Lower income but dramatically higher sales – both attributed to a key February acquisition – set a mixed fourth-quarter tone at Comtech Telecommunications Corp.
The Melville-based maker of high-tech communications systems reported earnings Thursday for its fiscal year 2016 fourth quarter, which ended July 31, and for its full fiscal year, which also wrapped up on that date. Among the fourth-quarter highlights: net sales of $152.4 million, nearly double the $77.5 million reported in 4Q FY2015.
The sharp increase was attributed primarily to Comtech’s $430.8 million acquisition of Maryland-based wireless-coms specialist TeleCommunication Systems Corp., which closed in February.
However, Comtech reported net income of only $2.7 million (14 cents per diluted share) for its fourth quarter, a 51 percent drop from the $5.5 million (34 cents per diluted share) reported in 4Q FY2015.
Despite that year-over-year decline, Comtech President and CEO Fred Kornberg – who served as chief executive for 38 years before Stanton Sloane took the mantle in December 2014, then retook the CEO slot last month – labeled the fourth quarter “an outstanding finish to a transformative year for Comtech.”
Kornberg, who told investors during a Thursday conference call that he “never expected to resume my role as CEO when I stepped down,” noted the TeleCommunication Systems Corp. acquisition included Comtech’s assumption of roughly $360 million in existing TCS debt.
That clearly contributed to the income decline – but in no way reflects Comtech’s overall performance, according to the two-time CEO.
“The fundamentals of our two business segments are solid and we see strong demand for our product and service offerings, as evidenced by recent order activity,” Kornberg told investors.
Comtech also reported Thursday its full-year financials for FY2016, including $411 million in net sales, a 25.2 percent increase over the $307.3 million reported for FY2015.
The company attributed the year-over-year jump to “incremental sales of approximately $151.4 million” resulting from the TeleCommunication Systems Corp. acquisition, which helped to overcome “lower sales of legacy Comtech products.”
Despite those lagging legacy-product sales, Kornberg sees good signs, and told investors Comtech is “targeting fiscal 2017 revenues at $600 million.”
“I am excited about 2017 and believe it will be the first of many years of sustainable growth,” the CEO said.