updated 3/10/2011 4:16:06 PM ET 2011-03-10T21:16:06

MELVILLE, N.Y., March 10, 2011 (GLOBE NEWSWIRE) -- Comtech Telecommunications Corp. (Nasdaq:CMTL) today reported its operating results for the three and six months ended January 31, 2011.

Net sales for the second quarter of fiscal 2011 were $162.8 million compared to $171.1 million for the second quarter of fiscal 2010. The period-over-period decrease in net sales is attributable to lower net sales in both our mobile data communications and RF microwave amplifiers segments, offset, in part, by higher net sales in our telecommunications transmission segment.

GAAP net income was $16.1 million, or $0.52 per diluted share, for the second quarter of fiscal 2011 compared to $16.3 million, or $0.51 per diluted share, for the second quarter of fiscal 2010.

Net sales for the six months ended January 31, 2011 were $341.0 million compared to $304.9 million for the six months ended January 31, 2010. The period-over-period increase in net sales is attributable to higher net sales in both our telecommunications transmission and mobile data communications segments that were offset, in part, by lower sales in our RF microwave amplifiers segment.

GAAP net income was $41.8 million, or $1.32 per diluted share, for the six months ended January 31, 2011 compared to $25.4 million, or $0.81 per diluted share, for the six months ended January 31, 2010.

Comtech also announced today that its Board of Directors declared a quarterly cash dividend of $0.25 per share payable on May 20, 2011 to shareholders of record at the close of business on April 21, 2011. The dividend is the Company's third quarterly dividend. While future dividends will be subject to Board approval, the Board of Directors is currently targeting annual dividend payments aggregating $1.00 per share.

In commenting on the Company's performance, Fred Kornberg, President and Chief Executive Officer, stated, "Although market conditions remain challenging, we posted solid results in the second quarter."

Mr. Kornberg added, "We continue to focus our acquisition efforts on a number of opportunities that we believe would complement our existing businesses and that would align with our long-term strategy."

Selected Fiscal 2011 Second Quarter Financial Metrics and Other Items

  • At January 31, 2011, the Company had $593.3 million of cash and cash equivalents. Net cash provided by operating activities was $44.2 million for the six months ended January 31, 2011 compared to $28.0 million for the six months ended January 31, 2010.
     
  • During the six months ended January 31, 2011, the Company repurchased 1,628,848 shares of its common stock under its $100.0 million stock repurchase plan in open-market transactions for an aggregate cost of $46.8 million (including transaction costs) with an average price per share of $28.73.
     
  • Backlog as of January 31, 2011 was $199.6 million. Bookings for the three and six months ended January 31, 2011 were $95.0 million and $202.5 million, respectively, compared to $82.3 million and $202.9 million for the three and six months ended January 31, 2010, respectively.
     
  • Earnings before interest, taxes, depreciation and amortization, ("Adjusted EBITDA"), was $32.3 million and $78.7 million for the three and six months ended January 31, 2011, respectively, versus $33.7 million and $55.1 million for the three and six months ended January 31, 2010, respectively.
     
  • The Company's effective tax rate for the three months ended January 31, 2011 reflects net discrete tax benefits of approximately $0.6 million, which primarily relates to the passage of legislation that included the retroactive extension of the federal research and experimentation credit from December 31, 2009 to December 31, 2011.
     
  • In January 2011, an independent audit of Comtech's compliance of International Traffic in Arms Regulations ("ITAR") was completed and the results of that audit were provided to the Enforcement Division of the Office of Defense Trade Controls Compliance ("DDTC") of the U.S. Department of State. The audit found no violations of ITAR, that the Company has taken numerous steps to significantly improve export control processes and that the Company made demonstrable efforts in developing an export compliance program. Such audit was previously requested by the DDTC in connection with previously reported violations.

Conference Call

The Company has scheduled an investor conference call for 8:30 AM (ET) on Friday, March 11, 2011. 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) 220-1116. In addition, an updated investor presentation, including earnings guidance, will be available on the Company's 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 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 the Company's MTS and BFT contracts; 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 ("SEC").

 

COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
         
  Three months ended January 31, Six months ended January 31,
  2011 2010 2011 2010
         
         
Net sales $ 162,811,000 171,132,000 340,971,000 304,948,000
Cost of sales  101,901,000  107,631,000  215,827,000  191,673,000
Gross profit  60,910,000  63,501,000  125,144,000  113,275,000
         
Expenses:        
Selling, general and administrative 23,175,000 22,909,000 47,190,000 44,628,000
Research and development 10,467,000 11,431,000 21,218,000 22,755,000
Amortization of intangibles  2,004,000  1,765,000 3,891,000  3,529,000
Merger termination fee, net  --  --  (12,500,000)  --
   35,646,000  36,105,000  59,799,000  70,912,000
         
Operating income 25,264,000  27,396,000 65,345,000 42,363,000
          
Other expenses (income):        
Interest expense 2,090,000 1,966,000 4,153,000 3,933,000
Interest income and other  (626,000)   (178,000)  (1,320,000)  (413,000)
         
Income before provision for income taxes 23,800,000 25,608,000 62,512,000 38,843,000
Provision for income taxes  7,704,000  9,275,000  20,760,000  13,478,000
         
Net income $ 16,096,000  16,333,000  41,752,000   25,365,000
         
Net income per share:        
Basic $ 0.59     0.58  1.51   0.90
Diluted $ 0.52      0.51  1.32   0.81
         
Weighted average number of common

shares outstanding – basic
 27,209,000  28,250,000  27,664,000   28,236,000
         
Weighted average number of common and

common equivalent shares outstanding –

diluted
 32,983,000   34,080,000  33,403,000   34,069,000
Dividends declared per issued and

outstanding common share as of the

applicable dividend record date
$ 0.25  --  0.50  --
 
 
COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
     
  January 31, 2011 July 31, 2010
Assets (Unaudited) (Audited)
     
Current assets:    
Cash and cash equivalents $ 593,338,000 607,594,000
Accounts receivable, net 80,864,000 135,840,000
Inventories, net 79,947,000 73,562,000
Prepaid expenses and other current assets 7,356,000 8,876,000
Deferred tax asset  13,843,000  14,947,000
Total current assets 775,348,000 840,819,000
     
Property, plant and equipment, net 30,491,000 33,727,000
Goodwill 137,354,000 137,354,000
Intangibles with finite lives, net 49,670,000 48,091,000
Deferred financing costs, net 4,515,000 4,675,000
Other assets, net  1,185,000  1,896,000
Total assets $ 998,563,000  1,066,562,000
     
Liabilities and Stockholders' Equity    
Current liabilities:    
Accounts payable $ 23,391,000 77,844,000
Accrued expenses and other current liabilities 41,784,000 53,398,000
Dividends payable 6,699,000 --
Customer advances and deposits 18,889,000 12,780,000
Interest payable 1,531,000 1,531,000
Income taxes payable  5,521,000  8,666,000
Total current liabilities 97,815,000 154,219,000
     
Convertible senior notes 200,000,000 200,000,000
Other liabilities 6,307,000 2,518,000
Income taxes payable 4,729,000 5,220,000
Deferred tax liability  3,464,000   2,973,000
Total liabilities 312,315,000 364,930,000
     
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 28,634,650 shares and 28,542,535 shares at January 31, 2011 and

July 31, 2010, respectively
2,863,000 2,854,000
Additional paid-in capital 350,787,000 347,514,000
Retained earnings  379,587,000  351,449,000
  733,237,000 701,817,000
Less:    
Treasury stock, at cost (1,839,785 shares and 210,937 shares at January

31, 2011 and July 31, 2010, respectively)
 

 (46,989,000)
  (185,000)
Total stockholders' equity  686,248,000  701,632,000
Total liabilities and stockholders' equity $ 998,563,000  1,066,562,000
     

 

COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures
(Unaudited)
         
  Three Months Ended January 31, Six Months Ended January 31,
  2011 2010 2011 2010
         
Reconciliation of GAAP Net Income to Adjusted EBITDA(1):        
GAAP net income $ 16,096,000  16,333,000 41,752,000 25,365,000
Income taxes 7,704,000 9,275,000 20,760,000 13,478,000
Net interest expense and other 1,464,000 1,788,000 2,833,000 3,520,000
Amortization of stock-based compensation 1,351,000 1,650,000 2,859,000 3,426,000
Depreciation and other amortization  5,686,000  4,683,000   10,511,000  9,349,000
Adjusted EBITDA $ 32,301,000  33,729,000  78,715,000  55,138,000
         
(1) Represents earnings before interest, income taxes, depreciation and amortization of intangibles and stock-based compensation. 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.

ECMTL

CONTACT: Media Contacts:
         Michael D. Porcelain, Senior Vice President and
         Chief Financial Officer
         (631) 962-7000
         Info@comtechtel.com

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