[Satellite TODAY Insider 05-17-11] EMS Technologies, which offers connectivity solutions across a number of different segments, saw its space and defense business struggle in the first quarter this year. This was one of the highlights of its results issued late last week. Revenues from the space and defense part of its business actually fell. It generated just above $14 million in revenues in the first quarter this year. In Q1 last year, revenues from defense and space were more than $16 million. Operating profits from defense and space also fell by more than 50 percent in Q1 this year compared with the same stage last year. 
 

Richard Valera, a technology equity analyst at Needham & Company said in a research note that EMS’ performance in the defense and space business did not reach expectations. “First quarter revenue for the defense and space segment was $14.1 million, below our $17 million estimate, down 15 percent year-on-year and down 21 percent quarter-on-quarter. The defense and space segment generated operating income of $0.4 million and adjusted EBITDA of $1.3 million. The defense and space backlog increased to $87 million from $73 million quarter-on-quarter, primarily due to a near-$20 million order for the Iridium Next program,” he says.
 

However, while the defense and space business struggled, revenues increased. The company generated overall revenues of $85 million in the first quarter this year, an increase of just over $2 million compared with the same stage last year. “Revenue of $85 million was slightly below our estimate of $87.5 million, while adjusted EPS (adding back $0.04 of proxy related expenses) were in line with our estimate of $0.20. Adjusted EBITDA of $9.5 million was just shy of our $9.7 million estimate,” adds Valera. 
 

Valera also talks about the potential of a company sale and how this might impact share performance the rest of the year. “With EMS’ Board having retained an advisor to explore strategic alternatives (i.e., a sale), we expect the shares to trade more on potential take out valuation than near-term fundamental performance. With that said, 1Q11 results were reasonably solid, albeit with strength in the LXE business offsetting some weakness in other segments, and apparently have the company on track to achieve its back-half weighted annual guidance,” he says. 
 

In other EMS news, EMS Aviation, a subsidiary of EMS Technologies, announced it will debut its Aspire family of satellite based in-flight connectivity systems in Europe this week. The Aspire 200 system began shipping in North America this spring. The first installation is currently underway on a Hawker 4000 and future installations of the system on a Cessna Sovereign and several other platforms will be completed by the end of the summer. 
 

EMS Aviation will now try and start getting deals with European business jet operators. It is showcasing these solutions at the European Business Aviation Convention & Exhibition (EBACE) in Geneva, Switzerland this week. “In-flight connectivity has become an essential element of aircraft operation and our Aspire products’ ease of installation, upgrade and operation make it simple for operators to fly like they live with seamless, global connections,” says John Jarrell, Vice President and General Manager, EMS Aviation. 
 

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