Comtech Telecommunications Corp.

Welcome to ComTech's fiscal year Q4 2024 earnings conference call. As a reminder, this conference is being recorded today, Thursday, October 31st, 2024. I would now like to turn the conference over to Mrs. Maria Sariello with 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 fourth quarter of fiscal year 2024. Today, I'm here with ComTech's President and 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 of 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 plans 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 cautionary statements contained in the company's SEC filings. Now, I'm pleased to introduce Comtex President and CEO, John Radigan. John?

Thanks, Maria, and thanks, everyone, for taking the time to join us today. I began last quarter's call acknowledging that I was relatively new to the role of Comtex CEO. And as I'm sure everyone on this call saw from our filings yesterday, it looks like I'll be able to use this line again. I could not be more excited about our Board of Directors appointing me as President and CEO. Let me start by saying we're going to be taking a different approach to our earnings calls going forward. We released our shareholder letter earlier today and filed our 10-K yesterday after the close. All of the key financial metrics and discussions surrounding our financial and operating performance are included in those materials. I know there's a lot to talk about, so instead of repeating already available information, we plan to spend more time on Q&A rather than prepared remarks. That being said, there are some important themes I want to address today before we open the call up for your questions. I'll acknowledge that ComTech has been through an extraordinary series of changes over the course of the past year. However, from my vantage point, the ComTech I see today rests on a strong foundation. We have best-in-class technology, great people, and a tremendous opportunity to drive profitable growth in our large and growing end markets. What we need is focus, operational discipline, and execution. and I'm excited to help lead the company on that journey. For the last few months, ComTech's board and leadership team have been developing and executing against a transformation strategy that we believe will deliver the best outcome for our customers, our people, and our shareholders. As you know, a process is underway to identify strategic alternatives for our terrestrial and wireless networks business. We believe this is the best way to unlock the value of this business while simplifying our capital structure. We are simultaneously taking a hard look at each of our businesses and product lines to ensure we have the best portfolio to meet our customers' needs and protect and grow our top and bottom lines. Looking ahead, the ComTech I see, which is the ComTech I believe our customers, our people, and our shareholders want, is a pure-play satellite and space communications company ready to serve in markets that are themselves at the beginning of their own technology-driven transformation cycles. This is the area that I focused on throughout my career, and the opportunity these markets represent right now is the reason I joined the company. It's why I've been clear in dozens of conversations with our shareholders and our board that as difficult as the current operating environment has been and as tough as the challenges ahead may be, I am committed to CompTech. I made a commitment to be direct in my communications with our shareholders too, so I'll be blunt. Our financial performance for the fourth quarter was below expectations. Importantly, our results were not a function of missed or lost market opportunities. ComTech's technologies, products, and solutions continue to be in demand from our customers, validated by our record-funded backlog of almost $800 million. This to me is a critical and direct reflection from our customers that ComTech has a defensible, highly competitive position in the market. However, in our fiscal fourth quarter, a number of individual factors combined to put pressure on our margins. You will see from our filings that while both of our businesses performed roughly in line with revenue expectations, satellite and space in particular experienced a decline in adjusted EBITDA margins. Several quarters of balance sheet related headwinds impacting manufacturing and deliveries combined with cost growth on cutting edge non-recurring engineering related programs that are nearing completion, our profitability was negatively impacted. We also experienced a delay in the timing of a receipt of a large troper scato-related foreign military sales order. The timing and amount of such orders are often difficult to predict due to various factors, including political influences and defense spending budgets. Taken together, the impact on segment profitability was significant. As I mentioned, for more detail on this, I'd encourage you to review our shareholder letter and SEC filings. Stepping back, And as I wrote in our shareholder letter, the close of our fiscal 2024 fourth quarter provides an opportunity to reflect on both the progress the company has made over the past year, as well as a reminder of how much remains to be done to build the ComTech our customers, our people, and our shareholders want. With our transformation strategy defined, in place, and well underway, I believe we'll get there. We have a lot of work to do, but from my perspective, we're engaging in that work from a position of strength Time and again, customers turn to ComTech to solve their most challenging communications problems. Now, let me turn to the operator to address your questions.