Comtech Telecommunications Corp Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Joe Gomes - Noble Capital - Analyst : I'm going to be harsh with you right out of the gate, okay? Warren Buffett has always been quoted as saying, "When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact." And while I appreciate your story, fraud doesn't necessarily equate to a bad business. Comtech's performance topped in, I think, it was fiscal 2019 in terms of revenues and adjusted EBITDA, and it's been pretty much downhill since. Almost, I don't know, two and a half years ago, Ken Peterman came on. He started one Comtech, built the Arizona facility, all of this to take out cost, the focus. John was continuing along the same path and now you're telling us we've got to redo it all over again and it just seems it's never ending, and I don't see the end in sight. So what's going to change to actually make Comtech start growing again and be a good business or is it just a bad business? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 13, 2025 / 1:30PM, CMTL.OQ - Q1 2025 Comtech Telecommunications Corp Earnings Call

Question: Joe Gomes - Noble Capital - Analyst : Thanks for that. Let me do one follow-up and then I'll get back in queue so other people ask some questions here. I know we're time constrained. And this one's more for Mike. Mike, in the fiscal Q4 call, you mentioned revenues were expected to be flat with fourth quarter and adjusted EBITDA, expectations were to see improvement and both of those numbers were down. And essentially, I believe at the time of the call, the quarter was pretty much done. And I'm just trying to square that circle as to how that you guys could have said that and then the numbers come in so different than what was said on the call?

Question: Greg Burns - Sidoti - Analyst : Good morning. When we look at the challenges, some of the top line challenges on the satellite business, I think over the last quarter or two, you've been pointing to maybe the balance sheet issues causing some production delays, your inability to get maybe deliver on some product. I guess REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 13, 2025 / 1:30PM, CMTL.OQ - Q1 2025 Comtech Telecommunications Corp Earnings Call the thought was now that you had both the debt current, and you would see maybe an improvement in production and start to see some movement on delivering against your backlog. Now, now we're back to the debt being current again and the balance sheet seems to be an increasing issue. So what's the impact going to be maybe on your production? Are we back to where we were? And maybe a quarter or two ago with the inability to maybe get terms from suppliers or how is this going to impact production going forward?

Question: Greg Burns - Sidoti - Analyst : Okay. And I guess just a follow-up. So in terms of maybe market demand, is what we're seeing now? Are you losing business or are you losing market share because the implication or the thought over the last couple of quarters was maybe some of this was -- it was not market related, it was kind of Comtech related in terms of your ability to get production levels back to normalized rates and your ability to deliver against your backlog. So is what we're seeing now more kind of market related? How should we view the decline in revenue this quarter maybe relative to what you had expected at the end of --?

Question: Griffin Boss - B. Riley Securities - Analyst : Hi. Thanks for taking my question. I'll try to keep this brief. Welcome, Ken, first of all, and then I'll just start on the strategic review, particularly for terrestrial and wireless networks. Back in October, when it was announced that the strategic transformation strategy was happening specifically for T&W, that was said to be well underway. Should we look at this kind of new updated strategic transformation as a continuation of that process for T&W or is this going to be a reset of that timeline to look for a potential sale of that business?

Question: Griffin Boss - B. Riley Securities - Analyst : Okay. Makes sense. And then maybe one more for Mike here. Now that you took that charge on the unbilled, can you just provide maybe more clarity or an update on the remaining unbilled and your expectation for meeting whatever milestones need to be met to convert those to build in the future?