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Segment Information | 9 Months Ended
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Apr. 30, 2024
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 interim Chief Executive Officer. Satellite and Space Communications is organized into three technology areas: satellite modem technologies and amplifier technologies, troposcatter and SATCOM solutions, and space components and antennas. 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 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™; and procurement and supply chain management of high reliability Electrical, Electronic and Electromechanical ("EEE") parts for satellite, launch vehicle and manned space applications. Terrestrial and Wireless Networks is organized into three service areas: next generation 911 and call delivery, Solacom call handling solutions, and trusted location and messaging solutions. 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; and software and equipment for location-based and text messaging services for various applications, including for public safety, commercial and government services. 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 allocation of any indirect expenses that are unrelated to the segment's operations, or any of the following: income taxes, interest, change in fair value of the convertible preferred stock purchase option liability, change in fair value of warrants, write-off of deferred financing costs, amortization of stock-based compensation, amortization of intangibles, depreciation expense, amortization of cost to fulfill assets, 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 or EBITDA (as such terms are defined in our Prior Credit Facility and New 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 April 30, 2024
|  | Satellite and Space Communications |  | Terrestrial and Wireless Networks |  | Unallocated |  | Total
Net sales |  | $ | 71,445,000 |  |  | 56,631,000 |  |  | — |  |  | $ | 128,076,000 |
Operating income (loss) |  | $ | 2,796,000 |  |  | 5,727,000 |  |  | (11,993,000) |  |  | $ | (3,470,000) |
Net income (loss) |  | $ | 1,828,000 |  |  | 5,266,000 |  |  | (4,299,000) |  |  | $ | 2,795,000 |
Provision for (benefit from) income taxes |  | 11,000 |  |  | 274,000 |  |  | (5,666,000) |  |  | (5,381,000) |
Interest expense |  | 884,000 |  |  | — |  |  | 4,262,000 |  |  | 5,146,000 |
Interest (income) and other |  | 73,000 |  |  | 187,000 |  |  | 149,000 |  |  | 409,000 |
Change in fair value of warrants |  | — |  |  | — |  |  | (6,439,000) |  |  | (6,439,000) |
Amortization of stock-based compensation |  | — |  |  | — |  |  | 404,000 |  |  | 404,000 |
Amortization of intangibles |  | 1,671,000 |  |  | 3,618,000 |  |  | — |  |  | 5,289,000 |
Depreciation |  | 1,047,000 |  |  | 1,985,000 |  |  | 89,000 |  |  | 3,121,000 |
Amortization of cost to fulfill assets |  | 240,000 |  |  | — |  |  | — |  |  | 240,000 |
CEO transition costs |  | — |  |  | — |  |  | 2,492,000 |  |  | 2,492,000 |
Restructuring costs |  | 549,000 |  |  | — |  |  | 2,206,000 |  |  | 2,755,000 |
Strategic emerging technology costs |  | 880,000 |  |  | — |  |  | — |  |  | 880,000 |
Loss on business divestiture, net |  | — |  |  | — |  |  | 200,000 |  |  | 200,000 |
Adjusted EBITDA |  | $ | 7,183,000 |  |  | 11,330,000 |  |  | (6,602,000) |  |  | $ | 11,911,000 |
Purchases of property, plant and equipment |  | $ | 388,000 |  |  | 2,154,000 |  |  | 125,000 |  |  | $ | 2,667,000 |
Total assets at April 30, 2024 |  | $ | 498,449,000 |  |  | 455,169,000 |  |  | 37,381,000 |  |  | $ | 990,999,000 |
|  | Three months ended April 30, 2023
|  | Satellite and Space Communications |  | Terrestrial and Wireless Networks |  | Unallocated |  | Total
Net sales |  | $ | 82,249,000 |  |  | 54,067,000 |  |  | — |  |  | $ | 136,316,000 |
Operating income (loss) |  | $ | 37,000 |  |  | 3,160,000 |  |  | (8,473,000) |  |  | $ | (5,276,000) |
Net income (loss) |  | $ | 650,000 |  |  | 2,902,000 |  |  | (11,010,000) |  |  | $ | (7,458,000) |
(Benefit from) provision for income taxes |  | (1,188,000) |  |  | 84,000 |  |  | (1,828,000) |  |  | (2,932,000) |
Interest expense |  | (25,000) |  |  | — |  |  | 4,411,000 |  |  | 4,386,000 |
Interest (income) and other |  | 600,000 |  |  | 174,000 |  |  | (46,000) |  |  | 728,000 |
Amortization of stock-based compensation |  | — |  |  | — |  |  | 4,126,000 |  |  | 4,126,000 |
Amortization of intangibles |  | 1,828,000 |  |  | 3,521,000 |  |  | — |  |  | 5,349,000 |
Depreciation |  | 1,027,000 |  |  | 1,921,000 |  |  | 33,000 |  |  | 2,981,000 |
Amortization of cost to fulfill assets |  | 240,000 |  |  | — |  |  | — |  |  | 240,000 |
Restructuring costs |  | 2,191,000 |  |  | 548,000 |  |  | 1,357,000 |  |  | 4,096,000 |
Strategic emerging technology costs |  | 1,029,000 |  |  | — |  |  | — |  |  | 1,029,000 |
Adjusted EBITDA |  | $ | 6,352,000 |  |  | 9,150,000 |  |  | (2,957,000) |  |  | $ | 12,545,000 |
Purchases of property, plant and equipment |  | $ | 1,106,000 |  |  | 3,549,000 |  |  | 300,000 |  |  | $ | 4,955,000 |
Total assets at April 30, 2023 |  | $ | 488,814,000 |  |  | 475,380,000 |  |  | 25,665,000 |  |  | $ | 989,859,000 |
|  | Nine months ended April 30, 2024
|  | Satellite and Space Communications |  | Terrestrial and Wireless Networks |  | Unallocated |  | Total
Net sales |  | $ | 252,436,000 |  |  | 161,776,000 |  |  |  |  | $ | 414,212,000 |
Operating income (loss) |  | $ | 14,756,000 |  |  | 17,901,000 |  |  | (31,068,000) |  |  | $ | 1,589,000 |
Net income (loss) |  | $ | 10,672,000 |  |  | 17,011,000 |  |  | (36,883,000) |  |  | $ | (9,200,000) |
Provision for (benefit from) income taxes |  | 547,000 |  |  | 696,000 |  |  | (604,000) |  |  | 639,000 |
Interest expense |  | 2,659,000 |  |  | — |  |  | 12,684,000 |  |  | 15,343,000 |
Interest (income) and other |  | 878,000 |  |  | 194,000 |  |  | 174,000 |  |  | 1,246,000 |
Change in fair value of warrants |  | — |  |  | — |  |  | (6,439,000) |  |  | (6,439,000) |
Amortization of stock-based compensation |  | — |  |  | — |  |  | 5,238,000 |  |  | 5,238,000 |
Amortization of intangibles |  | 5,014,000 |  |  | 10,852,000 |  |  | — |  |  | 15,866,000 |
Depreciation |  | 2,865,000 |  |  | 5,933,000 |  |  | 275,000 |  |  | 9,073,000 |
Amortization of cost to fulfill assets |  | 720,000 |  |  | — |  |  | — |  |  | 720,000 |
CEO transition costs |  | — |  |  | — |  |  | 2,492,000 |  |  | 2,492,000 |
Restructuring costs |  | 2,793,000 |  |  | 8,000 |  |  | 6,396,000 |  |  | 9,197,000 |
Strategic emerging technology costs |  | 3,228,000 |  |  | — |  |  | — |  |  | 3,228,000 |
Gain on business divestiture, net |  | — |  |  | — |  |  | (2,013,000) |  |  | (2,013,000) |
Adjusted EBITDA |  | $ | 29,376,000 |  |  | $ | 34,694,000 |  |  | $ | (18,680,000) |  |  | $ | 45,390,000 |
Purchases of property, plant and equipment |  | $ | 1,763,000 |  |  | 6,175,000 |  |  | 966,000 |  |  | $ | 8,904,000 |
Total assets at April 30, 2024 |  | $ | 498,449,000 |  |  | 455,169,000 |  |  | 37,381,000 |  |  | $ | 990,999,000 |
|  | Nine months ended April 30, 2023
|  | Satellite and Space Communications |  | Terrestrial and Wireless Networks |  | Unallocated |  | Total
Net sales |  | $ | 243,529,000 |  |  | 157,651,000 |  |  | — |  |  | $ | 401,180,000 |
Operating income (loss) |  | $ | 8,380,000 |  |  | 7,216,000 |  |  | (31,377,000) |  |  | $ | (15,781,000) |
Net income (loss) |  | $ | 9,588,000 |  |  | 7,070,000 |  |  | (40,017,000) |  |  | $ | (23,359,000) |
Benefit from income taxes |  | (1,832,000) |  |  | (197,000) |  |  | (1,733,000) |  |  | (3,762,000) |
Interest expense |  | 2,000 |  |  | — |  |  | 10,410,000 |  |  | 10,412,000 |
Interest (income) and other |  | 622,000 |  |  | 343,000 |  |  | (37,000) |  |  | 928,000 |
Amortization of stock-based compensation |  | — |  |  | — |  |  | 6,298,000 |  |  | 6,298,000 |
Amortization of intangibles |  | 5,484,000 |  |  | 10,563,000 |  |  | — |  |  | 16,047,000 |
Depreciation |  | 3,057,000 |  |  | 5,579,000 |  |  | 110,000 |  |  | 8,746,000 |
Amortization of cost to fulfill assets |  | 720,000 |  |  | — |  |  | — |  |  | 720,000 |
Restructuring costs |  | 4,336,000 |  |  | 548,000 |  |  | 2,080,000 |  |  | 6,964,000 |
Strategic emerging technology costs |  | 2,513,000 |  |  | — |  |  | — |  |  | 2,513,000 |
CEO transition costs |  | — |  |  | — |  |  | 9,090,000 |  |  | 9,090,000 |
Adjusted EBITDA |  | $ | 24,490,000 |  |  | 23,906,000 |  |  | (13,799,000) |  |  | $ | 34,597,000 |
Purchases of property, plant and equipment |  | $ | 5,660,000 |  |  | 8,505,000 |  |  | 708,000 |  |  | $ | 14,873,000 |
Total assets at April 30, 2023 |  | $ | 488,814,000 |  |  | 475,380,000 |  |  | 25,665,000 |  |  | $ | 989,859,000 |
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. See Note (1) - "General - CEO Transition Related" for information related to such costs. During the three and nine months ended April 30, 2024, our Unallocated segment incurred $2,206,000 and $6,396,000, respectively, of restructuring costs focused on: (i) streamlining our operations and supply chain, (ii) legal and other expenses primarily related to divestiture activities, and (iii) efforts to refinance our Prior Credit Facility and improve liquidity. During the three and nine months ended April 30, 2023, our Unallocated segment incurred $1,357,000 and $2,080,000, respectively, of restructuring costs focused on streamlining our operations. In addition, during the three and nine months ended April 30, 2024, we recorded a reduction to the estimated gain of $200,000 and an estimated gain of $2,013,000, respectively, related to the PST Divestiture. During the three and nine months ended April 30, 2024, our Satellite and Space Communications segment recorded $549,000 and $2,793,000, respectively, of restructuring costs primarily incurred to streamline our operations and improve efficiency, including costs related to the relocation of certain of our satellite ground station production facilities to our new 146,000 square foot facility in Chandler, Arizona. Similar restructuring costs of $2,191,000 and $4,336,000 were incurred during the three and nine months ended April 30, 2023, respectively. In addition, during the three and nine months ended April 30, 2024, we incurred $880,000 and $3,228,000 of strategic emerging technology costs for next-generation satellite technology to advance our solutions offerings to be used with new broadband satellite constellations. Similar strategic emerging technology costs of $1,029,000 and $2,513,000 were incurred during the three and nine months ended April 30, 2023, respectively. During both the three and nine months ended April 30, 2023, our Terrestrial and Wireless Networks segment recorded $548,000 of restructuring costs primarily incurred to streamline our operations and improve efficiency. Similar costs incurred in fiscal 2024 were nominal. Interest expense in the tables above primarily relates to our Prior Credit Facility, and includes the amortization of deferred financing costs. See Note (10) - "Credit Facility" for further discussion. Intersegment sales for both the three and nine months ended April 30, 2024 and 2023 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 April 30, 2024 consist principally of cash and cash equivalents, corporate property, plant and equipment, operating lease right of use assets and deferred financing costs. The large majority of our long-lived assets are located in the U.S.

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