ATLANTA, Nov. 8, 2005 (PRIMEZONE) -- EMS Technologies, Inc. (Nasdaq:ELMG) today reported strong earnings from continuing operations in the third quarter on record revenues. Third-quarter earnings from continuing operations were $3.3 million or $.29 per share in 2005, which tripled the $1.0 million in earnings, or $.09 per share, reported for the comparable period in 2004. Third-quarter revenues from continuing operations in 2005 were $84.4 million -- 46% higher than the revenues of $57.6 million reported in 2004.
Alfred G. Hansen, president and chief executive officer, commented, "With these latest results, we reported another strong quarterly performance in 2005 based on solid revenue growth, execution and profitability by each of the divisions in our continuing operations. LXE, SATCOM and EMS Wireless set new revenue records for the third quarter, and when consolidated, all divisions combined to set an all-time quarterly revenue record for the Company.
-- "LXE has now reported quarter-over-comparable-quarter growth for
twelve consecutive periods. Newer products, especially our latest
vehicle-mount computers, helped lead the growth in the third
quarter of 2005. To maintain this sales momentum, we continue to
expand our product line, including preparations for the full
market roll-out of our new MX7 handheld computer, which has
Bluetooth wireless technology and voice recognition capabilities.
We are also pleased with the success of ongoing customer trials
and the market potential of our new family of forklift-mounted
RFID readers.
-- "Defense & Space Systems ("D&SS") made a significant
third-quarter investment in heightened marketing efforts for
specific opportunities. Defense communications programs remain a
high priority in the defense budget and we have focused our
efforts on this area. We have provided hardware for many
long-term, high-priority communications and electronic warfare
programs, and we believe that this has placed us in a strong
competitive position for future related business.
-- "SATCOM's aeronautical products have firmly established this
division as a leading supplier of high-speed data ("HSD")
products to both commercial and military markets. Increased sales
of HSD products were a significant factor in SATCOM's good
performance for the third quarter. Future opportunities also grew
during the third quarter, when our HSD products were selected to
provide broadband capability on Airbus passenger aircraft. In
addition, we believe our previously announced
teaming-arrangements with the leading original equipment
manufacturers of avionics have helped build the potential for our
next generation of HSD equipment.
-- "EMS Wireless continued to benefit in the third quarter from
renewed build-out activity by U.S. wireless service providers.
During the third period, we substantially completed a warranty
effort to make the performance of the downtilt mechanism more
robust in extremely hot weather conditions. This antenna
continues to be very popular with our customers and is our
leading seller during the current period of network expansion.
"Soon after the end of the third quarter, we signed a definitive agreement to sell our Space & Technology/Montreal division, and we now expect to close this transaction before year-end. We also continued to pursue negotiations under a non-binding letter of intent from a potential strategic buyer of our SatNet division. During the third quarter, we recognized a $4.0 million asset impairment charge for the SatNet division, based on the terms and conditions on which we could expect to be able to sell the division, as well as the weakening of the U.S. dollar and near-term market conditions. As a result of the effect of this charge under the financial covenants in our revolving credit agreement, we have discussed with our lenders -- and we expect to obtain -- a waiver of covenant default prior to filing our third quarter report on Form 10-Q.
"We continue to be pleased with favorable business developments in 2005. Based on our current expectations, we are raising our earnings guidance for the year to $.80 - $.85 per share from continuing operations, as compared with the previous guidance of $.75 - $.80. Looking forward to 2006, we expect revenue growth of 10-15%, based on the expected demand for our current products, the planned introduction of new high-potential products, and positive outlook for defense communications programs."
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 1,800 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.
-- SATCOM antennas and terminals, for aeronautical, land-mobile and
maritime communications via satellite.
-- EMS Wireless base station antennas and repeaters, for
PCS/cellular telecommunications.
There will be a conference call at 4:30 p.m. Eastern time on Tuesday, November 8, 2005, in which the Company's management will discuss the financial results for the third 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 Tuesday, November 15, 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:
-- 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;
-- the requirement to obtain waivers from its bank creditors of
financial-performance covenants continued in the Company's credit
agreements, should the Company fail to meet its expectations for
earnings and positive cash flow in future quarters, and the risk
of credit agreement default if any such waiver should be required
and cannot be obtained;
-- successful completion of technological development programs by
the Company and the effects of technology that may be developed
by, and patent rights that may be held or obtained by,
competitors;
-- uncertainties related to the completion of the proposed sales of
the Company's Space & Technology/Montreal division, for which a
contract is currently in effect, and its SatNet division, which
is the subject of a non-binding letter of intent, as well as
external market conditions, internal priorities and constraints,
and financing availability that could affect a purchaser's
willingness and ability to complete the transactions on terms and
timing expected by the Company (in the event a sales transaction
is not completed, the Space & Technology/Montreal operations
and/or the SatNet division could be required to be reclassified
back into continuing operations, and prior-year financial
statements would be restated to reflect that status);
-- the ability of the Company to obtain patent licenses, with
satisfactory license rights and royalty rates, from owners of
RFID-related patents that the Company concludes are valid and
would otherwise be infringed by Company products;
-- 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,
and the cost structure of the Company's non-U.S. operations, as
well as the potential for realizing foreign exchange gains and
losses associated with non-U.S. assets or liabilities 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 actual taxable earnings in the
U.S., Canada and other taxing jurisdictions may vary from
expected taxable earnings;
-- 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
complimentary 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;
-- development of successful working relationships with local
business and government personnel in connection with distribution
and manufacture of products in foreign countries;
-- the demand growth for various mobile and high-speed data
communications services, and the possible effect of public health
concerns about alleged health risks of radio frequency emissions;
-- the Company's ability to attract and retain qualified personnel,
particularly those with key technical skills;
-- the availability of sufficient additional credit or other
financing, on acceptable terms, to support the Company's expected
growth;
-- the availability, capabilities and performance of suppliers of
basic materials, electronic components and sophisticated
subsystems on which the Company must rely in order to perform
according to contract requirements, or to introduce new products
on the desired schedule;
-- the effects of consolidation in the telecommunications service
provider industry, including effects on the numbers of suppliers
used by the Company's customers, the overall demand by such
customers for our products, and the possibility that such
customers may demand greater price concessions; and
-- uncertainties associated with U.S. export controls and the export
license process, which restrict the Company's ability to hold
technical discussions with customers, suppliers and internal
engineering resources and can reduce the Company's ability to
obtain sales from foreign customers or to perform contracts with
the desired level of efficiency or profitability.
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 Nine Months Ended
---------------- -----------------
Oct. 1 Oct. 2 Oct. 1 Oct. 2
2005 2004 2005 2004
------ ------ ------ ------
Net sales $ 84.4 57.6 226.2 179.7
Cost of sales 58.3 37.5 153.4 116.2
Selling, general and
administrative expenses 16.2 14.3 48.4 43.6
Research and development
expenses 4.0 4.0 11.7 12.7
------ ------ ------ ------
Operating income 5.9 1.8 12.7 7.2
Non-operating income 0.3 0.1 0.5 1.2
Foreign exchange loss (0.2) -- (0.3) (0.1)
Interest expense (1.0) (0.5) (3.0) (1.6)
------ ------ ------ ------
Earnings before income taxes 5.0 1.4 9.9 6.7
Income tax expense 1.7 0.4 3.4 1.9
------ ------ ------ ------
Earnings from continuing
operations 3.3 1.0 6.5 4.8
Loss from discontinued
operations (4.3) (2.7) (13.5) (4.5)
------ ------ ------ ------
Net earnings (loss) $ (1.0) (1.7) (7.0) 0.3
====== ====== ====== ======
Net earnings (loss) per share:
Basic - from continuing
operations $ 0.30 0.09 0.58 0.44
Basic - from discontinued
operations (0.39) (0.24) (1.20) (0.41)
------ ------ ------ ------
Basic earnings (loss)
per share $(0.09) (0.15) (0.62) 0.03
====== ====== ====== ======
Diluted - from continuing
operations $ 0.29 0.09 0.58 0.43
Diluted - from discontinued
operations (0.38) (0.24) (1.20) (0.41)
------ ------ ------ ------
Diluted earnings (loss)
per share $(0.09) (0.15) (0.62) 0.02
====== ====== ====== ======
Weighted average number of
shares:
Common 11.2 11.1 11.2 11.1
Common and dilutive common
equivalent 11.2 11.2 11.2 11.2
EMS Technologies, Inc.
Consolidated Balance Sheets
(In millions)
Oct. 1 Dec. 31
2005 2004
------ ------
Cash and cash equivalents $ 18.4 19.3
Receivables billed 68.1 56.0
Unbilled receivables under
long-term contracts 27.7 21.2
Customer advanced payments (3.0) (1.9)
------ ------
Trade accounts receivable 92.8 75.3
------ ------
Inventories 32.7 33.4
Other current assets 1.4 1.4
Assets held for sale 56.2 64.7
------ ------
Current assets 201.5 194.1
------ ------
Net property, plant and equipment 33.2 31.5
Goodwill 13.5 13.5
Other assets 16.9 16.0
------ ------
$265.1 255.1
====== ======
Bank debt and current
installments, long-term debt $ 18.5 3.5
Accounts payable 31.9 23.8
Other liabilities 23.7 19.7
Liabilities related to assets
held for sale 18.5 24.1
------ ------
Current liabilities 92.6 71.1
------ ------
Long-term debt 51.5 58.0
Stockholders' equity 121.0 126.0
------ ------
$265.1 255.1
====== ======
EMS Technologies, Inc.
Segment Data
(In millions)
Quarters Ended Nine Months Ended
-------------- -----------------
Oct. 1 Oct. 2 Oct. 1 Oct. 2
2005 2004 2005 2004
----- ----- ----- -----
Net sales
LXE $ 30.7 27.3 89.1 80.0
Defense & Space Systems 13.5 11.8 38.0 36.9
SATCOM 14.4 9.0 36.4 28.5
EMS Wireless 25.9 9.5 62.6 34.6
Other (0.1) -- 0.1 (0.3)
----- ----- ----- -----
Total $ 84.4 57.6 226.2 179.7
===== ===== ===== =====
Operating income (loss)
LXE $ 1.6 1.8 4.7 4.6
Defense & Space Systems 1.6 0.1 2.5 1.6
SATCOM 1.5 0.6 2.9 1.3
EMS Wireless 1.3 (1.1) 3.0 (0.6)
Other (0.1) 0.4 (0.4) 0.3
----- ----- ----- -----
Total $ 5.9 1.8 12.7 7.2
===== ===== ===== =====
Earnings (loss) from
continuing operations
LXE $ 0.9 1.1 2.7 2.7
Defense & Space Systems 0.9 -- 1.4 0.8
SATCOM 1.2 0.6 2.4 1.3
EMS Wireless 0.7 (0.7) 1.6 (0.6)
Other (0.4) -- (1.6) 0.6
----- ----- ----- -----
Total $ 3.3 1.0 6.5 4.8
===== ===== ===== =====