Comtech Telecommunications Corp. (CMTL)
F1Q10 Earnings Call
December 9, 2008 8:30 am ET
Maria Salerno – Investor Relations
Fred Kornberg – Chairman of the Board, President & Chief Executive Officer
Michael D. Porcelain – Chief Financial Officer & Senior Vice President
Jerome Kapelus – Senior Vice President Strategy & Business Development
Frank W. Otto – Senior Vice President Operations
Tyler Hojo – Sidoti & Company, LLC.
Mark Jordan – Noble Financial Capital Markets
Timothy Quillin – Stephens, Inc.
Joseph Nadol – J. P. Morgan
Peter Arment – Broadpoint Amtech
Richard Valera – Needham & Company
Michael Ciarmoli – Boenning & Scattergood, Inc.
Previous Statements by CMTL
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Welcome to the Comtech Telecommunications Corp. conference call for the first quarter of fiscal year 2010. With us on the call this morning are Fred Kornberg, President and Chief Executive Officer; Michael Porcelain, Senior Vice President and Chief Financial Officer; Jerome Kapelus, Senior Vice President Strategy and Business Development; and Frank Otto, Senior Vice President Operations.
A news release on the company’s results was issued yesterday afternoon and is posted to our website. Before we proceed I need to remind you of the company’s Safe Harbor language. Certain information presented in this call will include but not be limited to information relating to the future performance and financial condition of the company. The company’s plans, objectives and business outlook, the plans objectives and business outlook of the company’s management and the company’s assumptions regarding such performance, business outlook and plans are forward-looking in nature and involve certain significant risks and uncertainties.
Actual results could differ materially from such forward-looking information. Any forward-looking statements are qualified in their entirety by cautionary statements contained in the company’s Securities & Exchange Commission filings. I am pleased now to introduce the President and Chief Executive Officer of Comtech, Fred Kornberg.
Yesterday afternoon we reported our first quarter fiscal 2010 results. Before our CFO, Michael Porcelain presents a financial overview, I’ll provide some brief comments on our overall results and market conditions. After Mike completes the financial overview I will discuss each of our three operating segments followed by an update to our fiscal 2010 guidance.
The first quarter results we reported yesterday clearly show that we are off to a strong start to our fiscal year 2010. Although difficult market conditions still cause me to be cautious, as a result of our solid performance in the first quarter I am becoming increasingly optimistic because during the first quarter we started to see pockets of strength in some of our commercial product lines and importantly we now have increased visibility to the year.
As I look to the remainder of fiscal 2010, I believe we are at a turning point where our revenues and net income are picking up speed such that fiscal 2010 is on track to be a record year of revenues and a year of significant earnings growth. Now, let me turn the presentation over to Mike who will provide some financial highlights.
Michael D. Porcelain
Overall context first quarter results were solid. The cost reduction actions that we took over the past several months have resulted in tangible benefits and as Fred will discuss later, we believe Q1 sets the stage for revenue and earnings growth for the remainder of fiscal 2010. Let me start with some details on the first quarter. As usual, I will start with the top of the income statement and work my way down.
Q1 fiscal 2010 sales were $133.8 million which represents a decline of 30.3% as compared to Q1 of last year. Although sales in Q1 of fiscal 2010 were lower in all three of our segments, we began recording significant revenue in our mobile data communications segment related to shipments for MTS orders previously received from the US Army for new MTS ruggedized computers. As we will discuss in detail later in this call, because of the overall increased visibility that we now have, we expect that during the remainder of fiscal 2010 that the pace of shipments for MTS orders currently in our backlog will increase from current levels.
Of our first quarter 2010 consolidated sales our telecom transmission segment generated net sales of $46.7 million, a decrease of 37.4% as compared to Q1 of fiscal 2009. Like last year, the majority of sales in this segment during Q1 of fiscal 2010 consisted of satellite earth station products which were significantly lower as compared to Q1 of fiscal 2009. Importantly, we did see some positive signs during the quarter. Our quarterly satellite earth station product line bookings were not only better than our expectations just three months ago, they were significantly above the bookings we achieved in Q4 of fiscal 2009.
I should highlight that when considering the strength of our Q1 2010 bookings, be mindful that our Q1 2010 bookings do not include any bookings for video encoder and decoder products or commercial fiberglass antennas, which as we announced in August 2009 we are no longer offering to our customers.
Turning to our over-the-horizon microwave system product line, net sales for Q1 of fiscal 2010 were not only nominal but they were lower than Q1 of fiscal 2009. In total our telecommunications transmission segment represented 34.9% of consolidated Q1 2010 net sales as compared to 38.9% for the first quarter of fiscal 2009.