Earnings Per Share Expected to Grow 19%
EBITDA More Than 40% Higher
ATLANTA, Jan. 5, 2009 (GLOBE NEWSWIRE) -- EMS Technologies, Inc. (Nasdaq:ELMG) today announced that it expects earnings from continuing operations for the 2009 fiscal year to be in the range of $1.55 - $1.65 per share, based on accounting standards used in 2008 and prior years, as discussed below.
At the present time, the Company cannot appropriately confirm or modify its guidance on earnings from continuing operations for full year 2008. However, to provide context, the midpoint of the guidance range for 2009 would represent earnings-per-share growth of approximately 19% over the midpoint of the most recent earnings guidance range for 2008.
Paul Domorski, the Company's CEO, commented, "The guidance for the full year 2009 is based on expectations for organic revenue growth of 15% to 20% for our SATCOM and Defense sectors. For LXE, with the current economic conditions, our plan is based on flat revenue compared with 2008. We also believe that the profitability of all of our businesses will increase in 2009 as compared with 2008, as a result of the expected favorable mix of contracts and the benefit of successful initiatives to reduce costs and improve operating margins.
"In addition to our organic growth expectations, the Company's 2009 results will reflect several acquisitions announced in late 2008. In the third quarter of 2008, we acquired Sky Connect LLC, a leading supplier of Iridium-based tracking-and-voice systems for general aviation. In December 2008, we announced definitive agreements to acquire Satamatics Global Ltd., a global provider of satellite-based machine-to-machine ("M2M") services such as Inmarsat's IsatM2M, and Formation Inc., a provider of airborne wireless network products that enable in-flight passenger communications with terrestrial and satellite networks. The acquisition of U.S.-based Formation is expected to be completed by mid-January 2009, and the acquisition of the U.K.-based Satamatics is expected to be completed by the end of the first quarter 2009, subject to final regulatory approvals.
"Sales and earnings for each of the three acquisitions grew more than 20% in the most recent respective fiscal year. They are expected to contribute combined revenues in 2009 of $75 - $80 million, and combined EBITDA of $12 - $15 million.
"In 2009, consolidated earnings before interest, incomes taxes, depreciation and amortization ("EBITDA") is expected to grow more than 40% compared with 2008 and to exceed $50 million for the year. After amortization of the estimated intangible assets acquired in these transactions, the combined acquisitions are expected to be slightly accretive to earnings per share in 2009."
Domorski added, "EMS has become a leader in connectivity solutions for demanding applications, such as aero-connectivity, on-the-move-communications and data gathering, and asset tracking and messaging. Our acquisitions should enable us to expand our position in the market, help us to leverage our intellectual property, and fuel further profitable growth. We believe our efforts to expand distribution channels and lower costs in 2008, and continuing in 2009, will enable the LXE business to be a solid contributor to profits."
Effect of New Accounting Standard
As noted above, the Company's earnings guidance for 2009 is based on accounting standards used in 2008 and prior years. Effective in 2009, a new accounting standard, Statement of Financial Accounting Standards ("SFAS") 141(R), "Business Combinations," changes the accounting for business combinations. One of the changes required by SFAS 141(R) is that expenditures for transaction services such as legal advice, third-party due diligence and asset valuation will no longer be capitalized as part of the cost of an acquisition but will be expensed in the income statement. The Company estimates that the charge to the 2009 income statement for transaction costs related to acquisitions scheduled to be completed in the first quarter of 2009 will be approximately $.11 - $.13 per share, which is not included in the guidance above.
In addition, further significant acquisition activity not currently anticipated in 2009, would reduce earnings under generally accepted accounting principles by the amount of related transaction expenses. Other changes related to SFAS 141(R) include the requirement to use fair value accounting for an earnout provision, in which the Company will pay the sellers additional purchase price if specified levels of performance are achieved post-closing. If the Company's estimated liability for earnout payments should change based on post-closing developments, the Company must recognize subsequent changes in the fair value of the earnout as a charge (or credit) to the income statement.
About EMS Technologies, Inc.
EMS Technologies, Inc. (Nasdaq:ELMG) 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. EMS focuses on the needs of the mobile information user and the increasing demand for wireless broadband communications. EMS products and services enable communications across a variety of coverage areas, ranging from global, to regional, to within a single facility. EMS has three operating segments:
-- Satellite Communications ("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;
-- Defense & Space Systems supplies highly-engineered
subsystems for defense electronics and sophisticated satellite
applications -- from military communications, radar, surveillance
and countermeasures to commercial high-definition television,
satellite radio, and live TV for today's most innovative
airlines; and
-- 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's automatic
identification and data capture products serve mobile information
users at over 7,500 sites worldwide.
For more information, visit EMS at www.ems-t.com.
The EMS Technologies, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5502
Statements contained in this press release regarding the Company's expectations for its financial results for 2009, 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
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), and whether these responses and conditions
develop according to our expectations;
-- 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 continued availability of financing for aero-connectivity
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;
-- 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, and the risk that any such acquisitions
do not perform as expected or are otherwise dilutive to our
earnings;
-- the potential effects of implementing Statement of Accounting
Standards ("SFAS") 141(R), "Business Combinations," which
requires, for acquisitions completed in 2009 and thereafter,
that certain acquisition-related expenditures should be accounted
for as period expenses in the income statement, and that the
acquisition-date fair value will become the measurement objective
for all assets acquired and liabilities assumed, resulting in
potential unfavorable effects on the income statement if there
are subsequent changes in fair values of certain assets and
liabilities;
-- the potential effects, on cash and results of discontinued
operations, of final resolution of potential liabilities under
warranties and representations made by the Company, and
obligations assumed by purchasers, in connection with the
Company's dispositions of discontinued operations;
-- 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, 2007.