Comtech Telecommunications Corp. — Fiscal Year 2026 Earnings Summary

Financial Performance

• Fiscal 2026 net sales were $249.6 million, a 17.0% decrease from $300.9 million in fiscal 2025; fourth quarter 2026 net sales were $66.2 million, a 12.1% decrease from $75.3 million in the prior year quarter.
• Fiscal 2026 gross profit was $97.2 million (38.9% of net sales), up from $95.2 million (31.6%) in fiscal 2025; fourth quarter 2026 gross profit was $26.9 million (40.6%), up from $26.2 million (34.7%).
• Fiscal 2026 operating loss from continuing operations was $18.2 million, compared to $29.9 million in fiscal 2025; fourth quarter 2026 operating loss was $3.9 million, compared to $0.8 million.
• Fiscal 2026 net loss from continuing operations attributable to common shareholders was $51.0 million, compared to $67.9 million in fiscal 2025; fourth quarter 2026 net loss was $9.4 million, compared to $9.1 million.
• Fiscal 2026 Adjusted EBITDA from continuing operations was $20.6 million (8.3% of net sales), a 26% increase from $16.4 million (5.5%) in fiscal 2025; fourth quarter 2026 Adjusted EBITDA was $9.2 million (13.9% of net sales), up from $7.5 million (10.0%).
• Fiscal 2026 cash flows provided by operations were $25.0 million, compared to $29.2 million used in fiscal 2025; fourth quarter 2026 cash flows provided by operations were $18.5 million, compared to $1.2 million used.
• Consolidated year-end liquidity was $61.3 million; cash and cash equivalents at July 31, 2026, were $34.978 million.
• Fiscal 2026 net bookings were $263.7 million with a book-to-bill ratio of 1.06x, compared to $212.2 million (0.71x) in fiscal 2025; fourth quarter 2026 net bookings were $32.0 million (0.48x), compared to $58.5 million (0.78x).
• Funded backlog was $520.4 million as of July 31, 2026, compared to $506.3 million the prior year; revenue visibility was approximately $862.0 million.

Guidance and Future Outlook

• The company anticipates annual cost savings of approximately $16.0 million to $18.0 million (excluding one-time non-recurring expenses) after completing the sale of most of the S&S business and one year of transition.
• Pro forma Adjusted EBITDA for fiscal 2026 is estimated to be between $37.0 million and $39.0 million.
• Transition-related costs are expected to range between $13.0 million and $15.0 million, mostly incurred in fiscal 2027 and 2028.
• The company expects to close the sale of most of the S&S business in calendar 2026, subject to regulatory approvals and closing conditions.
• Upon closing, the company estimates receiving an additional $128.3 million in net cash proceeds (excluding retained assets and after sale-related expenses and escrow funding).
• The company plans to use 65% of net proceeds to prepay the majority of its Credit Facility and 35% to prepay debt under its Subordinated Credit Facility.
• The company intends to seek a comprehensive recapitalization following the transaction closing to further enhance financial flexibility and reduce the cost of capital.

Business Segments and Product Lines

• The company is transitioning to a focused business centered on Allerium's leadership in mission-critical public safety and communications technologies, retaining cyber security training services.
• The Satellite and Space Communications (S&S) segment results are presented as discontinued operations; continuing operations consist of the Allerium business, retained cyber security training, and corporate functions.
• Allerium entered fiscal 2027 with $520.4 million of funded backlog, approximately 80% of which is recurring revenue.
• New product launches in June 2026 included Allerium Mira (a multi-tenant, cloud-agnostic call handling solution) and Allerium Coral (a network-native capability for critical information exchange).
• Key contract awards in Q4 2026 included over $8.0 million from a domestic Tier 1 mobile network operator, approximately $6.5 million for U.S. government cybersecurity operations, over $2.5 million from an international Guardian customer, and over $1.0 million from a Northeastern NG9-1-1 customer.
• Allerium renewed Arizona's statewide NG9-1-1 partnership and expanded statewide service in Kentucky.
• A new purpose-built facility opened in Gatineau, Quebec, in May 2026, supporting over 60 NG9-1-1 upgrades in Canada during fiscal 2026.

Market and Competitive Landscape

• According to a 2026 Frost & Sullivan report, Allerium was the second leading provider of next generation core services (NGCS) in the U.S. with an estimated 25% market share based on primary contracts and population served.
• Allerium was the third leading provider of call handling solutions in the U.S. with an estimated 8% market share.
• Allerium's solutions support over 250 million wireless subscribers.
• The market is shifting from traditional voice-based systems toward data-centric communications, real-time coordination, and AI-enhanced decision making.
• Growth is expected to be driven by new emergency requesting devices (wearables, vehicles, smart speakers, AI cameras) and new delivery methods.

Risks and Challenges

• The transaction with Gilat is subject to regulatory approvals and customary closing conditions; failure to close could impact financial flexibility.
• Significant transaction costs and potential delays are associated with the proposed sale.
• The company faces risks related to retaining and hiring key personnel during the transition.
• Future performance depends on the successful integration of the remaining business and realization of expected cost savings.
• Risks include changes in government procurement practices, funding timing, and economic/political conditions.
• The company must adhere to credit facility covenants, though a covenant holiday has been extended to July 31, 2027.

Management Commentary and Tone

• CEO Ken Traub stated the company is "far stronger operationally, financially, organizationally and strategically" following the transformation plan.
• Management highlighted six consecutive quarters of positive consolidated operating cash flow and a successful strategic alternatives process.
• CEO Traub expressed confidence in the "revived culture of confidence" and the future of the focused Allerium business.
• Jeff Robertson, President of Allerium, noted the company is "uniquely positioned to lead" the large and growing public safety market.
• CFO Mike Bondi and CLO Don Walther are departing after a brief transition period; they will be succeeded by Rich Nyren and Amy Rothstein-Hovey.
• Jeff Robertson was appointed to the Board of the FirstNet Authority in June 2026.

Other Key Points

• On June 14, 2026, the company signed a definitive agreement to sell most of its S&S business to Wavestream Corporation, an affiliate of Gilat Satellite Networks Ltd, for a base purchase price of $157.5 million.
• The company received a $10.0 million Advance Payment, which was used to prepay $10.0 million of debt in July 2026.
• Contemporaneously with the sale agreement, the company entered into amendments to its senior debt, subordinated debt, and preferred stock agreements to enhance financial flexibility and lower the cost of capital.
• Amendments include a 1.0% reduction in prepayment penalties, extension of redemption rights for convertible preferred stock to October 31, 2029, and deferral of cash dividend rights until October 31, 2028.
• The company estimates that approximately 80% of fiscal 2026 net sales are recurring in nature.
• A multi-year contract extension valued in excess of $130.0 million was secured by Allerium's largest customer in fiscal 2026.
• Christopher Maloney was appointed as an independent director effective October 1, 2026.