Comtech Telecommunications Corp. (NASDAQ:CMTL) stock rose Monday after the communications technology company agreed to sell most of its Satellite and Space Communications business to Gilat Satellite Networks Ltd. (NASDAQ:GILT) for $157.5 million and reported fiscal third-quarter results that topped earnings expectations.
Comtech To Sell Satellite Business
Comtech said it signed a definitive agreement to sell most of its Satellite and Space Communications segment to Gilat for $157.5 million, including a $10 million payment made at signing. The company expects the transaction to close in the fourth quarter of calendar 2026, subject to regulatory approvals and customary closing conditions.
The company will retain certain cyber-focused assets and rights to some accounts receivable collections. Following the sale, Comtech plans to focus on its public safety technology business, Allerium, and eventually transition to the Allerium name.
Comtech expects net cash proceeds of roughly $143 million to $145 million after transaction-related expenses. The company plans to use most of the proceeds to reduce debt and strengthen its balance sheet.
Chairman, President and CEO Ken Traub called the transaction “a significant milestone in Comtech’s transformation” and said it reflects the successful execution of the company’s strategy.
As of March 31, Gilat Satellite reported $140.15 million in cash and cash equivalents.
Q3 Earnings Beat Estimates
The announcement came alongside fiscal third-quarter results.
Comtech reported an adjusted loss of 22 cents per share, beating Wall Street estimates for a loss of 27 cents per share. Revenue fell 16.4% year over year to $106.0 million, missing analyst estimates of $110.2 million.
The company posted gross profit of $36.1 million, or 34.0% of sales, compared with $38.9 million, or 30.7% of sales, a year earlier. Operating loss widened to $3.1 million from $1.5 million in the prior-year quarter.
Comtech generated $6.1 million in operating cash flow during the quarter, marking its fifth consecutive quarter of positive operating cash flow. Funded backlog stood at $696.1 million, while revenue visibility totaled approximately $1.1 billion.
Traub said the company’s operational improvements, strategic review process and capital structure initiatives have positioned Comtech to become a streamlined public safety technology company focused on long-term growth opportunities.
CMTL Stock Price Activity: Comtech Telecom shares were up 5.14% at $5.078 during premarket trading on Monday, according to Benzinga Pro data.
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