COLUMBIA, Md., March 14 /PRNewswire-FirstCall/ -- Essex Corporation announced today revenues of $159.8 million in fiscal 2005 compared to $70.5 million in fiscal 2004. Net income for fiscal 2005 was $8.6 million compared to a net income of $2.3 million in fiscal 2004. These results show an approximate 127% increase in revenues and an approximate increase in net income of over 274% from fiscal 2004 to 2005. Earnings per share, or EPS, for fiscal 2005 were $0.38 per share (diluted) versus $0.13 per share (diluted) for fiscal 2004.
Three month period revenues were $50.0 million for the fourth quarter of 2005 compared to $19.0 million in the same period of 2004. The net income for the three month period in the fourth quarter was $3.0 million compared to net income of $892,000 for the same period of 2004. These results show approximately a 163% increase in quarterly revenues over the comparable quarter in 2004 and a 236% increase in quarterly net income over the same period in 2004. Earnings per share (EPS) were $0.13 per share (diluted) for Q4 2005 versus EPS for the same period in 2004 of $0.05 per share (diluted).
The fourth quarter 2005 services and products revenue was $39.6 million compared to $37.7 million in the third quarter of 2005, a 5% increase in quarter-over-quarter in this area. Revenue from purchased materials in the fourth quarter of 2005 was $10.4 million, compared to $5.0 million in the third quarter of 2005, a 106% increase in quarter-over-quarter revenue in this area.
"Essex has delivered growth, performance, and value to our shareholders since we returned to the national equities markets in 2003," according to Leonard Moodispaw, CEO and President of Essex Corporation. "From 2003 to 2005, our annual revenue increased by nearly 10-fold, and our annual net income has increased over 60-fold. The Essex employee base has grown to 761 employees as of the end of February 2006."
"We continue to build toward a value equation that combines both products and services which we believe will deliver both top-line and bottom-line growth. We remain focused on the intelligence technology market for both services and products, and are expanding our ability to productize our innovations where we believe a strong market interest exists. In 2006, we intend to execute on our strategy that includes organic growth, internal investment, and acquisitions."
Fiscal 2005 results include ten months of operation of the Windermere subsidiary. The net income of $8.6 million for the fiscal 2005 includes approximately $1.3 million in interest income compared to $332,000 in the comparable period in 2004. The total gross margin for the fiscal year 2005 (including both services & products and purchased materials) was 27.4% compared to 20.8% for the fiscal year 2004.
Gross margin results in 2005 for both services and products revenue and on purchased materials revenue improved in comparison to the same period last year. Services and products gross margin increased to 31.1% for 2005 from 25.6% for 2004. The increase is a result of several factors, including a change in the mix of the work performed by subcontractors which have a lower margin, and higher margins on contracts obtained in the Windermere acquisition. The gross margin on purchased materials increased to 6.9% from 3.2% as a result of improved margins on our purchased materials because of certain contractual changes and better margins on contracts obtained through acquisitions.
"In 2005, Essex delivered growth in top-line revenue, bottom-line income, and gross margin and the outlook for Essex for 2006 remains strong," according to Lisa Jacobson, Chief Financial Officer of Essex. "We expect that 2006 will continue to be an investment year, as we meet the challenges and opportunities that come with rapid growth, and expand our ability to manage and sustain strong growth." Essex reaffirms revenue guidance for fiscal 2006 of $210-220 million.
As of December 31, 2005, Essex's total backlog, including both funded and unfunded components, was $499 million as compared with $231 million at December 31, 2004. Of these amounts, funded backlog was $90 million and unfunded backlog was $409 million as of December 31, 2005 compared to $30 million and $201 million at December 31, 2004. The significant increase in total backlog during fiscal 2005 from the comparable period in fiscal 2004 is primarily due to the contracts acquired in the Windermere transaction, the award of our "Cougar" contract and the growth in our "Woodstock" contract.
Working capital at December 31, 2005 was $48.1 million compared to $108.4 million at fiscal year end 2004. This decrease is primarily a result of the payment of the purchase price in the Windermere acquisition and related transaction costs. The acquisition agreement for the Windermere transaction contains earn-out provisions that may require Essex to make an additional cash purchase price payment on May 31, 2006 (up to a maximum of $30.0 million) and associated fees, depending upon the financial performance of the Windermere subsidiary. Essex is not yet able to determine the extent to which earn-out amounts may become payable under this agreement.
Essex has scheduled a conference call to discuss these results today (March 14th) at 5:00 p.m. (EST). At that time, management will review the Company's fourth quarter and Fiscal 2005 financial results. A question-and- answer session will follow to further discuss the results.
Interested parties will be able to connect to our Webcast via the Investor page on our website, http://www.essexcorp.com/investor.htmlon March 14th. Interested parties may also listen to the conference call by calling 1-866-831-6291, participant passcode 69732752. The International Dial In access number will be 617-213-8860.
An archive of the Webcast will also be available on our webpage following the call. In addition, a dial-up replay of the call will be available at approximately 7:00 p.m. EST on March 14th, and will remain available through March 21, 2005. To access the dial-up replay, call 1-888-286-8010, passcode 53212710. International callers may access the replay by calling 617-801-6888 with the same passcode.
ESSEX CORPORATION FINANCIAL HIGHLIGHTS - (In thousands, except per share
amounts)
Three Month Three Month
Period Period Fiscal Year Fiscal Year
Ended Ended Ended Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2005 2004 2005 2004
Revenue:
Services and
Products $39,639 $16,920 $135,577 $55,422
Purchased
Materials 10,343 2,049 24,224 15,049
Total 49,982 18,969 159,801 70,471
Cost of Goods Sold:
Services and
Products (26,499) (12,372) (93,436) (41,261)
Purchased
Materials (9,699) (1,795) (22,541) (14,569)
Total (36,198) (14,167) (115,977) (55,830)
Gross Margin 13,784 4,802 43,824 14,641
Selling, General
and Administrative
Expenses (9,470) (3,507) (30,198) (11,129)
Research and
Development
Expenses (871) (367) (2,815) (1,038)
Amortization of
Other Intangible
Assets (672) (175) (3,504) (523)
Interest Income Net 218 149 1,314 332
Provision for
Income Taxes 35 (10) (66) (10)
Net Income $3,024 $892 $8,555 $2,273
Weighted Average
Number of Shares
- Basic 21,401 17,062 21,210 15,603
- Diluted 22,855 18,378 22,756 17,146
Net Income per
Common Share
- Basic $0.14 $0.05 $0.40 $0.15
- Diluted $0.13 $0.05 $0.38 $0.13
Working Capital $48,062 $108,400
Working Capital Ratio 2.89:1 14.56:1
CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)
December 31, December 31,
2005 2004
ASSETS
Current Assets
Cash and cash equivalents $27,562 $105,094
Accounts receivable, net 39,229 10,198
Deferred tax asset - current portion 4,097 --
Note receivable - current portion 852 594
Prepayments and other 1,771 506
Total Current Assets 73,511 116,392
Property and Equipment, Net 13,748 2,297
Other Assets
Goodwill 71,935 11,842
Patents, net 378 313
Other intangibles, net 5,569 2,294
Note receivable - non-current 1,314 2,045
Deferred tax asset - non-current 820 --
Other 1,308 383
Total Other Assets 81,324 16,877
TOTAL ASSETS $168,583 $135,566
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $5,925 $3,643
Accrued wages and vacation 4,400 1,846
Accrued retirement plans contribution
payable 815 236
Other accrued expenses 14,282 2,255
Current portion of long-term debt 27 12
Total Current Liabilities 25,449 7,992
Long-Term Debt 55 29
TOTAL LIABILITIES 25,504 8,021
Shareholders' Equity
Common stock and additional paid-in
capital 146,510 139,531
Accumulated deficit (3,431) (11,986)
Total Shareholders' Equity 143,079 127,545
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $168,583 $135,566
About Essex: Essex provides advanced signal, image, information processing, information assurance and cyber-security solutions, primarily for U.S. Government intelligence and defense customers, as well as for select commercial customers. We create our solutions by combining our services and expertise with hardware, software, and proprietary and patented technology to meet our customers' requirements. For more information contact Essex Corporation, 6708 Alexander Bell Drive, Columbia MD 21046-2100; Phone 301.939.7000; Fax 301.953.7880; E-mail
This press release contains "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to risks, uncertainty and changes in circumstances, which may cause actual results, performance or achievements to differ materially from anticipated results, performance or achievements. All statements contained herein that are not clearly historical in nature are forward looking. The forward-looking statements in this release include statements addressing the following: plans regarding future products and services; expectations regarding future growth (including top-line and bottom-line growth); execution on future strategies, including organic growth, internal investment and acquisitions; expansion of Essex' ability to productize its innovations; expectations for 2006 as an investment year and striving to meet and manage challenges and opportunities related to rapid growth; expectations regarding sustained growth; and expected revenues for 2006. Factors, among others, that could cause actual results to differ materially from those described in the forward-looking statements includes: Essex's dependence on sales and revenues from government contracts; backlog and contract value figures reflect maximum authorized amounts under the contract, and to the extent unfunded, such amounts, and revenues from such contracts, may not be realized; dependence upon Federal government appropriations for contract funding; Federal government awards are subject to termination at government convenience and are heavily regulated; declines in defense and intelligence spending; remedial measures with respect to internal controls over financial reporting and disclosure controls for our Windermere subsidiary are ongoing but not yet completed; dependence on realization of benefits of recent and any potential future acquisitions; properly identifying attractive acquisition candidates, executing on acquisitions and integrating acquisitions; managing growth properly and retaining key employees.
More detailed information about these and other factors that could cause actual results to differ materially from those described in the forward- looking statements is set forth in Essex's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2005. Essex is under no obligation to (and expressly disclaims any such obligation to) update or alter its forward- looking statements whether as a result of new information, future events or otherwise.
Contact: Leonard E. Moodispaw
Chairman, CEO & President
301.939.7000
