Comtech reports Q4 EPS (39c), one estimate (44c)

Reports Q4 revenue $130.4M vs. $126.2M last year. Ken Traub, Chairman, President and CEO, stated: “I am proud to report how much stronger Comtech (CMTL) is today – financially, operationally and strategically. This is the result of the ongoing successful execution of the transformation initiatives that we announced when I started as CEO in January 2025. As a testament to our improving financial health, the disclosure regarding the Company’s ability to continue as a going concern, that was previously in the Company’s quarterly SEC filings for the past seven quarters, has been removed as we no longer have those concerns. We have executed a successful turnaround of our Satellite & Space Communications business, which is now revitalized, and our Allerium business, formerly known as Terrestrial & Wireless Networks, has continued to deepen our presence in the public safety market while securing long-term customer partnerships. We expect the Company’s significantly improved financial health to be reassuring to our current and prospective customers, vendors, employees, investors and partners. The early success of our transformation initiatives and the positive trajectory of the business are evident across numerous key metrics. Examples include: (i) operating cash flow of $11.4 million in the fourth quarter, which follows the $2.3 million of operating cash flow we reported in the third quarter – these are the first quarters of positive operating cash flow for Comtech since fiscal 2023, (ii) liquidity of $47 million, the highest level that Comtech has had in recent history, and an improvement from $27 million of liquidity disclosed in March, (iii) accounts payable reduced to just $26 million, the lowest level Comtech has had in years and down from $43 million as of January 31, (iv) net sales for the fourth quarter increased by 13% as compared to the first quarter of fiscal 2025, despite the wind down of certain legacy contracts, exit from a number of low margin contracts, elimination of other unsatisfactory revenue, and a $3.5 million adjustment as a result of revised estimates for a nonrecurring development project, (v) gross margins increased from 12.5% in the first quarter to 31.2% in the fourth quarter, and (vi) Adjusted EBITDA improved throughout fiscal 2025, from negative $31 million in the first quarter, to $13 million in the fourth quarter. While we are just getting started – and recognize there are remaining legacy challenges still to be addressed as well as inevitable quarterly fluctuations – we are energized by what we have accomplished so far. These accomplishments were enabled by new disciplines that align accountability throughout the organization, enhanced operational efficiency, reduced cost structures, a focus on cash flow optimization, improved working capital management and improved corporate governance. These initiatives have not only helped to drive Comtech’s significantly improved operating and financial performance, but have also enabled us to improve relationships with current and prospective customers, vendors and creditors. This leads to a flywheel effect in which improved relationships create a healthier dynamic for the business going forward and ultimately further improvements in performance.”