updated 2/7/2011 4:17:57 PM ET 2011-02-07T21:17:57

HANOVER, Md., Feb. 7, 2011 (GLOBE NEWSWIRE) -- The KEYW Holding Corporation (Nasdaq:KEYW) announces revenue for 2010 of $108.0 million as compared to $39.0 million in 2009, an increase of approximately 175%. Net and Total Comprehensive Income for 2010 was $10.9 million compared to a Loss for 2009 of ($2.1) million. Earnings Per Share (EPS) were $0.51 (diluted) for 2010 versus EPS for 2009 of ($0.18) (diluted). Income Before Income Taxes for 2010 was $18.7 million compared to Loss Before Income Taxes of ($3.1) million for 2009.

For Q4 of 2010, KEYW generated $29.3 million in revenue versus $12.1 million in the same period of 2009. Net income was $1.2 million and $0.4 million for the fourth quarters of 2010 and 2009, respectively. EPS for these same periods were $0.04 (diluted) in 2010 and $0.02 (diluted) in 2009. Revenue in Q4 2010 was below expectations due to delays in expected product orders during the quarter. Since the beginning of 2011, we have seen product orders return to prior quarter levels. Gross Margin (including both products and services) in Q4 was 29.1% which continues in-line with Gross Margin 29.2% across the full year 2010. 

 "2010 was a year of significant growth and accomplishment for KEYW," commented Leonard Moodispaw, CEO and President of KEYW Corporation. "During 2010 we completed 4 acquisitions, increased our revenue by over 175%, and completed our initial public offering. We now have a workforce of over 700 people, approximately 80% of whom hold TS/SCI clearances, and have contracts with almost 50% of the Intelligence Community (IC) agencies. We begin 2011 with zero debt, a robust pipeline of strategic acquisition candidates, strong momentum in both our services and products businesses, and a clear focus and differentiation in delivering agile solutions to the IC's toughest cyber challenges. With this momentum and our energized team, we believe 2011 will be another year of significant growth and accomplishment."

KEYW Adjusted EBITDA for Q4 2010 was $1.4 million, resulting in an Adjusted EBITDA margin of 4.6%. For 2010, our Adjusted EBITDA was $9.0 million and the Adjusted EBITDA margin was 8.4%. 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, and 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 Twelve Months Ended
  December 31, 2010 December 31, 2010
  (in thousands) (in thousands)
     
     
Net Income  $ 1,160  $ 10,906
Depreciation  219  757
Amortization  1,986  6,440
Stock amortization  851  1,920
Other expenses (1)  415  2,080
Acquisition accounting (2)  (4,200)  (22,550)
Interest expense (income), net  (17)  1,661
Taxes  948  7,814
     
Adjusted EBITDA  $ 1,362  $ 9,028
     
(1) Includes costs associated with our Initial Public Offering, acquisitions, and financing costs.
(2) Includes accounting adjustments related to the TAG acquisition earn-out and the earn-back of purchase

price from the LEDS acquisition.

In addition to these traditional financial metrics, we believe that our total number of KEYW employees and the total number of Staffed Positions, which includes personnel provided under subcontract to KEYW for performance on KEYW contracts, will provide investors with insight into our business and growth. At the close of 2010, we had 722 employees and a total number of Staffed Positions in our services business of 681, which is an increase of over 50% from the total number of Staffed Positions reported for Q3 2010.

 
The KEYW Holding Corporation Financial Highlights

Consolidated Statements of Operations

(in thousands except share and per share amounts)
         
  Three months ended Three months ended Twelve months ended Twelve months ended
  December December  December December 
  31, 2010 31, 2009 31, 2010 31, 2009
         
         
Revenues        
Services  $ 27,739  $ 10,275 $ 95,665 $ 32,743
Products  1,598  1,820  12,323  6,294
 Total  29,337  12,095  107,988  39,037
         
Cost of revenues        
Services   19,935  6,962  69,312 23,475
Products  878  1,255  7,132  4,443
 Total  20,813  8,217  76,444  27,918
         
Gross profit        
Services  7,804  3,313  26,353  9,268
Products  720  565  5,191  1,851
 Total  8,524  3,878  31,544  11,119
         
Operating Expenses        
Operating expenses 8,616  3,327  27,264  11,373
Intangible Amortization Expense 1,986  594  6,440  2,055
 Total 10,602  3,921  33,704  13,428
         
Operating Loss  (2,078)  (43)  (2,160)  (2,309)
         
Non-operating (gain) expense, net  (4,186)  11  (20,880) 783
         
Income (Loss) before income taxes 2,108  (54) 18,720  (3,092)
         
Income tax (expense)benefit, net  (948)  433  (7,814) 979
         
Net and Total Comprehensive Income (Loss)  $ 1,160  $ 379 $ 10,906 $ (2,113)
         
Weighted average common shares outstanding:        
Basic  24,803,792 14,114,737 17,582,028 12,062,930
Diluted 28,489,852 20,447,087 21,275,487 12,062,930
         
Earnings(Loss) per share:        
Basic   $ 0.05  $ 0.03 $ 0.62 $ (0.18)
Diluted  $ 0.04  $ 0.02 $ 0.51 $ (0.18)
         
Condensed Consolidated Balance Sheet

(in thousands except share amounts)
     
ASSETS December December
   31, 2010   31, 2009 
Current assets:    
Cash and cash equivalents $ 5,795 $ 7,333
Receivables, net  30,406  9,409
Inventories  5,183  4,334
Prepaid expenses   1,950  1,240
Income tax receivable  278  223
Deferred tax asset, current  1,252  -- 
Total current assets  44,864  22,539
     
Property and equipment, net  3,306  1,430
Goodwill  130,374  34,927
Other intangibles, net  22,716  6,314
Deferred tax asset  3,772  1,892
Other assets  232  28
TOTAL ASSETS $ 205,264 $ 67,130
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities:    
Accounts payable $ 6,292 $ 442
Accrued expenses  5,847  435
Accrued salaries & wages  5,442  2,214
Deferred income taxes  578  83
Total current liabilities  18,159  3,174
Long-term liabilities:    
Non-current deferred tax liability  11,869  1,564
Other non-current liabilities  125  53
TOTAL LIABILITIES  30,153  4,791
     
Commitments and contingencies     
     
Stockholders' equity:    
Preferred stock, $0.001 par value; 5,000,000 shares    
authorized, none issued  --   -- 
Common stock, $0.001 par value; 100,000,000 shares    
authorized, 25,554,433 and 14,187,520 issued and outstanding  26  14
Additional paid-in capital  168,358  66,504
Retained earnings/(Accumulated deficit)  6,727  (4,179)
Total stockholders' equity  175,111  62,339
     
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 205,264 $ 67,130
     
 
 Condensed Consolidated Statements of Cash Flows

(in thousands)
 
  December 31, December 31,
  2010 2009
     
Net income $ 10,906 $ (2,113)
Adjustments to reconcile net loss to net    
Cash used in operating activities    
Stock compensation  1,920  561
Depreciation/Amortization  7,197  2,365
Warrant accounting  --   690
Loss on disposal of equipment  10  -- 
Non-cash interest expense  584  -- 
Non-cash impact of TAG earn-out reduction  (21,950)  -- 
Deferred taxes  7,668  (876)
Decrease (increase) in balance sheet items    
Receivables  (7,294)  (5,242)
Inventory  (848)  (3,064)
Prepaid expenses  (911)  (1,023)
Accounts payable  (419)  56
Accrued expenses  1,708  965
Other balance sheet changes  (209)  210
Net cash used in operations  (1,638)  (7,471)
     
Cash flows from investing activities    
Acquisitions, net of cash acquired  (92,008)  (18,928)
Purchase of property and equipment  (1,909)  (1,069)
Proceeds from the sale of equipment  128  4
Net cash used in investing activities  (93,789)  (19,993)
     
     
Cash flows from financing activities    
Proceeds from stock issuances  88,823  29,400
Proceeds from term note  5,000  -- 
Proceeds from revolver  19,600  -- 
Proceeds from subordinated debt  8,250  -- 
Repayment of debt  (32,850)  -- 
Proceeds from option and warrant exercises  5,066  -- 
Net cash provided by financing activities 93,889 29,400
     
Net (decrease)increase in cash and cash equivalents  (1,538)  1,936
Cash and cash equivalents at beginning of period 7,333 5,397
Cash and cash equivalents at end of period $ 5,795 $ 7,333
     

KEYW has scheduled a conference call to discuss these results today, February 7, 2011, at 5:00 p.m. (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 7, 2011, and will remain available through March 7, 2011. To access the dial-up replay, call 1-800-642-1687, Conference ID 36520824. 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 1-706-645-9291, with the same passcode.

About KEYW: KEYW provides agile cyber superiority and cybersecurity 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 beginning 2011 with strong momentum in both our services and products businesses, statements that we believe 2011 will be another year of significant growth and accomplishment and statements that the total number of personnel and Staffed Positions provide insight into our business and growth. 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 prospectus, dated September 30, 2010 and filed with the Securities and Exchange Commission (SEC) on October 1, 2010 pursuant to Rule 424(b)(4) under the Securities Act of 1933, 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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