Comtech today reported results for the third quarter ended April 30, 2022. Consolidated net sales were US$ 122.1 million, up 1.4% sequentially from Q2 2022 and Adjusted EBITDA of US$ 11.2 million, a 14.3% sequential increase.
"Comtech delivered financial results for our third quarter ended April 30, 2022, that were ahead of our expectations. This was the second straight quarter in which we exceeded our bottom-line expectations and showed sequential quarterly revenue and Adjusted EBITDA growth," said Comtech CEO Mike Procelain. Highlights for the quarter include:
• Consolidated net sales were US$ 122.1 million, up 1.4% sequentially from Q2 2022;
• Adjusted EBITDA of US$ 11.2 million, a 14.3% sequential increase;
• Gross margins improved sequentially ten basis points to 38.2%;
• GAAP net loss attributable to common stockholders was US$ 1.7 million, and included $0.9 million of strategic emerging technology costs for next-generation satellite technology, as discussed below;
• GAAP EPS loss of $0.06 and Non-GAAP EPS income of $0.06;
• New bookings, also referred to as orders, were US$ 113.4 million, a 10.2% sequential increase and resulting in a quarterly book-to-bill ratio of 0.93x;
• Backlog of US$ 602.3 million as of April 30, 2022, as compared to US$ 611.1 million as of January 31, 2022;
• Revenue visibility of approximately US$ 1.2 billion (the sum of our US$ 602.3 million backlog plus the total unfunded value of certain multi-year contracts that the company has received and for which they have a high confidence of expected future orders); and
• Cash flows used in operating activities of US$ 1.1 million (excluding US$ 10.6 million in aggregate payments for its former CEO transition and settled proxy contest, cash inflow from operating activities would have been $9.5 million for Q3 2022).
Updated Fiscal 2022 Business Outlook:
"We, like businesses everywhere, continue to confront one of the most difficult operating environments in memory, as the global economy struggles to find its footing amidst a pandemic, geopolitical conflict, surging inflationary pressures, changes in government spending priorities, and worsening supply chain disruptions. Simply, this is a genuinely tough environment in which to do business, said Porcelain
The company updated it's 2022 outlook to:
• Q4 fiscal 2022 net sales are expected to approximate US$ 123.0 million resulting in expected fiscal 2022
• Q4 fiscal 2022 Adjusted EBITDA is expected to approximate US$ 11.5 million resulting in expected fiscal 2022 Adjusted EBITDA of approximately $38.0 million.
"This updated guidance reflects incremental research and development expenses and the removal of several identified and viable opportunities in both our Commercial Solutions and Government Solutions segments that we no longer expect to occur in Q4. In the Commercial Solutions segment, two NG-911 opportunities which we expected to generate bookings and revenue in fiscal 2022, are now in holding patterns. The larger of these opportunities relates to a signed contract to deploy a state-wide NG-911 system for the state of Ohio. The second opportunity is for initial work for a smaller NG-911 infrastructure project in the southwest. In the case of Ohio, it was originally expected to be funded during Q4 but the legislative vote to do so is now expected to occur in the Fall 2022. Although a vote for the smaller opportunity may occur soon, it has been delayed several times already, and it doesn’t seem prudent to expect that contract to be finalized in our Q4," added Porcelain.
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