Comtech Telecommunications (CMTL) 6 Jun 192019 Q3 Earnings call transcript

Ladies and gentlemen, thank you for standing by. Welcome to the Comtech Telecommunications Corp.

Third Quarter Fiscal 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session [Operator Instructions] As a reminder this conference is being recorded, Thursday, June 6, 2019.

to conference like to now would turn over the Mr. I of Comtech DiLorenzo Telecommunications. Jason sir. Please go ahead,

Thank Officer. morning. of and Vice and morning President call Michael With you, of good and on Chief are for Corp. Comtech us Chief D. Executive Bondi, the Operating conference Fred Telecommunications Comtech; Kornberg, Officer; third Officer call Michael President quarter the fiscal Chief XXXX. Welcome year Financial this to and the Senior Porcelain,

you remind will of company's management. we Any outlook business be statements The the proceed, Exchange condition involve to Before nature company, company's presented the in call assumptions contained could need differ language. of Commission such company's harbor are cautionary this limited to Securities by the performance, materially and information uncertainties. results plans, filings. in financial plans, regarding in and plans and include, the objectives Certain statements the business performance and relating I Actual safe forward-looking not the and objectives and company's from of are information. company's future the outlook qualified outlook to, and in their information but forward-looking entirety significant and risks such forward-looking business

to am Fred? of Comtech, Executive I Fred now introduce Officer pleased Kornberg. Chief the and President

fiscal This of Jason. you, quarter will we morning, be call. joining Good our discussing this third Thank morning, results on everyone, for and you us our for thank XXXX.

quarter excelled you can yesterday's fronts. As on many our from release, results see press third

another making year. XXX business on are of results, on acquisitions GD Solacom generate successful our fiscal both and well operating to the we strong XXXX closed continue way to We and the

our these we we our more adjusted of the than amounts EBITDA strategies to increased achieved to given the $XX year. XXXX goal approximately be metrics goal and $XXX have our XX% are business revenue fact, Both successful of last be to million. In XXXX increased million fiscal execution date, approximately

quarter results third our before, mentioned exceeded expectations. I As our

momentum positive of our remains and remains business pipeline opportunities strong. Our

and order business is we if be fact, has XXXX of as possible all it higher results than it amounts. achieved In that actual could our flow fiscal remains targeted our strong goals,

I'll of it about financial quarter XXXX provide third and some Mike will CFO, Mike a Bondi, some our will initial Now about Mike. fiscal discussion transfer as who our to come as discussion our And and turn Porcelain, before a I'll to now And provide XXXX. questions fiscal then Then our business results our of CEO, up guidance. over opening it well segments back to I'll answers. thoughts details

and Fred, you, good morning Thank everyone.

afternoon, sales Bookings total yesterday remarkable a of in As our and with XX.X% of QX net announced ratio $XX net income million. our financial based $XX.X $XXX.X under quarter for and was X.X. U.S. third measure, EBITDA, million, net sales the customers geographic of GAAP operating resulted to XXXX non-GAAP just a book-to-bill sales was were customers. million international in to million of From XX.X% a $XXX.X were perspective, were our truly adjusted consolidated

excess of in Solutions Solutions X. ratios segments Commercial achieved Government our Both book-to-bill and

of when finished received, have record that the have also million $XXX.X with portions than We we unfunded consolidated quarter more multi-year contracts we including and revenues. you the $X of IDIQ backlog into contracts, high of billion future include visibility

higher in mix fiscal Government XX.X% more QX to XX.X% Our occurring The increase third of which favorable than in XXXX XX.X% XXXX. was quarter of largely due fiscal gross profit achieved segment. in percentage our slightly product Solutions we XX.X%, to the our is was a from

contract for include expenses north related the XXXX, of solution sales. settlement net repositioning $XX.X For expenses approximate of April to or million were of XX%. ended fiscal that consolidated months we Technology XX.X% likely Enterprise XXXX, estimated percentage expect offerings. of an SG&A profit three our XX, consolidated little costs our will SG&A gross ongoing $X.X a million

net XX% For expected approximate to sales. are expenses the SG&A year, of

$XX.X and Solutions $XX.X sales. in our Research million million, Solutions in of for segment. third the balance were segment compensation, XXXX we or expenses of Of Commercial X.X% million segment development the is the $XX.X and our the representing fiscal the million spent quarter $X.X with stock-based in consolidated unallocated Government net recorded of amortization which

expected R&D For higher net fiscal XXXX achieved the than be fiscal due we but to year, to percentage we the sales. lower expenses the in dollars, increase XXXX expect in in

of vested the did we awards fully employees Like sold period. cannot restricted years, past the compensation awards expense $X.X The awarded the in year align FY expense with to for these but we million which least be a our approximate XXXX million. compensation incentive executives be fiscal we on believe XXXX ultimate and units. stock one stock-based $XX amount at fiscal form stock-based will be of awards, largely during shareholders these are was Total and to expect dependent QX for anticipated of XXXX finalization as for two

operating or approximate for months Amortization acquisition GD approximate was asset on fiscal now net ended XXXX $X.X X.X% XX, the fiscal million of million, to the of XXXX $XX.X expect sales. amortization QX and consolidated for Next intangibles to in the the the $XX.X the of light million. closing $X.X for XXX aggregate, GAAP third April Generation was In income our of period of intangible in quarter million we XXXX three business,

For the of million income net we GAAP of months of or operating first nine X.X% achieved $XX sales. XXXX,

been XXXX quarter of X.X% contract $X.X acquisition settlement would income of sales. Excluding expenses, estimated operating have the plan of million net million or consolidated the our million, consolidated $X.X costs of fiscal $XX.X and for third

contract operating of of that $X.X in believe plan consolidated settlement XXXX million costs of quarter, fourth additional with we Looking inclusive expenses the of will fiscal and income X.X%. and percentage acquisition finish net a around forward we sales as estimated GAAP

a fiscal approximate an expected percentage This estimated intellectual of as for is contract income plan property we consolidated expenses, the in achieved litigation XXXX. settlement represents net from costs, Excluding costs, fiscal acquisition exit X%. sales facility to the favorable increase operating X.X% all and settlement of XXXX

the adjusted XXXX. $XX.X $XX.X XX.X% net million, related was Commercial of or months Our sales XX.X% April Adjusted Solutions $XX Adjusted million XX.X% was net three our ended for EBITDA EBITDA consolidated of segment Solutions sales. or million, in Government in segment net was XX, EBITDA or our of related sales.

to XXXX net we in consolidated our of revenue Assuming $XXX will EBITDA. $XX we the XXXX. adjusted achieved of percentage be million XX.X% fiscal a goals Adjusted achieved as million in of EBITDA fiscal sales similar and

taxes, expense third the me let interest, Interest EPS, Now, cash $X.X about quarter million and was for fiscal balance XXXX. sheet. talk our flows of

to we year, $X.X the interest million. approximate expense For expect

excluding On rate of our in items was $XXX,XXX third the of fiscal tax discrete side, XXXX, the XX%. quarter effective tax

share line, On $XX.X nine months ended April for million, third GAAP fiscal was XXXX $X.XX and per the or $X.X the or XXXX. bottom diluted quarter for million, XX, $X.XX per of net diluted the income share

non-GAAP metrics we quarter comparative better of providing are a give to sense operating fiscal improved This our investors since performance XXXX.

period than the or expenses, months plan the tax XXXX, share. the nine contract million, net $XX.X $XX.X acquisition non-GAAP for of comparable XXXX and costs of our income the was And per was QX The estimated non-GAAP items, fiscal higher are prior for metrics non-GAAP the discrete income XXX% over million, for comparable nine months for diluted year. settlement year-to-date non-GAAP metrics diluted $X.XX Excluding share. per $X.XX or net

our which be expect represent For EPS XXXX achieved when year, to XX.X% a would in fiscal of the growth full we non-GAAP $X.XX, compared $X.XX the fiscal XXXX. EPS to non-GAAP we rate

look is third One to and of strength of at our operations. you from flows our can ways year-to-date quarter the best performance see GAAP cash the

for third for at Here our cash quarter nine the the fiscal $XX.X flows million XXXX XXXX. extremely were and months fiscal of $XX.X strong of first million

Solacom XXXX fact, April was In our fact cash $XXX total equivalents $XX.X debt business despite million sheet that million during for quarter. Generation we acquisitions our XXX cash and of the $XX.X the and and balance Next million, the XX, GD spend the at reflects of outstanding

Although there ways, be operating moment, at flows expect number for can the breakeven. a both we things quarter of the fourth approximately cash to are that shift

cash or so from fiscal activities of last GAAP expect So we conference we call, stated XXXX. in operating $XX as our flows million for

Now, Mike? two additional of developments I will over recent it each and some segments. for our Mike hand Porcelain provide to business to color

Thank you, we acquisitions believe results, are strong on based including our our paying strategies off. operating business our Michael. Clearly

you some segment. me perspectives give by Let

this net in exceptionally sales $XXX.X million quarter. X.XX. First, our coming on at in this segment Commercial Solutions Bookings were were $XX.X segment book-to-ratio a million of strong with

book-to-bill ratio the Next Our includes million a Generation $XXX award. large plus XXX benefit of

related satellite station an earth This terrific where this line for references. communities global its highest networks bookings from quarter HEIGHTS product connect was and one customer product and equipment also and year. quarter introductions. orders world include were to bookings quarterly for HEIGHTS It from exceptionally the for busy important was our backhaul. support this SES Claro great for quarter mobility services These are Argentina awards to cellular a

although have goals this products past, a fiscal the I sale are in product HEIGHTS XXXX mentioned long that pleased state our line. am to for achieving we As cycles,

exceeded months through the fiscal XXXX for fiscal have In that fact, bookings first the all nine XXXX. of

we a for in of performance invest we this to cost Remote line Given new product the H-Pico market high perception favorable, low HEIGHTS continue quarter, And announced with is expansion R&D. HEIGHTS an Gateway.

lower expand a sell product to heights cost. addressable performance market need smaller have our new to customers, for and allows a us who at This us to allows but

plan, satellites they product sometimes this satellites, to Given years product our will are station believe the number growth and line many to contribute high-throughput of we for sales HTS referred earth satellite new launching ahead. for or that line

are let turn to Now Technologies Security well. line very & Safety our where things solution me going

GD since QX are about TCS fiscal doubt, them of already No Solacom are having In first higher acquisitions acquisitions. a business. acquired impact. the and positive XXXX were XXX fact, the quarter for any than the excited irrespective truly business, our of we sales of we Both of

will of plus operate million Massachusetts. communication before quarter valued improve receive system working contract based five best-of-breed award. just XXX Next emergency consist fact, we Commonwealth year existing did we cloud to $XXX develop, system a solutions customer. in a system to this and cloud the IP XXX Generation Comtech providing XXX implement of – to of based system excess Generation million In the that is secured $XXX the a for Generation This Next are This ended, Next

on some color win important GD and give this contract XXX acquisition. the me Let

we GD and work this and existing customer, lot to and a integrator It contract. so large in the expiring us and on military August markets, a working of this wanted this successfully to GD award we For took five-year and other prime prior Commonwealth assign General on with new that meetings. customer completed played multibillion-dollar served focus they of the many us as is recently a to contract role Dynamics XXXX. acquisition contract the small began lot to convince a for a years,

were we awarded the and effort, of so or months successful we nine after Ultimately, contract. were

As we nice was and and for new such, many in to this joined employees. Comtech to who GD a contract, agreed immediately fulfill are acquisition XXX employees us, hired really and business purchase order Comtech. now government This state to talented have pleased welcome the local XX

the want win to thank and, our of important. publicly very our partners employees, own Additionally, $XXX is This we million-plus course, Commonwealth.

our in for and Coast. First, the East market that the customer the context XXX West of Coast Washington, it of we viewed leadership When the Generation well-respected systems. the on contract us system important state on solidifies award Next gives and operate NG-XXX this for references existing

many extremely customers for hope years. to reluctant repeat are to systems these annuity type or because Thus, change we and critical, generate vendors. revenue are Second, complex

more Finally, the state us solutions integrated to local provide and agencies. NG-XXX acquisition safety enables public to

on In of believe we fair over fact, large promising will GD been already. And closing Since this our have states. our efforts focusing opportunities time, win than a and chasing more the in the we Solacom we are number of we acquisitions, share. other

intend me all and talking and competitive dynamics spend market grow. this compete in customer of few about we the activity, Given to let and a XXX existing moments how

First, first TCS. the XXX acquisition reminder, February the a XXXX as space of Comtech of entered with in

customers understand increasing. Now recent Solacom have To XXX are positive. market and with interest extremely the leader customer acquisitions acquisitions, the date, our space. GD solutions our We strategy, reaction we in and to in been this a are believe clearly

others significant to area this but spend products funds R&D well. continue with developing as only integrated solutions We that and are focusing in work on not our

Motorola, side, companies, acquired companies competitive been the has in consolidation and Comtec has AT&T but call-handling within with several Corporation. competitor, space, the to industry. partner largest West Not continues did various On there two purchased only our the

a we have handling of the we that can believe call Given refreshed and market as share very we grow are systems updated small being country. today, around

competitor. as As relationship we it describe relates to a AT&T, our with best AT&T

us. to to solutions Corporation, the by quarter, the during surprising AT&T as West it This when us million example, of would expand For past for our routing move at AT&T of the offshore fact, that XXX spaces. we was business year they with on to won for the orders and relationships call all to a But such its time, their we us Verizon. not $X.X so, informed for have or competitor, we awarded same prepared us in decision have Comcast. XXX% of other customers, they worked

and to have expect our these We efforts. with continue success

Looking forward, base and is on track we healthy. grow XXXX. our Security for we end short, have of a & this opportunities believe and aggregate, to In in conditions strong that in growing business remain backlog fiscal products Safety to our market

our to Technologies solutions attention group. Enterprise our turn me let Now

number repositioning and higher-margin end customers. messaging a us. first of location-based on for we mapping solutions QX and solutions. for to are call, this providing Today, Many these on and products or evaluation an repeat-type our annuity-type offer As generate revenue discussed of of profits text good we applications focus conference began

However, products time, of certain same our XXXX lives. goal at and repositioning mapping group. The our on is services location location government XXXX, to margins that limited our we customers, products the which TCS low have very to similar ultimate have also which we technology miscellaneous or several legacy mapping of did repositioning successful the provide

As when it profits. we for about this it with but be will lower, revenues hopefully line in such, XXXX, higher think product

contracts to renewals. without contracts decided cease repositioning its living Our our date, and well have is way. certain expire on performing we And to

with are in QX, expecting supporting example, nominal business their where worked we simply platform line, also In stopped making and For being Verizon-navigated locator customers services our VirtuMedix and we ceased our for – family not money. dwindle whereas performing and we XXXX. no in developing we're were location product to any with longer QX, revenues Verizon

and in which TCS Mike fiscal contracts, the call all all record customer be wind handling a Our product did charge will we Solacom. enterprise includes QX solutions. sell product serviced this XXXX, with – by in legacy decision XXXX, down had contracts line wind our remaining And of connection In Bondi to million of mentioned. $X.X certain

it that fiscal invest still be such And certain solid be up, key through we R&D growth, continue when you and the side, in in we safety. better. On XXXX public to a will fiscal all, growth. technologies as areas even All of of add can all year believe XXXX

compared Solutions Now XXXX, where fiscal segment segment banner of turn $XX.X this let sales had in were me substantial our a Government representing Net itself to XX.X%. increase quarter. to $XX.X million the of QX as

our were in bookings strong. Our Government Solutions segment

we fiscal each second of first the quarters and fact, bookings XXXX. exceeded from of In

was a and ratio contracts. awards did the during And we book-to-bill receive important Our of quarter, X.XX. number

were program instance, million has a management Terminals, XX, to to April unfunded and For of the received of These value order GTACS, a Army's $XX.X U.S. orders contract other VSAT we – our Satellite products as Communication or U.S. network, XXXX. orders $XX.X with Army. of advanced of tactical Manpack remaining $XXX.X networking to supply System, million booked million Tactical equipment pursuant Advanced Global contract which the

sustainment million the We to orders did also U.S. $XX.X Army services to SNAP terminal for receive of program. the provide

received $X.X our funded contract. existing million option from U.S. Blue also sustainment order Tracking Army We Force year under two the of for

a provider, high-power from security Military. million $X.X a received also satellite order the solutions U.S. $X.X major national a from amplifiers for contract follow-on service We million

this of of for segment. Government all be a With will activity, Solutions year growth the significant XXXX fiscal

book, this we and pipeline like starting Looking opportunities look to year. have a solid for yet of segment to strong forward, still a is XXXX

who me provide will to remarks. let Fred closing some Now Fred? back it turn

Mike. you, Thank

our pleased to with performing and XXXX how leadership Fiscal mentioned results As expected is earnings business a to We too, I, previously, fiscal expected positions. is date. full for Comtech. am illustrate our year business of our power year that be our terrific the believe assert very XXXX I we'll product

and about future our the our increasingly out fiscal Looking XXXX, excited prospects trajectory of I'm positive to business.

are XXXX. in said, Mike for we as another positioned, think strong I year fiscal well

flow. unit believe very sheet we business drive management healthy strong over balance consistent shareholder Overall, returns cash strategies long and business our execution, are generating term. on Our teams the focused a will

the our strong share. outlook, XXXX payable on fiscal at July declared of Board quarter of for of XXXX, XX, XXXX. of This is Directors close fourth our record business common $X.XX the Given a to per dividend August of on business shareholders XX,

to Operator? Now I'd question-and-answer proceed our like to of part the call. conference

Merchant Citigroup. [Operator with Instructions] our And Asiya from first we’ll question take

Your line is open.

the team. was strong hear you me. a very Hi. to Congratulations quarter. can question. I Quick It hope

you think on performed a was, was quarter? On XXXX, what guidance there impact we the then forward how quarter, look this now the some you they the on And expected. us that two trend the how into commentary can outer closed, we during as acquisitions give lot about of fiscal should

first, fiscal initial the lap we you. demonstrating strong you should about fiscal just So results how guidance some Thank on think XXXX in as that XXXX? fiscal you're –

Sure.

So Solacom small relatively is a acquisition.

of we will did XXXX four business because reasons the we to in about growing have as it competitive can as XXXX the on five line want earlier, you results color top months about numbers think the don't as our – some and out so well but give We of I XXXX. numbers. accretive that to to in the on have mentioned And

we in QX only side, On of the numbers. had, XXX I something the GD days GD or like, acquisition, think two results

did quarter years. without of $XXX five So our we'll And about we divulging over full information contract talk regarding have results. a plans, million-plus exact

win we'll new provide divided $XXX should $X the just that's the you we're as then programs simply acquisition. you. to of think we about with think million, So them all do if working solutions want you the on, GD I way that to of math by obviously, the million And

and competitive. deal. the us so. win, it day, the numbers, And did for was accretive it It is important of from we GD But our at competitive was but the was to our end a perspective, to

Great.

And as you you margins, year so you can two government talk look just fiscal if strong think it XXXX, about had within in Obviously, segments. how fiscal guys think should about on XXXX? about How the the into margins the fiscal very a in XXXX. out we

fair And a our mean, we government all, quarter. Yes. spectacular first I of a it's side, had say question. I'd for

lower is at backlog earlier, that our fact, we as solutions increased In from in booked to look we until as XXXX. where of going were be And the ship some quarter into forward, same to QX these third expected we our At going quarter time, the segment. that QX mentioned QX. during than are not we

somewhat So for some at us, going is looking think, premature all But information segment guidance it's our a to to out. on all, you the business, little when come we targeting too give we we're for And where adjusted we that margin I our focus EBITDA. could in percentage than think adjusted just I increase, the XXXX. from we're a better XX.X% on think do EBITDA

you. Great. Thank

Quilty our Chris And we’ll from take question next Quilty Analytics. with

line Your open. is

Mike think from commercial contribution organic on the business. you're of my answer question. to to quarter out the rate don't in Thanks. was in figure I But the what Solacom the going I was going based ask growth comments, your to just side

of third since look it not not organic my is the line comment about a did think I product that stuff, you're Solacom question comment going in to contribution my the Security small to highest quarter. at there & at Dynamics Safety was that we answer include accurate. because and And couple our about the being would right. the I and being acquisition, General Yes I'm side things. you refer When are

organic have do do It's of our some still we the actually. line. working in time, our in offsetting our enterprise business. And strong same Safety through repositioning pretty Security growth and at product location – mapping & we're we So that,

So business. about that, we when have you navigated the think

it I of $XX working the new then, investing think maybe, And into sort the that or you business bought an business been and that legacy investing when basis. was annual we've we so lines. – million will, TCS, at if profit, around often on since

So year to million next is virtually going that $XX be gone.

higher up when line in think really on we and Verizon growth, and up. the the & going it now really because simply organic mapping those about it's not you about all we're wound when anymore. Safety them it's down, ate It's So contracts talk Security side to much have lower

picked backlog, were you the the from substantial also Got acquisition, up you. Also contributed GD book was million I'm there or $XXX on that up orders the picked the – obviously, order from you Solacom? sorry,

Yes, yes.

had a of healthy Solacom bookings. quarter

that we question Okay. And to of substantial as to a the like. on is mix look a business be we've of I there change historically? what business the into due profile seen going the margin go what to mean XXXX, relative should

revenue little a it's up, we government I is we QX, government total, that think to the what function when obviously, will to the precise. side we adjusted going you side, more in it what because, drive side, XX.X% for a – in do government get EBITDA in will that consolidation at segment But on if of we did consolidated get when of ultimately did revenue be to margins, be down. how add margin XX% it look going all on you number the we pull that under from the example, the much commercial

look say, well the above segment hit that then pretty of, let's government and impressive target in target what did you that And was XX%. at our if we year. think we've XX.X%, actually at our for We

sort about of for for in the now XXXX when fiscal around by which So XX% there we're segment, Commercial of to GD, segment, the the XX% is Solutions quarter. we're thinking impact probably including

if above XX% math, Commercial about segment. thinking, the for Solutions we’re you we're So run the so, still or

be next the the think think year. say end all starting point. going we think day, get On we I That's simply we number of we're higher timing, up the in and the segment I add the margin But QX. expecting, digits, lowest and for I double because the Solutions revenue when be Government we'll are than that probably XX% why think, in to just we next of to we in at should that's the don't about quarter it QX. of year, government side, year,

certainly to is commercial business, think, we Our grow. going

Government growth as margin we than is have. have still the and adjusted mark bit well. eat still all a a how dollars it we're of up, will little EBITDA to going question much think you when terms lumpiness, in in higher of terms be but But we you percentage of

And record it, onetime strong but one think you a I Got government these this margins quarter any EBITDA were mentioned Or QX. and there or good business there? gains strong the you. with issues particular in mix for was just Was in operating leverage?

No. It's exactly point, $XX of XX.X%. Chris, what did and go back, if go for did little we back you said. revenue you QX, just We a And you million-plus XX.X%, XX%. almost data to

improvements, So it's efficiencies mix efforts as and continue. cost a segment well to lower as we've is reduction to in just But revenue going than lot be what we that is the again, product going QX working been something our really and achieved.

for the be to the to we won't hit at would aggregate, again, beginning And that the too year. of in us we goal margins XX% tell think think we're it's you set at that for we going a we higher. premature number be XXXX. So be But XX%. yes, But little what

came on Got But updates I awarded Blue Raytheon been was out Army. there's that's no Force that you. that's about Tracking. the there that mention assuming of announcement And you the or a particular troposcatter the any fine. question, didn't And the know mention. either if contract programs? much wasn't those the with either change, I'm reason final on tropo, really

is important let numbers. or XXXX the in me make looking happen, or modeling tell be to it's I our that the update – cap programs address comment they're we're from thinking if most specifically at But right. would going say financial way great. and our it's they and our XXXX not two We're to That's the probably you. to you

not responding over. I before, So in process the we're yes, U.S. is that's think to is the by work mentioned this do we're to any And with not the partner, the will. decided over, see revenue going to we've Raytheon public government own But there. and next there Army that Army and of get existing out But quarter, program, a the And U.S. that in and awarded contract. Marines with forward move have the program. that's is There the was to U.S. Marines out to what announcement their during us ultimately program program, and that the try opportunity The to that Army obviously, in moment, there for the RPF that program that fact an an if in we'll thinking does on our you announcement was and have back year. numbers the again, cap our figure a we're it considering way to does. for ourselves give our protest

be There upside our to process. will thought

side, Tracking On changed. Force has Blue the nothing really

the sense we their R&D that are somewhat With we in we're funded to with the exception some smaller strategy, and announce not ready soon, It's do of to. continued thinking and we're point conversations where I – too the strategic that U.S. critical point them hope if binary Army, for are but expecting to great receive to But nothing may those get contracts, in think that, numbers. just that. us, to. for again, about a ultimately go is our decision But we not that's the orders where

you. Very, good thank

our will We from with take next Gomes NOBLE question Joe Capital.

Your is open. line

and morning great guys. Good quarter

Thank you.

would of it Would – it's for you at down but $XXX.X – year-over-year million question. and pull forward revenue about that's business be looking your the the below seeing – what by some estimate we've here into see did is QX guide, for to QX revenues consensus of – some quarter over were. Quick that fourth

revenues into quarter fourth were some seen you expect that might if originally pulled the you of wondering just third. So the would in have the

is Yes. absolutely. The short answer

quarter Our this you that's business drove what there's really just And $XX increase. business, so million a was did math, year, so in – lumpy $XX.X do government the versus particular, last our government XX% million that. is if

Now grow at I'd to to that's just love XX%, not to that's happen. but – going not going

So why do reason government changed has our QX. from is business we pull-in the QX number yes, the part get into of

happen. did that So yes,

as what at are seeing your that momentum here that are apple be so forward recently? that could you could so would concerns we've changer major mean, cart – well things And What recently, guys – a be Okay. are looking upset I going here? the seen from what going

instance, I some our supplier out you of in stuff. Well, couple I of the say with China, on we've in issues question. we mean, taken of said. sell we will them of We've would to to you tell numbers. been great our do China, a concerns guidance equipment considered We've and Joe, a almost happening the But would are what numbers. our I of them. a kind we light for our actually trade million moment, dollars of taken Huawei it's what's higher a out Huawei, guidance. than have that to that at there them and year of out are our And

a of the day. the But those So settle for Huawei we're thing to to year. And and taken them we that ship in perspective, were not cap. for expecting down, are backing to on we do in reasons have. think be things thinking just out next our QX, them able we've business concerns China. Same from We bid. every with political that's to And focused

to out figure to customers their and ship how needs. meet want to our We

But of confident about think feeling very we're So from we you to perspective, XXXX. and the guidance in of we've achievable actually thinking on hit. it. out we're given focusing where is them that extremely headed numbers we are a And terms cap taken our

Again quarter. great thanks. Great,

you. Thank

Northland Mike next take question with from We'll Capital. Latimore our

line is Your open.

the interpretation? you better I Mike, commercial there? Is you saying some Just said FY Are than expecting basically think that that growth think that to be segment you're be XXXX basic could even you clear, FYXX.

Which you I segment sorry. I'm hear. couldn't did –

Commercial.

business, yes. grow terms revenue of and Yes, think, in contributions, our I will EBITDA commercial healthily

the of between And those Okay. some products that is associated the you repositioning then in mentioned, segment revenue two of amounts the and that combined factors? kind what are of the that with AT&T

rate. growth effectively I because in go our as $XX about whole three worth – Verizon are I those think last did out absorbing all years, million revenue Navigator of that's call Well, – you it over back that we a organic business if our are the

our all to our is is about be a way lot ENT our & to So going business going is of grow, all, commercial that earth our Security growing. to satellite organic. – segment, But growing is in segment next down business AT&T in it decision, Safety think the and of net-net lot station year. one that business commercial growth is and a is our

far And prior seeing acquisition, into some great. I'm about – of I GD of the cycles Next pursuing you these. were How some That's already assume then talked some on of opportunity Gen curious a I on? the opportunities, on so going guess XXX there. to has those large you are it sales how just kind you the statewide been long

programs chasing question. were that there in relationships business Well, actually, is attractive to it's GD we were key had some an us. XXX of that – there, actually things which some not interesting the Yes, that was the one pretty

are don't there not don't opportunities being So because and Solacom out, GD there. of California so after GD exact in. acquisition, And were has we and then while we of that a different we dates know this, to are in to been talking the sort did this, think, on of But in of that's of California the me actually, out Commonwealth. we the were hold them, the the acquisition states, came it program, a I I a one program couple that now couple

our as public because is they're it in and here. week right or proposal going just we the put So timing is were RFP. maybe maybe use combined think California attractive, is an ago around example forward week. went But a think the together this I I'll we responses a through a solution due very actually as that And process, we

the are But far too business, it's I being a answer growth a opportunities, from example guess, is the lumpy, million out the into it when leader. ultimate weren't states comes. we're perspective, to an similar tell at can't The but opportunities business new moving although And there's These clearly of here. point. government we market about talked you our coming right, we'll $XXX it. inflection we We've how get the So there. this are contract,

East We now convinced Commonwealth Massachusetts we're on the the state Coast, key state on of the reference. the of West Coast. – the we And customer – doing Washington of have a

we So only we're think ones. the

States excited the we're when to We win. And think, it's now United up have very Ohio And our us to the opportunity. largest like in contracts, and in we about companies just California, two to stuff. this talk you

on wireless of the kind Claro of And it. was the one-off a big got part a is it, more HEIGHTS, here? then Got that backhaul opportunity there, the thing Or of pipeline?

customer not about talked again, But reference having was key always Claro we've points. one-off. The No.

we America to in having us say, in let's the equipment reference part purchase in of is helpful very down So testing, to a North from customer And point. very, continue spot. the including do world Claro or that

being So customer terms closing helpful, we're these enough business. their to now our sales deals. to again, allow customers cycle that's use we that be seeing out going names long reference think, of names But additional delightful as us some to are and in in there of points, the

Thanks Thanks. Sure. lot. a

George And we'll take our from Jefferies. Notter final with question

is open. line Your

results. over this beginning the in it of August, I guys, be Hi in in. be or – for ask about that pretty a revenue ratable? it course congrats might more to would is on disclosures anything that the it lot contract? back-end and believe And the the it more the Or August. Is of saw loaded? Thanks George. front-end you acquisition going add I if that Kyle bit come how of the Will when be question. starts regular your Wanted a maybe GD shape for to little around can on

can how you in be on we would that about think there add helpful? anything should So how comes

the on correct you're And Yes. date.

I tell out have. sort state selling whole, business to a we that, Massachusetts. Commonwealth it as solution call a but of mean is models of would the SaaS, a is It's like similar the – the the Kyle, – as public that – I well, software cloud-based we're that safety it we to don't Software-as-a-Service, business. So model

The year it's starting contract by $XX a for in a contract. $XXX August. X, So divided that terms, it's in simple $XXX million-plus million million

how Okay, know Between great. how that Thanks I And backlog bookings a much bookings? lot. the addition And into bookings then,. was this million GD were I quarter. you guess $XXX of kind backlog of much of went connected quarter the to that, mentioned the Solacom, the and acquisition-related? how and the this much acquisition-related? of

million. simple our a right, we at mathematical $XXX point, from Well, backlog, finished

So you to a and growing. at And don't contract, $XXX again, just number small anything that. putting million-plus without that on other you're want say take there, if else than $XXX million. off And Solacom a company I is

achieved what most in QX organic. is of So we

we various sales strength not flowing maybe Solacom, more Or as good gears a product as way your should biggest seeing cycles that, bit I bit million, are HEIGHTS? activity industries add the to less for that's little in? Are about. a looks I that is meaningful Is and in a line what the verticals from little The think are pipeline else driver bit – or then customers, there flow changing on that also but a like $XXX And can business to guess start some little here guess, well in some pretty cycles. activity seeing to that sales – more is that there anything now. it I there cycles? underway else with with now about the has sales more Want But of pipeline. any the or you you the right you're – start ask HEIGHTS know longer anything there said pretty regularly? these to for you're lumpiness HEIGHTS to

give for are HEIGHTS. line long a The too we I'll in achieved in of from tell don't current just level probably on the I first so hitting sales XXXX, that months most lumpy, again about momentum clumps in nine increased to HEIGHTS last say seeing or to I to So a year, than have order but but make more predict our maybe is comment little the product it a going the bookings in goals. all we takes business when yes, we we cycle. did the – it's we're as even HEIGHTS this guess, It again, is can does I could premature specifics, us close. you, of you time it think to want that And important itself year, doing. long HEIGHTS we're double comes that exactly

little But bit I there's in would a terms of lumpiness say, flow. of order

because about we solution in, once it So we it And don't it's important. it's a get concerned sale. get

September. we'll business net-net, levels. could opportunities the double that And up. XXXX, in to more But are we have is think, business in from fact existing So about up, talk

of go groups Okay. industries Great. customer that any And are successful most Fantastic. of there concentrations up? kind you're Any in?

product. the this SC/UPC now, be – to it's They our the question so line. on Well, line Right way. product an seem interested be to highly government interesting doesn't interested to in in continue answer and HEIGHTS that be seem the I would purchasing they

efforts Lines them. the not are. cellular we broad and be based the it and side the Argentina So not get them Carnival little spending of seeing a on We're effort side. lot backhaul we're the introducing with the that's a across the the and sales efforts entire cruise Cruise or We're whether SES ships had comfortable, Claro. opportunities Caribbean commercial to with government where markets, We'll – our but

on are that broad enterprise – based the So seeing pretty side. it we're we –

me. it a Okay, great. That’s Thanks That’s lot. from great.

further closing turn call any And there I'll back the remarks. over speakers to on no the questions for are line. the

today, we joining September. you again, in and with us speaking you Okay. Well, very forward thanks again to for look Thank much.

does today's This conclude program.

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