What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2022-09-29 compared with 2021-10-04 · 7 added, 87 removed, 13 unchanged (88% of the section changed)

1 unchanged sentence

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 graph below compares the cumulative total stockholder return on our common stock with the cumulative total return on the S&P 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."

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.

Since September 2010, we have paid quarterly dividends on shares of our common stock.

On October 4, 2021, December 9, 2021, March 10, 2022 and June 9, 2022, our Board of Directors declared a cash dividend of $0.10 per common share, which was paid on November 12, 2021, February 18, 2022, May 20, 2022 and August 19, 2022, respectively.

On September 29, 2022, our Board of Directors declared a cash dividend of $0.10 per common share, payable on November 18, 2022 to stockholders of record at the close of business on October 19, 2022.

Future common stock dividends remain subject to compliance with financial covenants under our Credit Facility, as well as Board approval and certain voting rights of holders of our Series A Convertible Preferred Stock.

The Board of Directors is currently targeting fiscal 2023 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.

Future common stock dividends remain subject to compliance with financial covenants under our Credit Facility, as well as Board approval, and certain voting rights of holders of our Series A Convertible Preferred Stock.

Recent Sales of Unregistered Securities

3 unchanged sentences

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.

We had approximately 27.6 million shares of Common Stock outstanding as of July 31, 2022.

Approximate Number of Equity Security Holders

1 unchanged sentence

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.

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.

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

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

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.

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

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity