Successful One Comtech transformation pivotal in string of major commercial, government wins
Comtech’s transformational shift that started only 12 months ago is delivering results right out of the gate for the company, employees, and customers.
“Since day one of our One Comtech journey, we focused on delivering exceptional results for customers. Through our renewed and unified customer-centric approach, Comtech is leveraging our unique understanding of our customers’ needs to succeed in global markets,” noted Comtech CEO Ken Peterman. “Comtech is leading the way in delivering the blended, hybrid, smart-enabled solutions and services that can empower a truly connected planet.”
In June, Ken took the stage at Comtech’s first-ever investor day to tout the company’s new unified structure and detail Comtech’s commitment to embrace and enable the new world of converged networks and markets. “It’s what we refer to as unleashing the more comprehensive value creation of One Comtech,” explained Ken, outlining Comtech’s ability to move beyond a siloed business structure to exploit the opportunities that come with market convergence.
The move to One Comtech has also driven efficiencies and streamlined focus, which has quickly contributed to a string of major commercial and government market wins at the outset of the company’s new fiscal year.
Big Deals on the Heels of Big Collective Change
“Comtech is better positioned than ever to attract and retain the right people and create the right environment to thrive,” said Maria Hedden, Comtech’s Chief Operating Officer. Redundancies were drastically reduced, key business processes were standardized, and, as a result, Comtech’s people and teams are better equipped to collaborate, innovate and meet our customer commitments in rapidly evolving markets.
Comtech’s customers have responded to the transformation. Comtech was just awarded up to $544 million to provide the U.S. Army with onsite professional engineering services and market leading satellite and terrestrial networking communications technologies for Global Field Service Representative (GFSR) support. This task order was awarded on Comtech’s existing contract with the U.S. Army, which leverages the ten-year, $5.1 billion Global Tactical Communications Systems (GTACS) II indefinite delivery / indefinite quantity (IDIQ) contract vehicle. Comtech was initially selected as one of multiple GTACS II IDIQ awardees in 2020.
The GFSR program provides ongoing communications and IT infrastructure support for the Army, Air Force, Navy, Marine Corps, and NATO, allowing U.S. and coalition forces to maintain robust, resilient, and secure connectivity for global all-domain operations.
The U.S. Army also awarded Comtech $48.6 million this fall for next-generation Enterprise Digital Intermediate Frequency Multi-Carrier (EDIM) modems in support of its digitization and modernization programs.
Comtech will design, develop, test, and deliver EDIM modems to replace aging military platforms and ultimately enable the Department of Defense (DoD) to move critical digitized data across hybrid satellite network architectures. The newfound capabilities will allow warfighters to simultaneously operate on multiple networks, easily roam across orbital regimes and blend traditionally disparate networks to maintain an information advantage in the world’s most challenging and adversarial geographies.
“This strategic contract award further illustrates the trust of our DoD customers in Comtech’s ability to deliver innovative software-defined solutions that meet the mission demands of today and the future,” explained Ken. “Our EDIM modems will be designed to continuously evolve over time to introduce performance enhancements that can significantly improve all-domain mission effectiveness.”
The DoD also recently selected Comtech for an Indefinite Delivery/Indefinite Quantity (IDIQ) contract award worth up to $3.2 billion over a ten-year period of performance. Comtech is one of multiple awardees under this Defense Logistics Agency (DLA) Gateway to Sustainment (G2S) contract, which enables the DoD and other U.S. Government customers to purchase a wide range of capabilities and services from multiple vendors in support of the Command, Control, Computers, Communications, Cyber, Intelligence, Surveillance and Reconnaissance (C5ISR) operations.
“This award further demonstrates the value our battle-proven, open architecture C5ISR capabilities can bring to warfighters operating in all-domain environments,” explained Ken. Comtech’s technologies available under this IDIQ multiple award contract (MAC) are designed to evolve over time to infuse new smart-enabled services and insightful applications that can help the DoD maintain a strategic advantage in a world of technology-driven deterrence.
“With our organizational transformation, the U.S. Government and our commercial customers can pull from all the technologies and expertise across Comtech and our collaborative solutions with integration partners around the world,” Ken added. “That’s a huge benefit and advantage Comtech brings to the markets we serve and a big driver behind our enduring customer wins.”
Comtech’s portfolio of defense and security technologies is designed to deliver the integrated communications capabilities needed to enhance Combined Joint All Domain Command and Control operations and deploy customized, interoperable, robust, and resilient communications systems and services for all branches of the DoD, as well as collation forces.
Comtech’s Public Safety Offerings Continue to See Growth
In July, the State of Ohio provided Comtech with initial funding of $21 million on a contract (with a total expected value of approximately $85 million) to design, deploy and operate Next-Generation 9-1-1 (NG9-1-1) services.
Comtech’s end-to-end NG9-1-1 systems will provide Ohio citizens with new public safety technologies, precise location-based services, and secure and reliable communications capabilities when they matter most. Through use of an Emergency Services Internet Protocol Network, Comtech’s NG9-1-1 services will provide a seamless, coordinated, and efficient statewide system that is available in every jurisdiction throughout Ohio.
“9-1-1 systems play a critical role in our daily lives, and we look forward to serving the citizens of Ohio by delivering Comtech’s comprehensive NG9-1-1 services that will significantly enhance overall response capabilities during an emergency,” said Ken.
According to Frost and Sullivan, Comtech was the second leading NG9-1-1 primary contract holder at the end of 2022 with an estimated market share of 22.3%. The Company currently provides next-generation 9-1-1 services for more than one-thousand public safety agencies across North America and offers one of the most complete end-to-end in-house systems available.
The Pennsylvania Emergency Management Agency (PEMA) has more than 4.5 million Pennsylvania citizens in 42 counties, roughly 35 percent of the state, covered by Comtech’s NG9-1-1 services. History was made in the state of Pennsylvania in September, when the one-millionth 9-1-1 call on Comtech’s platform came in for law enforcement response in the city of Erie, PA.
In addition, Comtech’s contract supporting a major Tier 1 mobile network operator (MNO) in routing and location delivery with 9-1-1 calls was extended for another year, effective Oct. 1, 2023. The extension of our critical recurring services demonstrates the strength and quality of the services that are being provided by Comtech and the substantial value to the company’s expansive and growing list of carrier customers.
Comtech looks to expand its highly successful next generation wireless emergency communications service capabilities and community reach in the coming months and years through continued investment and new product introductions, including 988 solutions, data analytics and insights atop existing 9-1-1 offerings, allowing for more precision to the location and movement of objects and individuals around emergency locations.
The Road Ahead
As Comtech honed its business down to two core segments, it has been able to deliver on increased customer satisfaction and on-time delivery. The company has also implemented key performance indicators to measure, improve, and execute to drive empowerment at the lowest possible level to ensure we’re meeting customer commitments.
The One Comtech transformation is well underway but far from complete. “The company is committed to making the tough but impactful decisions that create greater financial flexibility and stronger future opportunities,” said Ken.
Ken took the opportunity to congratulate the Comtech team on a successful fiscal 2023 during the Q4 2023 earnings call on October 12, and pointed to the One Comtech-driven positive start to fiscal year 2024. “I am excited about the momentum we are building as we progress on our One Comtech journey,” Ken told investors. “Going forward, I’m excited that we are already realizing significant strategic wins and material results that stem directly from our actions. Our implementation of standard tools, procedures, and process discipline across the enterprise have been a key driving factor in the improvements we are seeing in our balance sheet and our performance.”
Comtech’s performance over the past fiscal year is validating the One Comtech approach. The company is riding a wave of efficiency and collaborative success that has already had a significant impact on product development, market demand, and customer satisfaction.
“These recent contracts and successes represent only the leading edge of new customer engagements, and it is clear we are establishing valuable, long-term partnerships,” Ken noted. “For our shareholders, the transformational One Comtech restructuring initiatives and forward-facing investments in innovation are already delivering revenues and margin improvement and creating value today.”
The differentiated expertise and diversity of perspective is enabling Comtech’s people to collaborate with customers like never before, Ken shared. “Leveraging our unique culture of innovation and technology leadership is resulting in our winning significant strategic new business and strengthening our core market positions.”
Read the company’s latest shareholder letter here to learn more.
Certain information in this blog post contains statements that are forward-looking in nature and involve certain significant risks and uncertainties. Actual results and performance could differ materially from such forward-looking information. The Company’s Securities and Exchange Commission filings identify many such risks and uncertainties. Any forward-looking information in this press release is qualified in its entirety by the risks and uncertainties described in such Securities and Exchange Commission filings.