CMTL - Earnings call transcript Q4 2021 | Comtech Telecommunications Corp.

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to Comtech Telecommunications Corp. Fourth Quarter Fiscal 2021 Earnings Conference Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. reminder, is a October recorded, As XXXX. X, Instructions] this being conference Monday, [Operator like the to Mr. now would I turn conference to over Jason Telecommunications. DiLorenzo of Comtech ahead, go sir. Please

Jason DiLorenzo

and Thank Fred fiscal Officer D. year Comtech Bondi, With Officer. us Chief to Michael for you, Executive call of fourth of XXXX. afternoon. Porcelain, today the the Chief conference and are the full Michael Corp. Operating Chairman Financial President call the and quarter on and good Kornberg, Comtech; Officer; Telecommunications Chief and Welcome Board

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

Fred Kornberg

you Today joining an is Thank you, good and on us exciting Jason. And call. this everyone, for afternoon, day. thank

on of XXXX COO, our results adviser Porcelain, leadership Directors. quarter you take making Board. and addition will has a our and also announced Mike Mike end results, year Non-Executive Director the a calendar senior that full as our by Chief our as continue change, financial I asked continue President matters join on In hope announcing we and in fourth the saw, all and technology this XXXX. a Board and the Officer become role I of targets, a As also President our Executive of Comtech will of Board initial fiscal change. our Chairman year to

know, you in want a dedication him to a brings deserved role have appointment. and I and professional with I on I of Comtech. Mike As have to confidence his for him. and his years, of congratulate tremendous track many well worked achievement deep knowledge Mike record new

And Board, as I that thank our announced directors our be our outside upcoming been of longest also serving want will we business, These shareholders. X of announced our for terms August efforts the to Board year in the to Not actions. Board, first Comtech fresh the African Our appointed recently same second do so we're contributions Judy Judy time, Judy already also to In to bringing also Board. Chambers for member only invaluable ahead. important Board, is and of female diversity. the other American enhancing and our submit for their Board shareholders meeting. has was them is of joined the our have taken July, perspectives stewards At join she will continue making to that that we is staggered years confident plan and the personally to annual our our She many to to Judy wise refreshed tireless directors retiring Comtech on eliminate directors. behalf that intends XXXX, a

to our practices remains shareholders, our corporate building As engagement. committed productive sound and Board the value company for continues governance shareholder

the three we to Board. turn acknowledge to quarter, I we from intent that also election our details Capital Outerbridge our our of want individuals the to of its shareholders one nominate notice received of fourth Management for Before to

members with since Outerbridge times Board June. several of Our our leadership met team and have

further at on nothing publicly different the down candidates out dialogue. doing though, And With again listened the this. so. as When is to and open a our have lately always, business, to two to time, financials. over Committee we perspectives let's board. At join the this Porcelain candidates beginning provide thoroughly on Board Bondi, business. thoughtful constructive We our and review our our their shareholders. constructive Outerbridge that, all all will Michael of the that for get a once The discussion reviewing to a and sought it our we of Mike privately CFO, me August, Governance Nominating will individuals. individuals to of an have And dialogue with Bondi? today's report turn of director Outerbridge initiated remain and let update to following our procedures who provide nominated after Mr. standard three these proposed way, proposed of

Michael Bondi

you, everyone. Thank afternoon, good Fred. And

are customers. impacted in of have our fiscal issues COVID-XX a This since related guidance. million early Net was proud our and Of effects the performance $XXX.X in We XXXX. incredibly as and book-to-bill to quarter slightly that strong. these customers, XXXX the for continue We net our we year X.XX for calendar were during QX. navigate the to orders year of in received year US-based full $XXX.X sales with lingering the ended for were to above And business feat sales were XX% tremendous ratio $XXX.X were were Bookings XX% US-based year, times a million. XX% in customers, with of quarter. of these to million the sales, But fourth international to resulting XX.X% sales customers. international

times. which given book-to-bill bookings $XXX.X the achieved year's of was from COVID-XX, full of our headwinds we achieved the we impacted ratio we higher year, year, X.XX the a million, global customers. faced of X.XX was which fiscal than what all for almost times strong in The resulting For performance in XXXX

of or fiscal percentage XXXX sales. SG&A profit year, QX the in and for XX.X%. for net was Our $XX.X XXXX of was gross fiscal for consolidated million XX.X% was QX XX.X%, it

year, the sales. million or million net XX.X% consolidated was SG&A For $XXX $XXX.X - of

quarter sales. the of X.X% or million Turning in to fourth R&D. We invested $XX.X net

intangibles Total million XXXX net $XX amortization during million. compensation fiscal the fiscal For was of of $XX year based and million in stock of quarter the amortization was invested $XX.X we $X.X the for was for and year, $X.X or XXXX it million of of million. sales. was the QX consolidated X.X% fourth Total year

Our $X.X of income fourth costs. was the operating plan reflects restructuring $X.X $X.X for and million COVID-XX of million acquisition costs, of related GAAP million quarter $X.X and million expenses

costs, non-GAAP such have Excluding $XX.X or would been sales. of in consolidated operating income net QX X.X% million

had release our large in and prior calls, other As plan disclosed during acquisition conference the we costs on and expenses discussed earnings year.

have non-GAAP net of or million income costs, for full been operating sales. such fiscal $XX.X XXXX X.X% would year Excluding the

of the for Our quarter. fourth adjusted sales EBITDA consolidated was $XX.X million XX.X% net or

million adjusted of XX.X% basis, net sales. contributed consolidated the net On or For of related $XX.X adjusted Commercial of million of sales. in the our represents EBITDA $XX.X XX.X% EBITDA segment year, QX, Solutions our segment a

For the it sales. contributed year, million related of of $XX.X net EBITDA adjusted or XX.X%

QX Government We related EBITDA of million X.X% in or Solutions segment. sales. our $X.X net adjusted had to Turning of

or For expense $X.X XXXX, related $X.X the sales. Government Solutions the was million year, quarter, Interest $XX.X segment fourth and in our X.X% delivered was it of of fiscal EBITDA million. net million adjusted for

QX a we income for was million. $XXX,XXX, of generated benefit expense and only Our $X.X the actually year, tax in

net $X.X was share. line, XXXX $X.X net of bottom or Non-GAAP income was $X.XX in the or for XXXX our QX per million $X.XX diluted QX million GAAP On income share. diluted per

XXXX per tables fiscal was quarter. compared million EPS by income share. fiscal Cash by substantial our XXXX net share. can to $XX.X diluted the at full or today's $X.XX items reconciling $XX.X generated fiscal non-GAAP income loss impacted net net as fourth or in of was per represent and diluted fiscal being the earnings GAAP XXXX. $X.XX our operating loss income of found XXXX, improvements the Despite for activities $XX.X the a for bottom for of Non-GAAP net million our was non-GAAP Details of million fiscal COVID-XX release. year, be For

net a $XX.X have For termination million million. the excluding our year, from activities cash merger would $XX been operating payment,

balance July million. equivalents outstanding as XXst, Our XXXX, total and debt was our $XX.X of includes $XXX million cash sheet cash of

secured defined leverage our current in was times. as credit ratio facility Our X.XX

targets initial fiscal let we XXXX financial comments earlier. before issued over Now provide some me Mike, turning on to it that our

We are the healthy targets reflect pipeline, backlog $XX chain company's of anticipated constraints. sales $XX sales of and million. and EBITDA by range consolidated to million $XXX within $XXX million a net offset targeting the COVID-XX global and strength a impacts These million fiscal supply and XXXX adjusted of between tightening

recently in troops our fiscal our Also, financial we to It costs has we facilities. expect accurately of costs the increased due X of associated targets the In impact start of have is to really facilities up completed manufacturing COVID incur of to with reflect extent delays our withdrawal opening $XX to move that changes addition, to those of US the because range assets expense high-volume million. to technology costs and expected approximate to other million previously XXXX duplicate to estimate maintain. tax around XXXX total is US from fiscal the to million tough new be effective in fiscal XXXX. and Afghanistan our from expected million. We government be XXXX, is program announced. compensation Stock-based we fiscal And estimated for $X.X $XX $XX discrete amortization Interest estimate XX%. rate around items excluding expense is intangible currently caused

adjusted Solutions of in of cadence our on in our EBITDA XXXX the current anticipate in is lowest expectations Government our fiscal segment the fiscal of virtually XXXX Based financial on to we color XXXX. segment, QX. some in QX QX no expected performance fiscal of Now quarter Government be expected Solutions our performance. or revenues

Based segment COVID-XX a on our million half Solutions Additionally, constraints on the new will but to chain fiscal issues, second segment the approximate typical adjusted we consolidated expected and These are adjusted that in our Solutions believe significant year, believe million. these spikes our impacted. neighborhood performance than for represent in is QX of are Commercial headwind expected and are lower revenues orders with $XXX we as EBITDA Commercial and come issues half and recent supply of backlog to deliver the $X what revenues that seeing, we in result EBITDA being our strong in with first in.

monitoring XXXX. up to during inventory and supplier needs of these our and the We expect our are cautiously base fiscal closely half constraints second we ease

confidence we we such, the terrific. have solutions. expectation which being margin is from million, fiscal new far. of pipeline, and orders our second that of opportunities pretty is results segment sequentially strong These are backlog Comet after believe will other improve, that the and of receipt the about full $XXX.X quarterly including programs Troposcatter $XX and customer with the half quarter higher QX XXXX, will QX As fiscal Comtech With a feel year. our than peak backlog during million been good Solutions XXXX sales ending in defined from our our feedback benefit well higher the Government Contributing XXXX to for by the

Michael Porcelain. to over it Mike? Now hand I'll

Michael Porcelain

Thanks. good afternoon, And everyone.

team to systems. Comtech capitalize out First, the we on important service to believe start and range CEO. Board are let strong the to already of continuing uniquely me Fred leadership next Comtech entire with customers. work growing the I its management stockholders At that infrastructure and and myself, me I our by his forward. same to team, the years our to demand station ground employees, implement of for generation the board the appointed has carry behalf forward and for to on thanking honored do a and look also our XXX I'm time, them, dedication, underway of momentum to satellite initiatives positioned

have I am from is paying in quarter year results, challenging, to environment this forecasting our right confident fiscal our long-term you fourth the Although an strategy. can clearly as business operate see space. million next-generation QX valued continue to where multi-year we certainly we received In and off. position strategy contracts remains the that the regard, and that respectively. We market in leadership for a deploy Arizona in operate states generation XXX include next XXX $XX $XX.X of at and Iowa, Key bookings have services million and reliable

XXXX, awarded in significant industry space. increase contracts totaling this a we million. Sullivan, achieving fiscal most share Frost During year-over-year over research for Also, were market leading the multi-year firm, & $XXX Comtech recognized

We earth a also our product position leadership strong station satellite in have line.

a awesome to backhaul customer This a the generation new our in did independent leading firm, satellite a market. recognized this was broadband an Research, and a fourth job cellular win, team Sky satellite Comtech's Northern award huge Perhaps leader technology. Comtech program. of quarter the in multiyear Here, capturing a next of our the as growing contract consulting from strength validation large was best customize

will future Earth current technology on it this line product large station we to launched. orders our to visibility LEO opportunities, earth of can dollars that which of opportunities could satellite billion generation next used Based $X millions new several to hundreds does of for Our large not so pipeline revenue. over of satellites potential customized customer, well Orbit thousands LEO expected be And with have we of believe of amount with be this or include associated importantly, be to customer, Comtech. Low this incremental

and about terms sales direction now me of fiscal million of for an net received ratio very segment were things year $XXX.X Commercial of for X.X% in the wins. book-to-bill successes a XXXX. headed. $XXX.X over performance QX our of to for business Solutions also XXXX, want million Let and I contract on million talk in this X.XX. In see $XXX.X the team's in totaling the strong increase We and orders our where $XX.X year, QX fiscal resulting million in segment, we other touch for

in to higher fiscal achieved segment this in the sales we XXXX fiscal expect we level be XXXX. than forward, Looking

safety see higher to year's than of to lines. generation routing the higher, sales for quarter sales product of location by the and Net in slightly momentum continue and reflecting AT&T. public comparable absence solutions, last increased XXX our the offset call part technology year wireless was next We were sales in during quarter positive XXX

deploy me as highlight contract for increase previously announced this design, compared expected year Commonwealth We under us that some this and position is Pennsylvania. Now to a contract of in state-wide services $XXX let Work growth. 'XX XXX for fiscal the million-plus operate XXXX. wins to next-generation great to

South We next-generation also additional for deploy from orders of and state design, services contract million our Carolina. $XX operate the received XXX to

will contract includes on and $XX.X total state's value million the generation have multi-year of provide extension. fire The next-generation generation program our with at services operate and will same including for award next services to contract communication of design, citizens use emergency XXX core generation calling a the state state-wide handling won This the coordinated ability valued Arizona a technology, our Arizona services. offer centers. to each software police, for a the basis. to included award available cyber first and multiyear Through to also deploy PSAPs, Arizona. medical We that XXX The to new next contract and able security as efficient next contract implementing Comtech be capabilities and Arizona emergency our come. Solacom At advanced with solutions includes a when training solutions, cybersecurity we seamless well solutions system purchase as win responders state-wide hope training contract was be that call XXX of for for to XXX local includes an first to more our the software, for services, time,

We a $XX.X to of valued the contract was multi-year contract state for million. state-wide options million. is $XX award announced and to NG-XXX for extension includes This contract the services provide Initial up also at funding Iowa.

in cellphone. weather AT&T. alerts initially emergency product location, solution our state fiscal of our on location to $X.X of receive will the mentioned been this safety of the a NG-XXX allow following, key has issued and area on as of in for as devices, in a the severe calls, similar Ohio. receive and them public notable funded property that your and contract will awards and government contract a QX do during Additionally, million wireless It deployment contract the to alerts be a include for currently threats alert that contract technology imminent line based on cellular-based Other anticipate wanting prior Comtech winner mobile on selected designated you their life citizens to We multiyear XXXX. with

to operator network $X.X Separately, from operator. software Next, Tier Tier to supply also to a $X to growth we continue messaging another provide X releases US to a renewal in partner application million used maintenance million demand. mobile US valued network applications messaging messaging we X a by received new contract channel received the and the for up support mobile

customer. US $X.X project funding a Lastly, for million modernization next we military received to additional end XXX of generation related

assess, Solacom call intuitive a It an a with transfer ensuring redundant configuration call will wireless solution. recorded calls. solution replay This call will be quickly service interface. turnkey provide emergency deployed see, availability you management user this our customer possible allow as takers and voice and Guardian government highest solution, create will the handle in multi-geo And of diverse full recently and with over handling quickly calls, solution conferences, callers landline, our to prioritize can the determine IP conversations. can takers location is robust. extremely Call system,

build exciting several area. calls, continue safety on data situational prior are As to I awareness to the on working ideally various positioned products customers public initiatives stated our have are for XXX in out and we

a next-generation of cybersecurity a win can for solution the is first other a to common All Sales we response that product increasing of fiscal critical product in In a that vital addition I the network, ensure emergency role are this resources history feeds and the response line empowers have this expected individual and training that information, These growing satellite systems. cameras, you cannot of now recognizing I is information and be solution XXX situations. operators. new are key in more disaster offers customers at a software 'XX, playing caller importance of in cloud-based solution we public solution important public emergency critical nominal from is incorporating security of out or all, regard, critical are operational developed others. system. upgrading This for to points a live first nationwide are the XXX services a employees our that This potential Response. Arizona, to as not to appropriate solution meet want offers but begun effective well. contract scene solutions, up button. the and point do in provide top but need traffic Smart US in this to with the marketing In XXX a believe part next-generation and in and in criminal XXX smart areas, callers rural government's that only program preparedness are in we answering back XXX funding newly PSAPs, on agencies service called investing better responders for to to the data-driven XXXX XXX PSAP service response R&D nationwide their understate

uniquely product for a growing incorporating systems, higher even solutions. users that me the on continues for believe pandemic's this text networking particularly TDMA reported XXXX, SCPC station but will quarter satellite systems. For systems. international point, markets, was or provide ground be models positioned market. satellite call our and XXX station to in satellite sales leader Without including satellite both itself. to last this working on allow expertise in was and updates in the our instance, be were emergency a year users equipment, doubt, systems and this business in At given into that August constitutes though majority iPhone Net its the capabilities our it are public let these for in year, than to a effect that and demand Apple will I end believe we of platforms incorporated by ground on line safety be our large I customer some impacted

the believe growing, in to participation to As growing markets based to are product and very transform UHP's revolutionary we excited for and end small include extended high-speed modems. in has offerings you TDMA it. our UHP's our With satellite of March, UHP the significantly potential market aperture have technology we did our complete Networks we network satellite terminal acquisition know,

force both educating to are a in sales TDMA SCPC We as solutions. sales efforts establish ourselves and our modifying our and leader

clearly just as Our excited are. are customers industry and we the

Despite VSAT awards to announce with acquisition, together modems it contracts of our included a we for our were expect satellite XXX-watt the order multiple and terminals, leading a block X-band our strengthen antenna high-power term. $X.X chain high-throughput converters and offered up strategic TWTAs $X.X them, growth. expanded a distribution for aggregating integrator supply company. system mobile for to in contracts COVID-XX satellite we solutions station for of from example, a million Defense segments systems; the solid-state systems technology For have Kymeta, South utilized dollar to we solutions. the line Ministry following, million because This communication station a TDMA able to ability satellite Other region. we partnership with our our user a by optimization for still benefit offer Asia WAN of the multimillion expands military UHP equipment of long is for believe product and integrated power for our and both partnership both of US and KA-band be earth in multiple government line capabilities ground set from our satellite product our to issues, and integrator base, impact over amplifiers that Working aggregating and transportable

use pipeline parts satellite growing based We to network in remains is continue to with world. developing lacking. areas XG, for cellular sales remote satellite see a and increased penetration growth technologies infrastructure There particularly in strong to backhaul need XG terrestrial of network of due services the

the me million dynamics, segment, turn were impacted year. compared and lumpy million QX to be this of Revenues this flow. XXXX Government segment achieved for million three program we significantly $XX.X Sales troop $XX.X navigate US fiscal in each $XX.X withdrawals this last order in first segment where by other this quarters the slightly of including challenging of our April let in segment US lower the to changes. to government were Revenues expected than XXXX quarter. in Now of continue Solutions as to announcement are

and Comet increased is receipt Troposcatter segment benefit for and the revenue programs from Thereafter, including new expected to higher margin solutions. other of orders the Contact the

net in were with Solutions our represents book-to-bill Bookings were which prior QX XX.X% million, $XXX.X For for X.XX. of a segment million ratio year, of decrease $XX.X the fiscal a Government from the full sales year.

are the VSATs, valued for for and ratio backlog in IDIQ and space book-to-bill in deliveries this satellite the for a I complex contract adjusted joint with existing government were and analysis of EEE our was power our equipment from respect training earlier reliability high analysis expected missions, customers. to cost of antennas. cost high today which anticipated awards X For award the scale we sales troposcatter fiscal cyber continuing full Sales million announced used in the training services, of report year, electronic cyber Comet; satellite a awards large in for X/Y including solutions, future excellence orders This to warfare of pleased anticipated solutions, renewal analysis support those solutions for we $XXX parts and acknowledges and government am the million. $XXX.X and cybersecurity systems, used engineering year at training by at required cost delivering to a training funded joint our including that awarded segment to that are our cyber federal NASA EBITDA developing With operations and almost come joint from programs; X.XX. the contributions amplifiers, bookings many were at operations, U.S.

is of of expect our XXXX our beyond. perform this that receive to for do important we work additional customers. to course the nation's fiscal on continue this and contract funding Given honored one over We're this to top priorities

common the sole we been adjusted in Mike center, relating been revenues and and have lumpy, Timing segment have their our start of the no level have as view as manufacturing new are will in troposcatter demonstrating and for common for this and first we that is we terminals three segment, expected mentioned, had large be optimistic difficult half, a to predict strong in different. that demos said, if, of been for other low Trials customers. the across will are are unusually second but the these instances, segment seeing track. we as challenging up programs our on on year it we we with VSAT it the matter underway, the this solutions our opening we well actively be and the Overall, XXXX and Given other this of costs but are interest for are of EBITDA a not But discussing the needs. UK as several we look troposcatter right told selected and quarters. to and board always That source when. to

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

Fred Kornberg

Thank you, Mike.

I spite some wins headwinds, am in pleased how quarter. very of the As COVID great mentioned with fourth our in business I before, continuing is performing particularly

comfort have headwinds, positions continue our demonstrate positions our and the $X.XX to success team create we mentioned. Directors XXXX near challenging the our and plan, strong right and market confirm leadership the confidence future. close into Despite backlog per record prospects Board once declared the on growth, our with the XX, the right year-over-year business and our of in resilience We giving business. and market conditions, executing performance Our results October share, significant right delivered focus strong have bookings in ahead. our navigated large Reflecting just value and XXXX, our of for outlook beyond, achievements excited fiscal the shareholders shareholders at payable us I significant including opportunities be visibility on XXXX. COVID into long-term with I years November strategy, XXXX XX, again going continuing strengthening outlook, of to developing business our Mike our many of a of that prospects that on dividend of we this term believe our for to common the financial

to of call. Now part to I question-and-answer would our like the Operator? proceed

Operator

Capital with first Markets. our go we'll ahead. Joe NOBLE Please Gomes question take from [Operator And Instructions]

Joe Gomes

Mike, afternoon, Fred and Good announcements. on today's congratulations

Michael Porcelain

you, Thank Joe.

Joe Gomes

as might here, are some a where little most you as it's be to to talked you impacting there, the about past get give wondering, on lot to more might able company detail referring quickly how here. And and So can of you was a these supply you us chain I as much these what you exactly the constraints.

Michael Porcelain

Sure.

few we times. for times cases, and a would the parts our when extended XX of sort weeks. you sort that continued, the We good on sense months unique extended And we in is a West equipment, have satellite ago got everybody not XX so I in little about being QX chips some disclosed as XX-Q lead that something thing call, pretty in that back quarter one manufacturers it's are the XX, the go QX. saw XX, of we Coast. of you industry, sort have of that we some that to XX is, announced our And to things say or the to us. If larger probably in normally to X we lead relationships especially seen weeks of to worse. we've The in saw we good have key that are X the vendors that

we have the put coming really guidance will and pretty chain it's as visibility be out. feel we we to that in, in good when So supply reflected

do our quarters going really the think, end our got And the us, tail to to towards the it's up in year. then part of good a ability the for we've of as visibility QX. come we we the to in ease So and parts coming in, think latter ship

Joe Gomes

in higher of year. XXXX do significant expenditures for you And for you in us was for the you and how what some CapEx wondering if much Thank you that quantify I it kind CapEx should fiscal be Okay. fiscal mentioned XXXX? insight. think could was

Michael Bondi

that. I'll Hi, take Joe,

The specific a of our of expect the over up investments But those we have of releases terms make CapEx investments spread XXXX to we $XX and did going into we could million. that course requirements are highlight to to we In in few is timing XXXX. even that about year, get next plan concurrently. things and that possibly out the today, it

contract over programs won We booked in value that we have and this we $XXX the NG-XXX year. had million

year. year also, great our high-volume that we this this And then to two online satellite equipment sell. new manufacturing the facilities to Comtech the So these next-generation had to are wins investments for that support we're we support ground getting have station expect those that

tailing its So at the amount the but in that, to tricky by that in probably a and QX. being timing see QX we of QX peak pinpoint and do little then quarter, off exact dollar it's

Joe Gomes

in queue. Thanks back And get one that. the me I'll more for and Okay. for

the the obviously, satellite you So quarter, last station announced earth big win.

more initial the of that far. there also, not much results. could pursuing? in you're like there that, opportunities so million company little if looks anything other it talk fiscal $XX you order of the are bit which a release, unfolding project XXXX the through is Was about including how And is wondering outside Going

Michael Porcelain

a Joe, great it's Yeah, question.

I announced of is millions very SATCOM as good where an as the of and thousands growing documents could dollars show well launched can a public fantastic. share opportunities. day because to just the we're a some work to them. with we the I that excitement had we We customer. their this tell could had are things of this tell we're certainly, contract possible and hand-in-hand much we the of look, love I that including you would such to needs ones have a satellites are internally It's with as about customer, award underway and is detail provide And and that of that We're new back, relationships I hundreds could the working conversations with about is expected large of size. has aware tremendous. And So them. and to we best can only be you of when tell that you about are is every could this customer that. meet that you we with hundreds that sit regularly, refer just them we

to related we on when the speak for center and manufacturing to station satellite satellites. only not but we're an expert know, you new best-in-class DoD And Chandler itself. should are At I ground US out the also, to As comes manufacturing. same build on say, military the certainly, our it time, experts a side, in would decision

can have I take we this and good very subject strong with but And that. But you, excitement, at customer. nothing of own but me with share happening, if the offer there's and could about I of I But the say. could to all I data your just to that what think you points you kind dots. nothing am a let So connect nondisclosure best it that's leave things

Joe Gomes

All right.

Sounds good. Mike. Thanks,

Operator

our go question from take Please Mike We'll Northland Latimore next ahead. Capital. with

Mike Latimore

congratulations Fred, on roles and there. Mike new you. Thank your

great. Sounds

Fred Kornberg

you. Thank

Mike Latimore

more? Mike, states like would can talked I or on customer satellite a station kind elaborate services there enhancing on next pipeline in XXX little that the it you that or winning wins? being you're of that this So be large the are in mix you earth on strong more side, others the current guess, commercial gen Is just it about And specifically then there? providing state does the reflect strong, pipeline

Michael Porcelain

So, yeah. you answer I is guess way it just said, to one the part latter what Mike. of

strong. pipeline earth Our satellite is station

opportunities Our with pipeline large strong, customers. excludes our is XXX those new that and

amplifiers, commercial defense is modems, on and business side. basic our networks on selling the satellite strong the of side the So

a see do we So pipeline. growing

our about UHP benefit how offering training the to technology them Heights if network UHP you platform. we're have force, satellite going sales also with the capabilities integrate customers, our of educating our and to UHP technology, will, acquisition, We the we're our of

that you On always think that states I that there. as going say, could And have XXX chasing, well large find process strong. new during you it. categorize if the that our again, underway. this specific customer. so enough, although and on are states pipeline And pretty large these to out I'm XXXX. big we're out several out business, I you'll to our And new could with is our say, do into Adding not I look opportunity is hard orders there point top opportunities that would there we as fiscal translate big opportunities But

Fred Kornberg

Yes.

XXXX? that we versus on I then of impact that the how you last in more little think Okay. guess about Great. terms And in detail revenue bit Afghan any from quantified the withdrawal quarter. withdrawal, a should XXXX

Michael Bondi

Sure, take that. Mike. I'll

to the that going we see expecting we the when that third XXXX. of were impact program and we're terms of other And that QX, into as In troop saw out we're fiscal looking we changes what of did going up least for similar year. later next into margin before roughly for we a the in two the or that right as now, below starts higher what be at we to quarter it moving it's to to programs pick QX, start continue there now that's little quarter at withdrawal bit probably complete into level

Michael Porcelain

can give with to just also if numbers. Mike, look data point you another at just I public

in the the like a but due and quarterly moment changes predict, but for rate them lot difference programs. think get And out to you the is and what programs sudden of $XX in QX, come to And QX but going are of it if second the last difficult use QX is just our the if thinking, on bounce at do better the orders but look to could word other you $XX timing, always in QX, look where and the QX QX, timing QX, going thing, we QX, than predict. million, run us level can average you QX COMET we're again, a at one because the the did you we're of to you sort $XX around to on taking and QX ship the to year, the seeing our impact, it million segment able think we'd in $XX see, we're And we million could prepared came If government QX. quite last about we're averaged in see did we we or less for for QX. year and revenue. look, million million in at cautious earlier be the withdrawal difficult in these we're of million what maybe QX. difference we're terms government $XX the to in assuming said They we remarks, is as about $XX did lumpy half in That view than

Mike Latimore

right. Right,

COMET last on great. there Okay. the Are be opportunities would just well? Just And Got some of of is as troposcatter know, don't a these, international. more little pipeline then sort How activity on it. internationally? I international color

Michael Porcelain

Yeah.

troposcatter came I did were opportunities before and place. as we a get don't the COVID were into overseas. But And in side I call, we sneak in restrictions couple mean able sneak well tropo as improper. the travel them regular we to, where as of in able international Despite the On to opportunities. COMET, there restrictions, are visits something back

those demos are So and source we told were in moving. to able we've some get been overseas we're cases, done opportunities some and sole

it's So both. yes, side, on the tropo

the business. ground the we're definitely getting of one SATCOM the in show place virtually no On part station Europe had international from that The satellite impacted there. took side, on September

was our guidance that disappointment that's little thought reflected but we're think a we in will impact process, XXXX So giving. do the that

Mike Latimore

right. All

luck. Okay. Thanks lot. a Good Great.

Michael Porcelain

Thank you.

Operator

Caleb with move Analytics. Quilty Henry We'll to Please next go ahead.

Caleb Henry

from Hi. Two me. questions

Space some about going one that Development too max. it's know military to, don't kind but of not, Agency their I if or on early talked They've First, think, we're LEO seeing I with own the momentum up XXXX constellation.

opportunity is if if ground impact But with or project. R&D in the So I separate the having curious commercial just equipment on? constellations any interest see SDA from the was or even you're on military's providing any your LEO that doing you U.S.

Michael Porcelain

refer our don't the the in let just what tell space, my and thought doing I'll side, leader from strength you at about I we're want LEO a keep remarks that. be I could to think competitive it but me we perspective. in to the defense

Caleb Henry

on also like from for if even or state If cybersecurity of And question seeing Okay. just military cyber just then this for satellite government from? $XXX guess, about drivers or you're talk seeing other some operators? local you're where come I it's the of just within, my was it's And demand Can training? the million applications IDIQ. and that you if

Michael Porcelain

increased a two Yeah. but It's million versus $XXX renewal, really what pieces. had years. contract in funding of The we've is somewhat prior

the that And we've So to same applied our special year. competencies to to us a optimistic in funding in process over states, other preparedness taken time demand that could courses that we we've millions and public It have we've vital the the and disaster of off do will that a that trained both our to on talking first that hacked deal in in with we've including At XX cyber State contract and basis to we're time, the how cyber contract to to to the proactive we're it, government. evidence the It's months,. we're getting the service business an initiative those part mentioned, or It for the got really help was time our exceed public win, And And been the the safety I be truly of million. operations to were emergency the build to actually of the again. learned the cyber State over and the system. the response on. related It's working it PSAPs as of the as that of training clearly, customers That's reactive offering get XXX Arizona. And expecting new include a mean, basis the our year that and we we employees successful of that product on with. in the market to Arizona it original line are focuses a continue did market. we And is be not relates as the it our last training. I Homeland given we expertise and of contract safety Department could hacked contract government's sure hacked. done of going XXX well. make really we it's that states throughout handle think on with Security work $XXX award by again, is that and thinking course where that multiples

Caleb Henry

Thank you.

Operator

And we'll Kyle with from go question ahead. take McNealy Please next Jefferies. our

Kyle McNealy

targeted internal of And percentage go in much to Hi, that Is how in at management consider and XXXX? to right now to use there from a I UHP is as wanted a see all a Congrats revenue cases total TDMA station which that TDMA your ground UHP. wanted in guess might ask way plan to future sense about your and for Heights I be for you station give how where for on TDMA satellite be the cases as and if us little Heights, of you'd us Heights guess best SCPC versus of quantify bit could luck previously tracking in maybe and the is around. announcement, great. I well and a type roles new mix the ground use I UHP.

Michael Porcelain

side UHP lot Yeah. our only owned there's demand maybe line. versus that early a good a we've Heights a XXXX. read business It's read since early TDMA of maybe and I And of think product the I there's Kyle. market the actually say our our would solutions, bigger March question, is TDMA on for

adjusting would terms speak I a prefer you think we we're to they as Heights. TDMA a of versus know, in customers that solution

And there's more process, terms would to in we'll I thinking than in that. been the that a out. early in me our thought too say that an see swing, X% to but towards Is think have. our you swing for a of we that early just observation tilt how So I TDMA Heights XX% say, that that's plays

Kyle McNealy

have plus of an there as in the mix of you stream that overall UHP Is right QX? your Heights approximate revenue like now like

Michael Porcelain

that, not I at to just rather qualitative want prefer And business. I a comments I portion stick reasons. point, a competitive to line again, disclose just small would the than Yeah. very for of addition. think, talked to mean, It's UHP product quantitative our I the piece. small this being we about itself

Kyle McNealy

Yeah, I what's within will seeing of better? XXXX? second XXXX think it when kind and the issues chain guidance, being when half, it or have that what weigh start your perhaps the the frame so when fair around first year? your about much you the mean, you enough. bigger about talked continuing half like being But fine. contemplated past of then the get should Do to the year? it's supply of Okay. it you we a time on normalize And fiscal than middle that you the for normalize assumption in does mentioned COVID That's as specific worst

Michael Porcelain

our start QX. I will the at think it of be

be QX going And in it. we're humming sense QX about to look, think, we're And we Mike's it's sort back is XX% by thinking you with will. kind to chain our we a of take visibility, about think, thinking you we do terms working In nominal to definitely have things that start our probably to seeing supply of revenue by give be should will going think for be QX, - million to number get if Again, we're of event QX, seeing. that QX, certainly, where of we we're QX revenue. you constraints could we way vendors. $XXX But the to about just in talked And I a up improvement. normal, again.

Kyle McNealy

Okay…

Michael Porcelain

Maybe it view realistic but Kyle, maybe comes a taking cautious earlier, time. words, the view and a same the we're using at we're

Kyle McNealy

Thank you. great. Okay,

Operator

Citibank. Instructions] next [Operator to go ahead. move Asiya Merchant We'll with Please

Asiya Merchant

Mike Hi, and congratulations again, Fred.

of terms have the chain my kind you're bit anticipated Can as what have it COVID EBITDA answered talk of, about most little of you of in most guys in questions each your a in government thinking is been been on now? seeing. that of the the program. without probably disruptions from the supply that guide expected supply was obviously, Afghan would commercial to commercial us Just least revenues seeing disruptions your you your to also relates EBITDA these the about and you here. clearly if But effects EBITDA segment what at chain loss But because, without are could be just

Michael Bondi

So Asiya, this is Mike. I'll take that.

have In things terms going the the definitely COVID of few first respect and quarter, on we to a supply chain. with

seeing are of We that. the impact

facility, our in we're considering a the terms and sure. also, first we're during EBITDA for guidance, also migrating new that half of production to that's We ongoing our

what what say had basically would out months just we been we'd our see margins the supply those of are could in we already, these events. of In quarter EBITDA But to for the with recent I looking issues two terms months, back month. be chain not it it's today historical have where into surfaced next minus sort

Asiya Merchant

know fiscal you generation a think heavier 'XX. flow should in CapEx Okay. about talked 'XX? How Mike, percentage a about of I flow, terms cash cash of as And then revenues in fiscal cycle I for

Michael Bondi

Yeah.

the thinking flows cash do to I in a we're normally strong we the from early give year number. have for think full operations. precise it's year a But number, as

receivables see leveraging the of we of collecting in and sheet, rebounding our balance quarters the So first couple things year. do our

our we think and from operations cash together, normally expect endeavors. investments that we support So throw traditional to I when boil we would to other cash it see do and flows all off CapEx

Asiya Merchant

Okay.

So you wouldn't on additional be debt taking any here?

Michael Bondi

facility. there Throughout we that our could a is likelihood borrow the quarters, on

levels in we to where the incurring cash of existing I back frame 'XX. today as more facilities FY maybe and throttle to QX, to build be have we'll see the higher QX well end time towards think see it's We that the down But our out as levels the support debt, we'll that NG-XXX then of we're facility going the to on projects. investments room

Asiya Merchant

Okay, thank you.

Operator

questions does It this there time. are appear further at no

Fred Kornberg

speaking Okay. Thank we And again again forward today. in you for very much. That look concludes today's Thank you with joining call. December. us to you

Operator

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

disconnect at any You may time.

Comtech Telecommunications (CMTL) 5 Oct 212021 Q4 Earnings call transcript