EMS Technologies, Inc. (NASDAQ: ELMG) announced financial results for the fourth quarter and the full year 2009. EMS reported fourth-quarter revenues of $85.0 million and earnings from continuing operations of $2.4 million, or $0.16 per share, on a non-GAAP reporting basis, excluding acquisition-related items and an impairment charge for LXE goodwill. EBITDA, excluding acquisition-related items and LXE goodwill impairment (“Adjusted EBITDA”), was $7.7 million for the fourth quarter. Net cash provided by operating activities from continuing operations was $9.4 million in the fourth quarter, and cash exceeded debt at December 31, 2009 by $19.4 million.
The Company will recognize a non-cash impairment charge to goodwill in the LXE division for the fourth quarter. The Company has not completed the process to determine the specific impairment charge, but this determination requires that a significant portion of LXE’s fair value should be allocated to unrecorded intangibles and appreciated assets rather than goodwill. As a result, the impairment charge will be higher than the $5 million deficiency between estimated fair value and carrying value, and management expects that the charge will be in the range of $16 million to $21 million. Taking into account this impairment charge using the midpoint of the estimated range of $18.5 million, together with $1.9 million of acquisition-related charges in the fourth quarter, would result in a GAAP-basis loss from continuing operations for the quarter of $1.18 per share. The LXE goodwill impairment does not affect the Company’s forecasts for the LXE business or compliance with the terms of the Company’s credit facility. There was no impairment related to goodwill in the Company’s other business units.
Dr. Neil Mackay, EMS president and chief executive officer, commented, “EMS’s main business focus is enabling mobile connectivity in places where connectivity is really tough to achieve. And the ever-growing demand for mobile connectivity helps our key markets to have resilience, even in the current challenging economic climate.
* The communications and tracking (“C&T”) markets helped the fourth-quarter results to show a $2.8 million increase in revenues and a $2.3 million increase in Adjusted EBITDA as compared with the third quarter. Aviation sales were key, with better-than-expected orders related to in-flight connectivity (“IFC”) and military connectivity.
* Through cost control and good performance on production-phase contracts, our defense and space (“D&S”) business was able to basically break even, despite a $6.5 million drop in sales from the Q3 level and accrual of approximately $1 million of restructuring expenses following completion of our B-2 work, and cost growth on several development-stage contracts; and
* The LXE mobile logistics business also neared breakeven, led by improving revenues in North America.”
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