EMS Technologies Announces Preliminary Second Quarter 2004 Results


ATLANTA, July 13, 2004 (PRIMEZONE) -- EMS Technologies, Inc. (Nasdaq:ELMG) today announced that during the second quarter of 2004, it received record defense contract awards that will benefit future periods; however, the Company's second quarter earnings will be below its previously issued guidance primarily due to a low order level in the SatNet division. EMS expects to announce final results for the second quarter during the week of July 26, 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.

Earnings from continuing operations for the second quarter of 2004 are expected to be in the range of $700,000 to $1.1 million, or $.06 - $.10 per share, on consolidated revenues of $65-to-$66 million. The results from continuing operations for the comparable period in 2003 were earnings of $2.5 million, or $.23 per share, on revenues of $66 million. Preliminary divisional results for the second quarter of 2004 indicate that Space & Technology/Atlanta, LXE, and SATCOM were solidly profitable, although somewhat below the 2003 second quarter. EMS Wireless was also profitable, but its performance was less strong than these other divisions.

The SatNet division had a major shortfall from order expectations. SatNet's business of providing hardware for two-way, broadband communications is similar to a startup situation, where the marketplace and customer base are still being defined, and timing of specific orders is difficult to predict. SatNet had a major opportunity that was expected but did not materialize late in the second quarter. The customer requirement for this opportunity still exists, and we are hopeful the order will be received in a future quarter. If SatNet had been able to convert this opportunity into a sale in the second quarter, EMS's consolidated earnings from continuing operations for the period would have improved by approximately $1 million.

Alfred G. Hansen, president and chief executive officer, commented, "The variance from expectation for the second quarter of 2004 is the result of current weakness in our orders stream at SatNet and, to a lesser extent, EMS Wireless. We believe this situation reflects current customer circumstances and timing decisions and not long-term fundamental problems in these target markets. With the recent high level of awards and other customer activity in most of our other business units, our long-term outlook remains very positive:



 -   "Space & Technology/Atlanta has recently been selected to
     participate on some very large contracts for the U.S. Department
     of Defense (DoD), resulting in a record level of new contract
     awards in a quarter. Recent firm orders on current programs
     included follow-on production that pushed the backlog to $7
     million for antennas to be used in an advanced intra-flight data
     link system for combat aircraft. By far the largest portion of
     the second quarter awards related to new programs that we expect
     to be converted into initial firm orders in the near future.
     Several of these new programs are planned to extend more than a
     decade and are expected to generate combined orders and revenues
     to EMS exceeding $200 million over the programs' lives. We will
     begin to ramp up in the remainder of 2004 for development efforts
     that are expected to be worth $25-$30 million over the next two
     years, with the further expectation of moving into production
     phases that could yield combined annual revenues of over $20
     million beginning in 2007. We expect to make more detailed public
     announcements about these awards in the coming months, as
     contractual documentation is completed and we obtain customer
     consents for our press releases.

 -   "LXE set a new revenue record for the second quarter, extending
     its string of consecutive record-setting periods to seven. An
     important factor in LXE's sales growth has been our strategic
     plan of R&D investment, which has allowed us to bring new
     products to market earlier in the year. One of these recent new
     products is a rugged handheld computer that can gather data using
     both bar-code and RFID technologies.

 -   "SATCOM revenues were down slightly, as we continue to work on
     completing several agreements for DoD applications, which should
     benefit us during the remainder of the year. SATCOM is also
     continuing to work through the unexpectedly slow process of
     approvals for a search-and-rescue system to be installed in
     Greece. In addition, we expect to sign a long-term agreement in
     the near future to be a supplier of high-speed communications
     products to one of the world's largest avionics companies, which
     could generate more than $25 million in additional revenues for
     SATCOM over the term of the agreement.

 -   "EMS Wireless' results will likely be slightly better than
     breakeven for the second quarter. While sales of our repeaters
     and shipments from our Brazilian operations have been much
     stronger than in the previous year, sales of our base-station
     antennas in the U.S. were less than expected. Considering the
     uncertain timing of our customers' expected rollouts, we are
     taking immediate action to reduce operating expenses, which
     should improve the profit outlook for this division in the second
     half of 2004.

 -   "SatNet continues to develop its base of new customers, but in
     this developing market for two-way satellite broadband
     communications, the timing of orders is difficult to predict.
     However, we believe that interest in our open standard DVB-RCS
     equipment remains high, and we are working closely with major
     suppliers of broadcast services to expand our markets and
     geographic base. We are also taking steps to reduce the
     division's operating expenses and lower its breakeven point in
     the second half of 2004.

"Our discontinued operations - Space & Technology/Montreal - are showing real improvement in their financial results. For the first two quarters of 2004, the division has returned to reporting profit before taxes, interest and other non-operating charges. We believe that the division's more stable financial situation and promising new opportunities for its unique capabilities will enhance the business prospects currently being evaluated by potential purchasers of these discontinued operations.

"Despite the disappointment of the expected second quarter results, there is much at EMS to be excited about. Our dynamic product lines continue to make us a formidable competitor in our markets, as our technology strength and leadership have enabled us to respond to new product opportunities ahead of our competition. We have proven extremely successful in our recent defense marketing efforts, and we have expanded beyond components to also supplying full systems for defense applications. And our balance sheet remains strong, with debt below the levels where we started the year."

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 1,700 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,

 -   EMS Wireless base station antennas and repeaters, for
     PCS/cellular telecommunications,

 -   SATCOM antennas and terminals, for aeronautical and land-mobile
     and maritime communications via satellite, and

 -   SatNet broadband technologies for use in high-data-rate,
     high-capacity two-way satellite communications systems.

 Statements contained in this press release regarding 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 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 of 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, potential scope
     changes or potential 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 competing terrestrial systems reduce market
     opportunities for space-based broadband communication 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, 2003.



            

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