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KEYW Reports Q4 and 2011 Financial Results

HANOVER, Md., Feb. 1, 2012 (GLOBE NEWSWIRE) -- The KEYW Holding Corporation (Nasdaq:KEYW) announces revenue for 2011 of $191 million as compared to $108 million in FY 2010, an increase of 77%. Net Income for 2011 was $0.5 million after increasing our Research and Development (R&D) spending to $2.3 million for the year. Earnings Per Share (EPS) (diluted) for 2011 were $0.02 as compared to $0.51 in 2010. Our Adjusted EBITDA (as described below) increased to $20.6 million or 10.8% of revenue for 2011 up from $9.0 million or 8.4% of revenue for 2010. Cash from Operations was $10.3 million for 2011 as compared to cash used in operations of ($1.6) million for 2010. 

"2011 was another year of significant growth and accomplishment for KEYW," commented Leonard Moodispaw, CEO and President of KEYW Corporation. "During 2011 we acquired 3 companies and fully integrated all of the acquisitions that we have made since starting operations. We expanded our core capabilities, particularly in our geospatial intelligence business area, to become a Multi-INT innovator and solution provider. We have created an Integrated Solutions Sector, significantly growing our products and solutions business area, which will be reported as a separate segment beginning this year. I am proud of the intelligence and cyber focused business that we have created and excited by the breadth of opportunities to continue making a difference for our intelligence and defense customers as well as our stakeholders. We have significantly more opportunities now than we had just one year ago. We have the right team, resources, and market focus for this to be an exceptional year of performance. For KEYW, 2012 is about delivering on the enormous potential that I see in this Company."

For Q4 of 2011, KEYW generated $50.1 million in revenue versus $29.3 million in the same period of 2010. Net income was $0.3 million versus $1.2 million for the fourth quarters of 2011 and 2010, respectively. EPS for these same periods were $0.01 (diluted) in 2011 and $0.04 (diluted) in 2010. Gross margin (including both integrated solutions and services) in Q4 2011 was 32.4% versus 29.1% for the same period in 2010. In addition, KEYW was awarded new work totaling over $65 million in contract value.

KEYW's Adjusted EBITDA for 2011 increased by 128% as compared to 2010. Adjusted EBITDA, as defined by KEYW, is a non-GAAP measure that is calculated as GAAP net income plus other non-recurring expenses, interest expense, income taxes, and depreciation and amortization. We have provided Adjusted EBITDA because we use the measurement internally to evaluate performance. Our Board of Directors and management use Adjusted EBITDA:

  • As a measure of operating performance;
  • To determine a significant portion of management's incentive compensation;
  • For planning purposes, including the preparation of our annual operating budget; and
  • To evaluate the effectiveness of our business strategies.

Adjusted EBITDA is not a recognized term under U.S. GAAP and does not purport to be an alternative to net income as a measure of operating performance or the cash flows from operating activities as a measure of liquidity. Please refer to the table below that reconciles GAAP net income to Adjusted EBITDA. 

   
Year ended
December 31,
2011
 
Year ended
December 31,
2010
Three months
ended
December 31,
2011
Three months
ended
December 31,
2010
  (Unaudited and in thousands)
         
Net Income $ 535 $ 10,906 $ 318 $ 1,159
         
Depreciation  2,082  760  944  220
         
Intangible Amortization  13,410  6,440  5,304  1,986
         
Initial Public Offering and Acquisition Costs 588 2,080 139 415
         
Stock Compensation Amortization  2,829  1,920  660  851
         
Interest Expense (Income)  907  1,661  364  (17)
         
Tax Expense  218  7,814  233  948
         
Other Non-Recurring Items  --  (22,550)  --  (4,200)
         
Adjusted EBITDA $ 20,569 $ 9,031 $ 7,962 $ 1,362
         

In addition to these traditional financial metrics, we believe that the total number of KEYW employees will provide investors with insight into our business and growth. At the close of FY 2011, we had 827 employees, approximately 80% of whom hold the highest level clearances. 

 
THE KEYW HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
 
  Three months
ended
December 31,
2011
Three months
ended
December 31,
2010
 
Year ended
December 31,
2011
 
Year ended
December 31,
2010
  (Unaudited) (Unaudited) (Audited)
Revenues        
Services $ 37,770 $ 27,739 $ 159,748 $ 95,665
Integrated Solutions  12,300  1,598  30,839  12,323
Total  50,070  29,337  190,587  107,988
         
Costs of Revenues        
Services  27,526  19,935  115,343  69,312
Integrated Solutions  6,334  878  18,607  7,132
Total  33,860  20,813  133,950  76,444
         
Gross Profit        
Services  10,244  7,804  44,405  26,353
Integrated Solutions  5,966  720  12,232  5,191
Total  16,210  8,524  56,637  31,544
         
Operating Expenses        
Operating expenses  9,837  8,617  41,399  27,264
Intangible amortization  expense  5,304  1,986  13,410   6,440
Total  15,141  10,603  54,809  33,704
         
Operating Income (Loss)  1,069  (2,079)  1,828  (2,160)
         
Non-Operating Expense (Income), net  517  (4,186)  1,075 (20,880)
         
Income before Income Taxes  552  2,107  753  18,720
         
Income Tax Expense, net  (234)  (948)  (218)  (7,814)
         
Net Income $ 318 $ 1,159 $ 535 $ 10,906
         
Weighted Average Common Shares Outstanding        
Basic 26,139,832 24,803,792 25,991,914 17,581,887
Diluted 28,001,472 28,489,852 28,903,869 21,275,487
         
Earnings per Share        
Basic $ 0.01 $ 0.05 $ 0.02 $ 0.62
Diluted $ 0.01 $ 0.04 $ 0.02 $ 0.51
           

 

THE KEYW HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
 
  December 31,
2011
December 31,
2010
ASSETS (Unaudited) (Audited)
Current assets:    
Cash and cash equivalents $ 1,294 $ 5,795
Receivables  40,630  30,406
Inventories, net  7,242  5,183
Prepaid expenses  2,511  1,950
Income tax receivable  27  55
Deferred tax asset, current  1,193  1,475
Total current assets  52,897  44,864
     
Property and equipment, net  8,707  3,306
Goodwill  165,997  130,374
Other intangibles, net  39,002  22,716
Deferred tax asset  2,348  3,772
Other assets  211  232
TOTAL ASSETS $ 269,162 $ 205,264
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
Current liabilities:    
Accounts payable $ 4,136 $ 6,292
Accrued expenses  5,901  5,847
Accrued salaries & wages  9,644  5,442
Revolver  49,500  --
Deferred income taxes  1,591  578
Total current liabilities  70,772  18,159
Long-term liabilities:    
Non-current deferred tax liability  17,430  11,869
Other non-current liabilities  301  125
TOTAL LIABILITIES  88,503  30,153
     
Commitments and contingencies  --  --
     
Stockholders' equity:    
Preferred stock, $0.001 par value; 5 million shares authorized, none issued  -- --
Common stock, $0.001 par value; 100 million shares authorized, 25,770,795 and 25,554,533 shares issued and outstanding 26  26
Additional paid-in capital  173,371  168,358
Retained earnings  7,262  6,727
Total stockholders' equity  180,659  175,111
     
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 269,162 $ 205,264

 

THE KEYW HOLDING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
  Year ended
December 31,
2011
Year ended
December 31,
2010
  (Unaudited) (Audited)
Net income $ 535 $ 10,906
Adjustments to reconcile net income to net cash provided by (used in) operating activities:    
Stock compensation  2,829  1,920
Depreciation/Amortization  15,492  7,200
Loss on disposal of equipment  --  10
Non-cash interest expense  --  585
Non-cash impact of TAGG earn-out reduction  --  (21,950)
Windfall tax benefit from option exercise  (144)  --
Deferred taxes  (2,036)  7,668
Decrease (increase) in balance sheet items:    
Receivables  (1,784)  (7,294)
Inventory  (1,903)  (848)
Prepaid expenses  1,288  (911)
Accounts payable  (2,694)  (419)
Accrued expenses  (1,554)  1,708
Other balance sheet changes  274  (213)
Net cash provided by (used in) operating activities  10,303  (1,638)
     
Cash flows from investing activities:    
Acquisitions, net of cash acquired  (58,573)  (92,008)
Purchase of property and equipment  (3,508)  (1,909)
Proceeds from sale of equipment  --  128
Net cash used in investing activities  (62,081)  (93,789)
     
Cash flows from financing activities:    
Proceeds from stock issuances  --  88,823
Proceeds from term note  --  5,000
Proceeds from revolver  79,500  19,600
Proceeds from subordinated debt  --  8,250
Repayment of debt  (30,000)  (32,850)
Repurchase of stock  (3,079)  --
Windfall tax benefit from option exercise  144  --
Proceeds from option and warrant exercises  712  5,066
Net cash provided by financing activities  47,277  93,889
     
Net decrease in cash and cash equivalents  (4,501)  (1,538)
Cash and cash equivalents at beginning of  period  5,795  7,333
Cash and cash equivalents at end of period $ 1,294 $ 5,795

KEYW has scheduled a conference call to discuss these results today, February 1, 2012, at 5:00 pm (EST). Interested parties will be able to connect to our Webcast via the Investor page on our website, http://investors.keywcorp.com.  Interested parties may also listen to the conference call by calling 1-877-853-5645. The International Dial-In access number will be 1-408-940-3868.

An archive of the Webcast will 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 February 1, 2012, and will remain available through March 1, 2012. To access the dial-up replay, call 1-855-859-2056, Conference ID 45516010. In addition, a podcast of our conference call will be available for download from our Investors page of our website at approximately the same time as the dial-up replay. International callers may access the replay by calling 1-404-537-3406, with the same Conference ID.

About KEYW: KEYW provides agile cyber superiority, cybersecurity, and geospatial intelligence solutions primarily for U.S. Government intelligence and defense customers. We create our solutions by combining our services and expertise with hardware, software, and proprietary technology to meet our customers' requirements. For more information contact KEYW Corporation, 1334 Ashton Road, Hanover, Maryland 21076; Phone 443-270-5300; Fax 443-270-5301; E-mail investors@keywcorp.com, or on the Web at www.keywcorp.com.

Forward-Looking Statements: Statements made in this press release that are not historical facts constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include but are not limited to statements about our future expectations, plans and prospects, and other statements containing the words "estimates," "believes," "anticipates," "plans," "expects," "will," "potential," "opportunities", and similar expressions, Our actual results, performance or achievements or industry results may differ materially from those expressed or implied in these forward-looking statements. These statements involve numerous risks and uncertainties, including but not limited to those risk factors set forth in our Annual Report on Form 10-K, dated and filed March 29, 2011 with the Securities and Exchange Commission (SEC as required under the Securities Act of 1934, and other filings that we make with the SEC from time to time.  Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward-looking statements. KEYW 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: Ed Jaehne
         Chief Strategy Officer
         443-270-5300
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