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Globecomm Systems Reports Fiscal 2009 Second Quarter and Six-Month Financial Results

^{Published on 2009-02-09 08:07:52, Last Modified on 2009-02-09 08:10:55 - Market Wire}
 

HAUPPAUGE, N.Y.--([ BUSINESS WIRE ])--Globecomm Systems Inc. (NASDAQ: GCOM), a leading provider of satellite-based communications infrastructure solutions and services on a global basis, today announced financial results for the fiscal 2009 second quarter and six-months ended December 31, 2008. Globecomm is reporting its financial results on a generally accepted accounting principles (GAAP) basis as well as adjusted EBITDA, a non-GAAP financial measure. In the attached table the Company provides a detailed reconciliation of GAAP earnings to adjusted EBITDA. A summary of the Company's results are:

• Service revenues increased 20.1% to $18.6 million as compared to $15.5 million in the same period last year.
• Revenues from infrastructure solutions decreased by 45.2% to $21.3 million as compared to $38.9 million in the same period last year.
• Consolidated revenues were $40.0 million in the fiscal 2009 second quarter as compared to $54.4 million in the same period last year.
• GAAP earnings per diluted share were $0.05 in the second quarter of fiscal 2009 as compared to GAAP earnings per diluted share of $0.18 in the same period last year.
• Adjusted EBITDA was $3.1 million in the second quarter of fiscal 2009 as compared to $5.2 million in the same period last year.

Fiscal Year 2009 Second Quarter Results

Revenues for the Company's fiscal 2009 second quarter decreased 26.6% to $40.0 million, compared to $54.4 million in the same period last year. Revenues from infrastructure solutions decreased by 45.2% to $21.3 million compared to $38.9 million in the same period last year. Revenues from services increased 20.1% to $18.6 million as compared to $15.5 million in the same period last year. The increase in service revenues was driven by an increase in managed network service revenue within the Internet and data solution offering and life cycle support revenues. This was offset by a decrease in infrastructure solution revenues.

Net income for the Company's fiscal 2009 second quarter decreased to $0.9 million, or $0.05 per diluted share, compared to net income of $3.7 million, or $0.18 per diluted share, in the second quarter of fiscal 2008 on a GAAP basis. Adjusted EBITDA for the second quarter of 2009 decreased to $3.1 million as compared to $5.2 million in the second quarter of 2008. The decrease in net income and adjusted EBITDA was primarily driven by lower infrastructure solutions revenues caused by the global economic slowdown resulting in government and commercial customers and prospects delaying projects, and increased selling and marketing expenses.

Fiscal Year 2009 Six-Month Results

Revenues for the Company's fiscal 2009 six-months ended December 31, 2008 decreased 14.9% to $82.3 million, compared to $96.8 million in the same period last year. Revenues from infrastructure solutions decreased by 31.7% to $44.9 million compared to $65.7 million in the same period last year. Revenues from services increased 20.6% to $37.5 million as compared to $31.1 million in the same period last year. The factors behind these trends were the same as reflected in the second quarter results.

Net income for the Company's first six-months of fiscal 2009 decreased to $1.8 million, or $0.09 per diluted share, compared to net income of $6.7 million, or $0.34 per diluted share, in the same period last year on a GAAP basis. Adjusted EBITDA for the Company's first six-months of fiscal 2009 decreased to $6.1 million as compared to $9.8 million in the same period past year. The decrease in net income and adjusted EBITDA was primarily driven by lower infrastructure solutions revenues and increased selling and marketing expenses.

Management's Review of Results and Expectations

David Hershberg, Chairman and CEO of the Company, said, "Globecomm's more predictable services revenues, coupled with a solid balance sheet, which includes zero debt, provides the Company with stability during the current economic downturn. Globecomm continues to invest in sales and marketing and sees opportunity on the acquisition front as we look to expand our global network footprint and round out our existing technology offerings. Globecomm has built and manages a highly leveragable service platform providing cutting edge technologies to multiple market segments. We are excited about our future, and look forward to continued profitability" Mr. Hershberg continued, "Although we are disappointed by our results at this point in the current fiscal year due to delays in certain anticipated infrastructure bookings, we are encouraged by the recent bookings levels as reflected in our recent announcements and the performance of our service business."

Non-GAAP Measures

Adjusted EBITDA is a non-GAAP measure which represents net income before interest income, interest expense, provision for income taxes, depreciation and amortization expense and non-cash stock compensation expense. Adjusted EBITDA does not represent cash flows defined by GAAP. Globecomm discloses adjusted EBITDA since it is a financial measure commonly used in its industry. 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 adjusted EBITDA and GAAP net income is provided in a table immediately following the Condensed Consolidated Balance Sheets.

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

Globecomm Systems Inc. provides end-to-end value-added satellite-based communication products, services and solutions by leveraging its core satellite ground segment systems and network capabilities, with its satellite communication services capabilities. The products and services Globecomm offers include pre-engineered systems, systems design and integration services, managed network services and life cycle support services. Globecomm's customers include communications service providers, commercial enterprises, broadcast and other media and content providers and government and government-related entities.

Based in Hauppauge, New York, Globecomm Systems also maintains offices in Washington, DC, Maryland, Hong Kong, the United Kingdom, 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 difference might be significant and materially adverse to our security holders. In particular, the impact of the current economic downturn and the unpredictability of government spending programs make assessment of future performance extremely difficult.We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

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, including our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, all of which you should review carefully. Please consider our forward-looking statements in light of those risks as you read this press release.

(A) Includes one-time charge of $675 in the six-months ended December 31, 2008 related to accelerated vesting of the restricted stock of the Company's former President, who passed away on July 20, 2008.