Essex Corporation Raises 2006 Revenue Guidance and Reports Q2 2006 Results
biz.yahoo.com
Tuesday August 8, 4:20 pm ET
COLUMBIA, Md., Aug. 8 /PRNewswire-FirstCall/ -- Essex Corporation (Nasdaq: KEYW) announces it is increasing 2006 revenue guidance to the range of $230-$240 million. Revenues for the three month period ended June 30, 2006 were $63.8 million as compared to $41.4 million in the same period of 2005, an increase of 54%. Income After Taxes was $1.6 million and $1.8 million in the three month periods ended June 30, 2006 and June 30, 2005, respectively. Earnings per Share (EPS) were $0.07 per share (diluted) for Q2 2006 versus EPS for the same period in 2005 of $0.08 per share (diluted). Beginning with the first quarter 2006, Net Income and EPS reflect the impact of provisions for taxes and stock option expenses. Income Before Income Taxes for the three month period ended June 30, 2006 was $2.6 million compared to $1.8 million for the same period of 2005.
"Essex is in another period of exciting growth in its core business delivering services and products to its intelligence and defense customers," according to Leonard Moodispaw, CEO and President of Essex Corporation. "The growth indicators for this core business remain very strong and positive, including the growth in Services and Products revenue, the demand for more facility space to support customer requirements, and a high ordering volume on Purchased Materials. Key accomplishments in Q2 2006 include record revenue; the launch of the Software Configurable Radar Product; opening of a dedicated 37,000 square foot facility for the Cougar program; and record setting Net Cash Provided by Operating Activities."
Q2 2006 Services and Products revenue has grown by 19.3% since Q4 2005, and Q2 Purchased Materials revenue has grown by 59.8% in the same period. Total quarterly revenue in Q2 2006 has grown organically by 27.7% over quarterly revenue in Q4 2005. "I believe that these growth numbers demonstrate the strong momentum Essex has in its core business," commented Mr. Moodispaw. "Responding to these customer requirements has required that we further invest in expanded infrastructure and that we increase, in the near-term, our use of subcontractors. The impact of these expansions in the short-term is a reduction in gross and operating margins. However, by seizing the opportunity for expanded market share in our primary markets, I believe we are reinforcing our position of leadership in responsiveness, innovation, and rapid growth capacity, and strengthening our long-term position in these markets."
For the three month period ended June 30, 2006, Services and Products Gross Margin decreased to 28.1% from 31.4% for the comparable period of 2005. For the six month period ended June 30, 2006, Services and Products Gross Margin decreased to 29.5% from 30.6% for the comparable period of 2005. The decrease for the respective three and six month periods in Services and Products Gross Margin percent results primarily from increased subcontractor activity. Overall Gross Margin declined because of the revenue mix. Low margin materials revenue growth outpaced the revenue from Services and Products, lowering the overall Gross Margin from 27.6% for the six month period ended June 30, 2005 to 24.3% for the six month period ended June 30, 2006.
As of June 30, 2006, we had total backlog, funded and unfunded, of $412.2 million, as compared with $396.9 million at June 30, 2005. Of these amounts, funded backlog was $116.0 million and unfunded backlog was $296.2 million at June 30, 2006 compared to $101.3 million and $295.6 million, respectively, at June 30, 2005.
Our Working Capital at June 30, 2006 decreased to $35.6 million from $48.1 million at fiscal year end 2005. The decrease was primarily a result of the Windermere earn-out payment for cash. We also anticipate continued investment in infrastructure for the remainder of 2006 as we continue to support our growing workforce and as we expand our facilities to support our contracts.
For the three month period ended June 30, 2006 and the three month period ended June 30, 2005, Amortization of Other Intangible Assets was $585,000 and $1.2 million, respectively. For the six month period ended June 30, 2006, Amortization of Other Intangible Assets decreased by $600,000 to $1.2 million compared to $1.8 million in the comparable period in 2005. The decrease for the three and six month periods ended June 30, 2006 from the comparable periods in 2005 resulted from the declining amortization of customer contracts and other intangibles associated with the Windermere acquisition that occurred in February 2005. Amortization of Other Intangible Assets is expected to decline for the remainder of fiscal 2006. |
