COMTECH TELECOMMUNICATIONS CORP DE

Our Satellite and Space Communications segment designs, builds and supports a variety of sophisticated communications equipment critical to modern communications infrastructures. We are one of a limited number of U.S.-based providers of modems and high-power amplifiers, and a market leader in troposcatter technologies. Our Satellite and Space Communications segment has an innovative portfolio of these mission-critical technologies and serves some of the world’s largest defense contractors and allied foreign governments, as well as multiple U.S. government agencies, including the U.S. Department of Defense.

The Satellite and Space Communications segment operates in large and growing end markets that benefit from multiple tailwinds and demand-drivers, including growing global geopolitical tensions, rising global defense spending, and high barriers to entry. Further, these end markets are undergoing technology upgrade cycles and modernization initiatives that are expected to underpin demand for years to come. Fueling these cycles are the USSF’s Commercial Space Strategy and the DoD’s Joint All Domain Command and Control approach, which are expected to generate strong demand for the Satellite and Space Communications business’ next-generation digital solutions. Today, only a limited number of companies, including Comtech, can serve the complex needs of the U.S. and other governments and meet this demand.

Our Satellite and Space Communications segment is organized into four categories: satellite modem and amplifier technologies, troposcatter technologies, government services and space components.

Satellite Modem and Amplifier Technologies

We believe we are a leading provider of satellite earth station modems, solid-state amplifiers and traveling wave tube amplifiers. Many of our key satellite earth station modems incorporate forward error correction and bandwidth compression technologies, which enable our customers to optimize their satellite networks by either reducing their satellite transponder lease costs or increasing data throughput. We hold strong positions in the market for high-throughput modems used in cellular backhaul, a market that has been rapidly growing due to increased mobile device usage and increasing data throughput demands from LTE and 5G deployments worldwide.

An increasing area of focus for many governments, including the U.S. Department of Defense ("DoD") and several coalition partners, is maturing satellite communications. Many of our satellite communications products have been tested and certified for use by U.S. and coalition military satellite communications ("MILSATCOM") assets, such as the Wideband Global SATCOM constellation. We believe this provides us the opportunity to capture the increased demand for MILSATCOM programs.

In September 2024, we announced the launch of our new Digital Common Ground (“DCG”) portfolio of modems, designed to enable the U.S. DoD and coalition partners to move to digitized, hybrid satellite network architectures. Built on the our proven satellite communications (“SATCOM”) modem portfolio, our DCG modems are designed and built at Comtech’s headquarters in Chandler, AZ and support commercial and government satellite operations on a single common platform that can be reconfigured rapidly to address changing operational needs.

We believe our DCG portfolio is one of the first product lines on the market today offering robust access to multi-orbit capabilities across commercial and purpose-built networks. The DCG product line is also one of the first to be Digital Intermediate Frequency Interoperability (“DIFI”) compliant, adhering to DoD and coalition communications standards to enable seamless information flow between services, a key tenet of Combined Joint All Domain Command and Control (“CJADC2”). The DCG product line offers industry leading performance, through multi-gigabit throughput at launch. In addition, we incorporate modern cybersecurity design principles at every level across our DCG product line, ranging from a trusted supply chain to a thoughtful software upgrade lifecycle, including in-field updates. We believe the technologies incorporated into our DCG product line create a meaningful competitive advantage for us.

We also provide rugged, highly efficient, and reliable amplifiers for commercial and military applications around the world. These high-power amplifiers (“HPAs”) are used in critical communications links on the ground, in the air and on the sea; they support fixed traditional and direct-to-home broadcast, mobile news gathering, transportable and flyaway systems, secure high data rate communications, and broadband access over SATCOM. These products include configurations that are formally qualified for use on aircraft and being installed as both retrofit and linefit initiatives.

Troposcatter Technologies

We believe we are a world leader in the design and supply of troposcatter equipment. We have designed, manufactured, and delivered troposcatter systems for well over fifty years. We have significantly advanced the capabilities of our Troposcatter Family of Systems (“FoS”): we now deliver a next-generation, software-defined solution that represents a thousand-fold performance increase over prior generations of equipment.

Over the recent past, our next-generation Troposcatter terminals have been chosen by the U.S. Army, the Marines and defense organizations overseas to support the tactical communications requirements of our allies. While our traditional buyer is military, advances in mobility and performance expand our end markets to include new customers. Key industry verticals we are seeking to sell into include oil and gas, utility, marine and rail uses.

At the same time, the traditional defense market is changing and growing in ways that we believe make our equipment more relevant: for years, conflicts involving the U.S. and our allies mostly involved actions against unconventional adversaries with less advanced technology. That is no longer the case, as conflicts involving state actors arise around the globe. Now, U.S. and allied defense strategies are shifting focus to threats from organized, better equipped and higher technology adversaries. This places a premium on sophisticated communications technology from trusted, onshore providers, and creates a natural upgrade cycle for legacy systems deployed globally over the years.

We’re encouraged by the potential for our Troposcatter FoS, as we believe we offer one of the best products, with one of the best technologies, to a growing list of customers with expanding use cases, and a set of newly-developing end markets that should provide our business with long-term growth opportunities.

Government Services

We provide training and field support for multiple U.S. government agencies across an array of programs. These are typically long-term, multi-million dollar contracts, and examples include: Comtech as sole award winner of a 5-year, $544.0 million Global Field Service Representative (“GFSR”) contract with the U.S. Army to provide onsite professional engineering services, as well as supply and support communications technologies (we note that this contract is currently under protest by the incumbent); Comtech as sole award winner of a 5-year, $125.0 million contract to provide complex cybersecurity operations training for U.S. government customers; and Comtech as one of multiple awardees of a large multi-year Global Tactical Advanced Communication Systems II (“GTACS II”) contract with the U.S. Army to support Very Small Aperture Terminal (“VSAT”) satellite systems and related services.

Space Components and Antennas

For over 45 years, we have been recognized as an industry leader and global supplier of high-reliability products and supply chain management and engineering services, supporting selection of space-qualified parts for satellite and launch vehicle tracking solutions geared for critical U.S. National Aeronautics and Space Administration ("NASA") programs as well as several international space and defense agencies. Our engineers are not only involved in the design of products, but our technical team is heavily involved with the customer development of electronic parts and testing specifications to assure capability, reliability and radiation tolerance to specific mission/project requirements both as an individual service and for Electrical, Electronic, and Electromechanical (“EEE”) parts supplied to our customers. We also lead and conduct failure analysis investigations and assist with manufacturing and test problems at the source and support reporting and selloff with the customer and its prime (such as the Japanese Space Exploration Agency (“JAXA”) and NASA). Our quality engineering team assures that the product received from our suppliers and test facilities are compliant to their respective specifications prior to shipment to our end customers. Our service offerings have been expanded to include kitting to customer bill of materials with direct shipments to customer designated contract manufacturers.

Within the satellite communications market, we are a leading provider of components that support the mission requirements of LEO, MEO and GEO satellite communication and tracking requirements, offering a host of high-performance single-band and multi-band feed solutions. We also supply maritime antenna solutions that are fielded by foreign governments.

Satellite and Space Communications: Key Markets and Growth Drivers

As noted previously, the Satellite and Space Communications segment operates in large and growing end markets that benefit from multiple tailwinds, including technology upgrade cycles and modernization initiatives that are expected to underpin demand for years to come. The need for more communications infrastructure from governments and enterprise alike is expected to increase as larger constellations of satellites are deployed, connected devices and end-points proliferate, and elevated geopolitical tensions persist and re-prioritize government agency and defense spending. We believe that we are well-positioned to capitalize on this demand through sales of our market-leading, including new next-generation satellite ground infrastructure technologies that can be used with the thousands of new LEO, MEO and large HTS satellites that are expected to be deployed over the next several years, and our advanced troposcatter systems.

Examples of end-market applications that are driving long-term demand for our communication technologies include:

•Government and Military Satellite Communications: Government users rely on high-speed connectivity in a variety of conditions throughout the world to provide real time information sharing, including Situational Awareness (“SA”), dissemination of Intelligence, Surveillance, and Reconnaissance (“ISR”) information, and communications. Our communications solutions provide command and control and satellite networking capabilities that support U.S. and allied government initiatives for assured and resilient communications capabilities, as well as supporting interoperability objectives, including the Joint All Domain Command and Control (“JADC2”) efforts.

•New LEO, MEO and HTS Satellites: Thousands of new satellites are reportedly in orbit or being launched over the next several years, according to announcements by companies including Telesat Lightspeed, Eutelsat, OneWeb, SpaceX Starlink, Amazon Kuiper and Viasat, which we believe will lead to increasingly complex satellite networks. As service providers work to offer connectivity to these high-speed, high-bandwidth satellites and expand their networks to handle the demand for new LEO, MEO and HTS applications, we believe our ELEVATETM, Heights TMand UHP networking platforms, and our solid-state amplifiers will ultimately be incorporated into many new installations and equipment upgrades. We continue to provide modems and amplifiers to existing LEO and MEO communications satellite providers and expect to see growth in imaging satellites alongside commercial imaging constellations, including conventional, thermal and hyperspectral.

•Satellite-Based Cellular Backhaul: Demand for satellite-based cellular backhaul services is anticipated to grow rapidly as a result of the increased penetration of smart cellular phones and network upgrades to 4G and 5G in developing regions of the world. Ultimately, as 5G services continue to be deployed, we expect that mobile data services will become more critical. As mobile data penetration expands and mobile data consumption increases, wireless carriers must invest in their mobile network infrastructures, and we believe businesses will require back-up communications. In developing regions of the world, and in remote areas where terrestrial network infrastructure is lacking (or where challenging geography prohibits it), wireless network operators often backhaul, or transport, their wireless data traffic using satellite-based networking technologies. We are well positioned to serve the high-performance, high availability needs of satellite-based cellular backhaul through sales of our SCPC and TDMA satellite modems as well as our Heights TM, ELEVATETM and UHP networking platforms.

•Troposcatter Family of Systems: U.S. and allied defense strategies are shifting focus to threats from organized, better equipped and higher technology adversaries, placing a premium on sophisticated communications technology from trusted, onshore providers. Comtech’s Troposcatter Family of Systems (“FoS”) delivers a next-generation, software-defined solution that represents a thousand-fold performance increase over prior generations of equipment. Further, constant innovation means Comtech’s latest generation of equipment can be packed into two small cases, offering significant mobility improvements. Our next-generation troposcatter terminals have been chosen by the U.S. Army, the U.S. Marines and defense organizations overseas to support the tactical communications requirements of our allies. Additionally, we see multiple opportunities for non-defense applications, including oil and gas, utility, marine and rail industry use.

Satellite and Space Communications: Customer Base

Our customer base for the Satellite and Space Communications segment comprises numerous governments and companies worldwide with whom we have longstanding relationships, including leading system and network suppliers in the global satellite, mobile cellular, defense, broadcast and aerospace industries, as well as the U.S. federal government (including the U.S. Army, Air Force, Marine Corps and Navy), U.S. state and local governments and allied foreign governments. Approximately 55.4% of the segment’s sales are derived from U.S. government and related agency contracts. Representative customer categories include:

•The U.S. Army, U.S. Marine Corps, U.S. Navy, prime contractors to the U.S. Armed Forces, NATO and foreign governments (i.e., ministries of defense)

•Domestic and international defense customers, as well as prime contractors and system suppliers such as General Dynamics Corporation, Lockheed Martin Corporation, L3Harris Technologies, Inc., Northrop Grumman Corporation, Raytheon Technologies Corporation, The Boeing Company and ViaSat Inc.

•Commercial end-customers also include Claro Argentina, Intelsat S.A., JAXA, NASA, SED Systems (a division of Calian Ltd.), SES S.A. and Speedcast International Limited

•Satellite systems integrators, wireless and other communication service providers, and broadcasters, such as DIRECTTV Group

•Aviation industry system integrators such as Collins Aerospace, an RTX Business

•Oil companies such as Shell Oil Company and PETRONAS