ATLANTA, July 29, 2004 (PRIMEZONE) -- EMS Technologies, Inc. (Nasdaq:ELMG) today reported earnings from continuing operations of $888,000, or $.08 per share, on revenues of $64.5 million for the second quarter of 2004, and $2.8 million, or $.25 per share, on revenues of $128.6 million for the first six months of 2004. These results are in line with preliminary results announced earlier this month.
Alfred G. Hansen, president and chief executive officer, commented, "In the 2004 second quarter, we received record defense contract awards that will benefit future periods; however, as previously reported, the quarterly results reflect current weakness in our orders stream at our SatNet division and, to a lesser extent, at EMS Wireless. We believe this situation is the result of current customer circumstances and timing decisions and not long-term fundamental problems in these target markets. With the recent high level of awards and other customer activity in most of our other business units, our long-term outlook remains very positive:
-- "Space & Technology/Atlanta was recently selected to participate
on some very large contracts for the U.S. Department of Defense
(DoD), resulting in a record level of new contract awards in a
quarter. Most of the second quarter awards relate to new programs
with negotiation for initial firm orders in the near future.
Several of these new programs are planned to extend more than a
decade and are expected to yield orders with options and
resulting revenues to EMS exceeding $200 million over the
programs' lives. We will begin to ramp up in the
remainder of 2004 for development efforts that are expected to be
worth $25-$30 million over the next two years, with the further
expectation of moving into production phases that could yield
combined annual revenues of over $20 million beginning in 2007.
In addition, we are working under development funding or in the
proposal phase for three other large DoD contracts expected to
be awarded in mid-2005.
-- "LXE's $28 million in revenues set a new record for the second
quarter and extended its string of consecutive record-setting
periods to seven. An important factor in LXE's sales growth has
been our strategic plan of R&D investment, which has allowed us
to bring new products to market earlier in the year. One of
these new products is a rugged handheld computer that can gather
data using both bar code and RFID technologies.
-- "SATCOM revenues of approximately $10 million were down somewhat
from the comparable quarter in 2003, as we continue to work on
completing several agreements for DoD applications, which should
benefit us during the remainder of the year. SATCOM is also
continuing to work through the unexpectedly slow process of
approvals for a search-and-rescue system to be installed in
Greece. We recently announced the signing of a long-term
agreement for the sale of our high-speed commercial airline
communications products as part of systems offered by Honeywell
and Thales, two of the world's largest avionics companies. We
believe this agreement could generate more than $50 million in
additional revenues for SATCOM over the initial five years of
the agreement.
-- "EMS Wireless' results were slightly above breakeven for the
second quarter. While sales of our repeaters and shipments from
our Brazilian operations have been much stronger than in the
previous year, sales of our base-station antennas in the U.S.
were less than expected. Considering the uncertain timing of our
customers' expected rollouts, we have taken immediate action to
reduce operating expenses, which should improve the profit
outlook for this division in the second half of 2004.
-- "SatNet provides hardware to the developing market for two-way,
broadband communications. Similar to a startup situation, SatNet
continues to build its base of new customers, but the timing of
orders is difficult to predict. However, we believe that interest
in our open standard DVB-RCS equipment remains high, and we are
working closely with major suppliers of broadcast services to expand
our markets and geographic base. We have also taken specific steps
to reduce the division's operating expenses and lower its breakeven
point for the second half of 2004.
"We remained active in our efforts to sell our discontinued operations - Space & Technology/Montreal. Supplier delays on a difficult legacy program negatively affected this division's results, although the division was still able to report a profit for the first six months of 2004 before interest, taxes and non-operating charges. The division now expects to wrap-up this legacy program before the end of the year. We believe the division's otherwise more stable financial situation, and promising new opportunities for its unique capabilities, will enhance the business prospects currently being evaluated by potential purchasers of these discontinued operations.
"Although the quarter's financial results were disappointing in relation to previous expectations, the quarter was still highly encouraging for the significant underlying business developments during the period - especially our extremely successful recent defense marketing efforts. And our balance sheet remains strong, with debt below the levels where we started the year.
"Guidance about our future earnings performance is clearly subject to substantial uncertainties in current world economies, and in the timing and strength of activity in our key markets - especially two-way broadband communications and PCS/cellular telecommunications, where the rate of orders is currently below our expectations for the balance of the year. We believe that the Company's continuing operations can achieve revenues in the range of $276 - $280 million for the year 2004, with related annual earnings from continuing operations of $.74 - $.78 per share. These results include estimated earnings per share of $.18 - $.22 for the third quarter of 2004 on revenues of $71 - $73 million."
EMS Technologies, Inc. is a leading provider of technology solutions to wireless and satellite markets. The Company focuses on mobile information users, and increasingly on broadband applications. The Company is headquartered in Atlanta, employs approximately 1,700 people worldwide, and has manufacturing facilities in Atlanta, Montreal, Ottawa and Brazil.
The Company has five reporting segments...
-- Space & Technology antennas and other hardware, for space and
satellite communications, radar, surveillance, military
countermeasures, and other specialized uses,
-- LXE mobile computers and wireless local area networks, for
materials handling and logistics,
-- EMS Wireless base station antennas and repeaters, for
PCS/cellular telecommunications,
-- SATCOM antennas and terminals, for aeronautical, land-mobile
and maritime communications via satellite,
-- SatNet broadband technologies for use in high-data-rate,
high-capacity satellite communication systems.
There will be a conference call at 9:30 AM Eastern time on Thursday, July 29 2004, in which the Company's management will discuss the financial results for the second quarter of 2004. If you would like to participate in this conference, please call 800-867-1054 (international callers use 303-262-2143) within approximately 10 minutes before the call is scheduled to begin. The conference identification number is 11004546. A taped replay of the conference call will also be available through Thursday, August 5, 2004 by dialing 800-405-2236 (international callers use 303-590-3000) and entering the following code: 11004546.
Statements contained in this press release regarding the Company's expectations for its financial results for 2004, and concerning the potential for various businesses and products, are forward-looking statements. Actual results could differ from those statements as a result of a wide variety of factors. Such factors include, but are not limited to...
-- uncertainties related to identifying a purchaser of the Space
& Technology/Montreal division, as well as external market
conditions and internal priorities and constraints that could
affect a purchaser's willingness and ability to complete the
transaction on the terms and timing expected by the Company;
-- economic conditions in the U.S. and abroad and their effect on
capital spending in the Company's principal markets;
-- difficulty predicting the timing of receipt of major customer
orders, and the effect of customer timing decisions on our
quarterly results;
-- U.S. defense budget pressures on near-term spending priorities;
-- uncertainties inherent in the process of converting contract
awards into firm contractual orders in the future;
-- volatility of foreign exchange rates relative to the U.S. dollar
and their effect on purchasing power by international customers,
as well as the potential for realizing foreign exchange gains
or losses associated with net foreign assets held by the Company;
-- successful resolution of technical problems, proposed scope
changes, or proposed funding changes that may be encountered
on contracts;
-- changes in the Company's consolidated effective income tax rate
caused by the extent to which the actual levels and mix of
taxable earnings among the U.S., Canada, and other taxing
jurisdictions may vary from our current expectations;
-- successful completion of technological development programs by
the Company and the effects of technology that may be developed
by competitors;
-- successful transition of products from development stages to an
efficient manufacturing environment;
-- customer response to new products and services, and general
conditions in our target markets (such as logistics, PCS/cellular
telephony, and space-based communications);
-- the success of certain of our customers in marketing our line of
high-speed commercial airline communications products as a
complementary offering with their own lines of avionics products;
-- the availability of financing for satellite data communications
systems and for expansion of terrestrial PCS/cellular phone
systems;
-- the extent to which terrestrial systems reduce market
opportunities for space-based broadband communications systems
by providing extensive broadband Internet access on a dependable
and economical basis;
-- the growth rate of demand for various mobile and high-speed
communications services;
-- development of successful working relationships with local
business and government personnel in connection with
distribution and manufacture of products in foreign countries;
-- the Company's ability to attract and retain qualified personnel,
particularly those with key technical skills; and
-- the availability of sufficient additional credit or other
financing, on acceptable terms, to support the Company's
expected growth.
Additional relevant factors and risks are identified in the Company's Annual Report on Form 10-K for the year ended December 31, 2003.
EMS Technologies, Inc.
Consolidated Statements of Operations
(In millions, except per-share data)
Quarter Ended Six Months Ended
----------------- ----------------
July 3 June 28 July 3 June 28
2004 2003 2004 2003
------- ------- ------- -------
Net sales $ 64.5 66.1 128.6 121.8
Cost of sales 42.4 42.0 82.9 77.3
Selling, general
and administrative
expenses 15.7 14.5 31.3 27.2
Research and
development
expenses 4.4 4.8 10.0 9.4
------- ------- ------- -------
Operating income 2.0 4.8 4.4 7.9
Non-operating
income (loss) 0.1 (0.3) 1.0 (0.3)
Foreign exchange loss (0.2) (0.4) (0.1) (0.4)
Interest expense (0.6) (0.5) (1.2) (1.0)
------- ------- ------- -------
Earnings before
income taxes 1.3 3.6 4.1 6.2
Income tax expense 0.4 1.1 1.3 2.0
------- ------- ------- -------
Earnings from
continuing
operations 0.9 2.5 2.8 4.2
Loss from
discontinued
operations (1.1) (16.6) (0.8) (18.2)
------- ------- ------- -------
Net earnings (loss) $ (0.2) (14.1) 2.0 (14.0)
======= ======= ======= =======
Net earnings
(loss) per share:
Basic - from
continuing
operations $ 0.08 0.23 0.25 0.39
Basic - from
discontinued
operations (0.10) (1.55) (0.07) (1.71)
------- ------- ------- -------
Basic earnings
(loss) per share $(0.02) (1.32) 0.18 (1.32)
======= ======= ======= =======
Diluted - from
continuing
operations $ 0.08 0.23 0.25 0.39
Diluted - from
discontinued
operations (0.10) (1.55) (0.07) (1.71)
------- ------- ------- -------
Diluted earnings
(loss) per share $(0.02) (1.32) 0.18 (1.32)
======= ======= ======= =======
Weighted average
number of shares:
Common 11.1 10.7 11.1 10.7
Common and
dilutive common
equivalent 11.3 10.7 11.3 10.7
EMS Technologies, Inc.
Consolidated Balance Sheets
(In millions)
July 3 Dec 31
2004 2003
------- -------
Cash and cash
equivalents 9.4 14.2
Receivables billed 50.0 56.6
Unbilled receivables
under long-term contracts 24.4 18.6
Customer advanced payments (3.1) (3.8)
------- -------
Trade accounts receivable 71.3 71.4
------- -------
Inventories 37.1 33.5
Deferred income taxes 2.2 2.2
Assets held for sale 45.3 40.1
------- -------
Current assets 165.3 161.4
------- -------
Net property, plant and
equipment 37.5 38.5
Goodwill 13.5 13.5
Other assets 12.3 15.1
------- -------
$ 228.6 228.5
======= =======
Bank debt and current $ 35.5 38.1
installments,
long-term debt
Accounts payable 20.5 18.8
Other liabilities 16.7 18.3
Liabilities related to
assets held for sale 17.0 17.8
------- -------
Current liabilities 89.7 93.0
Long-term debt 15.4 15.5
Stockholders' equity 123.5 120.0
------- -------
$ 228.6 228.5
======= =======
EMS Technologies, Inc.
Segment Data
(In millions)
Quarters Ended Year Ended
----------------- ----------------
July 3 June 28 July 3 June 28
2004 2003 2004 2003
------- ------- ------- -------
Net sales
Space & Technology /
Atlanta $ 12.3 11.5 25.3 24.0
Less Sales to
Discontinued
Operations (0.2) (0.6) (0.4) (1.0)
------- ------- ------- -------
Space & Technology /
Atlanta external sales 12.1 10.9 24.9 23.0
LXE 27.7 24.3 52.6 46.4
EMS Wireless 12.9 15.3 25.1 24.1
SatCom 9.5 11.2 19.6 21.8
SatNet 2.6 4.3 6.6 6.5
Other (0.3) 0.1 (0.2) -
------- ------- ------- -------
Total $ 64.5 66.1 128.6 121.8
======= ======= ======= =======
Operating
income (loss)
Space &
Technology / Atlanta $ 0.6 0.9 1.5 1.9
LXE 1.7 1.8 2.8 3.1
EMS Wireless 0.4 1.6 0.5 1.7
SatCom 0.5 0.9 0.7 2.4
SatNet (1.1) 0.1 (1.2) (0.8)
Other & Corporate (0.1) (0.5) 0.1 (0.4)
------- ------- ------- -------
Total $ 2.0 4.8 4.4 7.9
======= ======= ======= =======
Earnings (loss) from
continuing operations
Space & Technology /
Atlanta $ 0.3 0.5 0.8 1.0
LXE 0.9 1.0 1.6 1.8
EMS Wireless 0.2 0.9 0.1 1.0
SatCom 0.5 0.6 0.7 1.9
SatNet (1.2) - (1.5) (0.9)
Other & Corporate 0.2 (0.5) 1.1 (0.6)
------- ------- ------- -------
Total $ 0.9 2.5 2.8 4.2
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