ATLANTA, Oct. 28, 2004 (PRIMEZONE) -- EMS Technologies, Inc. (Nasdaq:ELMG) today reported earnings from continuing operations of $671,000 or $.06 per share, on revenues of $62.4 million for the third quarter of 2004, and $3.4 million, or $.31 per share, on revenues of $191.0 million for the first nine months of 2004.
Alfred G. Hansen, president and chief executive officer, reiterated his previously released comments: "Divisional operating results for the third quarter of 2004 indicate that our core businesses of Space & Technology/Atlanta, LXE, and SATCOM remained profitable, although below the 2003 third quarter. However, our Wireless division was certainly affected by what we believe has been a telecom industry-wide slowdown in the wake of major consolidation activity among the wireless carriers. The SatNet division's orders were also below target, although an uneven level of orders is not unusual for an emerging business in a developing market. While disappointed with the third quarter results, we are buoyed by strategic successes in our core markets during the third quarter:
-- "During the third quarter, Space & Technology/Atlanta
announced more details about its recent strategic
contract wins. As previously publicized, we received the
first phase of the antenna development contract for the
Defense Department's Joint Common Missile, and we were
named supplier of the Advanced Extremely High Frequency
(AEHF) satellite communications system for the U.S. Air
Force's B-2 Stealth Bomber. Due to the timing of funding,
these contract awards did not benefit the third quarter
financial results, but we expect them to begin having a
major impact on our 2005 financial results and to
contribute significant revenues over the next decade.
-- "LXE is now the recognized leading supplier of fully
rugged handheld and vehicle-mounted computers. With
growth in both domestic and international markets, LXE
set a new revenue record for the third quarter, extending
its string of consecutive record-setting periods to
eight. An important factor in LXE's success has been its
strategic plan of R&D investment and the resulting steady
stream of successful new products, such as the Windows(r)-
based VX-5 vehicle-mounted computer and RFID readers.
Also important have been LXE's service efforts, which
recently won the division its third consecutive Mobile
Star Award(tm) from MobileVillage(r) for the best
customer service in the mobile hardware category.
-- "Revenues for another industry-leading division, SATCOM,
were down from the comparable quarter in 2003, mainly
because of lower military orders for our high-speed
aeronautical terminals. These terminals continue to
be an important part of the U.S. military's command
communications infrastructure, and we believe the
orders lull for our products has been driven by near-term
budget priorities, including repair of hurricane damage
to military equipment in Florida. The Ottawa-based
division's profitability also continued to be pressured
by higher costs caused by the recent strength of the
Canadian dollar. But we further enhanced our long-term
market position during the third quarter by signing an
agreement with Honeywell to supply high-speed-data
satellite communications products. This agreement has a
forecasted value of more than $50 million in revenue over
the next five years, and could create opportunities in
applications for commercial aircraft, as well as
corporate jets.
-- "SatNet continues to add customers and expand its
installed base of products for two-way broadband
communications, but the growth rate of this new business
has not yet reached the point to support consistent
profitability. With the expense of R&D efforts to help
define new applications and improve our cost structure,
SatNet reported a loss for the third quarter. Feedback
from the market is still quite positive, and we remain
committed to the success of this product line. We believe
SatNet will not only open up new markets, but it will be
highly complementary to other broadband efforts elsewhere
in the Company.
-- "Low activity in the wireless telecommunications market in
the third quarter seriously affected EMS Wireless's
revenue and resulted in a third quarter operating loss for
the division. We had previously scaled back our workforce
in anticipation of these tough times, and as severance
costs begin to taper off and other cost-saving measures
take effect, the benefit of these actions should be
evident in the fourth quarter. We have however continued
to pursue strategic R&D to expand Wireless's capabilities
and product offerings. As a result, we believe we are
well positioned to take advantage of renewed activity when
the telecommunications market moves beyond its most recent
consolidation phase.
"The third quarter's loss from discontinued operations totaled $2.4 million. This loss included a $1.7 valuation allowance to reflect updated information from recent discussions with potential purchasers concerning the probable market value of certain assets held for sale.
"Although we fell short of expectations in the third quarter, our overall orders are strong, and our core businesses are profitable and healthy. We are participating in several major defense proposals that should be awarded during 2005, and forecasts for increased executive jet sales bode well for our SATCOM product line. Consequently, we remain upbeat and confident about our prospects.
"Guidance about future earnings performance is clearly subject to substantial uncertainties in world economies and in the timing and strength of orders activity in our key markets -- especially wireless telecommunications and two-way broadband satellite communications. Due to the challenging market conditions during 2004, visibility on near-term business prospects in these areas has been limited and orders have been below our expectations. Taking these uncertainties into consideration, we believe that the Company's continuing operations can achieve estimated earnings per share of $.17 to $.21 per share in the fourth quarter of 2004 on revenues ranging from $64 million to $68 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 nearly 1,600 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,
-- SATCOM antennas and terminals, for aeronautical and land-mobile and maritime communications via satellite;
-- EMS Wireless base station antennas and repeaters, for PCS/cellular telecommunications, and
-- SatNet broadband technologies for high-data-rate, high-capacity two-way satellite communications systems.
There will be a conference call at 10:30 AM Eastern time on Thursday, October 28 2004, in which the Company's management will discuss the financial results for the third quarter of 2004. If you would like to participate in this conference, please call 800-895-1713 (international callers use 785-424-1058) within approximately 10 minutes before the call is scheduled to begin. The conference identification code is EMS. A taped replay of the conference call will also be available through Thursday, November 4, 2004, by dialing 800-839-5682 (international callers use 402-220-2567) and entering the following code: 400063.
Statements contained in this press release regarding the Company's expectations for its financial results for 2004 and beyond, 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 both the purchasing power of international customers and the cost structure of the Company's non-U.S. operations, as well as the potential for realizing foreign exchange gains or losses associated with net non-U.S. 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 Quarterly Report on Form 10-Q for the three months ended July 3, 2004.
EMS Technologies, Inc.
Consolidated Statements of Operations
(In millions, except per-share data)
Quarter Ended Nine Months Ended
----------------- ------------------
Oct 2 Sep 30 Oct 2 Sep 30
2004 2003 2004 2003
-------- -------- -------- --------
Net sales $ 62.4 61.5 191.0 183.3
Cost of sales 40.8 39.4 123.7 116.7
Selling, general and
administrative expenses 15.3 14.3 46.6 41.5
Research and development
expenses 4.6 4.4 14.6 13.9
-------- -------- -------- --------
Operating income 1.7 3.4 6.1 11.2
Non-operating income (loss) 0.1 -- 1.1 (0.3)
Foreign exchange loss (0.2) -- (0.3) (0.4)
Interest expense (0.6) (0.6) (1.9) (1.5)
-------- -------- -------- --------
Earnings before income
taxes 1.0 2.8 5.0 9.0
Income tax expense 0.3 0.9 1.6 2.9
-------- -------- -------- --------
Earnings from continuing
operations 0.7 1.9 3.4 6.1
Loss from discontinued
operations (2.4) (22.5) (3.1) (40.7)
-------- -------- -------- --------
Net earnings (loss) $ (1.7) (20.6) 0.3 (34.6)
======== ======== ======== ========
Net earnings (loss) per
share:
Basic -- from continuing
operations $ 0.06 0.18 0.31 0.57
Basic -- from
discontinued operations (0.21) (2.11) (0.28) (3.82)
-------- -------- -------- --------
Basic earnings (loss)
per share $ (0.15) (1.93) 0.03 (3.25)
======== ======== ======== ========
Diluted -- from
continuing operations $ 0.06 0.18 0.31 0.57
Diluted - from
discontinued operations (0.21) (2.09) (0.29) (3.81)
-------- -------- -------- --------
Diluted earnings (loss)
per share $ (0.15) (1.91) 0.02 (3.24)
======== ======== ======== ========
Weighted average number of
shares:
Common 11.1 10.7 11.1 10.7
Common and dilutive
common equivalent 11.2 10.8 11.2 10.7
EMS Technologies, Inc.
Consolidated Balance Sheets
(In millions)
Oct 2 Dec 31
2004 2003
-------- --------
Cash $ 10.7 14.2
Receivables billed 48.3 56.6
Unbilled receivables under long-term
contracts 25.3 18.6
Customer advanced payments (2.8) (3.8)
-------- --------
Trade accounts receivable 70.8 71.4
-------- --------
Inventories 37.8 33.5
Assets held for sale 45.4 40.1
-------- --------
Current assets 164.7 159.2
-------- --------
Net property, plant and equipment 37.2 38.5
Goodwill 13.5 13.5
Other assets 15.9 17.3
-------- --------
$ 231.3 228.5
======== ========
Bank debt and current $ 39.7 38.1
installments, long-term debt
Accounts payable 18.4 18.8
Other liabilities 18.4 18.3
Liabilities related to assets held
for sale 17.2 17.8
-------- --------
Current liabilities 93.7 93.0
Long-term debt 15.0 15.5
Stockholders' equity 122.6 120.0
-------- --------
$ 231.3 228.5
======== ========
Quarter Ended Nine Months Ended
-------------- ----------------
Oct 2 Sep 30 Oct 2 Sep 30
2004 2003 2004 2003
------- ------- ------- -------
Net sales
Space & Technology / Atlanta $ 11.8 11.9 36.9 34.9
LXE 27.4 25.5 80.0 72.0
EMS Wireless 9.5 12.0 34.6 36.2
SATCOM 9.0 10.8 28.5 32.6
SatNet 4.7 2.1 11.2 8.6
Other -- (0.8) (0.2) (1.0)
------- ------- ------- -------
Total $ 62.4 61.5 191.0 183.3
======= ======= ======= =======
Operating income (loss)
Space & Technology / Atlanta $ 0.2 1.2 1.6 3.1
LXE 1.8 1.9 4.6 5.0
EMS Wireless (1.1) 0.2 (0.6) 1.9
SATCOM 0.6 1.5 1.3 3.8
SatNet (0.2) (0.9) (1.4) (1.7)
Other & Corporate 0.4 (0.5) 0.6 (0.9)
------- ------- ------- -------
Total $ 1.7 3.4 6.1 11.2
======= ======= ======= =======
Earnings (loss) from continuing
operations
Space & Technology / Atlanta $ -- 0.7 0.8 1.7
LXE 1.1 1.2 2.6 3.0
EMS Wireless (0.7) 0.1 (0.6) 1.1
SATCOM 0.6 1.2 1.2 3.1
SatNet (0.6) (0.9) (2.0) (1.8)
Other & Corporate 0.3 (0.4) 1.4 (1.0)
------- ------- ------- -------
Total $ 0.7 1.9 3.4 6.1
======= ======= ======= =======