SPACEHAB Reports Financial Results for First Quarter Fiscal Year 2004
SPACEHAB, Incorporated
, a leading provider of commercial space services, today
announced financial results for the Company’s first quarter of fiscal year
2004 ended September 30, 2003.
First Quarter Results
Revenues for the first fiscal quarter of 2004 declined to $18.9 million
from $26.8 million for the first quarter of 2003. Gross profit increased this
quarter to $5.3 million, or 28% of revenue, compared to $5.2 million, or 19%
of revenue, for the same period a year ago. First quarter results were
impacted by a shift in the business mix including reduced operations
associated with NASA’s grounding of the space shuttle and a significant
reduction in the business base of the SPACEHAB Government Services unit.
The Company reported net income of $0.7 million, or $0.05 per basic and
diluted share for the first quarter, compared to a net loss of $0.1 million,
or ($0.01) per basic and diluted share for the same period a year ago.
SPACEHAB reported first quarter income from operations of $2.4 million
compared to $1.8 million in the same period last fiscal year, a result of
lower selling, general, and administrative expenses.
As a result of reductions in employee headcount and management’s
continuing cost reduction efforts, first quarter selling, general, and
administrative expenses continued to decline. First quarter fiscal year 2004
EBITDA (earnings before interest, taxes, depreciation, amortization, and other
non-cash charges) was $3.8 million compared to $4.8 million for the same
quarter last year.
Liquidity
The combined cash, cash equivalents, and short-term investments at
September 30, 2003 were $11.5 million. During the first quarter, SPACEHAB
repaid $1.9 million of debt obligations.
In July 2003 the Company submitted a detailed claim in draft to NASA in
the amount of $87.0 million seeking recovery of the uninsured portion of the
Company’s investment in its Research Double Module that was lost in the
Columbia space shuttle disaster. The claim is in the process of being revised
to incorporate the findings of the Columbia Accident Investigation Board and
will be re-filed with NASA. The Company believes it has a basis for recovery
of the loss from NASA but there can be no assurances as to the timing or the
amount, if any, to be received from the claim. Upon resolution of the claim,
any proceeds from NASA would be recorded in the period in which the claim is
resolved.
Subsequent to quarter end, Boeing notified the Company’s subsidiary,
Astrotech Space Operations (Astrotech), that effective October 1, 2003 Boeing
would exercise its right to terminate its payload processing contract with
Astrotech. Under the contract termination provision, Boeing is obligated to
pay Astrotech $17.5 million. Astrotech will use the proceeds from the
termination payment to service the mortgage on Astrotech’s Titusville, Florida
facility and repay funds used to complete construction of the unique five-
meter class Spacecraft Processing Facility (SPF). Astrotech’s SPF mortgage is
approximately $16.5 million as of September 30, 2003. The contract
termination will reduce Astrotech’s backlog by $34.9 million to $15.0 million
as of October 1, 2003.
The Company’s consolidated backlog as of October 1, 2003 is equal to
$106.7 million, reflecting the reduction in Astrotech’s backlog due to the
contract termination detailed above.
Update of Ongoing Operations
“Over the last year, we have focused on our core businesses and made the
hard decisions required to streamline our organization to ensure that we
sustain a competitive posture within our market,” said Michael E. Kearney,
President and Chief Executive Officer. “This quarter’s results under
challenging conditions demonstrate that we are now beginning to realize the
benefits of that initiative,” concluded Mr. Kearney.
The SPACEHAB Flight Services (SFS) business unit continues to support
people working and living in space. The Company concluded negotiations with
NASA for an equitable adjustment on the STS-116 (12A.1) and STS-118 (13A.1)
missions due to launch delays associated with the temporary grounding of the
space shuttle fleet. This adjustment, which provides additional revenue to
the Company for these missions, covers a period from May 2003 through November
2003. SPACEHAB is updating its proposal and will seek to negotiate additional
contract modifications to cover the period from December 2003 through the
current expected launch dates of these two missions, April 2005 and August
2005, respectively. The proposal includes the addition of a new Integrated
Cargo Carrier mission, STS-121 (ULF1.1), targeted for launch in November 2004.
SPACEHAB also concluded equitable adjustment negotiations through December
2003 with Boeing for delays in the STS-114 mission. The Company is in the
process of submitting a new equitable adjustment proposal for the period from
January 2004 through the currently expected launch in September 2004.
SPACEHAB Government Services (SGS) continues to provide critical services
to NASA including stowage integration and configuration management services
for the International Space Station (ISS). On November 5, 2003, NASA notified
SPACEHAB that it was not awarded the ISS Mission Integration contract.
Additionally, the Boeing team’s bid for the Cargo Missions contract, of which
SGS was a subcontractor, was not selected for contract award. The Company is
awaiting word from NASA regarding the other ISS procurement for which SGS, as
a subcontractor to ARES Corporation, submitted a proposal in the last fiscal
year.
Astrotech supported two successful missions this quarter. The Echostar
IX/Telstar 13 spacecraft, manufactured by Space Systems/Loral, was launched on
August 7, 2003 onboard a Zenit 3-SL booster from the Sea Launch platform
Odyssey in the central Pacific Ocean. Following this success, Astrotech
supported the tenth Sea Launch Company mission on September 30, 2003 with the
launch of the Galaxy 13/Horizons-1 communications satellite.
Non-GAAP Financial Measures
This announcement includes financial measures computed in accordance with
Generally Accepted Accounting Principles in the United States (GAAP), as well
as EBITDA, which is included as an additional non-GAAP measure of Company
performance. EBITDA includes components that are significant in understanding
and assessing our results of operations and cash flows. EBITDA should not be
construed as a substitute for net income, determined in accordance with GAAP,
as an indicator of operating performance, nor does EDITDA represent cash flow
from operating activities. Management believes that EBITDA is relevant and
useful information and is disclosing this information to permit a more
comprehensive analysis of our operating performance, as an additional
meaningful measure of performance and liquidity, and to provide additional
information with respect to our ability to meet future debt service, capital
expenditure and working capital requirements. The accompanying table presents
the calculation of EBITDA.
Conference Call
SPACEHAB will host a conference call on November 6, 2003 at 10:00 a.m.
Eastern time to discuss the first quarter earnings release. To participate on
the call, please register with Darren Barker at 818-382-9706. To participate
via the Internet, visit the Investor Relations section of the SPACEHAB website
at www.spacehab.com. A taped replay will be available immediately following
the conference call and accessible via access code 19959117 until 11:59 p.m.
Eastern time on November 7, 2003 at 800-252-6030 (domestic calls) or
402-220-2491 (international calls). An audio archived webcast of the
conference call will be available on the Company website for 90 days.
About SPACEHAB, Incorporated
With approximately $100 million in annual revenue, SPACEHAB, Incorporated
(www.spacehab.com) is a leading provider of commercial space services. The
Company develops, owns, and operates habitat and laboratory modules and cargo
carriers aboard NASA’s Space Shuttles for space station resupply and research
purposes. Its Government Services business unit provides Space Station and
Space Shuttle support services including orbiter crew compartment integration,
stowage, and configuration management to NASA’s Johnson Space Center in
Houston. SPACEHAB’s Astrotech subsidiary provides commercial satellite
processing services at facilities in California and Florida. Additionally,
through The Space Store, Space Media provides space merchandise to the public
and space enthusiasts worldwide (www.thespacestore.com).
The statements in this document may contain “forward-looking statements”
within the meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. Such statements are subject to
risks and uncertainties that could cause actual results to differ materially
from those projected in the statements. In addition to those risks and
uncertainties discussed herein, such risks and uncertainties include, but are
not limited to, whether the Company will fully realize the economic benefits
under its U.S. National Aeronautics and Space Administration (“NASA”) and
other customer contracts, whether NASA and other customers will continue to
utilize the Company’s habitat modules and related commercial space assets,
whether plans to complete the International Space Station (“ISS”) are
fulfilled, continued availability and use of the U.S. Space Shuttle system,
technological difficulties, product demand and market acceptance risks, the
effect of economic conditions, uncertainty in government funding, the impact
of competition, delays and uncertainties in future space shuttle and ISS
programs, resolution of the Company’s indemnification claim with NASA arising
from the loss of the Columbia orbiter and its crew during the STS-107 mission,
and other risks described in reports filed by the Company with the Securities
and Exchange Commission. The Company assumes no obligation to update these
forward-looking statements.
For more information contact:
Darren E. Barker Julia A. Pulzone
Vice President Chief Financial Officer
Investor Relations International SPACEHAB, Inc.
Phone 818-382-9706 Phone 202-488-3500
Fax 818-382-9701 Toll free 888-647-9543
dbarker@irintl.com pulzone@hqspacehab.com
SPACEHAB, INCORPORATED AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
Three Months
(In thousands, except share data) Ended September 30,
2003 2002
Revenue $18,850 $26,812
Costs of revenue 13,527 21,634
Gross profit 5,323 5,178
Operating expenses
Selling, general and administrative 2,932 3,414
Research and development - 14
Total operating expenses 2,932 3,428
Income from operations 2,391 1,750
Interest expense (1,740) (1,859)
Interest and other income, net 33 9
Income (loss) before income taxes 684 (100)
Income tax (expense) benefit (18) 6
Net income (loss) $666 $(94)
Income (loss) per share:
Net income (loss) per share -- basic $0.05 $(0.01)
Shares used in computing net income
(loss) per share -- basic 12,370,955 12,154,465
Net income (loss) per share -- diluted $0.05 $(0.01)
Shares used in computing net income
(loss) per share -- diluted 13,745,450 12,154,465
SPACEHAB, INCORPORATED AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
Three Months
(in thousands) Ended September 30,
2003 2002
GAAP Net income (loss) $666 $(94)
Income tax (expense) benefit 18 (6)
Interest expense 1,740 1,859
Interest and other income, net (33) (9)
Depreciation and amortization 1,417 3,011
EBITDA $3,808 $4,761
SPACEHAB, INCORPORATED AND SUBSIDIARIES
Selected Financial Data by Segment
(in thousands)
Three Months Ended September 30, 2003
Income (Loss)
before
Revenue Income Taxes
SPACEHAB Flight Services $11,777 $(107)
SPACEHAB Government Services 3,533 (238)
Astrotech Space Operations 3,373 1,062
Space Media 167 (33)
$18,850 $684
Three Months Ended September 30, 2002
Income (Loss)
before
Revenue Income Taxes
SPACEHAB Flight Services $12,367 $(1,006)
SPACEHAB Government Services 11,475 670
Astrotech Space Operations 2,846 318
Space Media 124 (82)
$26,812 $(100)
