Item 5. Market for Registrant’s Common Equity
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Stock Performance Graph and Cumulative Total Return
The graph below compares the cumulative total stockholder return on our common stock with the cumulative total return on the S&P’s 500 Index and the NASDAQ Telecommunications Index for each of the last five fiscal years ended July 31, assuming an investment of $100 at the beginning of such period and the reinvestment of any dividends. The comparisons in the graphs below are based upon historical data and are not indicative of, nor intended to forecast, future performance of our common stock.
Our common stock trades on the NASDAQ Stock Market LLC ("NASDAQ") under the symbol "CMTL."
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Dividends
Since September 2010, we have paid quarterly dividends. On September 29, 2020, December 9, 2020, March 11, 2021 and June 8, 2021, our Board of Directors declared a dividend of $0.10 per common share, which were paid on October 27, 2020, February 19, 2021, May 21, 2021 and August 20, 2021, respectively.
On October 4, 2021, our Board of Directors declared a dividend of $0.10 per common share, payable on November 12, 2021 to stockholders of record at the close of business on October 13, 2021.
The Board of Directors is currently targeting fiscal 2022 quarterly dividend payments of $0.10 per common share.
Future Common Stock dividends remain subject to compliance with financial covenants under our Credit Facility, as well as Board approval.
Recent Sales of Unregistered Securities
None.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
We did not repurchase any of our equity securities during the fiscal year ended July 31, 2021. On September 29, 2020, our Board of Directors authorized a new $100.0 million stock repurchase program, which replaced our prior program. The new $100.0 million stock repurchase program has no time restrictions and repurchases may be made from time to time in open-market or privately negotiated transactions, or by other means in accordance with federal securities laws. We had approximately 26.2 million of Common Stock outstanding as of July 31, 2021.
Approximate Number of Equity Security Holders
As of September 30, 2021, there were approximately 801 holders of our common stock. Such number of record owners was determined from our stockholder records and does not include beneficial owners whose shares of our common stock are held in the name of various security holders, dealers and clearing agencies.
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
The following table shows selected historical consolidated financial data for our Company.
Detailed historical financial information is included in the audited consolidated financial statements for fiscal 2021, 2020 and 2019.
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Fiscal Years Ended July 31,
(In thousands, except per share amounts)
2021 2020 2019 2018 2017
Consolidated Statement of Operations Data:
Net sales $ 581,695 616,715 671,797 570,589 550,368
Cost of sales 367,737 389,882 424,357 346,648 332,183
Gross profit 213,958 226,833 247,440 223,941 218,185
Expenses:
Selling, general and administrative 111,796 117,130 128,639 113,922 116,080
Research and development 49,148 52,180 56,407 53,869 54,260
Amortization of intangibles 21,020 21,595 18,320 21,075 22,823
Settlement of intellectual property litigation — — (3,204) — (12,020)
Acquisition plan expenses 100,292 20,754 5,871 — —
282,256 211,659 206,033 188,866 181,143
Operating (loss) income (68,298) 15,174 41,407 35,075 37,042
Other expenses (income):
Interest expense 6,821 6,054 9,245 10,195 11,629
Write-off of deferred financing costs — — 3,217 — —
Interest (income) and other (139) (190) 35 254 (68)
(Loss) income before (benefit from) provision for income taxes (74,980) 9,310 28,910 24,626 25,481
(Benefit from) provision for income taxes (1,500) 2,290 3,869 (5,143) 9,654
Net (loss) income $ (73,480) 7,020 25,041 29,769 15,827
Net (loss) income per share:
Basic $ (2.86) 0.28 1.04 1.25 0.68
Diluted $ (2.86) 0.28 1.03 1.24 0.67
Weighted average number of common shares outstanding – basic
25,685 24,798 24,124 23,825 23,433
Weighted average number of common and common equivalent shares outstanding – diluted
25,685 24,899 24,302 24,040 23,489
Fiscal Years Ended July 31,
(In thousands)
2021 2020 2019 2018 2017
Other Consolidated Operating Data:
Backlog at period-end $ 658,896 620,912 682,954 630,695 446,230
New orders 623,076 584,448 724,056 755,054 512,593
Research and development expenditures - internal and customer funded
62,783 64,103 71,086 70,793 81,310
Adjusted EBITDA 76,519 77,803 93,472 78,374 70,705
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As of July 31,
(In thousands)
2021 2020 2019 2018 2017
Consolidated Balance Sheet Data:
Total assets $ 993,111 929,647 887,711 845,157 832,063
Working capital 83,935 117,385 134,967 114,477 96,833
Debt, including finance leases and other obligations 201,000 149,500 165,757 167,899 195,802
Other liabilities 14,507 17,831 18,822 4,117 2,655
Stockholders’ equity 500,719 549,299 535,082 505,684 480,150
Non-GAAP Financial Data
This Annual Report on Form 10-K contains a Non-GAAP financial metric for the Company titled Adjusted EBITDA, which represents earnings (loss) before income taxes, interest (income) and other expense, write-off of deferred financing costs, interest expense, amortization of stock-based compensation, amortization of intangibles, depreciation expense, estimated contract settlement costs, settlement of intellectual property litigation, acquisition plan expenses, restructuring costs, COVID-19 related costs, strategic emerging technology costs (for next-generation satellite technology), facility exit costs, strategic alternatives analysis expenses and other. In future periods, we expect to incur expenses similar to the aforementioned items and investors should not infer from our presentation of Adjusted EBITDA that these costs are unusual, infrequent or non-recurring. These items, while periodically affecting our results, may vary significantly from period to period and may have a disproportionate effect in a given period, thereby affecting the comparability of results.
Adjusted EBITDA is a Non-GAAP financial measure used by management in assessing Comtech’s operating results. Although closely aligned, Comtech's definition of Adjusted EBITDA is different than the Consolidated EBITDA (as such term is defined in our Credit Facility) utilized for financial covenant calculations and also may differ from the definition of EBITDA or Adjusted EBITDA used by other companies and therefore, may not be comparable to similarly titled measures used by other companies. Our Adjusted EBITDA is also a measure frequently requested by Comtech’s investors and analysts. We believe that investors and analysts may use Adjusted EBITDA, along with other information contained in our SEC filings, in assessing our performance and comparability of our results with other companies.
Non-GAAP financial measures have limitations as an analytical tool as they exclude the financial impact of transactions necessary to conduct our business, such as the granting of equity compensation awards, and are not intended to be an alternative to financial measures prepared in accordance with GAAP. Non-GAAP financial measures should be considered in addition to, and not as a substitute for or superior to, financial measures determined in accordance with GAAP. Investors are advised to carefully review the GAAP financial results that are disclosed in our SEC filings.
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The following is a reconciliation of net income (loss), the most comparable GAAP measure, to Adjusted EBITDA:
Fiscal Years Ended July 31,
(In thousands)
2021 2020 2019 2018 2017
Adjusted EBITDA:
Net (loss) income $ (73,480) 7,020 25,041 29,769 15,827
(Benefit from) provision for income taxes (1,500) 2,290 3,869 (5,143) 9,654
Interest (income) and other (139) (190) 35 254 (68)
Write-off of deferred financing costs — — 3,217 — —
Interest expense 6,821 6,054 9,245 10,195 11,629
Amortization of stock-based compensation 9,983 9,275 11,427 8,569 8,506
Amortization of intangibles 21,020 21,595 18,320 21,075 22,823
Depreciation 9,379 10,561 11,927 13,655 14,354
Estimated contract settlement costs — 444 6,351 — —
Settlement of intellectual property litigation — — (3,204) — (12,020)
Acquisition plan expenses 100,292 20,754 5,871 — —
Facility exit costs — — 1,373 — —
Restructuring costs 2,782 — — — —
Strategic emerging technology costs 315 — — — —
COVID-19 related costs 1,046 — — — —
Adjusted EBITDA $ 76,519 77,803 93,472 78,374 70,705