Comtech Telecommunications (CMTL) 8 Jun 232023 Q3 Earnings call transcript

Welcome to Comtech's Fiscal Q3 2023 Earnings Conference Call.

As a reminder, this conference is being recorded today, Thursday, June 8, 2023.

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 the the third Comtech Telecommunications Corp's of year conference fiscal XXXX. quarter call for

Executive by Mike our with President Comtech's Today, Bondi, Peterman. I'm joined and CFO. here Chief also We're Officer, Chairman, Ken

Before we that I'll today, both are Ken have. and get investors to available may started always answer say myself questions our

strategy. touch meeting our in get if our to results, about please to a you So, organize company, talk the or want

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

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

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

our about me ever thanks team depth our spend weeks today, leadership from Rob. in for will future and Day. us. its Investor two than with day my Hello, joining at company Thanks, everyone, In first and less the senior speaking

if invite event facility haven't this Arizona you soon holding possible already. you as are in Chandler, in and state-of-the-art attendance confirm as to we exciting We our

filled our usher discoveries. with new enterprise, both valuable months transformational Since of on and challenging, the the and of connectivity forth exciting strategy hybridized has journey reshape notable that been I in embarked leading ago, a We Comtech just comprehensive of a to role expertise has the a and and business era technology Comtech's way. President set took XX and efficiency CEO operational achievements enhance with on

the report approach I'm we where of we are we one schedule. to our not of as journey, of proud end slightly year that Now, want be, if to ahead right

revenue I'll out, to call thing shortly, delivered Mike have improvement. EBITDA first speak we The of is will and which three sequential that adjusted quarters

say, Xth am are this our quarter direction I fact, and of the topline which consecutive credibility with marks very that pleased is financial In our revenue we performance. to growth, around establishing

me because have my we I meeting in offered guidance as commitments our to on to in Comtech's I the important pleased is of want have our to we became to CEO met one performance believe that we or trajectory I overall investors. key several this upward exceeded Comtech personally, our As the highlight financial since demonstrates that President, That I results, since day with and intent investors tenure. am made is

what XX examine accomplished team to our first Now within moments let's take collective just a these months. few has

accelerate initiatives. growth customers collaborative our prospective with here We and technology our beginning a and valuable current discuss EVOKE complete as let's workshops Comtech, series at First, our securing technology customer incubator partnerships to more support ability solutions. established of to our

end positions established launch our to and by of market communications ourselves we attractive portfolio, growing And for growth. exploit across satellite a our positions markets. incumbent spanning leveraging inflection as emerging technology and wireless positioned strengthened platforms points We variety

improve meaningful the finally, operational our significantly processes. identified Next, measure enhance will margins, KPIs to value. enterprise on throughout streamlined profit our performance financial opportunities and progress meaningfully And and strategic costs two siloed We common our the and our let's our which improve shareholder initiatives to we disparate discuss performance. and operating balance implemented assimilated tools reduce a from processes goal improvement flexibility. profit historically financial improvement initiatives. launched to operational against that in foundation We We our deployment our to sheet segments, establish businesses strengthen

to to that Now, as experience. human assets. most continued records partnerships industry we our talent one and toward accelerate initiatives, in particularly ever our attract track pipeline. company-wide robust our we Don first ESG Robinson with develop for our to must DEIB first-ever solidifying recognizing to leaders more established are of proven universities, company-wide that about a one additions internship team Comtech, of strategic and we progress Nicole technology our excited that launched Walther I'll people strategy, university leading capital, And important our our later. people a program Mr. say little I'm I with relevant and directly speak to more experienced the thought Ms. By

and pipeline proven Notably, addition extends people of the our team. development our to even of organic strategy leaders our the talent beyond

also capabilities, members to strategy Our experiences is Board and with short my two effective our announce long-term skill newest ensure alignment sets and our XX, assessments of objectives. regular the and our goals that To pleasure includes XXXX. Board continued it of members, June to end,

led January workforce the the through dollar Secretary protection responsible served and and products where Ms. acquisition capacity, The industrial Acquisition U.S. broad around customers services XXXX. Ellen range security, even Chief Lord for M. defense, Ms. The supporting Sustainment pertaining for materiel acquisition, a a the base. all of Textron this as appointment, infrastructure world. itself formally aerospace, Honorable Defense Defense defense Lord. and Under of Lord a Textron with and the Ms. Officer of readiness. logistics In Prior and and the matters President Executive was homeland of to business to Incorporated, Corporation, as Systems multi-billion of this Secretary Lord served she for subsidiary

growth looks serve. to Comtech same the global Importantly, markets that

in strategic this setting computers in General the CX, in and Crawford principal recipient A CIO command, Distinguished other and candidate of of ideal decorations, Lieutenant objectives General in the the Comtech's convergence and as modalities Chief Leaf world with supervising Secretary for technology and making General home the U.S. Lieutenant T. to became July inflections Board Army, Oak multiple largest seek one Army's control, and at retirement XXXX the Service U.S. was and XXXX. GX Bruce August communications abroad. Crawford direction one information the the Crawford Cluster Army of the serve technology employers network an among U.S. and all served or Lieutenant General and support awards of Lieutenant Crawford, his functions, for we through Medal to Officer, retired. advisor of the and Information role

me clear is to that consistent our working, A results. to financial speak our let financial our be Now, commitment performance. will indicator in One improvements Comtech

streamlined and managing quarters, we operating This risks. adjusted our reduced has business while operations several targets costs. For for and us EBITDA, to enabled net financial our our the past complex exceed sales meet have or economic

you are from today, business. during significant As focused we driving where change this while period reported across see the can our performance, we results transformational delivered improved remaining

and partner. technology $XX.X operating Specifically, addition Comtech was Cash to partnerships in We publicly for million. quarter. We Labs announced Sirqul, new Networks, grew EVOKE our announced for EBITDA by net three adjusted margin. sales improved $XX.X first the or WishKnish with Aarna activities X.X% Descartes million to consecutive EVOKE flow technology quarter the Xth provided

grow improve consolidated net consolidated with our be between we ahead, X% net quarter expect to sales. X.X% to X% to XXXX and range EBITDA XX.X% margins in fiscal results looking sequentially of anticipated to fourth the adjusted sales And and for of consolidated

transformation operations. to and from it's ongoing realize investments act benefits and this to as clear optimize providing are into decision making. that to-date conducted efforts that restructure goal. improve of purpose, insights our efficiencies expect this and opportunities In the and journey, start part to stated key of our benchmarking we are accelerate We particular, I needed we with At to swiftly this a meeting

improve management initiatives leveraging the fiscal lean business of proven our We quarters approach favorable believe expertise move and we of of and all actions our target yield start aspects by our of processes These multiple cost our XXXX track third XXXX. levels we team. for the leadership refreshed business fourth fiscal the aggressively business of our that as as more our to involve during record implemented and a will structure our

of remain on certain building impact members the But to course, to have of committed our sensitive, team. these are changes a We stronger Comtech.

innovative to the As new migration experience planned, this our in foundry most our research technology during development Comtech some EVOKE art innovation center. our including and customer and of our houses initiatives, and center Chandler, we at manufacturing facility state-of-the One is transformation completed quarter, past and This of facility our our Arizona.

of We to reality. offer on facility at vision a is a becoming Day forward hosting Chandler our Wednesday, to XX, June experience Investor our our how first-hand look

technology Comtech. team strategy some transformation the the to meet of the at of during our heart and to innovation be You'll have One drive opportunities able cutting-edge and experience our to

Day, us itself. upcoming Comtech fluent Investor During you future hear simply the today, we are life of in market future, and bringing it are we our to creating the not discuss will the how

look and must even of corners, it the possible while we the to see is vital as Importantly, down far as around present. not road sight lose

with toughest like them customers' overcome of their that trajectories never partnering our technology and future and innovation problems and For before. accelerating solving challenges strategically to means us current leverage today our to culture

clear toward networks, in blend terrestrial have customer ways. that us to blended value time, leveraging growing. hybridize we transporting create Satellite not markets reveal that to Over differentiated It's and our by ubiquity insights a value, evolved will are just but and these scale. on across and data network by new data global create infrastructures can and

exploit technology convergences expect Further, Comtech in identify accelerate ways culture and and increasingly the opportunities capabilities to technology that the Comtech's and positions to we is believe these to these insights. created new to leadership data-enabled innovative provide incumbent growth our We underlying longstanding well-positioned leadership profitability. by due

value of we're structure, lean improved streamline and instill is as foundation are culture to optimize The cost we commitment, committed partners, launch believe and day performance we already generally employees, further for that about Comtech's single for continue excited creating performance, a and delivering will discipline shareholders. our to initiatives, and a results are that delivering today future building our come. customers, shareholder framework we sustainable every to We're our years our create we

all believe that our bright. is Mike? transformation In are progress And is visible I us. future our One clearly to indicators that and working summary, around our Comtech of

Thanks, Ken.

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

a sales sales and XXXX significantly reflecting Primarily Our increased to our net net $XX.X our fiscal represented QX XXXX, Satellite Communication our QX higher last consecutive over quarterly fiscal third sales increase mentioned, Ken quarter XX.X%. net sixth or quarter segment. and as X.X% increase. million sequential Compared Space in

XXXX within Communications was software-based customers a profit an the achieved our increase Space mix and overall fiscal our Wireless a recurring changes, QX Our solutions product troposcatter segment. as our included consolidated for XX.X% primarily in significantly government historically segment, gross sales which and of reminder, profit higher percentage U.S. percentage and including and Network in and type lower to net than reflects Terrestrial Satellite sales net gross sales SATCOM

Also of in light XXXX contributing level to change was activity QX lower sales the benefited that fiscal expense that period. of margin, the prior from year reduced during in warranty

in non-GAAP to As measure we adjusted as earlier more referred reconciled and utilize today, our explained in a filed Form we EBITDA. detail XX-Q that

fiscal consolidated adjusted net sales, a reflects our through One as lean benefit $XX.X $XX.X to million or The X.X% of offset sales of gross April consolidated QX of XXXX, by lower in percentage. dollars QX or net part EBITDA million compared fiscal XX, increase Comtech in implemented in profit initiatives primarily the was X.X% XXXX. XXXX

book-to-bill million, quarterly totaled a quarter $XXX.X past X.XX this ratio Bookings representing times. of

and we visibility that guidance current multi-year which our Our last million the XXXX our with have and future certain total is approximates of line net plus $X.X the funded our were QX value of unfunded from received backlog in consolidated adjusted to sum EBITDA we revenue expect of quarter. and billion $XXX.X fiscal provided equal Overall, orders. contracts sales

Ken? remarks. I to it for over back Now, Ken closing will turn some

Mike. thanks, Well,

As culture shareholders ever creating by transformation enabled of ourselves. meeting deeply of focused leadership power we daily our a about how our collaboration, and the commitments are innovation, excited our as One our Comtech customers, bright technology to are and toward before we future, to our is more

we're already that is delivering performance. building The improved foundation today

commitment, we streamline As further performance, of a value a our to believe sustainable and will optimize we cost initiatives, continue culture create for structure, and creating lean shareholder years that we instill launch to discipline come. our are framework

regarding to Now team. new leadership additions our

to Robinson our Walther enhance designed our our Comtech's across are this across to to of and appointed We we deliver quarter, excitement compete Nicole As Officer team Strategy and leadership appointments, I mentioned Chief several Legal our as we global market Don a Chief new earlier, key markets. lot ability attracting segments. maximize continued In Officer. as with

significant at ITT private protected. is technology companies Comtech's industry public focus commercial previous experiences defense through and both He and ensuring in experience has Don competitive will differentiation in the preserved on his aerospace sectors and and and contracts with Boeing.

across oversee of a as she of and leading in President on the technologies, related and space U.S. geospatial imagery international other our known priorities new growth as orchestrate joining She Space communications both pursuits, analytics development provider. Comtech, initiatives, served well implementation is focus the and as and Nicole business and well data markets. global lead and Systems, Prior industry. satellite space creating Ursa intelligence data will implementing priority to

as the transformational as in as-a-service foundry, global will established we and technologies EVOKE to creating we innovation include, which service offerings. dedicated Regarding our In ecosystems, is partners. my advanced days services and models. envisioned accelerating Examples believe and of cloud-native XG Comtech's enhance technologies and then EVOKE satellite that tenure CEO, existing early business our EVOKE and changes

us opportunities and entirely expertise. As and the benefit with ideas well backgrounds new as industry of multiple to allow pioneer areas perspectives, of

Through test to rapid new method This allow at and could capture to are the an to market readiness. partnership, prototype us us share able market allow and expand will rate. and ideas capabilities unparalleled our potentially we quickly

across Comtech's variety customers in public to were add and added EVOKE's new hybrid anticipate roster, enabling Networks' companies and applications private, manage non-terrestrial we Aarna the WishKnish Corporation. Networks, networks we During dynamic several of quarter, to Aarna cloud and and platform, including both partners technologies most the to Labs environments. that easily growing By combining architecture terrestrial Descartes with announce recent a open cloud-based pleased

power artificial will product predictive machine work offerings. with and intelligence, Labs infuse the Descartes Comtech learning, intelligence insight Comtech's of across to monitoring

with collaborate WishKnish, highly we flexible and for secure, diverse plan across As distributed commercial blockchain integrating ledger or to them applications. on technologies government

expect ensure emerging Comtech of the at leading technologies. can forefront but not from with you world sectors, foster multiple universities we ahead, to We only with remain around Looking see the a see businesses governments, intend to individuals, partnerships also across by new ultimately match of and businesses communications the global we rate of era partnerships forging to create change and connectivity. industries communities, transforming academia collaborative for value in to

anniversary agile even efficiencies instilling performance. business profit-improvement discipline, Officer. segments, of The I initiatives are effectiveness, silos process more optimizing consistent are as took into with to was business So, our in The summary, than variety we The respect and more business. us business your President our collaborative XX improving improving of and factors. and leading making. August further more increasing excited decision be a I'm allows as in last I two is processes operational Executive Chief implementing to company-wide rollout legacy today approach when of my on Comtech, excitement stems one-year year assimilation I from My role on and of this stronger

collaboration partners us and accelerated and the technologies. positioning technology for with emerging the new exploit and growth ability EVOKE has to markets converging is fostered and

to revealing customer create customer are Our workshops immediate more opportunities comprehensive value.

create infrastructures and customer blended by and not by unique, insights data a to can satellite reveal differentiated terrestrial scale, leveraging value As across that hybridize we could transporting believe global but new, these create ways. network blend data value, in on networks, and we just

ever Comtech evolving value believe is before. better faster a customer agility, in improved that I more Again, comprehensive is collaboration, to and innovation, win that demanding market rapidly positioned than

data leverage evolving connectivity Our leadership to and technology and customer have our provide insights. clear to transport are data-enabled in communications we network infrastructures opportunities

that in significantly innovative will value. ways shareholder value we believe creation this can enhance monetized Further, be

months these for work days the building way the have ahead. foundation exciting need paving we XX we Finally, hard done past and is the

quickly Now make in closing, final before we take I'll your questions, observations. some

XX only in getting are started. only We we're months and

refreshed with experience who have purpose. leadership and are a We knowledge with quickly team moving and

the of with refreshed been also has Board leading Our professionals. some industry's

solve are Our towards of and experts most agile to their customers' pressing exciting and fields our bring and people in our we as some leaner shareholders. future dynamic turn most we unprecedented to to challenges EVOKE and them, partners our value the are relentlessly the and more

XX. that, support. with engagement always, and June you With on to I I meeting And your look continued forward appreciate as

to turn Now, it I will back Rob. over

call we now Operator Ken. Thanks, will open questions. for the

our question Instructions] with [Operator sir. Yes, And first Joe come will Gomes from Capital. NOBLE

Your line is open.

on evening. Congrats for the questions. Good quarter. my taking Thanks

Good afternoon, Joe. Good you. to see

the network Revenues pretty been quarters. have wanted flat five segment. So Bookings over past out to wireless and straight been for the have on down terrestrial four start quarters. there

of clients. is a get to some what it XXX of trying little segment? Just on give better update in Maybe occurring that idea a the

You these that in trying we deployment phase. here cetera get just future? know see you where states, out and Pennsylvania, understanding little the big of better today some talked of of South where et stands it previously Carolina, business about getting a And the near to can going

This is I'll Hey, question. Mike. take that Joe.

a certainly Investor and to of we terms detail expecting short-term during some and in broadly Day. in initiatives that tracking address come more are good several awards. we So But state to our plan more long-term do one question of speaking, through growth

that for opportunity. going have like the to Senate that You we some still House it's of believe reference, tracking signature. through did Governor moving the and we Ohio the and been There

watch the that's So weeks. I news will to of when think next we couple in have just the

customer, In only we us, think come and that around terms that of for we in I moving little set. opportunity a believe may that of that provide terms to that one services we can bit our have is Southwest how but solutions

expect to we to But that hit. some so And point at watch. would one that's

back had timeframe. One other we that December, submitted had the was was responses back also May state proposal RFPs We in in two for.

down just for selection we're the start. there, waiting process So to

bring that be of say XXX sort time that, we're tracking, other to type that solutions assess and would would We that bases. then, market And we Also at into spent some believe to to military to NG initiatives ground attack. taking trying that machine-to-machine those XXX it for up to infusing providing and to is looking the us you clients. good as-a-service technology if will, tier, applications, sort I AI solutions, of,

bringing they thought dispatching to better they also situation. to the We in PSAP, them can more, added of have analytics say assess emergency as about do trying smart insights some are so front with

in out really had opportunities, international customers. as And next platform we taking Tier our think with And X platforms. XG the their to targeted enrolling the also we here progress services the step carriers location-based have U.S. We've success good with international that we the there. market those is

in we definitely XXXX, we So an feel will that’s area attack.

talk I XXX And speaking, theme, a other think routing, more upgrade a we a as to segment as as-a-service, have and beyond for being there trying this call commercial can or that we just that are I about think Investor Day. transition things are view of we'll provider during from do generally entities we

quarter, should $X It's looking terms higher Okay, then QX, If quarter here expect thanks. a a restructuring was that, your or are QX. little cost. restructuring million we type more first we second in And looking charges? than impacted it out in you SG&A Mike. or of and level by any for Thank at third of the bit along quarter QX at levels obviously about for the

we would I Another with to to assume it experienced in QX. think point, I two this good what level terms expectations similar question. be Yes, to reasonable go, in our months a for of think at QX,

And one me from one last and queue. back Okay. in

the you do back in understanding XX% minimize guys better at the cash update been you know bit rate you to that guys rate quarter, little paying of that Maybe give but some that of pretty bit, here? overall. expenses almost little effective bring an to the down about up a are borrowing X% that a rates are interest if have is going high us But or trying I can past, talked this again interest in is So, quarter. over in you've the what

said XXXX. facility our have definitely in in Yes, idle, to it's focusing are going current not earnings credit that Joe, as we something, comes call. a We're we that last we of October sit on

evaluating we so about have we capital we specific and but want advantage them. to certainly time our don't to And alternatives, this juncture are use to say something structure at and

nature. at looking from do point are something We in durational holistic a We want this to that's view. of

heard So facility our renegotiating We feedback into from we'll our calculus next lenders. And we're there. through take we not and that or two in navigate one investors a say as from steps years now. definitely the

and are that, On top plan get see did we this we quarter to as investments to discipline and July of that we have and to processes we the we in a leverage part bringing that at test benchmarking proper for working of that. our to looking down capital table, our can process ratios did

No on small So, achievement that's I there. part task think a great team's the here.

as trying and ago we payment industry and in through be interest AR about that our and year company our down standards. grow, do inventory to with into certainly, line bring disciplined they X want taking grow vendors But go making cycle sure. We to a to we for investments what the to we're times -- bring certainly levels costs with consideration recognize our are were more and

we're I tell can that. So focused on you

the for you Thank answering Much appreciated. question. again

Thanks, Joe.

Joe. Thanks,

Our with come George next question Notter from will Jefferies.

open. is line Your

obviously softer heard the do margin expect talk you here. what kind and a And space satellite guess I certainly, forward? Thanks about about on but to business, going you margin guys. ask And much. wanted gross trajectory I can quarter the the takes regarding for there? and margins, coming you said very puts from what Hi, Tropo, I it's of

I'll Sure, take that, George.

three is of it QX, solutions significantly out we our contract higher this coming to the to there, a net One government it's were cost was to delivering equipment Satcom Army U.S. we U.S. off that equipment the sales details did experience of I main in quarter. and customers. the point that VSAT and would reimbursable. in the were there items where Tropo want yes, So that

they're flow So those payers, they good of cash in have types with as margin. while they're come said profit contracts, low and past, we good the

quarter. type So this you will, come transaction, we if that's had a through that legacy just

on We started second also, Marine project. did ship perform we as out a Corps theme, U.S. to our or

So we're ramping up our activities there.

a that time, on at and say, to starting while as lead contract the fall a in deliveries, priced. was, the that in long get of it And reminder, also took so a that little back and in that the order We -- And I'll won a pre-COVID XXXX. XXXX, we're show point to pricing on times. is that working significant was our you up, it inventory this will, but just had if quarter, pre-COVID with given influence,

those We quarter also the We some I that COMETs that think will, months, And while you take all type in have our had definitely software three we first-half more that sales additional those the as if and was have in COMETs past them when for we the in the seen did for traditionally the wireless, satellite had recurring and for quarter, some space carry mix nine discussed those year. more up segment, higher off were margins, margins the and you in destined of Ukraine. sell and sales percentage-wise the than in of terrestrial margins. lower

terms of getting space just the Comtech are to certainly and satellite initiatives, into in transactions things our the we forward looking of do headed, in with at that into and impacted it that's margins are that I something uplift So those improve. think And FY ‘XX, and confluence margins. there. focused QX expect on also looking One heavily we Heading where was

suboptimal expect backlog that the replace think see had and as with I'll off, items, to off and in it a turn we that we margin. burn I So pricing burn would newer say,

mentioned inventory it. where had great. dynamic therefore, And through sold been and came Got And Ukraine. you the this good that the project we've Is really non-repeat from that you of those you're now perspective, the products written quarter. COMET a describing? margin. a them case off business they Was That's then an got to that and

No, or were customer in out order we a never in they a we when got was we matter of order, Back of most Ukraine. be was fight as the written-off that expeditiously. pretty with tracking It no, February not large additional to to of finally Ukraine came XXXX, was just end the in a the September And COMETs to sale scale a for going we the ground it were There in end and they precise, around was user of inventory. that that Russia the bit out equipment, XXXX this opportunity, postponed timing QX. war, need as QX. -- was a the given That to invaded QX write-off thought, the in of to lost. not us little back it of transitioning place and August, the and our part, and was a compelling units but shipped the QX, QX urgent timeframe --

But order, and of that some extension continuation initial George.

Got it.

Okay.

very prior So that’s all Super, business it's a I quarters, to non-repeat Thanks relative had. of much. that that comparison hurt by okay. you

Thanks, George.

you. Thank

Merchant question Asiya with come from will next Citi. Our

line Your is open.

but fiscal -- like on you as lower a to why reasonable of contracts for expecting very us that north of year. margins? that us up were you you new this you if walk you through walk maybe those can sequentially, -- on I softer also know the well compared little much. there going what's the the last Thank some things, Great. they direct deal margins increased going margins then Is side years ramping margins. expect through to of EBITDA Could the that you couple fiscal back are are it back to revert forward? kind Is were into dial ago, they carry XX%. margins ‘XX, think a of to just ‘XX And of look I as out bit

it, X%. XQ your sequentially fiscal I about think to I think outlook if just then And X% up

you where perhaps be the seems XXXX, -- in it's -- or relative quarter is an of guys X%. to mean, obviously generally little X I to know underwhelming odd that of back exception extraordinary quarter, seems the year. It With had north which XXXX a I sales

So midpoint of walk X%, you be of kind conservatism I baking through some that can don't great. us know, X% to some If Is just that, here? that just of X%. in would

few a questions in are There unpack. We'll Yes. there.

another In and in terms on focused we are wireless, is move FY margins we of ‘XX. definitely this terrestrial as the into area

we're doing -- One we're I opportunities to part to benchmarking together economies to bringing speak awards, have team, of same the But the our think I us several going our we're award companies are time, opportunities we awaiting for back Comtech, awaiting get those identified as margins the some our at all of and as improve while impatient large and the forward. in scale some the segment. of we

take revenues a revenues to software-based the talked long-term will, little wireless, and at But it on up moving and you and the margin. will some of I different in types And tier, nature of bit a given about grow those of more backlog terrestrial the lower burn off. are the initiatives if was in to had They're us time that to trying long-term grab, with great contracts NGXXX very some the business. awards. a initial They margins land renewals. in It were nature work win the to have. They customers. Those that with

percentages getting segment being time, state, up ramping same business. and it's more are I of as two revenues business the there So up the core the yet. of expect a the do margin see year we good jobs. nonetheless, ramp into and that on the recurring At from renewal a overall those better or We're by are margins think We're to away influenced steady the of move to percentage But those of continue taking if NGXXX probably job, we with the happening. phases a seeing not we we routing revenues. just sort

to happen. not again, going -- just So to but allow we're that

the it. We verticals are trying come margins addressing We're up new revenue to and with get ways to up.

some course. our out costs have taken in March reduction in We

do give QX. expect on yet We And won't to full go in of to directionally, those sort is benefit ‘XX margins, the get thinking have we margins we but see specific into I EBITDA ‘XX. guidance not what as Asiya, that margins. to better that's we're historical seen back of

that increase achievable see And are to guess obviously we... to you like, in But hopefully And relative ‘XX? I understand fiscal trying I I'm you’re just ‘XX. EBITDA your fiscal do think that's -- margin

Evoque to create management than through more my our going one initiatives revenue do. to grow -- of up partnering perspective, technologies new looking speak at or decisions. two partners' I might redundancy streams. But through of Evoque pricing, we've making in in and I We've mean, initiatives We've looked chain at our won't optimization I terms contract something initiated layers supply at with there. our Ken of revenue from add new our to layers. and looked want

So have line I of we do think of activities, the of improving sight margins all those the to substantially. with culmination

of months risk timeline. of discovery, of -- If silo part mitigation, processes understanding inventory how management like we every program if a I this you Typically, organization. what maybe think XX it just mean, XX how supply this, of you operates, each management, Ken, through do think they use, go do the and chain, our to of touches they business they how management, the situation is

entire the So the board, putting it takes plans us best it some Then out, across lean we're the benchmark across time to the it. action process move organization, across together fully and enterprise. understand apply to that

the as plans where on And the action see the on enterprise. lean well phase plans, so just we're the reduction we're that action going investment moving to implementing plans as into cost holistically across we're on the return impact

So were the actions. 'XX. those of we that then we will And FY increasing say, see results see and I in through rolling now the must and quarter a impact and as will fourth implemented that a, have beginning as those

characterizes I probably think as yes, 'XX So as well can. that I FY

of positive I'm cash cash Okay. cash terms generation good -- for fair? assuming year, also I guys. you in this then had decent be Is you quarter guys mean, quarter do that And quarter. a flow for will a the you next quarter

two terms in looking QX, go. still to of mean, months how have Asiya, we at I I'm

payables large we're managing. have and that We receivables some

point, definitely to the we will timing just AP and come it pay stay at of making But this things. would covenants. to down coming that any I in, debt, go likely in also QX within would So our sure say cash down

QX it maybe So more slightly to typically. closer I repeat expecting of positive, would expect a breakeven be to not if

thank you. Okay. Alright,

you. Thank

Our Chris comes from Sakai question Singular next Research. with

is Your line open.

for be Yes, in And net afternoon. also, expect the What this? rate the you should quarter? we in Was in bookings good just a the for lumpiness would this Can talk normalized hi bookings future? decline orders? where about then

we about items we bookings large out the just the of did that have strong. come year very definitely in. the started some some had George, terms very with of talked in Chris, profile, COMETs We -- which we

renewals. some our annual their renewals also We X had carriers, with Tier

We also had new [Yahsat] a large from (ph), the are received from order types of in QX, to repeat very a customer. wouldn't Those orders you expect quarter-to-quarter.

QX, pretty items. performance take job actually you and in you those you when did our out, a actually think out we I good look the one-time when strip So bookings at

predict say see going of QX. QX I see hard do always lumpy. that Going subject bookings But you'll bookings in uptick than timing. a is to maybe do into the to That's also profile QX, think We QX. stronger be an and often I we to think in that timing

just tell the been for I'll as U.S. up our is, benefit sweep that and that. We can that, a to looking our I there's think QX to trend. traditionally but we good -- downward been don't and other it's quarter a has government think you and from that -- traditionally money think, think positioning spend lumpiness. And that Yes, us. see I I than QX I

Okay.

XX%. good. maybe profit XX% know should then good what And that you for -- sort be what, can I the XX%, to, we was a rate -- can that of we down gross normalized it about range? Should -- be expect Sounds would around

in terms profit, Yes. Chris, consolidated. On gross of talk I'll

are a we going is, now, through right view Our transformation.

see changes business making XXXX. improvements, are so we into to we we reinvesting decisions and go stronger tough to We as are some make do while and making our us also

for improvement, to QX. I might we into eye expect would margin won't have to improvement, margin specific think I similar right give next percentage see while now. And move So I but QX a look year, we an as

guidance give think I end we one closer wholesome QX. more the to we'll quarter out when of get

the going transformation. is significant that through Chris, add, organization I'll

streamlined, business out kind to we're it that of a and And efficient in processes more some processes. backlog. there's changes pre-COVID tools and some use the terms of tools across to We're We're And those period on also processes. going tools lot Now thing. rolling and of how people operations. this those pricing and We're is organization. where going degree, teaching a will backlog, through fruit bear of burning

off. have that to we burn So

consistent So meet the in forecast. performance, I think commitments our of terms hitting us our that to of I'm with ability quite the pleased

the seen And go upward before trend still I still of positive the results a that we've that trajectory meet profitability, sales see we're can difficult period sign our is think an the impacts and through upward that and this we're both initiatives experiencing the actually reduction cost in and implementing. commitments transformational and lean we and initiatives

of repeat the are that think really there's I just quarters we now, are and going -- excited So see the about to start hold -- pleased and put what few I -- encouraged would are next ahead of that repeat XX benefits I'm again -- by or right I'm months by on are we that we pleased that. to schedule as mean, we we the I I'm I'd what would I again ago. real together where

Great. Okay.

of margin? any through of some you're how lower lower Now you've you as burning mentioned is backlog light Can much that current to the backlog that shed backlog. margin

we Yes, is wireless of would that I one. the contracts our and this and to had years within a take of in more are large couple prone booked There, amount terrestrial contracts. be those say segment. Chris, last I'll very multiyear

we to dollars like a over a sitting of that hundred time. XX-month of think of off couple today, have So burn And million you period that's here going backlog.

to we're the it's bit we the segment. facing so reset background headwind for a be wireless going this as in more in and that little backlog. terrestrial And therefore, But

course, that the offset working reduction, one even than of lean reasons. initiatives more of the or that's challenge. the of cost And are And to offset any

Okay.

answers. Thanks the for great. Okay,

you. Thank

Greg with Our Sidoti. from will come next question Burns

open. is line Your

So contracts to side, do not a the go. increase going prices to with power? wireless how it's you so are improve you into your history the typically give of on terrestrial Are insight these on any around, pricing Or ability have on time kind renewals? thoughts you Can to able your of really these first margin. sure us

are the competitive wireless in were of first and These in segment their terrestrial nature Sure, kind. I'll take that. contracts they were definitely that

these around. go first wanted the the in won space contracts is We to be we felt work. were competed we that us. this this So for important and We and

the And so year to put had CapEx are five upfront. we contracts some award, three terms these in in base that to of

into improvement. going It renewal have take see to we margin depreciate do the We we of revenues, closer to amortize to expect is the move get it, that time. as and recurring some off side we and the CapEx to

and yet. from a So off year I we're of two that I maybe think we'll some we're, there said, away But about like approaching or renewals. be not burning these

successfully contracts $XX.X would I these for would XXX geography. we've done the sometimes the these there's the passed Ken, these I state I land Next-Gen a won that is funding add is add house this launch billion you have bill -- the seen grab. or might to that that unanimously. refer now -- incumbent platforms, We've where And

all to recognized a XG is to come the things, And going up. a handled play. XXX is of It's they XXX-like calls and a transactions, of trigger the not I'm transaction a intersection, today in to to XXX going human. move going overlooking and that that drive machine. quickly, by need have camera, number money that can these the by the go move AI cybersecurity, the of is That's human-to-human a of see be technologies kinds a can't going does machine data saying handled connected implementation to Now, learning there states so going that problem. processing, calls, are but beyond signal to it be to of street solutions, machines Internet And connected Fitbit, when number the a machine-to-machine, those come of world to number a of doorbell a into call camera kinds to

that point easily land grab took is and over the the improve -- a a experience couple years initially see of technology really growth to successfully bends. going is market where you we inflection as is that going So this can profitability the to that return, and will technology upcoming inflection

is about you Perfect. the color. a also there was charges. about repeated? called What be wanted that ask strategic something talked -- out This is that? to Thanks. And emerging to going just restructuring costs. you've technology That's is And good I

our upgrading emerging are ours end-use of strategic customer to applications. technology it we technology a the are costs enhancing The and of and Sure. taking meet specs their LEO to related that it

placed in felt to was our partner something orders. that launch some long their that production schedules as ready we So point start approach are was they start time show out we as starting that to to for, important lead orders putting customer them. being And where this we're hopefully, prepare to real to need with

occur to would closer expect these we So But would 'XX. will as fiscal continue start get through and they to production, that as these are to that say investments to would where time also the navigate would QX in ramp we make. I we I down. be

Okay.

customer. kind These work -- so orders Or hopes and you're obtaining clearly the of of at isn't from this some time behest reasonable just are in is the customer? this doing doing the something this So frame? orders you're of coming

work This that nickel. Yes. doing we're is on our

to anticipation We have the of contracts also in down orders with getting production the do certain customer the development work end line.

show to the But to is collaboratively that we've to market, decided is with this our a there that we're is a customer. to work new by what them place endeavors. and way given that race, is do stand their felt and a support in contracts have we legal this do we customer great So this

work took in as think we would this But some recurring. that downstream That's to will. year, you something this risk, ourselves gets it deployed. constellation upon do pay be fiscal -- at So will if dividends the that we

Right.

called to of we see lastly, some time these frame revenue out minimally frame we last when then on I viable products Evoque coming frame give some, guess, maybe coming you of from partnerships. a you quarter time time them that Evoque, And Okay. a see to and might maybe terms start could might maybe when and to in

of Yes, sure. things. say I'll a couple

will First of with weeks, in of a all, And active are couple coming partners see been Evoque our their very Investor us. you up attending engagement. our have if Day you

will things doing collaborative see of kind we're together. the You

subcontracts values. comprehensive more say how see we technology their that creates that have, look, a not it's root. I take in position growth to You in very we some initiatives will these technology those our let can with also fact, competitive of And We're customer contracts -- partners. Evoque in blended as have hand, in fact,

sensitivity have that. obviously we some So about

But yes, contracts things we have traction. get place. in seeing these some We're

that these prime coming saw are also workshops of value the where these Comtech could they our we bring partnerships they additional but of our saw the maps, customers, Some out value road that the bring. that had with in technology

in So we're be. customers' the a moving in creation forward to additional additional value currency, show technical a might it subscribers parameter creation profit operating those speed, customer demonstrate not like for and on or reduction whatever parameter, customers, that additional but the revenue network actually costs of in or

about good yes, those prepared talk But seeing we're are we to not specifically yes, So traction. that.

you. Thank Perfect.

queue. you. no the there in questions At are further time, this Thank

like or the over turn would closing Samuels additional Robert I call any So remarks. for to back to

Ken, everyone today. for in dialing Thanks, Mike, operator. and Thanks,

Ken signals. said, ongoing letter about additional we'll in investor available are and and and insights As our and provide performance details strategy SEC there our filings,

And as with as as forward. we be going to a we can reminder, responsible intend investors

out and you for third directly We the seeing This you We connect. reach questions, thank to with support. please forward to Arizona. let's anyone call. look our quarter concludes if your So me continued on in XXst

participation. Thank you, program, today's ladies, your we and and concludes gentlemen. This appreciate

time. any at disconnect may You