ATLANTA, March 5, 2007 (PRIME NEWSWIRE) -- EMS Technologies, Inc. (Nasdaq:ELMG) today reported new earnings records for both the fourth quarter and full year of 2006.
Fourth quarter revenues were $72.4 million, and earnings from continuing operations were $6.8 million or $.44 per share for the quarter. These earnings included tax benefits of $.16 per share, related to the recognition of some of the pool of R&D-related tax benefits in Canada and additional R&D credits that were enacted retroactively in the U.S. in December 2006.
Revenues for the full year were $261.1 million, and earnings from continuing operations for 2006 were approximately $15.8 million or $1.08 per share. These results included R&D-related tax benefits of $.41 per share recognized in the third and fourth quarters.
Continuing and discontinued operations consolidated together resulted in net earnings for the year of $33.0 million or $2.25 per share, which included an approximately $20 million after-tax gain from the disposal of the former EMS Wireless division.
Paul Domorski, president and chief executive officer, commented, "Our people did a great job in the fourth quarter and we had terrific execution across the entire Company. The LXE and SATCOM businesses remained on a profitable growth track, achieving sales and profit records, and the Defense & Space Systems ("D&SS") business is building an impressive backlog and positioning itself well for the future.
"We completed our sale of the Wireless division in the fourth quarter, and now LXE, SATCOM and D&SS are the components of continuing operations. As required by generally accepted accounting principles, we have recast our prior financial results to reflect Wireless in discontinued operations.
"The recast comparable financials show solid growth in sales and profitability throughout 2006. The fourth quarter has traditionally been good for EMS, and this most recent fourth quarter was especially good due to higher sales in the markets for LXE and SATCOM products, as well as the benefit to SATCOM of more favorable Canadian-dollar exchange rates. We were also able to recognize significant additional tax benefits from R&D-related activities. Excluding those tax benefits recognized in the quarter, we earned $.28 per share from our continuing businesses.
"In summary, it was a very strong quarter for the Company overall. Following are a few comments about each of our core business areas:
* "LXE capped an outstanding year with a powerful finish. Fourth
quarter revenues in 2006 were a new record for the quarter,
with notable successes in Europe, the Middle East, and Asia.
The Asian market is a key element in LXE's long-term growth
plans, and during the fourth quarter we expanded our marketing
footprint in this region by opening a representative office in
Shanghai. The Shanghai office will complement our Singapore
location, which was opened a year earlier, and both offices will
help us pursue opportunities in ports and other areas where LXE
is an established leader. LXE's profitability grew during the
quarter, in part, from a favorable product mix, including strong
sales of vehicle mount terminals and the handheld MX7. LXE was
also able to control its fixed cost base while growing its
revenue base. Combined, these two factors helped account for
record quarterly profits at the end of 2006. Fourth quarter
operating income and net earnings were both higher in 2006 than
2005 by more than 35%, which outpaced the 12% growth in sales for
the same periods.
* "In the fourth quarter, D&SS chalked up wins in highly
competitive defense markets. Fourth quarter orders included
follow-on awards on programs in which we have performed well
and are an established supplier. Typical of our follow-on work
are our current efforts to deliver high-power switch networks
for the Phalanx Close-in Weapon System. Phalanx, a program that
EMS has supported for 19 years, is a rapid-fire,
computer-controlled, radar-guided gun system designed to defeat
missile attacks and other close-in air threats to naval ships by
tracking multiple targets simultaneously. EMS also received
orders that could open significant new opportunities, such as
the recent order for Ku-band switched beam antennas that will
be used in unmanned aerial vehicle applications.
* "The largest contributor to SATCOM's growth remains the
aeronautical sector. This sector supports high demand in
military and corporate aviation, and growing demand in air
transport. We sell our products in the air transport market
through supply arrangements with the world's leading vendors of
avionics. A potentially important development in this market is
the use of our high-speed terminals in aircraft avionics systems
that also provide onboard GSM wireless service. This airborne
wireless service is being rolled out by service providers OnAir
and AeroMobile to airlines including Ryan Air, Air France,
United Emirates and Qantas. In non-aero markets, our emergency
management products are meeting with success in new applications.
We recently announced an order for a complete system for the
civilian search and rescue infrastructure in the United Arab
Emirates. We have also entered the combat search and rescue
market with systems to be deployed by the U.S. Army.
"As a result of the Company's strategic activities in recent years and especially in 2006, EMS has on its year-end balance sheet over $100 million in cash and no debt other than mortgages. We believe that our talented and hard-working employees, leading position in key markets and strong product portfolio, all supported by a sturdy balance sheet, should enable us to have another highly successful year in 2007. We continue to project that the 2007 consolidated earnings from continuing operations will be in the range of $.95 to $1.05 per share. These projected earnings compare with actual earnings from continuing operations of $.67 per share in 2006, excluding the $.41 per share of R&D-related tax benefits recognized during the year."
EMS Technologies, Inc. is a leading innovator in the design, manufacture, and marketing of wireless communications technologies addressing the enterprise mobility, communications-on-the-move and in-flight connectivity markets for both the commercial and government industries. We focus on the needs of the mobile information user and the increasing demand for wireless broadband communications. Our products and services enable communications across a variety of coverage areas, ranging from global, to regional, to within a single facility.
* 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; and
* 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.
On December 1, 2006, the Company sold the EMS Wireless division. Comparable historical financial data have been recast to reflect continuing operations as comprising only LXE, Defense & Space Systems and SATCOM. EMS Wireless has been reported as discontinued operations.
There will be a conference call at 9:30 AM Eastern time on Monday, March 5, 2007 in which the Company's management will discuss the financial results for the fourth 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 Monday, March 12, 2006 by dialing 800-615-9956 (international callers use 641-297-5237).
Statements contained in this press release regarding the Company's expectations for its financial results for 2007, 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;
* 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;
* 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 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;
* 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
hat 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; 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 September 30, 2006.
EMS Technologies, Inc.
Consolidated Statements of Operations
(In millions, except per-share data)
Quarters Ended Years Ended
-------------- --------------
Dec 31 Dec 31 Dec 31 Dec 31
2006 2005 2006 2005
------ ------ ------ ------
Net sales $ 72.4 62.3 261.1 225.9
Cost of sales 44.9 40.4 164.6 147.0
Selling, general and administrative
expenses 17.8 15.7 66.3 56.9
Research and development expenses 3.8 3.2 15.8 11.8
------ ------ ------ ------
Operating income 5.9 3.0 14.4 10.2
Interest income and other 0.6 0.1 2.2 0.6
Foreign exchange gain (loss) 0.1 0.1 (0.7) (0.3)
Interest expense (0.5) (0.9) (1.9) (3.3)
------ ------ ------ ------
Earnings before income taxes 6.1 2.3 14.0 7.2
Income tax expense (benefit) (0.7) 0.7 (1.8) 2.1
------ ------ ------ ------
Earnings from continuing operations 6.8 1.6 15.8 5.1
Gain (loss) from discontinued
operations 18.7 (6.1) 17.2 (16.5)
------ ------ ------ ------
Net earnings (loss) $ 25.5 (4.5) 33.0 (11.4)
====== ====== ====== ======
Net earnings (loss) per share:
Basic - from continuing operations $ 0.44 0.15 1.08 0.46
Basic - from discontinued operations 1.23 (0.55) 1.18 (1.48)
------ ------ ------ ------
Basic earnings (loss) per share $ 1.67 (0.40) 2.26 (1.02)
====== ====== ====== ======
Diluted - from continuing
operations $ 0.44 0.15 1.08 0.46
Diluted - from discontinued
operations 1.22 (0.55) 1.17 (1.48)
------ ------ ------ ------
Diluted earnings (loss) per share $ 1.66 (0.40) 2.25 (1.02)
====== ====== ====== ======
Weighted average number of shares:
Common 15.3 11.2 14.6 11.2
Common and dilutive common
equivalent 15.3 11.2 14.7 11.2
EMS Technologies, Inc.
Consolidated Balance Sheets
(In millions)
Dec 31 Dec 31
2006 2005
------- ------
Cash and cash equivalents $ 109.6 15.4
Receivables billed, net 70.6 52.5
Unbilled receivables under long-term
contracts 23.1 28.0
------- ------
Trade accounts receivable, net 93.7 80.5
------- ------
Inventories 26.0 21.0
Other current assets 9.7 10.1
Assets held for sale -- 49.2
------- ------
Current assets 239.0 176.2
------- ------
Net property, plant and equipment 31.8 31.2
Goodwill 10.0 10.0
Other assets 10.9 8.0
------- ------
$ 291.7 225.4
======= ======
Bank debt and current
installments of long-term debt $ 3.1 6.8
Accounts payable 29.3 25.9
Other current liabilities 30.0 26.7
Liabilities related to assets held for sale -- 13.1
------- ------
Current liabilities 62.4 72.5
Long-term debt, less current installments 11.8 36.6
Other liabilities 4.6 2.6
Shareholders' equity 212.9 113.7
------- ------
$ 291.7 225.4
======= ======
EMS Technologies, Inc.
Segment Data
(In millions)
Quarters Ended Years Ended
--------------- ---------------
Dec 31 Dec 31 Dec 31 Dec 31
2006 2005 2006 2005
------ ------ ------ ------
Net sales
LXE $ 38.3 34.0 138.0 123.1
Defense & Space Systems 15.4 13.4 52.4 51.4
SATCOM 18.7 14.9 70.7 51.4
------ ------ ------ ------
Total $ 72.4 62.3 261.1 225.9
====== ====== ====== ======
Operating income (loss)
LXE $ 3.9 2.8 11.1 7.5
Defense & Space Systems 0.8 0.7 2.6 3.2
SATCOM 2.2 0.8 6.2 3.5
Corporate and Other (1.0) (1.3) (5.5) (4.0)
------ ------ ------ ------
Total $ 5.9 3.0 14.4 10.2
====== ====== ====== ======
Earnings (loss) from continuing
operations
LXE $ 2.3 1.7 6.7 4.5
Defense & Space Systems 0.5 0.3 1.3 1.7
SATCOM 2.5 1.2 6.1 3.5
Corporate and Other 1.5 (1.6) 1.7 (4.6)
------ ------ ------ ------
Total $ 6.8 1.6 15.8 5.1
====== ====== ====== ======
Reconciliation of Non-GAAP Financial Information
For the Periods Ended December 31, 2006
(in millions, except per share data)
This press release contains information regarding our continuing
operations' diluted earnings per share excluding R&D-related tax
benefits for the fourth quarter of 2006 and the 2006 fiscal year.
This measure is not prescribed by generally accepted accounting
principles ("GAAP"). Management believes this non-GAAP measure provides
more useful information to investors than the most comparable GAAP
measure, because the non-GAAP measure more clearly reflects the
performance of our businesses' operating activities. Further, this
non-GAAP measure is consistent with the manner in which management
evaluated the financial performance of those businesses. Following is
a reconciliation of our continuing operations' earnings and diluted
earnings per share to the non-GAAP financial measures that exclude
R&D-related tax benefits for the respective period.
Fourth Quarter Fiscal Year
--------------- ----------------
Diluted Diluted
Earnings EPS Earnings EPS
------ ------ ------ ------
Earnings from continuing
operations, as reported $ 6.8 0.44 $ 15.8 1.08
Less: Recognition of R&D-related
tax benefit pool in Canada and
tax credits in the U.S. 2.5 0.16 6.0 0.41
------ ------ ------ ------
Earnings from continuing
operations, as adjusted $ 4.3 0.28 $ 9.8 0.67
====== ====== ====== ======
EMS Technologies, Inc.
Reconciliation of Financial Information
(in millions, except per share data)
As required by generally accepted accounting principles and to promote
comparability, we have recast our prior financial results to reflect
our former Wireless business in discontinued operations. This schedule
reconciles certain summarized financial information, as originally
reported, to the same basis as reported in the fourth quarter of 2006.
2006 Quarters Ended
----------------------------------
1-Apr 1-Jul 30-Sep 31-Dec
------- ------ ------- -------
Net sales:
As originally reported $ 74.7 78.0 76.1
Less: EMS Wireless net sales 15.7 13.0 11.4
------- ------ -------
As recast for discontinued
operations $ 59.0 65.0 64.7 72.4
======= ====== ======= =======
Operating income:
As originally reported $ 3.6 3.7 3.7
Less: EMS Wireless operating
income (loss) before
corporate expense allocations 0.2 (0.7) --
Less: Corporate expenses formerly
allocated to EMS Wireless 1.0 1.0 1.0
------- ------ -------
As recast for discontinued
operations $ 2.4 3.4 2.7 5.9
======= ====== ======= =======
Earnings from continuing
operations:
As originally reported $ 2.0 2.5 6.2
Less: EMS Wireless net earnings
(loss), excluding corporate
expense allocations, net of
tax benefit 0.1 (0.4) --
Less: Corporate expenses, net of
tax benefit, formerly allocated
to EMS Wireless 0.7 0.7 0.7
------- ------ -------
As recast for discontinued
operations $ 1.2 2.2 5.5 6.8
======= ====== ======= =======
Diluted net earnings per share:
As originally reported $ 0.15 0.16 0.40
Less: EMS Wireless net earnings
(loss), excluding corporate
expense allocations, net of
tax benefit 0.01 (0.03) --
Less: Corporate expenses, net of
tax benefit, formerly allocated
to EMS Wireless 0.04 0.04 0.04
------- ------ -------
As recast for discontinued
operations $ 0.10 0.15 0.36 0.44
======= ====== ======= =======