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KEYW Reports Q1 2012 Financial Results

HANOVER, Md., May 1, 2012 (GLOBE NEWSWIRE) -- The KEYW Holding Corporation (Nasdaq:KEYW) announces Q1 2012 revenue of $55.8 million, an increase of 34% versus Q1 2011. GAAP earnings per share (EPS) were $0.01 in Q1 2012 on a fully diluted basis, versus $0.00 in Q1 2011. Amortization associated with acquisition-related intangibles reduced Q1 2012 EPS by approximately $0.12 per share versus a reduction of $0.03 per share in Q1 2011, both on an after tax basis. Adjusted EBITDA (as described below) for Q1 2012 was $7.2 million, compared to $3.3 million in Q1 2011. As a percentage of revenue, Adjusted EBITDA margin was 12.9% in Q1 2012, which is an increase from 8.0% in Q1 2011. KEYW was awarded new work totaling $52.6 million in contract value in Q1 2012.

"KEYW is off to a strong start in 2012, and the pipeline of new opportunities looks very promising in terms of new proposal activity, growth in existing programs, and opportunistic acquisitions," commented Leonard Moodispaw, President and CEO of KEYW Corporation. "We are also progressing on our 'horizontal path' effort, and our investment in internal research and development has opened doors to significant new business potential. We continue to expect 2012 to be an exceptional year for KEYW."

Our Q1 2012 revenue of $55.8 million compares to revenue of $41.7 million in Q1 2011, an increase of approximately 34%. The increase was driven largely by the acquisitions of JKA Technologies, Forbes Analytic Software, and Flight Landata, and organic growth, offset by decreases in our Air Force services business and the Q4 2011 reassignment of a contract to another company. Consolidated gross margin in Q1 2012 was 33.9%, versus 29.4% for the same period in 2011. The increase is primarily due to a revenue mix shift toward our Integrated Solutions and Products segment.

Adjusted EBITDA, as defined by KEYW, is a non-GAAP measure that is calculated as GAAP net income plus other non-recurring expense, interest expense, income taxes, stock compensation, depreciation, and amortization. We have provided Adjusted EBITDA because we use the measurement internally to evaluate performance and we believe it is a commonly used measure of financial performance in comparable companies. It is provided to help investors evaluate companies on a consistent basis, as well as to enhance an understanding of our operating results.  In addition, 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.

     
  Three Months
Ended
Three Months
Ended
  March 31, 2012 March 31, 2011
  (in thousands) (in thousands)
     
Net Income $168 $64
Depreciation 1,029 255
Amortization 4,868 2,068
Stock amortization 647 756
Acquisition accounting (1) 24 56
Interest expense, net 417 23
Taxes 66 90
     
Adjusted EBITDA $7,219 $3,312
     
(1)  Includes costs associated with acquisitions and related financing (excluding interest which is disclosed separately).

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 Q1 2012, we had 837 employees, approximately 80% of whom hold the highest level clearances.

     
The KEYW Holding Corporation Financial Highlights
Condensed Consolidated Statements of Operations
(in thousands except share and per share amounts)
     
     
  Three months ended Three months ended
  March 31, 2012 March 31, 2011
  (Unaudited) (Unaudited)
Revenues    
Services $39,855 $38,626
Integrated Solutions 15,921 3,035
Total 55,776 41,661
     
Costs of Revenues, excluding amortization    
Services 28,877 27,358
Integrated Solutions 7,970 2,062
Total 36,847 29,420
     
Gross Profit    
Services 10,978 11,268
Integrated Solutions 7,951 973
Total 18,929 12,241
     
Operating Expenses    
Operating expenses 13,412 9,998
Intangible amortization expense 4,869 2,068
Total 18,281 12,066
     
Operating Income 648 175
     
Non-Operating Expense, net 414 21
     
Income before Income Taxes 234 154
     
Income Tax Expense, net 66 90
     
Net Income $168 $64
     
Weighted Average Common Shares Outstanding    
Basic 25,811,983 25,603,580
Diluted 27,766,772 29,449,923
     
Earnings (Loss) per Share    
Basic $0.01 $0.00
Diluted $0.01 $0.00
     
     
     
Condensed Consolidated Balance Sheet 
(in thousands except share amounts)
     
     
  March 31, December 31,
  2012 2011
  (Unaudited)  
ASSETS    
Current assets:    
Cash and cash equivalents $1,095 $1,294
Receivables 51,060 40,630
Inventories, net 8,128 7,242
Prepaid expenses 3,232 2,511
Income tax receivable 27 27
Deferred tax asset, current 1,193 1,193
Total current assets 64,735 52,897
     
Property and equipment, net 9,109 8,707
Goodwill 164,466 164,466
Other intangibles, net 34,133 39,002
Deferred tax asset 2,348 2,348
Other assets 220 211
TOTAL ASSETS $275,011 $267,631
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
Current liabilities:    
Accounts payable $3,419 $4,136
Accrued expenses 4,020 4,370
Accrued salaries & wages 9,788 9,644
Revolver 60,500 49,500
Deferred income taxes 1,591 1,591
Total current liabilities 79,318 69,241
     
Long-term liabilities:    
Non-current deferred tax liability 16,791 17,430
Other non-current liabilities 325 301
TOTAL LIABILITIES 96,434 86,972
     
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, 25,543,067 and 25,770,795 shares issued and outstanding 26 26
Additional paid-in capital 171,121 173,371
Retained earnings 7,430 7,262
Total stockholders' equity 178,577 180,659
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $275,011 $267,631
     
 
 
Condensed Consolidated Statements of Cash Flows
(in thousands)
     
     
  Three months
ended March 31,
2012
Three months
ended March 31,
2011
  (Unaudited) (Unaudited)
Net income $168 $64
Adjustments to reconcile net income to net cash used in operating activities:    
Stock compensation 647 756
Depreciation/Amortization 5,897 2,323
Changes in operating assets and liabilities:    
Receivables (10,430) (5,022)
Inventory (886) (1,034)
Prepaid expenses (721) (620)
Accounts payable (717) (1,045)
Accrued expenses (822) (2,297)
Other balance sheet changes (7) (25)
Net cash used in operating activities (6,871) (6,900)
     
Cash flows from investing activities:    
Acquisitions, net of cash acquired -- (9,918)
Purchase of property and equipment (1,431) (173)
Net cash used in investing activities (1,431) (10,091)
     
Cash flows from financing activities:    
Proceeds from revolver, net 11,000 14,000
Repurchase of Stock (2,948) --
Proceeds from option and warrant exercises 51 213
Net cash provided by financing activities 8,103 14,213
     
Net decrease in cash and cash equivalents (199) (2,778)
Cash and cash equivalents at beginning of period 1,294 5,795
Cash and cash equivalents at end of period $1,095 $3,017
     

KEYW has scheduled a conference call to discuss these results today, May 1, 2012, at 4:30 p.m. (EDT). 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. (EDT) on May 1, 2012, and will remain available through June 1, 2012. To access the dial-up replay, call 1-855-859-2056, Conference ID 72084099. 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," and similar expressions, including statements regarding our pipeline of new opportunities with respect to new proposal activity, growth in existing programs, and opportunistic acquisitions, and statements regarding opportunities resulting from our internal research and development activities. . 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 15, 2012 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: Chris Donaghey
         443-270-5300
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