Comtech Announces Financial Results for 2021 Second Quarter
Friday, March 12, 2021 | Comments

Comtech Telecommunications reported its operating results for the second fiscal quarter ended January 31 and updated its financial targets for fiscal year 2021.

Consolidated net sales were $161.3 million and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $18.1 million, or 11.2% of consolidated net sales, significantly exceeding Comtech's expectation for its second quarter of fiscal 2021.

With bookings of $215.8 million, the company achieved a book-to-bill ratio of 1.34 during its second quarter of fiscal 2021. Backlog as of January 31 was $660 million. The total value of multi-year contracts that Comtech has received is substantially higher than its reported backlog. When adding Comtech’s backlog and the total unfunded value of multi-year contracts that Comtech has received and for which it expects future orders, its revenue visibility approximates $1.1 billion.

The company incurred an aggregate of $3.4 million of acquisition plan expenses. The large majority of these expenses related to GD NG-911 acquisition-related expenses and the acquisition of UHP which closed on March 2. UHP is a leading provider of innovative and disruptive satellite ground station technology solutions. Based in Canada, UHP has developed revolutionary technology that Comtech believes is transforming the very small aperture terminal (VSAT) market. Feedback from customers has been extremely positive and initial order flow for UHP products looks strong, the company said.

The company's annual effective income tax rate was 17%, excluding a net discrete tax benefit of $800,000.

Including all acquisition plan expenses, restructuring costs and COVID-19 related costs, Comtech reported GAAP operating income of $5.4 million, GAAP net income of $4.2 million and GAAP net income per diluted share (EPS) of $0.17 for the second quarter of fiscal 2021. As of January 31, Comtech had $30.9 million of cash and cash equivalents and total outstanding debt of $208.0 million.

"I could not be more pleased with our outstanding performance during the quarter, including our very strong bookings and a growing pipeline of opportunities,” said Comtech Chairman and CEO Fred Kornberg. “Demand appears to be strengthening across our markets, showing early signs of the post-pandemic recovery. With our investment in innovation, including our recently completed acquisition of UHP, and our market leadership positions, I believe we are exceedingly well positioned for a banner year in fiscal 2022 and achieving many years of sustainable profitable growth.”

Comtech expects fiscal 2021 consolidated net sales to be in a range of $610 million to $620 million. This revenue range reflects an updated assessment of the timing of shipment for existing and anticipated orders. The company continues to target adjusted EBITDA in a range of $74 million to $76 million.

Comtech was awarded a statewide contract valued at up to $175.1 million to design, deploy and operate next-generation 9-1-1 (NG-9-1-1) services for the commonwealth of Pennsylvania. This contract was awarded to the company shortly after it announced the receipt of a $54 million contract to design, deploy and operate NG-9-1-1 services for the state of South Carolina. Based on anticipated timing of performance, the company expects meaningful revenue contribution from these contracts to begin in fiscal year 2022.

At the start of its third quarter of fiscal 2021, Comtech initiated an effort to improve efficiencies and streamline operations in its government solutions segment. Such efforts include the consolidation of certain administrative and operating functions in both its Florida and Maryland locations and the elimination of certain duplicate functions. In addition, Comtech expects to continue shifting production of many of its key satellite earth station products from its existing Tempe, Arizona, locations to a new 146,000 square foot facility in Chandler, Arizona. This new facility, which is located less than 10 miles from its current facilities, is expected to support anticipated growth and long-term business goals. Over time, these efforts are expected to improve consolidated adjusted EBITDA margins.

Because of the pandemic's continuing impact on global business conditions and the difficulty of estimating ongoing acquisition plan litigation expenses, the company is not providing any GAAP operating income, GAAP net income or GAAP EPS guidance or a reconciliation of the company’s projected adjusted EBITDA results to the most comparable GAAP measure, as such a reconciliation cannot be prepared without unreasonable effort. For the same reasons, the company is unable to address the probable significance of the unavailable information, which could be material to future results.

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