updated 6/7/2011 4:17:42 PM ET 2011-06-07T20:17:42

MELVILLE, N.Y., June 7, 2011 (GLOBE NEWSWIRE) -- Comtech Telecommunications Corp. (Nasdaq:CMTL) today reported its operating results for the three and nine months ended April 30, 2011.

Net sales for the third quarter of fiscal 2011 were $131.1 million compared to $216.3 million for the third quarter of fiscal 2010. The period-over-period decrease in net sales is attributable to lower net sales in both the Company's mobile data communications and RF microwave amplifiers segments offset, in part, by higher net sales in its telecommunications transmission segment.

GAAP net income was $14.3 million, or $0.47 per diluted share, for the third quarter of fiscal 2011 compared to $21.8 million, or $0.67 per diluted share, for the third quarter of fiscal 2010.

Net sales for the nine months ended April 30, 2011 were $472.1 million compared to $521.3 million for the nine months ended April 30, 2010. The period-over-period decrease in net sales is attributable to lower net sales in both the Company's mobile data communications and RF microwave amplifiers segments offset, in part, by higher net sales in its telecommunications transmission segment.

GAAP net income was $56.0 million, or $1.79 per diluted share, for the nine months ended April 30, 2011 compared to $47.2 million, or $1.48 per diluted share, for the nine months ended April 30, 2010.

Comtech also announced today that its Board of Directors declared a quarterly cash dividend of $0.25 per share payable on August 19, 2011 to shareholders of record at the close of business on July 21, 2011. The dividend is the Company's fourth 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, "Despite lower than expected sales for the third quarter, we once again posted solid quarterly results. Sales for the third quarter did not include originally anticipated shipments related to certain MTS hardware orders. These hardware orders are now expected to ship during the fourth quarter of fiscal 2011."

Mr. Kornberg added, "We continue to expect future annual sales and related operating income from the U.S. Army to significantly decline from current levels. Nevertheless, I remain optimistic about our future direction. With deployable cash of approximately $590 million, we continue to focus our acquisition efforts on a number of opportunities that we believe would complement our existing businesses, diversify our customer base and align with our long-term strategy."

Selected Fiscal 2011 Third Quarter Financial Metrics and Other Items

  • At April 30, 2011, the Company had $588.9 million of cash and cash equivalents. Net cash provided by operating activities was $68.9 million for the nine months ended April 30, 2011 compared to $82.5 million for the nine months ended April 30, 2010.
     
  • During the nine months ended April 30, 2011, the Company repurchased 2,365,870 shares of its common stock under its $100.0 million stock repurchase plan in open-market transactions for an aggregate cost of $68.1 million (including transaction costs) with an average price per share of $28.77.
     
  • Backlog as of April 30, 2011 was $196.2 million. Bookings for the three and nine months ended April 30, 2011 were $127.7 million and $330.2 million, respectively, compared to $180.6 million and $383.5 million for the three and nine months ended April 30, 2010, respectively.
     
  • Earnings before interest, taxes, depreciation and amortization, ("Adjusted EBITDA"), was $28.9 million and $107.7 million for the three and nine months ended April 30, 2011, respectively, versus $43.1 million and $98.2 million for the three and nine months ended April 30, 2010, respectively.
     
  • The Company's effective tax rate of 29.9% for the three months ended April 30, 2011 reflects net discrete tax benefits of approximately $1.0 million, which primarily relates to a reduction in expenses that were previously deemed to be non-deductible for tax purposes.
     
  • During the three months ended April 30, 2011, the Enforcement Division of the Office of Defense Trade Controls Compliance ("DDTC") of the U.S. Department of State informed the Company that it closed its review of the Company's compliance with International Traffic in Arms Regulations ("ITAR") without assessing any fines or penalties.

Conference Call

The Company has scheduled an investor conference call for 8:30 AM (ET) on Wednesday, June 8, 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) 220-0866. 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, including the Company's ongoing negotiations with the U.S. Army and pending audit of its 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 ("SEC").

 
 
COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
               
               
  Three months ended April 30,   Nine months ended April 30,
  2011   2010   2011   2010
               
               
Net sales $131,081,000   216,303,000   472,052,000   521,251,000
Cost of sales 74,110,000   141,512,000   289,937,000   333,185,000
Gross profit 56,971,000   74,791,000   182,115,000   188,066,000
               
Expenses:              
Selling, general and administrative 22,552,000   25,628,000   69,742,000   70,256,000
Research and development 10,328,000   11,383,000   31,546,000   34,138,000
Amortization of intangibles 2,173,000   1,754,000   6,064,000   5,283,000
Merger termination fee, net  --    --   (12,500,000)    --
  35,053,000   38,765,000   94,852,000   109,677,000
               
Operating income  21,918,000   36,026,000   87,263,000   78,389,000
               
Other expenses (income):              
Interest expense 2,135,000   1,980,000   6,288,000   5,913,000
Interest income and other (557,000)   (315,000)   (1,877,000)   (728,000)
               
Income before provision for income taxes 20,340,000   34,361,000   82,852,000   73,204,000
Provision for income taxes 6,085,000   12,565,000   26,845,000   26,043,000
               
Net income  $14,255,000   21,796,000   56,007,000   47,161,000
               
Net income per share:              
Basic $0.54   0.77   2.05   1.67
Diluted  $0.47   0.67   1.79   1.48
               
Weighted average number of common shares outstanding – basic 26,577,000   28,291,000   27,310,000   28,254,000
               
Weighted average number of common and common equivalent shares outstanding – diluted 32,378,000   34,086,000   33,069,000   34,074,000
               
Dividends declared per issued and outstanding common share as of the applicable dividend record date $0.25    --   0.75    --
 
 
COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
       
  April 30, 2011   July 31, 2010
Assets (Unaudited)   (Audited)
       
Current assets:      
Cash and cash equivalents $588,941,000   607,594,000
Accounts receivable, net 70,185,000   135,840,000
Inventories, net 81,428,000   73,562,000
Prepaid expenses and other current assets 7,722,000   8,876,000
Deferred tax asset, net 12,867,000   14,947,000
Total current assets 761,143,000   840,819,000
       
Property, plant and equipment, net 28,177,000   33,727,000
Goodwill  137,354,000   137,354,000
Intangibles with finite lives, net  47,497,000   48,091,000
Deferred financing costs, net 4,169,000   4,675,000
Other assets, net 1,194,000   1,896,000
Total assets $979,534,000   1,066,562,000
       
Liabilities and Stockholders' Equity      
Current liabilities:      
Accounts payable $17,828,000   77,844,000
Accrued expenses and other current liabilities 43,076,000   53,398,000
Dividends payable 6,521,000   --
Customer advances and deposits 16,416,000   12,780,000
Interest payable 3,031,000   1,531,000
Income taxes payable 3,397,000   8,666,000
Total current liabilities 90,269,000   154,219,000
       
Convertible senior notes 200,000,000   200,000,000
Other liabilities 6,389,000   2,518,000
Income taxes payable 4,914,000   5,220,000
Deferred tax liability 4,047,000   2,973,000
Total liabilities 305,619,000   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 28,662,144 shares and 28,542,535 shares at April 30, 2011 and July 31, 2010, respectively 2,866,000   2,854,000
Additional paid-in capital 351,984,000   347,514,000
Retained earnings 387,321,000   351,449,000
  742,171,000   701,817,000
Less:      
Treasury stock, at cost (2,576,807 shares and 210,937 shares at April 30, 2011 and July 31, 2010, respectively) (68,256,000)   (185,000)
Total stockholders' equity 673,915,000   701,632,000
Total liabilities and stockholders' equity $979,534,000   1,066,562,000
 
 
COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures
(Unaudited)
               
  Three Months Ended April 30,   Nine Months Ended April 30,
  2011   2010   2011   2010
               
               
Reconciliation of GAAP Net Income to Adjusted EBITDA(1):              
GAAP net income $14,255,000   21,796,000   56,007,000   47,161,000
Income taxes 6,085,000   12,565,000   26,845,000   26,043,000
Net interest expense and other 1,578,000   1,665,000   4,411,000   5,185,000
Amortization of stock-based compensation  1,118,000   2,332,000   3,977,000   5,758,000
Depreciation and other amortization 5,905,000   4,714,000   16,416,000   14,063,000
Adjusted EBITDA $28,941,000   43,072,000   107,656,000   98,210,000
               
               
(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 Contact:
         
         Michael D. Porcelain, Senior Vice President
           and Chief Financial Officer
         (631) 962-7000
         Info@comtechtel.com

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