000
============= ============ ============ ============
COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Audited) (Audited)
July 31, July 31,
2009 2008
------------- ------------
Assets
Current assets:
Cash and cash equivalents $485,450,000 410,067,000
Accounts receivable, net 79,477,000 70,040,000
Inventories, net 95,597,000 85,966,000
Prepaid expenses and other
current assets 13,398,000 5,891,000
Deferred tax asset 15,129,000 10,026,000
------------- ------------
Total current assets 689,051,000 581,990,000
Property, plant and equipment, net 38,486,000 34,269,000
Goodwill 149,253,000 24,363,000
Intangibles with finite lives, net 55,272,000 7,505,000
Deferred financing costs, net 6,053,000 1,357,000
Other assets, net 556,000 3,636,000
------------- ------------
Total assets $938,671,000 653,120,000
============= ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 19,233,000 31,423,000
Accrued expenses and other
current liabilities 51,741,000 49,671,000
Customer advances and deposits 19,571,000 15,287,000
Current installments of
other obligations -- 108,000
Interest payable 1,418,000 1,050,000
Income taxes payable 563,000 --
------------- ------------
Total current liabilities 92,526,000 97,539,000
Convertible senior notes 200,000,000 105,000,000
Other liabilities 2,283,000 --
Income taxes payable 4,267,000 1,909,000
Deferred tax liability 10,466,000 5,870,000
------------- ------------
Total liabilities 309,542,000 210,318,000
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 28,390,855 shares and
24,600,166 shares at July 31, 2009 and
July 31, 2008, respectively 2,839,000 2,460,000
Additional paid-in capital 322,636,000 186,246,000
Retained earnings 303,839,000 254,281,000
------------- ------------
629,314,000 442,987,000
Less:
Treasury stock (210,937 shares) (185,000) (185,000)
------------- ------------
Total stockholders' equity 629,129,000 442,802,000
------------- ------------
Total liabilities and
stockholders' equity $938,671,000 653,120,000
============= ============
COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures
(Unaudited)
Three Months Twelve months
Ended July 31, Ended July 31,
------------------------- -------------------------
2009 2008 2009 2008
------------ ------------ ------------ ------------
Reconciliation
of Non-GAAP
Net Income to
GAAP Net
Income(1):
Non-GAAP net
income $ 7,871,000 18,798,000 62,133,000 83,425,000
Amortization
of acquired
in-process
research and
development -- -- (6,200,000) --
Amortization
of stock-
based
compensation (2,527,000) (2,790,000) (9,576,000) (10,640,000)
Tax effect of
stock-based
compensation
expense 834,000 957,000 3,201,000 3,648,000
------------ ------------ ------------ ------------
GAAP net
income $ 6,178,000 16,965,000 49,558,000 76,433,000
============ ============ ============ ============
Reconciliation
of Non-GAAP
Diluted
Earnings Per
Share to
GAAP Diluted
Earnings Per
Share(1):
Non-GAAP
diluted
earnings
per share $ 0.26 0.67 2.14 2.98
Amortization
of acquired
in-process
research and
development -- -- (0.21) --
Amortization
of stock-
based
compensation (0.07) (0.09) (0.31) (0.34)
Tax effect of
stock-based
compensation
expense 0.02 0.03 0.11 0.12
------------ ------------ ------------ ------------
GAAP diluted
earnings
per share $ 0.21 0.61 1.73 2.76
============ ============ ============ ============
Reconciliation
of GAAP Net
Income to
EBITDA(2):
GAAP net
income $ 6,178,000 16,965,000 49,558,000 76,433,000
Income taxes 3,130,000 9,680,000 26,940,000 41,740,000
Net interest
expense
(income)
and other 1,318,000 (1,775,000) 429,000 (11,382,000)
Amortization
of acquired
in-process
research and
development -- -- 6,200,000 --
Amortization
of stock-
based
compensation 2,527,000 2,790,000 9,576,000 10,640,000
Depreciation
and other
amortization 5,685,000 2,922,000 21,615,000 10,906,000
------------ ------------ ------------ ------------
EBITDA $18,838,000 30,582,000 114,318,000 128,337,000
============ ============ ============ ============
(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