[November 06, 2012] |
 |
Globecomm Reports Fiscal 2013 First Quarter Financial Results
HAUPPAUGE, N.Y. --(Business Wire)--
Globecomm
Systems Inc. (NASDAQ: GCOM), a leading communications solutions
provider, today reported financial results for the fiscal 2013 first
quarter ended September 30, 2012. Globecomm is reporting its financial
results on a generally accepted accounting principles (GAAP) basis as
well as adjusted EBITDA and adjusted diluted net income per common
share, both non-GAAP financial measures, for which the Company provides
detailed reconciliations on the attached tables. The following are
highlights:
Revenues ($M)
|
|
|
|
Q1 FY13
|
|
Q1 FY12
|
|
% Change
|
Services
|
|
$
|
47.2
|
|
$
|
50.2
|
|
(6.1
|
)
|
Infrastructure solutions
|
|
$
|
34.0
|
|
$
|
20.7
|
|
64.0
|
|
Consolidated
|
|
$
|
81.2
|
|
$
|
71.0
|
|
14.4
|
|
|
GAAP Results ($M
except EPS)
|
|
|
|
Q1 FY13
|
|
Q1 FY12
|
|
% Change
|
Net income
|
|
$
|
2.7
|
|
$
|
9.3
|
|
(71.3
|
)
|
Diluted EPS
|
|
$
|
0.12
|
|
$
|
0.41
|
|
(70.7
|
)
|
|
Non-GAAP Results ($M
except EPS)
|
|
|
|
Q1 FY13
|
|
Q1 FY12
|
|
% Change
|
Adjusted EBITDA
|
|
$
|
8.0
|
|
$
|
8.2
|
|
(2.5
|
)
|
Adjusted Diluted EPS
|
|
$
|
0.12
|
|
$
|
0.12
|
|
-
|
|
|
Fiscal Year 2013 First Quarter Results
Revenues for the Company's fiscal 2013 first quarter increased 14.4% to
$81.2 million as compared to $71.0 million in the same period last year.
Revenues from services decreased 6.1% to $47.2 million as compared to
$50.2 million in the same period last year. The decrease in services
revenues was primarily due to a decrease in our access services offering
in the government marketplace due to the reduction of services in Iraq.
Revenues from infrastructure solutions increased by 64.0% to $34.0
million as compared to $20.7 million in the same period last year. The
increase in revenue was primarily driven by the achievement of revenue
milestones under a major government program which contributed
approximately $11.7 million in revenue and carries lower than
traditional infrastructure margins.
Net income for the Company's fiscal 2013 first quarter decreased to $2.7
million or $0.12 of diluted net income per common share as compared to
net income of $9.3 million, or $0.41 of diluted net income per common
share in the same period last year. Excluding an earn-out gain in the
prior period, adjusted diluted net income per common share for the first
quarter of fiscal 2013 was flat at $0.12 as compared to the first
quarter in fiscal 2012. During the first quarter of fiscal 2012, the
Company recorded a gain for the change in fair value of the ComSource
earn-out as a result of decreases in ComSource's actual results from the
previously forecasted performance. In accordance with GAAP, this change
in the fair value of the earn-out resulted in a $6.5 million ($0.29 per
diluted share) gain to net income. Net income was negatively affected by
the reduction of services revenue; however this was offset by a
reduction in operating expenses based on certain cost cutting
initiatives. Adjusted EBITDA for the first quarter of 2013 decreased
slightly to $8.0 million as compared to $8.2 million in the first
quarter of fiscal 2012.
Management's Review of Results and Expectations
David Hershberg (News - Alert), Chairman and CEO, said: "We are proud to report that
Globecomm's robust Long Island and Maryland facilities, both of which
were in the path of Hurricane Sandy, coupled with the operations team,
successfully provided 100% network uptime throughout the storm for our
global customer base. Globecomm will continue to work with our partner
Agility Recovery Solutions to assure continued business restoral
services for their customers and are on call 24 X 7 to support clients
across America. Globecomm's combined engineering know-how and
world-class global network provides us with a significant competitive
advantage and remains the core of the Company's value proposition. We
remain excited by the opportunities we see in each of our verticals,
most notably in the media and entertainment vertical, to leverage our
engineering expertise and global network to create value-added service
solutions. While our strategic focus is on increasing market share in
our targeted vertical markets and growing our services revenue as the
government vertical uncertainty persists, the infrastructure segment
remains a critical element of our vision.
"The continued strong cash flow from operations and over $70 million of
cash on the balance sheet provides us the flexibility to invest in our
business, including new products and personnel, and selectively pursue
strategic opportunities that will maximize shareholder value despite the
head-winds we face in the near term. We generated $6.7 million in cash
flow from operations in the quarter and we anticipate strong cash flow
in fiscal 2013 as we continue to ship inventory from the NATO TSGT
program."
Keith Hall, President and COO, added: "The team executed well in Q1 with
strategic government bookings in our infrastructure segment and
continued diversification of services offerings. With the backdrop of
government budget uncertainty, we continue to mature our value
proposition as a global communication solution provider, as is evident
by our recent success of TEMPO and M2M service awards. With the
evolution of the Internet and mobile communications, we remain at the
forefront of network and application innovation. Cloud and hybrid
satellite network opportunities are evolving based on this innovation,
and we continue to develop seamless user experiences. As we look to
build toward the future, we will continue to enhance this value
proposition and are excited about the opportunities it will afford us."
Management Maintains Expectations for the Fiscal Year Ending June 30,
2013
Globecomm currently expects the following financial results for the
fiscal year 2013:
-
Consolidated revenues to be between $340 and $360 million.
-
Services segment revenues to be between $200 and $210 million.
-
GAAP diluted net income per common share to be between $0.66 and $0.76.
-
Adjusted EBITDA to be between $40 and $44 million.
Non-GAAP Measures
Adjusted EBITDA is a non-GAAP measure which represents net income before
interest income, interest expense, provision for income taxes,
depreciation, amortization expense, non-cash stock compensation expense
and earn-out fair value adjustments. Globecomm believes this provides
greater transparency by helping illustrate comparability between current
and prior periods. Under an accounting pronouncement on business
combinations, changes to the fair value of earn-out payments must be
recognized in earnings. Therefore, the exclusion of the earn-out fair
value adjustments in the adjusted EBITDA calculation provides better
comparability.
Adjusted EBITDA does not represent cash flows as defined by GAAP.
Globecomm discloses adjusted EBITDA since it is a financial measure
commonly used in its industry. Because adjusted EBITDA facilitates
internal comparisons of our historical financial position and operating
performance on a more consistent basis, the Company also uses adjusted
EBITDA in measuring performance relative to that of our competitors and
in evaluating acquisition opportunities. The Company's management
regularly uses supplemental non-GAAP financial measures internally to
understand, manage and evaluate the Company's business and make
operating decisions. Adjusted EBITDA is not meant to be considered a
substitute or replacement for net income as prepared in accordance with
GAAP. Adjusted EBITDA may not be comparable to other similarly titled
measures of other companies. Reconciliation between GAAP net income and
adjusted EBITDA is provided in a table immediately following the
Condensed Consolidated Balance Sheets.
Reconciliation of adjusted diluted net income per common share excludes
earn-out fair value adjustments, which is not in accordance with GAAP.
However, Globecomm believes this measure provides greater transparency
by helping illustrate comparability between current and prior periods.
Non-GAAP financial measures are not meant to be considered in isolation
or as a substitute for comparable GAAP measures, and should be read only
in conjunction with the Company's consolidated financial statements
prepared in accordance with GAAP. The Company's management regularly
uses supplemental non-GAAP financial measures internally to understand,
manage and evaluate the Company's business and make operating decisions.
About Globecomm Systems (News - Alert)
Globecomm Systems Inc. ("we," "our," "us" or "Globecomm"), is a leading
global communications solutions provider. Employing our expertise in
emerging communication technologies, including satellite and other
transport mediums, we are able to offer a comprehensive suite of system
integration, system products, and network services enabling a complete
end-to-end solution for our customers. We believe our integrated
approach of in-house design and engineering expertise combined with a
world-class global network and our 24 by 7 network operating centers
provides us a unique competitive advantage. We focus this value
proposition in selective vertical markets, including government,
wireless, media, enterprise and maritime. As a communications solutions
provider we leverage our global network to provide customers managed
access services to the United States Internet backbone, video content,
the public switched telephone network or their corporate headquarters or
government offices. We currently have customers for which we are
providing these solutions in the United States, Europe, South America,
Africa, the Middle East and Asia.
Based in Hauppauge, New York, Globecomm also maintains offices in
Maryland, New Jersey, Virginia, the Netherlands, South Africa, Hong
Kong, Germany, Singapore, the United Arab Emirates and Afghanistan.
This press release contains forward-looking statements made pursuant
to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. These forward looking statements are based on
management's current expectations and observations. You should not place
undue reliance on our forward-looking statements because the matters
they describe are subject to certain risks, uncertainties and
assumptions that are difficult to predict. Our forward-looking
statements are based on the information currently available to us and
speak only as of the date of this press release. Over time, our actual
results, performance or achievements may differ from those expressed or
implied by our forward-looking statements, and such differences might be
significant and materially adverse to our security holders.
We have identified some of the important factors that could cause
future events to differ from our current expectations and they are
described in our most recent Annual Report on Form 10-K, including
without limitation under the captions "Risk Factors" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations," and in other documents that we may file with the SEC (News - Alert), all
of which you should review carefully. Please consider our
forward-looking statements in light of those risks as you read this
press release.
Globecomm Systems Inc.
|
Consolidated Statements of Operations
|
(In thousands, except per share data)
|
(Unaudited)
|
|
|
|
Three Months Ended
|
|
|
September 30,
|
|
September 30,
|
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
Revenues from services
|
|
$
|
47,172
|
|
|
$
|
50,239
|
|
Revenues from infrastructure solutions
|
|
|
33,991
|
|
|
|
20,731
|
|
Total revenues
|
|
|
81,163
|
|
|
|
70,970
|
|
|
|
|
|
|
|
|
Costs and operating expenses:
|
|
|
|
|
|
|
Costs from services
|
|
|
32,004
|
|
|
|
33,965
|
|
Costs from infrastructure solutions
|
|
|
32,072
|
|
|
|
18,122
|
|
Selling and marketing
|
|
|
4,288
|
|
|
|
4,593
|
|
Research and development
|
|
|
953
|
|
|
|
1,756
|
|
General and administrative
|
|
|
7,695
|
|
|
|
8,343
|
|
Earn-out fair value adjustments
|
|
|
-
|
|
|
|
(6,474
|
)
|
Total costs and operating expenses
|
|
|
77,012
|
|
|
|
60,305
|
|
Income from operations
|
|
|
4,151
|
|
|
|
10,665
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
85
|
|
|
|
55
|
|
Interest (expense)
|
|
|
(114
|
)
|
|
|
(165
|
)
|
Income before income taxes
|
|
|
4,122
|
|
|
|
10,555
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
1,446
|
|
|
|
1,228
|
|
Net income
|
|
$
|
2,676
|
|
|
$
|
9,327
|
|
|
|
|
|
|
|
|
Basic net income per common share
|
|
$
|
0.12
|
|
|
$
|
0.43
|
|
Diluted net income per common share
|
|
$
|
0.12
|
|
|
$
|
0.41
|
|
|
|
|
|
|
|
|
Weighted-average shares used in the calculation of basic net
income per common share
|
|
|
22,425
|
|
|
|
21,769
|
|
|
|
|
|
|
|
|
Weighted-average shares used in the calculation of diluted net
income per common share
|
|
|
22,859
|
|
|
|
22,537
|
|
|
Globecomm Systems Inc.
|
Condensed Consolidated Balance Sheets
|
(In thousands)
|
|
|
|
September 30,
|
|
June 30,
|
|
|
2012
|
|
2012
|
|
|
(Unaudited)
|
|
|
Assets
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
70,009
|
|
|
$
|
72,196
|
|
Accounts receivable, net
|
|
|
59,315
|
|
|
|
59,224
|
|
Inventories
|
|
|
31,439
|
|
|
|
30,664
|
|
Prepaid expenses and other current assets
|
|
|
4,309
|
|
|
|
4,101
|
|
Deferred income taxes
|
|
|
5,633
|
|
|
|
7,041
|
|
Total current assets
|
|
|
170,705
|
|
|
|
173,226
|
|
Fixed assets, net
|
|
|
48,331
|
|
|
|
47,712
|
|
Goodwill
|
|
|
68,717
|
|
|
|
68,463
|
|
Intangibles, net
|
|
|
18,717
|
|
|
|
19,331
|
|
Other assets
|
|
|
1,334
|
|
|
|
1,335
|
|
Total assets
|
|
$
|
307,804
|
|
|
$
|
310,067
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
$
|
58,662
|
|
|
$
|
63,389
|
|
Other liabilities
|
|
|
164
|
|
|
|
230
|
|
Long term debt
|
|
|
13,050
|
|
|
|
14,575
|
|
Deferred income taxes
|
|
|
12,485
|
|
|
|
12,485
|
|
Total stockholders' equity
|
|
|
223,443
|
|
|
|
219,388
|
|
Total liabilities and stockholders' equity
|
|
$
|
307,804
|
|
|
$
|
310,067
|
|
|
Globecomm Systems Inc.
|
Reconciliation of Net Income to adjusted EBITDA
|
(In thousands)
|
(Unaudited)
|
|
|
|
|
Three Months Ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
Net income
|
|
$
|
2,676
|
|
|
$
|
9,327
|
|
Adjustments:
|
|
|
|
|
|
|
Interest (income)
|
|
|
(85
|
)
|
|
|
(55
|
)
|
Interest expense
|
|
|
114
|
|
|
|
165
|
|
Earn-out fair value adjustments
|
|
|
-
|
|
|
|
(6,474
|
)
|
Provision for income taxes
|
|
|
1,446
|
|
|
|
1,228
|
|
Depreciation and amortization
|
|
|
2,973
|
|
|
|
3,147
|
|
Stock compensation expense
|
|
|
869
|
|
|
|
860
|
|
Adjusted EBITDA
|
|
$
|
7,993
|
|
|
$
|
8,198
|
|
|
Globecomm Systems Inc.
|
Reconciliation of adjusted diluted Net Income per common share
|
(In thousands)
|
(Unaudited)
|
|
|
|
|
Three Months Ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
Diluted net income per common share
|
|
$
|
0.12
|
|
|
$
|
0.41
|
|
Earn-out fair value adjustments
|
|
|
-
|
|
|
|
(0.29
|
)
|
Adjusted diluted net income per common share
|
|
$
|
0.12
|
|
|
$
|
0.12
|
|

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