Comtech Telecommunications (CMTL) 9 Dec 222023 Q1 Earnings call transcript

Welcome to Comtech's Fiscal Q1 2023 Earnings Conference Call.

As a reminder, this conference is being recorded, Thursday, December 8th, 2022. I would now like to turn the conference over to Mr. Robert Samuels of Comtech. Please go ahead, sir.

thanks the and in to everyone, today. afternoon, for time taking dial Good Comtech's Relations. of Rob Head I'm Samuels, Investor Welcome to Comtech first quarter Telecommunications Corp.'s conference fiscal XXXX. call year of for the Peterman. Chairman, Today, with President and I'm Comtech CEO, here Ken also hearing Maria be by we'll Office. Chief from Bondi, CFO Hedden, our We're and joined also Operating our Mike

you available a I'll please our questions investors to have, so Before today, that the results, myself answer also we company, get organize and or to both in want touch talk about our if get say meeting started Ken to and always our may strategy.

have discussion to quarters blog, Comtech we a have We and directly quarter also and available in our working been business detailed between communicate in letter our market shareholder also website Signals. about the our on our of our

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

Chief Ken? Officer Now, I to President Comtech, of am pleased Peterman. Ken the Executive introduce and

taking today. thanks dial and in for again to time everyone Hello the

the That about from as investors, and into with Comtech on XXXX, everyone move we CEO our leadership that and be conversations quarter my was our fiscal day transform days early for not move Comtech close clear with As as more to first pleased a our books before. that year One early needed thing one making tenure from everyone is ever the fundamentally our you I employees opportunities consistent journey all was still this the we're calendar and to ahead. head in and could said, than my know, in progress my of I and we faster new team, as the at in business.

our Our real-time, end markets are our Comtech one technologies contact. customers' financial our sharing our organization, changing to solutions also early products, new abilities but solve can in underway and It's it collective are their expertise, evolving, together the that working and as commit and performance. problems offer we our I needs and in means we if process, see in insights, our to improve constantly mean people to every and from creative operations, an This as to being reflected day it's our our the culture. One everything journey is working. in

restructure In our also straight of us I and we what to in she's we machinery accomplished directly addition want the sequential performance faster, want can I do forward. changes our sales, are we to our and across little a we've you more what functional do improving as of going at more from the make Maria creating key appointments, topline value improve our leadership and Comtech our organization. from talk quarter-over-quarter to about And million and that to so hear trenches, out COO, in senior delivered to consolidated everything to Hedden, was efficiently. better, should a streamlining this processes you increasing I our even Comtech. we the quarter expect growth increase business, with net as One as team representing reorganized functions point multiple bookings continued that customer foreshadows continued the Comtech, $XXX of fourth for

he so call the turn our for CFO, to through financial the want quarter. our do I you that, Mike? to Bondi, can Before walk over performance Mike

Thanks Ken.

recorded $XXX.X Satellite fiscal which Terrestrial recorded XXXX, net million and and sales, were million segment. $XX.X QX of in were we Wireless and consolidated our Network $XX.X Space our million in of recorded For Communication segment,

first last mentioned, quarter over Our sales QX quarter to as consecutive sales a represented net X.X% increase. year-ago fourth fiscal increased net gross quarter, Satellite were our with $XX.X the XXXX. consolidated Communication XXXX in margins increase by Ken fiscal and our quarterly consolidated Compared gross higher our achieved line Space Consolidated margins million in or our in revenue XX.X%, driven XX.X%, and QX segment. QX and,

profit the startup fiscal mix reflects changes. reflects XXXX of increase product centers, costs from COVID-XX associated resulting sales overall new pressures. percentage volume the QX technology ongoing gross in increased our and as impacts Our manufacturing with opening costs and also well It of an inflationary in high net as

lieu dollars fiscal net inflation, supply in Sequentially, adjusted costs of compared As adjusted sales, in reconciled last as QX to XXXX. changes explained we sales in net an our fiscal XX-Q and or million rise and today, XXXX overall fiscal in earlier measure is as dollars as fully QX compensation in units the Form X.X% EBITDA. general sales that detail -- chain filed and share in lower, XXXX increase sales. prior with in quarter the consolidated of QX in The was percentage of and non-GAAP XXXX to $XX.X both as a attributable adjusted to in a annual incentive both settlement EBITDA utilize increase was and or we of fiscal in fiscal referred $X.X guidance, more XXXX line cash. reflecting a EBITDA our fiscal million QX of the to vested inefficient primarily mix, in X.X% due percentage with

quarterly quarter $XXX.X increase, a X.XX As million, totaled during mentioned, and Ken representing previously sequential of XX.X% bookings quarterly a ratio book-to-bill the times.

approximately quarter plus we multi-year million orders. expect revenue the to value total of an challenging. of backlog last have to economic exceeded visibility ahead Our provided funded Overall, July, adjusted we increased of received targets, pleased our our have from which environment and light sum contracts current QX in unfunded $XXX.X that our from EBITDA billion and to backlog future of sales equal to net is continues be is of and our the funded particularly $X.X and certain we're that have and consolidated our guidance were

back return let Ken. Now, the to me over call

Thanks Mike.

optimize people organization, of my the at solutions, such business. of tools growth over the directly a they the P&L said, us to company every spearheaded accelerating performance that and shares the doing can the where keep is the the the of do, of we I a work from Maria is be that March, we're ensuring our and have of that want have going. and business. by is our a pace of lot In want most in machinery opinion, Maria's a Maria our set One an strategy, everything bringing A of As we Comtech experience Operating we to part XX Hedden, to do the to I core common years her make work sure operations business world executive big joined Maria, in day. business systems a history serve the top and hear hard improve commitment work Officer. and of with of at processes demanding growing. improving best everything a workplace to call, management our doing financial our that and profitability improve that's to we role able customers we're Maria? everything, Chief you important of Comtech's best To and performance. At in and support being reflects we're everyone and core lot to

speak all two are Thanks earnings call, Ken for first Today be to have expect is of participated time important with investors. highlights the it you but that think I I've today. to good things and able actually opportunity I the to on

at Ken and making what to we The strategic serious Comtech, is operational commitment call first heard One excellence, you've are integration Comtech.

commitment each that on we are with tangible actions work every that on other day. way the the translating and is The focused way strategic improve we that ground we work, the second into

cumulatively, so that value doing shareholders. into actions profitability, is those our us deliver translate and company, to stronger will and belief make growth in will Our directly a

All of had resource to me company single after the already in One it a a is became arrived, actions. have isn't say much I as Comtech ideas it important our can this that talented passionate we strategy place, clear as is most to about about Shortly workforce.

needed supply all were As unit. that meant I it, chain. ensure machinery through We these to had saw harmonize that the efficient, best people practices everything scalable. business company's collectively That the doing, business effective, our from more already around was optimizing they right organizational talented ways what were to job my each to and support with and them

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into appointments positions. leadership key hires We have made and strong

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just Thanks about positive at day incredibly making happening to and Maria that Maria. changes point was incredible are the want I Comtech. every extend the

as both segment changes segments. we our Wireless Justin and segment on As Jenkins Communications significant and our as to structure Satellite our Wexler well leadership she and our key markets customer is Tim focused is Terrestrial Network our President. made and Space have President now key end said, executive

Officer Defense, We also Daniel our as Chief for Officer commercial. our Jay Whitehurst Chief Strategy appointed for and Strategy Gizinski as

of segments. ahead. poised organization year Together, believe that and we units Houston, across Doug is ready appointed has in heading customers key people place, day, we needs to is Global successful have leadership Support. President specific Finally, for partner with it structure that every we customer the expertise of a have an Comtech a I our is with Vice in that means the improving itself business

questions, at let to me were first for million $XXX I quarter on Xx higher fiscal last to move circle of quarter, our Before which over than our bookings, year. take back the

to and will solving failed on not we be that this value Our focused continue we completely improve and creating ways. business, remain pick investors the problems and machinery unprecedented customers' our indication while clear unique to of customer in not our have a to should innovative

leaves of our wins only during demanding world. our quarter Comtech markets. clear never key unwavering contract our the in one the solutions services most set the standard mind It but customer continue focus, Our make validate that every and have also to not that in it we the customers

high the the we of Ukrainian too, Comtech business during Comtech. standards. paces are are U.S. But saw we up battle through have to just -- for them field technology-enabled as new our to military happy with identical before, year. adding put it and quarter awarded is well Among new measured business we I'm the welcome from contracts to their have new means they tested, the welcome -- were this always tested. customers government, We tough customers worked key March donated in these wins to products win those because not we Our with them we communication very systems solutions which at repeat as that their donated have

believe operational new a leadership, invigorated Comtech that, across is our been XXX we has customers and winning are that common an our new refreshed fast. contract growing. In and come have Comtech team, addition, largest organization, wireless end markets, of them, the underscoring infrastructure, Comtech in moving to carriers segments renewed one States, our again, One services our with prepared United of we a the challenges depend will aftershocks, geopolitical trust, better challenging, and inflationary combines advantage that that transformation macroeconomic and itself positioning take meet the be ahead unresolved upon know, present. me the working market we're and But given Comtech. environment these One they opportunities road us to pressures, let and With the success. is a acknowledge tensions. that and With pandemic energized for And in is never

to Now, moment finally, service Fred of Kornberg thank I XX years Comtech. to take for a want his to

here go over [Operator ahead. me first And questions. wish him let move from that, we'll to and Comtech, Next with us Instructions] NOBLE board your will Gomes years. at Fred week, contributions be the our retiring his from and Please well, him we for of thank all Joe take with And all Capital.

questions. Good for Thanks taking evening. my

Joe. Hi

Joe. evening Good

So, Ken, evaluation, on a your your I maybe got wanted a color or little belt, to ask under observations, your you've more detail quarter conclusions. now your

did some prepared You of remarks. in that your

you So, on to where any you're pushback if making these -- And deeper? are that getting of a dive little organization? getting the any some -- little pushback you changes bit you're

Yes, can or is look through. -- common you beginning thanks, to in, tell those the which and our Joe. with transitions on all, respect and performance challenging. performance we're I'm Maria aligning can current move on how to the practices their want We the this in measure and perspective biggest we common when on. we that challenge and first at aggressively much investment systems. prioritize lens in juncture of then One might obviously, put chime the And Comtech the through going that be I'll they that integrated so Mike offer on here on they programs. to our and through configuration, if forecast current We're an to on moving is the to operating them, businesses we our processes various But return that what schedule able we've And baselined, indicators place that. operating that and they operate that together master metrics key tasks that put and key operating

So, news on we're the about it. that the team is good ahead very is excited and moving

launched a Secondly, that we've number of initiatives. I'll crucial say

how and incubator, technical that's I'm if because And Officer. to led this That's they in value improve exciting into Joe technology we the even about some is what can they them partners controlled we Foundry, our own excited that already being significant. technologies a Chief by think Growth quantify kind we've who customer launch that incubator can't and customer you those of Innovation environment, relevant we improve identified initial our of that be. outcomes. the really so One and will, bring blend can customer our value of demonstrate that how with capabilities assess might really

that our Innovation and to measure lens up about provides here our Foundry which the services So, enthusiastic can really one excited I'm we performance customers. things and of the how that that and systems brings and is the through level the capabilities a

want, for more on states was Arizona, little in deployments, Thank the pardon the Okay, we business. great. be getting and you making Thank there, running? talk of business Pennsylvania, Terrestrial Terrestrial there, some the down XXX are will that the the Any maybe you there you a color great. any other color market how detail, opportunities It me, could move deployments a more little up it those is bit maybe that. on sequentially, And out you,

in going jump I'm Mike thanks. let Joe, Sure. on that. to

in of business winning services in again QX. favorable announced the have in Sure. disclosed to expected benefit that location-based cost QX, to Those claims contributed part XXXX the early XXX definitely in XG coming XXXX, Wireless Also a we lower due than in area. contracts. that the and mix remind Joe sales especially background fiscal on million did warranty last reducing of QX software to to and warranty contracts and were just we approval of year that everybody, result sales we large fiscal several product a $X.X Terrestrial

are installing generally software. Call generally Routing have statewide XXX XXX lower So, before, EBITDA to And QX contracts based and more Call we're light those look Services. the Whereas the certainly, as advanced new time, stated headwinds you time, on were some you we recurring of net the it's on take upfront to mature awarded improving year. some apps better our at terms subject a over service, the going PSAPs and margins we contracts XXX our we mix turn sales the in NG of the When PSAPs we're legacy mind contracts, the the NG Services are keep infrastructure, and lower that's upfront And cost. winning had than were fiscal that the last recently area, have in because and to have changes as as adjusted recently that disclose area, up margins, XXXX, Wireless on in contribution the to favorable the we in absorb Routing bottom-line. to won, XXX XXX we expectations

South of answer won, those the with of and that on getting contracts, PSAPs. we So, big CapEx, of have three think contracts. terms spending those I very happy are lining the towards in Carolina, Pennsylvania, progress the those progress tail all up the we're to portions where the end we contracts we on question, We're your of the been deployment, Arizona,

very we're move encouraged live. so likely to XXXX, see And PSAPs those progress. by into as we that And go more we'll of

back Thanks get the insight queue. Great. for Thanks I'll guys. again. in there,

Thanks Joe.

Thanks Joe.

take ahead. George with go next our we'll And Notter question from Please Jefferies.

Hi guys. much. very Thanks

the million I $XXX You chunky contracts. quarter, the bookings big that mentioned assume for some included number in

I that number. the military think announced the quarter, any for through Tropo $XX are assume other of kind there million. ran during deal you as there a that pieces chunkier well? I U.S. with bookings And in

in I'll expecting. included next-gen also outlined, than we the That take terminals. give were to some of tried And order you to have definitely nice our have it that was the shareholder as see; We color bigger It's orders. in letter. came we did in on the largest XX-Q, the we -- George. think I Troposcatter

a award. So, great that was

next renewed on Tier-X quarter We made [ph] progress units. have we that was delivering item, would COMETs would certainly reset quarter we call say in really the and out first three additional first customer. also services in we key those Army in but the with out. the for Those first probably received annual terms had some U.S. routing largest those -- eight large that of Ukrainian this I the good And the we we orders are call the quarter, the carrier that in provide call largest a some were we that the our we other wins, quarter, contract. And had

Got it.

the look our seeing and and to us addressable will capability together, of that you Systems George, move we enterprise our we business are tier into the to enables George I we wide Ken. and up this Services that expand segment. bring is One serviceable Comtech as that, as markets harness tell

enthusiastic seeing engaging and can value about revealing how better with proposition understand create this engage and for pretty opportunities value Satellite even them. the we're us directly to We're directly So, expanded Terrestrial with that's we're customers both customers. us to

underway demonstrate workshops XX leveraging the We next discussions have hosting days and the -- foundry partnering technology customer where within a strategic to enhanced in capabilities the XX we're innovation upcoming in and quantify these context. even

customers our funnel are that's this in our aligned So, value looking us expanding with going business new proposition, forward. forward, expanded

it. Got

guys Can the that question about the Okay. deal credit now. on of $XXX the about million line, kind is year. sheet I fall right expires given the now? where sheet. plans A to know kind think Also, balance revolver of, next have drawn right you of in on with quick that I the balance talk your you,

George. Sure,

of In add, actually amend said. I debt, terms on it's basically But little did X-K importantly, more we ago, just about north of a a facility. the week our we the did that through sheet, would announce credit balance what you

potentially but sheet, the balance see it's in successful the getting we're a default with today's to of terms you're thankful in that reports, news with were this long-term of We presentation last higher because And of pleased did in representative be there's on as a reading very out rates. week. deal. business, more announced forward with lenders deal was and a syndication change there our we amended of environment. global with skittishness a an very our some recession, So, lenders, lot to that lot move dealing Obviously, the we you

this navigating with that we're through outcome in us pleased the very it the and environment, to so gives flexibility operate. And

at a take Got it, great. Appreciate the very guys. look Thank you. I'll you Thank X-K. it, much.

Thanks.

next ahead. Mike Capital Markets. with move we'll Latimore Northland go Please to And

running looks the Great, the hit here, good. hit yes. Thank you. Yes, ground definitely

get that time gross of of margin where might year, go gross was over of through a little margin, just to the sense here? kind can you bit drivers trying you're and on this seeing the I a Just on go headwinds

for your and inflationary and We're will be in chains Ken of we given then against that I running optimally. QX. seen that have as supply environment, economic terms that's certainly guidance mindful only mentioned, definitely in we of pressures, is we're not with a backlog QX, we do or in our But that of year and we're have backlog margins Network up that so our think and lot segment. backdrop, was performance is A pleased of in that time, improve. over ago. Terrestrial challenging, in certainly still we our background, And Sure, Wireless multi-year nature, guidance, set disclosed, a will lot

when So, that some pricing is burn it's we time the it a line pleased when out able resetting for the last out, range. -- early to We're are the But take call. you we're with -- will the based backlog sitting that to And we QX, to year, inflationary keep little we but we're off mid-XX% the can, with I market-based, backlog. XX%. account of on in where time. isolate rest pointed and at those holding had in that fact the QX into mix But year, some that as too that pressures, higher that certainly favorability certainly taking

certainly top the our the and go we're targets saying But beyond is now, guidance and what QX So, we're we're for us to not right goal for going are higher. bottom-line. on

the who provided we the shareholder that veterans people got -- that businesses have thing clearly is give right that in tell seasoned to to before tell bus, you people in this kind in right are right And bus right people this will you I'll great direction. in like of that the progress, are. here. to headed have jump I the Ken, I'd we the details also on we But businesses the some We Maria some respect the we in together. making letter -- Mike are done with of siloed These bringing seats. got those chance

maybe Maria, to and so the the goals. integrated just word KPIs, the on their team master schedule with from that metrics, tracking And driving the way the respect against a you're

Ken. Thanks, Yes.

couple just that. things on So, a

instituted people performance some last key that, really what some on those out business the have strategy of that our indicators. and clearly understanding some is processes of quarter we've our we've So, rolled the with understanding focused been obviously, new done of that risks, but over

I and across to mentioned, that's of objectives our on Ken full to organization, perform needed while do. our visibility on we expectations. And to session to the day-to-day the As grow stay really what organization really continuing developing hosted stress driving and being day what able a focused alignment

Great. the maybe pipeline obviously itself, had macroeconomic, here, on of demand. out just you've Yes. kind And but also you geopolitical called then the effects strong

of So, here? maybe it? just terms prominent particularly areas pipeline, how healthy in pipeline are What the in is the

segments here offer market opportunities, to size it customers both speak value. It significantly able potential. before. siloed our pretty now significantly and that. I'll we're and you, Sure, market I individual businesses would to our offer tell expands that the our segment, new funnel. not have services offer systems some to This up Space our exciting significantly Satellite our expands growth business of In expands opportunities; and move it our us enables greater to

significantly enable more proposition in we to to can effectively. because value, the value able customers business into offer innovative arena we're customer Now, and -- more models that us that it more creates greater Space Satellite more value proposition significantly move monetize and

So we're excited that. about

Now, in geographically Terrestrial to and also both XXX with of calls we and Wireless, the respect we're expanding transactions queries. that location-based or we're increasing either handle number

another as that for available fact, of another of and like-calls machine-to-machine -- as and will dimension and Comtech. number move XXX transactions, make growth, increases So, toward in human-to-human, not increase just that the we

terrestrial to we connectivity Bluetooth, opportunities connectivity device also satellite choices, providers and infrastructures as dimension. like moving Wi-Fi, Thirdly, And with ad and you converge, Network and now in and Terrestrial offering growth Satellite direction. that another devices, multiple the multiple see see you cellular, in but devices see that Leo

level as of in segments, day, convergence enterprise the growth and where at significant as satellite each of through see So, individual uniquely the end the advantaged. [ph] trusted we well of our the is potential domains, at Comtech

Yes, there? part there the of just pipeline. a deals big that Are one. Troposcatter last out big

to tends envelope, -- that in bouncing an of when we propagated such that extremely signal degrade Well, have rain, in you performance, operates actually technology works. particles, Tropo signal improves hurricane, as the its better are heavy the as it generally performance the see it off a complements Troposcatter in by exciting SATCOM particles SATCOM more because the where its and because

it see in SATCOM. opportunity like connecting centers gas environment, and emergency in connectivity between centers, opportunity to a -- or we And connectivity defense terms So, companion the military a law other operations of but becomes enterprises, enforcement, see critical kind in a we providing traditional natural oil operations commercially situation. also of houses, and robust hospitals, hurricane there fire

market. So, able see expand see the at of in into adversary the like the moving level, being as oil defense the technology as conflict, peer adjacencies in gas. as we having and commercially, enterprise success it's well, Because markets new that to well we it

a we as significant opportunity us. growth So, see that for

Great, sounds good. Thank you.

Thank Mike. you,

Chris question our take Singular next we'll And Please Research. with Sakai go from ahead.

In a commitment guys, of this free for discussion and been you [Indiscernible] Hi, a Chris. flow, Ken, has for around light helm, cash growth the is headwind dividends? or taking to temporary to and off there

performance that We value. regular capital yes, deal can and look basis. we that you tell on board optimize I driving Well, shareholder at to at We level. to the respect of our with with business a try deployment creating

conversations in continuing there's yes, So, regard. that

to that fact liquidity right at. say Our that to look continually section don't plans anything we that have point the continually -- of specifically beyond the are I'm But I beyond capital allocation now I our on that XX-Q. reviewed. in discussed going disclosure our

I'm and stayed customer or constant couple company's as The if correct international around so base of percentage last five years, Okay. last has one wrong. years quarter a me

internationally, from can marketing developments and different internationally, it and of So, is per the how sales and comment maybe is, domestic efforts dynamics the dynamics? se, how you it on business

team dedicated that international sales team a have the we well. a then domestic market We have as that and dedicated serves the market, a market, sales defense serves

I our XX.X%. about presence think international has

favorable providing is service, as opportunity that benefit say as providing Comtech sense and you're in And going the business. seemed defense of as of as that a it's ground because customers So to right going that One a least they're that I well. that as about benefit infrastructure, going maybe to move But and as quarter our as part that and the or system business. domestic me to -- in transformation we have it's the international in our to reason be to that at this a ways satellite-ground

As the we XG, too. community see technologies market, Wireless And the international extend that from will see way, to the we market see benefit XG us. a international into migrate in XG services opportunity XG in and the bigger opportunity our that location-based to the and Terrestrial we

schemes, can several So the international move market, benefit we capabilities our same by our our international activities. really and into update defense our legs think and all we the the our as business, -- domestic as of marketing the that will market

be would -- of give can next sight quarter any and for you us benefited military to foreign how long this color line sales give and can -- you this terminals, communication you sales from Ukrainian think think benefit? beyond government you your So, quarter military a color. of extent do Do an

world conflict our adversary. something equipment we've effective said present, daughter communications. working. the What customer say, or I is is in well is otherwise, marketing is the And in uniform, a the son is that Ukraine in writer you as as the what in equipment because the a is blogs, in a of most conflict a can And our And service a our they're person in a we uniform is with like a tell nation. as example great or to pure who

marketing than greater has value podcast So, a seen. that that or becomes a ever test brochure I've that any

So extended proven. that of the continues and our in works environments the we an equipment, viability extent expect extends toughest because of do it its value, an benefit have it works, yes, -- to that

a And develops for the a Yes. finally, narrative too. And it's stock -- long-term it if great and we this. very can comment on Absolutely. question so

this So, have models the SOS. iPhone recent Emergency

a you competitive or complementary they Apple's trend products? regard, as threat So, come from you their Apple kind or be it a year, what a offerings? in foray a in possibility, company's It that you'll way substitution think of that the to product this draw do or could might see if line, next

strong both you traditionally for we of bands, domains. frequency the Terrestrial and have been both technology tell are as we and They have those I'll significant different infrastructures leadership Network those of Comtech in domains devices, different been a opportunity of Well, different strong in frankly, We've convergence domains. and Satellite different because with see players.

see take That's convergence of Satellite we together, that a to positioned as so Terrestrial And that. advantage comes first that as of and Comtech uniquely I'll say point.

Blackberry, The which more when moved at had away it it could applications, voice-only is many for to second And introduced market future -- was that the a phone, on predicted took what the is point the when providers you only opportunity many smartphone the we But by the share the flip from had you more saw that run saw I'll smartphone. emerge, saw voice. past. say BlackBerry apps the is looking the sometimes

when banking, larger been in apps enormous restaurant the them, share such had as take user them from phone. market introduced, reservations, list value. your was it that done of making it before smartphone don't new fact, Apps a online created didn't your that I the never much market you need boarding pass, see on So, to Blackberry, just customer created or downloading

Okay, so smartphone's incumbent, in it introduction share from the case, the the second entire take just expanded ecosystem. didn't market the

apps right the now, your bringing to market of former, in new everyone. of us new to or will for share expanded like provide explosion Terrestrial whether from whether market those and create going None of that take providers where and now that to behave looking So, Satellite forward. the going convergence attention it's an it do create SATCOM is capabilities the know ecosystem not an

strength that our Network Comtech prediction, very in reiterate So, to first to except a both point, Terrestrial and and my -- that, advantageously location-based think I services. is going say Comtech Satellite I'm positioned, I not technologies think, because make

of So, capabilities our reasons, take kind driving we -- this and of of the siloed the a up-tier that's reasons together, market advantage of so one businesses inflection. one we our can bought

Appreciate to new so luck you much. team. the it. Thank you. Thank you Good and

you. Thank

Thank you.

ahead. to go [Operator Company. Please Greg & with next Sidoti Burns move Instructions] We'll

Good afternoon.

With the Terrestrial for and Wireless that segment, what is a good target for a profile steady business? state margin

historically, saw with saw EBITDA because it profile Yes, our was saving, I think we the combined commercial there. you --

of certainly, same revenue up types the NG the revenue. we're at of and streams forward, seeing point XXX time two at a Going of building convergence where the we're

sort right the I'd costs, XG because we're initially, right those So, contribution large now, in those absorb say, of LBS what we between upfront be now, will contracts. you're as seeing EBITDA

As revenues see we announced in QX, we but had ramp end this a towards the up nice that through, tail from the sized order year. of you'll come

the services, now profile And on now than going as of it we of certainly what just is we're said, PSAPs our and a EBITDA of give recurring mix those XXX percentage, you're getting not as specific flip start right infrastructure will end we a contracts. revenues. the more front at more the broader it's I'm higher NG right leveraging a a to So, of base improve. but because over

a expecting up? XXs? Can you XXX give like these teens, business deals scale be low range high investors Like, what like, from this should as

XX%, I'll doing answer a come past the broader answer. EBITDA our seen that say, it we of way more the were this contributions down years, in in you've pre-COVID. In couple from

in exceed get to those all the in not company areas, we to back our if want a XXX of that. levels not As and historical product just area,

initiatives a bear going articulated, we is we that of we to will have now expectation once we've right our start and on fruit, get As there. lot

want overstate to do. So, would certainly that the years, this I to lot challenging next have environment, couple a level. get of work we of to don't to in It's back a I but expect

Okay.

And with change any years On the that there many how for? in pricing? has was Verizon, extended contract

of That this X a was in it, contract at renewal. it to and a very good time It renewal. just terms in annual was pricing, have we relationship due renewals, a with annual point of of competitive aspects was and an carrier, Tier seamless type

forward. rolled Just

can the or of was how and Tropo on? that bookings, you maybe much to that Marines, were deliveries size in the remind delivered us that have you of that total awarded, contract The that you Okay.

about marine for next be to just contract Greg, clear, gen the you're talking Tropo?

Yes.

Okay. we won contract about ago. That's two years the

million, We that it, the time order. desire get some a lot go to initially $XX them their got for, and there's in based of delivered was our have about I contract. using think a headroom we're in year been testing have. large a $XX leg maybe first the was million plus it's terms terms still million we going they field this in which run ceiling received, on first out of a order the we which the to the order of around, on the of But order But million. it headline they've very a run need prototypes, globally, needs ago. sort something $XXX for particular it's deliveries production that plus and a And we them. the And $XXX of that to current that focusing take left just that it's out on fact outlook, is a

the, the to quarter what contract market? else awarded then And to think you part they were Army had U.S. Army, is is were awarded a contract, this you opportunity the back U.S. that the Marine coming at the Like, there? I what of to Okay. awarded are award the time, larger someone the they the is when that,

this are as the and -- is is a because mentioned, our The situation Army equipment battle. situation. in awarded, our that's before, equipment Army of completely exploring, we heck were one we And a credential. quarter working obviously, Well, toward, independent proven that of is I

and that to So, what Army effective they any we're now. that, trying doing more lead get we the exploratory on to more discussions have the say leverage fight. have that right But in that can be as don't helps is to something

funding be approved is the when then And on line for side, of sight update on EXXX any might Ohio, contract? there that Okay. on any

one? You want me that to take

Yes.

no be our a in can we we desire work get. funding year do very a steps, kind closely the of design need next upfront. given point, and are to this and our with year. I of what of revenue voted it's terms a of they just terms view, certainly a But figure on contribution, lot end likely to was everybody customer, have think out trying just for application. this to in that the end booking And Ohio, of you before to just you working was the not that at the So, that In there likely have remind know,

our it's point, view to stories north funding booking, own might expectations, contribution wouldn't certainly to terms be at $XXX told in terms increments, of be or us now it's short-term don't could think be front. be they it's But give the is, of until but but of this our a up something we're to setting in going there. next much be now a could it's -- be the that's EBITDA right revenue large contribution, viewing a Our contract in likely still get how of to year. thing potential in right that is us in million. give terms outlook something up it of so, function And I front, be whole

see I the think the we have how vote to to session wait goes. next for

contracts Okay. there should And any that bid that state pipeline the are for is we for other large up on? be EXXX, focusing

Yes, there are other opportunities.

the I competitive We're opportunities. are us, idle to procurements. to wins those But despite market think capabilities, of we'll we have positioning coming of more that with we that and not for but the there and out identified other the our to states and have the recent our I'm report So, we'll or sitting there. terms good Ohio, be pushed are think near-term on have not handful those getting future. a certainly we in going regions, of name in nature responding

is contributing there, new might added you're and to update when and -- MEO satellite start lastly, are their high LEO there the on satisfy then think volume and some large part that those on to of out in for Arizona a up And I of now high that bringing production capacity ramp networks new revenue? Okay. any is that some volume

be from meet the are terms that we the in quarter, We LEO in demands our I as progress customer, And Yes, early things production I of other that's desire where about that are expanded see volume overall we'll it part it's our to to direction. this in And terms here in relationship, talking we're if next customer, call. with our right high the to we time. there's bringing progressing. aspects areas the capabilities year, timing with the we relationship. for to over large this a said, fast. of announced last revenue relationship. of expanded always contract say-- with sitting later I could terms would going has our in like of year think in wants XXXX. orders, certainly move the online, of as don't But But contributions anybody relationship, early expect this we're else said Certainly, in facility other we know that still of sure, And

obviously, costs And some to of definitely that things, there's moving the just facility. phase. continue drive production Mike shared, of make with units, higher and in those what as addition we're SMT a to more Yes, will for development line, build it other couple our rollout into new contracts that production we us efficient

facility of that are So, as drive planning of facility, part in through the and opening workload release that the area. and definitely additional to throughput we

Thank Perfect. you.

our from Citigroup. Asiya Please with ahead. Merchant take last we'll question go And

Thanks the opportunity. for Great.

think So, year? quarter the to we asked. I of of flow about trajectory the been about And cash the this operations? have how well with drawdown for on from a lot ask wanted cash as flow, your just cash remainder should a questions

CEO Sure, just in mind $X in for transition about the keep to did level-set to cost quarter, million during that we pay Asiya, out the quarter.

million growing last a some little at of increase backlog the mind we of this that now, to the high about keep our that. items we right in aware was cycle just perspective, you're of look unpaid In might prudent specific to investing So, sure making procurement in $X million of backlog. purchases. support in light it about but, quarter, end start capital of that felt that certainly an CapEx had QX, year, And $XX from

of million $XX And $XX million off hit holistically year, target million. we spent that QX. that coming -- So, in of a for about we last $XX

thoughts make to also in Pennsylvania contract, South we're on the to So, PSAPs move of time, so will in spending. where are can, channel continue we those same what future about we the amounts the be system. getting prudent facility and Certainly, we and contract, have of the our seeing The XXX timing growth contract and we're very the end. to trying coming at the we those space, the we're Carolina of But investments. towards Arizona also

CapEx to So, start we turn back to levels. start see more historical to should that

terms terms but going In on say, of and it's back to facility still we the some ratio give of in elevated, for that now cash credit flow for I the still going specific a leverage -- half that cash other CapEx have trying of new off initiatives to overall flows mindful But to you towards have of guidance then on, a generation, be be probably QX, working would we're year. can in we trail place. we're QX, I'm

and to operate of large support We have some to some flexibility bookings. these

lot for comments the may left, our year, a overall QX. going and opportunities this we're expect down not to be to we give point, a So, at positive, going hit there's do so now, right specific some of number. I'm keep We year to just pipeline that have but to still

your something strategic of is And R&D Okay. non-GAAP just Is recurring? kind regular not included then this -- this up -- and And these this. be that's OpEx? seems costs charges like in then technology there one-off why adjusted or the if going to that in to things so, show just are

customer technology specific emerging set. terms it and is strategic the type of technology a In costs, of to

we nature, this that with company a not those likely the to go to to we spending in evaluating because we're them. beyond customers a our and as of decision opportunities would in be potential existing show But say very opportunities, here recurring are partner for As market, and that. front made near-term of not it's we're us, that above customers

not be forever. to for opportunity will lot make to a it So, we're secure -- the to there's be that But going marketplace, going now, and investments for a there's there so very those it’s right competitive of something is to grab long-term.

now I guys it assume there's fair why guiding, fiscal the but level takes exit the exit these into double-digit talked margins -- that by as as EBITDA around that year, puts early maybe high I get you at? single-digit year, pining you of then know, you on is end into this to next with year, least, Okay. right are that margins the we guys about are fiscal and know And and X% to versus even you the margins you specifically, level? how at should back currently, -- do

would now, navigating I definitive through. call going But start early to just a into a while this encouraged and that QX, to of question with we're the at percentage. we're little love right Asiya, and challenging it's still environment of that in QX us address too for terms

so comments our And and keep to we're point. growth at topline for this to QX bottom-line going our

Okay.

last And one sorry, one.

So, a are better results. of reporting telecom lot equipment companies

it's color were expected a of supply some allowing into chain than you And was some that's quarter? revenues. effect was how on backlog much elevated just levels on for Can of revenues what them of an convert better that function give the better to perhaps that the

certainly -- trajectory, with are we the our Asiya, trajectory say this having Yes, sequential of our quarters pleased I mean, growth. would I four

with been growing to So, such I war, XXXX, quarter. know to others we're we the that our maybe then with certainly we've backlog business, nice Russia-Ukraine and being had to in headwinds see in it's and but industry, strong compared specific in having face our a certain bookings what

we time. think execute on foundation to But our now just building So, what lead work our continue sure we deliver it's namely backlog, timely are a of it. need aware to on long around, I enough have items, and to making we good we chain, we're in to Supply procure growth.

we just add color have that, can minute and Maria too. some I'd to like to a if take add then I

Comtech amplified our consolidate the One One perhaps voice, deal smaller with we speak our we we chain significant propositions siloed voice. can now should through see bringing from a of benefit together And with an buys maybe and with voice supply the those of ordering a that. businesses part same two businesses single louder value a instead can in and of different as quantities, is

offer brought extend some on In we're discussion. seasoned put into comment have We some part -- of of board. the sourcing. that to veterans the I'll doing another Maria addition, strategic

Yes, thanks Ken.

of of has identified and initial So, Don as to opportunities. He to team and obviously the of his definitely drive be we efficiencies impacting the across leverage that as his is it Bock our around entire being will And that on supply in able he's some [ph] him, really stovepipe, chain one charters ability Instead VP Operations our near-term strategic brought is business. more it today. drive to be sourcing.

operations, When machinery we of about thing business about. talking improving that's the our the of talk we're kind

you. Thank sense. Makes

now It there appear questions further it are no Samuels Robert would like turn for to this any at I to closing back does time. remarks.

Yes, thanks.

to and Ken, thanks Mike, and in Just Maria, today. for dialing everyone to thanks

are in to said, performance as there blog. letter and we our reminder, as about our available and we As Signals our SEC be can a additional investor filings we'll going Ken details forward. as investors and strategy with insights provide ongoing in intend responsive And

let's directly for to with me out So, questions, reach please connect. anyone just and

this your our for suppliers, thank and our support. employees, So, you continued Holidays concludes customers, called. first to We quarter shareholders. Happy

for you does conclude program. today's This participation. Thank your

and have any disconnect time may a at evening. You wonderful