Comtech Telecommunications Corp. announces financial results for Its fiscal 2020 second quarter and
Comtech Telecommunications Corp. has reported its operating results for the second fiscal quarter ended January 31, 2020 and updated its fiscal 2020 guidance.
Fiscal 2020 Second Quarter Highlights
Net sales for the second quarter of fiscal 2020 were $161.7 million.
Bookings during the second quarter of fiscal 2020 were $151.6 million, with a company-wide book-to-bill ratio of 0.94. Backlog as of January 31, 2020 was $638.3 million. When adding Comtech's backlog and the total unfunded value of certain multi-year contracts that Comtech has received and for which it expects future orders, its revenue visibility approximates $1.0 billion.
During the second quarter, Comtech was awarded several large contracts, including: a 10-year, $211.0 million IDIQ contract to provide next generation troposcatter systems for end use by the U.S. Marine Corps, with initial funding received to-date of $13.4 million; a multi-year contract extension totaling an estimated $14.2 million to provide enhanced 911 services to a tier one U.S. wireless telecommunications carrier; a contract valued at more than $8.8 million for Ka-band solid-state amplifiers to be used in an in-flight connectivity satcom application; and a contract worth $6.6 million to upgrade a next generation 911 system for a New England state.
On a GAAP basis, second quarter fiscal 2020 operating income was $6.2 million, net income was $3.5 million and net income per diluted share (EPS) was $0.14. During the second quarter, Comtech's operating income was impacted by $6.0 million of acquisition plan expenses and a $0.3 million benefit from the reversal of certain estimated contract settlement costs. As shown in the table below, excluding those acquisition plan expenses, the benefit from the reversal of certain estimated contract settlement costs and the net discrete tax expense during the quarter, Non-GAAP EPS was $0.32. Non-GAAP EPS is a non-GAAP financial measure which is reconciled to the most directly comparable GAAP financial measure below.
Adjusted EBITDA for the second quarter of fiscal 2020 was $21.2 million, or 13.1% of consolidated net sales. Adjusted EBITDA is a non-GAAP financial measure which is reconciled to the most directly comparable GAAP financial measure and is more fully defined below.
In late January 2020, Comtech announced the completion of its acquisition of CGC Technology Limited (CGC) for approximately $23.7 million. CGC is a leading provider of high precision full motion fixed and mobile X/Y satellite tracking antennas, reflectors, radomes and other ground station equipment around the world. With significant growth in low Earth orbit (LEO) and medium Earth orbit (MEO) satellite constellations expected, the acquisition adds another growth dynamic to Comtech and brings established relationships with several top-tier European aerospace companies and other government entities.
In January 2020, Comtech announced its highly strategic acquisition of Gilat Satellite Networks Ltd. in a cash and stock transaction, resulting in an enterprise value of approximately $532.5 million. Each Gilat ordinary share will be converted into the right to receive consideration of $7.18 in cash, without interest, plus 0.08425 of a share of Comtech common stock, with cash payable in lieu of fractional shares. Gilat is a worldwide leader in satellite networking technology, solutions and services, with market leading positions in the satellite ground station and in-flight connectivity solutions markets and deep expertise in operating large network infrastructures. The transaction is subject to customary closing conditions including, among others, the approval of Gilat’s shareholders and the expiration of the applicable waiting period under the Hart-Scott Rodino Antitrust Improvements Act of 1976.
In commenting on Comtech’s performance for the second quarter of fiscal 2020, Fred Kornberg, Chairman of the Board and Chief Executive Officer, noted, "Our operating results for the second quarter were solid, with strong performance on the bottom line. Despite the sudden and unexpected deterioration in macroeconomic and business conditions caused by the coronavirus, Comtech performed admirably well and we continue to track a number of large strategic orders that bode well for our future." Mr. Kornberg added, "We are very excited about our recently announced acquisitions and our attention is firmly focused on carefully planning our acquisition integration efforts and positioning the combined companies for a strong fiscal 2021, as we wait for general business conditions to improve."