Comtech Telecom (CMTL) Tops Q3 EPS by 7c, Miss on Revenues; Lowers FY17 Revenue Guidance
Comtech Telecom (NASDAQ: CMTL) reported Q3 EPS of $0.13, $0.07 better than the analyst estimate of $0.06. Revenue for the quarter came in at $127.8 million versus the consensus estimate of $136.74 million.
Comtech Telecom sees FY2017 revenue of $550-555 million, versus the consensus of $575.91 million.
2017 Fiscal Year Financial Targets
- The Company has updated its fiscal 2017 revenue target to a range of $550.0 million to $555.0 million. This new target, which compares to its previous target of $570.0 million to $580.0 million, largely reflects the Company's updated assessment of the impact of its tactical shift in strategy in its Government Solutions segment, a longer sales cycle for its HEIGHTS products and other product mix changes. The Company's fourth quarter is expected to benefit from an increase in orders for its HEIGHTS products; however, given the complexity and sophistication of the HEIGHTS system and the Company's experience since its launch of HEIGHTS, the initial sales cycle will be longer than the Company's prior satellite earth station new product launches. As such, the Company now anticipates that fiscal 2018 will be the break-out year for orders and sales of its HEIGHTS products, rather than the fourth quarter of fiscal 2017.
- The Company updated its GAAP diluted EPS goal to approximately $0.67 per diluted share (which includes $0.33 per diluted share related to $12.0 million of favorable TCS intellectual property litigation settlements).
- The Company firmed up its Adjusted EBITDA goal to a range of $68.0 million to $70.0 million. The range reflects updated revenue targets, the benefit of additional cost reduction actions and the impact of overall favorable changes in product mix assumptions.
- The Company is pursuing a number of awards for large multi-million dollar and multi-year contracts. Although the extent and timing of any of these contract awards is difficult to predict, the Company expects to receive some of these awards shortly. Because of uncertainty regarding contract award and order timing, it is difficult to predict our fourth quarter fiscal 2017 book-to-bill ratio. If some of these large contracts are awarded and orders are booked in the fourth quarter of fiscal 2017, consolidated fourth quarter bookings could be almost twice the level that the Company achieved in its third quarter of fiscal 2017. At the same time, it is possible that the award of these potential large contracts and related orders may slip into fiscal 2018. In either event, these orders, if booked, are expected to benefit fiscal 2018 financial results.
- Total annual amortization of intangibles is expected to range from $22.0 million to $24.0 million, total depreciation expense is expected to range from $14.0 million to $15.0 million and total amortization of stock-based compensation is expected to range from $5.0 million to $8.0 million.
- Interest expense, on total anticipated borrowings, is expected to approximate $12.0 million (including amortization of deferred financing costs). Such interest expense reflects an expected interest rate ranging from approximately 4.5% to 5.0%. The Company's actual cash borrowing interest rate (which excludes the amortization of deferred financing costs) currently approximates 4.0%.
- The Company's effective income tax rate (excluding discrete tax items) is expected to approximate 36.0%.
For earnings history and earnings-related data on Comtech Telecom (CMTL) click here.