Globecomm Systems Inc. reported financial results for the fiscal 2013 first quarter ended September 30, 2012.
Fiscal Year 2013 First Quarter Results
Revenues for the Company’s fiscal 2013 first quarter increased 14.4% to $81.2 million as compared to $71.0 million in the same period last year. Revenues from services decreased 6.1% to $47.2 million as compared to $50.2 million in the same period last year. The decrease in services revenues was primarily due to a decrease in our access services offering in the government marketplace due to the reduction of services in Iraq. Revenues from infrastructure solutions increased by 64.0% to $34.0 million as compared to $20.7 million in the same period last year. The increase in revenue was primarily driven by the achievement of revenue milestones under a major government program which contributed approximately $11.7 million in revenue and carries lower than traditional infrastructure margins.
Net income for the Company’s fiscal 2013 first quarter decreased to $2.7 million or $0.12 of diluted net income per common share as compared to net income of $9.3 million, or $0.41 of diluted net income per common share in the same period last year. Excluding an earn-out gain in the prior period, adjusted diluted net income per common share for the first quarter of fiscal 2013 was flat at $0.12 as compared to the first quarter in fiscal 2012. During the first quarter of fiscal 2012, the Company recorded a gain for the change in fair value of the ComSource earn-out as a result of decreases in ComSource’s actual results from the previously forecasted performance. In accordance with GAAP, this change in the fair value of the earn-out resulted in a $6.5 million ($0.29 per diluted share) gain to net income. Net income was negatively affected by the reduction of services revenue; however this was offset by a reduction in operating expenses based on certain cost cutting initiatives. Adjusted EBITDA for the first quarter of 2013 decreased slightly to $8.0 million as compared to $8.2 million in the first quarter of fiscal 2012.
Management’s Review of Results and Expectations
David Hershberg, Chairman and CEO, said: “We are proud to report that Globecomm’s robust Long Island and Maryland facilities, both of which were in the path of Hurricane Sandy, coupled with the operations team, successfully provided 100% network uptime throughout the storm for our global customer base. Globecomm will continue to work with our partner Agility Recovery Solutions to assure continued business restoral services for their customers and are on call 24 X 7 to support clients across America. Globecomm’s combined engineering know-how and world-class global network provides us with a significant competitive advantage and remains the core of the Company’s value proposition. We remain excited by the opportunities we see in each of our verticals, most notably in the media and entertainment vertical, to leverage our engineering expertise and global network to create value-added service solutions. While our strategic focus is on increasing market share in our targeted vertical markets and growing our services revenue as the government vertical uncertainty persists, the infrastructure segment remains a critical element of our vision.
“The continued strong cash flow from operations and over $70 million of cash on the balance sheet provides us the flexibility to invest in our business, including new products and personnel, and selectively pursue strategic opportunities that will maximize shareholder value despite the head-winds we face in the near term. We generated $6.7 million in cash flow from operations in the quarter and we anticipate strong cash flow in fiscal 2013 as we continue to ship inventory from the NATO TSGT program.”
Keith Hall, President and COO, added: “The team executed well in Q1 with strategic government bookings in our infrastructure segment and continued diversification of services offerings. With the backdrop of government budget uncertainty, we continue to mature our value proposition as a global communication solution provider, as is evident by our recent success of TEMPO and M2M service awards. With the evolution of the Internet and mobile communications, we remain at the forefront of network and application innovation. Cloud and hybrid satellite network opportunities are evolving based on this innovation, and we continue to develop seamless user experiences. As we look to build toward the future, we will continue to enhance this value proposition and are excited about the opportunities it will afford us.”
Management Maintains Expectations for the Fiscal Year Ending June 30, 2013
Globecomm currently expects the following financial results for the fiscal year 2013:
- Consolidated revenues to be between $340 and $360 million.
- Services segment revenues to be between $200 and $210 million.
- GAAP diluted net income per common share to be between $0.66 and $0.76.
- Adjusted EBITDA to be between $40 and $44 million.