Exhibit 99.1
For Immediate Release
Argon ST, Inc. Announces Fiscal Q3 Results; Updates FY 2007 Guidance
FAIRFAX, VA——Argon ST, Inc. (NASDAQ: STST), a leading systems engineering, development and services company providing full-service C4ISR (command, control, communications, computers, intelligence, surveillance and reconnaissance) systems and services to a wide range of defense and intelligence customers, today announced revenues and earnings for its third fiscal quarter and nine months ended July 1, 2007.
Revenues for the three months ended July 1, 2007 were $73.7 million compared to $68.9 million for the prior year quarter. This represents an increase of $4.8 million from the prior year quarter. Revenues for the nine months ended July 1, 2007 increased $5.7 million to $198.4 million compared to $192.7 million for the same period in the prior year.
Net income for the three months ended July 1, 2007 was $4.3 million or $0.19 per diluted share compared to $5.2 million or $0.23 per diluted share for the prior year quarter. For the nine months ended July 1, 2007 net income was $13.6 million or $0.60 per diluted share compared to net income of $15.3 million or $0.69 per diluted share in the prior year period.
The Company also reported bookings during the quarter of $47.9 million bringing total backlog at quarter end to $283.5 million. This compares to bookings of $103.7 million and backlog of $235.4 million, respectively, for the same period in the prior year. This represents a 20% increase in backlog over the last twelve months.
Terry Collins, CEO commented “We continue to build our business base with identification and capture of key programs. Although Q3 revenue did not grow as rapidly as we anticipated, and Q4 will also grow slower than planned as a result of slower growth on some of our larger programs, we remain positive about Q4 bookings and our business base going into FY08. During this year, we have developed some excellent expansion opportunities from the synergies with recently acquired companies, however, these acquisitions are having a dampening effect on operating income performance due to the associated amortization of intangible assets.”
Revised Guidance
The Company has revised its Fiscal Year 2007 guidance. Current targets for fiscal year end revenue are in the range of $276 to $286 million with expected operating income in the range of $28 to $29 million.
About Argon ST, Inc.
Argon ST, Inc. designs, develops, and produces systems and sensors for the Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance (C4ISR) markets including SIGINT (Signals Intelligence), ESM (Electronic Support Measures), EW (Electronic Warfare), IO (Information Operations), imaging, and acoustic systems serving domestic and international markets.
Forward-Looking Statements
Statements in this press release which are not historical facts are forward-looking statements under the provision of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of future performance and are based upon numerous assumptions about future conditions that could prove not to be accurate. Forward looking statements are subject to numerous risks and uncertainties, and our actual results could differ materially as a result of such risks and other factors. In addition to those risks specifically mentioned in the reports filed by the Company with the Securities and Exchange Commission (including the Company’s Form 10-K for the fiscal year ended September 30, 2006), such risks and uncertainties include, but are not limited to: the availability of U.S. and international government funding for the Company’s products and services; changes in the U.S. federal government procurement laws, regulations, policies and budgets (including changes to respond to budgetary constraints and cost-cutting initiatives); the number and type of contracts and task orders awarded to the Company; the exercise by the U.S. government of options to extend the Company’s contracts; the Company’s ability to retain contracts during any rebidding process; the timing of Congressional funding on the Company’s contracts; any government delay in award or termination of the Company’s contracts and programs; difficulties in developing and producing operationally advanced technology systems; the timing and customer acceptance of contract deliverables; the Company’s ability to attract and retain qualified personnel, including technical personnel and personnel with required security clearances; charges from any future impairment reviews; the future impact of any acquisitions or divestitures the Company may make; the competitive environment for defense and intelligence information technology products and services; general economic, business and political conditions domestically and internationally; and other factors affecting the Company’s business that are beyond its control. All of the forward-looking statements should be considered in light of these factors. Investors should not put undue reliance on any forward-looking statements. We undertake no obligation to update these forward-looking statements to reflect new information, future events or otherwise.
CONTACT: | Victor Sellier vic.sellier@argonst.com | |||
www.argonst.com | ||||
703.995.4219 |
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ARGON ST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
ASSETS | July 1, 2007 | September 30, 2006 | ||||||||||
(unaudited) | ||||||||||||
CURRENT ASSETS | ||||||||||||
Cash and cash equivalents | $ | 47,669 | $ | 33,498 | ||||||||
Accounts receivable, net | 95,917 | 86,842 | ||||||||||
Inventory | 4,076 | 3,954 | ||||||||||
Income taxes receivable | 369 | 23 | ||||||||||
Deferred project costs | — | 5,597 | ||||||||||
Deferred income tax asset | 2,870 | 2,083 | ||||||||||
Prepaids and other | 1,296 | 1,481 | ||||||||||
TOTAL CURRENT ASSETS | 152,197 | 133,478 | ||||||||||
Property, equipment and software, net | 18,747 | 16,726 | ||||||||||
Goodwill | 148,818 | 148,719 | ||||||||||
Intangibles, net | 11,452 | 13,200 | ||||||||||
Other assets | 1,906 | 1,408 | ||||||||||
TOTAL ASSETS | $ | 333,120 | $ | 313,531 | ||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
CURRENT LIABILITIES | ||||||||||||
Accounts payable and accrued expenses | $ | 19,275 | $ | 19,124 | ||||||||
Accrued salaries and related expenses | 14,122 | 10,678 | ||||||||||
Deferred revenue | 11,364 | 13,053 | ||||||||||
Other liabilities | 570 | 452 | ||||||||||
TOTAL CURRENT LIABILITIES | 45,331 | 43,307 | ||||||||||
Deferred income tax liability, long term | 3,836 | 2,937 | ||||||||||
Deferred rent and other liabilities | 1,295 | 1,591 | ||||||||||
Commitments and contingencies | — | — | ||||||||||
STOCKHOLDERS’ EQUITY | ||||||||||||
Common stock: | ||||||||||||
$.01 Par Value, 100,000,000 shares | ||||||||||||
authorized, 22,532,265 and 22,313,709 shares | ||||||||||||
issued at July 1, 2007 and September 30, 2006 | 225 | 223 | ||||||||||
Additional paid in capital | 215,938 | 212,610 | ||||||||||
Treasury stock at cost, 126,245 shares | (534 | ) | (534 | ) | ||||||||
Retained earnings | 67,029 | 53,397 | ||||||||||
TOTAL STOCKHOLDERS’ EQUITY | 282,658 | 265,696 | ||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 333,120 | $ | 313,531 | ||||||||
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ARGON ST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (unaudited)
(In Thousands, Except Per Share Data)
Third Quarter Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||||
July 1, 2007 | July 2, 2006 | July 1, 2007 | July 2, 2006 | |||||||||||||||||||||||||||||||||
CONTRACT REVENUES | $ | 73,660 | $ | 68,902 | $ | 198,375 | $ | 192,690 | ||||||||||||||||||||||||||||
COST OF REVENUES | 61,599 | 56,383 | 159,254 | 152,821 | ||||||||||||||||||||||||||||||||
GENERAL AND ADMINISTRATIVE | ||||||||||||||||||||||||||||||||||||
EXPENSES | 5,631 | 4,660 | 18,482 | 15,864 | ||||||||||||||||||||||||||||||||
INCOME FROM OPERATIONS | 6,430 | 7,859 | 20,639 | 24,005 | ||||||||||||||||||||||||||||||||
INTEREST INCOME, NET | 341 | 544 | 938 | 899 | ||||||||||||||||||||||||||||||||
INCOME BEFORE INCOME TAXES | 6,771 | 8,403 | 21,577 | 24,904 | ||||||||||||||||||||||||||||||||
PROVISION FOR INCOME TAXES | 2,485 | 3,237 | 7,945 | 9,613 | ||||||||||||||||||||||||||||||||
NET INCOME | $ | 4,286 | $ | 5,166 | $ | 13,632 | $ | 15,291 | ||||||||||||||||||||||||||||
EARNINGS PER SHARE (Basic) | $ | 0.19 | $ | 0.23 | $ | 0.61 | $ | 0.71 | ||||||||||||||||||||||||||||
EARNINGS PER SHARE (Diluted) | $ | 0.19 | $ | 0.23 | $ | 0.60 | $ | 0.69 | ||||||||||||||||||||||||||||
WEIGHTED-AVERAGE SHARES | ||||||||||||||||||||||||||||||||||||
OUTSTANDING | ||||||||||||||||||||||||||||||||||||
Basic | 22,399 | 22,120 | 22,319 | 21,495 | ||||||||||||||||||||||||||||||||
Diluted | 22,819 | 22,717 | 22,788 | 22,127 | ||||||||||||||||||||||||||||||||
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ARGON ST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (unaudited)
(In Thousands)
Nine Months Ended | ||||||||||||||||||||
July 1, 2007 | July 2, 2006 | |||||||||||||||||||
Cash flows from operating activities | ||||||||||||||||||||
Net income | $ | 13,632 | $ | 15,291 | ||||||||||||||||
Adjustments to reconcile net income to net cash provided by | ||||||||||||||||||||
operating activities: | ||||||||||||||||||||
Depreciation and amortization | 5,399 | 4,054 | ||||||||||||||||||
Deferred income tax provision (benefit) | 124 | (985 | ) | |||||||||||||||||
Stock-based compensation | 1,489 | 1,489 | ||||||||||||||||||
Bad debt expense | 30 | — | ||||||||||||||||||
Loss on sale of equipment | 2 | - | ||||||||||||||||||
Change in: | ||||||||||||||||||||
Accounts receivable | (9,169 | ) | 18,808 | |||||||||||||||||
Inventory | (122 | ) | (613 | ) | ||||||||||||||||
Deferred project costs | 5,597 | — | ||||||||||||||||||
Prepaids and other | 185 | (416 | ) | |||||||||||||||||
Accounts payable and accrued expenses | 151 | (13,464 | ) | |||||||||||||||||
Accrued salaries and related expenses | 3,444 | 2,734 | ||||||||||||||||||
Deferred revenue | (1,689 | ) | (3,211 | ) | ||||||||||||||||
Income taxes receivable | 7 | 1,927 | ||||||||||||||||||
Deferred rent | (208 | ) | 114 | |||||||||||||||||
Net cash provided by operating activities | 18,872 | 25,728 | ||||||||||||||||||
Cash flows from investing activities | ||||||||||||||||||||
Acquisitions of property, equipment and software | (5,613 | ) | (2,941 | ) | ||||||||||||||||
Reduction in advances and cash held in escrow | - | 10,900 | ||||||||||||||||||
Radix Technologies, Inc. acquisition | (400 | ) | (9,935 | ) | ||||||||||||||||
Acquisitions of ProDesign Solutions, LLC net of cash acquired | - | (1,712 | ) | |||||||||||||||||
Deposits and other assets | (504 | ) | 339 | |||||||||||||||||
Net cash used in investing activities | (6,517 | ) | (3,349 | ) | ||||||||||||||||
Cash flows from financing activities | ||||||||||||||||||||
Repayment on line of credit, net of borrowings | - | (11,000 | ) | |||||||||||||||||
Payment on note payable | - | (56 | ) | |||||||||||||||||
Payments on capital leases | (25 | ) | (14 | ) | ||||||||||||||||
Tax benefit on stock option exercises | 535 | 1,691 | ||||||||||||||||||
Proceeds from exercise of stock options | 911 | 2,238 | ||||||||||||||||||
Proceeds from employee stock purchase plan exercises | 395 | 444 | ||||||||||||||||||
Proceeds from secondary offering | - | 46,768 | ||||||||||||||||||
Net cash provided by financing activities | 1,816 | 40,071 | ||||||||||||||||||
Net increase in cash and cash equivalents | 14,171 | 62,450 | ||||||||||||||||||
Cash and cash equivalents, beginning of period | 33,498 | 4,064 | ||||||||||||||||||
Cash and cash equivalents, end of period | $ | 47,669 | $ | 66,514 | ||||||||||||||||
Supplemental disclosure | ||||||||||||||||||||
Income taxes paid | $ | 7,344 | $ | 6,982 | ||||||||||||||||
Interest expense paid | $ | 8 | $ | 165 | ||||||||||||||||
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