ATLANTA, Aug. 3, 2005 (PRIMEZONE) -- EMS Technologies, Inc. (Nasdaq:ELMG) today reported record earnings from continuing operations in the second quarter on sharply higher revenues compared with prior periods. Second-quarter earnings from continuing operations were $3.9 million or $.35 per share in 2005, which more than doubled the 2004 second-quarter earnings of $1.8 million or $.16 per share. Second-quarter revenues from continuing operations in 2005 were $81.6 million -- 31% higher than the revenues of $62.1 million reported in 2004.
Alfred G. Hansen, president and chief executive officer, commented, "These record results in the second quarter followed strong revenue growth and solid execution by each of the divisions -- LXE, Defense & Space Systems, SATCOM and EMS Wireless -- in our continuing operations. LXE and SATCOM set new second-quarter revenue records, and EMS Wireless set an all-time quarterly revenue record. All four divisions reported big jumps in second-quarter profitability in 2005 compared with 2004.
-- "LXE stretched to eleven its string of consecutive quarters in
which it has set a new sales record for the period. This record
of consistent achievement and growth in market share has been
built on balanced success in the Americas and international
markets. A key contributor to the recent growth has been LXE's
group of new powerful, rugged, vehicle-mount computers with the
versatile Windows(R) CE.NET operating system. Our top-line growth
and customer satisfaction has also been fueled by award-winning
customer service. In the second quarter, LXE was a finalist in
the "Best Customer Service" category for the prestigious American
Business awards.
-- "Defense & Space Systems ("D&SS") boosted its second-quarter
operating profits with good program execution and cost control.
The D&SS division's strong technical capabilities continue to
open new opportunities for advanced communications applications
in both defense and commercial markets. For example, the Office
of Naval Research recently awarded D&SS a contract to develop an
airborne common data link antenna to be mounted on an unmanned
aerial vehicle for communications-on-the-move applications.
Although much larger defense opportunities are currently delayed
due to development and budget issues, we are confident about
D&SS's ability to flourish in the defense transformation
communications arena.
-- "EMS Wireless experienced explosive growth in the second
quarter, as major wireless service providers intensified their
efforts to expand their network coverage footprints. With over
$24 million in revenues, EMS Wireless almost doubled the
revenues in the preceding quarter and the comparable quarter in
2004. These orders were driven in part by recently introduced
advanced antenna designs, but the orders also remained strong for
our traditional antenna portfolio, as well as our repeaters.
Service provider rollouts and antenna orders activity have
remained strong into the third quarter, and we are very
encouraged about the outlook for EMS Wireless.
-- "SATCOM's product line of high-performance, high-speed
terminals helped it reach a new quarterly sales record. The
executive jet market spurred a significant element of this sales
growth, with demand for both military and commercial
communications systems. SATCOM's leadership in satellite-based
broadband aeronautical products was highlighted by a recent
contract to supply the U.S. Army with broadband equipment aboard
Blackhawk helicopters for command and control of operations on
the ground and in the air. SATCOM also continued to expand its
leadership in satellite-based search-and-rescue ("SAR")
operations with a recently announced contract to enable Turkey to
expand its SAR capabilities.
"Our plans to sell our Space & Technology/Montreal and SatNet divisions are proceeding well. We have executed non-binding letters of intent with strategic buyers for both of these divisions, and we are currently engaged in due diligence processes. We are optimistic - although we cannot be certain until the processes are completed - that we will be successful in negotiating definitive sales agreements with the prospective buyers. We recognized a $10 million asset impairment charge in the second quarter related to the Space & Technology/Montreal assets held for sale, based on the terms of the related LOI. There is no indication of impairment of the SatNet assets held for sale.
"We are very pleased with the favorable business developments of the second quarter. Based on our current forecast for the year, we confirm our previous 2005 earnings guidance of $.75 - $.80 per share from continuing operations. "
-----------------
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 1,600 people worldwide, and has manufacturing facilities in Atlanta, Montreal, Ottawa and Brazil.
The Company has four reporting segments...
-- LXE mobile computers and wireless local area networks, for materials handling and logistics
-- Defense & Space Systems antennas and other hardware, for space and satellite communications, radar, surveillance, military countermeasures, and other specialized uses,
-- EMS Wireless base station antennas and repeaters, for PCS/cellular telecommunications,
-- SATCOM antennas and terminals, for aeronautical, land-mobile and maritime communications via satellite.
On May 20th, the Company's Board of Director's approved a plan to sell the assets of its SatNet division. As a result, the SatNet division has been reported in assets held for sale (discontinued operations) as of the second quarter 2005, and for all periods presented in this press release. SatNet broadband technologies are used in high-data-rate, high-capacity satellite communication systems.
There will be a conference call at 9:30 AM Eastern time on Wednesday, August 3, 2005, in which the Company's management will discuss the financial results for the second quarter of 2005. If you would like to participate in this conference, please call 800-807-2165 (international callers use 507-726-3531) within approximately 10 minutes before the call is scheduled to begin. A taped replay of the conference call will also be available through Wednesday, August 10, 2005 by dialing 800-670-2962 (international callers use 620-294-1036).
Statements contained in this press release regarding the Company's expectations for its financial results for 2005, 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...
- the requirement that the Company obtain a waiver from its lender banks of a covenant default created by the second-quarter S&T/Montreal impairment charge; based on discussions with bank representatives, the Company currently expects to receive the waiver prior to filing its second-quarter report on Form 10-Q with the U.S. Securities and Exchange Commission; - uncertainties relating to the proposed sale of the Space & Technology/Montreal and SatNet divisions, including external market conditions, internal priorities and constraints, and financing availability 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 periodic financial 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 aeronautical 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 under the caption "Risk Factors" in Part I, Item I, of the Company's Annual Report on Form 10-K/A Amendment No. 1 for the year ended December 31, 2004, filed March 31, 2005.
EMS Technologies, Inc.
Consolidated Statements of Operations
(In millions, except per-share data)
Quarter Ended Six Months Ended
--------------- ----------------
July 2 July 3 July 2 July 3
2005 2004 2005 2004
------ ------ ------ ------
Net sales $ 81.6 62.1 141.7 122.1
Cost of sales 54.4 40.5 95.1 78.6
Selling, general and
administrative expenses 16.1 14.6 32.1 29.2
Research and development expenses 4.1 3.9 7.7 8.7
------ ------ ------ ------
Operating income 7.0 3.1 6.8 5.6
Non-operating income 0.1 0.2 0.1 1.1
Foreign exchange loss (0.1) (0.3) (0.1) (0.1)
Interest expense (1.1) (0.5) (1.9) (1.1)
------ ------ ------ ------
Earnings before income taxes 5.9 2.5 4.9 5.5
Income tax expense 2.0 0.7 1.7 1.6
------ ------ ------ ------
Earnings from continuing operations 3.9 1.8 3.2 3.8
Loss from discontinued operations (9.5) (2.0) (9.2) (1.8)
------ ------ ------ ------
Net earnings (loss) $ (5.6) (0.2) (6.0) 2.0
====== ====== ====== ======
Net earnings (loss) per share:
Basic - from continuing
operations $ 0.35 0.16 0.29 0.35
Basic - from discontinued
operations (0.85) (0.18) (0.82) (0.17)
------ ------ ------ ------
Basic earnings (loss) per share $(0.50) (0.02) (0.53) 0.18
====== ====== ====== ======
Diluted - from continuing
operations $ 0.35 0.16 0.29 0.34
Diluted - from discontinued
operations (0.85) (0.18) (0.82) (0.16)
------ ------ ------ ------
Diluted earnings (loss)
per share $(0.50) (0.02) (0.53) 0.18
====== ====== ====== ======
Weighted average number of shares:
Common 11.2 11.1 11.2 11.1
Common and dilutive common
equivalent 11.2 11.3 11.2 11.3
EMS Technologies, Inc.
Consolidated Balance Sheets
(In millions)
July 2 Dec 31
2005 2004
------ ------
Cash $ 15.5 19.3
Receivables billed 67.7 56.0
Unbilled receivables under long-term contracts 24.8 21.2
Customer advanced payments (3.9) (1.9)
------ ------
Trade accounts receivable 88.6 75.3
------ ------
Inventories 32.9 33.4
Other current assets 1.4 1.4
Assets held for sale 59.3 64.7
------ ------
Current assets 197.7 194.1
------ ------
Net property, plant and equipment 32.5 31.5
Goodwill 13.5 13.5
Other assets 16.2 16.0
------ ------
$259.9 255.1
====== ======
Bank debt and current $ 18.8 3.5
installments, long-term debt
Accounts payable 27.1 23.8
Other liabilities 19.7 19.7
Liabilities related to assets held for sale 21.4 24.1
------ ------
Current liabilities 87.0 71.1
Long-term debt 52.0 58.0
Stockholders' equity 120.9 126.0
------ ------
$259.9 255.1
====== ======
EMS Technologies, Inc.
Segment Data
(In millions)
Quarters Ended Six Months Ended
--------------- ---------------
July 2 July 3 July 2 July 3
2005 2004 2005 2004
----- ----- ----- -----
Net sales
LXE $31.6 27.7 58.4 52.6
Defense & Space Systems 13.3 12.2 24.6 25.0
EMS Wireless 24.5 12.9 36.7 25.1
SATCOM 12.2 9.5 22.0 19.6
Other -- (0.2) -- (0.2)
----- ----- ----- -----
Total $81.6 62.1 141.7 122.1
===== ===== ===== =====
Operating income (loss)
LXE $ 2.2 1.7 3.1 2.8
Defense & Space Systems 1.5 0.6 1.0 1.5
EMS Wireless 2.6 0.4 1.7 0.5
SATCOM 1.1 0.5 1.8 0.7
Other (0.4) (0.1) (0.8) 0.1
----- ----- ----- -----
Total $ 7.0 3.1 6.8 5.6
===== ===== ===== =====
Earnings (loss) from continuing
operations
LXE $ 1.3 0.9 1.8 1.6
Defense & Space Systems 0.8 0.3 0.5 0.8
EMS Wireless 1.5 0.2 0.8 0.1
SATCOM 0.9 0.5 1.5 0.7
Other (0.6) (0.1) (1.4) 0.6
----- ----- ----- -----
Total $ 3.9 1.8 3.2 3.8
===== ===== ===== =====