Comtech Telecommunications Corp. EBITDA dropped on 19.0% and Revenue decreased on 8.2%
09/29/2020 • About Comtech Telecommunications Corp. (
$CMTL) • By InTwits
Comtech Telecommunications Corp. reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
- Comtech Telecommunications Corp. has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.4%. At the same time it's in pair with industry average of 19.3%
- CAPEX is quite volatile: $12m in FY2020, $15m in FY2019, $488m in FY2018, $5m in FY2017, $8m in FY2016
- The company has potentially unprofitable business model: ROIC is 2.3%
- It operates with high leverage: Net Debt/EBITDA is 2.3x while industry average is 0.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Comtech Telecommunications Corp.'s Revenue decreased on 8.2%. Revenue decline showed acceleration in FY20Q4 - it was 15.1% YoY. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased slightly on 1.3 pp from 10.7% to 9.4% in FY2020. During FY2016-FY2020 EBITDA Margin topped in FY2017 at 13.5% and was declining since that time.
Gross Margin showed almost no change in FY2020. Gross Margin followed a declining trend at -1.3 pp per annum in FY2016-FY2020. SG&A as a % of Revenue showed almost no change in FY2020. SG&A as a % of Revenue declined at -1.0 pp per annum in the last 5 years.
Net Income margin decreased on 2.6 pp from 3.7% to 1.1% in FY2020. During the last 5 years Net Income margin topped in FY2018 at 5.2% and was declining since that time.
Investments (CAPEX, working capital and M&A)
Comtech Telecommunications Corp.'s CAPEX/Revenue was 1.2% in FY2020. The company's CAPEX/Revenue showed almost no change from FY2017 to FY2020. It's average level of CAPEX/Revenue for the last three years was 1.3%. During the last 5 years CAPEX as a % of Revenue topped in FY2018 at 1.5% and was declining since that time.
Return on investment
The company operates at low ROIC (2.3%) and ROE (1.3%). ROIC decreased on 3.7 pp from 5.9% to 2.3% in FY2020. ROE decreased on 3.5 pp from 4.8% to 1.3% in FY2020. During the last 5 years ROE topped in FY2018 at 6.0% and was declining since that time.
Leverage (Debt)
Debt level is 2.3x Net Debt / EBITDA and 3.1x Debt / EBITDA. Net Debt / EBITDA jumped on 0.6x from 1.7x to 2.3x in FY2020. Debt increased on 9.7% while cash increased on 5.1%. During the last 5 years Net Debt/EBITDA bottomed in FY2019 at 1.7x.
Comtech Telecommunications Corp. has no short term refinancing risk: cash is higher than short term debt (576.6%).
Valuation and dividends
Comtech Telecommunications Corp.'s trades at EV/EBITDA 8.9x and P/E 54.7x.
Management team
Fred Kornberg is a the company's CEO. Fred Kornberg has spent 6 years with the company. The company's CFO is Michael A Bondi. Michael A Bondi has 2 years tenure at the company.
Financial and operational results
FY ended 07/31/2020
Comtech Telecommunications Corp. ($CMTL) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 411.0 | 550.4 | 570.6 | 671.8 | 616.7 | -8.2% |
| Gross Profit | 171.2 | 218.2 | 223.9 | 247.4 | 226.8 | -8.3% |
| SG&A | 94.9 | 116.1 | 113.9 | 128.6 | 117.1 | -8.9% |
| EBITDA | 22.7 | 74.2 | 69.8 | 71.7 | 58.0 | -19.0% |
| Net Income | -7.7 | 15.8 | 29.8 | 25.0 | 7.0 | -72.0% |
Balance Sheet
|
|---|
| Cash | 66.8 | 41.8 | 43.5 | 45.6 | 47.9 | 5.1% |
| Short Term Debt | 14.7 | 17.8 | 19.0 | 0.8 | 8.3 | 997.0% |
| Long Term Debt | 244.0 | 178.0 | 148.9 | 165.0 | 173.6 | 5.2% |
Cash flow
|
|---|
| Capex | 5.7 | 8.2 | 8.6 | 8.8 | 7.2 | -17.8% |
Ratios
|
|---|
| Revenue growth | 33.8% | 33.9% | 3.7% | 17.7% | -8.2% | |
| EBITDA growth | -51.6% | 227.4% | -5.9% | 2.6% | -19.0% | |
|
|---|
| Gross Margin | 41.7% | 39.6% | 39.2% | 36.8% | 36.8% | -0.1% |
| EBITDA Margin | 5.5% | 13.5% | 12.2% | 10.7% | 9.4% | -1.3% |
| SG&A, % of revenue | 23.1% | 21.1% | 20.0% | 19.1% | 19.0% | -0.2% |
| Net Income Margin | -1.9% | 2.9% | 5.2% | 3.7% | 1.1% | -2.6% |
| CAPEX, % of revenue | 1.4% | 1.5% | 1.5% | 1.3% | 1.2% | -0.1% |
|
|---|
| ROIC | -0.1% | 5.2% | 5.1% | 5.9% | 2.3% | -3.7% |
| ROE | -1.8% | 3.3% | 6.0% | 4.8% | 1.3% | -3.5% |
| Net Debt/EBITDA | 8.5x | 2.1x | 1.8x | 1.7x | 2.3x | 0.6x |
Comtech Telecommunications Corp. ($CMTL) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 170 | 162 | 135 | 150 | | 5.9% | -1.5% | -20.7% | -15.1% |
| EBITDA | 20 | 17 | 8 | 14 | | 36.9% | -13.6% | -58.6% | -27.9% |
| Net Income | 6 | 3 | -4 | 1 | | 84.2% | -55.3% | -152.4% | -81.6% |
Balance Sheet
|
|---|
| Cash | 47 | 46 | 51 | 48 | | 9.2% | 1.0% | 12.1% | 5.1% |
| Short Term Debt | 10 | 10 | 8 | 8 | | 521.6% | 657.2% | 723.3% | 997.0% |
| Long Term Debt | 197 | 184 | 185 | 174 | | 1.4% | 5.4% | 6.5% | 5.2% |
Ratios
|
|---|
| Gross Margin | 37.3% | 37.5% | 39.2% | 33.2% | | 1.4% | 0.2% | 1.4% | -3.1% |
| EBITDA Margin | 11.6% | 10.4% | 5.7% | 9.1% | | 2.6% | -1.5% | -5.3% | -1.6% |
| Net Income Margin | 3.8% | 2.2% | -3.0% | 0.8% | | 1.6% | -2.6% | -7.4% | -2.7% |
Peers in Communications Equipment
Below we provide Comtech Telecommunications Corp. benchmarking against other companies in Communications Equipment industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Resonant Inc. ($RESN) | - | 116.2% | -19.8% | 40.3% | 329.9% |
| Franklin Wireless Corp ($FKWL) | - | -18.8% | -38.1% | 21.3% | 105.9% |
| Ribbon Communications Inc. ($RBBN) | - | 30.6% | 75.2% | -2.6% | 49.8% |
| Inseego Corp. ($INSG) | - | -10.0% | -7.7% | 8.4% | 43.0% |
| Casa Systems, Inc. ($CASA) | - | 11.2% | -15.5% | -5.0% | 39.3% |
| |
|---|
| Median (35 companies) | 7.5% | 5.1% | 2.8% | 3.7% | 4.4% |
|---|
| Comtech Telecommunications Corp. ($CMTL) | - | 33.9% | 3.7% | 17.7% | -8.2% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| F5 Networks, Inc. ($FFIV) | 83.1% | 83.1% | 83.3% | 84.1% | 82.6% |
| Radware Ltd. ($RDWR) | 81.8% | 81.3% | 82.2% | 82.1% | 82.0% |
| Radcom Ltd. ($RDCM) | 69.6% | 71.8% | 74.0% | 70.0% | 71.4% |
| AudioCodes Ltd. ($AUDC) | 60.7% | 62.4% | 62.8% | 47.4% | 67.9% |
| Arista Networks, Inc. ($ANET) | 64.0% | 64.5% | 63.8% | 64.1% | 63.9% |
| |
|---|
| Median (33 companies) | 43.9% | 41.7% | 41.2% | 44.3% | 46.8% |
|---|
| Comtech Telecommunications Corp. ($CMTL) | 41.7% | 39.6% | 39.2% | 36.8% | 36.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| InterDigital, Inc. ($IDCC) | 73.6% | 67.3% | 41.9% | 37.5% | 39.5% |
| EchoStar Corporation ($SATS) | 40.3% | 38.1% | 37.4% | 36.4% | 35.0% |
| Arista Networks, Inc. ($ANET) | 23.3% | 29.8% | 14.0% | 35.7% | 33.1% |
| Motorola Solutions, Inc. ($MSI) | 22.2% | 25.5% | 22.0% | 26.7% | 25.9% |
| F5 Networks, Inc. ($FFIV) | 30.3% | 29.9% | 30.1% | 26.2% | 22.9% |
| |
|---|
| Median (32 companies) | 5.9% | 6.0% | 4.6% | 3.1% | 8.8% |
|---|
| Comtech Telecommunications Corp. ($CMTL) | 5.5% | 13.5% | 12.2% | 10.7% | 9.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Resonant Inc. ($RESN) | 132.5% | 124.8% | 245.2% | 109.7% | 22.3% |
| EchoStar Corporation ($SATS) | 39.9% | 30.9% | 26.5% | 22.2% | 21.7% |
| KVH Industries, Inc. ($KVHI) | 3.2% | 8.0% | 9.3% | 7.9% | 8.9% |
| Harmonic Inc. ($HLIT) | 3.7% | 3.2% | 1.7% | 2.6% | 8.5% |
| Applied Optoelectronics, Inc. ($AAOI) | 19.0% | 17.5% | 26.9% | 15.1% | 6.7% |
| |
|---|
| Median (32 companies) | 2.0% | 1.9% | 1.7% | 2.5% | 2.2% |
|---|
| Comtech Telecommunications Corp. ($CMTL) | 1.4% | 1.5% | 1.5% | 1.3% | 1.2% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Franklin Wireless Corp ($FKWL) | 12.2% | 4.7% | -14.9% | -13.0% | 37.5% |
| Motorola Solutions, Inc. ($MSI) | 26.4% | 39.5% | 35.3% | 34.0% | 26.4% |
| Arista Networks, Inc. ($ANET) | 25.7% | 33.9% | 14.5% | 33.3% | 23.5% |
| AudioCodes Ltd. ($AUDC) | 6.1% | 8.6% | 16.1% | -7.7% | 20.8% |
| F5 Networks, Inc. ($FFIV) | 43.1% | 46.9% | 47.9% | 34.1% | 16.5% |
| |
|---|
| Median (35 companies) | 2.4% | 2.1% | 0.3% | -1.6% | 1.9% |
|---|
| Comtech Telecommunications Corp. ($CMTL) | -0.1% | 5.2% | 5.1% | 5.9% | 2.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Inseego Corp. ($INSG) | - | - | 3.9x | 82.5x | 26.9x |
| CommScope Holding Company, Inc. ($COMM) | 4.3x | 4.6x | 4.4x | 27.0x | 10.5x |
| Harmonic Inc. ($HLIT) | - | - | 3.4x | 1.9x | 6.5x |
| Ribbon Communications Inc. ($RBBN) | -17.2x | - | - | - | 3.5x |
| Casa Systems, Inc. ($CASA) | -0.2x | 0.3x | 0.2x | 32.1x | 3.2x |
| |
|---|
| Median (24 companies) | -0.9x | -0.8x | -0.3x | -0.4x | -0.5x |
|---|
| Comtech Telecommunications Corp. ($CMTL) | 8.5x | 2.1x | 1.8x | 1.7x | 2.3x |
