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Globecomm Systems, Inc. (GCOM)

F4Q09 Earnings Call

September 10, 2009 10:00 am ET


Matthew Byron – Corporate VP, IR

David Hershberg – Chairman, CEO

Keith Hall – President, COO

Andrew Melfi – VP and CFO


Jim McIlree – Collins Stewart

Mark Jordan – Noble Financial

Rich Valera – Needham & Company

Dick Ryan – Dougherty & Company



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

Matthew Byron

Thank you. Good morning everyone and welcome to the Globecomm Systems fiscal 2009 fourth quarter and full year 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 after the closing bell, Globecomm issued its fiscal 2009 fourth 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, 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 Thursday, September 10, 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 6660794.

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

David Hershberg

Thank you Matt. Good morning everybody. Welcome to our fiscal 2009 fourth quarter and full year earnings conference call. Last night after the closing bell Globecomm issued its fiscal 2009 fourth quarter and full year financial earnings press release. Andrew Melfi, our CFO, will review the details of this release in a few minutes.

While fiscal 2009 presented a number of challenges on the infrastructure segment of our business we did book some important programs including a $27 million program to build a new generation of military mobile terminals. We continued to book business in the media area including a $5.7 million contract in the Far East and our Force Tracking contract was increased by $7.3 million to $34.8 million and we expect additional add-ons in fiscal 2010.

We installed the first systems in Alaska for GCI’s network under a contract that now totals approximately $30 million and developed some new x-band and KU band tactical satellite terminals. The service business continues to grow. All existing government contracts received funding as expected and in many cases these contracts were expanded. We have also been busy integrating our two new acquisitions plus our new professional services business company, Cachendo.

We are very proud of the perseverance and sacrifices of our employees. As the company remained profitable in each of our four quarters we completed two key acquisitions. We started a new professional services company and we named a new President and Chief Operating Officer. We reorganized our management team and positioned our company for record revenue and record EBITDA in fiscal 2010.

Fiscal 2009 was impacted by costs associated with acquisitions including $800,000 of amortization. The company anticipates revenue of $215-225 million and $0.30 to $0.35 per diluted share earnings in fiscal 2010. These include costs related to the two acquisitions of additional acquisition based amortization of $1.3 million and while we continue to face challenges on the infrastructure segment of the business in light of the current economic background the service segment of our business is thriving and providing the company with sufficient visibility to reinstate guidance for fiscal 2010 ahead of anticipated service revenue of approximately $125 million.

Our company new President and Chief Operating Officer, Keith Hall, will now give an overview of the business outlook.

Keith Hall

Thanks Dave. Good morning everyone. To start today’s discussion I would like to provide an update on our internal and external growth strategies and how the two are evolving. Globecomm launched our managed service business in 2002 to create a more scalable, predictable and higher gross margin business model. Our transformation from a pure systems integrator to an end-to-end managed service provider is going well. Being standalone systems integrator can be a difficult business model to maintain but the innovation we have created is unquestionable and it is a capability we must maintain and continue to develop.

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