Comtech Telecommunications(US:CMTL)2025-03-12 20:22Goodwill and Impairment - As of January 31, 2025, total goodwill recorded on the balance sheet was $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[231]. - 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[231]. - Consolidated gross profit for the six months ended January 31, 2025, was significantly impacted by a non-cash goodwill impairment charge of $79.6 million and restructuring costs totaling $21.3 million[326][328]. Financial Performance - Consolidated net sales for Q2 fiscal 2025 were $126.6 million, compared to $115.8 million in Q1 fiscal 2025 and $134.2 million in Q2 fiscal 2024[243]. - Consolidated net sales for the three months ended January 31, 2025, were $126.6 million, a decrease of $7.6 million or 5.7% compared to the same period in 2024[259]. - Consolidated net sales decreased by $43.7 million, or 15.3%, to $242.4 million for the six months ended January 31, 2025, compared to $286.1 million for the same period in 2024[302]. - GAAP net loss attributable to common stockholders was $22.4 million, including $5.0 million of intangible asset amortization and $3.4 million of restructuring costs[243]. - For the six months ended January 31, 2025, the consolidated net loss attributable to common stockholders was $178.2 million, compared to $33.8 million for the same period in 2024[340]. Segment Performance - Net sales in the Satellite and Space Communications segment were $73.7 million, down $4.9 million or 6.2% from $78.6 million in the prior year[260]. - Net sales in the Terrestrial and Wireless Networks segment were $52.9 million, a decrease of $2.7 million or 4.9% from $55.6 million in the same period of 2024[261]. - The Satellite and Space Communications segment represented 54.7% of consolidated net sales for the six months ended January 31, 2025, down from 63.3% in the prior year[303]. - The Terrestrial and Wireless Networks segment saw an increase in net sales of $4.6 million, or 4.4%, reaching $109.7 million for the six months ended January 31, 2025, driven by higher sales of call handling and NG-911 services[304]. Expenses and Costs - Selling, general and administrative expenses increased to $33.8 million, or 26.7% of consolidated net sales, compared to $30.3 million or 22.6% in the same period of 2024[269]. - Research and development expenses were $4.4 million, or 3.4% of consolidated net sales, down from $6.8 million or 5.1% in the prior year[272]. - The company recorded provisions for excess and obsolete inventory of $13.5 million for the six months ended January 31, 2025, compared to $1.5 million in the prior year[311]. - Interest expense increased to $20.5 million for the six months ended January 31, 2025, up from $10.2 million in the previous year, with an effective interest rate of approximately 20.3%[332]. Cash Flow and Liquidity - Cash and cash equivalents decreased to $26.7 million as of January 31, 2025, down from $32.4 million at July 31, 2024[347]. - Net cash used in operating activities was $22.0 million for the six months ended January 31, 2025, a decrease from $41.2 million in the same period of 2024[350]. - The company recognized a net cash provided by financing activities of $20.3 million for the six months ended January 31, 2025, compared to $37.3 million in the same period of 2024[350]. Contracts and Backlog - New bookings for Q2 fiscal 2025 were $79.4 million, resulting in a book-to-bill ratio of 0.63x[243]. - Backlog as of January 31, 2025, was $763.8 million, down from $798.9 million as of July 31, 2024[243]. - Revenue visibility is approximately $1.6 billion, combining funded backlog and the total unfunded value of multi-year contracts[243]. - A multi-year GFSR contract awarded by the U.S. Army has a total potential value of $544.0 million[244]. Strategic Initiatives - The company is exploring strategic alternatives for its various businesses and product lines to enhance profitability and efficiency[361]. - Capital investments for high-volume manufacturing centers and cloud-based networks are expected to continue throughout fiscal 2025 and beyond[362]. - The company plans to address its going concern uncertainties by maximizing borrowing capacity and generating positive cash inflows from operations[358]. Market Outlook - The company anticipates future growth in end markets due to increasing demand for global voice, video, and data usage, as well as the growth of emergency communication networks[226]. - The company is not providing forward-looking guidance due to uncertainties related to its transformation strategy and external economic factors[257].