Selected Fiscal 2013 Second Quarter Financial Metrics and Other Items
- Backlog as of January 31, 2013 was $126.4 million compared to $133.3 million as of October 31, 2012.
- Total bookings for the three and six months ended January 31, 2013 were $67.7 million and $138.0 million, respectively, compared to $98.4 million and $193.8 million for the three and six months ended January 31, 2012, respectively.
- The Company’s second quarter results for fiscal 2013 include a pre-tax benefit of $0.9 million related to a change in fair value of the earn-out liability associated with the Company’s acquisition of Stampede Technologies, Inc. and also includes a reversal of previously accrued costs of $0.2 million associated with its restructuring plan to wind-down the microsatellite product line of the Company’s mobile data communications segment.
- Adjusted EBITDA was $10.1 million and $28.6 million for the three and six months ended January 31, 2013, respectively, as compared to $15.7 million and $39.2 million for the three and six months ended January 31, 2012. Adjusted EBITDA is a Non-GAAP financial measure and is defined in the below table.
- The Company’s effective income tax rate for the three months ended January 31, 2013 was 44.1%, which reflects a net discrete tax expense of approximately $0.4 million, of which $0.7 million relates to the establishment of a valuation allowance on certain deferred tax assets of one of its foreign subsidiaries, offset, in part, by a $0.3 million discrete tax benefit related to the passage of legislation that included the retroactive extension of the federal research and experimentation credit from December 31, 2011 to December 31, 2013. The Company’s effective income tax rate for the twelve months ending July 31, 2013 is expected to approximate 35.5%, excluding discrete tax adjustments.
- During the three months ended January 31, 2013, the Company paid $9.6 million of cash dividends to its stockholders and repurchased 397,798 shares of its common stock at an aggregate cost of approximately $10.5 million (including transaction costs).
- At January 31, 2013, the Company had $352.9 million of cash and cash equivalents which does not reflect the subsequent repurchase of an additional 214,194 shares of the Company’s common stock for an aggregate cost of approximately $5.7 million (including transaction costs) from February 1, 2013 through March 6, 2013. Since establishing the Company’s first repurchase program on September 23, 2010, the Company has repurchased a total of 11,965,114 shares of common stock for approximately $355.2 million (including transaction costs). The Company can make additional repurchases of up to $45.1 million pursuant to its existing $50.0 million repurchase program.
- Additional information about the Company’s updated fiscal 2013 guidance is contained in the Company’s second quarter investor presentation which is located on the Company’s website at www.comtechtel.com.
Cautionary Statement Regarding Forward-Looking StatementsCertain 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, 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 its 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 Company’s legal proceedings and other matters; risks associated with certain U.S. government investigations; risks associated with the Company’s BFT-1 contracts, including its ongoing negotiations with the U.S. Army regarding pricing for the engineering services, program management and satellite network operations, and the post-award audit of its original BFT-1 contract; risks associated with the Company’s obligations under its revolving credit facility; 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 January 31,||Six months ended January 31,|
|Cost of sales||42,337,000||57,725,000||91,487,000||119,806,000|
|Selling, general and administrative||15,433,000||19,626,000||32,243,000||43,744,000|
|Research and development||9,278,000||9,444,000||19,327,000||19,128,000|
|Amortization of intangibles||1,582,000||1,692,000||3,164,000||3,411,000|
|Other expenses (income):|
|Interest income and other||(315,000||)||(434,000||)||(591,000||)||(930,000||)|
|Income before provision for income taxes||4,232,000||8,905,000||15,759,000||23,014,000|
|Provision for income taxes||1,867,000||3,084,000||5,959,000||4,592,000|
|Net income per share:|
|Weighted average number of common shares outstanding – basic||17,300,000||20,087,000||17,340,000||21,672,000|
|Weighted average number of common and common equivalent shares outstanding – diluted||17,401,000||26,056,000||23,394,000||27,588,000|
|Dividends declared per issued and outstanding common share as of the applicable dividend record date||$||0.275||0.275||0.55||0.55|
|COMTECH TELECOMMUNICATIONS CORP. AND SUBSIDIARIES Condensed Consolidated Balance Sheets|
|January 31, 2013||July 31, 2012|
|Cash and cash equivalents||$||352,927,000||367,894,000|
|Accounts receivable, net||42,236,000||56,242,000|
|Prepaid expenses and other current assets||11,541,000||8,196,000|
|Deferred tax asset, net||10,877,000||12,183,000|
|Total current assets||487,737,000||516,876,000|
|Property, plant and equipment, net||21,238,000||22,832,000|
|Intangibles with finite lives, net||35,669,000||38,833,000|
|Deferred tax asset, net, non-current||-||438,000|
|Deferred financing costs, net||1,806,000||2,487,000|
|Other assets, net||943,000||958,000|
|Liabilities and Stockholders’ Equity|
|Accrued expenses and other current liabilities||30,818,000||40,870,000|
|Customer advances and deposits||10,530,000||14,516,000|
|Total current liabilities||56,945,000||82,655,000|
|Convertible senior notes||200,000,000||200,000,000|
|Income taxes payable||3,074,000||2,624,000|
|Deferred tax liability, net||2,240,000||-|
|Commitments and contingencies|
|Preferred stock, par value $.10 per share; shares authorized and unissued 2,000,000||-||-|
|Common stock, par value $.10 per share; authorized 100,000,000 shares; issued 28,978,701 shares and 28,931,679 shares at January 31, 2013 and July 31, 2012, respectively||2,898,000||2,893,000|
|Additional paid-in capital||360,968,000||361,458,000|
|Treasury stock, at cost (11,961,857 shares and 11,564,059 shares at January 31, 2013 and July 31, 2012, respectively)||(349,654,000||)||(339,177,000||)|
|Total stockholders’ equity||418,677,000||429,401,000|
|Total liabilities and stockholders’ equity||$||684,747,000||719,778,000|
|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,|
|Reconciliation of GAAP Net Income to Adjusted EBITDA (1) :|
|GAAP net income||$||2,365,000||5,821,000||9,800,000||18,422,000|
|Net interest expense and other||1,715,000||1,749,000||3,550,000||3,399,000|
|Amortization of stock-based compensation||806,000||1,036,000||1,551,000||1,909,000|
|Depreciation and other amortization||3,576,000||4,053,000||7,183,000||8,192,000|
|Restructuring charges related to the wind-down of microsatellite product line||(253,000||)||-||569,000||-|
|Costs related to withdrawn fiscal 2011 contested proxy solicitation||-||-||-||2,638,000|
|(1)||Represents earnings before interest, income taxes, depreciation and amortization of intangibles and stock-based compensation and restructuring charges related to the wind-down of the microsatellite product line of the Company’s mobile data communications segment and costs related to a withdrawn fiscal 2011 contested proxy solicitation. Adjusted EBITDA is a non-GAAP operating metric used by management in assessing the Company’s operating results. The Company’s definition of Adjusted 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. Adjusted EBITDA is also a measure frequently requested by the Company’s investors and analysts. The Company believes that investors and analysts may use Adjusted EBITDA, along with other information contained in its SEC filings, in assessing its ability to generate cash flow and service debt.|