COMTECH TELECOMMUNICATIONS CORP /DE/

Transformation Plan

On January 13, 2025, we announced an expanded plan to transform our business (herein after referred to as our "transformation plan"). Our transformation plan includes, but is not limited to, the initiatives set forth below:

•improve corporate governance;

•strengthen executive leadership;

•upgrade talent in key positions;

•reinvigorate corporate culture that emphasizes transparency, empowerment and accountability;

•align accountability throughout the organization;

•optimize cash flow including disciplined working capital management;

•invest in next-generation solutions for our customers' expanding and emerging needs;

•enhance operational efficiency;

•streamline product lines with a focus on strategic, higher operating margin products;

•improve production efficiency;

•reduce cost structures;

•enhance customer satisfaction;

•improve contractual terms with customers and vendors;

•improve capital structure through amended and improved terms with creditors and reduction of principal and interest amounts due; and

•explore strategic alternatives for our various businesses and product lines, including the potential sale or divestiture of assets or business lines.

Elements of our transformation plan related to our operations have resulted in:

•On November 7, 2023, we completed the divestiture of our solid-state RF microwave high power amplifiers and control components product line, which was included in our Satellite and Space Communications segment, pursuant to a stock sale agreement entered into on October 11, 2023 (the "PST Divestiture"). Net proceeds from the PST Divestiture in fiscal 2024 were $33.2 million and used in part to repay a portion of our outstanding debt at the time, as well as to fund working capital needs.

•We have undertaken a detailed evaluation of our Satellite and Space Communications segment's product portfolio to identify further opportunities to divest, separate and/or rationalize businesses or facilities that are not core to our go-forward focus. Consistent with this effort, in our fourth quarter of fiscal 2024, we made the decision to exit our underperforming operations in Basingstoke, United Kingdom. Such operations were established in connection with the fiscal 2020 acquisition of CGC Technology Limited. Taking into consideration the significant ongoing investment, as well as unfavorable contract terms on prospective antenna sales, we concluded such operations would not generate an attractive return on invested capital and made the decision to exit these operations. Furthermore, we conducted an intensive review of our product portfolio to focus future investment on our most strategic, high-margin revenue opportunities within the Satellite and Space Communications segment. Upon completion of such review, we recorded a non-cash charge of $11.4 million within Cost of Sales on our Consolidated Statement of Operations, primarily related to the write down of inventory during the first quarter of fiscal 2025 associated with approximately 70 products within our satellite ground infrastructure product line that were discontinued.

•We implemented multiple reductions in force throughout our organization and in all our segments. Inclusive of actions taken in August 2025 (i.e., the start of our fiscal 2026), such reductions approximated 23% of our workforce as of July 31, 2024, or approximately $47.0 million in annualized labor costs. Related to these activities, in fiscal 2025, we recorded $3.6 million of severance costs within Selling, General and Administrative expenses in our Consolidated Statements of Operations.

•In September 2025, we initiated a process to further optimize our operations within our Satellite and Space Communications segment. Such actions include reducing our facility footprint and migrating the manufacturing of certain products to our Chandler, Arizona facility. We expect these actions to take place primarily in the first half of fiscal 2026 and result in approximately $3.0 million of annualized cost savings.

There can be no assurance that our plans will result in acquisitions, divestitures or other strategic changes or outcomes. Also, while anticipated to improve our profitability in future periods, such actions may result in near-term restructuring charges.