SPACEHAB, Incorporated
, a leading provider of commercial space services, today
announced financial results for the Company’s third quarter of fiscal year
2003, ended March 31, 2003.
Third Quarter Results
Revenues for the third fiscal quarter of 2003 rose 7% to $26.4 million
from $24.7 million for third quarter of 2002. Gross profit decreased $2.2
million to $4.3 million, or 16% of revenue, for third quarter 2003. Margins in
the current quarter were lower due to changes in the mix of business under
contract.
The Company reported a net loss of $62.7 million, or ($5.06) per diluted
share for the third quarter of 2003, as compared to a net income of $66,000,
or $0.00 per diluted share for the same period a year ago.
This loss, which was computed in accordance with Generally Accepted
Accounting Principles (GAAP), includes charges of $62.2 million. SPACEHAB
recognized a non-recurring charge of $50.3 million for the loss of SPACEHAB’s
Research Double Module (RDM) which was destroyed on the STS-107 Space Shuttle
mission. Additionally, the Company recorded a non-cash charge of $11.9 million
for goodwill impairment related to its Johnson Engineering subsidiary.
Excluding these charges, SPACEHAB’s adjusted net loss was $0.5 million for the
third quarter 2003.
SPACEHAB reported a loss from operations of $61.1 million, including the
charges referred to above. Excluding these charges, the Company’s adjusted
operating income was $1.1 million for the third quarter 2003.
“During the third quarter, we delivered improved operating results while
responding to NASA’s requirements in support of the Shuttle tragedy,” said
Michael E. Kearney, President and Chief Executive Officer. “Our dedicated
management team has continued its focus on delivering a steady revenue stream
and improving operating cash flow while reducing expenses and debt,” concluded
Mr. Kearney.
Selling, general, and administrative operating expenses declined $1.7
million to $3.2 million for the third quarter of fiscal 2003, a result of
continuing company-wide cost reduction efforts and elimination of non-core
operating expenses. Third quarter fiscal year 2003 EBITDA (earnings before
interest, taxes, depreciation, amortization, and other non-cash charges) was
$2.6 million compared to $4.6 million for the third quarter of 2002.
Nine Month Results
Revenues increased 9% to $81.3 million for the nine months ended March 31,
2003, compared to $74.7 million for the nine months ended March 31, 2002.
Gross profit declined to $14.8 million for the nine months ended March 31,
2003, compared to $16.1 million for the same period a year ago. Margins in the
current quarter were lower due to changes in the mix of business under
contract.
SPACEHAB reported a net loss of $61.6 million, or ($5.03) per diluted
share, for the nine months ended March 31, 2003, compared to a net loss of
$2.1 million, or ($0.18) per diluted share, for the same period a year ago. As
stated above, this quarter’s loss includes $62.2 million in charges. SPACEHAB
previously announced the loss of its RDM and has recorded a one-time charge of
$50.3 million. Additionally, the Company reported an impairment of $11.9
million of its goodwill associated with Johnson Engineering. Excluding these
charges, SPACEHAB’s adjusted net income was $0.6 million for the nine month
period.
SPACEHAB reported a loss from operations of $56.8 million for the nine
months ended March 31, 2003, including the charges referred to above.
Excluding these charges, SPACEHAB’s adjusted operating income was $5.4 million
for the nine month period.
Operating expenses for the nine months ended March 31, 2003, excluding the
nonrecurring charge and goodwill impairment charge reported during the period,
declined $5.8 million to $9.3 million, compared to $15.1 million the nine
months ended March 31, 2002. Previous fiscal year operating expenses included
$4.0 million in non-core operating expenses and $1.8 million of operating
expenses eliminated in the fiscal year 2003. EBITDA for the nine months ended
March 31, 2003 was $12.8 million, compared to $11.1 million for the nine
months ended March 31, 2002.
Balance Sheet
SPACEHAB continues to strengthen its balance sheet. The most significant
change in the Company’s liquidity position was the increase in investments of
$16.5 million at March 31, 2003. As previously disclosed, the Company received
the proceeds of its commercial insurance policy following the loss of the RDM
and has moved those proceeds into short-term investments. Additionally,
SPACEHAB has recorded an $11.9 million reduction in goodwill classified as
Other Assets.
Cash and cash equivalents increased to $3.7 million at March 31, 2003 from
$1.8 million as of December 31, 2002. The combined cash, cash equivalents, and
short-term investments on March 31, 2003 were $20.2 million.
As a result of the RDM loss, the Company was required to write off the
entire book value of the module net of the commercial insurance recovery. This
loss resulted in a material reduction in property, plant, and equipment assets
as of March 31, 2003. The Company has filed a claim for indemnification of its
loss with NASA and will record such proceeds in the future period in which the
claim is resolved.
“As previously disclosed, the change in our balance sheet is primarily a
result of the recognized loss of the RDM offset by $17.7 million in insurance
proceeds,” said Julia A. Pulzone, Senior Vice President, Finance and Chief
Financial Officer of SPACEHAB. “We are still in negotiations with NASA to
determine the amount of reimbursement payments from the Agency for the loss of
this module,” concluded Ms. Pulzone.
During the third quarter of fiscal year 2003, SPACEHAB repaid $2.3 million
of debt obligations and has repaid $5.8 million of debt for the fiscal year to
date.
Update of Ongoing Operations
The SPACEHAB Flight Services (SFS) business unit is continuing operations,
completing work on the STS-107 mission, and is continuing its quality support
under contract to NASA on three of the next five upcoming missions. NASA’s
accident investigation board is completing its analysis, and the Company is
prepared to support the Agency in its return to flight within the next year.
In the interim, SPACEHAB has begun negotiations of an equitable adjustment for
delays in these missions, to provide additional revenue for contracted mission
preparation activities during the period prior to NASA’s return to flight.
SPACEHAB’s Johnson Engineering subsidiary, now doing business under the
name SPACEHAB Government Services, has revised its operations by reducing
excess staffing levels and streamlining sales, general, and administrative
expenses to adjust to the completion of a NASA contract which was not awarded
to the Company during recompetition. The realignment of this business unit
strategically positions it to competitively bid on upcoming business
opportunities including International Space Station consolidation contracts.
The Company continues to expand its commercial payload processing
business. SPACEHAB subsidiary, Astrotech Space Operations, received two new
NASA missions further expanding its government customer sector. The NASA
MESSENGER and Deep Impact spacecraft are scheduled for launch in March 2004
and December 2004 onboard Boeing Delta II launch vehicles from Cape Canaveral
Air Force Station. With the successful April 10, 2003 launch of the Boeing-
built Asiasat-4 spacecraft, Astrotech is focusing on payload processing
efforts for the May 12, 2003 launch of HellasSat, a satellite scheduled to
provide broadcast coverage for the 2004 Summer Olympic Games in Athens.
Financial and Operational Outlook
“Despite the temporary grounding of the Space Shuttle fleet, SPACEHAB
maintains a complement of modules and carriers, currently under contract on
three of the next five Space Shuttle missions,” said Mr. Kearney. “Our
corporate reengineering activities, as well as our sound operational and
financial management, have enhanced our operating plan and competitive
position as we move into a period of opportunity, with the potential for new
contracts supporting both the Space Shuttle and International Space Station
programs,” concluded Mr. Kearney.
Non-GAAP Financial Measures
This announcement includes financial measures computed in accordance with
GAAP, as well as certain non-GAAP or “adjusted” results, which exclude certain
charges recorded in the third quarter of fiscal year 2003. Management believes
the adjusted results are more indicative of the underlying trend in operations
of the Company and will continue to provide adjusted results in addition to
reporting earnings in accordance with GAAP.
EBITDA is also included as an additional measure of Company performance.
EBITDA includes components that are significant in understanding and assessing
our results of operations and cash flows. EBITDA should not be construed as a
substitute for net income, determined in accordance with GAAP, as an indicator
of operating performance, nor does EDITDA represent cash flow from operating
activities. Management believes that EBITDA is relevant and useful information
and is disclosing this information to permit a more comprehensive analysis of
our operating performance, as an additional meaningful measure of performance
and liquidity, and to provide additional information with respect to our
ability to meet future debt service, capital expenditure and working capital
requirements. The accompanying table presents the reconciliation from GAAP to
the adjusted results and calculation of EBITDA.
Conference Call
SPACEHAB will host a conference call on May 8, 2003 at 11:00 a.m. Eastern
time to discuss the third quarter earnings release. To participate on the
call, please register with Haris Tajyar at 818-981-5300. To participate via
the Internet, visit the Investor Relations section of the SPACEHAB website at
www.spacehab.com. A taped replay will be available immediately following the
conference call and accessible via access code 16701662 until 11:59 p.m.
Eastern time on May 9, 2003 at 800.252.6030 (domestic calls) or 402.220.2491
(international calls). An audio archived webcast of the conference call will
be available on the Company website for 90 days.
About SPACEHAB, Inc.
With more than $100 million in annual revenue, SPACEHAB, Incorporated
(www.spacehab.com) is a leading provider of commercial space services. The
Company develops, owns, and operates habitat and laboratory modules and cargo
carriers aboard NASA’s Space Shuttles for space station resupply and research
purposes. Its Government Services business unit provides Space Station and
Space Shuttle support services including orbiter crew compartment integration,
stowage, and configuration management to NASA’s Johnson Space Center in
Houston. SPACEHAB’s Astrotech subsidiary provides commercial satellite
processing services at facilities in California and Florida. Additionally,
through The Space Store, Space Media provides space merchandise to the public
and space enthusiasts worldwide (www.thespacestore.com).
This release contains forward-looking statements that are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those projected in such statements. Such risks and
uncertainties include, but are not limited to, whether the Company will fully
realize the economic benefits under its NASA and other customer contracts, the
timing and mix of Space Shuttle missions, the impact of the recent Columbia
tragedy on the Company’s existing and future business operations, the amount
of any indemnification payments the Company may receive for its RDM, which was
lost as part of the Columbia tragedy, the successful development and
commercialization of new space assets, technological difficulties, product
demand, timing of new contracts, launches and business, market acceptance
risks, the effect of economic conditions, the impact of war, uncertainty in
government funding, the impact of competition, and other risks detailed in the
Company’s Securities and Exchange Commission filings. The Company assumes no
obligation to update these forward-looking statements.
For more information, contact:
Haris Tajyar Julia A. Pulzone
Managing Partner Chief Financial Officer
Investor Relations International SPACEHAB, Inc. -- Washington Office
Phone 818.981.5300 Phone 202.488.3500
Fax 818.981.5303 Toll free 888.647.9543
htajyar@irintl.com pulzone@hqspacehab.com
SPACEHAB, INCORPORATED AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
(In thousands, except share data)
Three Months Nine Months
Ended March 31, Ended March 31,
2003 2002 2003 2002
Revenue $ 26,413 $ 24,711 $ 81,275 $ 74,730
Costs of revenue 22,123 18,266 66,516 58,603
Gross profit 4,290 6,445 14,759 16,127
Operating expenses:
Selling, general and
administrative 3,146 4,767 9,229 14,824
Research and
development 20 148 105 291
Nonrecurring charge 50,268 - 50,268 -
Goodwill impairment 11,925 - 11,925 -
Total operating
expenses 65,359 4,915 71,527 15,115
Income (loss) from
operations (61,069) 1,530 (56,768) 1,012
Interest expense, net
of capitalized amounts (1,842) (1,438) (5,541) (4,181)
Interest and other
income, net (26) 2 (56) 1,126
Income (loss) before
income taxes (62,937) 94 (62,365) (2,043)
Income tax benefit
(expense) 218 (28) 727 (83)
Net income (loss) $ (62,719) $ 66 $ (61,638) $ (2,126)
Basic Income (loss)
per share:
Net Income (loss)
per share - basic $ (5.06) $ 0.01 $ (5.03) $ (0.18)
Shares used in
computing net income
(loss) per share -
basic 12,398,775 11,971,906 12,263,426 11,817,193
Diluted income (loss)
per share:
Net income (loss) per
share - diluted $ (5.06) $ 0.00 $ (5.03) $ (0.18)
Shares used in
computing net income
(loss) 12,398,775 13,308,778 12,263,426 11,817,193
SPACEHAB, INCORPORATED AND SUBSIDIARIES
Selected Financial Data by Segment (Unaudited)
(In thousands)
Three Months Nine Months
Ended March 31, Ended March 31,
2003 2002 2003 2002
Revenue
Space Flight Services $ 13,063 $ 12,212 $ 39,503 $ 37,230
Johnson Engineering 10,044 9,813 31,197 29,940
Astrotech Space
Operations 2,626 2,530 9,276 6,765
Space Media, Inc. 525 152 861 515
All Other 155 4 438 280
Total Revenue $ 26,413 $ 24,711 $ 81,275 $ 74,730
Earnings (loss)
before tax
Space Flight Services
(1) $ (52,619) $ 211 $ (54,714) $ (2,075)
Johnson Engineering
(2) (10,668) 481 (9,106) 1,717
Astrotech Space
Operations 368 299 1,875 1,877
Space Media, Inc. 111 (311) (81) (1,357)
All Other (129) (586) (339) (2,205)
Earnings (loss)
before tax $ (62,937) $ 94 $ (62,365) $ (2,043)
(1) Includes a nonrecurring charge of $50.3 million for the loss of
SPACEHAB's RDM on the STS-107 mission
(2) Includes a one-time charge of $12 million for impairment of goodwill
SPACEHAB, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
March 31, December 31,
2003 2002
(unaudited) (unaudited)
ASSETS
Cash and cash equivalents $ 3,716 $ 1,792
Investments 16,503 -
Accounts receivable, net 11,050 14,364
Prepaid expenses and other current assets 724 721
Total current assets 31,993 16,877
Property, plant, and equipment, net of
accumulated depreciation and
amortization 101,093 170,875
All other assets, net 15,962 27,846
Total assets 149,048 215,598
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities 32,629 35,662
Long-term liabilities 90,644 91,173
Minority interest in consolidated
subsidiary - 750
Stockholders' equity 25,775 88,013
Total liabilities and
stockholders' equity $ 149,048 $ 215,598
SPACEHAB, INCORPORATED AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(In thousands)
Three Months Nine Months
Ended March 31, Ended March 31,
2003 2002 2003 2002
GAAP Net income $ (62,719) $ 66 $ (61,638) $ 2,196
Nonrecurring charge 50,268 - 50,268 -
Goodwill impairment 11,925 - 11,925 -
Adjusted net income $ (526) $ 66 $ 555 $ 2,196
Three Months Nine Months
Ended March 31, Ended March 31,
2003 2002 2003 2002
GAAP Income from
operations $ (61,069) $ 1,530 $ (56,768) $ 1,012
Nonrecurring charge 50,268 - 50,268 -
Goodwill impairment 11,925 - 11,925 -
Adjusted income from
operations $ 1,124 $ 1,530 $ 5,425 $ 1,012
Three Months Nine Months
Ended March 31, Ended March 31,
2003 2002 2003 2002
GAAP Income from
operations $ (61,069) $ 1,530 $ (56,768) $ 1,012
Depreciation and
amortization 1,520 3,020 7,382 10,067
Nonrecurring charge 50,268 - 50,268 -
Goodwill impairment 11,925 - 11,925 -
EBITDA $ 2,644 $ 4,550 $ 12,807 $ 11,079
