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Segment Information | 3 Months Ended
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Oct. 31, 2022
Segment Reporting [Abstract] |
Segment Information | Segment Information Reportable operating segments are determined based on Comtech’s management approach. The management approach, as defined by FASB ASC 280 "Segment Reporting" is based on the way that the CODM organizes the segments within an enterprise for making decisions about resources to be allocated and assessing their performance. Our CODM, for purposes of FASB ASC 280, is our Chief Executive Officer. In the fourth quarter of fiscal 2022, we revised our business segments to better align them with end-markets for our products and services and our CODM began managing our business in two new reportable segments: “Satellite and Space Communications” and “Terrestrial and Wireless Networks.” As a result, the segment information for the prior fiscal year has been recast to conform to the current year presentation. Satellite and Space Communications is organized into four technology areas: satellite modem technologies and amplifier technologies, troposcatter and SATCOM solutions, space components and antennas, and high-power amplifiers and switches technologies. This segment offers customers: satellite ground station technologies, services and system integration that facilitate the transmission of voice, video and data over GEO, MEO and LEO satellite constellations, including solid-state and traveling wave tube power amplifiers, modems, VSAT platforms and frequency converters; satellite communications and tracking antenna systems, including high precision full motion fixed and mobile X/Y tracking antennas, RF feeds, reflectors and radomes; over-the-horizon microwave equipment that can transmit digitized voice, video, and data over distances up to 200 miles using the troposphere and diffraction, including the Comtech COMET™; solid-state, RF microwave high-power amplifiers and control components designed for radar, electronic warfare, data link, medical and aviation applications; and procurement and supply chain management of high reliability EEE parts for satellite, launch vehicle and manned space applications. Terrestrial and Wireless Networks is organized into four service areas: next generation 911 and call delivery, Solacom call handling solutions, trusted location and messaging solutions, and cyber security training and services. This segment offers customers: SMS text to 911 services, providing alternate paths for individuals who need to request assistance (via text messaging) a method to reach Public Safety Answering Points ("PSAPs"); next generation 911 solutions, providing emergency call routing, location validation, policy-based routing rules, logging and security functionality; Emergency Services IP Network transport infrastructure for emergency services communications and support of next generation 911 services; call handling applications for PSAPs; wireless emergency alerts solutions for network operators; software and equipment for location-based and text messaging services for various applications, including for public safety, commercial and government services, and cybersecurity training, skills labs, and competency assessments for both technical and non-technical applications. Our CODM primarily uses a metric that we refer to as Adjusted EBITDA to measure an operating segment’s performance and to make decisions about resources to be allocated. Our Adjusted EBITDA metric for the Satellite and Space Communications and Terrestrial and Wireless Networks segments do not consider any allocation of indirect expense, or any of the following: income taxes, interest (income) and other, change in fair value of the convertible preferred stock purchase option liability, write-off of deferred financing costs, interest expense, amortization of stock-based compensation, amortization of intangibles, depreciation expense, amortization of cost to fulfill assets, estimated contract settlement costs, settlement of intellectual property litigation, acquisition plan expenses, restructuring costs, COVID-19 related costs, strategic emerging technology costs (for next-generation satellite technology), facility exit costs, CEO transition costs, proxy solicitation costs, strategic alternatives expenses and other. These items, while periodically affecting our results, may vary significantly from period to period and may have a disproportionate effect in a given period, thereby affecting the comparability of results. Any amounts shown in the Adjusted EBITDA calculation for our Satellite and Space Communications and Terrestrial and Wireless Networks segments are directly attributable to those segments. Our Adjusted EBITDA is also used by our management in assessing the Company's operating results. Although closely aligned, the Company's definition of Adjusted EBITDA is different than the Consolidated EBITDA (as such term is defined in our Credit Facility and Amended Credit Facility) utilized for financial covenant calculations and also may differ from the definition of EBITDA or Adjusted EBITDA used by other companies and, therefore, may not be comparable to similarly titled measures used by other companies. Operating segment information, along with a reconciliation of segment net income (loss) and consolidated net income (loss) to Adjusted EBITDA is presented in the tables below:
|  | Three months ended October 31, 2022
|  | Satellite and Space Communications |  | Terrestrial and Wireless Networks |  | Unallocated |  | Total
Net sales |  | $ | 80,873,000 |  |  | 50,266,000 |  |  | — |  |  | $ | 131,139,000 |
Operating income (loss) |  | $ | 5,016,000 |  |  | 744,000 |  |  | (15,484,000) |  |  | $ | (9,724,000) |
Net income (loss) |  | $ | 5,815,000 |  |  | 605,000 |  |  | (17,516,000) |  |  | $ | (11,096,000) |
Benefit from income taxes |  | (222,000) |  |  | (165,000) |  |  | (221,000) |  |  | (608,000) |
Interest (income) and other |  | (575,000) |  |  | 304,000 |  |  | 16,000 |  |  | (255,000) |
Interest expense |  | (2,000) |  |  | — |  |  | 2,237,000 |  |  | 2,235,000 |
Amortization of stock-based compensation |  | — |  |  | — |  |  | 904,000 |  |  | 904,000 |
Amortization of intangibles |  | 1,828,000 |  |  | 3,521,000 |  |  | — |  |  | 5,349,000 |
Depreciation |  | 1,020,000 |  |  | 1,737,000 |  |  | 41,000 |  |  | 2,798,000 |
Amortization of cost to fulfill assets |  | 240,000 |  |  | — |  |  | — |  |  | 240,000 |
CEO transition costs |  | — |  |  | — |  |  | 9,090,000 |  |  | 9,090,000 |
Restructuring costs |  | 1,056,000 |  |  | — |  |  | 269,000 |  |  | 1,325,000 |
Strategic emerging technology costs |  | 746,000 |  |  | — |  |  | — |  |  | 746,000 |
Adjusted EBITDA |  | $ | 9,906,000 |  |  | 6,002,000 |  |  | (5,180,000) |  |  | $ | 10,728,000 |
Purchases of property, plant and equipment |  | $ | 4,435,000 |  |  | 2,542,000 |  |  | 244,000 |  |  | $ | 7,221,000 |
Total assets at October 31, 2022 |  | $ | 486,636,000 |  |  | 467,594,000 |  |  | 23,595,000 |  |  | $ | 977,825,000 |
|  | Three months ended October 31, 2021
|  | Satellite and Space Communications |  | Terrestrial and Wireless Networks |  | Unallocated |  | Total
Net sales |  | $ | 64,560,000 |  |  | 52,199,000 |  |  |  |  | $ | 116,759,000 |
Operating (loss) income |  | $ | (5,313,000) |  |  | 6,102,000 |  |  | (7,304,000) |  |  | $ | (6,515,000) |
Net (loss) income |  | $ | (5,074,000) |  |  | 5,978,000 |  |  | (6,888,000) |  |  | $ | (5,984,000) |
(Benefit from) provision for income taxes |  | (599,000) |  |  | 141,000 |  |  | (1,595,000) |  |  | (2,053,000) |
Interest (income) and other |  | 247,000 |  |  | (18,000) |  |  | (10,000) |  |  | 219,000 |
Change in fair value of convertible preferred stock purchase option liability |  | — |  |  | — |  |  | (304,000) |  |  | (304,000) |
Interest expense |  | 114,000 |  |  | — |  |  | 1,493,000 |  |  | 1,607,000 |
Amortization of stock-based compensation |  | — |  |  | — |  |  | 921,000 |  |  | 921,000 |
Amortization of intangibles |  | 1,828,000 |  |  | 3,521,000 |  |  | — |  |  | 5,349,000 |
Depreciation |  | 825,000 |  |  | 1,364,000 |  |  | 52,000 |  |  | 2,241,000 |
Proxy solicitation costs |  | — |  |  | — |  |  | 2,162,000 |  |  | 2,162,000 |
Restructuring costs |  | 712,000 |  |  | — |  |  | — |  |  | 712,000 |
COVID-19 related costs |  | 674,000 |  |  | — |  |  | — |  |  | 674,000 |
Adjusted EBITDA |  | $ | (1,273,000) |  |  | 10,986,000 |  |  | (4,169,000) |  |  | $ | 5,544,000 |
Purchases of property, plant and equipment |  | $ | 1,037,000 |  |  | 2,601,000 |  |  | — |  |  | $ | 3,638,000 |
Total assets at October 31, 2021 |  | $ | 485,087,000 |  |  | 471,858,000 |  |  | 26,044,000 |  |  | $ | 982,989,000 |
Unallocated expenses result from corporate expenses such as executive compensation, accounting, legal and other regulatory compliance related costs and also includes all of our amortization of stock-based compensation. During the three months ended October 31, 2022, we expensed $9,090,000 of CEO transition costs. See Note (1) - "General - CEO Transition Costs" for further information. During the three months ended October 31, 2022 and 2021, our Satellite and Space Communications segment recorded $1,056,000 and $712,000, respectively, of restructuring costs incurred to streamline our operations, including costs related to the ongoing relocation of certain of our satellite ground station production facilities to a new 146,000 square foot facility in Chandler, Arizona. Interest expense in the tables above primarily relates to our Credit Facility, and includes the amortization of deferred financing costs. See Note (9) - "Credit Facility" for further discussion. Intersegment sales for the three months ended October 31, 2022 and 2021 between the Satellite and Space Communications segment and the Terrestrial and Wireless Networks segment were nominal. All intersegment sales are eliminated in consolidation and are excluded from the tables above. Unallocated assets at October 31, 2022 consist principally of cash and cash equivalents, income taxes receivable, corporate property, plant and equipment and deferred financing costs. The large majority of our long-lived assets are located in the U.S.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8924-108599 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8981-108599 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9031-108599 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (f) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (e) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9038-108599 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (d) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 22 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8736-108599 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9054-108599 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 15 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8657-108599 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI https://asc.fasb.org/topic&trid=2134510 + Details
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