EMS Reports Record Revenue

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EMS Technologies Inc. has yet to finalize the sale of its two Montreal-based commercial space divisions, but company officials said it should happen well before the end of the year.

The Norcross, Ga.-based company held a conference call with financial analysts Aug. 3 to discuss its second-quarter earnings report.

Overall for the quarter, EMS had what company Chief Executive Officer Al Hansen called record revenue, bringing in $3.9 million in earnings compared with $1.8 million in 2004’s second quarter.

Total sales for the quarter were at $81.6 million, up significantly from $62.1 million for the same time period the year before.

Operating income, coming in at $7 million, was the highest in several years, Chief Financial Officer Don Scartz said.

During the call, Hansen said letters of intent have been executed with buyers of both the Canadian units: Satellite Networks and the Space & Technology division. The company is in the “due diligence” phase, Hansen said, and expects to complete the transaction late in the third quarter or early in the fourth quarter of 2005.

Satellite Networks has been a drag on company business in the past largely due to problems associated with the antenna it is supplying for the Canadian Space Agency’s Radarsat-2 program.

EMS’s involvement with Radarsat-2 will end once the sale of Satellite Networks is finalized. In this quarter, however, the program did not have a negative financial effect on the company, according to Gary Shell, a spokesperson for investor relations.

“We didn’t specifically address it in the conference call because we’re in the very final stages of wrapping that up, and it didn’t have an impact on the quarter,” Shell said in a follow-up interview, though he would not give a specific date for the close of the project.

The company’s LXE division, which handles mobile computers and wireless local area networks, set a new sales record for the 11th consecutive quarter, Hansen said. The division posted $31.6 million in net sales, compared with $27.7 million during second quarter the year before, and $1.3 million in earnings from continuing operations, up from $900,000 for the same quarter last year.

“I would best describe [LXE] as a revenue- and profit-generating machine,” Hansen said.

Scartz attributed the record revenue in part to high sales of vehicle-mounted terminals. For LXE, the company has made a $1.7 million investment in new initiatives, including both wearable and voice-activated units, Scartz said.

LXE is looking to expand its business primarily in southeast Asia, Hansen said.

The defense and space systems division of EMS showed $13.3 million in sales, up from $12.2 million in 2004 at this time, and $800,000 in earnings, $500,000 higher than second quarter 2004.

In the defense area, Hansen alluded to large potential government contracts on the horizon, without specifying further, saying he had a “high degree of confidence we will be successful in capturing them.”

Defense and space revenue dropped off first quarter due to some restructuring of defense business as well as technical problems, Hansen said, but bounced back in the second quarter. The company is developing antennae to be used on narrow-bodied aircraft, and expects it will become “the standard for airlines,” he said.

The company’s SATCOM division, which handles antennae and terminals for aeronautical, land-mobile and maritime communications via satellite, earned $12.2 million in net sales, up from $9.5 million during second quarter 2004. Earnings for the division were $900,000, higher than 2004’s $500,000 for second quarter.