Globecomm Systems Inc, announced financial results for the fiscal 2013 fourth quarter and fiscal year ended June 30, 2013. Globecomm is reporting its financial results on a generally accepted accounting principles (GAAP) basis as well as adjusted EBITDA and adjusted diluted net income per common share, both non-GAAP financial measures, for which the Company provides detailed reconciliations in the attached tables. The following are highlights:
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Revenues ($M) |
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| Q4 FY13 | Q4 FY12 | % Change | FY13 | FY12 | % Change | |||||||||||||||
| Service | $ 50.0 | $ 50.1 | (0.3) | $199.1 | $ 220.9 | (9.9) | ||||||||||||||
| Infrastructure solutions | $ 30.6 | $ 54.7 | (43.9) | $ 120.5 | $ 161.0 | (25.1) | ||||||||||||||
| Consolidated | $ 80.6 | $ 104.8 | (23.1) | $ 319.6 | $ 381.9 | (16.3) | ||||||||||||||
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GAAP Results ($M except EPS) |
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| Q4 FY13 | Q4 FY12 | % Change | FY13 | FY12 | % Change | |||||||||||||||
| Net income | $ 4.6 | $ 7.1 | (35.7) | $ 15.2 | $ 28.6 | (46.6) | ||||||||||||||
| Diluted EPS | $ 0.20 | $ 0.31 | (35.5) | $ 0.66 | $ 1.26 | (47.6) | ||||||||||||||
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Non-GAAP Results ($M except EPS) |
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| Q4 FY13 | Q4 FY12 | % Change | FY13 | FY12 | % Change | |||||||||||||||
| Adjusted EBITDA | $ 10.3 | $ 9.1 | 13.6 | $38.5 | $42.6 | (9.6) | ||||||||||||||
| Adjusted Diluted EPS | $ 0.19 | $ 0.13 | 46.2 | $ 0.66 | $ 0.74 | (10.8) | ||||||||||||||
Fiscal Year 2013 Fourth Quarter Results
Consolidated revenue for the Company’s fiscal 2013 fourth quarter was $80.6 million as compared to $104.8 million in the same period last year, a decrease of 23.1%. Revenues from services were flat at $50.0 million as compared to $50.1 million in the same period last year. Revenues from infrastructure solutions were $30.6 million as compared to $54.7 million in the same period last year, a decrease of 43.9%. The decrease in infrastructure solutions was primarily driven by the achievement of revenue milestones in the fourth quarter of fiscal 2012 of approximately $15.6 million under a major government program which was completed as of January 2013.
Net income for the Company’s fiscal 2013 fourth quarter was $4.6 million, or $0.20 of diluted net income per common share, compared to net income of $7.1 million, or $0.31 of diluted net income per common share, in the same period last year. During the fourth quarter of fiscal 2012, the Company recorded a gain for the change in fair value of the ComSource earn-out as a result of changes in ComSource’s actual results and forecasted performance. In accordance with GAAP, this change in the fair value of the earn-out resulted in a $4.1 million ($0.18 per diluted share) gain to net income. Excluding this gain, adjusted diluted net income per common share for the fourth quarter of fiscal year 2013 was $0.19 compared to $0.13 in the same period last year. The increase in adjusted diluted net income per common share was primarily driven by the increase in gross margin percentage in services and reductions in other operating expenses based on certain cost cutting initiatives, partially offset by the reduction of infrastructure revenue and gross margin percentage erosion based on additional costs incurred on certain fixed price contracts.
Adjusted EBITDA for the fourth quarter of 2013 was $10.3 million as compared to $9.1 million in the same period last year.
Fiscal Year 2013 Full Year Results
Consolidated revenue for the Company’s fiscal year ended June 30, 2013 was $319.6 million as compared to $381.9 million last year, a decrease of 16.3%. Revenues from services were $199.1 million as compared to $220.9 million last year, a decrease of 9.9%. The decrease in service revenues was primarily due to a non-recurring $12.5 million equipment sale by ComSource in the three months ended March 31, 2012 along with a decrease in the managed network service access product line in the government marketplace due to the reduction of services in Iraq and Afghanistan. Revenues from infrastructure solutions were $120.5 million as compared to $161.0 million in the same period last year, a decrease of 25.1%. The decrease in infrastructure solutions revenues was primarily driven by a reduction of $34.1 million due to the completion of a major government program in January 2013, this program had lower than normal margin. This program contributed $20.0 million in fiscal 2013 as compared to $54.1 million in fiscal 2012.
Net income for the Company’s fiscal 2013 year ended June 30, 2013 was $15.2 million, or $0.66 of diluted net income per common share, compared to net income of $28.6 million, or $1.26 of diluted net income per common share, last year. During fiscal year 2012, the Company recorded a gain of $11.9 million ($0.52 per diluted share) for the change in fair value of the ComSource earn-out as a result of changes in ComSource’s actual results and forecasted performance. Excluding this gain, adjusted diluted net income per common share for the fiscal year 2013 year ended June 30, 2013 was $0.66 as compared to $0.74 last year. The reduction in adjusted diluted net income per common share was primarily driven by the reduction of infrastructure solutions revenue and gross margin percentage erosion based on additional costs incurred on certain fixed price contracts and the reduction of service revenues, partially offset by reductions in other operating expenses based on certain cost cutting initiatives and the increase in gross margin percentage in services.
Adjusted EBITDA for the year ended June 30, 2013 decreased to $38.5 million as compared to $42.6 million last year.
The Transaction
On August 26, 2013 the Company announced that an affiliate of Wasserstein & Co. has entered into a definitive agreement to acquire Globecomm for $14.15 per share in cash. The purchase price represents a premium of 21.9% over the closing price on January 14, 2013, the day on which Globecomm announced that it had retained Needham & Company to assist it in a review of potential strategic alternatives to enhance shareholder value. The transaction is valued at approximately $340 million.
As a result of that announcement, the Company has not provided guidance for fiscal 2014 and will not be hosting a conference call to discuss the fourth quarter and full year financial results.