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Globecomm Systems, Inc. (GCOM)

F3Q09 (Qtr End 03/31/09) Earnings Call Transcript

May 7, 2009 10:00 am ET


Matthew Byron – Corporate VP, IR

David Hershberg – Chairman, CEO and President

Keith Hall – COO and SVP of Globecomm Network Services

Andrew Melfi – VP and CFO


Steve Ferranti – Stephens Inc.

Rich Valera – Needham & Company

Dick Ryan – Dougherty & Company



Good day and welcome to today’s Globecomm Systems fiscal 2009 third quarter earnings conference call. Today’s call is being recorded. For opening remarks and introductions, I would like to turn the conference over to Mr. Matthew Byron, Corporate Vice President. Please go ahead, sir.

Matthew Byron

Thank you. Good morning everyone and welcome to the Globecomm Systems fiscal 2009 third quarter earnings conference call. Joining me today from the Company are Chairman and CEO, David Hershberg; Chief Financial Officer, Andrew Melfi; and our COO and Senior VP of Globecomm Network Services, Keith Hall.

Earlier today Globecomm issued its fiscal 2009 third quarter earnings press release. In the event you have not seen a copy of the release, it is posted on the 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 performances 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 or 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 Thursday, May 7, 2009, and 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 4019651.

At this point, I'd like to turn the call over to our CEO, Dave Hershberg. Dave?

David Hershberg

Thank you, Matt. Last night, after the closing bell, Globecomm issued its fiscal 2009 third quarter financial earnings press release. Globecomm’s acquisition of Mach 6 and the Company’s record service segment revenues and operating income were the highlights of our third quarter.

During this quarter, we also shipped our first major Ku-band hub terminal and completed development of our Ku-band tactical terminals. Despite difficult economic times that continue to impact the infrastructure segment in our business, the Company recorded its twentieth [ph] consecutive profitable quarter and we expect that to continue going forward.

The shortfall in infrastructure business has not been as a result of losing contracts, but rather a primary result of deferrals and funding. With that said, proposal activity is very strong and the Company finished the third quarter with a record backlog, consisting of record backlog in the service business and about 10% shy of our record in the infrastructure side.

These factors are setting up for a better level of business in fiscal year ’10 and it is developing a lot better than we recently thought it would. The Company’s service business is strong in providing excellence stability during the current downturn and we expect this to continue. The Global Managed Services vision of the Company is set out – we set out over a decade ago is working and we are seeing lots of opportunity on this front.

Our cash position is still strong, and we continue to review complementary acquisitions in the service segment to further leverage the Company’s robust global network. The Mach 6 acquisition integration is going very well and we very excited about this maritime opportunity, and we see this as a big part of our future business. We also are continuing to invest in cellular wireless platforms and have had a significant experience in that area as noted in our recent press release.

The Company is going through a transformation as investments in the service area over the past 10 years and the coupling of our two acquisitions are paying excellent dividends. While we are somewhat disappointed by the push out in infrastructure bookings, we are confident therefore about our future, especially in the service area.

Today, we are going to have with us our Chief Operating Officer, Globecomm Network Services, our Senior Vice President, Keith Hall. He is going to into somewhat more detail on our service business. Keith?

Keith Hall

Thanks, Dave. Good morning everybody. Moving forward on these conference calls, I will attempt to provide some color to the financial metrics provided in our quarterly press release and some clarity to our focus and objectives as it relates to or services business. For reference, service business is made up of four subsidiaries, Globecomm Network Services, Globecomm Services Maryland, Crescendo, and now Mach 6, which we acquired on February 27th.

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