Thank you for standing by and welcome to Comtech Telecommunications Corp fourth Quarter Fiscal 2020 Earnings Conference Call. At this time, all participants are in listen-only mode. Later we will conduct a question-and-answer session. [Operator Instructions] This conference is being recorded Tuesday, 29, 2020.

I would now like to turn the conference over to Mr. Jason DiLorenzo of Comtech Telecommunications. Please go ahead, sir.

Jason DiLorenzo - Vice President of Tax

Thank you and good afternoon. Welcome to the Comtech Telecommunications Corp Q4 and year-end conference call for fiscal year 2020. With us on the call are Fred Kornberg Chairman of the Board and Chief Executive Officer of Comtech Michael President and Chief Operating Officer and Michael Bondi, Chief Finance Financial Officer. Before we proceed, I need to remind you of the company's safe harbor language 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 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 Securities and Exchange Commission filings. I am pleased now to introduce the Chief Executive Officer of Comtech Fred Kornberg Fred.

Fred Kornberg - Chairman & Chief Executive Officer

Thank you, Jason, and good afternoon everyone and thank you for joining us on this call today, we will be discussing the results for our fourth quarter of fiscal 2020 and our outlook for fiscal 2021 we hope, our employees, suppliers, customers, partners and investors remain healthy and safe.

As we continue to navigate in this covered 19 environment as you can see from our announcement this afternoon. Our 4th quarter performance reflected a strong finish to what was a challenging year resulting from the over 19 pandemic our 4th quarter sales were $149.7 million with an adjusted EBITDA of $23.5 million in the 4th quarter, we generated a book to bill ratio of 1.0-7 and our pipeline remains strong with a number of large opportunities that we are optimistic about for the year, we achieved a net sales of $667 million and an adjusted EBITDA of $7.8 million we finished the year with a healthy business and a solid backlog prudent financial management in these turbulent turbulent times has enabled us to generate $0.8 million dollars of operating cash flows and the flexibility to continue to invest in our business.

I firmly believe that we remain on the course of delivering long-term growth and driving shareholder value. Now that things have somewhat stabilized, all those things are still fluid we are reinstating guidance and our initial thinking is that we can do better in fiscal 2021 then we did in 2020. That said, we are targeting to achieve fiscal 2021 revenues of approximately $610 million to $130 million with an adjusted EBITDA in the range of 74 million to $8 million I believe that as the year progresses, and new orders come in I remain optimistic that actual 2021 results will exceed our target before further discussing our financial results and business in more detail, I would like to say a few words about the status of the Gillard acquisition.

As a reminder, in January 2020, we announced a highly strategic acquisition of Gilat a worldwide leader in satellite networking technology solutions and services. Unfortunately, after we announced the July the acquisition and COVID-19 pandemic resulted in a sudden and steep decline in the travel and aviation markets we are Gilat's operation and a significant slowdown in Gilat's business as publicly reported Gilat has suffered lower period over period sales and a negative adjusted EBITDA for the first 6 months of the calendar year 2020 given everything in July 2000-20, we commenced litigation in the Delaware Court of Chancery seeking certain declaratory judgments, including a declaratory judgment that Gilad has suffered a material adverse effect and that is a result of the material adverse effect.

We are not obligated to complete the acquisition currently, a trial is scheduled for October 5 2020 and the Delaware court has indicated that intends to render a judgment prior to October 2000-20, the date that we argue lot may terminate the merger agreement. Because this matter is getting ready for trial, I must tell you and I'm sure you will understand that we will not make any further comments on the Gilat acquisition or take any questions related to Gilad or the related to litigation now let me turn it over to Michael Bondi will provide additional commentary about our financials. And then the Michael porcelain who will provide an update on our business and our pending acquisitions mike.

Michael A. Bondi - Chief Financial Officer

Thank you, Fred. And good afternoon everyone. Our net sales for the 4th quarter of fiscal 2021.7 million and we finished the year with net sales of 7 million, our revenues for Q4 represent a 10.8% quarter-over-quarter increase as compared to our Q3 2020 results, which were significantly impacted by the covered 19 pandemic in fiscal 2020 net sales to US-based customers were 76% of total net sales we are 3% to international customers. It was a strong quarter for bookings, we received $157 million of orders which resulted in full year bookings of $584 million despite the impact of the pandemic, we achieved a book to bill ratio of 0.95 times and finished the year with a healthy backlog of $20.9 million although visibility into the economy remains a bit cloudy.

We do have pretty good visibility into fiscal 2021 given our healthy backlog. In fact, when you add or backlog plus the total unfunded value of multi-year contracts awarded to us, but not in backlog and for which we expect orders against we have clear visibility to approximately $1.1 billion in total future revenue a substantial portion of which we estimate will be recognized as revenue during the next 24 months. Now let me give you some financial metrics and commentary with respect to the rest of the income statement, our gross profit percentage in Q4 was 30% and for the year, it was 6.8%. Our gross profit in fiscal 2020 reflects minor increases in costs due to a lower level of factory utilization and higher logistics and operational costs resulting from covered 19 as we look into fiscal 2021 and expect.

We expect a slightly higher level of sales growth in both our Government Solutions segment and our Commercial Solutions segment and we expect ongoing higher production Logistics and safety-related costs resulting from covered 19 it would be reasonable to set an initial gross margin percentage target of 30% for fiscal 2021 however if product mix shifts favorably even a bit, we could easily be back to 37% if not higher SG&A for Q4 was 23.6 million or 0.8% of consolidated net sales for the year. Selling, general and administrative expenses were one hundred and $17 million dollars $117.1 million or 19% of consolidated net sales.

Turning to research and development expenses. We spent $11.3 million in the fourth quarter of fiscal 2020% or 7.5% of consolidated net sales for the year, R&D expenses were $52 million or 8% of consolidated net sales total amortization of stock-based compensation expense during Q4 of fiscal 2020 was $6.2 million and for the year, it was $3 million next year. We expected to approximate 11 million to $13 million total amortization of intangibles was 0.$6 million dollars in the fourth quarter of fiscal 2020 for the year, it was 21.6 million. Looking to fiscal 2021 and excluding the impact of our pending acquisitions. We estimate total annual amortization of intangible assets of $1.3 million. Our consolidated GAAP operating income for the fourth quarter of 2020 was $2.8 million for 1% of net sales as Mike will discuss in a bit. We continue to incur acquisition plan expenses including litigation costs, excluding 4 million of such costs. Operating income in Q4 2020 would have been $9.2 million or 6% of consolidated net sales for the year.

GAAP operating income was 2 million or 2.5% of net sales in fiscal 2020 we incurred $1.2 million of acquisition plan expenses and other similar expenses excluding such expenses. GAAP operating income would have been 5% of net sales, our adjusted EBITDA was $23.5 million or 7% of consolidated net sales for the 4th quarter of 2020 for the year, the $7.8 million of adjusted EBITDA translate into a ratio of 0.6% of consolidated net sales. On a segment basis in Q4. Our Commercial Solutions delivered $6 million of adjusted EBITDA or 7% of related net sales for the year, adjusted EBITDA in this segment was $1.7 million or 7% of related net sales turning to the Government Solutions segment, we delivered 0.$4 million dollars of adjusted EBITDA in Q4 or percent of related.

Net sales for the year our Government Solutions segment delivered adjusted EBITDA of $5.7 million or 9%, 8% of related net sales looking to fiscal 2021 and despite all of the mix changes, we expect adjusted EBITDA to approximate percent when using the $620 million midpoint of our 2021 targeted range for net sales. Now let me talk further about interest taxes EPS, cash flows and our balance sheet. Interest expense was $1.1 million in the 4th quarter of fiscal 2020 fiscal 2020 for fiscal 2020 it was 6.1 million, excluding the impact of our pending acquisitions. Interest expense is expected to be around $5.9 million in fiscal 2021 on the tax side.

Excluding discrete tax items, our fiscal 2020 effective tax rate was 37% when thinking about our tax rate for fiscal 2021 it is important to note that we will incur significant acquisition plan expenses so for modeling purposes. If you assume acquisition plan expenses of 0. Our effective tax rate is expected to approximate 21% for now, we would tell you to use that rate. But note that as we incur acquisition plan expenses. The actual effective tax rate for fiscal 2021 may be lower on the bottom line. GAAP net income in Q4 of 2020 was $1.1 million or $0.04 per diluted share excluding acquisition plan expenses and discrete tax items. Our non-GAAP net income for Q4 2020 was $5.2 million or $0.21 per diluted share for fiscal 2020 GAAP net income was $7 million or $0.28 per diluted share excluding adjustments indicated in our press release issued earlier today. Our non-GAAP net income for fiscal 2020 was $2 million or $0.77 per share share.

We achieved operating cash flows of $8 million for the 4th quarter of fiscal 2020 and as Fred mentioned, $2.8 million for fiscal 2020. This is quite impressive. Our balance sheet as of 31-2020 includes $47.9 million of cash and cash equivalents, and our total debt outstanding was $149.6 million before turning it over to Mike for a business update. Let me provide color on the cadence of our expected fiscal 2021 performance, although the outlook is somewhat cloudy. We do have some visibility into the timing of how things are expected to ship. Currently, we are expecting our Q1 revenues to come in at around $125 million with adjusted EBITDA of about $8 million for the remaining quarters in fiscal 2021, we expect sequential growth with Q4 like usual targeted to be the peak. Now I will hand it over to Mike porcelain.

Michael D. Porcelain - President & Chief Operating Officer

Thanks, Mike. As most everyone knows since the onset of the COVID-19 pandemic. The health and safety of our employees, customers and suppliers has really been our top priority. In addition to safety. We've been focused on ensuring business continuity for the many critical Advanced Technology solutions we provide to our customers, for instance, can you imagine for 911 public safety technologies suddenly were not available health care responders police fire and ambulatory personnel would be unable to timely respond if at all. Also, military and government personnel we not have the ability to securely communicate and their lives and the safety of our citizens around the world would be imperiled for many years. I've been saying that keeping people around the world connected using our critical technologies is the reason Comtech employees came to work each day. But in 2020.

That changed instead of being able to go to work. Many of our employees have to stay home to do their jobs, not in the less. We had to keep both our networks and the networks of our customers Operating and troubleshoot and adapt to whatever our customers needed. It was simply amazing to see and it all unfolded almost perfectly at our employees adopted 2 at all since March. We have conducted. Most of our non-production related operations using remote working arrangements also we're can tell most business travel and we have established social distancing safeguards. No doubt our employees did their jobs and save lives. Our employees are critical to the success of the company.

I must take a few moments to thank them for their incredible efforts and their commitment and dedication to serving our customers. With that said, let me now talk about our team's success in terms of business performance contract wins and the direction of where these efforts will lead us. I will talk first about our Commercial Solutions segment here. Net sales were 85 million in Q4 $3.7 million for fiscal 2020 which is a decrease of only 1% versus last year that small decrease is pretty incredible given everything that is going on this year. Additionally, bookings in the Commercial Solutions segment were strong at 90 million for the quarter and $23 million for the year, resulting in a solid 0.91 book to bill ratio in the COVID-19 environment.

Looking forward, we expect fiscal 2021 sales in this segment to be slightly higher than the level we achieved in fiscal 2020 although the business impact of 19 resulted in significantly lower net sales of our satellite, ground station technologies. During fiscal 2020 as compared to fiscal 2019 bookings did begin to rebound in the 4th quarter of our fiscal 2020, we were awarded a number of important satellite, ground station technology orders during Q4, including contracts by more than 2 million for K been high power traveling wave tube amplifiers or twp TAs for trailer based satellite communication terminals.

We were also awarded a contract valued at more than $1.5 million for 100 Watt band TW TAs for a Tracking telemonitoring and command application to be deployed globally by a major satellite service provider we also received 1.3 million in orders for advanced satellite modems Wayne optimization and redundancy switches to support cellular LTE backhaul for a service provider in the Middle East. We also received a 1.1 million order for solid ground station equipment from a Southeast Asia Ministry of Defense for network upgrade, which could expand to more than 2000 units. Importantly we saw continued strength in our US Government satellite, ground station business receiving additional orders to support a critical US Air Force and US Army anti-GM modem program, known as a 3 on the Ethereum program.

It is intended to provide the US Air Force and US Army with a secure wideband anti-GM satellite communication terminal modem for tactical satellite communications operations our Heights products continue to draw our interest and we continue to educate our customers. Although there are signs of pent-up demand. The satellite, ground station has some ways to go before a fully rebounds. As many of our customer locations remain closed or eliminating installations to only truly must have equipment now let me turn to our public safety location technology solutions who net sales were higher in 2020 then in 2019. To date, the business impact of COVID-19 on our public safety and location Technology Solutions has been relatively muted and demand for our products appear strong for example we secured several multi-year contracts valued at more than 15 million to deploy new call handling solutions in the Midwest region of the United States.

Also we were awarded and began work on close to $30 million of multi-year contracts from 2 US Tier 1 mobile network operators for 5 G virtual mobile location-based technology solutions including public safety applications, although 19 has resulted in the cancellation of several key public safety trade issues and some states and municipalities have announced budget constraints, other existing and potential customers are increasing their funding for Next Generation 911 solutions recognizing the critical importance of upgrading their 911 systems. For example, during Q4 2020, we were awarded the contract value to looked at 54 million to design deploy and operate Next Generation 911 services for the state of South Carolina.

Additionally, we are working with 2 other states for multi-million dollar contracts to upgrade certain components of their 911 networks. As you can see, we believe we are well positioned for long-term growth in this market and as mentioned on prior calls, we have several large opportunities for which we hope to announce contract award soon. Now let me turn to our Government Solutions segment here. Net sales were 7 million in Q4 of fiscal 2020 as compared to 0.4 million in Q4 of fiscal 2019. For the full fiscal year, net sales were 263 million, which represents a decrease of 6% from the prior year. Bookings in our Government Solutions segment. For fiscal 2020 were 163.2 million representing a book to bill ratio of 1 fiscal 2020 includes a nominal amount of sales related to our new X, Y satellite trucking internal product line, which we acquired through our acquisition of CGC we believe sales in fiscal 2020 for this product line will start to take off.

Margins in this product line or a bit less than our normal product set, but as volumes increase. We do expect margins to go up. All in all, we believe fiscal 2021. Net sales for the Government Solutions segment will be slightly higher than the amount we achieved in fiscal 2020 in addition to revenue contributions from the CGC acquisition fiscal 2021 is expected to benefit from existing and future orders to supply manpack Satellite Terminals networking equipment and other advanced VSAT products to the US Army and existing and future orders to provide ongoing sustainment services to the US Army for these sets in addition, we expect to continue working with the US government and delivering our joint Cyber and analysis. Of course, as well as performing sustainment work related to the US Army's Blue Force Tracking BFT one program.

As mentioned on prior calls, we are extremely pleased that in fiscal 2001 we will be managing certain aspects of the space component supply chain for NASA's ARTEMIS missions. We are excited to be part of this important space program and expect more follow-on orders in the future. Also we expect to receive new orders for our recently introduced common terminals. The world's smallest deployable troposcatter system. Additionally, we are making progress with respect to initial deliveries to the US Marine Corp for our next generation troposcatter system finally, we have several other large opportunities in this segment and are optimistic that is the fiscal year 2021 progresses, we will be able to report them as bookings next I would like to make some quick statements regarding 21 expenses and speak about the status of UHP our other pending acquisition first acquisition plan expenses in fiscal 2021 will include significant litigation expenses associated with our pending acquisition and litigation related to a lot as well as on selling expenses related to seeking Russian regulatory approval to date acquisition plan expenses in Q1, most of which relate to go out, litigation approximate 2 million as the trial continues litigation expense will obviously go higher. And if we are required to close the transaction, we would expect to incur an additional 38 million or so, including litigation cost given the ongoing trial, as Fred mentioned, we won't make additional comments about the status of the litigation or take questions on this matter.

As it relates to UHP the leading provider of innovative and disruptive shuttling ground station Technology solutions here, we are focused on the regulatory process in Russia, but we still need certain approval since our last conference call and announcement, we have made progress and we were requested to provide certain information to the Russian government and have provided such we hope that we will be able to receive approval from the Russian government and closed this acquisition by 31-2020 for those that want more detailed information about the UHPLC acquisition and a lot acquisition related litigation matters and the status of regulatory approvals. I do refer you to our Form 10-K that we just filed with the Securities and Exchange Commission earlier this afternoon. Now let me turn it back to Fred who will provide some closing remarks fred.

Fred Kornberg - Chairman & Chief Executive Officer

Thank you, Mike. As I mentioned before, I am very pleased with how our business is performing particularly the results for the 4th quarter fiscal 2020 was obviously a challenging year for Comtech and illustrates the earnings power of our business and our product leadership positions. Looking out to fiscal 2021. We have a strong, diversified customer base selling to both government customers and commercial customers. We have a good business mix and a diversified product line that has protected Comtech in the past and we believe it is a significant source of strength, today we remain determined to extend our market-leading positions and are firmly focus to achieve growth in hospital 2021 as market conditions continue to improve.

As I've said before, we believe that in an environment of increasing market demand for global voice, video and data usage customers will increasingly turn to Comtech to fulfill their needs the secure wireless communications given our business outlook. Our Board of Directors declared a dividend for the 4th quarter of fiscal 2020 of $0.10 per common share payable on October 27 2020 to shareholders of record at the close of business on October 14 2020. We continue to believe our dividend program is a great way to return capital and our shareholders. As we grow the business. Finally, today we announced our Board of Directors approved a new 100 million. Our stock repurchase program. Clearly, we believe this authorization demonstrates our confidence in the underlying value of our stock and in our future.

Now I would like to proceed to the question-and-answer part of our conference operator.

Question & Answers

Operator

[Operator Instructions] We can go ahead and take our first question from Merchant with Citigroup. Your line is open.

Asiya Merchant - Citigroup - Analyst

Great, thank you gentlemen for all the color. Quick questions, maybe for Mike fred Mike. It is a matter of first quarter guide down 16% and the lead. Sequentially, if you can give us some color on what's going on there and then obviously you expect the quarterly progression to be there. Seems like the guy seeing slightly better than what you guys achieved given that you guys have a good backlog, good visibility and why just slightly given an economic conditions have resumed and if you can give us some color on that. Thank you.

Fred Kornberg - Chairman & Chief Executive Officer

Sure. So customers out there. The way we're seeing in the marketplace. The order activity interest is pretty high, but there are still issues in terms of installations that are ongoing. I mean I referred to that in my, my prepared remarks, customers still have their doors lock so to speak, and it's very difficult to get into new installations, and you know this is a global company with global installations and it does take some time to find the right talent in the field that is willing to do it. So with that being said, we are expecting a quarterly ramp up Q1 was the number.

Michael D. Porcelain - President & Chief Operating Officer

Mike here and then each quarter. Thereafter, is the way we're thinking about it. If things shift earlier because vaccine gets developed or something like that. Installations are get ramped up then that that that will change, but right now, that's the way we're thinking about the the delivery of the revenue order flow. We actually feel pretty strong about, we've got some large opportunities out there in the 911 space and yesterday's news in the marketplace is very favorable to the things we need. It's just another sign to the, to the politicians that the 911 systems need to be upgraded so things like that. You know kind of go in our favor. We think fair enough. And then on cash, cash flow that was a pretty strong cash flow that you guys generated this year.

Asiya Merchant - Citigroup - Analyst

Can you guys share some commentary on what should we expect cash flow again to be higher given revenues will be higher next year or was there something one time that we should kind of keep in mind that will not occur in 21?

Fred Kornberg - Chairman & Chief Executive Officer

Well, Mike did talk about strong cash flows that we do expect I think obviously we're going to call out. Again, the acquisition plan expenses. So I mean candidly, I think, I think we spent $20 million or so in fiscal 2020. So anything above that number for 2021 will make that year-over-year comparison probably be lower, is the way I would tell you to think about it because acquisition plan expenses just need to get paid. And obviously, we are in litigation. So if you look at it 2 ways. If you pull out the acquisition plan expenses, you can see the very strong cash flow dynamics of the company and I think that's really the right way to look at the Company in a long-term basis.

Asiya Merchant - Citigroup - Analyst

Okay, thank you.

Operator

[Operator Instructions] We can go to Mike Latimore with Northland Capital. Your line is open.

Mike Latimore - Northland Capital - Analyst

Great, thank you. And just looking at the SG&A line there came down fairly significantly sequentially. I guess, is that a good baseline to think about it, was there any one-time items in there. What was the main factor behind that decline mike, that was probably a function of our cost savings initiatives that we put in place in Q3, and you're seeing the benefit of that in Q4.

Fred Kornberg - Chairman & Chief Executive Officer

Okay. And that's a good kind of baseline number to think about to start there. Yeah. As we enter 2021, certainly we'll be looking to be mindful of the cost expenditures on the SG&A line. Our view is that we're still seeing the benefits and for the foreseeable future. We're going to have those programs in place until conditions meaningfully improve.

Mike Latimore - Northland Capital - Analyst

Akay, all right. And then in terms of US federal government are kind of heading it right into their fiscal year-end here and I guess how is that customer behaving.

Fred Kornberg - Chairman & Chief Executive Officer

I guess into their fiscal year-end, sort of a normal pattern. There I guess we could say normal pattern. I think it will. It all depends on how close we get to October 31.

Mike Latimore - Northland Capital - Analyst

Okay. And then you talked a little bit about the like demand being solid and a little bit harder to get in and who installs.

Fred Kornberg - Chairman & Chief Executive Officer

I guess this does the does that install dynamic effect, the sales cycle to a little bit such that maybe the sales, like a little longer because of the longer install.Yeah, definitely. No, question about it. Yeah, the sales cycle is definitely longer. The way I would describe it in a good way though is back in Q3 and we didn't see any new opportunities. Right. Anything that was being done was old opportunities and now with everybody go into all the online video sales channels. We've really seen a pickup in new opportunities and those are the types of things that we started to see in Q4 come in, we expect them to continue to come in and then it's just a question of figuring out how we're going to get them installed whether it's contact doing it or third party doing it or one of our partners in the field. So we know that is extending that process and I would say, a good And if it's not small change. It's a big change that's out there.

Mike Latimore - Northland Capital - Analyst

Okay. And then any color on just international versus domestic demand is one clearly outperforming other here.

Michael D. Porcelain - President & Chief Operating Officer

Yeah, no, we're not. So what did you know I would say overall we're not, we're not seeing much difference between how people are reacting to the virus out there. I would say a bridal a positive note, is our 911 business, I mean I think that that we are seeing and we would like to see them push the final across the paper in sign that final document, so to speak.

Mike Latimore - Northland Capital - Analyst

Yeah. Okay, great. Thank you.

Operator

And we'll go now to Joichi Sakai with Singular Research. Your line is open.

Joichi Sakai - Joichi Sakai - Analyst

Hi, everyone. Just had a question. First question, I guess on on their research and development expense. I know this quarter it was, it was down about $4.5 million from from a year ago. Just wanted to see what you guys had to say about that. Going forward, do you see a rebound in that expense. Thanks.

Fred Kornberg - Chairman & Chief Executive Officer

Hi, Chris. Yeah, you saw a decline in the fiscal 2020 period. Certainly as we came out of Q3, we tried to be very mindful of critical projects and make sure we continue to invest there as we go into 2021. So I would say that our normal pattern. We're still exist in terms of percentage of sales.

Joichi Sakai - Joichi Sakai - Analyst

Okay. And then no, I've been noticing over the last four quarters. Your inventory level has been increasing out 2 to 3 million quarter can you guys comment on that we know are, is this planned. What do you see 2021. How do you see those levels.

Fred Kornberg - Chairman & Chief Executive Officer

Yeah, I think we do expect the inventory to go down a little bit in 2021. Some of the inventory buildup is we've taken the position is when we can get parts from suppliers will take them. Given that there is no logistical issues and Mike referred to that in his prepared remarks portion, there are some supply logistics that are out there and when we get a lot of the components or something like that. We decided to take them in. So we haven't to deliver our customers when they want to, but there's nothing, nothing special per se. That is occurring. Other than that and normal seasonality and normal fluctuation okay, all right.

Joichi Sakai - Joichi Sakai - Analyst

Okay, thanks.

Operator

[Operator Instructions]Today, we do have a follow-up from Asiya Merchant with Citigroup. Your line is open.

Asiya Merchant - Citigroup - Analyst

Hi, thanks. Thanks for the opportunity. Again, quick question on the stock buyback program. I'm trying to remember when was the last time you guys were buying back stock. But you also have two acquisitions in play here. So is this authorization something that one would expect, would get executed during the fiscal 2001 even partially or if you can just help us understand the rationale behind the stock buyback. Thank you.

Fred Kornberg - Chairman & Chief Executive Officer

Well, I think we view the stock is being undervalued obviously and really it depends upon the litigation that we're in. Our cash position is such that the old the old buyback program was coming to an end. And so we thought we would re-implemented and depending upon our cash position, we will start buying stock all right. While the acquisitions are in play, will you still be myself you'd wait till the acquisition one way or the other either paid or Germany. Yeah. I think we will, we will probably wait until the litigation is over. But we really hope to have the litigation over by the end of October.

Asiya Merchant - Citigroup - Analyst

Thank you.

Operator

[Operator Instructions] It does appear that we have no further questions at this time.

Jason DiLorenzo - Vice President of Tax

Okay, thanks very much, operator, and thanks everyone for joining us today. We look forward to speaking with you again in December.

Operator

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Q4 2020

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