ATLANTA, May 17, 2005 (PRIMEZONE) -- EMS Technologies, Inc. (Nasdaq:ELMG) today reported revenues of approximately $64 million for the first quarter of 2005, and a loss from continuing operations of $1.4 million, or $.12 per share.
Alfred G. Hansen, president and chief executive officer, commented, "Our LXE and SATCOM divisions continued their string of solidly profitable performances into the first quarter due to the strength of their market positions. EMS Wireless and the startup SatNet divisions had tough starts to begin 2005 due to what has been uneven orders flow for both businesses. It was also disappointing that further delays in funding of previously won contracts and technical problems during the quarter on a small number of contracts at our Defense & Space Systems ("D&SS") unit resulted in that division's first quarterly loss in over three years.
"Despite this difficult combination of factors to begin 2005, there have been clear indications late in the first quarter and subsequently that the business outlook for the three unprofitable units is improving. Recently there have been exceptional orders at EMS Wireless, favorable strategic developments at SatNet, and progress on technical issues at D&SS, and as a result we believe that the second quarter is off to a strong start. We are pleased that at the midpoint of the second quarter, we now have orders accounting for over 70% of our revenue goals for the period. Further, based on our current forecast for the year, we still expect to achieve our previous 2005 earnings guidance of $.75 - $.80 per share from continuing operations.
-- "LXE extended its impressive record of top-line growth and profitable financial performance, with consistently strong revenues across markets in the Americas and internationally. Our growth initiatives in Asia and Eastern Europe are proceeding as planned, and we expect these regions to fuel additional revenues later in the year. On the product front, LXE's recently introduced Windows(R) CE.net-enabled vehicle-mount computers are gaining wide market acceptance, and our mobile RFID terminal is proving itself in demonstrations in customer warehouse facilities. -- "Defense & Space Systems remains well-positioned for new defense work, having already won a role on, or being a leading contender for, initiatives on transformational defense systems. However, budget-related delays and evolving technical requirements at the Department of Defense ("DoD") have created uncertainty about the timing of specific, large contracts. Meanwhile, we continue to build on a stable backlog and participate in key funded technology development efforts. We are encouraged that the situation at DoD appears to be stabilizing, and we expect positive performance from the D&SS division for the remainder of the year. -- "As a result of network upgrades and expansion by the wireless service companies, EMS Wireless experienced a significant increase in orders late in the first quarter and continuing into the second quarter. To meet demand, we are expanding our production lines from four to eleven. In addition to the production line efficiencies associated with higher production rates, our purchasing and engineering efforts have helped achieve important reductions in material costs, which should benefit the Wireless division's profitability in future periods. -- "A vigorous first quarter order rate at our SATCOM division has helped build a strong backlog that will serve as a solid base of business for the remainder of the year. Once again, SATCOM was first to market with new high-speed aeronautical products that should boost both military and commercial aircraft opportunities in 2005. SATCOM high-speed equipment has now been selected for the Sikorsky Blackhawk helicopter program, as well as for the new Bombardier CL 604 and United States presidential helicopters. -- "The Satellite Networks ("SatNet") group was recently selected as supplier of DVB-RCS technology to the U.S. Defense Information Systems Agency ("DISA"), after rigorous technical evaluation of competing satellite platforms. Additionally, Telesat Canada has contracted with SatNet for a DVB-RCS system to operate with the ANIK F2 Ka-band payload, and Clear Channel has awarded SatNet a contract to significantly upgrade its existing DVB-RCS system. We believe the DISA order is a major strategic development for SatNet, and further new orders during the quarter from well-established commercial firms are signs of the market's growth potential. However, the timing of the order stream in this start-up market remains uncertain, and we are actively investigating strategic options for SatNet.
"We continue to pursue plans to sell our Space & Technology/Montreal division, which is currently reported as discontinued operations. This division reported over $1 million in profits in the first quarter, and we believe that the improved prospects for this division should contribute to our sales effort."
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 five 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, -- SatNet broadband technologies for use in high-data-rate, high-capacity satellite communication systems.
There will be a conference call at 4:30 PM Eastern time on Tuesday, May 17, 2005, in which the Company's management will discuss the financial results for the first 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, May 24, 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:
-- 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 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) 1st Qtr 1st Qtr 2005 2004 --------- --------- Net sales $ 63.7 64.1 Cost of sales 42.8 40.5 Selling, general and administrative expenses 17.4 15.6 Research and development expenses 4.4 5.6 --------- --------- Operating income (loss) (0.9) 2.4 Non-operating income - 0.9 Foreign exchange gain (loss) (0.1) 0.1 Interest expense (1.1) (0.6) --------- --------- Earnings (loss) before income taxes (2.1) 2.8 Income tax expense (benefit) (0.7) 0.9 --------- --------- Earnings (loss) from continuing operations (1.4) 1.9 Earnings from discontinued operations 1.1 0.3 --------- --------- Net earnings (loss) $ (0.3) 2.2 ========= ========= Net earnings (loss) per share: Basic - from continuing operations $ (0.12) 0.17 Basic - from discontinued operations 0.09 0.03 --------- --------- Basic earnings (loss) per share $ (0.03) 0.20 ========= ========= Diluted - from continuing operations $ (0.12) 0.17 Diluted - from discontinued operations 0.09 0.03 --------- --------- Diluted earnings (loss) per share $ (0.03) 0.20 ========= ========= Weighted average number of shares: Common 11.2 11.0 Common and dilutive common equivalent 11.2 11.3 EMS Technologies, Inc. Consolidated Balance Sheets (In millions) April 2 Dec 31 2005 2004 -------- -------- Assets Cash $ 16.4 19.3 Receivables billed 59.5 59.0 Unbilled receivables under long-term contracts 25.1 24.3 Customer advanced payments (3.9) (2.0) -------- -------- Trade accounts receivable 80.7 81.3 -------- -------- Inventories 39.8 37.4 Other current assets 1.4 1.4 Assets held for sale 54.4 48.7 -------- -------- Current assets 192.7 188.1 -------- -------- Net property, plant and equipment 36.9 37.2 Goodwill 13.5 13.5 Other assets 17.1 16.3 -------- -------- $ 260.2 255.1 ======== ======== Liabilities and Stockholders' Equity Bank debt and current installments, long-term debt $ 18.4 3.5 Accounts payable 23.6 25.6 Other liabilities 21.3 21.0 Liabilities related to assets held for sale 22.5 21.0 -------- -------- Current liabilities 85.8 71.1 Long-term debt 49.2 58.0 Stockholders' equity 125.2 126.0 -------- -------- $ 260.2 255.1 ======== ======== EMS Technologies, Inc. Segment Data (In millions) 1st Qtr 1st Qtr 2005 2004 --------- --------- Net sales LXE $ 26.8 24.9 Defense & Space Systems 11.3 12.8 EMS Wireless 12.2 12.2 SATCOM 9.9 10.1 SatNet 3.5 4.1 Other - - --------- --------- Total $ 63.7 64.1 ========= ========= Operating income (loss) LXE $ 1.0 1.1 Defense & Space Systems (0.5) 0.8 EMS Wireless (0.9) 0.1 SATCOM 0.4 0.2 SatNet (0.7) (0.1) Other (0.2) 0.3 --------- --------- Total $ (0.9) 2.4 ========= ========= Earnings (loss) from continuing operations LXE $ 0.5 0.7 Defense & Space Systems (0.4) 0.4 EMS Wireless (0.6) - SATCOM 0.5 0.2 SatNet (1.1) (0.2) Other & Corporate (0.3) 0.8 --------- --------- Total $ (1.4) 1.9 ========= =========