Investor Presentation Q2 Fiscal Year This presentation reflects information as of March 6, 2019

Transcription

1 Investor Presentation Q2 Fiscal Year 2019 This presentation reflects information as of March 6, 2019

2 Forward-Looking Statements Cautionary Statement Regarding Forward-Looking Statements Certain information in this presentation contains forward-looking statements, including but not limited to, information relating to Comtech Telecommunications Corp. s ( Comtech or the Company ) future performance and financial condition, plans and objectives of Comtech's management and Comtech's assumptions regarding such future performance, financial condition, and plans and objectives that involve certain significant known and unknown risks and uncertainties and other factors not under Comtech's control which may cause its actual results, future performance and financial condition, and achievement of plans and objectives of Comtech's management to be materially different from the results, performance or other expectations implied by these forward-looking statements. These factors include, among other things: the possibility that the expected synergies from the acquisition of Solacom Technologies Inc. ( Solacom ) will not be fully realized, or will not be realized within the anticipated time period; the risk that Comtech s and Solacom s businesses will not be integrated successfully; the possibility of disruption from the Solacom acquisition, making it more difficult to maintain business and operational relationships or retain key personnel; the risk that Comtech will be unsuccessful in implementing a tactical shift in its Government Solutions segment away from bidding on large commodity service contracts and toward pursuing contracts for its niche products with higher margins; the risks associated with Comtech s ongoing evaluation and repositioning of its enterprise technology solutions offering in its Commercial Solutions segment; the nature and timing of receipt of, and Comtech's performance on, new or existing orders that can cause significant fluctuations in net sales and operating results; the timing and funding of government contracts; adjustments to gross profits on long-term contracts; risks associated with international sales; rapid technological change; evolving industry standards; new product announcements and enhancements, including the risks associated with Comtech's recent launch of Heights TM Dynamic Network Access Technology ("HEIGHTS" or "HDNA"); changing customer demands and or procurement strategies; changes in prevailing economic and political conditions; changes in the price of oil in global markets; changes in foreign currency exchange rates; risks associated with Comtech's legal proceedings, customer claims for indemnification and other similar matters; risks associated with Comtech's obligations under its Credit Facility; risks associated with Comtech's large contracts; the impact of H.R.1, also known as the Tax Cuts and Jobs Act ("Tax Reform"), which was enacted in December 2017 in the U.S.; and other factors described in this and Comtech's other filings with the Securities and Exchange Commission.

3 Use of Non-GAAP Financial Measures In order to provide investors with additional information regarding the Company s financial results, this presentation contains "Non-GAAP financial measures" under the rules of the SEC. The Company's Adjusted EBITDA is a Non-GAAP measure that represents earnings (loss) before income taxes, interest (income) and other, write-off of deferred financing costs, interest expense, amortization of stock-based compensation, amortization of intangibles, depreciation expense, estimated contract settlement costs, acquisition plan expenses or strategic alternatives analysis expenses, facility exit costs, settlement of intellectual property litigation and other. The Company's definition of Adjusted EBITDA may differ from the definition of EBITDA used by other companies and therefore may not be comparable to similarly titled measures used by other companies. Adjusted EBITDA is also a measure frequently requested by the Company's investors and analysts. The Company believes that investors and analysts may use Adjusted EBITDA, along with other information contained in its SEC filings, in assessing the Company's performance and comparability of its results with other companies. The Company s Non-GAAP measures for consolidated operating income, net income and net income per diluted share reflect the GAAP measures as reported, adjusted for certain items as discussed in Appendix II. These Non-GAAP financial measures have limitations as an analytical tool as they exclude the financial impact of transactions necessary to conduct the Company s 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. These measures are adjusted as described in the reconciliation of GAAP to Non-GAAP in Appendix II, but these adjustments should not be construed as an inference that all of these adjustments or costs are unusual, infrequent or non-recurring. 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 the Company s SEC filings. The Company has not quantitatively reconciled its fiscal 2019 Adjusted EBITDA target to the most directly comparable GAAP measure because items such as stock-based compensation, adjustments to the provision for income taxes, amortization of intangibles and interest expense, which are specific items that impact these measures, have not yet occurred, are out of the Company's control, or cannot be predicted. For example, quantification of stock-based compensation expense requires inputs such as the number of shares granted and market price that are not currently ascertainable. Accordingly, reconciliations to the Non-GAAP forward looking metrics are not available without unreasonable effort and such unavailable reconciling items could significantly impact the Company's financial results.

4 Overview

5 Comtech - Connections that Matter Market leadership position in the growing secure wireless communications market We are profitable and generate significant cash flows from operating activities Thought Leader in Secure Wireless Communications We have paid quarterly dividends since September 2010 and our current quarterly dividend is $0.10 per common share Q financial results exceeded expectations Our backlog at January 31, 2019 was $586.4 million and we are positioned for growth Legacy of Complex Problem Solving Innovative Solutions for Commercial and Government Customers 5

6 Comtech Overview of Q2 Performance Commercial Solutions Revenue $86.7M Adjusted EBITDA $18.4M Adjusted EBITDA 21.2% Revenue by Segment Q2 FY % 47.2% Government Solutions Revenue $77.4M Adjusted EBITDA $9.0M Adjusted EBITDA 11.6% Q2 FY19 Revenue $164.1 million Sales by Customer: U.S. Government 45.2% U.S. Commercial 32.0% International 22.8% GAAP Operating Income of $12.4 million includes amortization of $4.3 million, depreciation of $2.8 million, stock-based compensation of $1.2 million, estimated contract settlement costs of $3.9 million, acquisition plan expenses of $1.8 million and a $3.2 million benefit related to a TCS intellectual property matter Adjusted EBITDA (1) (non-gaap) of $23.2 million or 14.1% of net sales GAAP diluted EPS of $0.32 Excluding estimated contract settlement costs of $3.9 million, acquisition plan expenses of $1.8 million and a $3.2 million benefit related to a legacy TCS intellectual property matter, EPS would have been $0.40 Notes (1) Adjusted EBITDA represents earnings (loss) before income taxes, interest (income) and other, interest expense, amortization of stock-based compensation, amortization of intangibles, depreciation expense, write-off of deferred financing costs, estimated contract settlement costs, acquisition plan expenses or strategic alternatives analysis expenses, facility exit costs, settlement of intellectual property litigation and other. (2) Totals may not foot due to rounding. 6

7 With Strong Backlog and Recent Contract Awards, We are Positioned For Growth Q2 book-to-bill ratio of 0.75 with funded backlog of $586.4 million In addition to backlog, we anticipate receiving approximately $405.0 million of future orders via existing contracts that we have been awarded $ thousands Segment Estimated Contract Value Orders/Funding Received Estimated Amount Not in Backlog Commercial Solutions $ 385,000 $ 170,000 $ 215,000 Government Solutions 435, , ,000 Estimated Total (Rounded) $ 820,000 $ 415,000 $ 405,000 (1) Commercial Solutions includes contracts such as: Large contract with the State of Washington for Next Generation 911 Rollout $96.2 million for Next Generation 911 and E911 public safety solutions $59.0 million and $19.1 million from the U.S. Navy for satellite earth station equipment and support Large contract for enterprise technology solutions for location and SMS text messaging solutions Combined with backlog, we have visibility to approximately $1.0 billion of potential revenue Government Solutions includes contracts such as: Large contract for satellite terminals to support the U.S. Army and U.S. Marine Corps $124.2 million of sustainment services from the U.S. Army for AN/TSC-198A SNAP II terminals $42.7 million to provide sustainment support for the U.S. Army s Blue Force Tracking (BFT-1) program Does not include the recent award of the U.S. Navy s SeaPort Next Generation ( SeaPort-NxG ) IDIQ multipleaward contract vehicle, with a total potential maximum value of $10.0 billion Note (1) These amounts represent the estimated value of actual contracts including unexercised negotiated options and indefinite delivery/indefinite quantity (IDIQ) contracts (and only include amounts for new funded orders that we believe are probable in the future). Actual contract values could be different. 7

8 Our solutions provide secure wireless communications when it counts We believe almost all of our end-markets are growing. Commercial Solutions Government Solutions Satellite-based Communications Safety & Security Technologies Enterprise & Trusted Location Technologies Command & Control (C4ISR) Solutions RF Power and Switching Technologies Troposcatter Technologies Key Growth Cellular Backhaul High Throughput Satellites Next Generation 911 Location-Based and Messaging Services Secure Satellite- Based Communications Systems & Services Solid State High Power Amplifiers Transmit data over unfriendly or inaccessible terrain over distances from 20 to 200 miles using the troposphere Areas: Upgrades to HDTV / 4K In-Flight Entertainment Domestic and International E911 Systems FCC Mandated Advanced E911 Location Standards Cyber Security Training Electronic warfare, jamming, medical and aviation applications Core Military and Emerging Markets Communications Infrastructure with increased data demands Market Size and Growth Rates Market Size and Growth Rates Market Size: $1.2 billion (1) Satellite backhaul equipment and services sales $350 million (2) Next Generation 911 market $402 million (3) Location-based services revenue ~$132 billion (4) Global C4ISR market $277 million (5) Non-line-of-sight Microwave Network Equipment market will reach $834 million by 2020 Growth Rates: ~13% per year (1) , satellite backhaul equipment and services sales ~17% per year (2) , Next Generation 911 market ~4% per year (3) , location-based services revenue ~4% per year (4) , global C4ISR market ~25% per year (5) , Non-line-of-sight Microwave Network Equipment market Notes (1) Northern Sky Research, Wireless Backhaul, Trunking and Video Offload via Satellite, 12 th Ed., Market size for (2) Frost & Sullivan, Next Generation 911 (NG911) Market Insight, Market size forecast by year (3) ABI Research, Location Technologies, World market size forecast by year (4) Research and Markets, The Global C4ISR Market Market Size and Drivers: Market Profile, Market size forecast by (5) IHS Technology Microwave Network Equipment Quarterly Market Tracker: Regional, Q Market size estimated for

9 Commercial Solutions Segment - $86.7M of Revenues in Q2 FY19 (52.8% of Total) Our solutions provide secure wireless communications when it counts. Satellite Modems Public Safety Location and Enterprise High Performance SCPC Satellite Modems Wireless Routing ESI Net of 911 Calls We Generate the Triangle & the Dot Used for Public Safety and Enterprise ESInet HEIGHTS TM IP-based Satellite Modems for New High-Throughput Satellites (HTS) 911 Message Routing 911 Video/Image Routing We achieved 21.2% Adjusted EBITDA margins in Q2 FY19 SMS Messaging Used for Public Safety and Enterprise 9

10 Government Solutions Segment - $77.4M of Revenues in Q2 FY19 (47.2% of Total) Our solutions provide secure wireless communications when it counts. Command and Control (C4ISR) Solutions Satellite Communications & Space Components RF Power and Switching and Troposcatter Equipment U.S. Army SNAP 850+ Systems Deployed U.S. Army BFT-1 Sustainment Support Identification Friend or Foe (IFF), Electronic Warfare (EW) and Medical Oncology Treatment Cyber Security Training Products and Services including PerformanScore Tool Satellite Ground Station Components Over-the-Horizon Microwave Systems We achieved 11.6% Adjusted EBITDA margins in Q2 FY19 10

11 Balance Sheet is Flexible and Can Support Growth As of January 31, 2019, we had $46.0 million of cash and cash equivalents On October 31, 2018, we entered into a First Amended and Restated Credit Agreement, replacing our Prior Credit Agreement. This new Credit Facility provides us with a Revolving Loan Facility up to $550.0 million, with a current borrowing limit of $300.0 million and an accordion feature for an additional $250.0 million ($ in millions) Q2 Indebtedness (1) 1/31/2019 Revolving Loan $ Capital leases and other obligations 1.8 Total Indebtedness $ Consolidated Q2 Secured Leverage Ratio (1) EBITDA Q $ 23.5 Q Q Q TTM Consolidated EBITDA $ 95.4 After the impact of the Solacom acquisition, our secured leverage ratio on a pro-forma basis would be slightly above 2.0x. Total Indebtedness $ Secured Leverage Ratio 1.85x vs. Maximum allowed 3.75x. Q2 Interest Expense Coverage Ratio Interest Expense Coverage Ratio 12.16x vs. Minimum allowed 3.25x Notes (1) Totals may not foot due to rounding. (2) Capitalized terms are as defined in the Credit Facility 11

12 Target Goals For Fiscal 2019 Non-GAAP Financial Measures Explained on Slide 3 $ millions, except per share data Commercial Solutions segment is expected to benefit from increased sales of satellite earth station products, with strong demand from U.S. government customers and higher sales of safety and security technology solutions and enterprise technology solutions FY 2019 Updated Targets Revenue $ $660.0 Adjusted EBITDA (1) $ $89.0 GAAP EPS $ $0.98 Comments on FY 2019 Targets We are targeting GAAP operating income to be similar to the 6.2% achieved in fiscal 2018 Depreciation expense to range from $12.0 million to $13.0 million Reflects significant revenue growth in our Government Solutions segment and improvement in operating income margin due to our tactical shift in strategy toward pursuing contracts for our niche solutions with higher margins, rather than large commodity-type service contracts Timing can still shift between quarters Q3 FY19 consolidated net sales are expected to approximate the amount we achieved during Q2 FY19, with GAAP operating income and Adjusted EBITDA approximating $9.0 million and $20.0 million, respectively. Given the strength of our backlog and timing of anticipated orders, our Q4 FY19 is expected to be the peak quarter of fiscal 2019 for Adjusted EBITDA. Amortization expense to approximate $17.8 million Amortization of stock-based compensation to range from approximately $11.0 million to $13.0 million Effective interest rate is expected to range from 5.3% to 5.5% (current cash borrowing rate of ~4.5%) Effective income tax rate (excluding discrete tax items in fiscal 2019) is now expected to approximate 23.0% and reflects the full benefit of the reduced U.S. statutory income tax rate resulting from Tax Reform Diluted shares of ~24.5 million Note (1) Adjusted EBITDA represents earnings (loss) before income taxes, interest (income) and other, interest expense, amortization of stock-based compensation, amortization of intangibles, depreciation expense, write-off of deferred financing costs, estimated contract settlement costs, acquisition plan expenses or strategic alternatives analysis expenses, facility exit costs, settlement of intellectual property litigation and other. 12

13 Acquisition of Solacom Completed February 28, 2019 Operations in U.S. and Canada ~70 Employees A leading provider of Next Generation 911 Public Safety Solutions Overview Provides 911 call handling solutions built on more than 30 years of research Supports thousands of agencies affecting millions of lives annually Leading Provider with Well Established Reputation First geospatial router for enterprise 911 traffic First national deployment using direct IP connectivity from a Local Exchange Carrier First fully IP-hosted customer premise ESInet deployment (Indiana) First NENA-certified NG911 system (Illinois) First statewide NG911 system (Maine) 13

14 Solacom s Products are Best In Class 50% 50% 16% 14

15 Summary Comtech is Positioned for Growth Market Leadership Positions Leading Technology Positions and Commitment to Innovation Backlog and Existing Contracts #1 provider of Single Channel Per Carrier ( SCPC ) satellite earth station modems #1 provider of troposcatter products and systems 50% market share of wireless 911 calls and sole provider of Verizon Navigator Backbone for SMS text messaging Leading provider of Command and Control Solutions (C4ISR) Employs over 400 engineering professionals Invested $27.2 million or 8.4% of YTD Q2 Fiscal 2019 revenues in Research and Development At 1/31/2019, Comtech had total backlog of $586.4 million and approximately $1.0 billion of potential revenue from existing contracts Achieving Growth with a History of Strong Capital Return to Stockholders Dividend of $0.10 per share declared on March 6, 2019, payable on May 17, 2019 to stockholders of record at the close of business on April 17, 2019 (35 th consecutive dividend) (1) Returned $596.8 million of capital to stockholders September 2010 March 2019 (cash dividends of $155.0 million and total share repurchases of $441.8 million) Experienced Management Team Fred Kornberg is President and CEO of Comtech Michael D. Porcelain is Senior Vice President and COO of Comtech and has top secret security clearance Michael A. Bondi is CFO of Comtech All have experience in executing and capitalizing on strategic acquisition opportunities Operating segment executives are strong and have over 25 years of experience within the industry Note (1) Future dividends remain subject to compliance with financial covenants under the new Credit Facility and Board approval. 15

16 Appendix I Historical Data and Trends

17 Market Data General Market Information NASDAQ Symbol: CMTL Institutional Holders (2) : Week Range (1) : $ $36.52 Analyst Coverage: 7 Source: NASDAQ Analysts Institution BMO Capital Markets Corp. Citibank N.A. Jefferies Group LLC Ladenburg Thalmann & Co. Inc. Noble Capital Markets Northland Capital Markets Quilty Analytics Analyst Name Tim Long Asiya Merchant George Notter Glen Mattson Joe Gomes Michael Latimore Chris Quilty Notes (1) 52 week range indicates the high and low closing prices during the period of February 1, 2018 through January 31, (2) As of February 26, (3) See Appendix II of this presentation for the reconciliation of reported net income to Adjusted EBITDA. (4) Comtech s fiscal year end is July

18 $ in 000s Recent Quarterly Operating Results Q2 Q3 Q4 Q1 Q Revenue Commercial Solutions $ 85,824 $ 89,936 $ 93,202 $ 77,973 $ 86,735 Government Solutions 47,907 57,918 74,233 82,871 77,398 Total Revenue $ 133,731 $ 147,854 $ 167,435 $ 160, ,133 Net Income $ 15,761 $ 8,210 $ 7,458 $ 3,468 $ 7,826 Adjusted EBITDA $ 14,548 $ 23,522 $ 30,720 $ 17,982 $ 23,201 % of Revenue GAAP Gross Profit 38.0% 42.2% 37.6% 35.9% 37.3% GAAP R&D Expenses 10.0% 8.7% 8.3% 8.2% 8.5% GAAP SG&A Expenses 20.3% 20.6% 16.6% 19.8% 19.5% GAAP Operating Income 3.7% 9.5% 9.6% 4.5% 7.6% Net Income 11.8% 5.6% 4.5% 2.2% 4.8% Adjusted EBITDA (1) 10.9% 15.9% 18.3% 11.2% 14.1% Notes (1) See Appendix II of this presentation for the reconciliation of reported net income to Adjusted EBITDA. (2) Comtech s fiscal year end is July

19 Recent Annual Operating Results $ in 000s Revenue Commercial Solutions $ 203,674 $ 248,955 $ 330,867 $ 345,076 Government Solutions 103, , , ,513 Total Revenue $ 307,289 $ 411,004 $ 550,368 $ 570,589 Net Income (Loss) $ 23,245 $ (7,738) $ 15,827 $ 29,769 Adjusted EBITDA $ 51,761 $ 48,062 $ 70,705 $ 78,374 % of Revenue GAAP Gross Profit 45.2% 41.7% 39.6% 39.2% GAAP R&D Expenses 11.7% 10.3% 9.9% 9.4% GAAP SG&A Expenses (1) 20.4% 23.1% 21.1% 20.0% GAAP Operating Income (Loss) 11.1% (0.1)% 6.7% 6.2% Net Income (Loss) 7.5% (1.9)% 2.9% 5.2% Adjusted EBITDA (2) 16.8% 11.7% 12.8% 13.7% GAAP EPS $ 1.42 $ (0.46) $ 0.67 $ 1.24 Fiscal 2016 impacted by TCS acquisition Notes (1) FY 2016 excludes acquisition plan expenses. (2) See Appendix II of this presentation for the reconciliation of reported net income to Adjusted EBITDA. (3) Comtech s fiscal year end is July 31. Excluding $18.8 million of favorable adjustments (described in our Form 10-K), GAAP operating income would have been 3.3% of net sales Includes $11.8 million, or $0.49 per diluted share, discrete tax benefit ( Tax Gain ) primarily due to Tax Reform 19

20 Historical Revenue Results $ in 000s Consolidated Revenue $550,368 $570,589 $307,289 $411,004 $324, YTD 2019 $ in 000s Commercial Solutions $ in 000s $330,867 $345,076 Government Solutions $219,501 $225,513 $203,674 $248,955 $164,708 $103,615 $162,049 $160, YTD YTD 2019 Note (1) Comtech s fiscal year end is July

21 Our Customer Base 30% 28% 26% 24% 56% 29% 39% 39% 32% 13% 31% 41% 33% 36% 45% YTD 2019 U.S. Government Domestic International Notes (1) Comtech s fiscal year end is July 31. (2) Totals may not foot due to rounding. 21

22 Historical Bookings & Backlog Bookings Total Backlog $ in 000s $ in 000s $755,054 $630,695 $586,412 $451,278 $512,593 $484,005 $446,230 $291,621 $280,694 $117, YTD YTD 2019 Note (1) Comtech s fiscal year end is July

23 Total Research and Development Expense $ in 000s Research and Development Expense $45,144 $59,622 $81,310 $70,793 $34, YTD 2019 Notes (1) Research and development expense includes company-funded plus customer-funded. (2) Comtech s fiscal year end is July

24 Recent Balance Sheet Trends Balance Sheet $ in 000s Jan. 31, Apr. 30, Jul. 31, Oct. 31, Jan. 31, Cash and Cash Equivalents $ 40,472 $ 44,173 $ 43,484 $ 42,943 $ 45,997 Working Capital 110, , , , ,072 Total Assets 822, , , , ,327 Current and Long-Term Debt (1) $ 194,179 $ 182,600 $ 167,899 $ 195,565 $ 176,274 Stockholders' Equity 490, , , , ,877 Total Capitalization $ 684,800 $ 680,384 $ 673,583 $ 701,661 $ 689,151 Notes (1) Current and long-term debt includes capital lease obligations. (2) Comtech s fiscal year end is July

25 Appendix II

26 Reconciliation of CMTL GAAP to Non-GAAP Financial Measures Quarterly Adjusted EBITDA Q Q Q Q Q Reported net income $ 15,761 $ 8,210 $ 7,458 $ 3,468 $ 7,826 Income tax (benefit) expense (13,349) 3,071 5,880 (2,127) 2,371 Net interest expense & other 2,471 2,698 2,653 2,735 2,216 Write-off of deferred financing costs ,217 - Stock-based compensation expense 1,080 1,104 5,638 1,046 1,191 Depreciation and amortization 8,585 8,439 9,091 7,140 7,137 Acquisition plan expenses ,130 1,778 Estimated contract settlement costs ,886 Settlement of intellectual property litigation (3,204) Facility exit costs ,373 - Adjusted EBITDA $ 14,548 $ 23,522 $ 30,720 $ 17,982 $ 23,201 Quarterly Operating Income Q Q Q Q Q Operating income $ 4,883 $ 13,979 $ 15,991 $ 7,293 $ 12,413 Facility exit costs ,373 - Acquisition plan expenses ,130 1,778 Estimated contract settlement costs ,886 Settlement of intellectual property litigation (3,204) Adjusted operating income $ 4,883 $ 13,979 $ 15,991 $ 9,796 $ 14,873 Quarterly Net Income Q Q Q Q Q Net income $ 15,761 $ 8,210 $ 7,458 $ 3,468 $ 7,826 Facility exit costs ,061 - Acquisition plan expenses ,369 Write-off of deferred financing costs ,485 - Estimated contract settlement costs ,992 Settlement of intellectual property litigation (2,467) Net discrete tax (benefit) expense (including Tax Reform) (14,018) - 2,279 (2,432) - Adjusted net income $ 1,743 $ 8,210 $ 9,737 $ 5,455 $ 9,720 Notes (1) See statement regarding the use of Non-GAAP financial measures on slide 3 of this presentation. (2) Dollar amounts in thousands, except per share information. Comtech s fiscal year end is July

27 Reconciliation of CMTL GAAP to Non-GAAP Financial Measures (cont d) Annual Adjusted EBITDA YTD 2019 Reported net income (loss) $ 23,245 $ (7,738) $ 15,827 $ 29,769 $ 11,294 Income tax expense (benefit) 10,758 (454) 9,654 (5,143) 244 Write-off of deferred financing costs ,217 Net interest expense & other 74 7,616 11,561 10,449 4,951 Stock-based compensation expense 4,363 4,117 8,506 8,569 2,237 Depreciation and amortization 12,736 23,245 37,177 34,730 14,277 Strategic alternatives analysis expenses Estimated contract settlement costs ,886 Settlement of intellectual property litigation - - (12,020) - (3,204) Acquisition plan expenses - 21, ,908 Facility exit costs ,373 Adjusted EBITDA $ 51,761 $ 48,062 $ 70,705 $ 78,374 $ 41,183 Annual Earnings (Loss) per Diluted Share YTD 2019 GAAP diluted earnings (loss) per share $ 1.42 $ (0.46) $ 0.67 $ 1.24 $ 0.47 Strategic alternatives analysis expenses Acquisition plan expenses Estimated contract settlement costs Settlement of intellectual property litigation - - (0.33) - (0.10) Net discrete tax benefit (including Tax Reform) (0.49) (0.10) Write-off of deferred financing costs Facility exit costs Non-GAAP earnings per diluted share $ 1.44 $ 0.57 $ 0.34 $ 0.75 $ 0.63 Notes (1) See statement regarding the use of Non-GAAP financial measures on slide 3 of this presentation. (2) Dollar amounts in thousands, except per share information. Comtech s fiscal year end is July 31. (3) Totals may not foot due to rounding. 27

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