ATLANTA, Oct. 28, 2003 (PRIMEZONE) -- EMS Technologies, Inc. (Nasdaq:ELMG) today reported earnings from continuing operations of $1.9 million, or $.18 per share, on revenues of $61.5 million for the third quarter of 2003, and $6.1 million ($.57 per share) on revenues of $183.3 million for the first nine months of 2003. All of the Company's major reporting segments were profitable, including its LXE division, which set a new sales record for the third consecutive quarter.
As previously announced, management started the formal process in the third quarter to dispose of the Company's Space & Technology / Montreal division. Also during the quarter, management proceeded to dispose of its Healthcare product line. As a result, these business components were accounted for as discontinued operations, and the net assets held for sale were written down to their estimated fair value upon disposal. The combined fair value adjustment was a $19 million charge, comprising writedowns of $17 million related to the Space & Technology / Montreal division and $2 million for the Healthcare product line. Including the fair value adjustment, the combined loss from discontinued operations in the third quarter was $25.4 million.
Alfred G. Hansen, president and chief executive officer, commented, "The third quarter results demonstrate the solid profitable foundation that undergirds our continuing operations. All of our reporting segments were profitable in the third quarter despite current uncertain economic times.
-- LXE set a new record for third quarter revenues on the
strength of outstanding performance in all markets,
especially in Europe. And we believe the prospects for
continued success were enhanced with the introduction during
the third quarter of our new MX6 handheld computer. This
rugged computer runs on the Windows(r) Pocket PC 2002
operating system and uses a powerful, battery- saving
Intel(r) Xscale(tm) PXA255 processor. With the MX6, our
customers will be able to deploy a wide range of sophisticated
mobile applications. We have also introduced two new
programs that we believe will help create new business
opportunities: the "PartnerPass" program to build
relationships with new business partners, and a leasing
program that offers financing flexibility to our customers.
-- Space & Technology / Atlanta's profits were driven by
exceptional contract performance and diligent control of
costs. We are clearly benefiting now from important
steps taken in recent years, such as major investments
in capital equipment and improvement of our processes
to create new manufacturing efficiencies. These
improvements have not only benefited the Company but
also our customers, as demonstrated by the recent
hardware deliveries on the F/A-22 program months ahead of
schedule. The technology strength of this business also
continues to reach opportunities in non-military markets,
such as the recent order for switch hardware to be used
by the COSMO SkyMed constellation of environmental
monitoring satellites.
-- SATCOM's industry-leading product line had another
strong revenue and earnings quarter. Sales of our AMT-50
aeronautical terminals for commercial aircraft were well
ahead of plan during the third quarter. The orders activity,
especially late in the quarter, was also particularly good
for Storm terminals (for video communications) and a record
for packet data terminals (for tracking and security).
-- EMS Wireless had vigorous end-of-quarter orders activity,
which has continued and given us a fast start to the fourth
quarter. Although the telecommunications market remains
challenging, EMS Wireless continues to enhance its industry
leadership position with the introduction of innovative new
products, such as the high-performance "Heirline" antennas,
and a variable electronic downtilt antenna that makes it
much easier and less expensive for a wireless service
provider to change antenna coverages to meet the demands of
changing traffic patterns.
-- The Satellite Networks group -- our start-up venture
providing DVB-RCS-standard hubs and terminals for broadband
communications via satellite -- has delivered new systems
throughout the first nine months of this year. Each new
system in the installed base increases the momentum in a
market that we believe offers considerable potential.
We are excited about the changes going on throughout EMS. We are receiving expressions of interest in our Space & Technology / Montreal business, and the process of identifying a purchaser for that business is ongoing. Furthermore, Space & Technology / Montreal made considerable progress during the third quarter on its most difficult programs, and we expect substantial improvement in the results of these discontinued operations beginning in the fourth quarter of 2003. In continuing operations, our businesses remain profitable market leaders, and they are pushing forward with new products and technologies that should create new opportunities. Guidance about the future earnings performance of the Company is clearly subject to substantial uncertainties in current world economies, especially in the telecommunications sector, and defense spending priorities. However, we believe that the Company's continuing operations can achieve revenues in the range of $250 -- $260 million for the year 2003, with related annual earnings of $8 -- $8.9 million, or $.75 -- $.83 earnings per share. As we develop our strategic plan for 2004, it is management's objective to achieve 10% -- 15% organic revenue growth.
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...
-- 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.
There will be a conference call at 9:30 AM Eastern time on Tuesday, October 28, 2003, in which the Company's management will discuss the financial results for the third quarter. If you would like to participate in this conference, please call 800-867-1054 (international callers use 303-262-2075) within approximately 10 minutes before the call is scheduled to begin. The conference identification number is 557592. A taped replay of the conference call will also be available through Tuesday, November 4, 2003 by dialing 800-405-2236 (international callers use 303-590-3000) and entering the following code: 557592.
Statements contained in this press release regarding the potential for various businesses and products, and potential proceeds from the sale of the Space & Technology/Montreal division 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; -- U.S. defense budget pressures on near-term spending priorities; -- 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 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, 2002.
EMS Technologies, Inc.
Consolidated Statements of Operations
(In millions, except per-share data)
Quarter Ended Nine Months Ended
----------------- -----------------
Sept 27 Sept 28 Sept 27 Sept 28
2003 2002 2003 2002
------ ------ ------ ------
Net sales $ 61.5 56.5 183.3 171.1
Cost of sales 39.4 35.7 116.7 107.5
Selling, general and
administrative expenses 14.3 12.6 41.5 39.1
Research and development
expenses 4.4 4.7 13.9 15.2
------ ------ ------ ------
Operating income 3.4 3.5 11.2 9.2
Non-operating income (loss) -- 0.3 (0.3) 0.3
Foreign exchange gain (loss) -- 0.7 (0.4) 0.7
Interest expense (0.5) (0.6) (1.5) (1.7)
------ ------ ------ ------
Earnings before income
taxes 2.8 3.9 9.0 8.6
Income tax expense (0.9) (1.2) (2.9) (2.6)
------ ------ ------ ------
Net earnings from
continuing operations 1.9 2.7 6.1 6.0
Earnings (loss) from
discontinued operations (25.4) (0.7) (43.6) 0.6
------ ------ ------ ------
Net earnings (loss) $(23.5) 2.0 (37.5) 6.6
====== ====== ====== ======
Net earnings (loss) per
share:
Basic - from
continuing
operations 0.18 0.25 0.57 0.57
Basic - from
discontinued
operations (2.38) (0.07) (4.09) 0.05
------ ------ ------ ------
Basic earnings
(loss) per
share $(2.20) 0.18 (3.52) 0.62
====== ====== ====== ======
Diluted - from
continuing
operations 0.18 0.25 0.57 0.56
Diluted - from
discontinued
operations (2.38) (0.07) (4.09) 0.05
------ ------ ------ ------
Diluted
earnings
(loss) per
share $(2.20) 0.18 (3.52) 0.61
====== ====== ====== ======
Weighted average number of
shares:
Common 10.7 10.6 10.7 10.5
Common and dilutive
common equivalent 10.8 10.8 10.7 10.8
EMS Technologies, Inc.
Consolidated Balance Sheets
(In millions)
Sept 27 June 28 Dec 31
2003 2003 2002
------ ------ ------
Cash $ 9.2 11.3 12.4
Receivables billed 52.4 50.9 51.7
Unbilled receivables under long-
term contracts 19.2 20.2 22.4
Customer advanced payments (2.2) (1.9) (2.4)
------ ------ ------
Trade accounts receivable 69.4 69.2 71.7
------ ------ ------
Inventories 35.1 33.7 30.1
Assets held for sale 44.3 66.6 77.1
------ ------ ------
Current assets 157.9 180.8 191.3
------ ------ ------
Net property, plant and equipment 38.5 39.0 36.7
Goodwill 13.5 13.5 13.5
Other assets 11.7 13.4 14.7
------ ------ ------
$221.6 246.7 256.3
====== ====== ======
Bank debt and current
installments, long-term debt $ 41.7 38.8 33.8
Accounts payable 21.0 22.1 21.0
Other liabilities 13.2 15.9 16.9
Liabilities related to assets
held for sale 14.9 15.4 19.8
------ ------ ------
Current liabilities 90.8 92.2 91.6
Long-term debt 15.9 16.3 18.7
Stockholders' equity 114.9 138.2 146.0
------ ------ ------
$221.6 246.7 256.3
====== ====== ======
EMS Technologies, Inc.
Segment Data
(In millions)
Quarters Ended Nine Months Ended
----------------- -----------------
Sept 27 Sept 28 Sept 27 Sept 28
2003 2002 2003 2002
----- ----- ----- -----
Net sales
Space & Technology / Atlanta $12.4 13.9 36.5 38.1
LXE 25.6 21.1 71.9 62.9
EMS Wireless 12.1 10.3 36.2 38.0
SatCom 10.9 8.1 32.7 23.2
Other 0.5 3.1 6.0 8.9
----- ----- ----- -----
Total $61.5 56.5 183.3 171.1
===== ===== ===== =====
Operating income (loss)
Space & Technology / Atlanta $ 1.2 1.9 3.1 3.4
LXE 1.9 1.2 5.0 2.8
EMS Wireless 0.2 -- 2.0 2.7
SatCom 1.6 0.9 4.2 2.8
Other (1.5) (0.5) (3.1) (2.4)
----- ----- ----- -----
Total $ 3.4 3.5 11.2 9.3
===== ===== ===== =====
Net earnings (loss) from
continuing operations
Space & Technology / Atlanta $ 0.7 1.0 1.7 1.8
LXE 1.2 0.6 3.0 1.8
EMS Wireless 0.1 0.2 1.1 1.8
SatCom 1.3 1.2 3.3 2.4
Other & Corporate (1.4) (0.3) (3.0) (1.8)
----- ----- ----- -----
Total $ 1.9 2.7 6.1 6.0
===== ===== ===== =====