CMTL - NASDAQ

Welcome to Comtech Telecommunications Corp.'s Conference Call for the Fourth Quarter and Full Year of Fiscal 2025. As a reminder, this conference call is being recorded. I would now like to turn the call over to Maria Ceriello, Senior Director of FP&I of Comtech. Please go ahead, Maria.

Thank you, operator, and thanks, everyone, for joining us today. I'm here with Ken Traub, Comtech's Chairman, President and CEO; and Mike Bondi, our CFO. After Ken and Mike's remarks, they will be available for questions together with Daniel Gizinski, President of our Satellite and Space Communications segment; and Jeff Robertson, President of Allerium, formerly known as the Terrestrial and Wireless segment. Before we get started, please note we have a detailed discussion of the quarter and year in the press release and 10-K we issued this afternoon, which is available on our website as well as the SEC's website. 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 planned 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. Any forward-looking statements are qualified in their entirety by cautionary statements contained in the company's SEC filings. With that, I will turn it over to Ken. Ken?

Thank you, Maria, and good afternoon, everyone. I appreciate you joining us today. I am proud to report how much stronger Comtech is today, financially, operationally and strategically. This is the result of the ongoing successful execution of the transformation initiatives that we announced when I started as CEO in January 2025. As a testament to our improving financial health, the company no longer has uncertainties regarding its ability to continue as a going concern, and this disclosure has been removed from our financial statements. We have executed a successful turnaround of our Satellite and Space business, which is now revitalized and our Allerium business, formerly known as terrestrial and wireless has continued to deepen our presence in the public safety market while securing long-term customer partnerships. We expect the company's significantly improved operational and financial health to be reassuring to our current and prospective customers, vendors, employees, investors and partners. The early success of our transformation initiatives and the positive trajectory of the business are evident across numerous key metrics. Let me provide some examples. First, operating cash flow. We reported $11.4 million of positive operating cash flow in the fourth quarter, which follows the $2.3 million of positive operating cash flow in the third quarter. These are the first quarters of positive operating cash flow for Comtech since fiscal 2023. These operating cash flow numbers are after taking into account the payment of cash interest expense and fees on our debt as well as restructuring activities, including payments to resolve legacy issues we inherited from former management. The significant improvement in operating cash flow is the result of a cultural shift, emphasizing optimizing cash flow, improved process disciplines, better working capital management as well as the timing of and progress of completion on contracts that enabled us to bill customers and collect accounts receivable. Second, liquidity. We concluded the fiscal year with $47 million of liquidity. That includes qualified cash as well as undrawn availability under our revolving credit facility. This is the highest level of liquidity that Comtech has had in recent history compares to $27 million disclosed as recently as March 2025. This is the result of the generation of operating cash flow that I just described as well as improved terms with our lenders. The increased liquidity gives us comfort to continue executing on our improvement initiatives as well as the ammunition to prudently invest in building sustainable long-term value. Third, accounts payable to vendors. The cash flow and liquidity improvements that I just discussed were achieved while we also paid accounts payable down to the lowest level Comtech has had in years. We finished the fiscal year with accounts payable of just $26 million, which is down from $43 million as of January 31. We are now building stronger and healthier relationships with key vendors and partners. Fourth, revenue increase and improved mix. Quarterly revenue increased 13% from the first quarter to the fourth quarter of fiscal 2025 despite the anticipated wind down of certain legacy contracts, a deliberate shift away from a number of low-margin contracts and the elimination of other revenue contracts that had unsatisfactory operating margins or excessive demands on working capital. This increase in quarterly net sales reflects improvements in both of our operating segments, including a shift back to higher rate production orders in our satellite ground infrastructure solutions product line, which is expected to produce a more favorable revenue mix going forward. Fifth, improved gross margins. Gross margins improved from 12.5% in the first quarter to 31.2% in the fourth quarter of fiscal 2025. Gross margins are improving as a result of the revenue discipline I just described, resulting in a more favorable revenue mix as well as the implementation of operational efficiencies and cost savings measures. Sixth, we've improved the bottom line. Our adjusted EBITDA, a non-GAAP measure, improved sequentially in each quarter of the year. We went from a negative $30.8 million in the first quarter to positive $2.9 million in the second quarter to $12.6 million in the third quarter and $13.3 million in the fourth quarter. Our adjusted EBITDA gains stem from our improved gross margins as well as further savings in corporate overhead and operating expenses. Adjusted EBITDA is now more closely correlated with operating cash flows than it has been in the past. Seventh, improved credit facility terms. As previously reported, we succeeded in negotiating significantly improved terms with Comtech's creditors. These negotiations were facilitated by both the operational and financial improvements I just discussed as well as a relationship of trust and a spirit of cooperation that we've developed with our lenders. As a result, Comtech now has significantly enhanced financial flexibility. Eighth, progress in repeating -- in remediating our material weaknesses. We have been implementing improved control systems and working with external experts to remediate the previously disclosed material weaknesses in the company's internal controls. While we have more to do in this regard, we have made significant progress. The revised engineering estimates that we made recently on a development project with an international customer are manifestations of this progress. While I was disappointed that the revisions delayed our report on all of the accomplishments that we are discussing today, I am also encouraged that our enhanced bottoms-up analysis have led to an overall improvement in our processes and quality of our reports. The metrics that I just described highlight the significant improvements and achievements in the second half of fiscal 2025. However, we recognize that we still have legacy challenges to address and fluctuations in our quarterly results are inevitable. Now I would like to share with you just some of the initiatives that made these achievements possible. First, improved corporate governance. I have always believed that strong corporate governance and a healthy dynamic both within the Board of Directors and between the Board and executive management is fundamental to corporate success. The corporate Board of Comtech is well informed and is working diligently, collaboratively and constructively in their evaluation and support of corporate priorities. This strong governance and alignment between the Board and management has enabled a focused execution of the transformation initiatives that I will describe in more detail. Secondly, strengthened executive leadership. The Comtech leadership team is now strong and capable, both at the corporate level and the operating segment level. Our executives are rising to the occasion and performing at a high level as they are aligned around key priorities and core values. We have also recruited additional key members of the team that are helping to drive continuous improvement. I will discuss this in more detail when I move into the discussion of developments at the segment level later in this call. The strengthened executive leadership team has fostered an improved dynamic and is energized by the positive momentum resulting from the successful execution of our transformation initiatives. Third is accountability. We've empowered key contributors throughout this organization while implementing new disciplines to foster accountability. For example, we've initiated a revised delegations of authority program that clearly defines lines of responsibility, authority and accountability. We've also improved the systems we use to manage, approve and monitor critical activities, including capital expenditures, research and development initiatives, purchasing, contract execution, employee hiring and incentives. Fourth, cash flow optimization. I've seen companies in my career use various metrics as their primary focus. such as revenue growth, revenue per employee, adjusted EBITDA and others. These metrics can get companies into trouble, particularly if they are misaligned with cash flow or inconsistent with either short- or long-term shareholder equity value maximization. The principle that we're currently focusing on here at Comtech is optimizing for cash flow, not revenue. Our return to positive cash flow enables us to strengthen our short- and long-term financial, operational and strategic positions. Fifth, improving working capital management. A key component of cash optimization is alignment of the organization around understanding and managing the balance sheet and particularly working capital. Our strengthened financial position, coupled with enhanced disciplines will anchor further initiatives to optimize working capital management as a source of cash for further improvements in our capital structure as well as investments in value-accretive opportunities. Sixth, strong customer focus and support. We are dedicated to meeting and exceeding our customers' current and future needs and expectations. We've already seen how our efforts are enhancing customer satisfaction. Our team is focused, not only providing excellent customer service and support today, but we're also developing innovative next-generation solutions to address the growing needs of our customers in each segment of our business. Seventh, enhanced operational efficiency. We have been implementing new processes to improve reliability, quality, on-time delivery and capacity utilization as well as streamlining product lines and operations to reduce complexity and cost. And the eighth initiative is a reduced cost structure. In addition to savings from operational efficiencies, we are identifying opportunities to lower the cost structure with less internal labor and reduce use of external consultants and expensive professional service firms. And finally, is a revitalized corporate culture. The final major initiative I would like to mention is centered around corporate culture. I say this for last because it is the most important. We've been reinvigorating the corporate culture here at Comtech by emphasizing transparency, empowerment and accountability. On a personal note, it is particularly gratifying for me to see how our employees are increasingly taking pride in contributing to our success, which has also enhanced morale, retention and performance. The initiatives I just described not only helped to drive Comtech's significantly improved financial performance, but also enabled us to improve relationships with current and prospective employees, customers, vendors and creditors. This leads to a flywheel effect, in my opinion, in which improved relationships create a healthier dynamic for the business going forward and ultimately, further improvements in operational and financial performance. Now I will provide some commentary on our business units. Under Daniel Gizinski's leadership, our Satellite and Space Communications business has been executing a successful turnaround. In fiscal 2024 and early in fiscal 2025, Comtech's Satellite and Space business performed poorly and was a drain on the company's financial results and liquidity. Daniel was promoted to President of the business in the second quarter of fiscal 2025 has done a very impressive job of identifying the issues that gave rise to the previous underperformance, executing a remediation plan to address those issues and positioning the Satellite and Space segment for margin improvement, cash flow generation and long-term growth. As Daniel took the reins of the Satellite and Space business, he and the team identified several factors that contributed to the prior underperformance of that segment. Let me explain 6 of those factors. First, the company suffered from a failure to respond effectively to industry trends. Secondly, the company had a product portfolio that included some aging and obsolete products. Third, we had poor cost management. Fourth, the company had poor procurement approval disciplines and related excessive inventory buildup. Fifth, the company had poorly negotiated contractual terms. And sixth, we had a lack of skilled program managers, resulting in poor change control management. Over the course of the past year, Daniel and our leadership team addressed these issues with decisive actions, which yielded immediate improvements and have positioned the business for long-term success. Let me explain some of these actions. First, we recruited a strong segment leadership team, specifically Steve Black as Chief Operating Officer; Brent Norman as Chief Financial Officer; Mark Dale as Chief Technology Officer; Bob Pescatore as General Manager as well as other key contributors under Daniel's direction. Second, we developed a new product road map, featuring differentiated technologies aligned with customer needs. Third, we've eliminated over 50% of slow-moving products, which enabled us to have a tighter focus on a differentiated value-driven product line. Fourth, we restored operational discipline. Fifth, we implemented productivity enhancements and cost reduction initiatives. Sixth, we implemented a disciplined approach to procurement and inventory management. Seventh, we improved customer relations and contractual terms. And finally, we established best practices in program management, showing improved reliability and performance. These initiatives are already having a significant impact. For instance, in the fourth quarter of fiscal 2025, Satellite and Space generated over $20 million of operating cash flow. This compares to a negative cash flow of $1 million in the first quarter of fiscal 2025 and approximately $23 million of negative cash flow in fiscal 2024. The significant improvement in Satellite and Space cash flow in the fourth quarter reflects the early impact of the operational improvements I just described. Additionally, in the fourth quarter, Satellite and Space benefited from earlier-than-anticipated orders and related cash collections. Now that these improvements have been implemented, the Satellite and Space business is better positioned to pursue growth opportunities in our markets. We are prepared to meet increasing demand for technology to support 5G nonterrestrial networks and sovereign defense networks with the launch of our next-generation platforms. We are already seeing traction from the launch of our digital common ground platform, including additional early production prototype order agreements. In the fourth quarter, the Satellite and Space business completed initial deliveries of our small form factor troposcatter system, referred to as our Multipath Radio or MPR, to an international Air Force customer. We believe the small form factor troposcatter capabilities align closely with the modern defense demands, and we believe there will be increasing demand for the unique features and capabilities we offer. When you hear me discuss shifting our focus toward opportunities in which we can provide a more differentiated solution at higher margins, MPR is one such type of opportunity. During fiscal 2025, we began delivery of initial production units to our prime contractor support of a next-generation satellite modem contract and we'll be transitioning into full production during fiscal 2026 as the program transitions from a multiyear development period into a production-oriented stage. A second next-generation product with the same prime contractor has also significantly progressed in development and is also expected to begin production deliveries in fiscal 2026. This is an important milestone as it signifies the long-awaited migration from low-margin nonrecurring engineering efforts to higher volume production with improved operating margins and faster cash conversion cycles. We continue to support key space initiatives, including NASA's Artemis project with bookings in support of this project of approximately $10 million during the fourth quarter. Additionally, satellite and space was awarded over $7 million for its work supporting a U.S. government cybersecurity training program. All of the initiatives that we have been executing under Daniel's leadership in our Satellite and Space business have resulted in a comprehensive turnaround with significantly improved operating performance. This has helped to reinvigorate employee morale, partner commitments and customer trust. The durable differentiation in our product portfolio as well as the new products that we have been developing position Satellite and space to capitalize on the growing demand for the innovative, secure communication solutions we provide to our target markets. Now I will provide commentary on our Allerium segment, formerly known as our Terrestrial and Wireless Networks segment. Our Allerium segment led by Jeff Robertson, delivered a strong fourth quarter with adjusted EBITDA growing 37% to $13.7 million from $10 million in the same period last year. This performance was driven by higher net sales and gross profit related to our location-based and next-generation 911 call handling solutions, offset in part by increased research and development activities geared toward further solidifying our role as a trusted provider of innovative emergency communication and location-based technologies. During the fourth quarter, Allerium was awarded multiple orders across each of its 3 product areas, reflecting confidence in Allerium's performance and the strong collaboration with customers that defines these relationships. In total, bookings for the fourth quarter aggregated about $50 million. Taken together, we believe these awards validate Allerium's role as a market leader in emergency communication and location-based solutions. This momentum is underscored by a significant achievement that we reported today. After year-end, we have secured a multiyear contract extension from Allerium's largest customer, a leading telecommunications company in the U.S. known for its network reliability and security. This contract award is valued in excess of $130 million and is for a scalable service. The agreement reinforces Allerium's commitment to helping carriers and public safety organizations modernize critical infrastructure and optimize service reliability with confidence. This also highlights a core strength of this business. Regardless of broader economic conditions, emergency response has a history of consistent funding. As the world becomes more complex and riskier, governments as well as commercial entities are increasing their investment in public safety and precise location-based technologies, which provides Allerium with a durable tailwind and enhances our long-term revenue opportunities. The Allerium rebrand reflects a new unified go-to-market strategy that consolidates this segment's product lines under the single Allerium name. It marks a fresh new chapter, elevating our name in the markets we serve. Internally, it has served as a rallying cry for our teams, renewing focus on innovation and strengthening both employee engagement and recruitment as we drive the next generation of public safety technology. To support and accelerate this strategy, we have opened a new Allerium Innovation Lab in Broomfield, Colorado. This facility will be a center of excellence, focusing on next-generation R&D and attracting the best talent in public safety technology. A cornerstone of this strategy is Allerium Mira, our next-generation public safety-grade cloud-native call handling solution. Mira simplifies complex emergency call handling operations by allowing public safety answering points to manage voice, text, video and alerts through a single interface, unlocking smarter routing and deeper integration. Allerium Mira is also the engine for our broader service expansion. We are moving beyond traditional 911 calls to handle many other forms of information for a wide array of originating service providers. This includes data from wearables, connected cameras, fire panels, vehicles and traffic cameras. By integrating these inputs with next-generation software tools, we provide critical situation awareness to ensure first responders are prepared to deliver the emergency services the public needs. This strategy is proving successful, both domestically and abroad. As I stated last quarter, some of our key growth drivers include cloud-based products like Allerium Mira, next-generation call handling solutions and 5G location-based technologies for international customers. We are already executing on this global strategy and expanding our international footprint as I can confirm that during the fourth quarter, Allerium secured over $6.5 million in new contracts for work in South Australia and Canada. This entire vision is underpinned by Allerium's competitive advantage, the combination of our industry-leading statewide, innovative next-generation 911 networks with decades of experience in dispatch centers around the world. As agency expand beyond voice to multimodal data-rich request for help, this integration of network and dispatch technology gives us a distinct ability to help them manage complex emergencies. As previously disclosed, the company has been reviewing strategic alternatives with the assistance of nationally recognized investment bankers. We will only be providing updates on these processes if and when we have something specific to share. At this point, there is nothing to share. With that, I'll turn the call over to Mike to walk through the financials. Mike?

Thank you, Ken, and good afternoon, everyone. Before getting into the detailed results, I would like to first summarize this past quarter. Sequentially, our consolidated GAAP operating results were better than our third quarter of fiscal 2025. We continue to grow net sales and improve gross margins, further reduced our operating expenses, generated positive GAAP operating income for the first time in over 5 quarters, further increased our adjusted EBITDA and achieved our second consecutive quarter of positive cash flows from operations. The Allerium segment continues to perform well, securing several large multiyear contract extensions from key customers. Our Satellite and Space Communications segment has been rejuvenated and improvements are evident with sequential growth in net sales, gross profit, operating income, adjusted EBITDA and operating cash flows. We were also successful in reducing corporate unallocated operating expenses during the more recent fiscal year quarter. While there are always opportunities for greater efficiency, the transformation plans that Ken described earlier have not only stabilized our business, but have also strengthened our financial condition and opportunities for further growth. I'm going to review our financial results for fiscal 2025 first, then discuss results for the fourth quarter. In fiscal 2025, Comtech had consolidated net sales of $499.5 million compared to $540.4 million in fiscal '24. The change in sales reflects the anticipated wind down of certain legacy troposcatter contracts, lower sales of EEE space components and antennas, including those related to the CGC divestiture that we initiated in our fourth quarter of fiscal '24 and the divestiture of our high-powered solid-state amplifiers product line in November of 2023. These items were offset in part by higher sales of our Allerium's NG911 emergency communication, call handling and location-based solutions and SATCOM solutions in our Satellite and Space segment, primarily satellite ground infrastructure solutions and VSAT and similar equipment sales to the U.S. Army. Gross margin as a percentage of net sales was 25.6% for fiscal 2025 compared to 29.1% in fiscal 2024. Fiscal 2025 margins reflect an $11.4 million noncash charge in our first quarter from inventory write-downs related to restructuring within our Satellite and Space segment. Our quarterly gross profit, both in dollars and as a percentage of consolidated net sales improved sequentially throughout fiscal 2025. Over the course of the fiscal year, we improved our quarterly consolidated GAAP operating income from a loss of $129.2 million in the first quarter to income of $1.9 million in the fourth quarter. Reductions in quarterly expenditures for SG&A expenses contributed to this improvement. As outlined in the company's annual report on Form 10-K for fiscal 2025, Net loss attributable to common shareholders was $204.3 million compared to $135.4 million in fiscal 2024. In aggregate, fiscal 2025 results were impacted by $187.5 million of net charges, of which $167.1 million were noncash. Our net loss attributable to common shareholders improved sequentially throughout fiscal 2025 due primarily to improved operational and financial performance, as Ken just explained. Adjusted EBITDA loss for Comtech in fiscal 2025 was $2 million compared to adjusted EBITDA income of $45.7 million in fiscal 2024. This change primarily reflects the anticipated lower consolidated net sales and gross profit in fiscal 2025, both in dollars and as a percentage of consolidated net sales and including an $11.4 million noncash charge in our first quarter related to the write-down of inventory and higher selling, general and administrative expenses driven by a $16.1 million noncash charge in our first quarter related to the allowance for doubtful accounts, offset in part by lower company-funded research and development expenses in light of increased levels of customer-funded initiatives. Overall, we experienced sequential quarterly improvements in adjusted EBITDA throughout fiscal 2025 with improvements ranging from negative $30.8 million in our first quarter to positive $13.3 million in our fourth quarter. Net bookings in fiscal 2025 were $372.7 million compared to $700.6 million in fiscal 2024. Bookings in fiscal 2025 were impacted by a $36.4 million debooking in the third quarter following the award of a protested low-margin U.S. Army field services contract to the incumbent provider. Also, bookings in the prior year included a large multiyear contract awarded to us from an NG 911 customer in the Northeastern region of the U.S. Comtech's funded backlog as of July 31, 2025, was $672.1 million compared to $798.9 million as of July 31, 2024, and $708.1 million as of April 30, 2025. For clarity, such backlog does not yet include the $130 million-plus multiyear contract extension just recently awarded to Allerium. Fiscal 2025 GAAP cash flows used in operations were $8.3 million, a significant improvement from the $54.5 million of cash flows used in operations last year. Fiscal 2025 cash flows include $23 million in aggregate payments for restructuring costs, including severance, proxy solicitation costs and CEO transition costs. This compares to $16 million in fiscal 2024. Fiscal 2025 also includes cash payments for interest and taxes of $29.6 million as compared to $23 million in fiscal '24. Throughout fiscal 2025, Comtech had sequential quarterly improvements in operating cash flows, improving from negative $21.8 million of operating cash flow in our first quarter to positive $11.4 million in our fourth quarter. Pivoting now to our results for the fourth quarter of fiscal 2025, consolidated net sales were $130.4 million compared to $126.2 million in the fourth quarter a year ago and $126.8 million in the third quarter of fiscal 2025. The fourth quarter benefited from earlier-than-anticipated orders in both segments, offset in part by a $3.5 million charge in our fourth quarter due to higher-than-expected cost completion on a nonrecurring development project within our Satellite and Space segment. Gross profit in the fourth quarter of fiscal 2025 was $40.7 million or 31.2% of net sales, representing a substantial 50.2% increase from the $27.1 million or 21.5% of net sales in the fourth quarter last year. Gross profit in the more recent quarter also represents a 4.6% sequential increase from the $38.9 million or 30.7% of net sales in our third quarter of fiscal 2025. We continue to make progress in improving our product mix, including our ongoing shift back to higher volume production orders in our satellite ground infrastructure Solutions product line as certain legacy low or no-margin nonrecurring engineering contracts draw near to completion. In our fourth quarter of fiscal 2025, we continued our trend of lowering GAAP operating expense, in particular, SG&A. Such reduction resulted in our ability to report positive operating income in our fourth quarter of $1.9 million, which compares to an operating loss of $1.5 million in the prior quarter and an operating loss of $81.5 million in the fourth quarter of fiscal 2024. These improvements in our financial performance also resulted in consolidated adjusted EBITDA for the fourth quarter to increase to $13.3 million compared to $0.3 million in the fourth quarter of last year and $12.6 million in the third quarter of this year. As mentioned, fourth quarter of fiscal 2025 cash flows provided by operations were $11.4 million, a substantial improvement from the $9.5 million of cash flows used in operations in the fourth quarter of 2024 and the $2.3 million of cash flows provided by operations in the third quarter of this year. The improvement in this metric is due to operational enhancements and our revitalized culture with aligned focus on optimizing cash flow, which in part contributed to earlier-than-anticipated collections in our fourth quarter of fiscal 2025. Now turning to the balance sheet and as discussed in more detail in our SEC filings, we recently amended our credit facilities. These amendments, among other things, provided for the incurrence of a $35 million incremental subordinated priority term loan, the net proceeds of which were used to prepay without premium $28.5 million of outstanding term loans and $5.8 million of the outstanding revolver loan under the credit facility. Importantly, it suspends until the 4-quarter period ending January 31, 2027, testing of the net leverage ratio, the fixed charge coverage ratio and the minimum EBITDA covenants. They altered the interest rates applicable to term loans under the credit facilities. It delayed the scheduled repayment of a portion of the principal on the term loans and fees due pursuant to the second amendment to the credit facility. The amendments reduced the minimum EBITDA requirements, reduced the minimum quarterly average liquidity requirements from $17.5 million to $15 million, permanently reduced commitments under the credit facility revolver loan by $2.1 million and obligated the company to enter into management incentive and retention arrangements for its key personnel. Such amendments also permit us to engage in the sale or disposition of certain properties and assets approved by the administrative agents subject to the conditions to use net cash proceeds from such sale to repay outstanding principal amounts of the obligations under our credit facilities. Collectively, these amendments provide Comtech with enhanced financial flexibility. In terms of our liquidity and outstanding debt obligations, at July 31, 2025, our available sources of liquidity totaled $47 million. Total outstanding borrowings under our credit facility were $133.9 million, of which $17.6 million was drawn on the revolver. Total outstanding borrowings under our subordinated credit facility were $100.1 million, excluding the $25.7 million make-whole amount associated with the $65 million portion of such facility through July 31, 2025 and the liquidation preference of our outstanding convertible preferred stock was $204.2 million, excluding potential increases that could be triggered by, among other things, asset sales and/or changes in control of the company. Before turning it back over to Ken, I will now provide a brief update on our consolidated performance for the first quarter of fiscal 2026. While we currently have a policy of not providing guidance or full year targets, given the unique situation of having our fiscal 2025 earnings call after the end of our first quarter of fiscal 2026, we felt an update in this instance, albeit preliminary, would be appropriate. For the fiscal quarter ended October 31, 2025, we are currently estimating the following consolidated results: net sales to approximate a range of $107 million to $113 million compared to $115.8 million in the first quarter of fiscal '25. Cash flow provided by operating activities to approximate a range of $6 million to $7 million compared to cash flow used in operating activities of $21.8 million in the first quarter of fiscal '25 and liquidity, defined as our qualified cash and cash equivalents and available portion of our revolver loan under our credit facility as of October 31, 2025, was $51 million. Performance in the first quarter of fiscal 2026 is expected to reflect, among other things, the impacts of earlier-than-anticipated orders, net sales and cash collections that we just discussed as well as certain contracts nearing completion in the fourth quarter of fiscal 2025. Additionally, performance in the first quarter of fiscal 2026, particularly in our S&S segment, is expected to reflect the impacts of timing, delays in orders, net sales and cash collections as a result of the U.S. government shutdown as well as the decision to phase out and eliminate certain low-margin revenue. While not providing full year guidance or specific targets, we do expect performance to improve in subsequent quarters of fiscal 2026. Additional details will be provided when we file our Form 10-Q for the first quarter of fiscal 2026, Also, as a reminder, statements about our anticipated results are subject to the cautionary language on forward-looking statements included at the start of this call as well as in our various SEC filings. Now let me turn the call back over to Ken. Ken?

Thank you, Mike. To sum up briefly, Comtech has been successfully executing the transformation plan that I announced in January, which has not only helped to drive Comtech's significantly improved operating and financial performance, but also has enabled us to improve relationships with current and prospective employees, customers, vendors and creditors. I believe this leads to a flywheel effect in which improved relationships create a healthier dynamic for the business going forward and ultimately, further improvements in operating and financial performance. As a reminder, Jeff and Daniel will be joining us for the Q&A. With that, operator, please open the call to any questions.

[Operator Instructions] And we'll take our first question from Matthew Maus with B. Riley.

Matthew on for Mike Crawford. I guess to start off, regarding the $130 million carrier contract, I'm assuming it hits 2Q '26 bookings. Can you help us model some of the economics in terms of the contract duration, how it's -- how the revenue is expected to ramp and whether you think it kind of represents a meaningful step-up in Allerium's growth trajectory?

Thanks for the question, Matthew. So it's -- we're not going to give a lot more specifics for commercial and competitive reasons. We'll say that it's at least $130 million contract. It is a long-term commitment with a major customer, and we believe it gives us an opportunity to build significantly around that. Jeff Robertson is on the call. Jeff, do you want to add anything?

No, Ken. I think you covered it well. We're just encouraged by this customer, and it's the long-term backlog that it represents gives us some confidence in the future. That's all I would add to that.

So I do want to clarify, Matthew, that this is an existing customer that is making a going-forward long-term commitment. And -- but it is -- it's a very significant milestone for us, right? This locks in a long -- one of our most important customers in the Allerium business, and it's an anchor of stability that we will be building around.

Got it. And you provided some preliminary first quarter '26 guidance. I guess, given the government shutdown impact and the pull forward you mentioned, how should we think about the quarterly cadence through fiscal '26?

Okay. So we're a company that doesn't give guidance. We did for Q1 because Q1 is already complete. So what we can tell you is we do believe that business will continue to improve throughout fiscal 2026 and beyond. We've now -- we've achieved a lot of improvements that I've detailed in my remarks, and we do anticipate improvements in the quarters following Q1.

Got it. All right. And so bookings and the book-to-bill ratio both improved sequentially. I'm just wondering if you can lay that out one more time. What's kind of driving that improvement towards getting that above 1 in fiscal '26? And like where -- which segment specifically do you see the most strength of that?

Mike, do you want to handle that question?

Sure, Ken. In terms of our book-to-bill ratio, just always keep in mind that as you just heard us announce today, we had a very large contract, a multiyear contract award that was booked in November. So that's something that we would not expect to repeat. But overall, I think we're very excited about our progress in Allerium's success in international markets. That's been a focus of ours, and it's nice to see that we're getting some bookings there as well. And I think working through the government shutdown, we don't think it's going to be permanent. And I would think that the cadence will pick up once we get past this shutdown period.

And last one for me, just quickly on -- I think previously, you mentioned the EDIM certification was expected prior to calendar year-end. I'm just wondering where things stand now. Are you through the certification and what would the ramp look like?

Matthew, could you clarify your question? What was it that you were asking about a certification?

Yes, the EDIM certification in terms of it being -- it was previously expected prior to year-end. I'm wondering if there's an update on that.

Okay. I think you're referencing the EDIM program, we referenced it as EDM.

Right, EDIM.

Yes. Maybe that's a question best answered by Dan Gizinski. But yes, I'll start off by saying that, that program has been progressing. We definitely are excited that we're getting towards the tail end of our nonrecurring engineering phase and moving to production, which is in our wheelhouse, but I'll turn it over to Daniel.

Yes. Thanks for the question. So high level on the EDIM program, I think the expectation that we had communicated is that we would be delivering initial prototype equivalent products to begin the certification process prior to calendar year-end. We are still expecting to see that final certification phase that we're going to work through collaboratively with the U.S. government certainly will be dependent on the delivery of those units as well as coordination with various different government entities to conduct that final certification, and that will take place over the earlier parts of calendar '26 with, I think, some flexibility in the schedule. We are continuing to make good progress and are still expecting to have those units delivered in place to begin the certification process prior to our calendar year-end.

[Operator Instructions] We show no further questions at this time. I will now turn the call over to Ken Traub for closing remarks.

Well, I'd like to thank you all for joining us today. And as a final message, in anticipation of Veterans Day tomorrow, I would like to express our gratitude to all those who have served our country. Thank you all very much.