Strong Third Quarter is Another Positive for EMS
EMS Technologies expects to reap $21.3 million from the sale of its Montreal-based Space & Technologies unit to MacDonald, Dettwiler and Associates (MDA), according to Don T. Scartz, EMS’s chief financial officer. The money will be paid when the deal is closed, which is expected to occur before the end of the year, Scartz said in a telephone interview Nov. 9.
EMS announced the sale of the long-struggling division Oct. 31, but declined to disclose the terms. EMS has been trying to unload the Montreal operation since 2003.
In a quarterly filing with the U.S. Securities and Exchange Commission Nov. 8, Atlanta-based EMS reported total revenue of $84.4 million for the three months ending Oct. 1, up 46 percent from the same period last year. Earnings were $3.3 million for the quarter, more than triple the $1 million in profit recorded during the same period in 2004.
“This is a clear indication of the strength of our core businesses,” EMS Chief Executive Officer Alfred G. Hansen said in a conference call with analysts. EMS makes antennas and other hardware for satellites, satellite networks and terrestrial wireless systems.
Revenue at EMS’s Defense & Space unit was $13.5 million for the quarter, up 14 percent over the same period last year. Hansen attributed the growth to steady, long-term programs in areas such as electronic warfare. EMS has future opportunities in a variety of space programs such as the Wideband Gapfiller and Advance Extremely High Frequency communications satellite systems, he said.
EMS’s SatCom division posted a record $14.4 million in revenues, up 60 percent from the same period last year.
In addition to divesting its Space & Technology division, EMS is negotiating the sale of its SatNet division under a nonbinding letter of intent with the prospective buyer. EMS is taking a $4 million third-quarter charge “based on the terms and conditions on which we could expect to be able to sell the division, as well as the weakening of the U.S. dollar and near-term market conditions,” Hansen said in a prepared statement.
In the telephone interview, Scartz said the charge is equivalent to the likely sale price of the SatNet division less its book value. EMS lists the SatNet and Space & Technology divisions as discontinued operations for accounting purposes.