Ladies and gentlemen, thank you for standing by. Welcome to the Comtech Telecommunications Corp. Fourth Quarter Fiscal 2014 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, Friday, October 10, 2014. I would now like to turn the conference over to Ms. Maria Ceriello (sic) [Salerno] of Comtech Telecommunications. Please go ahead, ma'am.

Thank you, and good morning. Welcome to the Comtech Telecommunications Corp. conference call for the fourth quarter and fiscal year ended July 31, 2014. With us on the call this morning are Fred Kornberg, President and Chief Executive Officer of Comtech; Michael Porcelain, Senior Vice President and Chief Financial Officer; and Rob Rouse, Senior Vice President, Strategy and M&A. 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. The company's assumptions regarding such performance, business outlook and plans are forward-looking in nature and involve 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, Fred Kornberg. Fred?

Thanks, Maria. Good morning, everyone, and thank you for joining us in this call. As announced yesterday afternoon, we reported our fourth quarter results of $89.4 million in revenues and a GAAP diluted EPS of $0.48. For the year, our revenues totaled $347.2 million, and our GAAP diluted EPS was $1.37. Our adjusted EBITDA was $16.7 million for the fourth quarter and $61.3 million for the full fiscal year. We are extremely pleased with our fourth quarter and full year financial results. After several years of revenue and operating income decline, fiscal 2014 was a year of meaningful growth, and we are optimistic that this momentum will continue into our fiscal 2015. We believe that our revenues in fiscal 2015 will be in the range of $355 million to $370 million. We expect our GAAP diluted EPS to be in the range of $1.70 to $1.86 and our adjusted EBITDA to be in the range of $63 million to $67 million. During fiscal 2014, we generated $34.6 million of operating cash flow, and in light of both our short- and long-term growth expectations, yesterday, our board of directors approved a dividend for the first quarter of fiscal 2015 of $0.30 per common share. This dividend is expected to be paid on November 19, 2014, to stockholders of record on October 24, 2014. To date, and over the past 16 consecutive quarters, we have paid out over $85 million of dividends, and we continue to believe that our dividend program is an excellent way to return capital to our stockholders. In addition, during the fourth quarter of fiscal 2014, we repurchased approximately 398,000 shares of our common stock at an aggregate cost of $12.6 million. From inception to date, we have repurchased approximately $436.7 million of our common stock, and we are currently -- we currently have approximately $13.7 million available for additional repurchases, pursuant to our current board authorization. As you know, in August of this year, we confirmed, in response to media reports, that our Board of Directors is exploring strategic alternatives to enhance shareholder value. There can be no assurance that any transaction or other strategic change will occur as a result of the current exploration of alternatives. And since this process is ongoing, we will not have any further comment at this time, and we respectfully ask that you do not ask any questions about this ongoing process. Now let me turn it over to Mike Porcelain to provide an overview of our financial results, and then I will return to talk more specifically about each of our 3 business segments. Mike?

Thanks, Fred, and good morning, everyone. I'll walk you through the Q4 results, make a few comments about our full fiscal year and I'll provide some comments on our expected 2015 business outlook. During Q4, we generated revenues of $89.4 million, of which, 27.9% were for U.S. government end users, 60.4% were for international customers, with the remainder being for domestic commercial end customers. For the full year fiscal 2014, we finished at $347.2 million of revenue, with 28% being generated from the U.S. government and slightly more than 59% from our international customer base. Net sales on our telecom transmission segment were $59.3 million in Q4 of fiscal 2014 as compared to $50.1 million we achieved in Q4 of last year, representing an increase of 18.4%. This increase is attributable to higher sales in both our satellite earth station and our over-the-horizon product lines. After several years of decline, our satellite earth station product revenue increased for the year as we benefited from increased sales to both the U.S. government and international customers. Sales of our over-the-horizon microwave systems in Q4 of fiscal 2014 primarily related to our ongoing performance on both our 3-year, $58.6 million contract and our 4-year, $57.4 million contract to design and supply over-the-horizon microwave systems and equipment for use in a North African government's communications network. For the full year fiscal 2014, net sales in our telecom transmission segment were $231.5 million, up $36.9 million or 19% from the $194.6 million we achieved in fiscal 2013. Looking to fiscal 2015, given the number of large jobs that are in our pipeline, we expect sales in our satellite earth station product line to be higher than the level we achieved in fiscal 2014. For our over-the-horizon microwave system product line, based on expected performance on…

Thanks, Mike. Now let me discuss some of our growth drivers and recent developments in each of our 3 business segments. As always, let's start with our largest business segment, telecommunications transmission. This segment is comprised of 2 product lines: satellite earth station products 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 to our end customers. We've maintained our reputation as the innovation leader in this space by continuously introducing groundbreaking technologies that have enabled applications for our end customers that were not considered possible. We are increasingly more excited about our new line of products called Advanced VSAT. These products combine a variety of technologies within our IP portfolio to provide an integrated solution, including advanced forward error correction, advanced coding modulation, compression, RAN & WAN Optimization and our bandwidth management technology. By listening closely to our end customers, we've been able to offer our Advanced VSAT solutions into markets that have traditionally been served by TDMA solutions. Although we just started our major marketing efforts relating to these products a little more than a year ago, we have begun to see our efforts pay off. Recently, as well, we have seen certain TDMA users move away from that technology since many of the users are now demanding more efficient, more dedicated reliable bandwidth and are unwilling to tolerate the latency issues associated with TDMA. In addition to the introduction of new product lines, such as Advanced VSAT, we have recently refreshed our core low-, middle- and high-end modem lines. As a result, our modem portfolio today offers even greater bandwidth efficiencies to our end customers. As you know, the majority of our commercial satellite earth station product…

[Operator Instructions] And we will go to our first question from Joe Nadol of JPMorgan. Christopher Sands - JP Morgan Chase & Co, Research Division: It's actually Chris on for Joe. Mike, I was hoping you could elaborate on the back-half-loaded profile. You mentioned that some of it was due to the timing of orders already in backlog, but also that there's orders out there that you need to receive. Can you give us an idea, relative to one another, are there more orders that you still need to get? Or is most of it already in backlog?

Well, it's a combination of both. As we sit here today, post our 7/31 year-end, we did receive a couple of large orders, both in our satellite earth station group for the ATIP. Some of those production orders are not going to ship in the first part of the year. We also had some orders that come in, again, post 7/31 in our amplifiers segment, which is not going to ship until the latter part of the year. So just really -- we do have some stuff in the backlog that's really time-sensitive or that's going to drive the timing, and then the large opportunities that we see in our satellite earth station side are not expected to result in revenue during the first half of the year. So it's really going to be heavily weighted towards the back end. Christopher Sands - JP Morgan Chase & Co, Research Division: So from the opportunity perspective, you'd say that it's mostly in the satellite earth station that you're more comfortable with the RF second half outlook?

Yes. I'm not sure I fully understand. I -- literally, if you took -- and with the exception of our mobile datacom business segment, both the telecom and RF are both going to be heavily weighted towards the second half of the year. Christopher Sands - JP Morgan Chase & Co, Research Division: Right. I was just trying to say that it is more of the second half weighting in RF already in backlog versus satellite earth station?

Yes, yes, that is accurate. Christopher Sands - JP Morgan Chase & Co, Research Division: Okay. And then can you give us an idea what the telecom transmission backlog x over-the-horizon was in the quarter sequentially? Just the movement. Was it down a certain percent or flat?

Yes. I guess, let me give you some color on the backlog itself by segment, first, as we normally do on the call. In our telecom segment, we finished with backlog of $83.3 million, RF was $39.5 million and mobile datacom was $10.6 million, for a total of $133.4 million. And if you look at the imputed bookings that we did during the quarter, almost all of that was satellite earth station bookings. So really, the decline in our backlog in that segment was primarily driven by OTH. Christopher Sands - JP Morgan Chase & Co, Research Division: Okay. And then, just one more on the over-the-horizon. You mentioned that there could be awards from 2 new or a few new long-term customers this year. Can you provide any more color on that?

Yes. As I mentioned, we have bids outstanding in a number of areas of the world and in a number of countries. We expect to, or hope to, kind of get into the similar situation as we have in -- with our North African customer for a nice, long association. Christopher Sands - JP Morgan Chase & Co, Research Division: And do you have a sense for when those decisions may come?

I think, as I mentioned, we expect somewhere in the latter part of 2015 and beyond, really. It's, as you know, it's very difficult to predict timing on these large tropo programs.

And our next question will come from Mark Jordan of Noble Financial.

A question on the mobile data. You talked about the 2 opportunities, the 2.5 and then the dual band. Do you believe that there'll be any potential revenue for those programs in fiscal '15? Or is that more likely '16 and beyond? And then secondly, in the BFT-2 bid, one of the sticklers was sort of ownership of intellectual property. Is that an issue with these 2.5 and 3.0?

I guess, Mark, the answer to the first question is we don't expect much revenue in 2015 other than maybe some development work on either one of these, and this is based on an assumption that the government does find the funding to go forward with these 2 RFIs and convert them into actually RFPs. As far as the IP is concerned, yes, the original BFT competition requested that IP be given to the U.S. government for the BFT-2 transceivers. As we understand it, that seems to be a problem area for the U.S. Army. And whether they come out on the 2.5 or the 3, I suspect, definitely on the 3, they will be asking for the IP. It's harder to tell whether on the 2.5 because that seems to be almost a stopgap solution to the present problems that they may ask for the IP. So after a long-winded answer, we really don't know.

Okay. A question relative to the share repurchase. Obviously, you've been very active over the years, but as you go through the current process of looking at strategic alternatives, should we assume that, that would be on hold until there's some form of resolution of your current process?

Yes. I think that's fair. I mean, I'd refer you to our earlier conference call where we kind of assessed where things were and kind of put things on hold. So I think that's a fair way to look at it.

Okay. Final question for me, relative -- Michael, your guidance on gross profit margins seemingly, just potentially, being up a few basis points versus fiscal '14. Given the fact that you're seeing growth in telecom, tropo and RF and mobile data has that solid slug of intellectual property, what is the -- why isn't there a little greater improvement in operating margin?

Yes, it really just is anticipated products mix changes. I mean, I would tell you from an operating margin perspective, we're shooting for around 13%. Based on, again, the stuff that we have in backlog, some of these are larger-type orders, so you don't -- you're not getting to get the same margin that you may get on a smaller order. But at the end of the day, we're shooting for 13%. Could we do better? Time will tell as the orders come in, and the mix. But right now, that's the number that we're going with.

And our next question comes from Tyler Hojo of Sidoti & Company. Tyler Hojo - Sidoti & Company, LLC: Yes. I want to talk about backlog and bookings a little bit more. When you look at your backlog level for this year, I mean, it's quite a bit lower than the coverage you had last year, and I understand that obviously you have less backlog from Blue Force Tracking, but could you just talk about kind of confidence levels, just given kind of the backlog dynamic? And maybe just talk a little bit about kind of bookings expectations for fiscal '15.

Sure, Tyler. I guess, again, I always guide folks to look at the backlog by segment, and if you do some quick comparisons, our RF amplifiers segment, for instance, is almost the same as it was at the end of FY '013, around $40 million. And we do see lots of opportunities in our RF amplifier segment. As you switch to mobile datacom, that's just a question and a function of the BFT-1 sustainment contract, which is heading lower. So if you look at, say, FY '013, we finished $15.6 million down to $10.6 million at the -- to the end of the year. And again, we certainly believe, in March, we'll get that -- the second year of the BFT-1 sustainment contract. So we do feel very, very confident that we'll get that booking. So then, you switch over to telecom segment, and the year-over-year decline is strictly related to the troposcatter side of the business. We have the lumpy over-the-horizon microwave contracts, and we do see those coming in, in the second half of the year. So with that said, that really is the explanation for all the flux that's occurring. Tyler Hojo - Sidoti & Company, LLC: Okay, great. And maybe just a follow-up to your commentary on OTH MS, can you talk about what the expectation, just from a volume standpoint, is for '15? Are sales to North Africa expected to be up year-over-year? Or what are the expectations there?

I guess the expectations in that area -- as Mike just mentioned, it's pretty lumpy to try to predict exactly when the timing of orders are in. On the North African customer right now, we're working off 2 major large contracts, and so that's why you see the backlog kind of trending down. And it's always been that way, a couple of years of orders and then, the backlog seems to be going down and then we get another couple of large orders and the backlog is at its record high again. So it's kind of a lumpy business. Do we expect some orders in the immediate near term? I would say in the latter half of the '15 or beyond. Actually, in terms of our North African customer, I think we do expect to see some large contracts. In other countries, yes, we have the same opportunities, a very large pipeline at this point, much more than in years past, but again, it's very, very difficult to predict exactly when the contracts will come in.

But we do expect, Tyler, in the second half of the year -- Fred mentioned on the NIE testing, that was wrapped up over the summer. So we're expecting it to take 3 to 6 months to turn that into orders, and those, we do expect to receive, and there is a kind of defined demand for those products that we expect to generate some revenue at the end of this year. Tyler Hojo - Sidoti & Company, LLC: Okay, got it. And just a question on free cash flow. I get that your expectation is for that to be lower year-on-year for '15. Just maybe if you could expand the commentary into CapEx. '14 was, I think, a historically low year for CapEx spend. Are there more requirements for that in '15? Or what should we expect?

No. I think if you look at fiscal 2014, it's a good proxy for what we would do for FY '015. We feel pretty good about our -- say, if you look at our Cap expense spending in the last several years, we've got to where we need to be right now. So there's not a lot of CapEx requirements in the company at this point. Tyler Hojo - Sidoti & Company, LLC: Okay, got it. And just last question on RF. I know you expect significant growth in '15, and I guess when you guys report your Q1, the bookings numbers will be pretty good there, but you mentioned other opportunities kind of related to some of your development initiatives there. Are those anticipated in the growth expectations? Or is it basically just what you've already won?

Well, in the RF -- in the amplifiers segment, what I think I mentioned was that we just recently won the FAB-T program and the WIN-T program and, along with the FOT and the SWAN programs that we've already got in backlog, these 4 are major ongoing programs. And so yes, we have the backlog on the 2 programs, we just won the second 2, so that backlog is already here, but the expectation is for those programs to continue for a number of years.

[Operator Instructions] Our next question comes from Chris Quilty of Raymond James. Chris Quilty - Raymond James & Associates, Inc., Research Division: Fred, just as a follow-up on that RF amplifier discussion. Can you remind us, were those WIN-T, FAB-T orders, were they competitive wins, takeaways or add-ons to existing contracts?

No. They were -- well, I shouldn't say competitive. Most of our programs are competitive. The FAB-T program, we happened to be working on that program for at least 6 to 7 years, and we were heavily involved in the initial, let's say, development of the components for that program, initially with Boeing, and then this last program award was from Raytheon who beat out Boeing for the final FAB-T program. So we've been involved in that program with Boeing and Raytheon for quite a while, and so we were in a position of a sole-source position. The WIN-T was a competitive program. Chris Quilty - Raymond James & Associates, Inc., Research Division: Okay, great. Also, could you talk a little bit more about the Advanced VSAT product line? I think you got one nice-sized order from Harris. But what do you view as the opportunities for selling that to other customers and where it's positioned in the end market in terms of either applications or within the price scale of solutions that are out there?

I think, in a general way, what we can give you as some color in terms of -- this is not just a modem. It's more of a network box that provides a number of services and applications. I think our main thrust today is to introduce that product mainly into those programs and those applications that are presently using the TDMA concept, and we think we can kind of get into that market with that product pretty heavily. And also... I'm sorry, go ahead. Chris Quilty - Raymond James & Associates, Inc., Research Division: I was going to say, is it specific to maritime VSAT? Or are these fixed-site cellular backhaul solutions? Is there a particular end market where it best plays?

It's really all of the above. It's a network box that's not only applicable to maritime. We just happen to get an opportunity in the maritime area and we were able to replace the TDMA solution there. But it's a box that's really applicable throughout the spectrum. Chris Quilty - Raymond James & Associates, Inc., Research Division: Got you. And just I think, more generally, when you look at the market opportunities in the earth station product area, do you think most of the growth is going to be driven by direct-to-home and international markets? Is it cellular backhaul? Is it maritime? Is it government MILSATCOM applications? Is there something that stands out?

I think from a number of items that you mentioned, we certainly see the backhaul, the satellite backhaul as a very, very large market and continuing. The maritime, I think, is new for us, and I think that has the wherewithal to become a large market for us. DTH, although we supply the amplifiers for DTH markets, we're really not in the satellite earth station products other than that. So that's not a market that we see for, let's say, our modems and so forth, but we do see a very heavy portion of the market for us in the amplifier business. So it kind of varies with the different products that we have. Chris Quilty - Raymond James & Associates, Inc., Research Division: Okay. And it sounds like you're getting good customer wins on the RF side serving the HTS satellites. But where do you see your positioning on the modem side? How does HTS impact you?

HTS impacts us only on, as far as the modem side is concerned, is it's just developing new modems with a higher bandwidth throughput, which we have done. I mentioned that we've kind of upgraded our products and so forth. We just recently finalized one of the product developments or upgrades to go past the 300 megabits per line that we have in the modem. So it's just more bandwidth, obviously. There's more bandwidth at RF, then there's got to be more data that can be put through the pipe.

At this time, there are no further questions. I will now turn it back over to Comtech communications for closing remarks.

Okay. Thank you very much for attending our session today, and we'll speak again in 3 months. Thanks.

This concludes today's program. You may now disconnect, and have a wonderful day.