ATLANTA, Oct. 21, 2004 (PRIMEZONE) -- EMS Technologies, Inc. (Nasdaq:ELMG) today announced that the Company's third quarter earnings will be below its previously issued guidance, with the primary factor being low order levels in both the Wireless and SatNet divisions. Earnings from continuing operations for the third quarter of 2004 are expected to be in the range of $600,000 - $900,000, or $.05 - $.08 per share, on consolidated revenues of $62 - $64 million. The results from continuing operations for the comparable period in 2003 were earnings of $1.9 million, or $.18 per share, on revenues of $62 million.
EMS expects to announce final results for the third quarter late in the week of October 25, 2004, at which time there will be a conference call to review both the historical results in detail and the Company's guidance for the remainder of the year.
Alfred G. Hansen, president and chief executive officer, commented, "Preliminary 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.
"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."
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.
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.