CMTL - Earnings call transcript Q1 2019 | Comtech Telecommunications Corp.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day. And welcome to Comtech Telecommunications Corp.’s First Quarter Fiscal 2019 Earnings Conference Call. Currently, all phone lines are in listen-only mode. Later, there will be an opportunity to ask questions during the question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded. pleasure the my Mr. over now is to program turn to It DiLorenzo. Jason

You may begin, sir.

Jason DiLorenzo

good Officer. to of Chief fiscal Michael morning. Corp. and Executive President this you, Thank Welcome and Kornberg, Fred D. for us the Chief Chief first Bondi, Porcelain, morning With Vice are conference and the and the quarter Michael XXXX. Operating of President Officer; year Officer on Financial call Comtech; call Telecommunications Comtech Senior

from you remind will of company’s we management. business and not and proceed, financial to Before the the presented the and to call of forward-looking need language. outlook Comtech, condition Harbor this be relating company, outlook company’s information regarding the and entirety company’s significant such include, statements the the results Securities plans, company’s could Certain future information and Officer involve now performance, business contained I’m to Commission Executive by I outlook, The company’s and assumptions Kornberg. Safe will performance of materially plans, pleased objectives, certain Fred? the forward-looking and of business are limited objectives, in forward-looking the and Fred in introduce filings. to but and uncertainties. in their Actual are nature qualified Chief such in President information. risks cautionary plans Exchange differ statements Any

Fred Kornberg

This this XXXX. first Good Jason. we our call. on you, morning be Thank morning, us discussing you everyone thank fiscal results joining will and of quarter for our for

for EBITDA believe provide and off and yesterday's year will can a see we're our a what great growth. quarter adjusted be anticipate we from revenue a you first As we of results to solid foundation release, start press

because have more market aware the are conditions in headlines and activity the you volatile. become news, business stock political recent As of

business products environment. to for do we are current overall that our any not see change this and our mindful volatility of currently believe strong strong remains demand we the Although we

to such, our a million targets EPS XXXX a increasing million. to million to EBITDA in our But follows. of CFO, as increasing increasing Mike? let approximately updating As range back segments. $XXX will over range to discuss first goal business $XXX come our to after $X.XX later diluted call. we're more answers. discussion first of to We're Then our to up I'll a turn our We're Porcelain, to adjusted of goal our that of results and it financial talk will two this me revenue and $X.XX goal $XX quarter questions Bondi provide million. who our Mike Mike $XX a fiscal and opening range our GAAP before CEO I'll

Michael Bondi

morning, Thanks, Fred and everyone. good

results million. announced EBITDA consolidated $XXX.X backlog million of million, quarter afternoon $XXX.X $XX we million. million of in As the reported with of yesterday $XXX.X profit adjusted operating finished We $X.X first and of bookings and quarter revenues our a

Our building a to in Government which schedules. first our approximately in due quarter of results from occurred primarily $XX million segment, accelerated shift sales Solutions customer benefited

expectations our of this results product in of key were net many Excluding fiscal our first above significantly reflect and our XXXX quarter impact, higher still sales lines.

customers international will customers. From sales, As segments. sales a in Solutions geographic Porcelain and Commercial total Mike Government U.S. to next, XX.X% to sales both with we experienced our discuss based perspective, XX.X% growth were of

was despite On consolidated strong million. backlog We our record book-to-bill the our times. a near achieved finished the bookings we and of X.XX quarter ratio sales front, consolidated high $XXX.X with $XXX.X million

first XXXX. first XXXX XX.X% quarter of our which fiscal quarter achieved as reflect Our fiscal percentage was gross anticipated XX.X%, we does the the the decline in profit from in of

influenced are margins Solutions Solutions changes than our our generates lower segment reminder, gross product Commercial and our mix margins a segment. As by Government

gross margin consolidated pick sales Solutions impact up, will percentage. So Government when it our likely

to This Solutions increase This Government consolidated consolidated in sales represented segment percentage this the of contributed profit quarter. quarter, sales of lower Government compared Solution XX.X% as our year. last a net XX.X% gross to percentage

full product changes, will our profit year. that be expect XXXX and sales than lower mix the given gross consolidated growth expected we fiscal For last percentage year,

the On consolidated year. SG&A $XX.X sales, XX.X% QX million better side expense is which operating or of XXXX reported XX.X% expenses last fiscal in the of were net than

$XX.X quarter of spending EPS segment segment, diluted were stock-based and to recorded Our Solutions sales the $X.XX to of manufacturing which reflect development consolidation segment. facilities. net Solutions expenses million SG&A compensation, the of constituting QX in of related expenses or fiscal Commercial unallocated Research the of consolidated of is of XXXX rest the costs or related in were $X.X this with $XX.X $X.X comprised million of Government in and X.X% spending our million of amortization million

to range of was is $X.X $X as year to XXXX of respective to million as the compensation compensation of fiscal units we in we fiscal of annual $X.X XXXX R&D basis million the pay XXXX. million of the still million in form intangibles QX QX to a and expect stock-based SG&A expected XXXX. be in XXXX. annual in we awards both fiscal similar For percentages incentive be in of fiscal to higher of compared was share dollars, QX in QX vested expect an million $XX fully expenses Amortization fiscal fiscal XXXX. in stock-based but Total amortization of to in expense On achieved $XX

fiscal intangibles approximate $XX.X is amortization million. expected to forward, XXXX of Looking

acquisition or $X.X which we acquisition share, recorded all segment. to During our in diluted plan initiated of million solutions XXXX small, technology per the a related quarter is of plan and unallocated but growing $X.XX first a fiscal expenses of targeted company incurred

incur the or XXXX. and this XXXX expect in additional of change of all sales and ongoing although X.X% operating number can QX In we aggregate GAAP net to of expenses income was million $X.X acquisition Our an are inclusive million related our efforts so to of second $X fiscal or of plan ongoing charges fiscal QX quarter efforts. these in consolidated

million million related Solutions of of of or our XX.X% net QX segment XX.X% sales. was segment in sales XXXX was fiscal and adjusted net XX.X% $XX net in Our million our $X.X Adjusted or Government in sales. consolidated related was or of EBITDA Commercial Solutions EBITDA $XX.X

and sales of fiscal forward fiscal changes mix targeting be EBITDA similar to percentage XXXX. to in net we XXXX are XX.X% consolidated achieved a adjusted despite as Looking the we

talk first let me sheet. $X.X balance million fiscal about taxes expense XXXX. quarter Now, in our and was our expense, interest the Interest of

feature we additional pro amounts XXXX, announced up into on covenant to secured compliance. consisting forma million X, a facility loan to accordion a an publicly us to subject $XXX plus revolving As November of borrow an $XXX credit new allowing additional with facility million entered

or per was this and facility diluted new prior in in QX. we million deferred with share $X.XX Our wrote-off connection refinanced in full entering of facility, financing cost into $X.X

EBITDA October trailing we was XXXX, adjusted XX ratio of months months a leverage of X.XX EBITDA. debt compared As XX maximum total including had adjusted capital XX, our trailing allowable X.XX times and to of leases million as $XXX.X times

On tax audit of fiscal the million to or tax of per net recorded tax an the tax successful $X.X discrete XXXX share our $X.XX return. diluted resolution IRS benefit we a side, primarily related

our effective was tax Excluding discrete items, XX.XX%. rate

share GAAP income was $X.XX in On net $X.X diluted the line, QX. per or bottom million

our of million, discrete Excluding tax million. our acquisition write-off cost expenses facility our benefit of cost our $X.X million net of plan $X.X exit million financing of deferred $X.X of and $X.X

have slice EPS you was outstanding. how would diluted Our our first see could it, $X.XX. that really been No you matter quarter QX

$XX.X On October XXXX, balance cash equivalents. had XX, at the and side, sheet we million cash of

cash period first a of many low As flow. sometimes or is of quarter negative you know, traditionally our

in quarter cash This cash not million from we large to had collect that this is collections quarters we we did originally collected. A since expected $XX.X believe million an for that does operations. $X.X not This amount be collected for of dip positive receivable cash fiscal of outflows and be quarter XXXX reason shortly that between and concern Timing before strong. end. quite will flows has been us was

fact, it activities $XX in flows XXXX. expected is In reasonable of somewhere cash from million think, fiscal can to operating we around given generate growth

want over announced yesterday. it additional guidance COO, our Mike comments to the we turning provide a Before Porcelain, on few I to

the higher of fiscal XXXX changes we year expected adjusted various to financial expected adjusting balanced for same than expectations quarter, shift expect GAAP first XXXX be nearly to half. although operating the our compared Government updated as regard, of the to -- be results third quarter currently expected expect more not better We quarter fiscal in fielding do results expect given In than overall our performance. our XXXX. First, first We of $XX the second second of our quarter for are with timing we customer be to the sales EBITDA a guidance. our second prior Solutions schedules, and are and do income the an this assessment our in business, our fiscal mentioned earlier in million of half

incur a of operating still income fiscal is expected items, XXXX are can expect our sales, have of quarter be the shift performance. number we of timing million and acquisition Keep our plan impact currently to QX. EBITDA. or Also still do so to in expenses in $X quarterly which of mind, the we and net ongoing adjusted peak financial fourth efforts acquisition for plan and expected consolidated Our quarter

what a in At However, ability our and to expect we that really solid successful of the do be the very would achieve guidance. start we currently quarter Comtech such our end any timing Comtech. was changes year to updated it not a believe impact to negatively good a for for day,

developments over provide Now, Porcelain, to our to for of recent hand color segments. and Mike? I some each will Mike two it business additional

Michael Porcelain

Thanks.

momentum another see positioned we XXXX We can to by As fiscal our year. in successful are two you results, of we segments. business be experiencing are for each positive our operating well believe

segment. markets, you QX let which overall to is large million last Solutions sales $XX.X focused activity a remains Commercial were as In here strong me million. on sense compared our several Our growing business by which of segment, were and $XX give year,

solid which quarter quarter satellite fronts earth compared we our many see continue SCPC QX product higher our of products. amplifiers. Sales for a line, these on power products to year, This last were includes and satellite good was this and Heights of our Heights market modems the products with or to as state quarter, station

our on from significantly current our based solutions levels. for Additionally, sales outlook assumes of business grow that fiscal Heights will XXXX, current opportunities or still

looking Also at earth are revenues this for product here sales Just ago, this absolutely this U.S. double-digit important growth we a to station continues year. be few product now government commercial our line years line. customer no sitting had satellite and

becomes Naval contract fully $X.X of services. yesterday, available funded. still contract million along Systems announced has ceiling fact, related with for and SLMXXXXB periods order related we a $XX as our In future from space in the to modem, and Command Warfare million additional orders satellite This we $XX just award delivery Navy U.S. million our a for contract expect this

optimistic multi-year Given overall are revenue a for experiencing line. our growth satellite market we period dynamics, product of we that station are earth

in Solution and Enterprise location to wireless Technology of Solutions products platforms. and and Sales sales quarter slightly text Security compared and Turning as our Group, Technology Solutions QX these such a and next to bookings Safety XXXX QX our and products. generation lower were of as was XXXX fiscal Technology solid of XXX Safety platforms of for include Security XXXX. messaging these fiscal QX net

For instance, enabled based service a million $X.X We key location services. virtualize $X.X various supporting to provide GPS contract we a provide to customer. renewal mobile application won contract location won to Fortune platforms device a a XXX million

resistance service services. contract provider $X.X a won delivery telecom that U.S. a will added services also enable location value separate We data based million for for the hosted from of top

won U.S. also a to expansion provide million totaling emergency wireless carrier. XXX mandated $X.X a routing FCC call contract We and to services multi-year enhanced

Safety healthy. Security We have strong for end remain market competitive pretty and and conditions Solutions Enterprise and Technology although backlog our

We the one have carriers, win have we sales we in opportunities predict to past awards alone. especially responded that next award in Timing cycles or large XX them and with and several sole and proposals announcement these we opportunities are more of some is as of solutions fiscal remain XXXX. responding seen optimistic source potential wireless for any of to will difficult

that these sales in achieved XXXX. we total to fiscal that from to top products what XXXX assumes look out, in outlook be similar and the fiscal a will increase expected of year our XXXX be business sit we Our are believe fiscal of expected Solutions we peak strong back the When segment quarter being on quarter segment, with the a segment sales. basis, sales of the total Commercial for XXXX to fourth in year-over-year with fiscal

Solutions Now me segment. let Government our turn to

book this to Here net segment just approximately substantial strong, our $XX.X were of million X.XX $XX.X one. for in or fiscal sales compared and bill were to This XXXX. represents QX million Bookings increase was XX.X%. as ratio of a here under

During number this and important orders contracts. quarter awarded of a we were

equipment million satellite $XX.X advanced over terminals, received to to pack V-set Army. supply the man other we networking products of orders U.S. instance, For and

pursuant Advance All Army. Tactical our GTACS of U.S. Global the or to were with booked which Communication contract System

also million $X.X advanced We the a to deliver solutions of Baltimore. order various City of communications received to agencies

also for a $X.X system our U.S. ability receive Northrop $XX sustainment XX supply We Work capability for demonstrate next to Also hope we program. Systems generation the is future Naval foreign over-the-horizon military this the program. the this the NJ products. $X.X is Navy's electronic Band contract ongoing GLB Low system of market and partner services orders XXG October for the Grumman U.S. to receive to attack contract jammer believe received related our provide is over-the-horizon troposcatter month electronic to Command, microwave million a the addressable demonstrable demonstration XXth Also and our on a both customer with Army this snap Harris to underway of our we partnered well on to which or awarded contract line. expand Navy's Corporation to evidence technologies million existing we airborne of size orders Northrop Air warfare for Growler Grumman EA for integrator in contract some with September, terminals. current and million the Comtech existing of has the product

decade. to our amplifier we least which are at excited next line bode well be microwave the We for participant, believe for will RF product a

our a Track terminals. we are DODs to the in troposcatter waiting supply call, the communications last to still government replace of multi-year from U.S. RFP conference in large the feedback discussed response for XXX hundreds equipment for of As neutral

are an program significant revenue income Although to would make operating is in XX we to winning we this XX expect successful income years. to XXXX, of not contributions if fiscal in revenue generate expected perhaps significant and or operating it award for to any

closely work addition, demonstrated and and Army request joint high and BFT the the their reasons. demonstrated alternative BFT-X The our operating system look program. that demonstration at over it In as we the capacity joint with various Army or released work provide exchange with for diversity solution Tracking this BlueForce dismount to a was This as relates Army the can capabilities over application battle platform continue very satellite. the as a capabilities capability communication the to October success that U.S. existing the U.S. such in security U.S. as of the we to geo Comtech’s the with command to as is data the a for they pass. In Transceiver improve satellite could BFT-X we to well BFT HC iridium important

the We to a army continue U.S. to further with has evidence deliver several is and military addition satellite such received We in an XXXX expected of remaining second initiated complete $XX.X of MT-XX the our of we and in fiscal to quarter end by substantially our our fiscal shipments last work for and In BFT demonstration is threats to deploy to that we need XXXX. this can initial shipments thousand needs. edge the pursuant cutting shipments be solutions Comtech XXXX first capabilities to fill Transceivers them vital fiscal believe emerging year. address order continued of HC quarter are our million transceivers and

to thereafter the We place our such to additional in U.S. fiscal XXXX. and transceivers expect test government for continue sometime orders MT-XXXX units

going have any revenue we fiscal showing Solutions XXXX, Ultimately, included to in adjusted However timing in or predict to outlook earnings adjusted segment successful margins. contributions very we MT-XXXX because growth is business have updated are EBITDA not and and the fiscal any transceiver a our orders significant believe XXXX. and new Government year-over-year EBITDA amount for of our revenue difficult improvement

current We our backlog will bright. look some are larger but likely burn off our things secured, some of of really until opportunities

remarks. Now, some back Fred? let closing to it me Fred, who provide will turn

Fred Kornberg

you, Thank Mike.

I'm is before, mentioned how environment. navigating what As recently become our more volatile I business a has pleased through business to

reflects growth rate that EBITDA than adjusted of rate signs it new I of $XX XX%, impressive. believe for guidance $XXX an of all targets again, fiscal our of Also million. EBITDA million. guidance the impressive. XX% in range of annual businesses. As an see is new almost year our slightly increased an XXXX revenue Comtech. mind, our growth across $XXX With At very positive I reflects less At increased be our expected midpoint adjusted range to million also million the to today I an terrific is our reflect I revenue think is that target see reflects new here, midpoint, new to a annual that $XX

Additionally, implemented company-wide a XXXX went the CFO management and on that say our with team. talented and without October hitch I'm we I to that pleased want COO do transition very X,

given for our fiscal of XX, of per XXXX January Board Directors at strong share, of the Finally, the to XX, shareholders on payable has outlook our quarter dividend record be of XXXX on business common of February will close declared which $X.XX a XXXX. business second

Now, the our of Operator? part to I’d proceed question like answer and to conference.

Operator

[Operator And we BMO will Instructions] Markets. take with question Capital Tim our Certainly. first Long from

now is line open. Your

Tim Long

shift questions on the How think Could And sense -- as you bit us there. about government. you. many measures the But secondly, to can further you opportunities I this And have gross talked fulfill of within business as then big more being mix or could, evolves grow you there. government, also Thank just in give obviously the help just on are few a to next are deals there that that are about years? could just the on certain talk over Thank help sounds we EXXX that here? to like timing long maybe those, how that? been Michaels there gross won you'll where of that the how Two congrats are that the margin, and a game lot a than that transition mix margin business, year there taken be you. little impact if the

Fred Kornberg

in we programs the side of programs. Sure. the that relatively or XXX won QX Most small camp in existing to the also of add-ons were

in on trajectory And use we're it hand of number to number through but always a fiscal from XXXX.The be even other will and in need cycles things just inning we this fair number long come been on opportunities win increase. number the pretty two, a in our two. a working phrase, those continue pretty share. opportunities. we So long perspective, Sales market out bidding And when of pretty it's are and inning to we're we'll the

you segment, In did tell we terms last we what year. of government margins margin our at XX.X% X.X% our what last in side in a a did QX I year, also was we will to Government we the report EBITDA was -- gross look EBITDA, the in business, since we And improvement which beat XX.X%, was ago. year significant did from did and of which

that Our some and of working There increasing And improve we're the costs of areas. doing we in things working that time margins. some our we've are some QX of costs been same facility on at did but slowly. it we're that also we're other the rather is example side closures take on marketing an the to out, to

back a last the year. we're meaningful Government be going sit we should we segment, year we which X.X% think improvement the to from to get double-digits for did when the in So

Tim Long

very thank Okay, much. you

Operator

Analytics. Quilty [Operator Instructions] to Quilty We will Chris go next with

is now Your open. line

Chris Quilty

Is there. the by fourth full clarification double-digit a just or double-digit quarter that Mike, year? for

Michael Porcelain

down might I do but And the throughout little fiscal to up some year, bounces you a bit be no, and the full mean, XX% XXXX. have QX. year. did we over for for expect in XX.X% we No,

Chris Quilty

Okay.

you on side? terms in looking that tell commercial it do that's acquisition capital? a deploy which of more you're is you're you part or preference can on, or the the government And whether us working have On side just two, of the business to opportunistic

Fred Kornberg

Fred Chris, this is Kornberg.

when about on not this it occurs and not we'd at -- rather I think acquisition this talk call. phone that

Chris Quilty

Okay.

Does It spending exposed on bit. business like little years a going that me is on growth programs on. change bit the Let the your you're couple balance calling defense after a of sounds that the shift Trump a start little or thought to potential back the that increases. the of rate administration given

Fred Kornberg

don't I think No so.

last, I there push continue. think that that mean, mentioned by last programs the think our years. I I As will to momentum are We're record last, marketing and I and think really X it that on is a instituting on I will programs will XX

Chris Quilty

where you Great. most And vertical platform, the the on success give by that market with of Heights sense you're or can seeing application? us either platform a

Fred Kornberg

We've success announced won I the on for instance, Carnival is the I think, really think Heights Line previously that project. widespread. we the Cruise

that received we haven't but we have been as We that. told won yet, that order

cruise So area is which the obviously. that’s one line area

The area. MEO that star other with networks especially are areas be that really performer influx the of systems satellite the believe communications and Heights in LEO hopefully the satellites basic and that a we

Chris Quilty

Got in you’re some know demand international you from volatility that markets? impact where areas about And from given level the any a any I seen. seen sales statement you. international Are coming concern any haven’t there of of we’ve seeing XX-Q there was the

Michael Porcelain

really, books Chris, before in mean, tariffs to some potential people and rather probably in wait fact that. with it’s changes the caused than put orders everything on I Not

but that about. material there’s as one being us enough of actually not probably where characterize been to I it, that’s some acceleration talk certainly for area and would not So maybe significant

thought as seen we when we’ve this back we some it and So, no, our it in thinking we current in considered of relates remember and to guidance gave to you September kind guidance kind thoughts well. at if gave our our in of are haven’t our those September as back reflective guidance

Chris Quilty

chain products? And the presumably that your covers components also on supply for

Michael Porcelain

that and that could some does where like made comment that is part stuff and and we’ve get the availability timing in kind it’s as into Bondi given earlier as and military on the the fielding commercial the side, some of well shortages thoughts of that quarters shift stuff But between yes schedule. side. Yes, Mike seeing I impacting are we still mean, different component our the of again

of volatile our changes little of lot all again seeing a a of terms that more kind we’re considered that there’s we’ve in bit roll outs, thoughts. are but of So that in

Chris Quilty

and Great, let else bow I out questions. someone will ask

Operator

we And take Glen Ladenburg. with our question can Mattson next from

Your line is open.

Glen Mattson

Hi, the questions. taking for thanks

that but was would that a didn’t in can imagine get all then so you talk what the talk end So, -- guess bit like parameters I so just idea it just I or company he to be increased like the things. about of wanted higher kind Is acquisition or guess, we multiples what little we us potential but growing about mentioned growing anticipation of else sometimes or and self you would it. kind of how this; be all said it and would borrowing plus capacity, an using your plus it about towards, of Fred a size that we’re geared is? of increased talking And just small something can markets capacity frame I of imagine that give sense stock

position, some that this the is process your shortly what the just or be thought of parameters would general dilutive talking about. we’re around financially kind So accretive after sense

Michael Porcelain

way, shape or it’s to magic not to not our say even going likely any small, impact but growing. impact we’ll be Sure, at our would revolver, a significant pull something but well, be I to small, point a form. you word, going will to down from to I This profile be all. in our that it’s debt ratings will material the

but to company and think some just small a So we growing. that going it’s amortization see might we’re to stick be now folks excited there. will technology right It we about, and in something is

of could certainty successful we within to So Fred, ultimately that, we no as, there’s but I’ll really leave say it be course said transaction. that the and can’t

out and we news. the you play will close if be things just let’s some transaction back report we’ll successfully So to good really to think able we’re and it

Glen Mattson

color any situation contract, of a for about then, length the just the that potential timing as color. more you kind more extra mentioned detail should you one. what thanks a little feedback us or little give far -- and competitors? you’re bit competitive Could to getting tropo be able And your of win on you as versus Okay,

Michael Porcelain

that’s we guess, at ago. have different I very to report we any three this than little months time reported

with December in still their that that fiscal XXst. their say in started and let’s army year, standing first decision X a will the made October that the think they’ve award and words which the I will would contract they they in quarter of end --

got if at word you of they've take to couple So, weeks a their them go.

extremely and other hand it's the quiet On silent.

I we think it say hope happens it So expect next in to December, let's be don't the happen in the will timeframe. March the to which January that quarter, in we

Glen Mattson

color for the great. Thanks and Okay, luck. good

Operator

our from take will we question And with next McNeely Kyle Jefferies.

Your line is open.

Kyle McNeely

that XXX next at thanks ASCO Conference were a guys you're you Hi, low same funding if the XXX. market. apparent on to an [ph] have a pretty still I now? the Congress has time more see generation and pickup at was enhance And actions wanted a at questions. generation year bit has few to pretty even to penetration level. next it And environment the taking this We throughout lot offer guess, higher I been -- for any any little whether right seeing there

wait in Or out. actions So that are great. something Congress may seeing Anything that would this you of play for to opportunities add front we is kind that you on just be have can curious, right an to uptick now?

Michael Porcelain

something we But states based growing well. -- legislation cities are -- want time to want focus the are that that's sales think, counting extremely a to when opportunities we we at that. New just Yes, on to City cycles our help. an on. all city system, go efforts of been has And have to our that’s municipalities mid-opportunities certainly Will Yes, seeing long. we're certainly focus so And think to opportunities. Passage is York of for and seeing we're on it's an IP we Passage I going where will say again as work Federal lot a in I longer our long I would where of smaller list the And a it to probably do mean a would proposal are like even the larger get the through from they and Federal perspective help. local you

market. are So signs a all slow it's towards market. the But a pointing growth

Kyle McNeely

Okay, improvement big it such And already, but lot. a this then sequential was to know, EBITDA bit Government margin. great. Thanks asked had looks a not you segment, a a sequential shifting big improvement in the on sales, but on like in I

what Just you the in And certain additional in out there as product big get is was there add of what like sales like line was you uptick to that with. kind can anything can saw pull million discussion operating a $XX of to forward QX. curious the product that you concentration the around leverage lines associated

Michael Porcelain

Yes, sure Kyle.

First, than to be higher were are clear EBITDA significantly our margins last year. adjusted they just are Government

So we this the in last QX again versus XXXX. X.X% XX.X% if versus year X.X% year of in do

that a the substantial of so. From line. do improvements So made we've some in mix in perspective, to and over-the-horizon business of part we’re product the we early continue microwave

early So we that think we say we tend and about the are more those little to million got know prudent and a would margins. programs various we've bit in $XX stages got that you contract I be as almost

at Government our And our some it have Tampa going and things Orlando we'll our margins those down in in just facility. go it pretty I the are ability So leave that. if We merged up. But to things take well of down well with shut business. facility would

some see ramps portion well. we So new should improvement that there of as as facility up, that

Kyle McNeely

outperformance necessarily product a QX. was that what associated And with? in Okay, the line great Like for was thanks. there concentration

Michael Porcelain

them them our in we're and the their Yes, control taking provide and for to stuff we're deployment. command solutions it was assembling government we’re products them, integrating that mostly we

product it's just really as same it last basis just would but change But say it was that from mix. quarter-to-quarter, on about where annual an year. the I does was that's So

So and efficiency we're better in that getting doing. improvement better what we're

Kyle McNeely

Okay, great. for it, quarter have And ending I I if for have expectation last an cash credit facility. with the Do QX. maybe one one new but expectation me an debt the on correct like -- missed you and

Michael Porcelain

already collected we think Right I had QX cash $XX We QX in bit flow Mike flow Mike was We odd quarter doing might well on some we're $XX quarter, And but cash be year, positive about year. will $XX we be -- to now operations our so have mentioned we're now cash we and thought will almost million, don't QX a last million XXXX free number better. way specifically the versus as for have perspective cash this put to September, strengthening cash have increased flow. a sales actually this of from mentioned, might on -- so this anything been believe believe is about a $XX a flow. as negative right we're back we in have are a year. And actually with things year or that likely we that but million than million lower from on

Kyle McNeely

Okay, the lot. for Thanks fair presentation. a enough. Great. Thanks

Operator

take next will [Operator Merchant. Instructions] Asiya We question our from

Your line is open.

Asiya is with Citigroup.

Asiya Merchant

A Great. of have been questions Congratulations everyone. lot the asked.

in in, there on some were some you Government cadence and see some you If as clarity Government. given in could in orders the guidance and the pull the segment, provide some both Commercial of the the

think on you. line? So should top as revenue the from of we seasonality how the how year Thank looks rest well the like as about

Fred Kornberg

Sure.

mentioned, had Government segment. did a in have QX Mike big we in As pull our

So we did in QX. $XX.X million

I the perspective decline think throughout is we be QX a number than to that will from lower did what in year. going QX, QX, trajectory QX.

different again may segment seeing we're moment some in get larger adjust. the see of again that we'll sales next sort these that But we declines spike if year. timings Now quarter-to-quarter our at of have type Government bookings, before

to We're see we level the to it's of did margin opposite. sort side Commercial -- QX. the revenues QX,QX, On the from in expect going increase QX

it it Government all improvement in has than and on our higher consolidation, EBITDA because the business adding adjusted going margin see margins back again you're you Commercial to so our business. side up, all And taking

So that do in will the same QX QX you’re be quarter probably higher we dip little almost a peak did to $XXX.X tell we how before sales. had going And that to as said that be number a than QX. be see you I I think QX. I guess would likely of QX. the same the it. will will million is $XXX.X million, a QX about we'll mean, That's number that's did bit from then nearly in And be going to Mike as

Asiya Merchant

et shortage just longer you of product some is still that just seem and that know -- can quarter color -- that if is cetera has lines? component impacting government last it no with I other that shortages, And on I provide revenues. impacted may some exist, were component some does Great. If it your you there issues not know ask, so I'm Thank mistaken that? your If you.

Fred Kornberg

component would guidance component kind we've shortages, they're that thinking. seeing also built And shortages. into I material say but of our not are We

spread pretty are things So out.

cadence buying we have procurement securing did in in revenue parts of it We given inventory built And also perspective think right. and them. a our from advance things -- number a we we

Asiya Merchant

you. Thank great. Okay,

Operator

Noble we question, from And Joe with comes have Instructions] do [Operator a Capital. Gomes

open. Your is line

Joe Gomes

on Congratulations the quarter. morning. Good

You the you've XXXX? much quarter. the done had rest some you reduction of cost Do fiscal if more see mentioned first for actions that how in any

Fred Kornberg

will reduction going not We types operating activities. mojo -- We're business but to to reduction and get detail, is efficiency really to at say are that something get cost our so not looking something I into is in of speak. that's improvement the embedded cost

I we're And our down, would you it. to tell like we'll guys. doing announce stuff. we But to at always something, we're continue we'll big something always have tell certainly shut do enough So you looking facility if

Joe Gomes

there current the new of I been and getting some employees. market discussion And difficulty employment this cover, Okay. some companies in other that here in has in

difficulties driving attract get seeing if within are any guys to and you costs guys are is having maybe are you big now. and that able up If some right you deal that employees no

Fred Kornberg

talented organization. that bringing people have Well, the of in issue into we always

it's so the rate you people fair low. But the to as unemployment pretty difficulty say there read that is headlines we no I is in attracting think doubt. do

is work right other to and people think what we'll pretty to the to do. a we the place On need good and pretty we do hand Comtech turnover low have recruit we

Joe Gomes

thanks. Okay,

Operator

at There this instructions] time. are no [Operator questions additional

Fred Kornberg

look wish you I to March. you to again want with and again in for Year shareholders. our much. Okay, Thank New and and customers we suppliers, employees, to Happy very today speaking forward thanks joining well us everybody a holiday happy

Operator

you conclude Thank your program. This today's participation. for does

at You time. any may disconnect

Comtech Telecommunications (CMTL) 7 Dec 182019 Q1 Earnings call transcript