Comtech Telecommunications Corp. Q2 FY2026 earnings call

• ComTech continued on positive trajectory with fourth consecutive quarter of positive operating cash flow, net bookings of $175 million, book-to-bill ratio 1.64, backlog to $732 million, revenue visibility at $1.1 billion. • Streamlined product lines, selective in customer orders. Impacted by US government shutdown, consolidated net sales decreased. • Satellite and Space Communications phased out low margin and working capital intensive revenues, pursued higher-margin solutions, saw operating income improvement. • Allerium continued strong performance with net sales increase in all product areas, moving forward with cloud-based and AI-infused software applications. • Addressed termination of prior CEO and related arbitration matters.

Satellite and Space Communications: Net sales decreased from $127 million in Q2 FY2025 to $107 million in the recent quarter. Gross profit increased from $34 million to $36 million, gross profit percentage from 27% to 34%, and operating income improved from $1.2 million to $2.5 million. Allerium: Net sales were $56.2 million, an increase of 6.2% compared to Q2 FY2025. Operating income was $5.5 million, compared to $3.4 million in Q2 FY2025.

• Net bookings $175 million, book-to-bill ratio 1.64, backlog $732 million, revenue visibility $1.1 billion. • Satellite and Space Communications' two next-generation products expected to transition into full production and begin production deliveries in FY2026. • Allerium's growth and initiatives continue.

• Forward-looking statements involve significant risks and uncertainties, actual results could differ. • Impact of US government shutdown on business. • Risks associated with product line streamlining decisions.

Q: How much of revenue decline was due to fiscal discipline vs federal business and if federal business is pushed out?

A: Decline in satellite and space is due to phasing out low margin legacy business and US government shutdown delay, offset by new revenue.

Q: Any more low margin business to work off?

A: No, phased out.

Q: Dimensionalize opportunity for modems?

A: One in low-rate production to kick in second half, another program near completion for production tail end of fiscal year, successor to Viasat's EBEM modem with large installed base.

Q: AI in Illyrium PSAP space and cloud transition?

A: AI used to collect data during emergencies for response, moving products to cloud three quarters done, announced Mira cloud-based 911 call handling platform.