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Jan 31, 2020
Comtech Q2 2020 Earnings Report
Comtech reported solid results for the second quarter of fiscal year 2020, with strong bottom line performance, despite macroeconomic and business conditions deterioration caused by the coronavirus.
Key Takeaways
Comtech Telecommunications Corp. announced its operating results for the second fiscal quarter ended January 31, 2020. Net sales for the quarter were $161.7 million. On a GAAP basis, operating income was $6.2 million, net income was $3.5 million, and EPS was $0.14. Non-GAAP EPS was $0.32. The company updated its fiscal 2020 guidance, expecting consolidated net sales of approximately $712.0 million and Adjusted EBITDA of $99.0 million.
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.
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.
Adjusted EBITDA for the second quarter of fiscal 2020 was $21.2 million, or 13.1% of consolidated net sales.
Comtech
Comtech
Forward Guidance
Comtech's Updated 2020 Fiscal Year Financial Targets reflect its assumption that the sudden and unexpected deterioration in macroeconomic and business conditions caused by the coronavirus are temporary and that conditions will significantly improve during the second half of Comtech’s fiscal 2020.
Positive Outlook
- Consolidated net sales target is now approximately $712.0 million.
- Adjusted EBITDA goal is now $99.0 million, reflecting a target of approximately 14.0% of consolidated net sales.
- GAAP operating income, as a percentage of consolidated net sales, is expected to approximate 6.0%.
- Excluding certain net expenses, operating income, as a percentage of fiscal 2020 consolidated net sales, is expected to approximate 7.5%.
- Comtech’s effective income tax rate (excluding discrete tax items) for each of the remaining quarters of fiscal 2020 is expected to approximate 23.0%.
Challenges Ahead
- The largest business impact of the coronavirus has been felt in Comtech's satellite ground station technologies product line which has and continues to experience order delays.
- There remains significant uncertainty and if current poor business conditions including travel restrictions and order delays continue longer than expected, fiscal 2020 deliveries and or opportunities in Comtech’s pipeline could shift into fiscal 2021.
- Third quarter consolidated net sales are expected to range from $150.0 million to $155.0 million.
- Third quarter Adjusted EBITDA is expected to range from $16.0 million to $18.0 million.
- The updated fiscal 2020 financial targets do not include the impact of the pending acquisitions of UHP and Gilat or the impact of any other expense Comtech may incur in order to achieve its strategic objectives.