Comtech Reports Operating Results for Fiscal Quarter
Thursday, June 06, 2019 | Comments

Comtech Telecommunications reported its operating results for the third fiscal quarter ended April 30 and updated its fiscal 2019 guidance.

Net sales for the third quarter of fiscal 2019 were $170.4 million compared with the $147.9 million achieved during the third quarter of fiscal 2018, representing an increase of $22.5 million, or 15.2%. Net sales for the first nine months of fiscal 2019 were $495.4 million compared with $403.2 million achieved during the first nine months of fiscal 2018, representing an increase of $92.2 million, or 22.9%.

Bookings during the third quarter of fiscal 2019 were $331.2 million, with a companywide book-to-bill ratio of 1.94 with both its commercial and government solutions segments achieving book-to-bill ratios in excess of 1.00. Bookings this quarter reflect strength in almost all of Comtech’s product lines, especially its safety and security technology solutions and satellite earth station technology solutions, the company said.

Backlog as of April 30 reflects a record high of $747.1 million. Comtech took several strategic steps to enhance its business including closing on the acquisition of Solacom Technologies in February, closing on the acquisition of the state and local government next-generation 9-1-1 (NG 9-1-1) business from General Dynamics Information Technology in April, initiating efforts to acquire a small technology company with complementary solution offering, and continuing its ongoing evaluation and repositioning of its enterprise technology product solution line.

In connection with these steps, Comtech incurred $1.7 million of acquisition plan expenses and $2.5 million of estimated contract settlement costs. It also recorded $600,000 discrete tax benefit. Including all of these expenses, GAAP operating income was $11.3 million, and GAAP net income was $7.6 million. Cash flows from operating activities during the third quarter of fiscal 2019 were $40.8 million. Cash flows from operating activities during the nine months ended April 30 were $53.8 million.

"The third quarter was yet another strong showing of outstanding business performance by Comtech,” said Fred Kornberg, president and CEO. “Our business excelled on many fronts. We expect the positive business momentum we are experiencing to continue into fiscal 2020.

“The company’s strategic acquisitions of Solacom and the GD NG 9-1-1 business significantly enhanced Comtech’s ability to deliver innovative market-leading products and services to public-safety agencies around the world. Anchored by our strong backlog, recent acquisitions and expected strong fiscal 2019 finish, fiscal 2020 is looking like it will be a terrific year.”

Comtech’s fiscal 2019 consolidated net sales are now expected to be $660 million, which is higher than the mid-point of its prior expected range of $645 million to $660 million. Fourth quarter consolidated net sales are estimated to approximate $164.6 million. Comtech’s updated fiscal 2019 net sales target of $660 million reflects an anticipated growth rate of 15.7% from the $570.6 million it achieved in fiscal 2018.

Comtech's estimated effective income tax rate for fiscal 2019 excluding net discrete items is expected to approximate 23%. Comtech expects its fourth quarter of fiscal 2019 to be impacted by a charge of about $2.2 million primarily related to ongoing efforts for a small targeted acquisition and its enterprise technology product solutions repositioning.

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