Comtech Telecommunications Corp.

Welcome to ComTech Telecom's conference call for the second quarter of fiscal 2025. As a reminder, this conference is being recorded. I would now like to turn the conference over to Maria Ciriello, Senior Director of Financial Operations 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 Bodney, CFO, Daniel Gudzinski, 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 afternoon, 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 questionnaire statements contained in the company's SEC filings. With that, I will turn it over to Ken. Ken?

Thank you, Maria, and good afternoon, everyone. I appreciate your taking the time to join us today. ComTech's last conference call was on January 13, 2025, which was also my first day in the role as president and CEO of the company. I had joined the company shortly before that as an independent director on October 31st and then assumed the role of executive chairman on November 26th. So I had a little bit of experience with the company when I shared my perspectives that day. A point I emphasized on that conference call, as I have done consistently since then with all of ComTech's stakeholders, is that I believe earning trust is the most essential ingredient for success in business. I stated specifically that, frankly, the ComTech organization has work to do to earn trust in light of its historically poor track record of financial performance and missed expectations. Our goal is to earn the trust of all of our stakeholders, and we intend to do that by being transparent, holding ourselves accountable, and delivering on our promises. On January 13th, we were clear and direct. Comtech's recent financial performance was unacceptable. Further, we disclosed our expectation at that time that the company anticipates breaching financial covenants at the end of the quarter on January 31st, and this could have significant consequences for the company. In light of the company's challenges, I announced a comprehensive transformation plan. The key pillars of that transformation plan are Number one, improving operational discipline and reducing the cost structure. Number two, supporting the growth and development of successful high-margin business initiatives. Third, conducting a broad review of strategic alternatives. Fourth, strengthening the company's capital structure. And fifth, promoting a corporate culture centered on taking pride in our transformations resulting in enhanced employee morale and productivity. The early evidence that this transformation plan is gaining traction and credibility is the series of transactions we announced last week to improve the company's capital structure. As anticipated, the company actually did breach the net leverage ratio and the fixed charge coverage ratio cabinets as of January 31st, by a substantial margin, which put the company in default on the senior secured term loan, the revolving line of credit, and the subordinated debt. These were problems that needed to be solved. Fortunately, we have developed strong relationships of trust and confidence with the company's secured creditors, as well as its preferred shareholders and subordinated debt holders. We demonstrated to each of them the merits of our transformation plan and the progress we are making in executing on that plan. Consequently, they agreed to support the company in new transactions that not only cured the prior breaches, but improves the company's financial flexibility going forward. This included a new capital infusion of $40 million in the form of subordinated debt, the proceeds of which were used to prepay a portion of the senior secured credit facility. The lenders agreed to waive the prepayment fees that would have been due in accordance with the terms of the credit agreements and agreed to grant waivers, cure the breaches that already occurred for the quarter ended January 31st and agreed to suspend certain financial covenant testing till after the quarter ending October 31st, 2025. I would like to emphasize that gaining the support of our lenders and creditors in these transactions was the result of demonstrating that each element of our transformation plan has merit. While you would see evidence of the progress of some of these initiatives and the results discussed today, we do anticipate we will be showing even more demonstrable progress on each of the pillars of our transformation plan in the coming quarters. Before we discuss the specific business units and recent developments, I want to comment briefly on our previously disclosed process to broadly explore strategic alternatives. As an update, we have engaged Imperial Capital for the review of strategic alternatives for the terrestrial and wireless business, and we have engaged TD Cowen for the review of strategic alternatives for the rest of the company, including the satellite and space business. We will provide updates on these processes only if and when we have something specific to share. Now I will provide some comments on our business units. Our satellite and space business has underperformed in recent quarters and has been in need of a turnaround. Daniel Gosinski was appointed president of this business on November 19, 2024, and he's doing a great job of addressing historic issues that have undermined performance and is developing a new approach to optimize the business and drive future profitability and value. Some examples of this new approach include, number one, offering a refocused product portfolio that emphasizes differentiated higher margin offerings. Second, instituting clear lines of accountability resulting in more effective operational discipline. Third, implementing more disciplined approval policies purchasing and inventory management. Fourth, highlighting customer value proposition, enabling improved pricing and terms. Fifth, adding strong product management capabilities to ensure alignment among engineering, product, quality, and customer expectations. Sixth, eliminating slow moving and low margin SKUs. And seventh, launching next generation products with validated customer demand. The positive impact of these actions are already bearing fruit as starting to be reflected in the second quarter results that Mike will describe shortly. As further validation of our progress, on March 10th, we announced that our customer, L3Harris, awarded ComTech sole source contracts in excess of $26 million for advanced next generation anti-jam modems supporting the US Army and the US Air Force. Daniel will provide further details on how all of these actions are better positioning the satellite and space business going forward. The terrestrial and wireless business continues to perform well and is poised for growth due to the planned launch of new cloud-based emergency response products and increased interest from international carriers around our proven 5G location technologies. P&W generally performed in line with our expectations for this quarter, while the reduced level of performance was primarily attributed to a one-time implementation delay in Q2, as well as to quarterly variations in deployment timing and sales cycles. We remain confident in the position of this business and strong backlog and continue to take steps to enhance its strategic potential. Now, before I turn the call over to Mike to go through the financials, I wanted to take a moment to talk about our corporate culture. The ComTech organization has had a challenging run over the past few years. I know it has been difficult and frustrating for all of our employees, but it is really gratifying to see how the corporate culture is starting to brighten as employees are increasingly taking pride and the positive trajectory toward a stronger and healthier future for ComTech. I am proud to lead the ComTech organization, and I hope every employee, partner, and stakeholder shares in my enthusiasm in embarking on the journey for a successful future for ComTech. Mike is going to review ComTech's finances now, followed by Daniel and Jeff's discussion of the business segments they lead. I'll have some closing remarks, and then we'll open the call for questions. Mike?