Comtech Telecommunications Corp.

Corp's conference call for the first quarter of fiscal 2025. As a reminder, this conference is being recorded. I would now like to turn the conference over to Ms. Maria Ciriello of ComTech. Please go ahead, Maria.

Thank you, Operator, and thanks, everyone, for joining us today. I'm here with Ken Traub, ComTech's Chairman, President, and CEO, Mike Bondi, CFO, Daniel Gazinski, President of the Satellite and Space Communications business, and Jeff Robertson, President of the Terrestrial and Wireless Networks business. Before we get started, please note we have a detailed discussion of the quarter in the press release we issued this morning, which is 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 questionary statements contained in the company's SEC filings. With that, I will turn it over to Ken. Ken?

Thank you, Maria, and good morning, everyone. I appreciate your taking the time to join us today. Let me introduce myself. I'm Ken Traub, the new Chairman, President, and CEO of ComTech. I joined the ComTech Board of Directors on October 31st of this year. became executive chairman on November 27th, became the president and CEO today. Before I begin my remarks, I would like to express my appreciation to John Radican. John's last day at ComTech was today. He's a true gentleman and professional. At this critical juncture, John and I and the rest of the board of directors reached an amicable and consensual understanding that it was best for John to step aside so that I can take over as president and CEO. He has been supportive and has done so with grace and dignity, which has helped to facilitate a smooth transition. We are grateful and wish him the best in all of his future endeavors. I would also like to express my appreciation to Judy Chambers and Yaakov Shamash, who have both been valued members of the Board of Directors and whose last day is today, as of the annual shareholder meeting. We also welcome Michael Hildebrandt, who joined the board on November 18th and is already a valuable contributor to the board and the company. I will now provide you with some highlights on my personal background, which will enable me to share my high-level perspectives on leadership, particularly in turnarounds, and then I will apply that to my observations and plans for content. I have devoted most of my professional career to business transformations and turnarounds. This is not easy work, but I find it very rewarding to help companies navigate through challenges and capitalize on opportunities to achieve optimal outcomes for all stakeholders. I've taken a proactive role in business transformations of numerous companies as chairman, CEO, independent director, and active investor. Harvard Business School wrote a case study about a company that I turned around earlier in my career as CEO. I enjoy teaching that case study to both MBA students and experienced corporate executives, as it has compelling lessons on crisis management, turnarounds, and leadership in general. Let me explain these lessons and how they apply to our plans for ComTech. The Harvard Business School case study was entitled Ken Trout at American Banknote Holographics, which I will refer to as AB&H. It is somewhat unusual for Harvard to entitle a case study about an individual rather than a company or an industry. They did that because, as a newly hired executive, I stepped into an extraordinary circumstance and crisis, one that was far more extreme than the challenges facing ComTech. On my very first day of work at AB&H, I discovered irregularities in the company's financial statements that were previously filed with the SEC. reported my findings to the board of directors and auditors. This led to a crisis at AB&H, including criminal indictments of the CEO and other members of its senior management, an SEC investigation, extensive litigation, the auditors retracting all prior audits, the faults on AB&H's bank debt, a liquidity squeeze, loss of major customers, vendors, cutting off supply, turmoil on the board, senior management, and workforce. I was quickly elevated. to AB&H's CEO in the midst of this crisis. Most people thought this company could not survive, but fortunately, we resolved all of the problems that we inherited, executed a successful turnaround, and grew the business. Ultimately, AB&H was sold with a return exceeding 1,000% for shareholders. Let me reiterate, the crisis I faced at AB&H was far more extreme than any of the challenges facing ComTech. To be clear, the problems at AB&H were precipitated by a fraud. This is not the case at ComTech. Nevertheless, I think the case study and the lessons learned provide a useful framework. The core question in this case study is, how was Ken able to save the company and generate a great return for shareholders despite the walls closing in from every direction? The leadership lessons Harvard and other business schools teach MBA students as well as seasoned corporate executives with this case study are lessons I apply in everything I do. And they will certainly apply at ComTech. So what are those lessons? Number one, trust is the single most important ingredient for success in business. The prior management of AB&H abused the trust of all of its key stakeholders. And understandably, those stakeholders did not want to continue to do business with, invest in, or work for a company that had become known for fraud. The key to saving AB&H was to earn the trust of all of its stakeholders. Most importantly, demonstrating consistently that acting with transparency and integrity is fundamental to everything we do. Second lesson, focus on priorities. With so many existential problems threatening the viability of a company like AB&H, it is easy to get lost in the fog. Strong, disciplined leadership is key to align the organization on the most important priorities. When leaders are clear on the priorities, it enables everyone from the shop floor to the C-suite to be more focused, less stressed, and more effective. Third lesson. Culture drives performance. Let me give an example. When I was a kid, I was a big fan of the 1969 and 1973 New York Mets. At that time, Tug McGraw coined a phrase that got them through the tough times and ultimately the championships, and that was, you gotta believe. I applied that philosophy at AB&H to get us through the crisis and in every leadership position I've ever had. The key is aligning every person in the company around a shared culture that drives everyone in the same direction and toward a common and positive goal. It is fundamental to leadership in general and critically important in navigating a turnaround. You've got to believe. I will now share my observations of ComTech's current situation and how the leadership lessons that I just described apply to what you should expect from ComTech going forward. Number one, It's about earning trust. My first priority is to earn the trust and confidence of all of ComTech's key stakeholders, including shareholders, lenders, customers, suppliers, employees, and the communities in which we operate. To be frank, we are starting with a trust deficit in light of the company's poor track record of financial and operational performance, missed expectations, and lack of accountability. I don't expect to earn your trust by just acknowledging these issues and saying, I want you to trust me now. We need to prove it with actions that the ComTech of today and tomorrow will be different from the ComTech of yesterday. ComTech is committed to transparency, frankness, and accountability as we execute on a thoughtful plan to address longstanding challenges capitalize on significant value creation opportunities within our portfolio of businesses, and strengthen relationships with all key stakeholders to support our mission of building sustainable value. Second, it's about focusing on our priorities. Earning your trust will be supported by being clear on our corporate priorities and operational objectives and executing on them. To summarize, In terms of priorities, first, we will be focused on cash management. We are fortunate that the company has available liquidity to fund our operations with approximately $30 million in the bank as of both October 31, 2024, and January 10, 2025. We are also confident that we are positioned to generate positive cash flow over the coming months, in part by improved working capital management, including collection of accounts receivables. This will be supplemented with additional actions I will be discussing to improve cash flow from operations and generate cash through asset sales. Maximizing cash in the short term is a high priority to enable us to invest in what's working, eliminate what is not working, strengthen the business for the long term, and reduce leverage with a mutually beneficial pay down of debt. Our next priority is supporting and growing our successful business units. The entire terrestrial and wireless network segment and some components of the satellite and space communication segment are performing well now, and they have significant opportunities for further growth in revenue and margins. We have the benefit of differentiated product offerings and strong customer relationships that we intend to nurture. The terrestrial and wireless business has a bright future and is poised for growth. due to the need for nontraditional methods to request emergency help for new devices, as well as new safety initiatives in our public safety technologies business. The growth of our carrier business was supported by our latest cloud-agnostic 5G passive and emergency location messaging and alerting services. In the satellite and space business, we are strong in designing, manufacturing, and supporting sophisticated communications equipment, for both our defense and commercial users that rely on us to provide mission-critical communications infrastructure. We will be prudently investing in and supporting our successful businesses and capitalizing on opportunities to expand these businesses and monetize their value when appropriate. Next, we will be fixing or selling underperforming businesses. While some aspects of the satellite and space business perform very well and have significant future potential, other components of this segment have performed poorly. There are several reasons for this, which include historical acquisitions that were not integrated successfully, poor product and market fits, misaligned incentives in which salespeople were incentivized to bring in low-margin business that did not fit well with the company's core competencies, and an excessive cost structure which has been misaligned with the realistic revenue expectations. We have action plans that are now underway to streamline the satellite and space business and improve processes and accountability which will help To strengthen the operations we retain while other operations within this segment, we will divest. Our next priority, we will undertake a comprehensive review of strategic alternatives. ComTech previously announced the process to review strategic alternatives for just the terrestrial and wireless network segment. We will be broadening this effort and we'll be conducting a comprehensive review of all strategic alternatives. Our intention is for this process to provide us with more optionality as we consider potential partners, investors, and or acquirers for operations within our satellite and space business in addition to our terrestrial and wireless business. We also see this process as part of a comprehensive initiative to improve the company's capitalization, reduce leverage, and create improved operational and financial flexibility to build sustainable value. Our next priority, we are committed to improving our relationships with our lenders and preferred stockholders and strengthening the capital structure. Comtech entered into a new credit facility in June 2024. In September 2024, the company notified its lenders that it had breached certain financial covenants for the quarter ended July 31st, 2024. These breaches were cured by a new investment of subordinated debt by the company's existing preferred stockholders in October, which resulted in a covenant holiday under the credit facility through January 31, 2025. We currently believe the company will breach covenants again when quarterly testing resumes. Fortunately, we believe we have developed a healthy and constructive relationship with our lenders and preferred stockholders, and we are working cooperatively to gain their support for an improved capital structure and increase financial flexibility going forward. All of the actions and initiatives we are describing today are consistent with the objective of building on the supportive and cooperative relationship with our lenders and preferred stockholders, improving the capital structure and creating the environment for long-term success for ComTech. And finally, culture. The ComTech organization has been through a lot of turmoil and disappointment. I am the fifth CEO to leave this organization in just a few years. It is human nature to worry in times of change and frustration. I really do get it. But starting now, we are going to instill in this organization a new constructive attitude and a new culture of commitment and accountability. Yes, we do recognize and accept this company has challenges. We'll be transparent and we'll tackle them head on. We also take pride in not only overcoming the challenges, but embarking on a journey to build a healthier and more successful future for ComTech. This journey starts with earning the trust and confidence of each of our key stakeholders, clearly defining our priorities and executing with confidence and determination on each priority, As I have summarized here today, ComTech is fortunate to have a strong talent in key positions throughout this company, some of whom you will be hearing from today and many others who are working behind the scenes to help us execute on these priorities. We are already building a culture where the entire organization shares a commitment to the ideals I've described and a positive vision for the success of ComTech. I am proud to lead the ComTech organization, and I hope that every employee, partner, and stakeholder shares in my enthusiasm in embarking on a journey for a successful future for ComTech. I will now turn the call over to Mike Bondi, who will provide an overview of the first quarter financial results and the company's financial position. You will then hear from Daniel Gazzinzi and Jeff Robertson about our business segments. I'll wrap things up, and we will then open the call for questions before we head to our annual shareholder meeting shortly after this call. Mike?