Q3 2024 Comtech Telecommunications Corp Earnings Call

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Operator: Please stand by; your program is about to begin. Welcome to Comtech's Fiscal Third Quarter 2024 Earnings Conference Call. As a reminder, this conference is being recorded today, Tuesday, June 18, 2024. I would now like to turn the conference over to Mrs. Maria Ceriello of Comtech. Please go ahead, Maria.

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Operator: Welcome to Comtext, fiscal third quarter 2024 earnings conference call. As a reminder, this conference is being recorded today to stay June 18th, 2024.

Welcome to come text.

Speaker Change: <unk> third quarter 2024 earnings Conference call. As a reminder, today's conference is being recorded today Tuesday June 18th 'twenty 'twenty four I would now like to turn the conference over to Mrs. Maria Cyrilla Comtech. Please go ahead Maria.

Maria Ceriello: I would now like to turn the conference over to Mrs. Maria Cereola of Comtech. Please go ahead, Maria.

Maria Ceriello: Thank you, operator, and thanks to our investors for taking the time to dial in today.

Speaker Change: Thank you operator.

Speaker Change: Thanks to our investors for taking the time to dial in today.

Maria Ceriello: Welcome to Comtext Telecommunication Corp's conference call for the third quarter of fiscal year 2021-04. Today, I'm here with Comtext Chief Executive Officer, John Radigan. We're also joined today by Mike Bondy, Comtext CFO.

Maria Ceriello: Operator, and thanks to our investors for taking the time to dial in today. Welcome to Comtech Telecommunications Corp.'s conference call for the third quarter of fiscal year 2024. Today, I'm here with Comtech's Chief Executive Officer, John Ratigan. We're also joined today by Mike Bondi, Comtech's CFO.

Welcome to contact Telecommunication Corp's conference call for the third quarter of fiscal year 2024.

John: Today, I'm here with context, Chief Executive Officer, John right again.

John: Also joined today by Mike Bondi Concept's CFO.

Maria Ceriello: Before we get started today, please note we have a detailed discussion of the quarter in our shareholder letter available on our website. Certain information presented in this call will include, but not be limited to, information related to the future performance and financial condition of the company. The company's planned objectives and business outlook and the plan's objectives and business outlook of the company's management. The company's assumptions regarding such performance, business outlook, and plans are forward-looking in nature and always involve significant risks and uncertainties. Actual results could differ materially from such forward-looking information.

Maria Ceriello: Before we get started today, please note we have a detailed discussion of the quarter in our shareholder letter available on our website. Certain information presented in this call will include, but is not limited to, information relating to the future performance and financial condition of the company, its plans, objectives, and business outlook, and the plans, objectives, and business outlook of the company's management. The company's assumptions regarding such performance, business outlook, and plans are forward-looking in nature and always involve significant risks and uncertainty. However, actual results could differ materially from such forward-looking information.

Speaker Change: Before we get started today. Please know we have a detailed discussion of the quarter in our shareholder letter available on our website.

Speaker Change: Certain information presented in this call will include but not be limited to information relating to the future performance and financial condition of the company.

Speaker Change: The company's plans objectives and business outlook, and the plans objectives and business outlook of the company's management.

Speaker Change: The company's assumptions regarding such performance business outlook and plans are forward looking in nature and always involve significant risks and uncertainties.

Speaker Change: Actual results could differ materially from such forward looking information.

Maria Ceriello: Any forward-looking statements are qualified in their entirety by cautionary statements contained in the company's SEC filings.

Maria Ceriello: Any forward-looking statements are qualified in their entirety by cautionary statements contained in the company's SEC filings. Now I'm pleased to introduce Comtech's CEO, John Ratigan.

Speaker Change: Any forward looking statements are qualified in their entirety by cautionary statements contained in the company's SEC filings.

John Ratigan: Now, I'm pleased to introduce Comtext CFO, John Radigan. John?

John: Now I'm pleased to introduce context C E O John glad again John.

John Ratigan: Thank you, Maria. And as you know, I'm relatively new to the role of CEO of Comtext, but I'm feeling that I'm already making a positive difference. Last quarter during our earnings call, I said that it was clear to me that the performance concern of all of our stakeholders, and certainly our shareholders, was refinancing our balance sheet. I also said that executing a refinancing would be my highest priority. As I'm certain you saw, we announced the completion of a $222 million refinancing that replaces our bank facility with a new credit facility, consisting of a $60 million asset-based lending facility and $162 million term loan that matures in 2028.

John Ratigan: Thank you, Maria. And as you know, I'm relatively new to the role of CEO at Comtech, but I feel that I'm already making a positive difference. Last quarter, during our earnings call, I said that it was clear to me that the foremost concern of all of our stakeholders, and certainly our shareholders, was refinancing our balance sheet. I also said that executing a refinancing would be my highest priority.

John Ratigan: Thank you Maria and as you know I'm relatively new to the role of CEO at contract, but I am feeling that I'm already making a positive difference.

John Ratigan: Last quarter during our earnings call I said that it was clear to me that our foremost concern at all of our stakeholders.

Speaker Change: And certainly our shareholders with refinancing our balance sheet I also said that executing our refinancing would be my highest priority.

John Ratigan: As I'm certain you all saw, we announced the completion of a $222 million refinancing that replaces our bank facility with a new credit facility consisting of a $60 million asset-based lending facility and a $162 million term loan that matures in 2028. The completion of the refinancing is important for Comtech in many ways. First, our balance sheet is stronger and can support the improved performance and growth of our business as we look ahead. We can now conduct our business without the distraction associated with a looming debt maturity with all of our stakeholders.

Speaker Change: As uncertainties all saw we announced the completion of a $222 million refinancing that replaces our bank facility with a new credit facility, consisting of a $60 million asset based lending facility and $162 million term loan.

Speaker Change: That matures in 2028.

John Ratigan: The completion of the refinancing is important for contact in many ways. First, our balance sheet is stronger and can support the improved performance and growth of our business as we look ahead. We can now conduct our business without the distraction associated with aluminum debt maturity, with all of our stakeholder holders we benefit from. Our customers, our vendors, and our people are all excited to move forward unencumbered by reservations about liquidity. It also means that my top operational priority is now the acceleration of our cash conversion cycle and managing our unbuilder's receivables downward by executing against some of our large multi-year contracts.

The completion of the refinancing is important for comtech in many ways.

Speaker Change: First our balance sheet is stronger and can support the improved performance and growth of our business as we look ahead.

We can now conduct our business without the distraction associated with a looming debt maturity with all of our stakeholders will benefit.

John Ratigan: Our customers, our vendors, and our people are all excited to move forward unencumbered by reservations about liquidity. It also means that my top operational priority is now the acceleration of our cash conversion cycle and managing our unbilled receivables downward by executing against some of our large, multi-year contracts. This quarter, we made progress in delivering against our Next Generation Troposcatter Awards with the U.S. Marine Corps and the U.S. Army. With the refinancing complete, the Comtech team is now wholly and wholly focused on accelerating execution against these contracts to deliver value to both our shareholders and our customers. This leads me to my second key point.

Speaker Change: Our customers our vendors and our people are all excited to move forward unencumbered by reservations about liquidity.

Speaker Change: It also means that my top operational priority is now the acceleration of our cash conversion cycle.

Speaker Change: Managing our unbilled receivables downward by executing against some of our large multiyear contracts.

John Ratigan: This quarter, we made progress in delivering against our next-generation Troposkateral Awards with the U.S. Marine Corps and the U.S. Army. With the refinancing complete, the Comtech team is now totally and wholly focused on accelerating execution against these contracts to deliver value to both our shareholders and our customers.

This quarter, we made progress in delivering against our next generation Tropate Scatter awards with the U S. Marine Corps in the U S Army.

Speaker Change: With the refinancing complete the Comtech team is now totally and wholly focused on accelerating execution against these contracts to deliver value.

Speaker Change: Both our shareholders and our customers.

John Ratigan: This leads me to my second key point. Comtech hasn't been waiting to move forward. We've been winning business this entire time, demonstrating the strength of our technologies and mission-critical nature of our solutions. I'll give you the most recent obvious example following a competitive process on May 16th, the Commonwealth of Massachusetts Motor to Award Contract, a five-year contract with a five-year extension option for the operations and maintenance of their statewide next-generation 911 public safety system. The initial value of this contract is an excess of 120 million dollars, with additional upside potential over the 10-year life of the agreement.

Speaker Change: This leads me to my second key point Comtech as Hasnt been waiting to move forward.

John Ratigan: Comtech hasn't been waiting to move forward. We've been winning business this entire time, demonstrating the strength of our technologies and mission-critical nature of our solution. I'll give you the most recent obvious example.

Speaker Change: We've been winning business this entire time, demonstrating the strength of our technologies and mission critical nature of our solutions.

Speaker Change: I'll give you. The most recent obvious example, following a competitive process on may 16th the Commonwealth of Massachusetts voted to award Comtech, a five year contract with a five year extension option for the operations and maintenance of their statewide next generation 911 public safety system.

John Ratigan: Following a competitive process on May 16th, the Commonwealth of Massachusetts voted to award Comtech a five-year contract with a five-year extension option for the operations and maintenance of their statewide next-generation 911 public safety system. The initial value of this contract is in excess of $120 million with additional upside potential over the 10-year life of the agreement. These wins, combined with our recent $48 million contract extension with the state of Washington, demonstrate the competitive advantage of our people and our technology.

Speaker Change: Okay.

Speaker Change: The initial value of this contract is in excess of $140 million with additional upside potential over a 10 year life of the agreement.

John Ratigan: These wins combined with our recent 48 million dollar contract extension with the State of Washington demonstrate the competitive advantage of our people and our technology. Within our satellite and space communication segment, the Comtech team continues to deliver against the next-generation Troposkateral Awards with the U.S. Marine Corps and the U.S. Army. In addition to completing work against existing contracts, Comtech continues to expand its relationship with the US Army with a recent 13.5 million dollar award for these ad equipment and related services.

Speaker Change: These wins combined with our recent $48 million contract extension with the state of Washington demonstrate the competitive advantage of our people and our technology.

John Ratigan: Within our satellite and space communications segment, the Comtech team continues to deliver against the Next Generation Troposcatter Awards with the U.S. Marine Corps and the U.S. Army. In addition to completing work on existing contracts, Comtech continues to expand its relationship with the U.S. Army with a recent $13.5 million award for VSAT equipment and related services.

Speaker Change: Within our satellite and space Communications segment. The Comtech team continues to deliver against the next generation triplet scatter rewards with the U S. Marine Corps in the U S Army.

Speaker Change: In addition to completing work against existing contracts Comtech continued continues to expand its relationship with the U S Army with a recent $13 $5 million award for VSAT equipment and related services.

John Ratigan: This leads me to a higher level point that I've made both publicly and in my direct conversations with investors, and that I want to emphasize here today. Comtech has a longstanding history of providing mission-critical communication solutions to its customers. In this country, for example, it's easy to take a 911 call for granted. But making sure that those calls have the public safety result they should is an extraordinarily complex problem. And Comtech is at the forefront of the technology that solves it. We play a similar critical role in satellite and space stuff markets, providing communication infrastructure that ensures people, businesses, and governments can connect anywhere on Earth under any conditions.

John Ratigan: This leads me to a higher level point that I've made both publicly and in my direct conversations with investors and that I want to emphasize here today. Comtech has a long-standing history of providing mission-critical communication solutions to its customers. In this country, for example, it's easy to take a 911 call for granted.

Speaker Change: This leads me to a higher level point.

Speaker Change: They both publicly and in my direct conversations with investors and that I want to emphasize here today.

Speaker Change: <unk> has a long standing history of providing mission critical communication solutions to its customers in this country. For example, it's easy to take a 911 call for granted.

John Ratigan: But making sure that those calls have the public safety result they should is an extraordinarily complex problem, and Comtech is at the forefront of the technology that solves it. We play a similar critical role in the satellite and space markets, providing communications infrastructure that ensures people, businesses, and governments can connect anywhere on Earth under any condition. This mission-critical role and capability is what I want our investors to remember and hope the markets reconsider.

We're making sure that those calls have the public safety result, they should is an extraordinarily complex problem and comtech is at the forefront of the technology to solve it.

Speaker Change: Play a similar critical role in satellite and space stock markets, providing communications infrastructure that ensures people businesses and governments can connect anywhere on earth under any conditions.

John Ratigan: This mission critical role and capability is what I want our investors to remember and hope the markets reconsider. The fact is that our ability to develop and deliver superior technology remains fully intact.

Speaker Change: This mission critical role and capability is what I want our investors to remember and hope the market's reconsider.

John Ratigan: The fact is that our ability to develop and deliver superior technology remains fully intact, and Comtech's underlying value as one of just a few businesses in the world that can do what we can do remains unchanged. So what has changed?

Speaker Change: The fact is with our ability to develop and deliver superior technology remains fully intact.

John Ratigan: Act. And Comtech's underlying value is one of just a few businesses in the world that do what we can do remains unchanged.

Speaker Change: And context underlying value is one of just a few businesses in the world that do what we can do remains unchanged. So what has changed.

John Ratigan: So what has changed? First, we now move ahead with a committed financing and strengthen balance sheet. Second, we can more successfully leverage two underlying businesses that each do growing demand from traditional buyers, from upgrade cycles in public safety and satellite and space communications, and from opportunities in the new end markets. Michael speaks in detail to this quarter's financial performance in a moment.

John Ratigan: First, we now move ahead with the Committed Financing and Strengthen Balance Sheet. Second, we can more successfully leverage two underlying businesses that each see growing demand from traditional buyers, from upgrade cycles in public safety and satellite and space communications, and from opportunities in the new and more. Mike will speak in detail about this quarter's financial performance in a moment.

Speaker Change: We now move ahead with the committed financing and strengthened balance sheet second we can more successful successfully leveraged to underlying businesses that each see growing demand from traditional buyers from upgrade cycles and public safety in satellite and space Communications and some opportunities in the new end markets.

Speaker Change: Mike will speak in detail to this quarter's financial performance in a moment before I make that handoff I do want to make one other point to our shareholders. It says something very positive about our business and our company that we continue to be able to attract exceptional talent.

John Ratigan: Before I make that handover, I do want to make one other point to our shareholders. It says something very positive about our business and our company that we continue to be able to attract exceptional talent. You may have seen these announcements or read our newsletters, but it's meaningful to the capital markets as well that we have done the following. We announced Jeff Robertson's appointment as president of our terrestrial and wireless business back in April, and it's safe to say that he's hit the ground running.

John Ratigan: Before I make that hand up, I do want to make one other point to our shareholders. It says something very positive about our business and our company that we continue to be able to attract exceptional talent. You may have seen these announcements or read our newsletters, but it's meaningful to the capital markets as well that we have done the following. Announced Jeff Robertson's appointment as president of our Congressional and wireless business back in April. And it's safe to say that he's hit the ground running. Jeff is a known leader and expert in the 911 and public safety space.

Speaker Change: You may have seen these announcements or read our newsletters, but it's meaningful to the capital markets as well that we have done the following.

Michael A. Bondi: Jeff Robertson's appointment as president of our terrestrial wireless business back in April.

Michael A. Bondi: And it's safe to say that he has hit the ground running Jeff is a known leader and expert in the 911 and public safety space.

John Ratigan: Jeff is a known leader, an expert in the 911 and public safety space, and even as he and his team have secured the contract win with Massachusetts, he's moving fast to both improve our existing operations and grow into new opportunities. We hired two other senior public safety officials, Tom Guthrie and John Whitehead.

John Ratigan: And even as he and his team have secured the contract with Massachusetts, he's leading fast to both improve our existing operations and grow into new opportunities. We hired two other senior public safety officials, Tom Guthrie and John Whitehead. And on the satellite and space side, we added Raleigh Regal as Vice President of Business Development and Sales. Raleigh is well-known across the industry for his expertise and ability to drive growth, both in terms of top-line sales and also in terms of building teams. I wrote this in our investor letter, and we'll repeat it here.

Jeff Robertson: And even as he and his team has secured the contract win with Massachusetts is moving fast to both improve our existing operations and grow into new opportunities.

Speaker Change: We hired two other senior public safety officials, Tom Guthrie and John Whitehead.

John Ratigan: And on the satellite and space side, we added Raleigh Regal as Vice President of Business Development and Sales. Raleigh is well-known across the industry for his expertise and ability to drive growth, both in terms of top-line sales and also in terms of building teams. I wrote this in our investor letter and will repeat it here. I don't think Comtech has ever had a deeper and stronger bench than it does today.

Speaker Change: And on the satellite and space side, we added Raleigh recall as vice President of business development and sales.

Raleigh recall: Raleigh is a well known across the industry for his expertise and ability to drive growth. Both in terms of topline sales and also in terms of building teams.

Raleigh recall: I wrote this in our Investor letter and we'll repeat it here I don't think Comtech has ever had a deeper and stronger bench than it does today.

John Ratigan: I don't think CompTech has ever had a deeper and stronger bench than it does today. CompTech is a good business that offers mission-critical solutions to the world's most demanding customers. We've got some of the best people and technologies in the market, and the markets we are selling into are themselves growing. Taken together, are you made optimistic about our future and our ability to create value for all of our stakeholders.

John Ratigan: Comtech is a good business that offers mission-critical solutions to the world's most demanding customers. We've got some of the best people and technologies in the market, and the markets we are selling into are themselves growing. Taken together, I remain optimistic about our future and our ability to create value for all of our stakeholders. Now, I'm going to turn it over to Mike Bondi.

Speaker Change: Comtech, it's a good business that offers mission critical solutions to the world's most demanding customers.

Speaker Change: Got some of the best people and technologies in the market and the markets. We are selling into are themselves growing.

Speaker Change: Taken together I remain optimistic about our future and our ability to create value for all of our stakeholders.

Michael Bondi: I'm going to turn it over to the bottom now. Thanks, John.

Michael A. Bondi: I'm going to turn it over to Mike bottomed out.

Michael A. Bondi: Thanks, John.

Michael A. Bondi: Before discussing our recent results for Q3, let me first cover the status of our refinancing effort. Last night, we were very pleased to announce that we entered into a new $222 million credit facility with a new syndicate of lenders, which replaces our prior credit facility and which is expected to be funded today, June 18. With July 31st, 2028 as its maturity date, we have significantly pushed out our repayment obligations by about four years, and by adding an asset-based revolver component to the facility, we have immediately enhanced our liquidity.

Michael Bondi: Before discussing our recent results for Q3, let me first cover the status of our refinancing efforts. Last night, we were very pleased to announce that we entered into a new $222 million credit facility with a new syndicate of lenders, which replaces our prior credit facility and which is expected to be funded today, June 18th. With July 31st, 2028 at this maturity date, we have significantly pushed out our repayment obligations by about four years and by adding an asset-based revolver component to the facility, have immediately enhanced our liquidity.

Speaker Change: Before discussing our recent results for Q3, let me first cover the status of our refinancing efforts.

Michael A. Bondi: As a result of entering into this new credit facility, we are able to once again reclassify a major portion of our outstanding debt back to its long-term status. The new credit facility itself consists of a committed $162 million firm loan facility and a $60 million revolver loan facility, backed by our eligible receivables and inventory. At close, outstanding borrowings at close approximate $187 million, reflecting $25 million drawn on the revolver. At close, our available sources of liquidity approximate $63 million, consisting of qualified cash and cash equivalents and access availability under the revolver, both as defined under the credit agreement, of approximately $28 million and $35 million, respectively.

Michael A. Bondi: Last night, we were very pleased to announce that we entered into a new $222 million credit facility with a new syndicate of lenders, which replaces our prior credit facility, which is expected to be funded today June 18th.

Michael A. Bondi: Interest on the term loan facility currently approximates SOFR plus 9.5%, whereas interest on the asset-based revolver currently approximates SOFR plus 5%; combined, the rate currently approximates 14%. Interest on the term loan is dependent on a pricing grid based on our net leverage ratio. And interest on the revolver is dependent on a pricing grid based on our average revolver usage, both as defined in the agreement. Our first covenant testing period is July 31st, 2024. At such a date, our maximum net leverage ratio is set at 3.25 times trailing 12-month EVADOT. As for the minimum fixed charge coverage ratio, that is initially set at 1.2 times.

Michael A. Bondi: The first step down in the net leverage ratio to 3.15 occurs on July 31st, 2025, and the first uptick in our fixed charge coverage ratio to 1.25 occurs on April 30, 2025. Other financial covenants we need to maintain include an initial minimum trailing 12-month EBITDA of $35 million starting in October of 2025 and a minimum average liquidity of $20 million. In connection with entering into the new credit facility, we exchanged our Series B Convertible Preferred Shares for a new series of B1 Convertible Preferred Shares.

Michael A. Bondi: With July 31, 2028, as its maturity date, we have significantly pushed out our repayment obligations by about four years.

Michael A. Bondi: And by adding an asset based revolver component to the facility have immediately enhanced our liquidity.

Michael Bondi: As a result of entering this new credit facility, we are able to once again reclass a major portion of our outstanding debt back to its long-term status. The new credit facility itself consists of a committed $162 million firm loan facility and a $60 million revolver loan facility. Backed by our eligible receivables and immense outstanding borrowers, that close approximate $187 million, reflecting $25 million drawn on the revolver. Act closed, our available sources of liquidity approximate $63 million, consisting of qualified cash and cash equivalents and excess availability under the revolver, both as defined under the credit agreement of approximately $28 million and $35 million, respectively.

Michael A. Bondi: As a result of entering this new credit facility, we are able to once again re class a major portion of our outstanding debt back to its long term status.

Michael A. Bondi: The new credit facility itself consists of a committed $162 million.

Michael A. Bondi: Term loan facility and a $60 million revolver loan facility backed.

Speaker Change: Backed by our eligible receivables and inventory.

Speaker Change: Outstanding borrowings at close approximate $187 million, reflecting $25 million drawn on our revolver.

Speaker Change: At close our available sources of liquidity approximate $63 million.

Speaker Change: Consisting of qualified cash and cash equivalents and excess availability under the revolver.

Speaker Change: As defined under the credit agreement.

Speaker Change: Of approximately $28 million and $35 million respectfully.

Michael Bondi: Interest on the terminal and facility currently approximates SOFR plus 9.5%, whereas interest on the asset-based revolver currently approximates SOFR plus 5%. Blended, the rate currently approximates 14%. Interest on the terminal is dependent on a pricing grid based on our net leverage ratio, and interest on the revolver is dependent on a pricing grid based on our average revolver usage, both as defined in the agreement.

Speaker Change: Interest on the term loan facility.

Speaker Change: Currently approximates sulfur plus nine 5%, whereas interest on the asset based revolver currently approximates sofa plus 5%.

Speaker Change: Blended the rate currently approximates 14%.

Speaker Change: Interest on the term loan is dependent on a pricing grid based on our net leverage ratio and interest on the revolver is dependent on a pricing grid based on our average revolver usage, both as defined in the agreement.

Michael Bondi: Our first covenant testing period is July 31, 2024. At such date, or maximum net leverage ratio is set at 3.25 times trailing 12 months EBITDA. As for the minimum fixed charge coverage ratio, that is initially set at 1.2 times. The first step down in the net leverage ratio to 3.15 occurs on July 31, 2025, and the first uptick in our fixed charge coverage ratio to 1.25 occurs on April 30, 2025. Other financial covenants need to maintain include an initial minimum trailing 12 month EBITDA of $35 million starting in October of 2025 and a minimum average liquidity of 20 million.

Speaker Change: Our first covenant testing period is July 31, 2024 at such state our maximum net leverage ratio is set at three to five times trailing 12 months EBITDA.

Speaker Change: As for the minimum fixed charge coverage ratio that is initially set at one two times.

Speaker Change: The first step down and the net leverage ratio to 315 occurs on July 31, 2025, and the first uptick and our fixed charge coverage ratio to one <unk> occurs on April 30th 2025.

Speaker Change: Other financial covenants, we need to maintain include an initial minimum trailing 12 month EBITDA of $35 million starting in October of 2025, and a minimum average liquidity of $20 million.

Michael Bondi: In connection with entering into the new credit facility, we exchange our Series B convertible preferred shares for a new series of B1 convertible preferred shares. The new series B1 convertible preferred shares reflect certain changes to consent rights and existing put rights related to payments upon a change of control following specified assets. In each case, consistent with the terms of the new credit facility. The powers, preferences, and rights of the Series B1 convertible preferred stock are substantially the same as those of the Series B. We did not receive any cash proceeds from the issuance of the Series B1 shares, and importantly, as I'm sure some might ask, the preferred holders' conversion price and interest rate did not change.

Speaker Change: In connection with entering into the new credit facility, we exchanged our series B convertible preferred shares for a new series of B, one convertible preferred shares.

Michael A. Bondi: The new Series B-1 convertible preferred shares reflect certain changes to consent rights and existing put rights related to payments upon a change of control following specified asset sales, in each case consistent with the terms of the new credit facility. The powers, preferences, and rights of the Series B-1 convertible preferred stock are substantially the same as those of the Series B. We did not receive any cash proceeds from the issuance of the Series B-1 shares, and importantly, as I'm sure some might ask, the preferred holder's conversion price and interest rate did not change. Now, the documents themselves are lengthy, so I'm not going to run down each and every term in the agreement.

Speaker Change: The new series B, one convertible preferred shares reflect certain changes to consent rights and existing put rights.

Speaker Change: Related to payments upon a change of control following specified asset sales in.

Speaker Change: In each case consistent with the terms of the new credit facility.

Speaker Change: Power's preferences and rights of the series B, one convertible preferred stock are substantially the same as those of the series B, we do not receive any cash proceeds from the issuance of the series B one shares and importantly, as I'm sure some might ask the preferred holders conversion price and interest rate did not change.

Michael Bondi: Now, the documents themselves are lengthy, so I'm not going to run down each and every term in agreement. I just covered a good amount of ground on the key terms and strongly urge investors to read these documents, which are being filed in the form A.K. with the SEC today.

Speaker Change: Now the documents themselves are lengthy so I'm not going to run down each and every terminal agreement I guess covered a good amount of ground on the key terms and strongly urge investors to read these documents, which are being filed in a form 8-K with the SEC today.

Michael A. Bondi: I just covered a good amount of ground on the key terms and strongly urge investors to read these documents, which are being filed in a Form 8K with the SEC today. Entering into the new credit facility was a key milestone, not only for our company, but for our customers, our vendors, and our dedicated employees who got this over the finish line. We are very pleased to have finally resolved a significant overhang on our business and expect the new credit facility to contribute significantly to enhancing our liquidity and business prospects. With this refinancing now in the rearview mirror, we can get back to the tasks at hand of growing our business, liquidating our unbilled receivables, and increasing value for our shareholders. Now, let's talk about the Q3 results.

Michael Bondi: Entering into the new credit facility was a key milestone not only for our company but for our customers, our vendors, and our dedicated employees, who got this over the finish line. We are very pleased to have finally resolved the significant overhang on our business and expect the new credit facility to contribute significantly to enhancing our liquidity and business prospects.

Speaker Change: Entering into the new credit facility was a key milestone not only for our company, but for our customers our vendors our dedicated employees, who got this over the finish line.

Speaker Change: We are very pleased to have finally resolved a significant overhang on our business and expect the new credit facility to contribute significantly to enhancing our liquidity and business prospects.

Michael Bondi: With this refinancing now in the rearview mirror, we can get back to the tasks that hand of growing our business, liquidating our unbuilt receivables, and increasing value for our shareholders.

Speaker Change: With this refinancing now in the rearview mirror, we can get back to the tasks at hand of growing our business liquidating, our unbilled receivables and increasing value for our shareholders.

Michael Bondi: Now, let's talk about two-three results. Consolidated in that sales were $128.1 million compared to $134.2 million in the second quarter of fiscal 2024 and $136.3 million in the third quarter of fiscal 2023.

Michael A. Bondi: Consolidated net sales were $128.1 million, compared to $134.2 million in the second quarter of fiscal 2024 and $136.3 million in the third quarter of fiscal 2023. Net sales during our third quarter of fiscal 2024, primarily in our satellite and space communications segment, continue to reflect challenging business conditions stemming principally from our efforts during the quarter to refinance our prior credit facility, which temporarily slowed down our receipt of components from suppliers and our ability to deliver finished products during the quarter.

Now, let's talk about Q3 results consolidated net sales were $128 1 million compared to $134 2 million in the second quarter of fiscal 2024, and $136 3 million in the third quarter of fiscal 'twenty three.

Michael Bondi: Department. Net sales during our third quarter of fiscal 2024, primarily in our satellite and space communication segment, continue to reflect challenging business conditions stemming principally from our efforts during the quarter to refinance our prior credit facility, which temporarily slowed down our receipt of components from suppliers and our ability to deliver finished products during the quarter. While we have made significant progress toward resolving such conditions by entering into our new credit facility, net sales related to certain orders in our backlog shifted to future periods.

Speaker Change: Net sales during our third quarter of fiscal 2024.

Speaker Change: Primarily in our satellite and space Communications segment continue to reflect challenging business conditions stemming principally from our efforts during the quarter to refinance our prior credit facility, which temporary temporarily slowed down our receipt of components from suppliers and our ability to deliver finished products during the quarter.

Speaker Change: While we have made significant progress toward resolving such conditions by entering into our new credit facility.

Speaker Change: Net sales related to certain orders in our backlog shifted to future periods.

Michael Bondi: Also, as an important reminder, net sales in our satellite and space communication segment for our third quarter reflected absence of PST, which was divested on November 7, 2023. For the three months ended April 30, 2024, net sales in our satellite and space communication segment primarily reflect higher net sales of our triple scatter solutions to U.S. government and customers, including progress toward delivering next-generation triple scatter terminals to both the U.S. Marine Corps and U.S. Army, more than offset by lower net sales of high-power, solid state amplifiers related to the PST, the vestiture, comatropo terminals to an international customer, and V-SATCOM equipment for the U.S.

Speaker Change: Also as an important reminder, net sales in our satellite and space Communications segment for our third quarter reflect the absence of PST, which was divested on November seven 2023.

Michael A. Bondi: While we have made significant progress toward resolving such conditions by entering into our new credit facility, net sales related to certain orders in our backlog shifted to future periods. Also, as an important reminder, net sales in our satellite and space communications segment for our third quarter reflected absence of PST, which was divested on November 7, 2023. For the three months ended April 30th, 2024, NetSales and our Satellite and Space Communications segment, primarily reflect higher net sales of our troposcatter solutions to U.S. government and customers, including progress toward delivering next-generation troposcatter terminals to both the U.S. Marine Corps and U.S. Army, more than offset by lower net sales of high-power solid-state amplifiers related to the PST divestiture, comet tropo terminals to an international customer, and VSAT-SACCOM equipment for the U.S. Army.

For the three months ended April 32024, net sales in our satellite and space Communications segment.

Speaker Change: Primarily reflect higher net sales of our <unk> solutions to U S government and customers, including progress toward delivering next generation turbo scatter terminals to both the U S Marine Corps and U S Army more than offset by lower net sales of high power solid state amplifiers related to the PSC divestiture.

Speaker Change: <unk> terminals to an international customer and VSAT satcom equipment for the U S Army.

Michael Bondi: Army.

Michael Bondi: I'll look to the ratio of measured defined as bookings divided by net sales in this segment for the three months ended April 30, 2024, was 285 times. During the third quarter of fiscal 2024, this segment was awarded over $13.5 million of funded orders from U.S. Army for V-SAT equipment and related services, over 6 million of funding from U.S. Army for cyber training related solutions, over $5.5 million in operational support and maintenance orders from the Japan Aerospace Exploration Agency, over $5 million of funding from a Canadian customer to upgrade a previously deployed triple scatter system, as well as an order from an international military who is evaluating our comatropo scatter solutions.

Michael A. Bondi: A book-to-bill ratio, a measure defined as bookings divided by net sales, in this segment for the three months ended April 30, 2024, was 0.85 times, during the third quarter of fiscal 2024. This segment was awarded over $13.5 million of funded orders from the U.S. Army for VSAT equipment and related services, over $6 million of funding from the U.S. Army for cyber training related solutions, over $5.5 million in operational support and maintenance orders from the Japan Aerospace Exploration Agency, over $5 million of funding from a Canadian customer to upgrade a previously deployed troposcavage system, as well as an order from an international military who is evaluating our Comet Troposcata solution.

Speaker Change: Our book to Bill ratio a measure.

Speaker Change: Find as bookings divided by net sales in this segment for the three months ended April 32024 was two five times during the third quarter of fiscal 2024.

Speaker Change: This segment was awarded over $13 $5 million of funded orders from the U S Army for VSAT equipment and related services over $6 million of funding from the U S Army for cyber training related solutions.

Speaker Change: Over $5 $5 million in operational support and maintenance orders from the Japan Aerospace exploration Agency <unk>.

Speaker Change: Over $5 million of funding from our Canadian customer to upgrade a previously deployed <unk> system.

Speaker Change: As well as in order from an international military who is evaluating our common <unk> solutions.

Michael Bondi: We believe that this new international customer, along with the two other new international customers that placed orders in our second quarter of fiscal 2024, to evaluate our next-generation modular transportable transmission systems, could lead to larger scale triple opportunities in the future.

Michael A. Bondi: We believe that this new international customer, along with the two other new international customers that placed orders in our second quarter of fiscal 2024 to evaluate our next-generation modular transportable transmission systems, could lead to larger-scale TROPO opportunities in the future. As for our terrestrial and wireless network segment, compared to the comparable period of the prior year, Q3 fiscal 2024 reflects higher net sales of our NG911 and call handling services, while being offset in part by lower net sales of our location-based solutions. A book-to-bill ratio in this segment for the three months ended April 30, 2024, was 0.72 times.

We believe that this new international customer along with the two other new international customers that placed orders in our second quarter of fiscal 2024 to evaluate our next generation modular transportable transmission systems could lead to larger scale triple opportunities in the future.

Michael Bondi: As for our terrestrial and wireless network segment, compared to the comparable period of the prior year, Q3 fiscal 2024 reflects higher net sales of our NG901 and coal handling services, while set in part by lower net sales of our location-based solutions. A book to build ratio in this segment for the three-month ended April 30, 2024, was 0.72 times. Key bookings include a multi-year extension for critical NG901 services for a large county in a Midwestern state, valued at over $10 million, and an extension of our short messaging service software engineering services to a large international mobile network operator, valued at over $7 million.

Speaker Change: As for our terrestrial and wireless network segment compared to the comparable period of the prior year Q3 fiscal 2024 reflects higher net sales of our <unk> 911, and coal handling services offset in part by lower net sales of our location based solutions.

Speaker Change: Our book to Bill ratio in this segment for the three months ended April 32024 was <unk> seven two times <unk>.

Michael A. Bondi: Key bookings include a multi-year extension for critical NG911 services for a large county in a Midwestern state valued at over $10 million, and an extension of our short messaging service software engineering services to a large international mobile network operator valued at over $7 million, and a multi-year NG911 call handling services contract aggregating $4 million for PSAPs located in Canada. Additionally, as John referenced before, subsequent to our quarter end, we entered into a contract with the Commonwealth of Massachusetts for the continued operation and maintenance of the state's NG911 system.

Speaker Change: <unk> bookings include a multiyear extension for critical <unk> 911 services for a large county in our Midwestern state valued at over $10 million.

Speaker Change: And an extension of our short messaging service software engine engineering services to a large international mobile network, operator valued at over $7 million.

Michael Bondi: A multi-year NG901 coal handling services contract aggregating $4 million for Peace Apps located in Canada.

Speaker Change: And a multi year N G 91 coal handling services contract aggregating $4 million for peace apps located in Canada.

Michael Bondi: Additionally, as John referenced before, subsequent to our quarter end, we entered into a contract with the Commonwealth of Massachusetts for the continued operation of the state's NG-901 system. This new contract has an initial five-year term from August 1, 2024, through July 31, 2029, and includes one option to renew for a five-year period through July 31, 2034. Including the option period, the total contract value could potentially exceed $250 million. We are very honored to have been selected again to be a trusted solution provided to the Commonwealth. This competitive win serves to highlight strong value proposition of our critical communications infrastructure services and significantly enhances our revenue visibility into the future.

Speaker Change: Additionally, as John referenced before our subsequent to our quarter end, we entered into a contract with the Commonwealth of Massachusetts for the continued operation and maintenance of the states <unk> 911 system.

Michael A. Bondi: This new contract has an initial five-year term from August 1st, 2024 through July 31st, 2029 and includes one option to renew for a five-year period through July 31st, 2034. Including the option period, the total contract value could potentially exceed $250 million. We are very honored to have been selected again to be a Trusted Solutions Provider to the Commonwealth.

John: This new contract has an initial five year term from August one 2024 through July 31, 2029 and includes one option to renew for a five year period through July 31 2034.

John: Including the option period, the total contract value could potentially exceed $250 million.

John: We are very honored to have been selected again to be a trusted solutions provided to the Commonwealth. This competitive win serves to highlight the strong value proposition of our critical communications infrastructure services and significantly enhances our revenue visibility into the future.

Michael A. Bondi: This competitive win serves to highlight the strong value proposition of our critical communications infrastructure services and significantly enhances our revenue visibility into the future. Gross margins for the quarter were 30.4%, compared to 32.2% in our second quarter of fiscal 24, and 31.7% in our third quarter of fiscal 23. We reported a gap operating loss in Q3, Fiscal 24, of $3.5 million compared to an operating loss of $5.3 million in Q3 of Fiscal 23.

Michael Bondi: Gross margins for the quarter were 30.4% compared to 32.2% in our second quarter of fiscal 24 and 31.7% in the third quarter of fiscal 23.

John: Gross margins for the quarter were 34% compared to 32, 2% in our second quarter of fiscal 'twenty, four and 31, 7% in the third quarter of fiscal 'twenty three.

Michael Bondi: We reported a gap operating loss in Q3, fiscal 24, of $3.5 million compared to an operating loss of $5.3 million in Q3 of fiscal 23. While both quarters included restructuring charges, GAAP operating loss in the more recent quarter includes $2.5 million of CEO transition costs.

John: We reported a GAAP operating loss in Q3 fiscal 'twenty for a $3 5 million compared to an operating loss of $5 3 million in Q3 of fiscal 'twenty three.

Michael A. Bondi: While both quarters included restructuring charges, the gap operating loss in the more recent quarter includes $2.5 million of CEO transition costs. As explained in more detail and reconciled in our Form 10-Q for the quarter, we utilize a non-GAAP measure that we refer to as Adjusted EBITDA. For Q3 fiscal 24, adjusted EBITDA was $11.9 million, or 9.3% of related net sales, as compared to $12.5 million, or 9.2% that we achieved in Q3 fiscal 23.

Speaker Change: While both quarters included restructuring charges GAAP operating loss in the more recent quarter includes $2 $5 million of CEO transition costs.

Michael Bondi: As explained in more detail and reconciled in our form, thank you for the quarter. We utilized a non-GAAP measure that we refer to as adjusted EBITDA. For Q3, fiscal 24, adjusted EBITDA was $11.9 million, or 9.3% of related net sales. As compared to $12.5 million or 9.2% that we achieved in Q3 of fiscal 23. The decrease in adjusted EBITDA in dollars reflects lower research and development expenses in both of our reportable operating segments. More than offset by lower consolidated net sales and lower consolidated gross profit, both in dollars and as a percentage of consolidated net sales.

As explained in more detail and reconciled in our Form 10-Q for the quarter, we utilized a non-GAAP measure that we referred to as adjusted EBITDA.

Speaker Change: For Q3 fiscal 'twenty four adjusted EBITDA was $11 9 million or nine 3% of related net sales as compared to $12 5 million or nine 2% that we achieved in Q3 of fiscal 2003.

Michael A. Bondi: The decrease in adjusted EBITDA in dollars reflects lower research and development expenses in both of our reportable operating segments, more than offset by lower consolidated net sales and lower consolidated gross profit, both in dollars and as a percentage of consolidated net sales, and higher unallocated SG&A expenses due to our One Comtech and People Strategies initiatives.

Speaker Change: The decrease in adjusted EBITDA in dollars reflects lower research and development expenses in both of our reportable operating segments more than offset by lower consolidated net sales on lower consolidated gross profit both in dollars and as a percentage of consolidated net sales and higher unallocated SG&A expenses due to a one comtech and people strategies.

Michael Bondi: And higher, unallocated, S-GNA expenses due to our one-contact and people strategies initiatives.

Speaker Change: Initiatives.

Michael Bondi: As we enter the fourth quarter of fiscal 2024, business conditions continue to be challenging, and the operating environment is law-driven, unpredictable. And light of these business conditions and resulting challenges, while we are pleased to have successfully closed on our refinancing of the prior credit facility, we do anticipate variability from time to time as we move through our one-contact transformation in our targeting net sales and adjusted EBITDA for our fourth quarter of fiscal 2024 to be similar to our third quarter of fiscal 2024. Such expectation considers our strong backlog of $653.4 million as of April 30, 2024.

Michael A. Bondi: As we enter the fourth quarter of fiscal 2024, business conditions continue to be challenging, and the operating environment is largely unpredictable. In light of these business conditions and resulting challenges, while we are pleased to have successfully closed on our refinancing of the prior credit facility, we do anticipate variability from time to time as we move through our one-contact transformation and are targeting net sales and adjusted EBITDA for our fourth quarter of fiscal 2024 to be similar to our third quarter of fiscal 2024.

Speaker Change: As we enter the fourth quarter of fiscal 2024 business conditions continue to be challenging in the operating environment is largely unpredictable.

Speaker Change: These business conditions, and resulting challenges while we are pleased to have successfully closed on a refinancing of our prior credit facility. We do anticipate variability from time to time as we move through our one contact transformation and are targeting net sales and adjusted EBITDA for our fourth quarter of fiscal 2024 to be Sim.

Speaker Change: <unk> to our third quarter of fiscal 2024.

Michael A. Bondi: Such expectation considers our strong backlog of $653.4 million as of April 30th, 2024; our revenue visibility of approximately $1.5 billion, and the timing of our refinancing of the prior credit facility today being so close to our fiscal year-end. Now, Mike, and thanks again to those of you who dialed in today.

Speaker Change: Such expectation considers our strong backlog of $653 4 million as of April 32024 hour revenue visibility of approximately $1 5 billion.

Michael Bondi: Our revenue visibility of approximately one and a half billion dollars and the timing of our refinancing of the prior credit facility today being so close to our fiscal year end.

And the timing of our refinancing of the prior credit facility today being so close to our fiscal year end.

John Ratigan: Now let me turn the call back over to John. Thanks, Mike, and thanks again to those of you who dialed in today. To recap, our balance sheet is strong. We have made excellent additions to our leadership team. Our people, technology and equipment are best in class, evidenced by our continuing success in winning new business.

Speaker Change: Now, let me turn the call back over to John.

John Ratigan: Thanks, Mike, and thanks again to those of you who dialed in today to recap. Our balance sheet is strong. We have made excellent additions to our leadership team. Our people, technology, and equipment are best in class, evidenced by our continuing success in winning new business.

Speaker Change: John.

John: Thanks, Mike and thanks again to those of you who dialed in today to recap our balance sheet is strong.

John: We have made excellent additions to our leadership team our people technology and equipment are best in class evidenced by our continuing success in winning new business.

John Ratigan: As I said, my top near-term priority is ensuring that we manage our unbilled receivables downward, improving our cash conversion cycle. There's a lot ahead of us to look forward to, and we're exiting the corner with significant positive momentum. Some of what's to come is challenging, but I remain confident and will get to where we need to be. I'm excited to lead Comtech forward at this moment in time, and I expect it won't be long before the markets come to appreciate and properly value our business.

John Ratigan: As I said, my top near-term priority is ensuring that we manage our unbilled receivables downward, improving our cash conversion cycle. There's a lot ahead of us to look forward to, and we're exiting the quarter with significant positive momentum. Some of what's to come is challenging, but I remain confident and we'll get to where we need to be. I'm excited to lead Comtech forward at this moment in time, and I expect it won't be long before the markets come to appreciate and properly value our business. In closing, I would like to thank our dedicated employees, customers, and suppliers for their continued commitment to Comtech.

John: As I said in my top near term priority is ensuring that we manage our unbilled receivables downward improving our cash conversion cycle. There's a lot ahead of us to look forward to and we're exiting the quarter with significant positive momentum.

John: Some of what's to come is challenging, but I remain confident and we will get to where we need to be.

John: I am excited to lead contract forward at this moment in time and I expect it won't be long before the markets come to appreciate and properly value our business and closing I would like to thank our dedicated employees customers and suppliers for their continued commitment to comtech.

John Ratigan: In closing, I would like to thank our dedicated employees, customers, and suppliers for their continued commitment to Comtech. Thank you very much.

John: Thank you very much.

Operator: And at this time, if you would like to ask a question, please press the star and one on your telephone keypad. You may withdraw your question by pressing star two. Once again, to ask a question, please press the star and one on your telephone keypad.

Operator: And at this time, if you would like to ask a question, please press the star and 1 on your telephone keypad. You may withdraw your question by pressing star 2. Once again, to ask a question, please press star and 1 on your telephone keypad. We'll take our first question from Joe Gomes with Noble Capital. Please go ahead.

Speaker Change: And at this time, if you would like to ask a question. Please press star one on your telephone keypad.

You may withdraw your question by pressing star two.

Speaker Change: Once again to ask a question. Please press star one on your telephone keypad.

Joseph Gomes: We'll take our first question from Joe Gomes with Noble Capital. Please go ahead. Good morning, John.

Speaker Change: We'll take our first question from Joe Gomes with Noble capital. Please go ahead.

Joseph Anthony Gomes: Good morning, John and Mike. Congratulations on the refi.

Joseph Anthony Gomes: Good morning, John and Mike Congrats on the refi.

John Ratigan: I'm Mike and Graff on the REFY. Morning, Joe. Thank you. Thanks, Joe.

John Ratigan: Morning, Joe. Thank you. Thanks, Joe.

Speaker Change: Good morning, Joe. Thank you thanks, Joe.

Joseph Anthony Gomes: A couple of quick questions on the refi, during the call scanning the 8K. I was wondering, you know, you say it's with a new group; did White Hat, Magatar, did they contribute any additional funds over and above what they had done previously? Also, saw that there were about 1.4 million warrants that were attached to the deal. Was wondering, you know, who those warrants went to. You gave us, you know, kind of a blended 14% rate. If you could just remind us how that compares to what it was under the old facility,

John Ratigan: A couple of quick questions on the REFY, just during the call of scanning the 8-K. And I was wondering, you know, you said it's with a new group. Did White Hat, Maga Tar, did they contribute any additional funds over and above what they had done previously?

Okay.

Speaker Change: Quick questions.

Speaker Change: On the refi just during the call scanning the 8-K.

Speaker Change: I was wondering with the new group.

Speaker Change: Dear White Magna tar to date contribute any additional funds over and above what they had done previously also saw theres about $1 4 million warrants that were attached to the deal was wondering who those warrants went shoe.

John Ratigan: I also saw there's about 1.4 million warrants that were attached to the deal, was wondering, you know, who those warrants went to? And you gave us, you know, a great; if you could just remind us how that compares to what it was under the old facility. Sure, I'll add to that back there, but if I miss one or two, please remind me. So, in terms of the, let's cover the warrants first. The warrants did not go to the Maga Tar White Hat. That was going to the lenders as part of the deal. Maga Tar White Hat did not put any new cash into their investment.

Speaker Change: And then you gave us kind of a blended 14% rate. If you could just remind us how that compares to what it was.

Speaker Change: Under the old facility.

Michael A. Bondi: Sure. I'm glad to come back there, but if I missed one or two, please remind me.

Speaker Change: Sure Plateau impact there, but if I Miss one or two please remind me.

Michael A. Bondi: So in terms of the warrants, let's cover those first. The warrants did not go to Magnetar and White Hat. That was going to the lenders as part of the deal. Magnetar and White Hat did not put any new cash into their investment.

Speaker Change: So in terms of the.

Speaker Change: So let's cover the warrants first the warrants.

Speaker Change: <unk> did not go to magnitude why had that was going to the lenders as part of the deal.

Magnetar and.

Speaker Change: White House did not put any new cash into their investment.

Michael A. Bondi: You know, they were very supportive during the process and helped us along the way. And in terms of the economics of the rate compared to what we have today, we're sitting at about 10% currently under the old agreement. So there was a step up, but it's reflective of the deal that we're striking here.

John Ratigan: You know, they were very supportive during the process and helped us along the way. And in terms of the economics to the rate compared to what we have today, we're sitting at about 10% currently under the old agreement. So there was a step up, but it's reflective of, you know, the deal that we're striking here.

Speaker Change: They are very supportive during the process and helped us along the way.

Speaker Change: And in terms of the economics to the rate compared to what we have today, we're sitting at about 10%.

Speaker Change: Currently under the old agreement.

Speaker Change: So there was a step up.

Speaker Change: It's reflective of the deal that we're striking here.

John Ratigan: Okay, thanks for that clarification. And two, you know, one of the things that you'd mention, you know, was the challenges with the supply chain and getting products done, and that has pushed some of the, we'll call it some of the revenues to the right. And, you know, I'm just trying to get an idea of how long. you think this is, you know, resolving the supply chain and getting the finished products. How long is that process going to take to get back to, you know, let's call it a normalized rate? Yeah, so as you might imagine, going through the period we went through where our liquidity was low, we weren't able to get everything to the suppliers that we needed.

Joseph Anthony Gomes: Okay, thanks for that clarification. And two, one of the things that you'd mentioned was the challenges with the supply chain and getting products done, and that has pushed some of the We'll call it some of the revenues to the right, and I'm just trying to get an idea of how long it will take to resolve the supply chain and get the finished products. How long does that take? process it is going to take to get back to a, you know, let's call it a normalized rate.

Okay. Thanks, Thanks for that clarification.

Speaker Change: Im too one of the things that you'd mentioned.

Speaker Change: Was the.

Speaker Change: Challenges with the supply chain and getting products and that has pushed some of the.

Speaker Change: I won't call you know some of the revenues to the right.

Speaker Change: And I'm just trying to get an idea of how long do you think.

Speaker Change: Resolving the supply chain and getting the finished products how long the zac.

Speaker Change: So it's going to take to get back to let's call. It a normalized.

Speaker Change: Right.

John Ratigan: Yeah, so as you might imagine, going through the period we went through, where our liquidity was low, we weren't able to get everything to the suppliers that we needed. They weren't able to supply equipment, and it certainly pushed things to the right. We were hopeful that within a three month time frame, we could reset the supply chain and return to a kind of rate of normal production at all of our facilities.

Speaker Change: Yes so.

Speaker Change: As you might imagine going through the period, we went through where our liquidity was low.

Speaker Change: We werent able to get everything to the suppliers that we needed they werent able to supply equipment and certainly push things to the way we were hopeful that within a three month timeframe. We can we can reset the supply chain.

John Ratigan: They weren't able to supply equipment, and it certainly pushed things to the right. We were hopeful that within a three-month time frame we can reset the supply chain and return it to a kind of a rate of normal production of all the work facilities.

Speaker Change: And returning to a kind of a rate of normal production.

Speaker Change: All of our facilities.

Joseph Gomes: That answered the question. Yeah, thank you for that.

Speaker Change: That answer the question.

Speaker Change: Yes, thank you for that.

Joseph Gomes: The man, one of the big contracts, there's the Global Field Services and it would have been under protest and I think there had been some issue, issue, issue inches that maybe they had, the protests have been denied, but maybe you just give us some update on where that, that contract stands today. Yeah, so as of last Thursday, we got a note from on the contract demand that the stock work order had been lifted, and so we are anticipating taking over that contract. Okay, and when do you think you might start seeing revenues out of that, then?

John Ratigan: Yes, thank you for that. I mean, one of the big contracts, the Global Field Services contract, I know it has been under protest. And I think there have been some issuances that maybe the protests have been denied. But maybe you could just give us some update on where that contract stands today.

Speaker Change: Yes.

Speaker Change: I mean, one of the big contracts.

Speaker Change: Global field services I know had been under.

Speaker Change: <unk> has been I think there'd been some issue.

Speaker Change: Doing issuances that maybe they had the protests have been denied but maybe you can just give us some update on where that that contract stands today.

John Ratigan: Yeah, so as of last Thursday, we got a note from Army Contract Command that the stop work order had been lifted, and so we are anticipating taking over that contract.

Speaker Change: Yes, so as of last Thursday.

Speaker Change: We got a note from army contract demand that the stop work order had been lifted.

Speaker Change: And so we are anticipating taking over that contract.

John Ratigan: Okay, and when do you think you might start seeing revenues from that then?

Speaker Change: Okay and when do you think you might start seeing revenues out of that then.

John Ratigan: Yeah, our view at this point, Joe, with the stock work order lifted, we would get going pretty quickly. We do have our ramping up, but your army has already expressed their desire to get going. So we will get ramped up. It's probably going to start contributing meaningfully in 2025. I think that's what I'm talking about right now, the time to transition all the employees I would expect all of this first.

John Ratigan: Our view at this point, Joe, is that with the stop work order lifted, we would get going pretty quickly. We do have a ramping up, but the Army, you know, has already expressed the desire to get going. So, you know, we will get ramped up. It's probably going to start contributing meaningfully in 2025. I think, I think that's on you.

Speaker Change: Yes, our view at this point Joe is with the stop work order lifted we would get going pretty quickly. We do have a ramping up but the army has already expressed the desire to get going so we will get ramped up is probably going to start contributing meaningfully in 2025.

John Ratigan: I think that the timing is about right. By the time we transition all the employees, I would expect August 1st.

Speaker Change: I think that timing is about right.

Speaker Change: By the time, we transition all the employees I would expect August one.

John Ratigan: Okay, and then one last one for me, and I'll jump back in queue. So John, a lot of great news here with the Re-5 finally done and continuing to move forward on adding new people, some major contract wins like Massachusetts. Any time frame as to when they are going to remove the temporary tag? Oh, well, you know, unfortunately, I would give you one answer, but it's the Board of Directors, and of course I would be sharing responsibility to do a search, and that is ongoing. You'd have to talk to our Chairman, Mark Quinlan, about that, but as I told the board, I'm going to make it very difficult for them to take me out of this job, and if they can find somebody better, then more power to them. But I'm loving performing under the job and with the team that we've got in place and others to be added, I couldn't think of a better place to be.

Joseph Anthony Gomes: Okay, and one last one for me, and I'll jump back in queue. So John, a lot of great news here with the refi finally done and continuing to move forward on adding new people, some major contract wins like Massachusetts, any time frame as to when they are going to remove the temporary tag?

Speaker Change: Okay, and one last one for me and ill jump back in queue.

John: So John a lot of great news here with the refi finally done and continuing to move forward on adding new people. Some major contract wins like Massachusetts any timeframe as to when they are going to remove the temporary tag.

John Ratigan: Oh, well, you know, unfortunately, I would give you one answer, but it's the Board of Directors who, of course, have the fiduciary responsibility to do a search, and that is ongoing. You'd have to talk to our Chairman, Mark Quinlan, about that, but as I've told the Board, I'm going to make it very difficult for them to take me out of this job, and if they can find somebody better, then more power to them, but I love performing in this job, and with the team that we've got in place and others to be added, I couldn't think of a better place to be.

Speaker Change: Oh well.

Speaker Change: Fortunately I would give you one answer but it's the it's the board of directors, who of course is the fiduciary responsibility to do a surge and that is ongoing.

Speaker Change: You'd have to talk to our chairman Mark Gwendolyn about that but.

Speaker Change: As I've told the board Im going to make it very difficult for them to take me out of this job and if they can find somebody better than more power to them, but.

Speaker Change: Im loving.

Speaker Change: Performing end of the job with the team that we've got in place and the others to be added.

Speaker Change: I Couldnt think of a better place to be.

Speaker Change: Okay.

Joseph Gomes: Great.

Joseph Anthony Gomes: Great, well, congratulations again on getting the refi done. Look forward to getting back to business as normal, and I will allow someone else to ask some questions. Thank you.

Speaker Change: Great.

Joseph Gomes: Well, I can get crafts again on the Re-5 done. Look forward to getting back to business as normal, and I will allow someone else to ask some questions. Thank you.

Speaker Change: <unk> again on the regaining of refi John look forward to getting back to business as normal and I will allow someone else to ask some questions. Thank you.

John Ratigan: Thank you, Joe. Thanks, Joe.

Speaker Change: Thank you Jeff Thanks, Joe.

Michael Crawford: And we will move next with Mike Crawford with B.R.I.L.E.

Operator: And we will move next with Mike Crawford of B-Royalty Securities. Please go ahead.

Speaker Change: And we will move next wave, Mike Crawford with B Riley Securities. Please go ahead.

Michael Crawford: Security, please go ahead. Thank you.

Michael Roy Crawford: Thank you. With the win in Massachusetts, does that whole $140 million go into bookings already in this July 4th quarter?

Speaker Change: Thank you what the win.

Michael Crawford: What the when in Massachusetts, does that whole 140 million go into bookings already in this July 4th quarter? That would be a full of quarterbooking, yes. You would not put the option you're in at the point. The option year would not be in backlogged.

Michael Roy Crawford: When in Massachusetts to does that whole 140 million go into bookings already in this.

Speaker Change: July 4th quarter.

John Ratigan: That would be a fourth-quarter booking, yes. We would not put the option year in at this point. The option here would not be in backlog.

Speaker Change: That would be a flop quota book and yes.

Speaker Change: We would not put the option year end at this point.

Speaker Change: The option year would not be in backlog.

Michael Bondi: And then regarding the unbuilt deceivables and how those will be declining in the next year, we just walk through some of the mechanisms regarding that, maybe starting with Troppo scatters. For example, time line from order to delivery to acceptance on a troppo product and maybe what relative contribution that kind of section of unbuilt deceivables is on the balance sheet and maybe kind of a similar walk through on the other major items there. Sure.

Michael A. Bondi: And then, regarding the unbilled receivables and how those will be declining in the next year, can we just walk through some of the mechanisms regarding that, maybe starting with troposcatters, for example, the timeline from order to delivery to acceptance on a Tropo product and maybe what the relative contribution that kind of section of unbilled receivables is on the balance sheet and maybe kind of a similar walkthrough on the other major items there.

Speaker Change: And then.

Speaker Change: Regarding the.

Speaker Change: <unk> receivables.

Speaker Change: And how those will be declining in the next year can we just walk through some of the mechanisms regarding that maybe starting with truckload Scouters for example.

Speaker Change: Time line from order to delivery to acceptance.

Speaker Change: On the on the turbo product and maybe.

Speaker Change: What what relative contribution that kind of section of Unbilled receivables as.

Speaker Change: On the balance sheet, and maybe kind of a similar philosophy when the other major items there.

John Ratigan: Sure. Hi Mike.

Michael Bondi: Hi, Mike. This quarter, looking at our footnote, you probably will notice that while the total headline numbers date about the same, we did have a shift in our unbuilt receivables with the U.S. government towards build receivables. So I take that as a sign that we are starting to get the components in, starting to make the deliveries that we need to in order to clear the unbuilt. So we always felt around this time of the year, we would start to see this liquidation. I think now, with the refi behind us and supporting our balance sheet, we can lean in on the supply chain to get components in faster and out the door sooner.

Speaker Change: Sure Hi, Mike.

Speaker Change: This quarter looking at our footnote you'd probably will notice that while the total headline number has stayed about the same we did have a shift in our unbilled receivables with the us government towards billed receivables.

Michael A. Bondi: This quarter, you know, looking at our footnote, you probably will notice that while the total headline numbers stayed about the same, we did have a shift in our unbilled receivables with the U.S. government towards billed receivables. So, you know, I take that as a sign that we are starting to get the components in, starting to make the deliveries that we need to in order to clear the unbilled receiv So, we always felt that around this time of the year, we would start to see this liquidation.

I'll take that as a sign that we are starting to get the components and starting to make the deliveries that we need to.

Speaker Change: In order to clear the Unbilled.

Speaker Change: We always felt around this time of the year, we would start to see this liquidation I think now with the refi behind us and supporting our balance sheet, we can lean in on the supply chain to get components in faster and out the door sooner I think thats, probably the probably the number one thing to do is just to get the supply.

Michael A. Bondi: I think now with the REFI behind us and supporting our balance sheet, we can lean in on the supply chain to get components in faster and out the door sooner. I think that's probably the, you know, probably the number one thing to do is just get the supply chain, get the manufacturing, and get those deliveries out as planned on both the Army TROPO order as well as the Marine TROPO order. So, I think we're in the thick of it right now, and we do expect to see a nice liquidation in those two particular contracts over the next couple of months.

John Ratigan: I think that's probably the probably the number one thing to do is just get the supply chain, get the manufacturing and getting those deliveries out as planned on both the Army Truple Order as well as the Marine Truple Order. So I think we're in the thick of it right now, and we do expect to see a nice liquidation in those two particular contracts over the next couple of months. Yeah, I would also add that we started deliveries, significant deliveries, I should say, at the end of May. We'll be delivering throughout the month of June, July, and August.

Speaker Change: Chain get the manufacturing and getting those deliveries out as planned on both the army Troppo order as well as the marine Triple order. So I think we're in the thick of it right now and we do expect to see a nice liquidation in those two particular contracts.

Speaker Change #100: Over the next couple of months, Yes, I would also add that we started deliveries significant deliveries I should say at the end of May we'll be delivering throughout the month of June July and August and I believe the last deliveries were trying to move it into August but the last deliveries I think or the beginning of September.

Michael A. Bondi: Yeah, I would also add that we started deliveries, significant deliveries, I should say, at the end of May. We'll be delivering throughout the months of June, July, and August. And I believe the last deliveries, we're trying to move them into August, but the last deliveries, I think, are at the beginning of September.

John Ratigan: And I believe the last deliveries, we're trying to move it into August, but the last deliveries I think are the beginning of September.

Michael Crawford: Okay, that's great for the Truple.

John Ratigan: Okay, that's great for the tropo, but what about for things like software delivered to telecom customers where you've been waiting for acceptance after it's been delivered?

Speaker Change #101: Okay, that's great for the turbo and what about for things like software delivered to telecom customers, where you have been waiting for acceptance after it's been delivered.

Michael Bondi: And what about for things like software delivered to telecom customers, where you've been waiting for acceptance after it's been delivered? Yeah, I think we're doing what we need to do for deliveries. Some of these milestones were out in fiscal 2005, so we haven't yet approached those milestones.

John Ratigan: Yeah, I think we're doing what we need to do for delivery. Some of these milestones are out in fiscal 25, so we haven't yet approached those milestones. I think you're probably going to see a more dramatic drop in the satellite and space unbuilds. The T&W unbuilds, I think, will have a little bit of a longer tail. But, you know, I think we're moving along doing what we need to, working with our customers, and I fully expect to recover that as planned. Yeah, some of those.

Speaker Change #101: Yes, I think we're doing what we need to do for our deliveries. Some of these milestones were out in fiscal 'twenty fives. So we haven't yet approached those milestones.

Michael Bondi: I think you're probably going to see probably more dramatic drop in the satellite and space unbuilds. The T&W unbuilds I think will be a little bit of a long detail, but I think we're moving along doing what we need to, working with our customers and fully expect to recover that as planned. Yeah, some of those contracts in that space, which are indicative of that market, have long times between milestones.

Speaker Change #102: Yes, I think you're probably going to see probably a more dramatic drop in the.

Speaker Change #102: Satellite and space Unbilled AR, the PNW Unbilled, I think will be a little bit of a longer tail, but I think we're moving along doing what we need to.

Speaker Change #102: Working with our customers and fully expect to recover that.

John Ratigan: Some of those contracts in that space, which are indicative of that market, have long times between milestones. And so, as we catch up to those, and I believe, you know, in fiscal year 25, we'll start to roll those off, and in the future, we will try to make sure that we put in place contracts with a little bit better milestone.

Speaker Change #102: As planned yes.

Speaker Change #103: Are those some of those contracts in that space, which are indicative of that market.

Speaker Change #102: Sure.

Speaker Change #102: Long times between milestones and so as we catch up to those and I believe in fiscal year 'twenty five we will start to roll those off.

Michael Bondi: and so as we catch up to those, and I believe in fiscal year 25 we'll start to roll those off, and in the future we will try to make sure that we put in place contracts with a little bit better model sense.

In the future we will try to.

Speaker Change #102: Make sure that we put in place contracts with a little bit better milestones.

Speaker Change #102: Okay.

Michael Bondi: Yeah, that would be good, and then just to be clear, this 11.9 million adjusted EBITDA number for 3Q, with a similar expectation for 4Q, are those the numbers that will be used for the leverage covenant in your new bank facility? Yeah, in terms of the specifics, how we derive that, you know, this is our view at the moment based on the refinancing done, and certainly we have some risks and opportunities that we track. And you know, we felt at this juncture, it's so close to your end. This was probably the appropriate guidance. Certainly, will do our best now having secured the refinancing to expedite and move things to the left, but you know we just want to be cautious. We're only into it one day and you know we want to start executing now servicing the supply chain.

Michael A. Bondi: Yeah, that would be good. And then, just to be clear, this $11.9 million adjusted EBITDA number for 3Q and a similar expectation for 4Q, are those the numbers that will be used for the leverage covenant in your new bank facility?

Speaker Change #104: Yeah that would be good and then.

Speaker Change #105: And just to be clear this 11.9 million adjusted EBITDA number for <unk> with a similar expectation for <unk> are those the numbers that will be used for the leverage covenant in your new bank facility.

Michael A. Bondi: Yeah, in terms of the specifics, how we derive that, you know, this is our view at the moment based on getting the refinancing done. And certainly, we have some risks and opportunities that we track, and, you know, we felt at this juncture, it's so close to year-end, this was probably the appropriate guidance. Certainly, we'll do our best now, having secured the refinancing, to expedite and move things to the left. But, you know, we just want to be cautious.

Yeah in terms of the specifics how we derive that this is our view at the moment based on getting the refinancing done and certainly we have some risks and opportunities that we track and we felt at this juncture. It's so close to year end this was probably the.

Speaker Change #105: The appropriate guidance certainly we will do our best now having secured the refinancing to expedite and move things to the left.

Michael A. Bondi: We're only into it for one day, and, you know, we want to start executing now, servicing the supply chain. In terms of how we develop the covenants themselves, we've modeled in sensitivities, and if we feel comfortable that, you know, how we set up the covenants going out of the gate, we expect to be in compliance is the best way to say it.

Speaker Change #105: But we just wanted to be cautious we were only into it one day.

And we wanted to start executing now servicing the supply chain.

Michael Bondi: In terms of how we develop the covenant themselves, we model in sensitivities, and if we feel comfortable that you know how we set up the covenant going out of the gate, you know we expect to be in compliance as best as they say.

Speaker Change #105: In terms of how we develop the covenants themselves we.

Speaker Change #105: <unk> sensitivities and we feel comfortable that.

Speaker Change #105: How we set up the covenants going out of the gate.

Speaker Change #105: We expect to be in compliance, especially I'd say.

Michael Crawford: Great, well thank you very much.

Michael A. Bondi: Great. Well, thank you very much.

Speaker Change #106: Great well, thank you very much.

Gregory Burns: Thank you. And as a reminder, it is star and one if you would like to join the queue. We will move next way the Greg Burns with Sudoti. Please go ahead. Morning. I'm just to follow up on that last comment. When you look at staying in compliance with those covenants, obviously this run rate would imply like either a step down in the level of debt or, you know, EBITDA growing, you know, from these levels. You know, what is your view on that, on how you're going to stay in compliance? Are you expecting to liquidate those receivables and reduce the level lending? Give a view on EBITDA maybe stepping up with the some of these contracts kicking in in 2025. How should we think about that.

John Ratigan: Thank you. Thank you.

Speaker Change #107: Thank you.

Mike: Thanks, Mike.

Operator: And as a reminder, it is star and a one if you would like to join the queue. We will move next with Greg Burns and Sudowoodi. Please go ahead.

Speaker Change #109: And as a reminder, it is star one if you would like to join the queue.

Speaker Change #110: We will move next to Greg Burns with Sidoti. Please go ahead.

Gregory John Burns: Morning. Just to follow up on that last comment, when you look at staying in compliance with those covenants, obviously, this run rate would imply either a step down in the level of debt or EBITDA growth from these levels. What is your view on that, on how you're going to stay in compliance? Are you expecting to liquidate those receivables and reduce the level of lending? Do you have a view on EBITDA maybe stepping up with some of these contracts kicking in in 2025? How should we think about that?

Gregory John Burns: Good morning, just a follow up on that last comment when you look at staying in compliance with those covenants, obviously just run rate would imply like either a step down in the.

Speaker Change #110: Yes.

Speaker Change #110: Level of debt.

Speaker Change #110: Debt or EBITDA growing.

Speaker Change #110: From these levels.

Speaker Change #112: What is your view on that on how youre going to.

Speaker Change #113: Stay in compliance.

Speaker Change #114: Are you expecting to liquidate those receivables and reduced the level of lending do you have a view on.

Speaker Change #115: EBITDA, maybe stepping up with the some of these contracts kicking in in 2025, how should we think about that.

John Ratigan: I think in now that in the last point certainly the unbuild receivables and liquidating the unbuild the key driver to this we are expecting those they sit earlier to unwind over the summer and generate cash rolls for us. And certainly we have, you know, grown all backlog and you know, on pace to have record backlog if we keep this up. So I think things are trending in the right direction. And now that we have a refinancing secure that we feel comfortable about, you know, making those investments to move forward on bringing whatever we can to the left and maximizing our EBITDA. But, you know, I think that the number one item is definitely the unbuild that's going to drive our compliance.

Michael A. Bondi: I think you nailed it in the last point. Certainly, the unbilled receivables and liquidating the unbilled is a key driver to this. We are expecting those, as I said earlier, to unwind over the summer and generate cash flows for us. And certainly, we have, you know, grown our backlog, and we're on pace to have a record backlog if we keep this up. So I think things are trending in the right direction.

Speaker Change #116: I think and know that in the last point is certainly the unbilled receivables and liquidating. The Unbilled was a key driver for this.

Speaker Change #117: We are expecting those as I said earlier to unwind over the summer.

Speaker Change #118: And generate cash flows for us.

Speaker Change #118: And certainly we have grown our backlog and we're on pace to have record backlog. If we keep this up so I think things are trending in the right direction and now that we have a refinancing secure that we feel comfortable about making those investments to move forward on on bringing whatever we can to Alaska and maximizing our EBITDA.

Michael A. Bondi: And now that we have the refinancing secure, we feel comfortable about, you know, making those investments to move forward on bringing whatever we can to the left and maximizing our EBITDA. You know, I think that the number one item is definitely the unbilled revenue that's going to drive our compliance.

Speaker Change #119: Yes, I think the number one item is definitely the unbilled, that's going to drive our compliance.

John Ratigan: Okay, and when you look at the disruptions in your business that you saw last quarter and this quarter, I guess we're probably into the next quarter a little bit. How much of that is just timing with the supply chain and getting the products out the door versus maybe lost business?

John Ratigan: Okay, and when you look at the disruptions in your business that you saw last quarter and this quarter, and I guess probably into the next quarter a little bit. How much of that is just timing with the supply chain and getting the products out the door versus maybe lost. from Lost Business. I would say the majority is components, getting key components in to manufacture things. It only takes one part to hold you up. And certainly, we were in the throes of getting the refinancing done. We were expecting to have this done back in March. So we were living under this agreement for another three months.

Speaker Change #118: Okay.

Speaker Change #118: And then when you when you look at the disruptions in your business that you saw last quarter and this quarter.

I guess probably into next quarter a little bit.

Speaker Change #120: How much of that is just timing with the supply chain and getting the products out the door versus may be lost.

Speaker Change #120: Lost business.

John Ratigan: I would say the majority are components, getting key components in to manufacture things. It only takes one part to hold you up, and certainly as we were in the throes of getting the refinancing done, you know, we were expecting to have this done back in March, so we were living under this agreement for another three months, in the factories and keeping Maria's team busy.

Speaker Change #121: I would say, it's the majority is components getting key components and to manufacture things. It only takes one part to hold you up and.

Speaker Change #121: And certainly as we were.

Speaker Change #121: In the throes of getting the refinancing done.

Speaker Change #121: We were expecting to have this done back in March So we were living under this agreement for another three months.

John Ratigan: There was coming that we had a reserve for in that old agreement, which changes your behaviors. So now that things have opened up a little bit with our liquidity under this new asset-based loan and the way we structure this, we'll have more liquidity out of disposal. And again, service to supply chain. There have been very good partners over the last several months working with us. I think it's time to return the favor now and get things prioritized in the factories and keeping Maria's team busy. Yeah, I would also add that I'm not sure that we were losing orders, but that there were orders that were being delayed, with some of the customer-based worried a bit about our financial stability.

Speaker Change #121: Coming that we had a reserve for it.

Speaker Change #121: In that old agreement, which changes their behavior. So now that things have.

Speaker Change #121: Open up a little bit with our liquidity.

Speaker Change #121: Under this new asset based loan in the way we structured this.

Speaker Change #121: We will have more liquidity out of disposal.

Speaker Change #121: And again.

Speaker Change #121: Service the supply chain and they've been very good partners over the last several months working with US I think it's time to return the favor now and get things back prioritizing the factories.

Speaker Change #121: While keeping murray's team busy.

John Ratigan: Yeah, I would also add that I'm not sure that we were losing orders, but that there were orders that were being delayed, and some of the customer base was worried a bit about our financial stability. And this completion and the resolution of the refinancing will solve all of those problems in terms of our perception in the market, as well as giving us a boost in business for the next year.

I would also add that I am not sure that we were losing orders, but there were orders that were being delayed with some of the customer base worried a bit about our financial stability.

John Ratigan: And this completing and resolution of the refinancing will solve all of those problems in terms of our perception in the market, as well as giving us a boost into business for the next year.

Speaker Change #121: And this.

Speaker Change #121: <unk> and the resolution of the refinancing will.

Speaker Change #122: So all of those problems in terms of our perception in the market.

Speaker Change #122: Well as giving us a boost.

Speaker Change #123: Into business for the next year.

John Ratigan: Okay, when you think about alternative solutions, if a customer is delaying and kind of waiting to see where you're at, how easy would it be for them to replace your solutions or? You know, I'm just trying to get a sense of maybe if they were able to find another supplier or if they...

John Ratigan: Okay.

Speaker Change #124: Okay. When you think about alternative solutions of our customers delaying kind of waiting to see where you're at now.

John Ratigan: When you think about alternative solutions of the customer's delaying and kind of waiting to see where you're at, how easy would it be for them to replace new solutions? I'm just trying to get a sense of maybe if they found that we're able to find another supplier, or if they... Yeah, so on the troopers' side. Yeah, on the troopers' side or side, there really aren't a lot of competitors in that market, and certainly we're the world leader in the technology that's in that space. So sometimes it'll come down to what's their trade off, whether or not they want to go to a piece of equipment that is less capable than what we produce.

Speaker Change #125: Easy would it be for them to replace your solutions or.

Speaker Change #126: Yes, I'm just trying to get a sense of maybe if they found that we're able to find another supplier or if they.

John Ratigan: Yes, sir, on the purpose-shatter side. Yeah, on the troper scatter side. There really aren't a lot of competitors in that market. And certainly, we're the world leader in the technology that's in that space. So sometimes it'll come down to what their tradeoff is, whether or not they want to go to a piece of equipment that is less capable than what we produce. On the satellite side, on the digital side, on the RF side, there are competitors there, but we're still seeing a very healthy backlog.

Speaker Change #127: Yes, so on the turbo side.

Speaker Change #128: Yeah on the <unk> side, there really arent a lot of competitors in that market and certainly we are the world leader in the technology that's in that space.

Speaker Change #128: So sometimes it will come down to what's their trade off.

Speaker Change #128: Whether or not they want to go to a.

Speaker Change #128: A piece of equipment that has less capable than what we produce.

John Ratigan: On the satellite side, on the digital side, and the RF side, there are competitors there, but we're still seeing a very healthy backlog. I wouldn't say that they were the diverse set of competitors there, but certainly there are. And they could go to other places, but we haven't seen that yet. I think what we've seen is a delay in some of the things that customers are doing, as well as our ability to produce and get equipment out the door. We're going to be excited to do that in a much better way than we have over the last three or four months.

Speaker Change #128: On the satellite side on the other on the digital side in the RF side. There are competitors, there, but we're still seeing a very healthy backlog I wouldn't say that there was a diverse set of competitors there, but certainly there are.

John Ratigan: I wouldn't say that there was a diverse set of competitors there, but certainly there are, and they could go to other places, but we haven't seen that yet with customers, as well as our ability to produce and get equipment out the door. We're going to be excited to do that in a much better way than we have over the last three or four months.

Speaker Change #128: And they could go to other places, but we haven't seen that yet I think what we've seen is a delay in some of the things that.

Speaker Change #128: Customers are doing as well as our ability to produce and get equipment out the door.

Speaker Change #128: Would it be excited to do that in a much better way than we have over the last three or four months.

John Ratigan: Great. And with the 9-1-1 renewals, what was the pricing like on those? Was there a step down in pricing, or not? How did those renegotiations go? Yeah, I don't think we'll get to that.

Gregory Burns: Great.

Speaker Change #129: Alright, great and then the 911 renewals what was the pricing like on those it was there a step down in pricing or.

John Ratigan: And within the 9-1 renewals, what was the pricing like on those? Was there a step down in pricing, or how did those renewals go? Yeah, I don't think we'll get specific as to how we price the opportunity, but I would say we have good relationships with our customers. These were competitive awards that we won, so there were folks out there that we were competing with, and we outbid them. I guess if you will, but the pricing and the jobs themselves, this is a lot of work that we've been doing for years, and the continuation of that work, and we're not seeing like massive discounts to win the opportunities.

How did those negotiations go.

John Ratigan: Yeah, I don't think we'll get specific as to how we priced the opportunity, but I would say we have good relationships with our customers. These were competitive awards that we won, so there were folks out there that we were competing with, and we outbid them, if you will. But the pricing and the jobs themselves, this is a lot of work that we've been doing for years and the continuation of that work, and we're not seeing massive discounts to win the opportunities.

Speaker Change #130: Yes, I don't think we'll get specific as to how we price the opportunity but.

Speaker Change #131: I would say we have good relationships with our customers.

Speaker Change #132: These were competitive awards that we won.

Speaker Change #132: So there are folks out there that we're competing with and we have out there.

Speaker Change #132: <unk> I guess, if you will but the pricing and the jobs themselves. As this is a lot of work that we've been doing for years and the continuation of that work.

Speaker Change #132: And we're not seeing like massive discounts to win the opportunities I think the customers are at the point in their life cycles, where they're also looking to do upgrades of the technologies, particularly in the 911 space and so that gives us opportunities to have margin expansion.

John Ratigan: I think customers are at the point in their life cycles where they're also looking to do upgrades of the technologies, particularly in the 911 space, and so that gives us opportunities for margin expansion while we secure the base and then bring in other opportunities on top of that.

John Ratigan: I think the customers are at the point in their life cycles where they're also looking to do upgrades of the technologies, particularly in the 9-1 space, and so that gives us opportunities to have margin expansion while we're secure the base and then bring another opportunity on top of that.

Speaker Change #132: While we secure the base and then bring another opportunities on top of that.

John Ratigan: Okay, great.

Michael Crawford: Thank you.

Speaker Change #133: Okay, great. Thank you.

Michael Crawford: Thanks, Greg. We do have a follow-up from Mike Crawford with the Rally Securities. Please go ahead. Thank you.

Okay. Thanks, Greg.

Operator: We do have a follow-up from Mike Crawford with B-Rally Securities. Please go ahead.

Speaker Change #134: We do have a follow up from Mike Crawford with B Riley Securities. Please go ahead.

Michael Roy Crawford: Thank you. Just on growth, other growth drivers, so the global field services representative contract, is that still anticipated to grow to be as much as $100 million a year kind of revenue contribution for the company over several years?

Michael Crawford: Just on growth, other growth drivers, so the global field services representative contract, is that still anticipated to grow to be as much as a hundred million a year kind of revenue contribution for the company for several years. Yeah, that was a four-plus, four-and-a-half year contract. It's staffing, you know, over 200, something positions globally. And once you have them in place, it's pretty stable study work.

Michael Roy Crawford: Thank you just on growth.

Michael Roy Crawford: Growth other growth drivers so the global field services representative contract is that still anticipated to grow to be as much as $100 million a year kind of revenue contribution for the company.

Speaker Change #135: For several years.

John Ratigan: Yeah, that was a four plus four and a half year contract, staffing, you know, over 200 positions globally. And once you have them in place, it's, you know, pretty stable, steady work.

Speaker Change #136: Yes that was.

Speaker Change #137: <unk>, plus four and a half year contract.

Speaker Change #138: Staffing over 200, something positions globally and once you have them in place its yes, its pretty stable steady work.

John Ratigan: Okay, thank you. And then the other one that we've been maybe more excited about is the EDM modem that you're developing that really is the next iteration of this. Abum modem, that FISAAT, I think is generated about a billion dollars of revenue over the last decade. And I believe you're building the first articles there.

John Ratigan: Okay, thank you. And then the other one that we've been maybe more excited about is this EDEM modem that you're developing that really is the next generation of this EBM modem that Fisat, I think, has generated about a billion dollars of revenue on over the last decade. And I believe you're building the first articles there. What is the timeline for EDEM?

Speaker Change #139: Okay. Thank you and then the other one that we've been maybe more excited about is this EDAM modem that youre developing that really is the next generation of this app.

Speaker Change #139: Our modem that price at.

Speaker Change #139: Generated about $1 billion of revenue on over the last decade.

Speaker Change #140: I believe you're building the first articles there or what is the what's the timeline on Eden.

John Ratigan: What's the timeline on EDM? Yeah, so the first articles and prototypes are due in September. We aren't expecting significant revenue to that to probably the end of what would be our towards the end of our 2025 fiscal year. But yeah, that will be that will be the first digital modem in the market. We're pretty excited about that. That kind of aligns with where our strategy is going forward, which is the digitalization of the satellite industry. So we're getting a bit of a jumpstart on it with the Army on that modem. By the way, we have other modems that we do expect that we've been involved in.

John Ratigan: Yes, so the first articles and prototypes are due in September. We aren't expecting significant revenue from that till probably the end of what would be our, you know, towards the end of our 2025 fiscal year.

Speaker Change #141: Yes, so the first articles and <unk>.

Speaker Change #142: <unk> are due in September.

Speaker Change #143: We arent expecting significant revenue to that probably the end of.

Speaker Change #143: What would be or towards the end of our 2025 fiscal year.

John Ratigan: But, yeah, that will be the first digital modem in the market. We're pretty excited about that. That kind of aligns with where our strategy is going forward, which is the digitalization of the satellite industry. So we're getting a bit of a jump start on it with the Army on that modem. We, by the way, have other modems that we do expect that we've been involved in. There have been three major programs that have come out of the military, and Comtech has been involved in all three of them.

Speaker Change #143: But yes that will be that will be the first digital modem in the market, we're pretty excited about that.

Speaker Change #143: Kind of aligns with where our strategy is going forward, which is the digitalization of the satellite industry.

So we're getting a bit of a jumpstart on it with.

Speaker Change #143: With the army.

Speaker Change #143: On that on that.

Speaker Change #143: That modem.

Speaker Change #143: We by the way we have we have other modems that we do expect.

John Ratigan: There's been three major programs that have come out of the military, and Comtec has been involved in all three of them. That's the LAMC, the A3M, which is the only Air Force anti-jam modem as well as the EDM. And we expect the A3M to move into the production phase very shortly. And that should provide significant revenue for us in the fiscal year 2025. Okay, great.

Speaker Change #143: We've been involved in Theres been three major programs that have come out of the military in Comtech has been involved in all three of them that's the lands.

John Ratigan: That's the WAMS, the A3M, which is the Army Air Force anti-jam modem, as well as the EDAM. And we expect the A3M to move into a production phase very shortly, and that should provide significant revenue for us in the fiscal year 2025.

Speaker Change #143: The <unk> III, which is the army Air Force anti Jam modem as well as the Eden and we expect the <unk> to move into a production phase very shortly.

Speaker Change #143: And that should provide significant revenue for us in the fiscal year 2025.

Michael Crawford: Thank you.

Speaker Change #144: Okay, great. Thank you.

John Ratigan: I wish you no further questions at this time.

Operator: And, with no further questions at this time, I will turn the call back to our presenters for any closing or additional remarks.

Speaker Change #145: And we show no further questions at this time I will turn the call back to our presenters for any closing or additional remarks.

John Ratigan: I will turn the call back to our presenters for an eclosing or additional remarks. Thanks, everybody, for calling in and being with us today. Mike and I and his entire team of financial professionals are very proud of what we did to complete the refinancing. And we're happy to be forward, and we're excited about the future. We think there are lots of good things ahead for Comtec. We expect the continue to bring on additional leaders in the industry and expect great things out of both our public safety and satellite and space services.

John Ratigan: Okay, thanks everybody for calling in and being with us today. Mike and I, and his entire team of financial professionals, are very proud of the work we did to complete the refinancing. And we're happy to move forward. We're excited about the future. We think there are lots of good things ahead for Comtech. We expect to continue to bring on additional leaders in the industry and expect great things from both our public safety and satellite and space businesses. Thank you.

Speaker Change #146: Okay, Thanks, everybody for calling in and being with us today.

Speaker Change #147: Mike and I and his entire scheme of Athena financial professionals that are very proud of the work we did to compete.

Speaker Change #146: <unk>.

Speaker Change #146: Refinancing.

Speaker Change #148: And we're happy to move forward and we're excited about the future. We think there are lots of good things ahead for Comtech, we expect to continue to bring on additional leaders in the industry and expect great things out of both our public safety and satellite and space businesses.

John Ratigan: Thank you.

Speaker Change #148: Thank you.

Speaker Change #148: Yeah.

Operator: And they self-concluded the program. Thank you for your participation.

Operator: And this does conclude today's program. Thank you for your participation. You may disconnect at any time.

Speaker Change #149: And this does conclude today's program. Thank you for your participation you may disconnect at any time.

Operator: You may disconnect at any time. ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶ ¶

Speaker Change #149: Okay.

Okay.

Speaker Change #149: [music].

Operator: Copyright 2020 Mooji Media Ltd. All Rights Reserved. No part of this recording may be reproduced without Mooji Media Ltd.'s express consent.

Speaker Change #149: Yes.

Speaker Change #149: [music].

Speaker Change #149:

Speaker Change #149: Uh-huh.

Speaker Change #149: Okay.