ATLANTA, Aug. 8, 2006 (PRIMEZONE) -- EMS Technologies, Inc. (Nasdaq:ELMG) today reported second quarter earnings from continuing operations of $2.5 million or $.16 per share, on revenues of $78.0 million. All of the Company's operating divisions were profitable except for EMS Wireless, which had lower orders from major U.S. wireless carriers for system expansion. The Company's consolidated earnings for the comparable quarter in 2005 were $3.9 million or $.35 per share, on revenues of $81.6 million.
Paul Domorski, president and chief executive officer, commented, "There was much to be pleased about in the performance of three of our four operating divisions. We posted record quarterly revenues at LXE and SATCOM, and the excellent order intake at Defense & Space Systems ("D&SS") was well ahead of the preceding year. The combined profitability of these three units in 2006 exceeded the comparable combined profitability in 2005. However, our consolidated profits were below expectations due to lower orders at the EMS Wireless division.
-- "LXE reported quarter-over-comparable-quarter growth for the
fifteenth consecutive period. Led by customer demand for the
versatile MX7, we shipped more handheld rugged computers in the
second quarter than in any other quarter in our history. Sales
were particularly strong in the Americas and improved across all
of our geographic markets. Revenues in Asia-Pacific grew
significantly in the first half of 2006, with several important
container-port wins in the region. We also continued to build
our reputation as the leading customer service provider in the
mobile computing market, having been named during the second
quarter as a finalist for the 2006 American Business Awards(sm)
for best customer service organization.
-- "D&SS's second quarter order activity continued the strong pace
of the first quarter. In the first half of 2006, D&SS has
received $40 million in orders, including contracts for the
development of RF subsystems for a U.S. government satellite
communications system, and additional orders for airborne, ship-
based and classified programs. D&SS's profits were not up to the
level we had hoped for due to defense-program delays and technical
difficulties on a current commercial contract. However, we
continued work on technologies that we believe have long-term
promise, including a prototype jamming antenna system for the U.S.
Army and Marines that protects against improvised explosive
devices ("IEDs").
-- "SATCOM established a new quarterly sales record on the strength
of sales of high-speed data ("HSD") aeronautical products for both
commercial and military applications. SATCOM also continued to
expand beyond its traditional markets, into new commercial and
military opportunities. For example, we recently announced that
we would be teaming with Thales to provide high-speed mobile
satellite communications systems for OnAir's cellular phone and
Internet service to Airbus aircraft; this arrangement marks a
significant move to tap the potential of the air transport market.
SATCOM also received significant orders for military application
of its mobile ground-asset tracking technologies.
-- "EMS Wireless had a tough second quarter, because expected
orders were not received for further system expansion by the major
U.S. wireless providers. As a result, we have begun an intensive
review and analysis of EMS Wireless's operations, with the near-
term goal of achieving profitability at the division's current
level of sales. We recently initiated specific cost reductions as
a step towards this goal, but a broader analysis of the division's
capabilities, products, processes and market position is also
under way.
"Based on performance-to-date and expectations for the remainder of the year, the outlook for LXE, D&SS and SATCOM continues to be bright. As recently announced, we have lowered our expectations for EMS Wireless's performance in 2006 while we work to improve the long-term profit outlook for that division. As a result (and also as previously announced), we now project 2006 consolidated earnings to be in the range of $.70 to $.80 per share."
EMS Technologies, Inc. is an innovative leader in the technology of advanced wireless communications, focusing on the needs of the mobile information user and broadband applications. Headquartered in Atlanta and with approximately 1,200 workers worldwide, we provide wireless communications products for diverse markets, including commercial and defense. The Company's four business units address the needs of different markets, but they share a common foundation in broadband and other advanced wireless technologies, leading to important technical and marketing synergies:
-- LXE is a leading provider of rugged computers and wireless data
networks used for logistics applications such as distribution
centers, warehouses and container ports. LXE automatic
identification and data capture products serve mobile information
users at over 7,500 sites worldwide;
-- Defense & Space Systems supplies highly-engineered subsystems for
defense electronics and sophisticated satellite applications --
from military communications, radar, surveillance and
countermeasure to commercial high-definition television, satellite
radio, and live TV for today's most innovative airlines;
-- SATCOM supplies a broad array of terminals and antennas that
enable end-users in aircraft and other mobile platforms, such as
military command vehicles or over-the-road trucks to communicate
over satellite networks at a variety of data speeds; and
-- EMS Wireless is recognized globally as a leading supplier of RF-
based mobile telephony solutions. The division's extensive
product line ranges from base station antennas and wireless
backhaul products for PCS/cellular telecommunications to active
antennas and repeaters for complete in-building communications
solutions.
There will be a conference call at 9:30 AM Eastern time on Tuesday, August 8, 2006, in which the Company's management will discuss the financial results for the second quarter of 2006. If you would like to participate in this conference, please call 800-647-3898 (international callers use 641-297-7675) within approximately 10 minutes before the call is scheduled to begin. A taped replay of the conference call will also be available through Tuesday, August 15, 2006 by dialing 800-615-9956 (international callers use 973-854-2594).
Statements contained in this press release regarding the Company's expectations for its financial results for 2006, 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;
-- the success of LXE's efforts to develop new product designs and
manufacturing processes to comply with the European Union's
directive for restriction of hazardous substances ("RoHS"), and
the availability of compliant materials for LXE's sales to Europe;
-- difficulty predicting the timing of receipt of major customer
orders, and the effect of customer timing decisions on our
quarterly results;
-- 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;
-- 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;
-- changes in the rates at which our products are returned for
repair or replacement under warranty;
-- 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;
-- 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 senior
management and other personnel, particularly those with key
technical skills;
-- the availability of sufficient additional credit or other
financing, on acceptable terms, to support any large acquisitions
that we believe would contribute to our growth and profitability;
-- the ability to negotiate successfully with potential acquisition
candidates, finance acquisitions, or effectively integrate the
acquired businesses, products or technologies into our existing
businesses and products;
-- 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.
Further information concerning relevant factors and risks are identified under the caption "Risk Factors" in the Company's annual report on Form 10-K for the year ended December 31, 2005 and in the Company's quarterly report on Form 10-Q for the period ended July 1, 2006.
EMS Technologies, Inc.
Consolidated Statements of Operations
(In millions, except per-share data)
Quarter Ended Six Months Ended
------------------ ------------------
Jul 1 Jul 2 Jul 1 Jul 2
2006 2005 2006 2005
-------- -------- -------- --------
Net sales $ 78.0 81.6 152.6 141.7
Cost of sales 50.4 54.4 99.3 95.2
Selling, general and
administrative expenses 18.8 16.1 36.0 32.2
Research and development
expenses 5.1 4.1 10.1 7.7
-------- -------- -------- --------
Operating income 3.7 7.0 7.3 6.7
Interest and other income 0.6 0.1 1.0 0.2
Foreign exchange loss (0.3) (0.1) (0.7) (0.1)
Interest expense (0.5) (1.1) (1.2) (2.0)
-------- -------- -------- --------
Earnings before income taxes 3.4 5.9 6.4 4.9
Income tax expense 1.0 2.0 1.9 1.7
-------- -------- -------- --------
Earnings from continuing
operations 2.5 3.9 4.5 3.2
Loss from discontinued
operations (0.8) (9.6) (2.6) (9.2)
-------- -------- -------- --------
Net earnings (loss) $ 1.7 (5.6) 1.9 (6.0)
======== ======== ======== ========
Net earnings (loss) per share:
Basic - from continuing
operations $ 0.16 0.35 0.32 0.29
Basic - from discontinued
operations (0.05) (0.86) (0.19) (0.82)
-------- -------- -------- --------
Basic earnings (loss) per
share $ 0.11 (0.51) 0.13 (0.53)
======== ======== ======== ========
Diluted - from continuing
operations $ 0.16 0.35 0.31 0.29
Diluted - from discontinued
operations (0.05) (0.85) (0.18) (0.82)
-------- -------- -------- --------
Diluted earnings (loss) per
share $ 0.11 (0.50) 0.13 (0.53)
======== ======== ======== ========
Weighted average number of
shares:
Common 15.2 11.2 14.1 11.2
Common and dilutive common
equivalent 15.3 11.2 14.1 11.2
EMS Technologies, Inc.
Consolidated Balance Sheets
(In millions)
July 1 Dec 31
2006 2005
-------- --------
Cash and cash equivalents $ 55.3 15.6
Receivables billed 62.9 70.9
Unbilled receivables under long-term contracts 30.2 25.1
Customer advanced payments (5.0) (3.0)
-------- --------
Trade accounts receivable 88.2 93.0
-------- --------
Inventories 38.5 34.7
Other current assets 1.4 2.1
Assets held for sale -- 6.7
-------- --------
Current assets 183.5 152.1
-------- --------
Net property, plant and equipment 34.4 34.3
Goodwill 13.5 13.5
Other assets 17.4 19.5
-------- --------
$ 248.8 219.5
======== ========
Bank debt and current
installments, long-term debt $ 3.1 6.8
Accounts payable 24.7 34.1
Other current liabilities 25.4 24.4
Liabilities related to assets held for sale -- 2.1
-------- --------
Current liabilities 53.2 67.5
Long-term debt 12.3 36.6
Other liabilities 1.8 1.8
Stockholders' equity 181.5 113.7
-------- --------
$ 248.8 219.5
======== ========
EMS Technologies, Inc.
Segment Data
(In millions)
Quarters Ended Six Months Ended
---------------- ----------------
Jul 1 Jul 2 Jul 1 Jul 2
2006 2005 2006 2005
------- ------- ------- -------
Net sales
LXE $ 35.1 31.6 66.7 58.4
Defense & Space Systems 11.5 13.3 23.4 24.6
SATCOM 18.4 12.2 34.0 22.1
EMS Wireless 12.9 24.5 28.5 36.7
Other -- -- -- --
------- ------- ------- -------
Total $ 78.0 81.6 152.6 141.7
======= ======= ======= =======
Operating income (loss)
LXE $ 2.9 2.2 4.7 3.2
Defense & Space Systems 0.4 1.5 0.7 1.0
SATCOM 1.3 0.9 2.9 1.3
EMS Wireless (0.7) 2.6 (0.5) 1.7
Other (0.2) (0.2) (0.6) (0.4)
------- ------- ------- -------
Total $ 3.7 7.0 7.3 6.7
======= ======= ======= =======
Earnings (loss) from continuing
operations
LXE $ 1.7 1.3 2.8 1.8
Defense & Space Systems 0.2 0.8 0.3 0.5
SATCOM 1.1 0.7 2.4 1.3
EMS Wireless (0.5) 1.5 (0.4) 0.9
Other -- (0.5) (0.7) (1.2)
------- ------- ------- -------
Total $ 2.5 3.9 4.5 3.2
======= ======= ======= =======