COMTECH TELECOMMUNICATIONS CORP (CMTL) SEC Filing 10-Q Quarterly report for the period ending Wednesday, October 31, 2018

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Exhibit 99.1
Media Contacts:                    
Michael D. Porcelain, Senior Vice President and Chief Operating Officer
(631) 962-7000
Info@comtechtel.com

COMTECH TELECOMMUNICATIONS CORP. ANNOUNCES
RESULTS FOR FISCAL 2019 FIRST QUARTER AND
UPDATES ITS FISCAL 2019 GUIDANCE

Melville, New York – December 6, 2018 – Comtech Telecommunications Corp. (NASDAQ: CMTL) today reported its operating results for the first fiscal quarter ended October 31, 2018 and updated its fiscal 2019 guidance.

Fiscal 2019 First Quarter Highlights

Net sales for the first quarter of fiscal 2019 were $160.8 million as compared to the $121.6 million achieved during the first quarter of fiscal 2018.

Bookings during the first quarter of fiscal 2019 were $157.4 million, with a company-wide book-to-bill ratio (a measure defined as bookings divided by net sales) of 0.98.

Backlog as of October 31, 2018 reflects a near record high of $627.3 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.

Comtech received a number of strategic contracts and orders, including: (i) over $28.4 million of orders to supply Manpack Satellite Terminals, networking equipment and other advanced VSAT products to the U.S. Army; (ii) a $6.8 million contract renewal to provide a GPS-enabled application to a key Fortune 100 customer; (iii) a strategic contract valued at $5.5 million from a global telecommunications and media company to provide virtualized mobile service device location platforms supporting various location-based services ("LBS"); (iv) $5.4 million of orders to provide ongoing sustainment services to the U.S. Army for the AN/TSC-198A SNAP (Secret Internet Protocol Router ("SIPR") and Non-classified Internet Protocol Router ("NIPR") Access Point), Very Small Aperture Terminals ("VSATs"); (v) a multi-year $1.9 million order from a top U.S. telecom service provider for hosted data assistance services related to the delivery of LBS; and (vi) a multi-year contract extension totaling $1.2 million to provide Federal Communications Commission ("FCC") mandated enhanced 911 ("E911") and emergency call routing services to a U.S. wireless carrier.

GAAP operating income of $7.3 million, GAAP net income of $3.5 million and GAAP diluted earnings per share of $0.14 was impacted by several steps taken by Comtech to improve operating efficiencies and make progress towards achieving its long-term business goals. As presented in more detail in the below table, these steps include: (i) successfully consolidating a manufacturing facility located in Tampa, Florida with its facility in Orlando, Florida; (ii) initiating a targeted acquisition plan related to a small but growing technology solutions company; (iii) entering a new $550.0 million Credit Facility that is intended to provide increased balance sheet flexibility, improved interest rate pricing and less restrictive covenants as compared to its prior credit facility; and (iv) recording a net discrete tax benefit primarily related to the favorable resolution with the Internal Revenue Service ("IRS") with respect to their audit of its fiscal 2016 federal income tax return. Excluding the impact of these steps, operating income would have been $9.8 million, net income would have been $5.5 million and earnings per diluted share would have been $0.22.

Adjusted EBITDA was $18.0 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.

In commenting on Comtech’s performance for the first quarter of fiscal 2019, Fred Kornberg, President and Chief Executive Officer, noted, "Fiscal 2019 is off to a great start. Our results for the first quarter exceeded our expectations and our pipeline of opportunities remains strong. Based on our outstanding first quarter performance, we are increasing our targeted goals for consolidated net sales and Adjusted EBITDA and expect fiscal 2019 to be another successful year."

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The following information was filed by COMTECH TELECOMMUNICATIONS CORP on Thursday, December 6, 2018 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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  • 18487865_101
    Revenue - Product
    If assumed net sales and cash flow projections are not achieved in future periods or our common stock price significantly declines from current levels, our Commercial Solutions and Government Solutions reporting units could be at risk of failing the quantitative assessment and goodwill and intangibles assigned to the respective reporting units could be impaired.
  • 18487865_157
    Revenue - Product
    Based on our outstanding first quarter performance, our Business Outlook has improved since September 26, 2018 (the date we filed our Annual Report on Form 10-K with the Securities Exchange Commission (the "SEC")) and we are increasing our targeted goals for consolidated net sales, net income per diluted share and Adjusted EBITDA for fiscal 2019.
  • 18487865_304
    Revenue - Product
    The significant increase in our Government Solutions segment's Adjusted EBITDA, in dollars and as a percentage of related segment net sales, was primarily driven by significantly higher net sales at slightly higher gross margins, as discussed above.
  • 18487865_245
    Revenue - Product
    This increase was primarily due to overall favorable product mix changes during the most recent fiscal quarter, including a higher percentage of segment net sales related to our over-the-horizon microwave systems products.
  • 18487865_100
    Revenue - Product
    A significant decline in our customers' spending that is greater than we anticipate or a shift in funding priorities may also have a negative effect on future orders, sales, income and cash flows and we might be required to perform a quantitative assessment during fiscal 2019 or beyond.
  • 18487865_164
    Revenue - Product
    In addition to increasing our targeted goals for consolidated net sales, net income per diluted share and Adjusted EBITDA, we are also adjusting our expectations of the timing of our financial performance given actual first quarter 2019 performance, changes in expected fielding schedules from our customers and an overall updated assessment of our assumptions.
  • 18487865_342
    MA - Other
    If our acquisition plan for a small but growing technology solutions company is successful, we expect to pay for such acquisition primarily from existing cash and cash equivalents and increased borrowings.
  • 18487865_99
    Other - Other
    It is possible that, during fiscal 2019 or beyond, business conditions (both in the U.S. and internationally) could deteriorate from the current state, our current or prospective customers could materially postpone, reduce or even forgo purchases of our products and services to a greater extent than we currently anticipate, or our common stock price could decline.
  • 18487865_311
    Financial - Earnings
    Index Index A reconciliation of our fiscal 2018 GAAP Net Income to Adjusted EBITDA of $78.4 million is shown in the table below (numbers in the table may not foot due to rounding): In addition, a reconciliation of our GAAP consolidated operating income, net income and net income per diluted share during the three months ended October 31, 2018 to the corresponding non-GAAP measures is shown in the table below (numbers in the table may not foot due to rounding): Our Adjusted EBITDA is a Non-GAAP measure that represents earnings (loss) before income taxes, interest (income) and other, write-off of deferred financing costs, 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, facility exit costs and other.
  • 18487865_281
    Financial - Expense
    If we do not achieve our fiscal 2019 business goals, amortization of stock-based compensation expense would be lower than our current expected fiscal 2019 range.
  • 18487865_185
    MA - Other
    Important orders received during our first quarter of fiscal 2019 include: (i) a $6.8 million contract renewal to provide a GPS-enabled application to a key Fortune 100 customer; (ii) a strategic contract valued at $5.5 million from a global telecommunications and media company to provide virtualized mobile service device location platforms supporting various location-based services ("LBS"); (iii) a multi-year $1.9 million order from a top U.S. telecom service provider for hosted data assistance services related to the delivery of LBS; and (iv) a multi-year contract extension totaling $1.2 million to provide Federal Communications Commission ("FCC") mandated enhanced 911 ("E911") and emergency call routing services to a U.S. wireless carrier.
  • 18487865_271
    Financial - Income
    The significant increase in our Government Solutions segment?s operating income, both in dollars and as a percentage of related segment net sales, was primarily due to significantly higher net sales at slightly higher gross margins, offset, in part, by $1.4 million of facility exit costs, as discussed above.
  • 18487865_119
    Financial - Expense
    In fiscal 2019 and beyond, Tax Reform will result in the loss of our ability to take the domestic production activities deduction, which has been repealed, and is also likely to result in lower tax deductions for certain executive compensation expenses.
  • 18487865_428
    Financial - Debt
    Except for a prospective transition approach required for debt securities for which an other-than-temporary impairment had been recognized before the effective date, an entity will apply the amendments in this ASU through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (that is, on a modified-retrospective approach).
  • 18487865_75
    Other - Other
    These contract liabilities are not considered to represent a significant financing component of the contract because we believe these cash advances and deposits are generally used to meet working capital demands which can be higher in the earlier stages of a contract.
  • 18487865_117
    Financial - Income
    On December 22, 2017, H.R.1, also known as the Tax Cuts and Jobs Act ("Tax Reform"), was enacted in the U.S. Tax Reform significantly lowered the amount of our current and future income tax expense primarily due to the reduction in the U.S. statutory income tax rate from 35.0% to 21.0%.
  • 18487865_242
    Financial - Earnings
    Over time, we believe that margins will improve as HEIGHTS volume increases.
  • 18487865_244
    Financial - Earnings
    Our Government Solutions segment's gross profit, as a percentage of related segment net sales, for the three months ended October 31, 2018 was higher than the level we achieved in the three months ended October 31, 2017.
  • 18487865_134
    Financial - Earnings
    Because of our strong cash position and the nominal amount of interest we are earning on our cash and cash equivalents, we have, on a limited basis, approved certain customer requests.
  • 18487865_325
    Financial - Cash Flow
    The period-over-period decrease in cash flow from operating activities is attributable to overall changes in net working capital requirements, principally the timing of shipments, billings and payments.
  • 18487865_239
    Financial - Earnings
    Our Commercial Solutions segment's gross profit, as a percentage of related segment net sales, for the three months ended October 31, 2018 was slightly higher than the three months ended October 31, 2017.
  • 18487865_367
    Other - Other
    Borrowings under the Credit Facility shall be either: (i) Alternate Base Rate borrowings, which bear interest from the applicable borrowing date at a rate per annum equal to (x) the greatest of (a) the Prime Rate (as defined) in effect on such day, (b) the Federal Funds Effective Rate (as defined) in effect on such day plus 1/2 of 1.00% per annum and (c) the Adjusted LIBO Rate (as defined) on such day (or, if such day is not a business day, the immediately preceding business day) plus 1.00% per annum, plus (y) the Applicable Rate (as defined), or (ii) Eurodollar borrowings, which bear interest from the applicable borrowing date at a rate per annum equal to (x) the Adjusted LIBO Rate for such interest period plus (y) the Applicable Rate.
  • 18487865_272
    Financial - Income
    Looking forward, we expect fiscal 2019 operating income, in dollars and as a percentage of related segment net sales, to be significantly higher as compared to fiscal 2018.
  • 18487865_332
    Financial - Cash Flow
    As we expect to generate significant cash flows from operating activities during the remainder of fiscal 2019, borrowings under our new Credit Facility are expected to decline from current levels.
  • 18487865_289
    Financial - Debt
    Index Index Based on the type, terms, amount of outstanding debt (including capital leases and other obligations) and current interest rates, our effective interest rate (including amortization of deferred financing costs) in fiscal 2019 is now anticipated to range from 5.4% to 5.6% which compares to our prior estimate of 6.0% to 6.4%.
  • 18487865_218
    Revenue - Product
    Sales in the most recent quarter benefited from work performed on our $31.0 million order received in fiscal 2018 for Modular Transportable Transmission System ("MTTS") troposcatter terminals to be utilized as part of a deployable communications network for an Asia Pacific military service and a $9.1 million contract to supply another foreign military with our over-the-horizon microwave systems.
  • 18487865_63
    Other - Other
    For contracts with multiple performance obligations, we allocate the contract?s transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract.
  • 18487865_141
    Revenue - Product
    In addition, our first quarter benefited from a shift in sales of approximately $10.0 million in our Government Solutions segment that primarily occurred due to accelerated customer fielding schedules.
  • 18487865_336
    Revenue - Geography
    Our investment policy relating to our cash and cash equivalents is intended to minimize principal loss while at the same time maximize the income we receive without significantly increasing risk.
  • 18487865_160
    Financial - Expense
    This GAAP EPS metric reflects all facility exit costs, acquisition plan expenses, write-off of deferred financing costs and net discrete tax benefits.
  • 18487865_364
    Other - Other
    The proceeds of the new Credit Facility were used, in part, to repay in full the outstanding borrowings under the Prior Credit Facility, and additional proceeds of the Credit Facility are expected to be used by us for working capital and other general corporate purposes.
  • 18487865_174
    MA - Other
    Additionally, there is no certainty that our acquisition plan efforts will be successful and except for the impact of acquisition plan expenses discussed above, our updated 2019 fiscal year financial targets do not include the impact of such acquisition.
  • 18487865_430
    Financial - Shares / Equity
    FASB ASU No. 2017-11, issued in July 2017, which provides guidance on the accounting for certain financial instruments with embedded features that result in the strike price of the instrument or embedded conversion option being reduced on the basis of the pricing of future equity offerings (commonly referred to as "down round" features).
  • 18487865_291
    Financial - Income
    During the three months ended October 31, 2018, we recorded a net discrete tax benefit of $2.4 million, primarily related to (i) the favorable resolution of the IRS audit of our fiscal 2016 federal income tax return and (ii) discrete tax benefits for stock-based awards that were settled during the quarter.
  • 18487865_312
    Other - Other
    Our 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.
  • 18487865_317
    Financial - Expense
    These measures are adjusted as described in the reconciliation of GAAP to Non-GAAP in the above tables, but these adjustments should not be construed as an inference that all of these adjustments or costs are unusual, infrequent or non-recurring.
  • 18487865_307
    Revenue - Product
    Nevertheless, based on expected bookings, expected timing of our performance on orders and the anticipated increase in our Government Solutions segment net sales as a percentage of consolidated net sales, we currently expect our Adjusted EBITDA, as a percentage of consolidated net sales, for fiscal 2019 to be similar to the percentage we achieved in fiscal 2018.
  • 18487865_286
    Financial - Income
    Looking forward, on a consolidated basis, we are targeting operating income, as a percentage of consolidated net sales, to be higher than the 6.2% we achieved in fiscal 2018.
  • 18487865_278
    Financial - Expense
    On an annual basis, amortization of stock-based compensation expense in fiscal 2019 is expected to increase to a range of $10.0 million to $12.0 million as compared to the $8.6 million amortized in fiscal 2018.
  • 18487865_24
    Financial - Expense
    Under the cost-to-cost measure, the extent of progress toward completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion, including warranty costs.
  • 18487865_305
    Revenue - Product
    Because our Adjusted EBITDA, as a percentage of consolidated net sales, depends on the volume of sales, sales mix and related gross profit for each individual segment as well as unallocated spending, it is inherently difficult to forecast.
  • 18487865_240
    Revenue - Product
    Our Business Outlook for Fiscal 2019 assumes we continue to seed and invest in the market for our HEIGHTS solutions and that related sales will grow significantly from the level we achieved in fiscal 2018.
  • 18487865_359
    Financial - Debt
    Although it is difficult in the current economic and credit environment to predict the terms and conditions of financing that may be available in the future, should our short-term or long-term cash requirements increase beyond our current expectations, we believe that we would have sufficient access to credit from financial institutions and/or financing from public and private debt and equity markets.
  • 18487865_206
    Revenue - Product
    The increase in sales in this segment primarily reflects higher net sales of our command and control solutions (in particular, incremental sales of Electrical, Electronic and Electromechanical ("EEE") space components and deliveries of our next generation MT-2025 mobile satellite transceivers, which are also known as the Blue Force Tracker-2 High Capacity ("BFT-2-HC") satellite transceivers) and, to a lesser extent, over-the-horizon microwave systems products.
  • 18487865_314
    Other - Other
    We believe that investors and analysts may use Adjusted EBITDA, along with other information contained in our SEC filings, in assessing our performance and comparability of our results with other companies.
  • 18487865_30
    Revenue - Product
    This EAC process requires management judgment relative to assessing risks, estimating contract revenue and costs, and making assumptions for schedule and technical issues.
  • 18487865_285
    Financial - Expense
    Excluding the aforementioned $1.4 million of facility exit costs and $1.1 million of acquisition plan expenses, consolidated operating income would have been $9.8 million, or 6.1% of consolidated net sales in the first quarter of fiscal 2019.
  • 18487865_167
    Other - Other
    Our third quarter results for fiscal 2019 are expected to be better than our expected results for the second quarter of fiscal 2019.
  • 18487865_182
    Revenue - Product
    Index Index COMPARISON OF THE RESULTS OF OPERATIONS FOR THREE MONTHS ENDED OCTOBER 31, 2018 AND 2017 Commercial Solutions Net sales in our Commercial Solutions segment were $78.0 million for the three months ended October 31, 2018, as compared to $76.1 million for the three months ended October 31, 2017, an increase of $1.9 million, or 2.5%.
  • 18487865_173
    Revenue - Product
    However, we currently do not believe that changes in such timing would negatively impact our ability to achieve our revised consolidated net sales, operating income and Adjusted EBITDA targets for fiscal 2019.
  • 18487865_237
    Financial - Expense
    The three months ended October 31, 2017 also included a favorable warranty settlement which resulted in a reduction of $0.7 million to cost of sales in our unallocated segment.
  • 18487865_283
    Financial - Expense
    This expected increase is primarily due to anticipated changes in compensation costs (including amortization of stock-based compensation expense), acquisition plan expenses and other increased spending.
  • 18487865_151
    MA - Other
    There is no certainty that our acquisition plan efforts will be successful; We entered into a new $550.0 million credit facility (the "Credit Facility") and wrote-off $3.2 million of deferred financing costs.
  • 18487865_371
    Financial - Debt
    The Credit Facility also contains certain financial covenants and customary events of default (subject to grace periods, as appropriate), such as payment defaults, cross-defaults to other material indebtedness, bankruptcy and insolvency, the occurrence of a defined change in control and the failure to observe the negative covenants and other covenants related to the operation of our business.
  • 18487865_374
    Other - Other
    As of October 31, 2018, our Secured Leverage Ratio was 2.25x TTM Adjusted EBITDA compared to the maximum allowable Secured Leverage Ratio of 3.75x TTM Adjusted EBITDA.
  • 18487865_422
    Other - Other
    These ASUs are effective for fiscal years beginning after December 15, 2018 (our fiscal year beginning on August 1, 2019), including interim periods within those fiscal years and should be applied with a modified retrospective approach.
  • 18487865_426
    Other - Other
    This ASU is effective for fiscal years beginning after December 15, 2019 (our fiscal year beginning on August 1, 2020), including interim periods within those fiscal years.
  • 18487865_20
    Financial - Expense
    Continuous transfer of control is typically supported by contract clauses which allow our customers to unilaterally terminate a contract for convenience, pay for costs incurred plus a reasonable profit and take control of work-in-process.
  • 18487865_223
    Revenue - Product
    Although there are a number of items that could shift between quarters, we believe that sales in this segment will decline for each of the remaining quarters of fiscal 2019 with the fourth quarter of fiscal 2019 being the lowest quarter for net sales.
  • 18487865_92
    Revenue - Product
    For purposes of conducting our impairment analysis, we assumed revenue growth rates and cash flow projections that are below our actual long-term expectations.
  • 18487865_282
    Financial - Expense
    Looking forward, unallocated operating expenses are expected to be higher in fiscal 2019 as compared to fiscal 2018.
  • 18487865_323
    Other - Other
    Index Index LIQUIDITY AND CAPITAL RESOURCES Our cash and cash equivalents decreased to $42.9 million at October 31, 2018 from $43.5 million at July 31, 2018, a decrease of $0.6 million.
  • 18487865_181
    Other - Other
    Additional information related to our Business Outlook for Fiscal 2019 and a definition and explanation of Adjusted EBITDA is included in the below section "Three Months Ended October 31, 2018 and 2017."
  • 18487865_431
    Other - Other
    This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018 (our fiscal year beginning on August 1, 2019) and early adoption is permitted, including adoption in an interim period.
  • 18487865_168
    Revenue - Product
    We still expect our fourth quarter of fiscal 2019 to be the peak quarter for consolidated net sales, operating income and Adjusted EBITDA.
  • 18487865_201
    Revenue - Product
    Government Solutions Net sales in our Government Solutions segment were $82.9 million for the three months ended October 31, 2018 as compared to $45.5 million for the three months ended October 31, 2017, a significant increase of $37.4 million, or 82.2%.
  • 18487865_8
    Other - Other
    We believe this segment is a leading provider of command and control applications (such as the design, installation and operation of data networks that integrate computing and communications (including both satellite and terrestrial links)), ongoing network operation and management support services including project management and fielding and maintenance solutions related to satellite ground terminals), troposcatter communications (such as digital troposcatter multiplexers, digital over-the-horizon modems, troposcatter systems, and frequency converter systems) and RF power and switching technologies (such as solid state high-power broadband amplifiers, enhanced position location reporting system (or commonly known as "EPLRS") amplifier assemblies, identification friend or foe amplifiers, and amplifiers used in the counteraction of improvised explosive devices).
  • 18487865_29
    Financial - Expense
    For over time contracts using a cost-to-cost measure of progress, we have an estimate at completion ("EAC") process in which management reviews the progress and execution of our performance obligations.
  • 18487865_139
    Financial - Income
    Operating income of $7.3 million; Net income of $3.5 million; and Adjusted EBITDA (a Non-GAAP financial measure discussed below) of $18.0 million.
  • 18487865_111
    Financial - Income
    The development of valuation allowances for deferred tax assets and reserves for income tax positions requires consideration of timing and judgments about future taxable income, tax issues and potential outcomes, and are subjective critical estimates.
  • 18487865_217
    Revenue - Product
    Our ongoing marketing and sales efforts and investments to expand this product line and the level of our international business into new countries are yielding positive results.
  • 18487865_268
    MA - Other
    There is no certainty that our acquisition plan efforts will be successful.
  • 18487865_288
    MA - Other
    There is no certainty that our acquisition plan efforts will be successful.
  • 18487865_309
    MA - Other
    There is no certainty that our acquisition plan efforts will be successful.
  • 18487865_343
    MA - Other
    There is no certainty that our acquisition plan efforts will be successful.
  • 18487865_81
    Revenue - Product
    Commissions payable to our third party sales representatives related to large long-term contracts are included in total estimated costs at completion for such contracts and are expensed over time through cost of sales on our Condensed Consolidated Statements of Operations, as we consider these types of commissions direct and incremental costs to obtain and fulfill such contracts.
  • 18487865_320
    Financial - Income
    We have not quantitatively reconciled our 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 our control, or cannot be predicted.
  • 18487865_207
    Revenue - Product
    Of the $82.9 million of segment sales, approximately $10.0 million of command and control solution sales primarily occurred due to accelerated customer fielding schedules.
  • 18487865_438
    Other - Other
    This ASU is effective for fiscal years beginning after December 15, 2018 (our fiscal year beginning on August 1, 2019), including interim periods within that fiscal year.
  • 18487865_243
    Financial - Earnings
    Overall, looking forward, based on the mix and anticipated timing of shipments and performance related to orders currently in our backlog and the mix and timing of expected new orders, gross profit for this segment, as a percentage of related segment net sales, for fiscal 2019 is expected to be lower than the level achieved in fiscal 2018.
  • 18487865_194
    Revenue - Product
    We believe that market conditions for safety and security technology solutions and enterprise technology solutions remain favorable, but they have long sales cycles and are subject to difficult-to-predict changes in the overall procurement strategies of wireless carrier customers.
  • 18487865_106
    Other - Other
    Any impairment charges that we may record in the future could be material to our results of operations and financial condition.
  • 18487865_165
    Financial - Income
    Although our GAAP consolidated operating income and Adjusted EBITDA in the second half of fiscal 2019 are still expected to be higher than the first half of fiscal 2019, we now expect a more balanced year.
  • 18487865_187
    Revenue - Product
    Net sales of our satellite earth station products (which include satellite modems, traveling wave tube amplifiers ("TWTAs") and solid-state power amplifiers ("SSPAs")) during the three months ended October 31, 2018 were higher than the three months ended October 31, 2017 and reflect growth in sales to both U.S. government and international customers.
  • 18487865_330
    Other - Other
    During the three months ended October 31, 2018, we entered into a new Credit Facility and repaid in full the outstanding borrowings under our Prior Credit Facility.
  • 18487865_196
    Revenue - Product
    In aggregate, we expect fiscal 2019 sales in our Commercial Solutions segment to increase as compared to fiscal 2018.
  • 18487865_80
    Revenue - Product
    As commissions payable to our sales and marketing employees or contractors are contingent upon multiple factors, such commissions are not considered direct costs to obtain or fulfill a contract with a customer and are expensed as incurred in selling, general and administrative expenses on our Condensed Consolidated Statements of Operations.
  • 18487865_197
    Revenue - Product
    From a timing perspective, we currently expect our second quarter fiscal 2019 sales to be higher than the amount we achieved during the first quarter of fiscal 2019 with additional growth in both the third and fourth quarters of fiscal 2019.
  • 18487865_21
    Revenue - Product
    Revenue recognized over time is generally based on the extent of progress toward completion of the related performance obligations.
  • 18487865_152
    Financial - Income
    Our new Credit Facility is intended to provide us with, among other things, increased balance sheet flexibility, improved interest rate pricing and less restrictive covenants as compared to our prior credit facility; and We recorded a net discrete tax benefit of approximately $2.4 million primarily related to the favorable resolution with the IRS with respect to their audit of our fiscal 2016 federal income tax return and for tax benefits associated with stock-based awards that were settled during the quarter.
  • 18487865_116
    Other - Other
    If actual outcomes differ materially from these estimates, they could have a material impact on our results of operations and financial condition.
  • 18487865_445
    Other - Other
    An entity is permitted to early adopt any removed or modified disclosures upon issuance of this ASU and delay adoption of the additional disclosures until their effective date.
  • 18487865_420
    Other - Other
    In July 2018, the FASB issued ASU Nos. 2018-10 and 2018-11, which provide further codification improvements and relieves the requirement to present prior comparative year results when adopting the new lease standard.
  • 18487865_105
    Other - Other
    We believe that the carrying values of our net intangible assets were recoverable as of October 31, 2018.
  • 18487865_47
    Other - Other
    When identifying a contract with our customer, we consider when it has approval and commitment from both parties, if the rights of the parties are identified, if the payment terms are identified, if it has commercial substance and if collectability is probable.
  • 18487865_171
    Revenue - Product
    Additionally, as a percentage of consolidated net sales, Adjusted EBITDA in fiscal 2019 is expected to be similar to the percentage we achieved in fiscal 2018.
  • 18487865_179
    Financial - Dividend
    On December 6, 2018, our Board of Directors declared a dividend of $0.10 per common share, payable on February 15, 2019 to stockholders of record at the close of business on January 16, 2019.
  • 18487865_352
    Financial - Dividend
    On December 6, 2018, our Board of Directors declared a dividend of $0.10 per common share, payable on February 15, 2019 to stockholders of record at the close of business on January 16, 2019.
  • 18487865_461
    Revenue - Product
    The ASU also precludes entities from presenting consideration from transactions with a collaborator that is not a customer together with revenue recognized from contracts with customers.
  • 18487865_60
    Revenue - Product
    We estimate variable consideration as the amount to which we expect to be entitled, and we include estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the estimation uncertainty is resolved.
  • 18487865_68
    Financial - Expense
    Transaction prices for contracts with U.S. domestic and international customers are usually based on specific negotiations with each customer and in the case of the U.S. government, sometimes based on estimated or actual costs of providing the goods or services in accordance with applicable regulations.
  • 18487865_140
    Revenue - Product
    Our first quarter of fiscal 2019 results were significantly above our expectations and reflect higher net sales in many of our key product lines.
  • 18487865_295
    Financial - Income
    The decrease from 34.5% to 22.75% is principally attributable to the passage of Tax Reform which reduced the statutory income tax rate from 35.0% to 21.0%.
  • 18487865_435
    Other - Other
    This ASU is effective for fiscal years beginning after December 15, 2018 (our fiscal year beginning on August 1, 2019) and for interim periods therein, with early adoption permitted.
  • 18487865_443
    Other - Other
    This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 (our fiscal year beginning on August 1, 2020).
  • 18487865_449
    Other - Other
    This ASU is effective for fiscal years beginning after December 15, 2019 (our fiscal year beginning on August 1, 2020), and interim periods within those fiscal years.
  • 18487865_455
    Other - Other
    This ASU is effective for fiscal years beginning after December 15, 2018 (our fiscal year beginning on August 1, 2019) and for interim periods therein, with early adoption permitted.
  • 18487865_458
    Other - Other
    This ASU is effective for fiscal years beginning after December 15, 2019 (our fiscal year beginning on August 1, 2020) and for interim periods therein, with early adoption permitted.
  • 18487865_462
    Other - Other
    This ASU is effective for fiscal years beginning after December 15, 2019 (our fiscal year beginning on August 1, 2020) and for interim periods therein, with early adoption permitted.
  • 18487865_444
    Other - Other
    Upon the effective date, certain provisions are to be applied prospectively, while others are to be applied retrospectively to all periods presented.
  • 18487865_79
    Financial - Expense
    Incremental costs to obtain or fulfill contracts with an amortization period greater than one year were not material.
  • 18487865_158
    Revenue - Product
    Our fiscal 2019 consolidated net sales goal is now expected to be higher and within a range of approximately $625.0 million to $640.0 million as compared to our prior range of $600.0 million to $625.0 million.
  • 18487865_0
    Revenue - Geography
    MANAGEMENT?S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS Certain information in this Quarterly Report on Form 10-Q contains forward-looking statements, including but not limited to, information relating to our future performance and financial condition, plans and objectives of our management and our 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 our control which may cause our actual results, future performance and financial condition, and achievement of our plans and objectives to be materially different from the results, performance or other expectations implied by these forward-looking statements.
  • 18487865_204
    Other - Other
    Important orders received during our first quarter of fiscal 2019 include: (i) over $28.4 million of orders to supply Manpack Satellite Terminals, networking equipment and other advanced VSAT products to the U.S. Army (which were booked pursuant to our $223.4 million Global Tactical Advanced Communication Systems ("GTACS") contract with the U.S. Army's PM Tactical Network, which has a remaining unfunded contract value of $95.1 million as of October 31, 2018) and (ii) $5.4 million of orders to provide ongoing sustainment services to the U.S. Army for the AN/TSC-198A SNAP (Secret Internet Protocol Router ("SIPR") and Non-classified Internet Protocol Router ("NIPR") Access Point), Very Small Aperture Terminals ("VSATs").
  • 18487865_103
    Other - Other
    If our assumptions and related estimates change in the future, or if we change our reporting unit structure or other events and circumstances change (e.g., a sustained decrease in the price of our common stock (considered on both absolute terms and relative to peers)), we may be required to record impairment charges when we perform these tests, or in other future periods.
  • 18487865_228
    Revenue - Product
    Index Index Geography and Customer Type Sales by geography and customer type, as a percentage of related sales, for the three months ended October 31, 2018 and 2017 are as follows: Sales to U.S. government customers include sales to the U.S. Department of Defense ("DoD"), intelligence and civilian agencies, as well as sales directly to or through prime contractors.
  • 18487865_190
    Revenue - Product
    Although the sales cycle for HEIGHTS is longer than our historical satellite earth station product line, we expect a steady increase in sales throughout fiscal 2019.
  • 18487865_434
    Other - Other
    FASB ASU No. 2017-12, issued in August 2017, which expands and refines hedge accounting for both nonfinancial and financial risk components and simplifies and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements.
  • 18487865_348
    Other - Other
    As of October 31, 2018 and December 6, 2018, we were authorized to repurchase up to an additional $8.7 million of our common stock, pursuant to our current $100.0 million stock repurchase program.
  • 18487865_166
    Revenue - Product
    In this regard, our second quarter consolidated net sales, operating income and Adjusted EBITDA are expected to be nearly the same as our first quarter results of fiscal 2019.
  • 18487865_216
    Revenue - Product
    Net sales of our over-the-horizon microwave systems products for the three months ended October 31, 2018 were significantly higher than the three months ended October 31, 2017, as business activity in this product line recently picked up.
  • 18487865_136
    Other - Other
    Our overall credit losses have historically been within our expectations of the allowances established; however, we cannot guarantee that we will continue to experience the same credit loss rates that we have in the past.
  • 18487865_10
    Financial - Earnings
    In addition, our gross profit is affected by a variety of factors, including the mix of products, systems and services sold, production efficiencies, estimates of warranty expense, price competition and general economic conditions.
  • 18487865_44
    Other - Other
    In the early phases of manufacturing, raw materials and work in process (including subassemblies) consist of common parts that are highly fungible among many different types of products and customer applications.

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  • Form Type: Quarterly
  • Number of times amended: 0
  • Accession Number: 0000023197-18-000097
  • Submitted to the SEC: Thursday, December 6, 2018 4:24:53 PM EST
  • Accepted by the SEC: Thursday, December 6, 2018
  • Period ending: October 2018
  • Industry: Radio And Tv Broadcasting And Communications Equipment
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CMTL

COMTECH TELECOMMUNICATIONS CORP

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