Globecomm Systems Inc. (GCOM)
F3Q10 Earnings Call
May 11, 2010 10:00 am ET
Matthew Byron – Senior Vice President of Corporate Office
Andrew Melfi –Chief Financial Officer
David Hershberg – Chairman and Chief Executive Officer
Keith Hall - President and Chief Operating Officer
Stephen Ferranti – Stephens Inc.
Mark Jordan – Noble Financial
Jim McIlree – Merriman Curhan Ford & Co.
Rich Valera – Needham & Company
Dick Ryan – Dougherty Brokerage
Previous Statements by GCOM
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Welcome to today’s Globecomm Systems fiscal year 2010 third quarter earnings conference call. Today’s call is being recorded. For opening remarks and introductions, I will like to turn the call over to Matthew Byron, Senior Vice President of Corporate Office.
Thank you, Michael. Good morning everyone and welcome to the Globecomm Systems fiscal 2010 third quarter earnings conference call. Joining me today from the company are Chairman and CEO, David Hershberg; President and Chief Operating Officer, Keith Hall and our Chief Financial Officer, Andrew Melfi.
Last night Globecomm issued its fiscal 2010 third quarter earnings press release. In the event you have not seen a copy of the release, it is posted on Globecomm Systems’ website at www. globecommsystems.com or you can contact me at 631-457-1301 and I will send a copy to you.
Comments made during this conference call may contain projections or other forward-looking statements regarding future events or the future financial performance of Globecomm Systems. These statements are only projections and reflect the current beliefs and expectations of the company. Actual events or results may differ materially. With that said, it is routine for internal projections and expectations to change as quarters progress.
All forward-looking statements are based on information available to the company on the date hereof and the company assumes no obligation to update such statements. Please refer to the documents the company files from time to time with the SEC, specifically the company’s Annual Report on Form 10-K, its quarterly reports on Form 10-Q, its current reports on Form 8-K and the Safe Harbor language contained in the company’s press releases.
These documents contain and identify important factors that could cause the company’s actual results to differ materially from those contained in its projections or forward-looking statements, which the company urges all investors to consider. Globecomm undertakes no obligation to publicly release the revisions to such forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
Please note that this call is being recorded on Tuesday, May 11, 2010, contains time-sensitive information, and will be available as a webcast replay for at least nine months on the Investor Relations section of the Globecomm Systems website and as a phone replay at 1-888-203-1112 for domestic callers, or 719-457-0820 for international callers with an access code of 3480623.
At this point, I’d like to turn the call over to our Chairman and CEO, Dave Hershberg. Dave.
Thank you, Matt, and good morning everyone. Welcome to our fiscal 2010 third quarter earnings conference call. Last night Globecomm issued its fiscal 2010 third quarter financial earnings press release. With the economy still experiencing some difficult times, the company completed the largest acquisition in our history and capped off a record revenue quarter with an increase in operating income of 239% excluding acquisition costs.
We adjusted previously issued consolidated revenue guidance to the high end of our range of $225 million, adjusting service revenue from approximately $130 million to approximately $140 million and maintained our $0.30 to $0.35 of fully diluted earnings per share including the $0.03 acquisition cost charge. Andy Melfi will provide more details on our financials a little later.
Our service segment is more robust than ever and should provide stability and visibility for the foreseeable future. There are multiple drivers supporting the continued service segment momentum. In the Government market we continue to witness strong renewals which have included significant increases in scope.
The Maritime market remains strong as a transition from narrowband to broader band is increasing every day. In the Broadcast area, the transition from standard definition to high definition is driving demand and we are also working on design of a 3D broadcast system to be in a position to support upgrades to existing and for new broadcast centers.
In the Wireless Cellular market, we continue to add hosting customers to our modern 3G cellular switch and believe this will be a major growth area for the company. We recently launched TEMPO which is an enterprise hosted interactive software solution platform for both satellite and terrestrial applications. This is the first of a new initiative to host and license applications in our business areas.
Regarding our infrastructure business, we are experiencing increased demand for our newly developed Ka and X-Band products suites. We are investing heavily in products supporting these frequency bands and believe that commercial initiatives such as the upcoming launches of mobile, ka band and satellite and the government’s commitment to the new wideband global initiatives supporting X and Ka band will drive this demand for new ground segment infrastructure.
The third quarter represents the company’s 24th consecutive quarter of profitability. We’ll enter fiscal ’11 with greater visibility than ever as the recurring revenue portion of the company’s consolidated revenues is at a record level and continues to grow. We are very excited about our future and look forward to a record fourth quarter and what is shaping up to be a record revenue year for fiscal year ’11.