CMTL - Earnings call transcript Q2 2022 | Comtech Telecommunications Corp.

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Operator

Ladies and gentlemen, thank you for standing by. Welcome the Comtech Telecommunications Corp.

Second Quarter fiscal 2022 Earnings Conference Call. [Operator instructions] As a reminder, this conference is being recorded, Thursday, March 10, 2022. I would now like to turn the conference over to Mr. Telecommunications. Comtech of DiLorenzo Jason Please go sir. ahead,

Jason DiLorenzo

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

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

Michael Porcelain

measure the first the XX.X% to the financial and Jason. quarter X.X% sequentially Comtech Thank numbers. second lot first, Adjusted million, afternoon, first was about. up talk from sequential us for $X.X look increase headline quarter. EBITDA a everyone. sales And got But at good have today. $XXX.X you, Thanks for from million, consolidated non-GAAP We've quarter. joining were the let's net a

of referred $XXX.X the XX.X% as X.XX. to increase ratio in resulting million, New from a a were book-to-bill also bookings first quarter sequential orders

backlog QX. end ending million was of to $XXX.X compared $XXX of as QX million, Our the

total plus $XXX is We the generate and visibility unfunded from Our measure despite approximately of our which cash backlog we visibility flows cash expect making have did of revenue operating contest. that payments received This million for proxy multi-year certain future revenue million from And contracts value $X of sum almost $X.X million the we we as billion. our settled of orders. $X.X this activities.

showed second fiscal and fiscal consolidated improvements and quarter Our XXXX adjusted results sales sequential versus bookings net XXXX. QX EBITDA

these and bit, it, we our Mike fiscal Finally, of have million. a are but do and financial a revenue shooting EBITDA discuss comments $XX adjusted we XXXX let of targets the wish in although I me more first, $XXX business for approximately to changes didn't now million add quarter environment. and and will Bondi lowered on few

going matter on and armed strategic they that our air, or and finally, can growth sea governments matter of our conflicts know fiscal on to rely safety This for see satellite and our role of call the new the significantly XXXX at product and deploy position Both and board plans Comtech, independent lines. as as natural was now next two to no generation Communications will took and no market on end a to grow cycle Comtech the are term what's infrastructure in we members end next line, at on directors, new communications to to these beginning product and what in continued over our communication years. quarter XXX expected year second our upgrade CEO, includes are $XXX further long public solution I are leading markets, several we a proceeds a space the clearly from key of outside welcome we businesses people, disaster. of the investment. The markets they are We provider transformative solidify And the critical million Failsafe the investment where land, market. two

For more so But change, Comtech. highly manufacturing as than communications equipment. and years, DNA market developing did reliable was Comtech’s XX

several generation customers under past DNA solutions place to other leadership work Our more conditions, evolved and solutions. in safety has require next to the wireless operators, data governments are sophisticated defense enterprises strategic the include invest our time added technologies, and that who public communications most every such initiatives. software With our and network public XXX new transmission flexibility providers, in secure cyber demanding as training agencies significantly years, in and over safety and mobile and

Our as and evolution look we are optimistic continue will we ahead.

in are short appropriately uncertainties believe Although, the we our term reflected second face are we our that and of XXXX. challenges updated in we half continued We fiscal items optimistic, know these guidance.

and repercussions the Ukraine Russia significant. military are the instance, of between conflict For

are For purchasing such directly customers short-term real impacting equipment. of systems, as in priorities Certain defense Comtech, is our and conflict in now sales worldwide the equipment instead began European anti-tank being war-fighting of the elements procurement geopolitics. US and war paused to reflect troposcatter and missiles, have adjusted other and changing defense deployment current and time pipeline. of satellite budgets The budget communication lethal

supply. as include are benefit inventory world, of in cooling parts new companies our had fans a the certain issues, other delays. waitlist cases, demand and prices doubled, like supply around well costs the conflict in and getting have power on many have as the of we the and months, opportunities some uncertainties have up experience supplies. as an components. some And for component are freight cases and now like depleted around trouble our are stock past suggests On and quality Component that we XX% hand, constraints types create In different shortages several new for we working approximately from that Comtech other will communication solutions chain and uptick we

only slow distraction proxy more unsolicited strategic are we the a just and leadership while and powerful it, offer. are require organization an emerging Finally, events a and from time focus execution. we from drawn-out These stronger contest of and acquisition for

these level and our turnover, the solid stress their Comtech bottom uncertainty our performance use despite of competitors some did that a to higher contract face and quarter a employee financial in during some challenges, bookings and exceeded lost them. experience were second delayed, company the quarter, all short While term achieved wins of we line Nevertheless, we cases, expectations. advantage,

CFO, these Bondi come Now over turn details little provide and for a will some me of it and Mike our on back I more let the more quarter, remarks key developments. then

Michael Bondi

time closing fiscal the Omicron surged, an quarter already join our of XXXX. fiscal COVID-XX line expectations strained below shut which for the arrive our up further Thanks fell were XXXX delays and with and thanks use declined parts. strain All we Mike. today. them. taking to in XXXX In X to suppliers production again, in call, chain. discuss for earnings quality supply standards, the everyone expected shape Mike reasons did the believe parts, deliveries our following to why starting And December was and our second down to cease Certain Immediately forced we us

out quarter QX to sales, of time, with in in thinking As of get But we results shipments EBITDA of millions bookings several door. the a line nevertheless showed our vs fiscal result, unable adjusted the XXXX. dollars second improvements and were our at

which solution QX which program QX our to reported consolidated fiscal slightly thank of our Both of the consolidated to with activities sales achieved the net related $XXX.X US XXXX, other the were we in million year sales government and The net changes. roughly sales quarter, But in from $XXX.X of to associated segment, reported our were customers. Compared Afghanistan than were revenue commercial XXXX. of million ago million US million in customers million XX.X%. higher than $XX.X field the and sales, balance recorded fiscal segments revenues in XXXX. withdrawal XX% based or two QX troops reported majority were $XX.X lower $XX.X international large solution consolidated and Of lower of support QX For declined in segment. fiscal

product margins was XX.X% product the Gross than Our of gross margins we XX.X%. sales, as or XXX generation the From of SG&A operations. expenses line. in perspective, talent. decision QX as This costs in mix, consolidated in were well XX.X% our million and new costs QX XXXX. improvement SG&A of achieved more for $XX.X of our net markets labor of improvement and tight SG&A of restructuring a to continue in in profit existing was $X.X OpEx both include invest our next XXXX favorable in streamline expected first from quarter million, related also fiscal to lower reflecting reflect an XXXX XX.X% to warranty and XX.X% or costs QX of million, sales. move QX to $XX.X

unexpected with make of $XX.X expenses were R&D R&D investments. levels. consolidated or million R&D These in the million, long-term we X.X% sales. side, in XX.X% continue $XX.X generally were line On sales. of QX XXXX was to net or QX investments

$XX.X this it CEO settled net costs, $XXX,XXX million of our and contributed GAAP cost. million of leadership related relates and adjusted proxy a will million roughly $XX.X segments, COVID-XX Government quarter also to roughly EBITDA. our million for sales reported transition of XX.X% includes and operating loss charges $X.X net incremental million, of of million, we including EBITDA. million of solutions adjusted contributed Investors Solutions $XX.X of $XX.X operating As restructuring to which $X.X $X.X that commercial note contest, costs XX.X% of sales

was common or per earlier letter Looking loss to our share, common or shareholder $X.XX the reconciling GAAP $XX.X per our shareholders can loss in line, share. net attributable QX a diluted loss QX net Form to common be $XXX,XXX, XX-Q non-GAAP and today with at financial million, bottom our loss found GAAP our SEC. Details in diluted measures filed was non-GAAP and the $X.XX

were prudently. was And continue QX, by activities $XX.X equivalents Mike sheet of XX, and our leverage cash secured manage January as operating and We to was million. million ratio cash $XXX.X said in million. Total as our our balance generated outstanding X.XXx. was $X.X debt Cash

Although CEO of as incurred contest. the pay go we and during the a we off second transition costs proxy half with the debt will up lot

given flexibility the have sheet our October. $XXX We balance million raised in in

a about up, our to call Before to few Mike make the have updated guidance. to Porcelain points turning wrap back I

we our forecasting As calls, is in reliable discussed challenging. prior conference

military uncertainty the set conflict geopolitical and of pressures. a quarter, the in created During new Europe Russia Ukraine

remainder For was communications of XXXX wireless we European bookings reasons. be still and for second systems that and specifically us us, has fiscal to Ukraine. troposcatter the deployed revenues to expected Funding associated the for effort during to immediate to fiscal it services are by intense and were we the COMET impossible and going for which to communication Comtech orders these as disclosing Despite expectations related COMET US country, an obtain awards defensive have originally the of had, This funding systems and country of related our large to one amount has in need now ongoing half predict these both immediate changed provided for our dollar or XXXX. satellite the systems, by deploy be for other become and government. now customer timing for with

million. awards and businesses, targets we aftershocks of and logistical for the a been chain space communications Additionally, These other expected tried of temporarily many the will has $XX customers. decision these in anticipated we priorities. for approximated cycles to pandemic customers, and possibility targets. revenues as for book including are global disruptions aggregate supply that NG-XXX affect of delayed continue items impact and and updated supply are fiscal or global no and changes customers, we our about pricing of the have ship the our expect amount purchase our other it Also, chain programs, to our opportunities on to impact second in adjusted funding extended half The EBITDA pressure as spending anticipate delays as XXXX, shifted to And execution. or adjusted COVID-XX component our defense we XXXX thought availability in have of constraints that to account fiscal and we and costs. aforementioned longer result continue as Like satellite well our to disruptions

We are also considering Russia. sales to no new

which of to with expected revenues million items issues, half a sales. $XX XXXX of we $XXX around of EBITDA occurring million and $XX million, XXXX, quarter. in originally including large QX. occur fiscal X.X% pretty revenues fiscal no respectively, we longer of targeted of are these our approximately up and the of Adding As with adjusted expected remainder these adjusted second was EBITDA the revenue million fourth of adjusted $XX in quickly the and wind together, expected our are majority revenues EBITDA be and in QX’s $XXX to million or result

respectively, quarter, With While turn, we in to Heading these do QX of reliable a any forecasting and our for percentages third Mike targeted time call we believe half given let targets that have backlog. remain now at the XX% were challenge, QX Porcelain. lower. our XX%, revenues the approximately are into the return second our Historically, reasonable. and me

Michael Porcelain

to I the questions while the some long-term services talk get Comtech the to doesn't has opportunity one comes bridge achieve we'll takes We Communications And in right time positioning plan. make future realistic and improvements our of to making But a to soon. the Mike. some to having our the our how now. we're represent about that sure between We easy, us Thanks products distance that the it to resources But I ready. know a When right physical like it channels we're I'm capital sure invested Failsafe products, both wanted and vision itself more to is to to for we're selling markets. future company our and the the thing, human right view person. need execute right success. against making and another. come a the the in of customers them Change and to is company in right think is

call scalability. build next seen in our it infinite have full create networks and sea topology will We're announced may This its picture. opportunity any agnostic communication using satellite interface or ELEVATE, data on VSAT that is interfaces most through service is directly a energy, common comprising by enterprise of about land, and constellations and it improving size functionality these securely as scalable, private, agricultural, response or professionals operating the an responders. situation. any public with software or reliable we user and RapidSOS that any next developing platform, Together solutions communication to with a will Internet of for XXX defined links we new safety that flexible air a ELEVATE, reliable the XXXX, because product networks platform. and in SmartResponse are competitive And of excited data other VSAT to edge. emergency defined SmartResponse at Communications. lines. our our RapidSOS incredibly data cases satellite that launch have customers is can or that been lifesaving and the solution as emergency we with generation any in The emergency geography the product APIs. the announced that of customers needs In You an new the compatible private March use platform mobile, now information, so we a with programming system emergency for of completely available available, interest data give is land, most platform and our known with the and enable Failsafe any generation use response of dispatch technology offer recently that multiple routing, Department spanned data increasing everywhere, handling fast providers a Transportation cloud live reliable. and centers Comtech where single location weather called industries communication application believe into traffic, combines secure arm camera ELEVATE that native aerospace, our proliferation of and future points the information solution maritime, performance government devices community, communication will time Things accurate In application edge accurate a with ELEVATE works caller first to feeds

other on initiatives. some to our Now of

based for Arizona. investing South next have out to While support the continue XXX contract computer This do our of states Pennsylvania, future, building significant we making previously and expenditures will announced been and includes Carolina generation wins and in so. capital networks we been to judicious we've our cloud

continue connection facility also other improvements new investments in investments XX,XXX will and with our a of opening new will in capital Kingdom, we locations. Basingstoke, XXX,XXX square in the United foot equipment making also foot facility a of some establishment building Chandler of the We in and other in square be Arizona,

With extended manufacturing these by have property, expect issues first XXXX. are other spend initiatives, next support $XX.X in broadband half investments the expected to approximately chain have respect $X.X schedule, satellite original and supply we million and out fiscal plant and equipment. to technology operational build for fiscal generation should XXXX. of COVID-XX Although so we In in early production million our far be capital centers spent to both

the reporting. lead the investors segment Comtech. way we with the is evaluating intend way are customers We're I present our the is to market initiative Another and to way reporting itself in the change our sure as segment to and growing make aligned and changing, businesses want and we them

way particular of we a are EPS. present focus the reviewing with We also on metrics use non-GAAP non-GAAP

markets our to to when historically And compensation changing have stock-based calculating non-GAAP done are not them EPS, in to companies difficult makes this that of us EPS results it informed this metric. for Some competitors. investors and seriously our intangibles have compare Several amortization difference eliminate we new so. we evaluating

This the During achieve invest we allow continue of activities, and expect social we brand, to in visibility, also marketing, fiscal our us longer-term includes half initiatives will our new and second people. XXXX, believe to media to goals. business that other

Our talent. in bringing investment it important, invest continuing our in and people to is on means new and employees

some of So I key exciting and talent searches the far, areas very ongoing entire in new hires around welcome have HR, other for the VP active new we hope we shortly. new to company. announce

shift, announced here XXXX, Canada. first allied governments which agile platforms and example each to was its VSAT and our transforming as have Comtech’s establishing January business anticipate of want own meet conclude questions. to improve contractor, we a formalize how emerging to increasing As our major focus the will a also that stop and unique of by exploit that organizational and organization, But serve the I'll collaboration defense stating most serve I to Innovation exhilarating Center appropriate and end an our remarks on to prime renewed This business This new are of a content. for two will of which ensuring needs effectively. and ourselves is a the on structure in prepared It changing structure, markets based nimble opportunities. for growing have we're time this really creation ability also and for means companywide customers. my US is means units, XX, we

in we're everywhere Our for advanced markets, new they all believe transforming our Communications and strategic investment with in customers alongside them we transforming infrastructure. communities a governments well, Failsafe leadership, investments and significant and Comtech, put technologies are the next need significant generation, make as initiatives, leader position. our their us technologies capital that

We ahead to of long-term our look dividend to at record shareholders XXXX a in common of confidence are $X.XX this of business optimistic, as payable board again future. on XX, May outlook, on our XXXX. per directors the a April the business our XX, we Reflecting declared close share

Operator? questions. your take me let Now,

Operator

[Operator we'll with move Instructions] NOBLE to first And Gomes Capital Joe Markets.

Joe Gomes

afternoon. Good

control. is Europe detail maybe times, positive experience are these lot So that you right things suggests you about for give you've that now a mentioned obviously that or operating that your in more Mike of a where occurring or color environment, past? types a it us guys, in you examples the tough of could out couple wondering of way little seen following issues a a if But of your guys’

Michael Porcelain

the mean, for We are now. situation Sure. really million of The ongoing present. talking probably to itself if matter, on is occurs over parties you guess opportunities of timing $XX get now about difficult situation there. that revenue how logistical obtain but at conversations communication actually there, Well, took not growing. destroyed. equipment infrastructure right approximately about No that's But the the we're the forecast has given or country there. depending Ukraine various of going opportunity an the it still outcome look what's I I'd the to to be funding There's of rather the the past, been Ukraine with XXXX. is and there our out ability talk I extremely

situation be, upgraded deployed that. And the So would satellite be some I like happening our systems satellite of to troposcatter about there again, the our think aligned for terrestrial is future with sort be and equipment systems, as able need you say what's is a that's point. perfectly example And to will communication communication now. an deal something at that of

provide of in techniques do US countries think the weeks that competitors satellite software And one example and the saw occurring. sophisticated of a lot our will technologies I jammed. with our those we and two things from news headline of is a was that another and allied in government last you and prevent components some really the some major system that

becomes satellite So important. really again, I is think communication

for Failsafe believe You with look to you Musk over our Communications, saw to continued terminals out, guess as that I I'll going Ukraine I use the expand that demand in see Elon communications, new shipping to you're it. I but think buzzword what really

Joe Gomes

there? lot that. talked for the the of that side update you in in you can't the us contract terms station, the give you just any And the thank name contract, talk about that can ground in satellite Okay, you've of about a other us where but award? give And what can past space you that

Michael Porcelain

believer We're to specific out there. we're have the I We're We're provide believe right use our the you I the of the you, that with Elon again, these could types customer, I out way need I point satellite heads markets our it, you going I'll demand, generation are I can't as We that on our the see facilities other best talk down. grow. Musk agreement satellite given building next working legal update, give it. that to think anything will out a the any working. technology. but saying future just we big example can't of guess systems We're broadband to for than

Joe Gomes

of a term the type bid you term? longer do of I you'd you that this book-to-bill one. opportunity? especially that looking below do short been Okay. back see book-to-bill think that mean, you that get couple you're in as pipeline here, it's past think year environment, Or one out And the quarter’s in over

Michael Porcelain

answer perspective. book-to-bill and the backlog we believe exceed will that we QX, QX on from Well, expect year, our based we actually still pipeline, close. it'd say we, our have be is short the QX. in and comes X.X QX I opportunities some our to what for Where that difficult But in the orders a think going pretty grow still to in to we guess is do large nicely bookings

I the us, fans think, it other be have is again, issue these supplies, for and things things I cooling company every get were the out we we, Some power that can like mean, to ago, suddenly door? of just up. going available two months dried

the we the good So, goes is feel everything answer exceed thinking pretty X.X, still about we'll yes, we're book-to-bill, we short think if way it.

be approach. But exceed that's trying target still our We’re thoughtful X.X. to to in our

Operator

Citigroup. Asiya to next move And Merchant with

Asiya Merchant

Great, talk year, thank a you you. there. just were margins then for SG&A in the lastly, And this for little look just revenue side it investing. elaborate to ‘XX. second you of on And on more kind the margins bit ask for you on the are a can for positive expectations Thank just can Can I you quarter. was guidance guys elevated that? And surprise if this model. the of is cash what elevated said expected had just than that's your the fiscal of If at you the And in are remain opportunity. as what I the level, about very half much based gross outlook you out, the flow things, it

Michael Bondi

that. Asiya. This I'll Bondi. is Hi, Okay. Mike take

been asked half sure. business QXX, in more did would be margin terms in range that that question the in year, warranty have see so we the the would product the some range terms even we the In mix we a have a uplift us imagine we commercial shift of also first something you half. still the of continue we But And of in to improvement to gave that XX% mix there. would second second that I our of quarter without the better had as that's about in a in for reversal in as

stock-based second being question point of just your retiring G&A of in quarter. would SG&A have terms our I terms compensation, did want In terms out elevated, this three we and of directors in to

about So $XXX,XXX G&A did have we of cost. incremental

EBITDA things the at though of some carrying are we're terms But rent had in So to progressing you nicely moving also building we restructuring facility costs, we're getting look the restructuring costs there. out that's duplicative related when the back. to additional added as Arizona, as facility. And

that that hopefully answered question. of the part So

about I terms flows of another guess when we'll our it of of into in that we the between is charges number think everything In the that expecting numbers, we're collections obviously, million back in this contest, back had somewhere proxy $XX $XX I as cash subject one-time namely as timing the QX, year, it's for cash. year. at things that. you of payments into for account, But for the think And expectations adding to well be take you CEO taking making, consideration, cash in when taken quarterly as and the point the million time, $X million cash and the transition out cost, like

like about thinking be $XX really $XX could you million. million So to

for this year cash at time. be that'll terms from outlook flows of operations in point this cash in for So our

Asiya Merchant

the XXX. then just And a generation bit great. Okay, on next little

just If you that the in there? I correctly like bit noticing you investment my can is the can you. comments that focus there? If elaborate on dynamics that, Thank competitive bit a is Are more competitive little something if you read a requiring space? little through dynamic that more on

Michael Porcelain

Sure.

on people because and the landscape, a satellite the is bit frequencies such to along anybody topic after throughput of it a of with a that's you frequencies, day, bandwidth that now, as band, high of satellites. is coming and talking sense out band additional my of higher think V the HTS the in go satellite new launching right there. new there's I and whole at spending about LEOs There's least world speed bunch, if people competitive will, from little that are capacity that a of need pause that though,

to to be go figure their which with customers they're an Are are to to going buy, going open with trying system service. out what a to they we're that some they has do is going an we continue date platform? provider, platform? open to network, we'll as and everybody they Our to serve can to going closed been So we're want to are going be strategy be independent

think, that for we did And change as defend this perspective. old the to they own And Leo before pause, and platform. that's world we our causing need little our TDMA as look you an perspective, our their you back to of I a if in things. to systems that's people in go so we're to that's XXXX, provide the as on of the we acquisition these some didn't our have And think new opportunity, are chasing a of technology there from to enterprises after field all market us overall of that TDMA and conversations think UHP. I I pressure again, So around very and bit because will, upgrade. had viewed my launching sort playing platforms, people of entry the from pricing, at competitors when huge competitive there's marketplace, why of go the it, And back out TDMA Other base installed Comtech the we into going satellite sit networks. we a

we as market what positioned well, SEPC we and think fair our technology so TDMA best in modulation than with as breed would more and our breed combining the best share, techniques. And the we're gain the grows. technology to investing be of are I our long to consider We say it in platform,

and launches, upgraded. So again, as systems Leo as these get

But about my back the I when there's delayed things of now I that has or was thought but to Omicron think things. I little to talking helpful, clearly are think a The still we're is in I that's they as that decisions a that everybody slowed it I'm just COVID this the is a coming of guess if in everybody and environment know do. industry. growth down, don’t there's viewing pause. still color. again, way bit going see right pause making the overtone from people seat. really the it been that's what want But

Operator

Research. Chris Sakai to next Singular move we And with

Chris Sakai

I know changing have budgets. affecting the questions. prepared and because guys some war how it in had to And this you Russian remarks, seen their how Ukraine I just you? mentioned, your of wanted I afternoon. good you already ask governments is Hi, were

Michael Porcelain

that obviously, specific is And, of we've that Sure. UK the equipment Ukraine news, things. mean, it. missile, mean, disclose not Ukraine, how directly missiles. COMET seeing but is include from of tracking I is a the our not other customers. government. It types the you're of reading we're opportunities, government buying the Javelin I the number only would stuff the been customer US lots in to with And again,

So that's our that an to where for stuff got supposed was go stuff example shifted. temporarily

Chris Sakai

-- I then, war to And have will expands this guidance sort guess, Okay. that of, I sort and analysis was I guys some done to of your something mean, how revenue will to or much going sensitivity you mean, see forward? affect

Michael Porcelain

talked of year, able earlier, going the X.X. Yes, live. than right the to as out going more to we we're second we're we half our be watch now it play think I book think to perspective, from Again

So my increase the plays wars how come been process. out But satellite some lifetime opportunities it point of seeing all at we're through in it's here, you see again, the but we least, have will we'll in, in if experienced, an to the we've resulted always look communications, live. that that at think at during

something every though that, being attacked, I the cyber-war to perspective. under from emphasize not it portion XXX that's systems is same time, being think about I then in day, business. mean, you're the of XXX a and So reading

So and talk customers in to to talking the help work our and have services a them we how we we're of States, them and that United as that, cyber-attacks. about they for could how help networks. with some finding major that XXX customers are protect their stuff best increased states prevent being us system And given the we from to to need like do them our the

just types I examples from. of will think So that benefit I those are think things they're real of things

Chris Sakai

are board? on comment generation the we out Okay, you -- states the or hop to next systems, expect I of, more out great. I can the do you think of on head XXX you as mean, these then guess pandemic, you'll seeing And hopefully,

Michael Porcelain

contracts, initiatives that number very our the is legislator support. customer have is a that There's least we call, that it's fund I And signed guidance bipartisan that backlog do we're last are not it $XXX we a contract the working of but types mentioned in very is of north won. and second that to new for are to receive of working to a It's funding things Ohio in funding. in the be that going Ohio. size We answer our and will Yes. and has public more as to certainly one those got contract. our to through, difficult is our a smaller and in I'll It's It's Ohio I with conference where we are are does opportunities not, is we've another the This than we do, fund as the to million. with of second predict how but if making there, contract forget contract, hope of do. say, at a the half Ohio, by actively they're government progress of, fiscal increase out still our lumpy contract half think knowledge. awarded and contract end not that state question tax other and that assume much to us fiscal well they're XXXX mean a couple expecting but short of XXXX. I funding about

Operator

our And from Chris we'll Quilty question Analytics. take Quilty next from

Chris Quilty

Mike. Hey,

you've that in the done the heard of some issues increases. mentioned competitors month price had chain something last that here, supply several You are considering? or of I've Is that mentioned your

Michael Porcelain

little part was low and question. the I us that first a it for to apologize, of Chris, hear

Chris Quilty

that considering over of was saying issues that just calls chain on last that's conference the was if month something your doing? prices. talked supply I I wondering raising done, And you've same fact competitors about their the or they're have several and are that the

Michael Porcelain

the answer would I latter.

We've There for in backlog. but flow items to it, new our but haven't committed we for done the prices future our anything price that and we some quarters, been P&L of increases have haven't in obtained contracts have actually we will We are that that that and the through it we've holding done considering been yet. have yet. been few a

cost product One our product of for UHP line, the of instance, benefits low line. a it's

purchased it answer always that to But way dynamic. the think they but that one we will like scale it keep So want I done we we smaller to Because up we felt our buy that we TDMA prices. and haven't we across allow will the as could short back enter yet. in look, such reasons And was raise to we need to. is of when XXXX. to the the in then platform, And customers anything a we board can, the market

Chris Quilty

commend on letter. the one, for shareholder I And Right. you

I as scanning Can down I the twice. mentioned the you're taking million I revenue time just before million letter $XX side? saw to was think give use the that's some information, the call. guidance that down looks on of breakdown came through point, midpoint of read format. $XX And where a could Lots I you good like a the more it by to revenue

Michael Bondi

Sure, Chris, this is Mike.

budgets. reduction, defense million coming things we're stemming $XX thinking is and the million of terms $XX about from it Russia, from Ukraine, In

in $XX and and looking seeing being time tray, at other commercial we're with our the the just million more next disruptions but point more we're supply is change in QX, and driven to QX. space exact timing almost QX this similar, like in as two overall, uptick quarters, The at

could being in current with say the quarter, QX So QX most of quarter the is still. the reduction, peak you

Chris Quilty

And station you I it past, looking the or provide? kind down and your of change Thank earth But in know you're up was around trends, you've any there's reporting. broken you. whether the out and to business language can details

Michael Porcelain

I year. of chain to you look station our take in the segment, really that XXXX. commercial course But significant that, a seeing we're satellite say mentioned, supply I the versus replacement. stuff, Whether marketplace. like because to a to that's our going this our is withdrawals. most and and I minuses. is But whole business a I due And year, in of earth our not to versus because at Afghanistan mean, the last it's going down, in of answer X%, Mike as obviously issues last our is year some I'd see year-over-year component short think with business be station at had Yes, going or guidance, is as down the when revenue of down the of down versus be government slightly portion that's think down. as progresses, pluses the earth point COMET And some there's we'll that, as there now segment X% something lower is being be satellite

doing get supply we'll leave And the and year. us businesses trend will next hopefully COMET to chain reverse Our those that as generation in be well. is issues I next think able

Chris Quilty

replacement sticking and the for only Height product with Got old? is years from earth station, ELEVATE is the it the or line, separate a it which is a that couple platform,

Michael Porcelain

it's very pretty necessarily of I for are taking, is to the we fully we've smaller the something high, got where more point we that It's say way think XX,XXX that very XX,XXX. would want on the scale side the campus, system. is I to really separate powerful networks Height describe it would - to developed not be. really it's guess what It's Heights it really Oh, for

is a technology the of doing with create develop house, we're we able new line take of that what So product we're Fidelity. sort to that called expertise type our in and and

And so right. over some compatible backward be of that will time

as interested there's doing the some does. there's to that does very sophisticated So going customers It's have Heights have government that in international out well need support exactly some customers what that to very, We system. think but we're a And Heights, system many it, them. a there customer. a customers for as very continue that

what product So have the Heights we line. taking best there. product, be new on. is for It's And a But to ELEVATE that's is brand really new us, a focusing breed going for out we're there. product brand in good what

Chris Quilty

And Haven't XG on I'm about platform. the XG both you new impact station. question are much final earth the PP networks talk designed and of assuming And into capabilities heard of the those standards.

Michael Porcelain

that to Arizona What say we're I space. in was I except would just talking about don't the say pretty want say much, to visible I in to it. XG you And is,

things, And location have to lot a in don't in share we yes, business yet. the we in the I as what some plans particularly we're but our dominance just has with itself side. want space, XG on thought Our of take there, working our location relationships

Chris Quilty

heard theme frozen at Final on cell your I the song, question phone? the was

Michael Porcelain

I'm sure. not

Chris Quilty

No comment.

Okay.

Operator

We'll with move Capital. Latimore to Northland next Mike

Unidentified Analyst

is And revenue? added Aditya Hi, are your of Could percentage Latimore. your is what this you technologies? you me seeing opportunities on XXX some business of recurring behalf XXX for international tell Mike

Michael Bondi

call part the the business, it report is two we've think XXX cover good level on don't nice Those anything in if to our that recurring pretty the a cycle, we be contracts long-term routing been something contracts upgrade portion to specific. of especially we recurring, phases But are XXX about sort tend I'll have of first them. Sure, types about revenue. their That's XXX those side. revenue, the watching, of

X, First the X, years. is the recurring X then contracts you get implementation into phase. And once run those usually piece,

we've fall can that that the And So question? a the in terms category. good recurring into second business portion the of repeat NG-XXX would question, you just second of won,

Unidentified Analyst

International opportunities, yes.

Michael Bondi

Yes.

full in do area, we, Australia. remind in you, that handling just to I think we

triple also We've in do been handling have work Canada. work do zero. also up winning some We in we call New So Zealand.

putting in in cyber and call more networks a solutions. upgrading So hard handling cities the lot have Guardian Canada, robust of their been to Solacom hard, in

there. those type maybe a year to And contract look are on. then we've renewals bit inroads we been get of as well, that little one upfront implementation, making two So contracts recurring and good period nice or

Unidentified Analyst

particular Alright, color acquisitions? year? have plan if can That's you also you this an give important for on some

Michael Porcelain

Well, back yes, for raised started the $XXX short about we're cautious think in market a But million yes. reasons very being that XXXX. is we We as probably the of whole. the I October answer

of going on the in light to out proved the us has that it's that's sheet, intelligence in provided balance sense of time we, think I in everything the investment really world. our flexibility

turned So I just think a just fantastic decision. that to out be

interest see the same capital are but pricing in for at can now you're is depressed seeing availability difficult, time, the you As some rates increasing M&A. and

our down could as think, a result these number securing backlog, have conditions, one come of that look we has on the through the I the And moment things say pricing, execution growth market look in the positioning at side the along, that we flexibility sense. the really year for six all would for when makes the we the prove but some going maybe my you us into and is M&A itself. ‘XX as which of to something of it, So focus if opportunities to I to half company months. Yes, have next for comes more certainly next we But XXXX, be that by do that's focus chasing, are attractive second it. advantageous of

at to So the that's how questions any this does to further now I'd turn presenters no appear answer your are question. it there I like back time. It would closing for remarks.

Michael Porcelain

speaking Well, everybody. We you want everybody Thanks us okay, joining again June. to thank look I for in today's call. today. concludes to really, forward really that with

Operator

Thank call. your for today’s conclude does conference participation. This you

You may any disconnect wonderful a at afternoon. have and time

Comtech Telecommunications (CMTL) 11 Mar 222022 Q2 Earnings call transcript