Ladies and gentlemen, thank you for standing by. Welcome to Comtech Telecommunications Corp.'s Second Quarter Fiscal 2015 Earnings Conference Call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded, Thursday, March 12, 2015. I would now like to turn the conference over to Ms. Maria Salerno of Comtech Telecommunications. Please go ahead, ma'am.

Thank you, and good morning. Welcome to the Comtech Telecommunications Corp. conference call for the second quarter of fiscal year 2015. With us on the call this morning are Dr. Stanton D. Sloane, President and Chief Executive Officer of Comtech; and Michael Porcelain, Senior Vice President and Chief Financial Officer. Before we proceed, I need to remind you of the Company's Safe Harbor language. 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, the Company's plans, objectives and business outlook, and the plans, objectives and business outlook of the Company's management of certain significant risks and uncertainties. Actual results could differ materially from such forward-looking information. Any forward-looking statements are qualified in their entirety by cautionary statements contained in the Company's Securities and Exchange Commission filings. I am pleased now to introduce the President and Chief Executive Officer of Comtech, Dr. Stanton Sloane. Dr. Sloane?

Thank you, Maria. Good morning, everyone, and thank you for joining us on the call. Before discussing yesterday afternoon’s press release, which announced Comtech’s second quarter results and updated our business outlook for fiscal 2015. I would like to take a moment to provide a few comments regarding the recent leadership change announced by our Board of Directors in December of 2014. I joined the Comtech Board in January of 2011 and I’ve been privileged to be a Director and now CEO and President. We have a top-notch management team here at the Company world-class products also have tremendous market opportunities in front of us. I’ve admired Fred Kornberg’s leadership and I’m honored to step into his prior roles. This will be big shoes to fill. Let me shift now to current topics, as announced yesterday we reported our second quarter results of $81.8 million in revenue GAAP diluted earnings per share of $0.46 and adjusted EBITDA of $14.9 million. In summary, we are pleased with our solid second quarter financial results. At the same time in light of the slowdown in satellite earth station bookings and a large shift associated with timing of anticipated orders for large contracts in over-the-horizon product line. We now believe that revenues in fiscal 2015 to be in the range of $320 million to $330 million. GAAP diluted earnings per share is expected to range from $1.35 to $1.51 and adjusted EBITDA is expected to be in the range of $52 million to $56 million. Our updated earnings guidance for fiscal 2015 includes approximately $1 million of incremental costs associated with senior leadership changes. Given our new guidance, we no longer expect year-over-year revenue or EBITDA growth. Nevertheless I view these events on the short-term impediments on the road to sustainable long-term growth. So it’s assuming the leadership role in January. I spend a great deal of time meeting with our management team, our employees and our customers. Well my review of strategy and operations is not yet complete based on what I’ve already seen I can tell you that I am confident our products and technologies are second to none. And I do believe that we are on the path to long-term growth. Now, before I turn the call over to Mike I want to thank Fred personally for his service and commitment to Comtech and to our entire management team all of whom I have assisted and making sure I get up to speed quickly. Over the next few months I expect to continue to meet with customers and investors and continue the critical work Fred and management team has started. With that said, let me turn over to Michael Porcelain, our Senior Vice President and CFO to provide an overview of our financial results and some comments on our business outlook. I will return later and talk more specifically about each of our business segments. Mike?

Thanks, Stan, and good morning, everyone. Let me walk you through our Q2 results and as I do I will provide some comments as it relates to our updated fiscal 2015 business outlook. During Q2, we generated revenues of $81.8 million of which 27.5% were for U.S. government end users, 60.8% were for international end users with the remainder being for domestic, commercial and customers. Net sales in our Telecom Transmission segment were $53.9 million in Q2 of fiscal 2015, as compared to the $56.5 million we achieved in Q2 of last year representing a decrease of 4.6%. This decrease reflects lower net sales on both our satellite earth station product and our over-the-horizon microwave system product lines. During the second quarter of fiscal 2015, we experienced a significant slowdown in bookings as well as lower sales in our satellite earth station product line. As we first discussed in our first quarter SEC filing and on our last conference call, global oil prices had plunged certain businesses we are experiencing reductions in revenue and we did see reduced spending by some of our customers in November. Unfortunately during our second quarter volatile market conditions continued. In fact, during this past quarter oil prices continue to decrease and the U.S. dollar strengthened. As most of you know almost all of our sales are denominated in U.S. dollars as such these conditions resulted in lower purchasing power from many of our international customers. Ultimately, and although December and January monthly bookings for our satellite earth station products increased from the level we saw in November they did not reach the levels we were originally expecting. As such and although we believe one of the pipeline in satellite earth station opportunity is strong, we believe many of our customers will continue to face…

Thanks Mike. Now, let me discuss some of the recent developments in each of the three business segments. Starting with the largest segment, Telecommunications Transmission. This segment is comprised of two product lines, satellite earth stations and over-the-horizon microwave systems. We remain the undisputed leader in the satellite earth station, SCPC modem area, driven primarily by our proven ability to deliver the most bandwidth-efficient modems in high efficiency amplifiers to our end customers. We continue to be excited about our Advanced VSAT product line. These products combine a variety of technologies within our IP portfolio to provide integrated solutions to our customers. By listening closely to our end customers, we’ve focused our technology developments on solutions targeted at markets that have traditionally been served by TDMA. Recently, we have seen TDMA users move away from that technology as customers demand more efficient use of bandwidth, lower latency and higher quality of service. Despite the recent slowdown in satellite earth station bookings, we’ve made and expect to continue to make significant investments in research and development that we believe will result in success. In fact, the next week Satellite 2015 show in Washington D.C. we’ll announce new satellite earth station network product offerings targeted at new growth end markets. I can’t be more specific at this time, but I will elaborate on this on our next conference call expected to occur in June. Some of the new products we’ve introduced in the past, such as our Advanced VSAT, the new network product offerings we are planning to announce next week. It will take little time to establish themselves in the market. At the same time, we are also offering technical services to our customers and expect this to contribute to growth over the next few years. On the U.S. government side…

[Operator Instructions] Our first question is from Mark Jordan from Noble Financial. Your line is open.

Good morning, everyone and welcome to Stan. First question relative to the revenue short fall that you highlight with the reduced revenue guidance at midpoint, it’s about $35 million. Can you break that down as to how – a rough percentage of the reduction is tied to the modem market versus the tropo?

Mark, without giving specifics is probably fair to assume about 50% to both of the product lines.

Okay and in relative to the tropo – is this all international delays or is there some domestic? I mean we have talked and I think your partner in the MTTS market has looked for some significant shipments. They thought to skew more towards the latter part of this calendar year. So when you look at that of what your assumptions had been, is it all tied to international contracts or had you pushed out of some domestic opportunity?

It’s both it’s with our new international customers for some of these large projects that we’ve been working on for several years. And I think you alluded to it, but our comment with these in February, we tested and demonstrated the MTTS system. So obviously it take sometime for them to go through their process and do what they need to do before we ship. So that is part of the shift in over-the-horizon microwave product line.

Okay, on the modem side you mentioned, excuse me - in dollars, with the strength of the dollar against some currencies at least, especially, the euro have you seen a change in the competitive landscape or you losing any competitive bids because of being dollar-based or are you seeing your customers just deferring purchase as you don’t have effective competition?

So I’d say it’s - we’re not losing things, it’s that people are delaying their capital expenditures because of the problem, whether that’s a short-term or longer term effect who knows because things obviously will keep changing, but I don’t believe it’s because of loss of market share, it's just delays.

Okay. In the marketplace, do you see any effective competition from a non-dollar based competitor?

No nothing different than what’s been the status quo. Obviously, we have competitors in the international markets.

Okay. I guess final question from me relative to the small form factor tripled opportunities you have similar to the MTTS, have you seen an interest and how are you marketing that internationally?

Let’s see how we are marketing. So we have a go to market structure through either direct through end primes or directly to customers in the field obviously we have the sales and marketing organization internally. What I think is most of interest in the tropo is that we are getting the data rates now that become - that make tropo pretty attractive. There is nobody in the world that has that sort of performance ahead of tropo system. So I think that’s going to open up additional markets and additional interest and we’ll go-to-market with that again either directly through primes or integrating larger elements of systems or directly through our sales force.

Okay. Thank you very much.

[Operator Instructions] Our next question is from Tyler Hojo from Sidoti & Company. Your line is open.

Yes, hi good morning. Just firstly, I was hoping we could talk about ATIP a little bit more, in the press release you guys talked about some potential mix issues coming from that contract in Q3. And I’m just trying to clarify has something changed in regards to the profitability on the hardware or is this margin issue in Q3 really predicated on the $6.4 million development contract that you got in that basically running through the P&L?

Really is a mix issue Tyler and simple is that the ATIP contract is structured really in two phases, it’s an NRE development which is cost plus work and obviously we’ve mentioned on past conference calls we are not doing making a lot of money on the NRE. These initial production units that are going out the door are profitable. However, they are not as profitable as our regular satellite earth station modems let say the commercial markets. So what you are seeing is we had lower bookings in Q2 of commercial type products that’s not going to be shipping in Q3 were a large percentage of our regular shipments let’s just say and I don’t even want to say large, but a portion of our mix is going to be these ATIP products which will just be at our lower margins.

Okay, so can you maybe quantify on the hardware side what the differential in margin is, because I know this is going to be even more important contract in fiscal 2016?

I can’t do that, but what I can tell you was that over time as we get out of the initial production units our margin should be higher than what we will do in Q3.

Okay, that’s fair. Okay, I appreciate that and then just a follow-up on the OTHMS conversation, as it relates to the guidance certainly understand kind of push outs in orders, but is there anything anticipated in terms of booking and shipping a new OTHMS order whether would be from North Africa or somebody else embedded in the fiscal 2015 guidance?

I would say smaller orders, but nothing huge.

Okay, got it. And then lastly if I may just a question for Dr. Sloane I understand you are still kind of new on the job and working through your process of learning the Company and really getting situated, but I was just curious if you think anything will potentially change, just in regards the kind of the company’s capital deployment strategy.

So let’s say I have been on the job five weeks, still trying to absorb things, a little bit of a head start from being on the board for few years and know something about the company. So at the moment, I don’t have any plan finalized that I could share with you. Obviously assessing everything, deciding what way we're going to head, but at the moment nothing to tell you.

Okay Fair enough. Thought I would ask though.

Sure.

[Operator Instructions] and we do have a follow-up question from Tyler Hojo from Sidoti & Company. Your line is open.

Yes, actually just one more question. If you have it handy, what's the backlog by segment?

Sure Tyler, our backlog for the quarter was $129.4 million, in our Telecom segment we finished the quarter with $71.4 million, RF amplifiers was $53 million with the remainder being in our Mobile Data Communication segment.

Okay, got it and just in regard to Telecom, I know in the Q you guys indicated that booking for satellite earth stations picked up, I think it was in the month of February. As you sit here, I realize we’re fairly early in March here, but as you sit here in kind of mid-March I mean can you maybe just update that commentary in regards to kind of real-time trends?

I couldn’t update anything better than what we told you, I mean we’ve seen November was the month we first saw the slowdown and certainly that slowdown continued into three months of Q2. We did in the month of February had relatively good bookings and that number did include $5 million of funded orders pursuant to our ATIP contract with the advanced modulation. So we need to March to work its way through and April you know obviously we do think our customers are facing headwinds which is why we’ve adjusted our guidance accordingly. We are expecting bookings to effectively increase at a very, very slow rate for the rest of the year, but we just need to see the second half play its way out.

Yes. Okay, got it. That’s all I had. Thank you. End of Q&A

And there are no further questions at this time.

Thanks again for joining us today. We look forward to speaking with you again in June.

That does conclude today's program. You may now disconnect at any time.