FORM 8-K |
September 27, 2017 | 0-7928 | |
Date of Report (Date of earliest event reported) | Commission File Number |
(Exact name of registrant as specified in its charter) |
Delaware | 11-2139466 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
68 South Service Road, Suite 230 Melville, New York 11747 | ||
(Address of Principal Executive Offices) (Zip Code) | ||
(631) 962-7000 | ||
(Registrant’s telephone number, including area code) |
Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Exhibit Number | Description |
By: | /s/ Michael D. Porcelain Name: Michael D. Porcelain Title: Senior Vice President and |
• | Net sales for the three months ended July 31, 2017 were $147.8 million as compared to $152.4 million for the three months ended July 31, 2016. |
• | Comtech achieved a company-wide book-to-bill ratio (a measure defined as bookings divided by net sales) of 0.90. As of July 31, 2017, the Company had backlog of $446.2 million. |
• | GAAP operating income was $14.8 million and GAAP net income was $7.3 million, or $0.31 per diluted share, for the three months ended July 31, 2017, as compared to GAAP operating income of $7.5 million and a GAAP net income of $2.7 million, or $0.14 per diluted share, for the three months ended July 31, 2016. |
• | Adjusted EBITDA was $29.1 million for the three months ended July 31, 2017. Adjusted EBITDA is a non-GAAP financial measure which is reconciled to the most directly comparable GAAP financial measure and is more fully defined in the below table. |
• | As of July 31, 2017, the Company had $41.8 million of cash and cash equivalents. During the fourth quarter of fiscal 2017, the Company generated cash flows from operating activities of $23.0 million. |
• | Net sales for the fiscal year ended July 31, 2017 were $550.4 million as compared to $411.0 million for the fiscal year ended July 31, 2016. The year-over-year increase in net sales reflects a full year of TCS operations, which contributed incremental net sales of $147.1 million for fiscal 2017. |
• | Comtech achieved a company-wide book-to-bill ratio (a measure defined as bookings divided by net sales) of 0.93. |
• | GAAP operating income was $37.0 million and GAAP net income was $15.8 million, or $0.67 per diluted share, for the fiscal year ended July 31, 2017, as compared to a GAAP operating loss of $0.6 million and a GAAP net loss of $7.7 million, or $(0.46) per diluted share, for the fiscal year ended July 31, 2016. |
• | Adjusted EBITDA was $70.7 million for the fiscal year ended July 31, 2017, which reflects $6.7 million of benefit associated with a fee paid by the U.S. Army to use our BFT-1 intellectual property. Effective April 1, 2017, the U.S. Army retains a limited non-exclusive right to use this intellectual property for no additional payment. |
• | During the fiscal year ended July 31, 2017, the Company generated cash flows from operating activities of $66.7 million and reduced the level of its total indebtedness by $63.7 million. |
• | Revenue goal with a range of approximately $550.0 million to $575.0 million. |
• | GAAP diluted EPS goal with a range of approximately $0.41 to $0.44. |
• | Despite the absence of BFT-1 intellectual property license fees in fiscal 2018, adjusted EBITDA goal in a range of approximately $68.0 million to $72.0 million. |
• | Total annual amortization of intangibles of approximately $21.0 million. |
• | Total depreciation expense is expected to range from $14.0 million to $16.0 million. |
• | Total amortization of stock-based compensation is expected to range from approximately $9.0 million to $10.0 million. |
• | Interest expense is expected to reflect a rate (including amortization of deferred financing costs) of 5.0%. |
• | The Company's effective income tax rate (excluding discrete tax items in fiscal 2018) is expected to approximate 34.75%. |
• | Based on the anticipated timing of shipments and performance related to orders currently in the Company's backlog and the timing of expected new orders, net sales and Adjusted EBITDA for its first and second quarters of fiscal 2018 are expected to be lower than the comparable operating quarters in fiscal 2017. Given the straight-line amortization expense associated with intangible assets with finite lives, the Company expects to report an operating loss in both the first and second quarters of fiscal 2018, with each of the third and fourth fiscal 2018 quarters achieving operating profits. The Company's fourth quarter of fiscal 2018 is expected to be the peak quarter for both net sales and Adjusted EBITDA. |
(Unaudited) | (Audited) | ||||||||||||||
Three months ended July 31, | Twelve months ended July 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net sales | $ | 147,762,000 | $ | 152,377,000 | $ | 550,368,000 | $ | 411,004,000 | |||||||
Cost of sales | 87,350,000 | 90,171,000 | 332,183,000 | 239,767,000 | |||||||||||
Gross profit | 60,412,000 | 62,206,000 | 218,185,000 | 171,237,000 | |||||||||||
Expenses: | |||||||||||||||
Selling, general and administrative | 26,484,000 | 34,114,000 | 116,080,000 | 94,932,000 | |||||||||||
Research and development | 13,889,000 | 13,974,000 | 54,260,000 | 42,190,000 | |||||||||||
Amortization of intangibles | 5,268,000 | 6,067,000 | 22,823,000 | 13,415,000 | |||||||||||
Settlement of intellectual property litigation | — | — | (12,020,000 | ) | — | ||||||||||
Acquisition plan expenses | — | 587,000 | — | 21,276,000 | |||||||||||
45,641,000 | 54,742,000 | 181,143,000 | 171,813,000 | ||||||||||||
Operating income (loss) | 14,771,000 | 7,464,000 | 37,042,000 | (576,000 | ) | ||||||||||
Other expenses (income): | |||||||||||||||
Interest expense and other | 2,691,000 | 4,129,000 | 11,629,000 | 7,750,000 | |||||||||||
Interest income and other | (80,000 | ) | 93,000 | (68,000 | ) | (134,000 | ) | ||||||||
Income (loss) before provision for (benefit from) income taxes | 12,160,000 | 3,242,000 | 25,481,000 | (8,192,000 | ) | ||||||||||
Provision for (benefit from) income taxes | 4,846,000 | 540,000 | 9,654,000 | (454,000 | ) | ||||||||||
Net income (loss) | $ | 7,314,000 | $ | 2,702,000 | $ | 15,827,000 | $ | (7,738,000 | ) | ||||||
Net income (loss) per share: | |||||||||||||||
Basic | $ | 0.31 | $ | 0.14 | $ | 0.68 | $ | (0.46 | ) | ||||||
Diluted | $ | 0.31 | $ | 0.14 | $ | 0.67 | $ | (0.46 | ) | ||||||
Weighted average number of common shares outstanding – basic | 23,470,000 | 19,318,000 | 23,433,000 | 16,972,000 | |||||||||||
Weighted average number of common and common equivalent shares outstanding – diluted | 23,566,000 | 19,341,000 | 23,489,000 | 16,972,000 | |||||||||||
Dividends declared per issued and outstanding common share as of the applicable dividend record date | $ | 0.10 | $ | 0.30 | $ | 0.60 | $ | 1.20 |
July 31, 2017 | July 31, 2016 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 41,844,000 | $ | 66,805,000 | |||
Accounts receivable, net | 124,962,000 | 150,967,000 | |||||
Inventories, net | 60,603,000 | 71,354,000 | |||||
Prepaid expenses and other current assets | 13,635,000 | 14,513,000 | |||||
Total current assets | 241,044,000 | 303,639,000 | |||||
Property, plant and equipment, net | 32,847,000 | 38,667,000 | |||||
Goodwill | 290,633,000 | 287,618,000 | |||||
Intangibles with finite lives, net | 261,871,000 | 284,694,000 | |||||
Deferred financing costs, net | 3,065,000 | 3,309,000 | |||||
Other assets, net | 2,603,000 | 3,269,000 | |||||
Total assets | $ | 832,063,000 | $ | 921,196,000 | |||
Liabilities and Stockholders’ Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 29,402,000 | $ | 33,462,000 | |||
Accrued expenses and other current liabilities | 68,610,000 | 98,034,000 | |||||
Dividends payable | 2,343,000 | 7,005,000 | |||||
Customer advances and deposits, current | 25,771,000 | 29,665,000 | |||||
Current portion of long-term debt | 15,494,000 | 11,067,000 | |||||
Current portion of capital lease obligations | 2,309,000 | 3,592,000 | |||||
Interest payable | 282,000 | 1,321,000 | |||||
Total current liabilities | 144,211,000 | 184,146,000 | |||||
Non-current portion of long-term debt, net | 176,228,000 | 239,969,000 | |||||
Non-current portion of capital lease obligations | 1,771,000 | 4,021,000 | |||||
Income taxes payable | 2,515,000 | 2,992,000 | |||||
Deferred tax liability, net | 17,306,000 | 9,798,000 | |||||
Customer advances and deposits, non-current | 7,227,000 | 5,764,000 | |||||
Other liabilities | 2,655,000 | 4,105,000 | |||||
Total liabilities | 351,913,000 | 450,795,000 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity: | |||||||
Preferred stock, par value $.10 per share; shares authorized and unissued 2,000,000 | — | — | |||||
Common stock, par value $.10 per share; authorized 100,000,000 shares; issued 38,619,467 shares and 38,367,997 shares at July 31, 2017 and 2016, respectively | 3,862,000 | 3,837,000 | |||||
Additional paid-in capital | 533,001,000 | 524,797,000 | |||||
Retained earnings | 385,136,000 | 383,616,000 | |||||
921,999,000 | 912,250,000 | ||||||
Less: | |||||||
Treasury stock, at cost (15,033,317 shares at July 31, 2017 and 2016) | (441,849,000 | ) | (441,849,000 | ) | |||
Total stockholders’ equity | 480,150,000 | 470,401,000 | |||||
Total liabilities and stockholders’ equity | $ | 832,063,000 | $ | 921,196,000 |
Three months ended July 31, | Twelve months ended July 31, | |||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||
Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA: | ||||||||||||
Net income (loss) | $ | 7,314,000 | 2,702,000 | 15,827,000 | (7,738,000 | ) | ||||||
Provision for (benefit from) income taxes | 4,846,000 | 540,000 | 9,654,000 | (454,000 | ) | |||||||
Interest (income) and other expense | (80,000 | ) | 93,000 | (68,000 | ) | (134,000 | ) | |||||
Interest expense | 2,691,000 | 4,129,000 | 11,629,000 | 7,750,000 | ||||||||
Amortization of stock-based compensation | 5,526,000 | 951,000 | 8,506,000 | 4,117,000 | ||||||||
Amortization of intangibles | 5,268,000 | 6,067,000 | 22,823,000 | 13,415,000 | ||||||||
Depreciation | 3,505,000 | 3,752,000 | 14,354,000 | 9,830,000 | ||||||||
Acquisition plan expenses | — | 587,000 | — | 21,276,000 | ||||||||
Settlement of intellectual property litigation | — | — | (12,020,000 | ) | — | |||||||
Adjusted EBITDA | $ | 29,070,000 | 18,821,000 | 70,705,000 | 48,062,000 |