Comtech Telecommunications Corp.

Welcome to ComTech's Fiscal Q2 2024 Earnings Conference Call. As a reminder, this conference is being recorded today, Monday, March 18, 2024. I would now like to turn the conference over to Ms. Maria Ciriello of ComTech. Please go ahead, Maria.

Thank you, Operator, and thanks to our investors for taking the time to dial in today. Welcome to ComTech Telecommunication Corps Conference Call for the second quarter of fiscal year 2024. Today, I'm here with ComTech's Chief Executive Officer, John Radigan. We're also joined today by Mike Bondy, ComTech CFO. Before we get started today, please note we have a detailed discussion for the quarter in our shareholder letter available on our website. Certain information presented in this call will include but not be limited to information relating to the future performance and financial condition of the company, the company's plans, objectives, and business outlook, and the plans, objectives, and business outlook of the company's management. The company's assumptions regarding such performance, business outlook, and plan are forward-looking in nature and always involve significant risks and uncertainties. Actual results could differ materially from such forward-looking information. Any forward-looking statements are qualified in their entirety by questionnaire statements contained in the company's SEC filings. Due to a number of factors, including our ongoing refinancing efforts and changes in leadership, we will limit today's call to prepared remarks from management. Now, I'm pleased to introduce ComTech CEO, John Radigan. John?

thanks maria and thanks everyone for dialing in today's format will be more compact than usual which i think everyone can appreciate given that i've only been in my new role since wednesday of last week today i want to accomplish two things first i want to properly introduce myself second and before mike discusses our financial performance in more detail i want to provide some context for our investors customers employees and vendors as it relates to what i expect is the market's single biggest focus regarding the company strengthening our balance sheet by refinancing our existing credit facility, which matures in October 2024. As I said in our investor letter, while I'm new in the role of Comptech CEO, I'm not new to Comptech, our strategy, our markets, or our customers, and I'm not new to being a CEO. Before Comptech, I served as CEO and president of iDirect Government for 20 years, a company delivering secure satellite-based voice, video, and data applications with anytime and anywhere connectivity in the air, at sea, and on land. When I direct government, I led the team that built a business from the ground up to over $100 million in annual revenue and led the acquisition of Glolink Communications. I have been involved in network technologies and satellite communications for the majority of my career, and I know what it takes to both lead and grow a business. And while I joined as ComTech's Chief Corporate Development Officer last fall, My roots here run deeper. I spent 10 years at EF Data Corporation prior to its acquisition by ComTech in July of 2000. It's fair to say a lot has changed at ComTech since then, and that's exactly why I chose to return. As Chief Corporate Development Officer, I have already spent months traveling to visit our sites and working closely with leaders across all our businesses, focused on the shared goal of growing our organization in every way. I also believe that as CEO, it's best practice to be direct with the people you have made commitments to, customers, your employees, vendors, and certainly your shareholders. As it relates to this quarter, I understand that foremost in people's minds is our refinancing. You should know that it is and will remain my single highest priority until it is complete. Throughout the quarter, the team has been working hard to strengthen our balance sheet. Here's where we are right now. First, in January, two of our biggest current shareholders, White Hat Capital, Magnetar, agreed to make an additional $45 million strategic investment in ComTech. Both know ComTech very well, following an initial investment of $100 million in October of 2021. White Hat's co-founder, Mark Quinlan, joined our board and has been active in helping promote and accelerate our one ComTech transformation, something he's now doing as our recently appointed board chair. The continued support of Mark, White Hat, and Magnetar, particularly given their deep understanding of our company, our markets, and our strategic vision is not only appreciated, but we also take it as a validation of the underlying strength and long-term potential of our business. Second, we've been engaging with potential lenders to refinance our existing credit facility and have advanced it to what we believe are productive negotiations. We expect to replace our existing credit facility and look forward to sharing more details once we have finalized our important work here. Mike will discuss our results in more detail, but let me offer the headline numbers here. Our consolidated net sales increased slightly year over year to $134.2 million compared to $133.7 million in the second quarter of fiscal 2023. Gross margin was 32.3%. compared to 31.5% in our first quarter of fiscal 2024. And our adjusted EBITDA was $15.1 million as compared to $11.3 million in the second quarter of fiscal 2023. What this shows is that despite net sales coming in roughly flat year over year, our adjusted EBITDA grew 33% over the same time period, achieving an 11% adjusted EBITDA margin. This overall increase in profitability is a reflection of the operational improvements we have undertaken through the one ComTech lean initiatives over the past year. We believe the sequential decline in net sales and in turn adjusted EBITDA is attributable in large part to temporary uncertainties created by the refinancing overhang. And as a reminder, this is the first quarter we were reporting after completing the sale of PST in early November, 2023, but As I look forward, I believe we will win back any ground loss during the first half of our fiscal year. Overall demand for our products remains healthy as the CompTech team continues to secure key wins for our business with backlog reaching $680 million. Our previously announced multi-year global field services representative contract with the U.S. Army with a total potential value of $544 million was protested by the incumbent in November 2023. The protest was dismissed in January and context favor. However, the incumbent has protested again, but I am confident that we'll see another favorable outcome and expect this contract to contribute significantly to our top line shortly thereafter. We also secured a significant win from our terrestrial and wireless network segment, which extended critical next generation 911 services for the state of Washington. ComTech has had a long standing partnership with the state of Washington for over eight years to deploy one of the most robust and advanced next generation 911 systems in the United States. This contract extension is valued at $48 million over the next five years with the option to extend further through 2034. We had other call handling wins in Australia, Canada, and the US as our Solicom product line continues to expand its market share within these regions. Our satellite and space team continues to sell our market-leading Troposcatter communications equipment to our allies around the world, with the team securing notable bookings from two foreign militaries this quarter. More broadly, we have roughly $1.6 billion in visible revenue, a strong position to be in, with meaningful opportunities ahead for future growth. Before I turn to Mike, let me step back and make a larger observation. Roughly 18 months ago, ComTech embarked on a journey to drive meaningful growth with improved profitability. It involved the execution of the most significant transformation in ComTech's history and a path we remain committed to. Accordingly, we're focused on ensuring that ComTech is not only a stable combination of the right people and processes in place, that our business operations rest upon a solid foundation that includes an innovative culture, technology leadership, an intense focus on the customer, and importantly, a steadily improving balance sheet. As I said earlier, I'm well aware of how important our balance sheet is. We have done and will continue to put in the hard work necessary to build a bigger, stronger, more profitable business. We continue to attract exceptional talent to the company and add to our high-quality management team. And we continue to add impactful members to our senior leadership team precisely because we expect to grow. With that said, Let me turn the mic over to Mike Bondy, our CFO, to discuss our financials. Mike?