Comtech Telecommunications(CMTL) - 2025 Q1 - Quarterly Report

Financial Performance - Consolidated net sales for Q1 fiscal 2025 were $115.8 million, down from$126.2 million in Q4 fiscal 2024 and $151.9 million in Q1 fiscal 2024[230]. - Consolidated net sales decreased to$115.8 million for the three months ended October 31, 2024, down $36.1 million or 23.8$151.9 million in the same period of 2023[248]. - Net sales in the Satellite and Space Communications segment fell to $58.9 million, a significant decrease of$43.5 million or 42.5% compared to $102.4 million in the prior year[249]. - The Terrestrial and Wireless Networks segment saw an increase in net sales to$56.9 million, up $7.4 million or 14.9$49.5 million in the same period of 2023[250]. - Gross profit for the three months ended October 31, 2024, was $14.5 million, a decrease of$33.4 million from $47.9 million in the prior year, with a gross profit margin of 12.5$155.9 million, including a $79.6 million non-cash impairment charge and a$17.4 million reserve for unbilled receivable[230]. - Consolidated net loss for the three months ended October 31, 2024, was $(148.4) million, compared to a net loss of$(1.4) million in the same period of 2023[289]. - Adjusted EBITDA decreased to $(19.4) million for the three months ended October 31, 2024, down from$18.4 million in the same period of 2023, reflecting lower consolidated net sales and gross profit[290]. - Operating loss for the three months ended October 31, 2024, was $129.2 million, compared to operating income of$2.1 million in Q4 2023[273]. - Non-GAAP net loss attributable to common stockholders for the three months ended October 31, 2024, was $(37.3) million, compared to$(3.3) million in the same period of 2023[296]. Segment Performance - The company operates through two reportable segments: Satellite and Space Communications, and Terrestrial and Wireless Networks[216]. - The Satellite and Space Communications segment reported an operating loss of $118.8 million in Q1 2025, impacted by lower net sales and a non-cash inventory write-down of$11.4 million[276]. - The Terrestrial and Wireless Networks segment saw an increase in Adjusted EBITDA due to higher net sales, despite a lower gross profit percentage[292]. - The book-to-bill ratio for the Satellite and Space Communications segment was 0.99x, while the Terrestrial and Wireless Networks segment had a book-to-bill ratio of 1.22x for the same period[249][250]. Impairments and Charges - A non-cash impairment charge of $79.6 million was recorded in the Satellite and Space Communications segment during the first quarter of fiscal 2025 related to long-lived assets, including goodwill[220]. - The company recorded a non-cash charge of$11.4 million related to inventory write-downs during the first quarter of fiscal 2025[257]. - Impairment of long-lived assets, including goodwill, amounted to $79.6 million for the three months ended October 31, 2024[297]. - A$17.4 million non-cash charge related to an allowance for doubtful accounts impacted overall performance, contributing to lower consolidated net sales and gross profit[290]. Costs and Expenses - Selling, general and administrative expenses rose to $51.6 million, representing 44.6$32.7 million or 21.5% in the same period of 2023[259]. - Research and development expenses decreased to $3.7 million for the three months ended October 31, 2024, down 52.5$7.8 million in the same period of 2023[262]. - The company reduced its workforce by approximately 7%, resulting in annualized cost savings of about $18.0 million, with severance costs of approximately$1.1 million expected in Q2 fiscal 2025[245]. - Restructuring costs totaled $17.9 million for the three months ended October 31, 2024, compared to$3.7 million in the same period of 2023[297]. Revenue and Backlog - New bookings totaled $127.9 million, resulting in a book-to-bill ratio of 1.10x[230]. - Backlog increased to$811.0 million as of October 31, 2024, compared to $798.9 million as of July 31, 2024[230]. - Revenue visibility is approximately$1.6 billion, combining funded backlog and the total unfunded value of multi-year contracts[230]. Legal and Regulatory Matters - The company is subject to ongoing legal expenses related to pending and threatened legal actions, which may adversely affect financial condition[323]. - The company has entered into employment and change of control agreements with certain executive officers, which may require payments under specific circumstances[324]. Future Outlook and Guidance - The company is not providing forward-looking guidance due to unpredictable business conditions and challenges related to its transformation strategy[246]. - The evaluation of the company's ability to continue as a going concern is ongoing, with substantial doubt raised due to current financial conditions[300]. - The company has not provided future financial targets, making it difficult to reconcile business outlook to GAAP measures[295]. Goodwill and Intangible Assets - As of October 31, 2024, total goodwill recorded on the balance sheet is $204.6 million, with$30.5 million in the Satellite and Space Communications segment and $174.1 million in the Terrestrial and Wireless Networks segment[220]. - Amortization of intangibles increased to$6.6 million in Q1 2025 from $5.3 million in Q1 2024, with the Satellite and Space Communications segment accounting for$3.0 million of this amount[268].