Comtech Telecommunications Corp. Announces Results for Fiscal 2018 Fourth Quarter and Full Year and Provides Fiscal 2019 Guidance

MELVILLE, N.Y. –
September 26, 2018– Comtech Telecommunications Corp. (NASDAQ: CMTL)
today reported its operating results for the fourth quarter and fiscal
year ended July 31, 2018. The Company also announced financial targets
for its 2019 fiscal year.

2018 Fourth Quarter Highlights

  • Net sales for the fourth quarter of fiscal 2018 were $167.4 million as
    compared to the $147.8 million achieved during the fourth quarter of
    fiscal 2017.
  • Bookings during the fourth quarter of fiscal 2018 were $214.4 million,
    with a company-wide book-to-bill ratio (a measure defined as bookings
    divided by net sales) of 1.28.
  • Comtech received a number of strategic contracts and orders,
    including: (i) $44.8 million of orders to supply the U.S. Army with
    advanced VSAT equipment; (ii) a $31.0 million order to supply its
    Modular Transportable Transmission System troposcatter terminals to a
    foreign subsidiary of a U.S. based top-tier prime contractor; (iii) an
    award of over $20.0 million from a systems integrator for its new
    high-frequency amplifier products to support high-speed satellite
    networks; (iv) $16.6 million of orders to provide ongoing sustainment
    services for the U.S. Army’s “SNAP” mobile satellite communications
    program; and (v) multi-year contract renewals worth $14.2 million for
    various SMS text messaging solutions.
  • GAAP operating income was $16.0 million and GAAP net income was $7.5
    million, or $0.31 per diluted share. GAAP net income was negatively
    impacted by a net discrete tax expense of $2.3 million, or $0.09 per
    diluted share (“Tax Expense”), primarily due to updated estimates of
    the impact of H.R.1, also known as the Tax Cuts and Jobs Act (“Tax
    Reform”). Excluding the $2.3 million of Tax Expense, GAAP net income
    would have been $9.7 million, or $0.40 per diluted share.
  • Adjusted EBITDA was $30.7 million. Adjusted EBITDA is a non-GAAP
    financial measure which is reconciled to the most directly comparable
    GAAP financial measure and is more fully defined in the below table.
  • During the fourth quarter of fiscal 2018, the Company generated cash
    flows from operating activities of $19.7 million and reduced the level
    of its total indebtedness by $15.0 million. Total indebtedness as of
    July 31, 2018 was $171.3 million (excluding deferred financing fees)
    and its current cash borrowing rate is approximately 4.5%.
  • As of July 31, 2018, the Company had $43.5 million of cash and cash
    equivalents.

2018 Fiscal Year Highlights

  • Fiscal 2018 was the third consecutive year of revenue growth. Net
    sales for the fiscal year ended July 31, 2018 were $570.6 million as
    compared to the $550.4 million achieved during fiscal 2017.
  • Backlog as of July 31, 2018 reflects a record high of $630.7 million.
    Backlog does not include the portions of multi-year contracts that
    have not been funded. As such, the total value of multi-year contracts
    that Comtech has received is substantially higher. Bookings during
    fiscal 2018 were $755.1 million, with a company-wide book-to-bill
    ratio of 1.32.
  • GAAP operating income was $35.1 million and GAAP net income was $29.8
    million, or $1.24 per diluted share. GAAP net income includes a full
    year net discrete tax benefit of $11.8 million, or $0.49 per diluted
    share (“Tax Gain”), primarily due to Tax Reform. Excluding the Tax
    Gain, GAAP net income would have been $18.0 million or $0.75 per
    diluted share.
  • Adjusted EBITDA was $78.4 million for the fiscal year ended July 31,
    2018 as compared to the $70.7 million achieved during fiscal 2017.
  • During the fiscal year ended July 31, 2018, the Company generated cash
    flows from operating activities of $50.3 million and reduced the level
    of its total indebtedness by $29.2 million.

In commenting on the Company’s performance, Fred Kornberg, President and
Chief Executive Officer, noted “I could not be more pleased with our
fourth quarter and fiscal 2018 performance. We enter fiscal 2019 with a
record high backlog and strong business momentum in each of our two
operating segments. I believe we are well-positioned for fiscal 2019 to
be another successful year.”

2019 Fiscal Year Financial Targets

Looking forward, the Company believes that fiscal 2019 will be even
better and have established the following consolidated financial targets:

  • Net sales goal with a range of approximately $600.0 million to $625.0
    million.
  • Consolidated fiscal 2019 book-to-bill ratio expected to be in excess
    of 1.0.
  • GAAP operating income, as a percentage of net sales, expected to be
    higher than the 5.9% that Comtech achieved in fiscal 2018 when
    excluding the $1.7 million of favorable adjustments described in the
    Company’s annual report on Form 10-K.
  • The Company’s effective income tax rate (excluding discrete tax items
    in fiscal 2019) is expected to approximate 23.25% and reflects the
    full year benefit of the reduced U.S. statutory income tax rate
    resulting from Tax Reform.
  • GAAP diluted EPS goal with a range of approximately $0.89 to $1.10.
  • Adjusted EBITDA goal in a range of approximately $80.0 million to
    $86.0 million.

Comparable to Comtech’s business cycle for the past several years,
financial performance in the second half of fiscal 2019 is expected to
be higher than the first half of fiscal 2019. In addition, given the
straight-line amortization expense associated with intangible assets
with finite lives, the Company expects to report GAAP operating income
slightly above break-even in the first quarter of fiscal 2019, with each
of the remaining fiscal 2019 quarters achieving GAAP operating income.
Comtech’s GAAP operating income and Adjusted EBITDA in its first quarter
of fiscal 2019 are expected to be a bit better than the amounts it
achieved in the first quarter of fiscal 2018. After considering the
impact of expected fiscal 2019 interest expense and income taxes, like
in fiscal 2018, the Company expects to report a slight GAAP net loss in
the first quarter of fiscal 2019 and GAAP net income for the remainder
of the year.

In addition, based on the anticipated timing of shipments and
performance related to orders currently in the Company’s backlog and the
timing of expected new orders, net sales and Adjusted EBITDA for each of
its first three quarters of fiscal 2019 are expected to be a bit better
when compared to the respective quarters of fiscal 2018. The Company’s
fourth quarter of fiscal 2019 is expected to be the peak quarter, by
far, for consolidated net sales, operating income and Adjusted EBITDA.

The Company’s revenue goal reflects the adoption of the Financial
Accounting Standards Board’s Accounting Standards Codification Topic 606
“Revenue from Contracts with Customers, the
impact of which was not material. Although the amount and timing of
orders are difficult to predict, the Company expects to receive at least
one additional order for its Blue Force Tracker-2 High Capacity
(“BFT-2-HC”) mobile satellite transceivers in fiscal 2019. If the
Company receives and can ship multiple or very large orders for its
BFT-2-HC mobile satellite transceivers, actual fiscal 2019 net sales,
operating income and Adjusted EBITDA could ultimately be higher.

Additional information about the Company’s fiscal 2019 guidance is
included in the Company’s fourth quarter investor presentation which is
located on the Company’s website at www.comtechtel.com.

Конференц-звонок

The Company has scheduled an investor conference call for 8:30 AM (ET)
on Thursday, September 27, 2018. Investors and the public are invited to
access a live webcast of the conference call from the Investor Relations
section of the Comtech website at www.comtechtel.com.
Alternatively, investors can access the conference call by dialing (877)
876-9174 (domestic), or (785) 424-1672 (international) and using the
conference I.D. “Comtech.” A replay of the conference call will be
available for seven days by dialing (800) 753-4652 or (402) 220-4235. In
addition, an updated investor presentation, including earnings guidance,
is available on the Company’s website.

О компании Комтех

Comtech Telecommunications Corp. проектирует, разрабатывает, производит и продает
инновационные продукты, системы и услуги для передовых коммуникационных
решений. Компания продает продукцию разнообразной клиентской базе на
глобальных коммерческих и правительственных рынках связи.

Предостерегающее заявление в отношении прогнозных заявлений

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, among other things: the risk that the Company will be
unsuccessful in implementing a tactical shift in its Government
Solutions segment away from bidding on large commodity service contracts
and toward pursuing contracts for its niche products with higher
margins; 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; new product
announcements and enhancements, including the risks associated with the
Company’s recent launch of HeightsTM Dynamic Network Access
Technology (“HEIGHTS” or “HDNA”); changing customer demands and or
procurement strategies; changes in prevailing economic and political
conditions; changes in the price of oil in global markets; changes in
foreign currency exchange rates; risks associated with the Company’s and
TeleCommunication Systems, Inc.’s (“TCS”) legacy legal proceedings,
customer claims for indemnification and other similar matters; risks
associated with the Company’s obligations under its Secured Credit
Facility, as amended; risks associated with the Company’s large
contracts; the impact of H.R.1, also known as the Tax Cuts and Jobs Act
(“Tax Reform”), which was enacted in December 2017 in the U.S.; and
other factors described in this and the Company’s other filings with the
Securities and Exchange Commission.

COMTECH TELECOMMUNICATIONS CORP.
И ДОЧЕРНИЕ КОМПАНИИ
Консолидированные отчеты о прибылях и убытках
(Неаудировано) (Аудировано)
Три месяца, закончившиеся 31 июля, Двенадцать месяцев, закончившихся 31 июля,
2018 2017 2018 2017
Чистые продажи $ 167,435,000 $ 147,762,000 $ 570,589,000 $ 550,368,000
Себестоимость продаж 104,447,000 87,350,000 346,648,000 332,183,000
Валовая прибыль 62,988,000 60,412,000 223,941,000 218,185,000
Расходы:
Торговля, общие и административные расходы 27,822,000 26,484,000 113,922,000 116,080,000
Исследования и разработки 13,906,000 13,889,000 53,869,000 54,260,000
Амортизация нематериальных активов 5,269,000 5,268,000 21,075,000 22,823,000

Settlement of intellectual property
litigation

- - -

(12,020,000)

46,997,000 45,641,000 188,866,000 181,143,000
Операционный доход 15,991,000 14,771,000 35,075,000 37,042,000
Прочие расходы (доходы):
Процентные расходы и прочее 2,588,000 2,691,000 10,195,000 11,629,000
Проценты (доходы) и прочее 65,000 (80,000 ) 254,000

(68,000)

Income before provision for (benefit
from) income taxes

13,338,000 12,160,000 24,626,000 25,481,000
Резерв по (выгода от) налогу на прибыль 5,880,000 4,846,000 (5,143,000 ) 9,654,000
Чистая прибыль $ 7,458,000 $ 7,314,000 $ 29,769,000 $ 15,827,000
Чистый доход на акцию:
Основной $ 0.31 $ 0.31 $ 1.25 $ 0.68
Разводненный $ 0.31 $ 0.31 $ 1.24 $ 0.67

Средневзвешенное количество обыкновенных акций
в обращении - базовое

23,857,000 23,470,000 23,825,000 23,433,000

Средневзвешенное количество простых
и простых эквивалентных акций
в обращении
- разводнённый

24,270,000 23,566,000 24,040,000 23,489,000

Дивиденды, объявленные на одну выпущенную и
размещенную обыкновенную акцию по состоянию на
на
применимую дату регистрации дивидендов

$ 0.10 $ 0.10 $ 0.40 $ 0.60
COMTECH TELECOMMUNICATIONS CORP.
И ДОЧЕРНИЕ КОМПАНИИ
Консолидированные балансы
(Аудировано)
31 июля 2018 года 31 июля 2017 г.
Активы
Текущие активы:
Денежные средства и их эквиваленты $ 43,484,000 $ 41,844,000
Дебиторская задолженность, нетто 147,439,000 124,962,000
Товарно-материальные запасы, нетто 75,076,000 60,603,000
Расходы будущих периодов и прочие текущие активы 13,794,000 13,635,000
Итого текущие активы 279,793,000 241,044,000
Основные средства, нетто 28,987,000 32,847,000
Гудвилл 290,633,000 290,633,000
Нематериальные активы с ограниченным сроком службы, нетто 240,796,000 261,871,000
Отложенные расходы по финансированию, нетто 2,205,000 3,065,000
Прочие активы, нетто 2,743,000 2,603,000
Итого активы $ 845,157,000 $ 832,063,000
Обязательства и акционерный капитал
Текущие обязательства:
Кредиторская задолженность $ 43,928,000 $ 29,402,000
Начисленные расходы и прочие текущие обязательства 65,034,000 68,610,000
Дивиденды к выплате 2,356,000 2,343,000
Авансы и депозиты клиентов, текущие 34,452,000 25,771,000
Текущая часть долгосрочной задолженности 17,211,000 15,494,000
Текущая часть капитального лизинга и прочих обязательств 1,836,000 2,309,000
Проценты к уплате 499,000 282,000
Итого текущие обязательства 165,316,000 144,211,000
Долгосрочная часть долгосрочной задолженности, нетто 148,087,000 176,228,000
Долгосрочная часть обязательств по капитальному лизингу и прочих обязательств 765,000 1,771,000
Подоходный налог к уплате 2,572,000 2,515,000
Отложенное налоговое обязательство, нетто 10,927,000 17,306,000
Авансы и депозиты клиентов, долгосрочные 7,689,000 7,227,000
Прочие обязательства 4,117,000 2,655,000
Итого обязательства 339,473,000 351,913,000
Обязательства и условные обязательства
Акционерный капитал:

Привилегированные акции, номинальная стоимость $.10 за акцию; акции объявлены и
не выпущенные
2,000,000

- -

Common stock, par value $.10 per share; authorized 100,000,000
shares;
issued 38,860,571 shares and 38,619,467 shares at
July 31, 2018 and
2017, respectively

3,886,000 3,862,000
Дополнительный оплаченный капитал 538,453,000 533,001,000
Нераспределенная прибыль 405,194,000 385,136,000
947,533,000 921,999,000
Меньше:
Treasury stock, at cost (15,033,317 shares at July 31, 2018 and 2017) (441,849,000 )

(441,849,000)

Итого акционерный капитал 505,684,000 480,150,000
Итого обязательства и акционерный капитал $ 845,157,000 $ 832,063,000

COMTECH TELECOMMUNICATIONS CORP.
И ДОБАВЛЕННЫЕ КОМПАНИИ
Сверка финансовых показателей, не относящихся к GAAP, с финансовыми показателями, относящимися к GAAP.
финансовых показателей, не относящихся к GAAP, с финансовыми показателями GAAP
(неаудировано)

Использование финансовых показателей, не относящихся к GAAP

In order to provide investors with additional information regarding its
financial results, this press release contains “Non-GAAP financial
measures” under the rules of the SEC. The Company’s Adjusted EBITDA is a
Non-GAAP measure that represents earnings (loss) before income taxes,
interest (income) and other expense, interest expense, amortization of
stock-based compensation, amortization of intangibles, depreciation
expense, settlement of intellectual property litigation, acquisition
plan expenses or strategic alternatives analysis expenses and other. The
Company’s definition of Adjusted EBITDA may differ from the definition
of EBITDA used by other companies and therefore 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 the Company’s performance and comparability of its
results with other companies. These Non-GAAP financial measures have
limitations as an analytical tool as they exclude the financial impact
of transactions necessary to conduct the Company’s business, such as the
granting of equity compensation awards, and are not intended to be an
alternative to financial measures prepared in accordance with GAAP.
These measures are adjusted as described in the reconciliation of GAAP
to Non-GAAP in the below table, but these adjustments should not be
construed as an inference that all of these adjustments or costs are
unusual, infrequent or non-recurring. Non-GAAP financial measures should
be considered in addition to, and not as a substitute for or superior
to, financial measures determined in accordance with GAAP. Investors are
advised to carefully review the GAAP financial results that are
disclosed in the Company’s SEC filings. The Company has not
quantitatively reconciled its fiscal 2019 Adjusted EBITDA target to the
most directly comparable GAAP measure because items such as stock-based
compensation, adjustments to the provision for income taxes,
amortization of intangibles and interest expense, which are specific
items that impact these measures, have not yet occurred, are out of the
Company’s control, or cannot be predicted. For example, quantification
of stock-based compensation expense requires inputs such as the number
of shares granted and market price that are not currently ascertainable.
Accordingly, reconciliations to the Non-GAAP forward looking metrics are
not available without unreasonable effort and such unavailable
reconciling items could significantly impact the Company’s financial
results.

Три месяца, закончившиеся 31 июля, Двенадцать месяцев, закончившихся 31 июля,
2018 2017 2018 2017

Reconciliation of GAAP Net Income to
Adjusted
EBITDA:

Чистая прибыль $ 7,458,000 7,314,000 29,769,000 15,827,000
Резерв по (выгода от) налогу на прибыль 5,880,000 4,846,000 (5,143,000 ) 9,654,000
Проценты (доходы) и прочее 65,000 (80,000 ) 254,000

(68,000)

Процентные расходы 2,588,000 2,691,000 10,195,000 11,629,000
Амортизация вознаграждения на основе акций 5,638,000 5,526,000 8,569,000 8,506,000
Амортизация нематериальных активов 5,269,000 5,268,000 21,075,000 22,823,000
Амортизация 3,822,000 3,505,000 13,655,000 14,354,000
Урегулирование судебных споров по интеллектуальной собственности - - -

(12,020,000)

Скорректированный показатель EBITDA $ 30,720,000 29,070,000 78,374,000 70,705,000

ECMTL

Media:
Michael D. Porcelain, Senior Vice President and Chief
Financial Officer
631-962-7103
[email protected]

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