Comtech Telecommunications Q3 2024 Earnings Call Transcript

Quartr
Provided by Quartr
June 18, 2024

There are 7 speakers on the call.

Operator

Welcome to Comtech's Fiscal Third Quarter 20 24 Earnings Conference Call. As a reminder, this conference is being recorded today, Tuesday, June 18, 2024. I would now like to turn the conference over to Mrs. Maria Cirillo of Comtech. Please go ahead, Maria.

Speaker 1

Thank you, operator, and thanks to our investors for taking the time to dial in today. Welcome to Comtech's Telecommunication Corp. Conference call for the Q3 of fiscal year 2024. Today, I'm here with Comtech's Chief Executive Officer, John Ragan. We're also joined today by Mike Bondi, Comtech's CFO.

Speaker 1

Before we get started today, please note we have a detailed discussion of the quarter in our shareholder letter available on our 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 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 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.

Speaker 1

Now I'm pleased to introduce Comtech's CEO, John Rattigan. John?

Speaker 2

Thank you, Maria. And as you know, I'm relatively new to the role of CEO of Comtech, but I'm feeling that I'm already making a positive difference. Last quarter during our earnings call, I said that it was clear to me that the foremost concern of all of our stakeholders and certainly our shareholders was refinancing our balance sheet. I also said that executing a refinancing would be my highest priority. As uncertainty saw, we announced the completion of a $222,000,000 refinancing that replaces our bank facility with a new credit facility consisting of a $60,000,000 asset based lending facility and $162,000,000 term loan that matures in 2028.

Speaker 2

The completion of the refinancing is important for Comtech in many ways. First, our balance sheet is stronger and can support the improved performance and growth of our business as we look ahead. We can now conduct our business without the distraction associated with a looming debt maturity, which all of our stakeholders would benefit from. Our customers, our vendors and our people are all excited to move forward unencumbered by reservations about liquidity. It also means that my top operational priority is now the acceleration of our cash conversion cycle and managing our unbilled receivables downward by executing against some of our large multiyear contracts.

Speaker 2

This quarter, we made progress in delivering against our next generation TropoScatter awards with the U. S. Marine Corps and the U. S. Army.

Speaker 2

With the refinancing complete, the Comtech team is now totally and wholly focused on accelerating execution against these contracts to deliver value to both our shareholders and our customers. This leads me to my second key point. Comtech hasn't been waiting to move forward. We've been winning business this entire time demonstrating the strength of our technologies and mission critical nature of our solutions. I'll give you the most recent obvious example.

Speaker 2

Following a competitive process on May 16, the Commonwealth of Massachusetts voted to award Comtech a 5 year contract with a 5 year extension option for the operations and maintenance of their statewide next generation 911 public safety system. The initial value of this contract is in excess of $120,000,000 with additional upside potential over the 10 year life of the agreement. These wins combined with our recent $48,000,000 contract extension in the State of Washington demonstrate the competitive advantage of our people and our technology. Within our satellite and space communications segment, the contact team continues to deliver against the next generation troposcatter awards with the U. S.

Speaker 2

Marine Corps and the U. S. Army. In addition to completing work against existing contracts, Comtech continues to expand its relationship with the U. S.

Speaker 2

Army with a recent $13,500,000 award for VSAT equipment and related services. This leads me to a higher level point that I've made both publicly and in my direct conversations with investors and that I want to emphasize here today. Comtech has a long standing history of providing mission critical communication solutions to its customers. In this country, for example, it's easy to take a 911 call for granted. But making sure that those calls have the public safety result they should is an extraordinarily complex problem and Comtech is at the forefront of the technology that solves it.

Speaker 2

We play a similar critical role in satellite and space top markets, providing communications infrastructure that ensures people, businesses and governments can connect anywhere on earth under any conditions. This mission critical role and capability is what I want our investors to remember and hope the markets reconsider. The fact is that our ability to develop and deliver superior technology remains fully intact And Comtech's underlying value is one of just a few businesses in the world that do what we can do remains unchanged. So what has changed? First, we now move ahead with a committed financing and strengthened balance sheet.

Speaker 2

2nd, we can more successfully leverage 2 underlying businesses that each see growing demand from traditional buyers from upgrade cycles in public safety and satellite space communications and from opportunities in the new end markets. Mike will speak in detail to this quarter's financial performance in a moment. Before I make that hand up, I do want to make one other point to our shareholders. It says something very positive about our business and our company that we continue to be able to attract exceptional talent. You may have seen these announcements or read our newsletters, but it's meaningful to the capital markets as well that we have done the following: announce Jeff Robertson's appointment as President of our Terrestrial and Wireless business back in April, and it's safe to say that he's hit the ground running.

Speaker 2

Jeff is a known leader and expert in the 911 and public safety space and even as he and his team have secured the contract win with Massachusetts, he's moving fast to both improve our existing operations and grow into new opportunities. We hired 2 other senior public safety officials, Tom Guthrie and John Whitehead. And on the satellite and space side, we added Raleigh Regal as Vice President of Business Development and Sales. Raleigh is a well known across the industry for his expertise and ability to drive growth, both in terms of top line sales and also in terms of building teams. I wrote this in our investor letter and will repeat it here.

Speaker 2

I don't think Comtech has ever had a deeper and stronger bench than it does today. Comtech is a good business that offers mission critical solutions to the world's most demanding customers. We've got some of the best people and technologies in the market and the markets we are selling into are themselves growing. Taken together, I remain optimistic about our future and our ability to create value for all of our stakeholders. I'm going to turn it over

Speaker 3

to Bobby now. Thanks, John. Before discussing our recent results for Q3, let me first cover the status of our refinancing efforts. Last night, we were very pleased to announce that we entered into a new $222,000,000 credit facility with a new syndicate of lenders, which replaces our prior credit facility and which is expected to be funded today, June 18. With July 31, 2028, as its maturity date, we have significantly pushed out our repayment obligations by about 4 years.

Speaker 3

And by adding an asset based revolver component to the facility have immediately enhanced our liquidity. As a result of entering this new credit facility, we are able to once again reclass a major portion of our outstanding debt back to its long term status. The new credit facility itself consists of a committed $162,000,000 term loan facility and a $60,000,000 revolver loan facility, backed by our eligible receivables and inventory. Outstanding borrowings at close approximate $187,000,000 reflecting $25,000,000 drawn on the revolver. At close, our available sources of liquidity approximate $63,000,000 consisting of qualified cash and cash equivalents and excess availability under the revolver, both as defined under the credit agreement, of approximately $28,000,000 respectively.

Speaker 3

Interest on the term loan facility currently approximates so for plus 9.5%, whereas interest on the asset based revolver currently approximates sulfur+5%. Blended, the rate currently approximates 14%. Interest on the term loan is dependent on a pricing grid based on our net leverage ratio and interest on the revolver is dependent on a pricing grid based on our average revolver usage, both as defined in the agreement. Our first covenant testing period is July 31, 2024. At such date, our maximum net leverage ratio is set at 3.25 times trailing 12 months EBITDA.

Speaker 3

As for the minimum fixed charge coverage ratio, that is initially set at 1.2 times. The first step down in the net leverage ratio to 3.15 occurs on July 31, 2025, and the first uptick in our fixed charge coverage ratio to 1.25 occurs on April 30, 2025. Other financial covenants we need to maintain include an initial minimum trailing 12 month EBITDA of $35,000,000 starting in October of 2025 and a minimum average liquidity of $20,000,000 dollars In connection with entering into the new credit facility, we exchanged our Series B convertible preferred shares for a new Series of B1 convertible preferred shares. The new Series B1 convertible preferred shares reflects certain changes to consent rights and existing put rights related to payments upon a change of control following specified asset sales. In each case, consistent with the terms of the new credit facility, The powers, preferences and rights of the Series B1 convertible preferred stock are substantially the same as those of the Series B.

Speaker 3

We did not receive any cash proceeds from the issuance of the Series B1 shares. And importantly, as I'm sure some might ask, the preferred holders conversion price and interest rate did not change. Now the documents themselves are lengthy, so I'm not going to run down each and every term in the agreement. I just cover a good amount of ground on the key terms and strongly urge investors to read these documents, which are being filed in the Form 8 ks with the SEC today. Entering into the new credit facility was a key milestone not only for our company but for our customers, our vendors, our dedicated employees who got this over the finish line.

Speaker 3

We are very pleased to have finally resolved a significant overhang on our business and expect the new credit facility to contribute significantly to enhancing our liquidity and business prospects. With this refinancing now in the rearview mirror, we can get back to the tasks at hand of growing our business, liquidating our unbilled receivables and increasing value for our shareholders. Now let's talk about Q3 results. Consolidated net sales were $128,100,000 compared to $134,200,000 in the Q2 of fiscal 2024 and $136,300,000 in the Q3 of fiscal 2023. Net sales during our Q3 of fiscal 2024, primarily in our Satellite and Space Communications segment, continued to reflect challenging business conditions stemming principally from our efforts during the quarter to refinance our prior credit facility, which temporarily slowed down our receipt of components from suppliers and our ability to deliver finished products during the quarter.

Speaker 3

While we have made significant progress toward resolving such conditions by entering into our new credit facility, net sales related to certain orders in our backlog shipped at the future periods. Also as an important reminder, net sales in our Satellite and Space Communications segment for our Q3 reflect the absence of PST, which was divested on November 7, 2023. For the 3 months ended April 30, 2024, net sales in our Satellite and Space Communications segment primarily reflect higher net sales of our troposcatter solutions to U. S. Government and customers, including progress toward delivering next generation troposcatter terminals to both the U.

Speaker 3

S. Marine Corps and U. S. Army, more than offset by lower net sales of high power solid state amplifiers related to the PSC divestiture, COMETropo terminals to an international customer and VSAT SATCOM equipment for the U. S.

Speaker 3

Army. Our book to bill ratio, measured defined as bookings divided by net sales, in this segment for the 3 months ended April 30, 2024 was 0.85 times. During the Q3 of fiscal 2024, this segment was awarded over $13,500,000 of funded orders from the U. S. Army for VSAT equipment and related services, over 6,000,000 dollars of funding from U.

Speaker 3

S. Army for cyber training related solutions, over $5,500,000 in operational support and maintenance orders from the Japan Aerospace Exploration Agency, over $5,000,000 of funding from a Canadian customer to upgrade a previously deployed triple scatter system as well as an order from an international military who is evaluating our common triple scatter solutions. We believe that this new international customer along with the 2 other new international customers that placed orders in our Q2 of fiscal 2024 to evaluate our next generation modular transportable transmission systems could lead to larger scale triple opportunities in the future. As for our Terrestrial and Wireless Network segment, compared to the comparable period of the prior year, Q3 fiscal 2024 reflects higher net sales of our NG911 and call handling services offset in part by lower net sales of our location based solutions. Our book to bill ratio in this segment for the 3 months ended April 30, 2024 was 0.72x.

Speaker 3

Key bookings include a multiyear extension for critical NG911 services for large county and a Midwestern state valued at over $10,000,000 and an extension of our short messaging service software engineering services to a large international mobile network operator valued at over $7,000,000 and a multiyear NG911 call handling services contract aggregating $4,000,000 for PSAPs located in Canada. Additionally, as John referenced before, subsequent to our quarter end, we entered into a contract with the Commonwealth of Massachusetts for the continued operation and maintenance of the state's NG911 system. This new contract has an initial 5 year term from August 1, 2024 through July 31, 2029 and includes one option to renew for a 5 year period through July 31, 2034. Including the option period, the total contract value could potentially exceed $250,000,000 We are very honored to have been selected again to be a trusted solutions provider to the Commonwealth. This competitive win serves to highlight strong value proposition of our critical communications infrastructure services and significantly enhances our revenue visibility into the future.

Speaker 3

Gross margins for the quarter were 30.4% compared to 32.2% in our Q2 of fiscal 2024 and 31.7% in the Q3 of fiscal 'twenty three. We reported a GAAP operating loss in Q3 fiscal 2024 of $3,500,000 compared to an operating loss of $5,300,000 in Q3 of fiscal 2023. While both quarters included restructuring charges, GAAP operating loss in the more recent quarter includes $2,500,000 of CEO transition costs. As explained in more detail and reconciled in our Form 10 Q for the quarter, we utilized a non GAAP measure that we refer to as adjusted EBITDA. For Q3 fiscal 2024, adjusted EBITDA was $11,900,000 or 9.3 percent of related net sales as compared to $12,500,000 or 9.2 percent that we achieved in Q3 of fiscal 2023.

Speaker 3

The decrease in adjusted EBITDA in dollars reflects lower research and development expenses in both of our reportable operating segments, more than offset by lower consolidated net sales and lower consolidated gross profit, both in dollars and as a percentage of consolidated net sales and higher unallocated SG and A expenses due to our OneContact and People Strategies initiatives. As we enter the Q4 of fiscal 2024, business conditions continue to be challenging and the operating environment is largely unpredictable. In light of these business conditions and resulting challenges, while we are pleased to have successfully closed on our refinancing of the prior credit facility, we do anticipate variability from time to time as we move through our OneContact transformation and are targeting net sales and adjusted EBITDA for our Q4 of fiscal 2024 to be similar to our Q3 of fiscal 2024. Such expectation considers our strong backlog of $653,400,000 as of April 30, 2024, our revenue visibility of approximately $1,500,000,000 and the timing of our refinancing of the prior credit facility today being so close to our fiscal year end. Now let me turn the call back over to John.

Speaker 3

John?

Speaker 2

Thanks, Mike, and thanks again to those of you who dialed in today. To recap, our balance sheet is strong. We have made excellent additions to our leadership team. Our people, technology and equipment are best in class evidenced by our continuing success in winning new business. As I said, my top near term priority is ensuring that we manage our unbilled receivables downward, improving our cash conversion cycle.

Speaker 2

There's a lot

Speaker 3

ahead of us

Speaker 2

to look forward to and we're exiting the quarter with significant positive momentum. Some of what's to come is challenging, but I remain confident and we'll get to where we need to be. I'm excited to lead Comtech forward at this moment in time and I expect it won't be long before the markets come to appreciate and properly value our business. In closing, I would like to thank our dedicated employees, customers and suppliers for their continued commitment to Comtech. Thank you very much.

Operator

We'll take our first question from Joe Gomes with NOBLE Capital. Please go ahead.

Speaker 4

Good morning, John and Mike. Congrats on the refi.

Speaker 3

Good morning, Joe. Thank you. Thanks, Joe.

Speaker 4

A couple of quick questions on the refi just during the call scanning the 8 ks. And I was wondering, you said it's with a new group. Did WhiteHat, Magitar, did they contribute any additional funds over and above what they had done previously? Also saw there's about $1,400,000 warrants that were attached to the deal. I was wondering who those warrants went to.

Speaker 4

And you gave us kind of a blended 14% rate. If you could just remind us how that compares to what it was under the old facility?

Speaker 3

Sure. Glad to unpack there, but if I miss 1 or 2, please remind me. So in terms of the let's cover the warrants first. The warrants did not go to Magnetar and WhiteHat that was going to the lenders as part of the deal. Magnetar and WhiteHat did not put any new cash into their investment.

Speaker 3

They were very supportive during the process and helped us along the way. And in terms of the economics to the rate compared to what we have today, we're sitting at about 10% currently under the old agreement. So there was a step up, but it's reflective of the deal that we're striking here.

Speaker 4

Okay. Thanks for that clarification. And 2, one of

Speaker 2

the things that you'd mentioned

Speaker 4

was the challenges with the supply chain and getting products done and that has pushed some of the, we'll call it, some of the revenues to the right. And I'm just trying to get an idea of how long do you think this resolving the supply chain and getting the finished products, how long is that process going to take to get back to, let's call it, a normalized rate?

Speaker 2

Yes. So as you might imagine, going through the period we went through where our liquidity was low, we weren't able to get everything to the suppliers that we needed. They weren't able to supply equipment and it certainly pushed things to the right. We were hopeful that within a 3 month time frame, we can reset the supply chain and return to a kind of a rate of normal production of all of our facilities.

Speaker 3

Does that answer the question?

Speaker 4

Yes. Thank you for that. Lemann, one of the big contracts, the Global Field Services, I know it had been under protest and I think there had been some issuances that maybe they had the protest had been denied. But maybe you could just give us some update on where that contract stands today?

Speaker 2

Yes. So as of last Thursday, we got a note from omni contract demand that the stop for the quarter had been lifted. And so we are anticipating taking over that contract.

Speaker 4

Okay. And when do you think you might start seeing revenues out of that then?

Speaker 3

Yes. Our view at this point, Joe, is with the stop work order lifted, we would get going pretty quickly. We do have a ramping up, but the Army has already expressed desire to get going. So we will get ramped up. It's probably going to start contributing meaningfully in 2025.

Speaker 3

I think that timing is about right. By the time we transition

Speaker 2

all the employees, I would expect August 1.

Speaker 4

Okay. And one last one for me and I'll jump back in queue. So John, a lot of great news here with the refi finally done and continuing to move forward on adding new people, some major contract wins like Massachusetts. Any timeframe as to when they are going to remove the temporary tag?

Speaker 2

Well, unfortunately, I would give you one answer, but it's the Board of Directors who, of course, have the fiduciary as I've told the Board, I'm going to make it very difficult for them to take me out of this job. And if they can find somebody better, then more power to them. But I'm loving performing under the job. And with the team that we've got in place and others to be added, I couldn't think of a better place to be.

Speaker 4

Great. Well, congrats again on the re getting the refi done. Look forward to getting back to business as normal and I will allow someone else to

Speaker 5

ask some questions. Thank you.

Speaker 2

Thank you, Jeff. Thanks, Jeff.

Operator

And we will move next with Mike Crawford with B. Riley Securities. Please go ahead.

Speaker 6

Thank you. What the when in Massachusetts does that whole $140,000,000 go into bookings already in this July Q4?

Speaker 3

That would be a 4th quarter booking, yes. We would not put the option year in at this point. The option year would not be in backlog.

Speaker 6

And then, regarding the unbilled receivables and how those will be declining in the next year. Can we just walk through some of the mechanisms regarding that, maybe starting with scatters, for example, timeline from order to delivery to acceptance on a Tropo product and maybe what relative contribution that kind of section of unbilled receivables is on the balance sheet and maybe kind of a similar walk through on the other major items there?

Speaker 3

Sure. Hi, Mike. This quarter, looking at our footnote, you probably will notice that while the total headline numbers stayed about the same, we did have a shift in our unbilled receivables with the U. S. Government towards billed receivables.

Speaker 3

So I take that as a sign that we are starting to get the components and starting to make the deliveries that we need to in order to clear the unbilled. So we always felt around this time of the year, we would start to see this liquidation. I think now with the refi behind us and supporting our balance sheet, we can lean in on the supply chain to get components in faster and out the door sooner. I think that's probably the number one thing to do is just get the supply chain, get the manufacturing and getting those deliveries out as planned on both the Army Tropo order as well as the Marine Tropo order. So I think we're in the thick of it right now and we do expect to see a nice liquidation in those two particular contracts over the next couple of months.

Speaker 2

Yes, I would also add that we started deliveries, significant deliveries, I should say, at the end of May. We'll be delivering throughout the month of June, July August. And I believe the last deliveries, we're trying to move it into August, but the last deliveries I think are the beginning of September.

Speaker 6

Okay. That's great for the tropo. And what about for things like software delivered to telecom customers where you've been waiting for acceptance after it's been delivered?

Speaker 3

Yes. I think we're doing what we need to do for our deliveries. Some of these milestones were out in fiscal 2025, so we haven't yet approached those milestones. I think you're probably going to see probably a more dramatic drop in the satellite and space unbilled. The T and W unbilled, I think, will be a little bit of a longer tail.

Speaker 3

But I think we're moving along doing what we need to, working with our customers and fully expect to recover that as planned.

Speaker 2

Yes. Some of those contracts in that space, which are indicative of that market, have long times between milestones. And so as we catch up to those, and I believe in fiscal year 'twenty five, we'll start to roll those off. And in the future, we will try to make sure that we put in place contracts with a little bit better milestones.

Speaker 6

Yes, that would be good. And then just to be clear, this 11 point $9,000,000 adjusted EBITDA number for 3Q with a similar expectation for 4Q, Are those the numbers that will be used for the leverage covenant in your new bank facility?

Speaker 3

Yes. In terms of the specifics how we derive that, this is our view at the moment based on the refinancing done. And certainly, we have some risks and opportunities that we track. And we felt at this juncture, it's so close to year end. This was probably the appropriate guidance.

Speaker 3

Certainly, we'll do our best now, having secured the refinancing to expedite and move things to the left. But we just want to be cautious. We're only into it one day. And we want to start executing now servicing the supply chain. In terms of how we develop the covenants themselves, we modeled in sensitivities and we feel comfortable that how we set up the covenants going out of the gate, we expect to be in compliance is the best way to say it.

Speaker 3

It. Great. Well, thank you very much. Thank you. Thank you.

Speaker 3

Thanks

Operator

We will move next with Greg Burns with Sidoti. Please go ahead.

Speaker 5

Good morning. Just to follow-up on that last comment, when you look at staying in compliance with those covenants, obviously, this run rate would imply like either a step down in the level of debt or EBITDA growing from these levels? What is your view on that and how you're going to, I guess, stay in compliance? Are you expecting to liquidate those receivables and reduce the level of lending? Do you have a view on EBITDA maybe stepping up with some of these contracts kicking in, in 2025?

Speaker 5

How should we think about that?

Speaker 3

I think you nailed it in the last point. Certainly, the unbilled receivables and liquidating unbilled is a key driver to this. We are expecting those, as I said earlier, to unwind over the summer and generate cash flows for us. And certainly, we have grown our backlog and we're on pace to have record backlog if we keep this up. So I think things are trending in the right direction.

Speaker 3

And now that we have the refinancing secured, we feel comfortable about making those investments to move forward on bringing whatever we can to the left and maximizing our EBITDA. But I think the number one item is definitely the unbilled that's going to drive our compliance.

Speaker 5

Okay. And when you look at the disruptions in your business that you saw last quarter and this quarter and I guess probably into the next quarter a little bit, how much of that is just timing with the supply chain and getting the products out the door versus maybe lost business?

Speaker 3

I would say it's the majority is components, getting key components into manufacture things. It only takes one part to hold you up. And certainly, as we were in the throes of getting the refinancing done, we were expecting to have this done back in March. So we were living under this agreement for another 3 months. There was coming that we had a reserve for in that old agreement, which changes your behaviors.

Speaker 3

So now that things have opened up a little bit with our liquidity under this new asset based loan and the way we structured this. We'll have more liquidity at a disposal and again service and supply chain, they've been very good partners over the last several months working with us. So I think it's time to return the favor now and get things back prioritizing the factories and keeping Maria's team busy.

Speaker 2

Yes. I would also add that I'm not sure that we were losing orders, but that there were orders that were being delayed with some of the customer base worried a bit about our financial stability. And this completing and the resolution of the refinancing will solve all of those problems in terms of our perception in the market as well as giving us a boost into business for the next year.

Speaker 5

Okay. When you think about alternative solutions, if a customer is delaying and kind of waiting to see where you're at, is it how easy would it be for them to replace your solutions? Or I'm just trying to get a sense of maybe if they found that we're able to find another supplier or if they

Speaker 2

Yes. So on the yes, on the troposcatter side, there really aren't a lot of competitors in that market. And certainly, we're the world leader in the technology that's in that space. So sometimes it will come down to what's their trade off, whether or not they want to go to a piece of equipment that is less capable than what we produce On the satellite side, on the other on the digital side, on the RF side, there are competitors there, but we're still seeing a very healthy backlog. I wouldn't say that there was a diverse set of competitors there, but certainly there are.

Speaker 2

And they could go to other places, but we haven't seen that yet. I think what we've seen is a delay in some of the things that customers are doing as well as our ability to produce and get equipment out the door. We're going to be excited to do that in a much better way than we have over the last 3 or 4 months.

Speaker 5

Great. And within the 9 11 renewals, what was the pricing like on those? Was there a step down in pricing or how did those renegotiations go?

Speaker 3

Yes. I don't think we'll get specific as to how we price the opportunity, but I would say we have good relationships with our customers. These were competitive awards that we won. So there were folks out there that we were competing with and we outbid them, I guess, if you will. But the pricing and the jobs themselves, this is a lot of work that we've been doing for years and the continuation of that work.

Speaker 3

And we're not seeing like massive discounts to win the opportunities. I think the customers are at the point in their life cycles where they're also looking to do upgrades of the technologies, particularly in the 9 eleven space. And so that gives us opportunities to have margin expansion, while we secure the base and then bring in other opportunities on top of that.

Speaker 5

Okay, great. Thank you.

Speaker 2

Okay. Thanks, Craig.

Operator

We do have a follow-up from Mike Crawford with B. Riley Securities. Please go ahead.

Speaker 6

Thank you. Just on growth other growth drivers, so the Global Field Services representative contract, is that still anticipated to grow to be as much as $100,000,000 a year kind of revenue contribution for the company for several years?

Speaker 3

Yes, that was a 4 plus 4.5 year contract. It's staffing over 200 something positions globally. And once you have them in place, it's pretty stable, steady work.

Speaker 6

Okay. And then the other one that we've been maybe more excited about is this EDAM modem that you're developing that really is the next generation of this ebbem modem that ViaSat I think has generated about $1,000,000,000 of revenue on it over the last decade. And I believe you're building the first articles there or what is the what's the timeline on EDIM?

Speaker 2

Yes. So the first articles and prototypes are due in September. We aren't expecting significant revenue to that till probably the end of what would be our towards the end of our 2025 fiscal year. But yes, that will be the 1st digital modem in the market. We're pretty excited about that.

Speaker 2

That kind of aligns with where our strategy is going forward, which is the digitalization of the satellite industry. So we're getting a bit of a jump start on it with the Army on that modem. By the way, we have other modems that we do expect that we've been involved in. There's been 3 major programs that have come out of the military and Comtech has been involved in all three of them. That's the LAMS, the A3M, which is the Army Air Force anti jam modem as well as the EDAM.

Speaker 2

And we expect the A3M to move into a production phase very shortly. And that should provide significant revenue for us in the fiscal year 2025.

Speaker 3

Okay, great. Thank you.

Operator

We show no further questions at this time. I will turn the call back to our presenters for any closing or additional remarks.

Speaker 2

Okay. Thanks everybody for calling in and being with us today. Mike and I and this entire team of financial professionals are very proud of the work we did to complete the refinancing. And we're happy to move forward. We're excited about the future.

Speaker 2

We think there are lots of good things ahead for Comtech. We expect to continue to bring on additional leaders in the industry and expect great things out of both our public safety and satellite and space businesses.

Speaker 3

Thank you.

Operator

And this does conclude today's program. Thank you for your participation. You may disconnect at any time.

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