Comtech Telecommunications Corp. (NASDAQ:CMTL) Q4 2020 Earnings Conference Call - Final Transcript

Sep 29, 2020 • 04:30 pm ET


Comtech Telecommunications Corp. (NASDAQ:CMTL) Q4 2020 Earnings Conference Call - Final Transcript


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Fred Kornberg

new orders come in, I remain optimistic that actual 2021 results will exceed our targets.

Before further discussing our financial results and business in more detail, I would like to say a few words about the status of the Gilat acquisition. As a reminder in January 2020, we announced a highly strategic acquisition of Gilat, a worldwide leader in satellite networking technology solutions and services. Unfortunately, after we announced the Gilat acquisition, the COVID-19 pandemic resulted in a sudden and steep decline in the travel and aviation markets where Gilat's operation is, and a significant slowdown in Gilat's business. As publicly reported, Gilat has suffered lower period-over-period sales and a negative adjusted EBITDA for the first six months of the calendar year 2020.

Given everything in July 2020, we commenced litigation in the Delaware Court of Chancery seeking certain declaratory judgments, including a declaratory judgment that Gilat has suffered a material adverse effect, and that as a result of the material adverse effect, we are not obligated to complete the acquisition. Currently, a trial is scheduled for October 5, 2020, and the Delaware Court has indicated that intends to render a judgment prior to October 2020, the date that we or Gilat may terminate the merger agreement.

Because this matter is getting ready for trial, I must tell you and I'm sure you will understand that we will not make any further comments on the Gilat acquisition or take any questions related to Gilat or the related litigation. Now, let me turn it over to Michael Bondi, who will provide additional commentary about our financials; and then to Michael Porcelain who will provide an update on our business and our pending acquisitions. Mike?

Michael A. Bondi

Thank you, Fred, and good afternoon, everyone.

Our net sales for the fourth quarter of fiscal 2020 were 149.7 million, and we finished the year with net sales of 616.7 million. Our revenues for Q4 represent a 10.8% quarter-over-quarter increase as compared to our Q3 2020 results, which were significantly impacted by the COVID-19 pandemic. In fiscal 2020, net sales to U.S.-based customers were 76.5% of total net sales with 23.5% to international customers.

It was a strong quarter for bookings. We received $159.7 million of orders, which resulted in full year bookings of $584.4 million. Despite the impact of the pandemic, we achieved a book-to-bill ratio of 0.95 times and finished the year with a healthy backlog of 620.9 million.

Although visibility into the economy remains a bit cloudy, we do have pretty good visibility into fiscal 2021 given our healthy backlog. In fact, when you add our backlog plus the total unfunded value of multi-year contracts awarded to us, but not in backlog and for which we expect orders against, we have clear visibility to approximately $1.1 billion in total future revenue, a substantial portion of which we estimate will be recognized as revenue during the next 24 months.

Now, let me give you some financial metrics and commentary with respect to the rest of