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Jul 31, 2020
Comtech Q4 2020 Earnings Report
Comtech reported solid Q4 2020 results, showing a sequential increase in net sales and achieving a book-to-bill ratio of 1.07. The company's prudent financial management enabled them to generate strong operating cash flows.
Key Takeaways
Comtech Telecommunications Corp. reported solid fourth-quarter results for fiscal year 2020, with net sales of $149.7 million and a book-to-bill ratio of 1.07. The company reported operating income of $2.8 million, a net income of $1.1 million and EPS of $0.04. Comtech provided forward-looking comments and financial targets for fiscal 2021.
Consolidated net sales for the fourth quarter of fiscal 2020 were solid at $149.7 million, representing a sequential increase of 10.8% compared to the previous quarter.
Bookings of $159.7 million resulted in a book-to-bill ratio of 1.07 for the fourth quarter of fiscal 2020.
GAAP operating income was $2.8 million, net income was $1.1 million, and EPS was $0.04 for the fourth quarter of fiscal 2020.
Adjusted EBITDA for the fourth quarter of fiscal 2020 was $23.5 million, or 15.7% of consolidated net sales, with strong GAAP operating cash flows of $13.8 million.
Comtech
Comtech
Forward Guidance
Comtech expects fiscal 2021 consolidated net sales and Adjusted EBITDA will be slightly higher than the amounts achieved in fiscal 2020.
Positive Outlook
- Strong demand for Manpack Satellite Terminals, networking equipment and other advanced VSAT products by the U.S. Army.
- Ongoing sustainment services to the U.S. Army for the AN/TSC-198A SNAP terminal.
- Sustainment services for the U.S. Army's Project Manager Mission Command (“PM MC”) Blue Force Tracking (“BFT-1”) program.
- Joint Cyber Analysis Course (“JCAC”) training solutions.
- Additional orders for the newly introduced Comtech COMET, the world’s smallest deployable troposcatter terminal, and its next-generation troposcatter system used by the U.S. Marine Corps.
Challenges Ahead
- Fiscal 2021 net sales will reflect the absence of a high margin 911 call routing software contract from a large U.S. mobile network operator whose contract with Comtech ended in March 2020.
- Fiscal 2021 will reflect the cessation of certain software-related services provided to a smaller U.S. mobile network operator that was recently acquired by a competitor.
- Fiscal 2021 operating income will be impacted by acquisition plan expenses (including litigation expenses) associated with the pending acquisitions of Gilat Satellite Networks Ltd. ("Gilat") and UHP Networks, Inc. ("UHP").
- To-date, during the first quarter of fiscal 2021, the Company has incurred approximately $14.2 million of acquisition related litigation expenses.
- Acquisition plan expenses are expected to continue through the Company’s second quarter of fiscal 2021.