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

Sep 29, 2020 • 04:30 pm ET

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

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Q & A
Operator
Operator

[Operator Instructions] We can go ahead and take our first question from Asiya Merchant with Citigroup. Your line is open.

Analyst
Asiya Merchant

Couple of quick questions, maybe for Mike, Fred, Mike, it doesn't matter. First quarter guide is down 16%, I believe sequentially. If you can give us some color on what's going on there? And then, obviously, you expect the quarterly progression to be there. Seems like the guide is staying slightly better than what you guys achieved given that you guys have a good backlog, good visibility, why just slightly given economic conditions have resumed, if you can give us some color on that? Thank you?

Executive
Fred Kornberg

Sure. So the customers out there, the way we're seeing in the marketplace, the order activity interest is pretty high, but there are still issues in terms of installations that are ongoing. I mean, I referred to that in my prepared remarks, customers still have their doors locked so to speak, and it's very difficult to get in to do installations. And you know, this is a global company with global installations, and it does take some time to find the right talent in the field that is willing to do it.

So, with that being said, we're expecting a quarterly ramp up. Q1 was the number, Mike gave to you and then each quarter thereafter is the way we're thinking about it. If things shift earlier because vaccine gets developed or something like that and installations get ramped up, then that will change. But right now, that's the way we're thinking about the delivery of the revenue. Order flow, we actually feel pretty strong about. We've got some large opportunities out there in the 911 space, and yesterday's news in the marketplace is very favorable for the things we need. It's just another sign to the politicians that the 911 systems need to be upgraded. So, things like that kind of go in our favor we think.

Analyst
Asiya Merchant

Fair enough. And then on cash, cash flow, the pretty strong cash flow that you guys generated this year, can you guys share some commentary on should we expect cash flow again then to be higher given revenues will be higher next year or was there something one time that we should kind of keep in mind that will not occur in '21?

Executive
Fred Kornberg

Well, Mike did talk about strong cash flows that we do expect. I think obviously we're going to call out again, the acquisition plan expenses. So I mean, candidly, I think we spent $20 million or so in fiscal 2020. So anything above that number for 2021 will make the - that year-over-year comparison probably be lower, is the way I would tell you to think about it because acquisition plan expenses just need to get paid, and obviously, we're in litigation. So if you look at it two ways, if you pull out the acquisition plan expenses, you can see the very strong cash flow dynamics of the company, and I think that's