Revenues for the third quarter of fiscal 2001 were $24.2 million, a 30.6% increase over revenues of $18.6 million reported in the third quarter of fiscal 2000. This increase in revenues reflects strong growth in revenues generated by NetSat Express and an increase in revenues generated by Globecomm Systems.
Globecomm’s operating loss was $1.9 million in the third quarter of fiscal 2001, compared to $2.7 million in the third quarter of fiscal 2000, a 27.5% decrease. Net loss for the third quarter of fiscal 2001 was $3.7 million, or $0.31 per diluted share, compared to a net loss of $2.1 million, or $0.22 per diluted share in the third quarter of fiscal 2000. The increased net loss was primarily attributable to the interest and depreciation expenses associated with NetSat Express’ investments in long-term satellite transponder capital leases. The increased net loss also reflects higher operating expenses associated with NetSat Express, mainly attributable to an increase in network operations, personnel and increased sales and marketing expenses to support NetSat Express’ expansion.
NetSat Express’ third quarter fiscal 2001 revenues were $6.2 million, a 230.1% increase over revenues of $1.9 million in the third quarter of fiscal 2000. For the third quarter of fiscal 2001, NetSat Express had a net loss of $3.9 million, or $0.33 per diluted share, compared to a net loss of $2.3 million, or $0.24 per diluted share, in the third fiscal quarter of 2000. Excluding the net loss incurred by NetSat Express, Globecomm Systems would have had net income of $0.2 million, or $0.02 per diluted share, for the third quarter of fiscal 2001.
Consolidated EBITDA loss for the third quarter of fiscal 2001 was $0.5 million, compared to a consolidated EBITDA loss of $2.0 million for the third quarter of fiscal 2000. The reduction in consolidated EBITDA loss reflects higher gross margins, partially offset by an increase in operating expenses. Consolidated gross margins for the third quarter of fiscal 2001 were 21.6% versus 13.3% in the third quarter of fiscal 2000. This increase is attributable to NetSat Express’ increased utilization of network capacity. The successful renegotiation of a NetSat transponder lease discussed below will reduce interest and depreciation charges going forward. As a result, we will exclude reporting EBITDA in the future.
Revenues for the nine months ended March 31, 2001 were $77.5 million, a 40.0% increase over revenues of $55.4 million in the corresponding period in the prior year. Revenue growth for the nine-month period reflects strong growth at NetSat Express and in Globecomm Systems’ core satellite infrastructure business.
Globecomm’s operating loss was $6.2 million, compared to $5.4 million in the corresponding period of the prior year, a 16.1% increase. Net loss for the nine months ended March 31, 2001 was $11.4 million, or $0.96 per diluted share, compared to net loss of $1.7 million or $0.18 per diluted share, for the corresponding period in the prior year. Net loss for the nine months ended March 31, 2000 includes a previously announced one-time gain of $2.4 million from the sale of common stock for a minority interest in the Company’s majority owned NetSat Express subsidiary. Excluding this gain, net loss for the nine months ended March 31, 2000 would have been $4.0 million, or $0.43 per diluted share.
NetSat Express’ revenues for the nine months ended March 31, 2001 were $18.2 million, a 231.8% increase over revenues of $5.5 million in the corresponding period in the prior year. For the nine months ended March 31, 2001, NetSat Express had a net loss of $12.8 million, or $1.07 per diluted share, compared to a net loss of $4.5 million, or $0.47 per diluted share, in the corresponding period in the prior year. Excluding the net loss incurred by NetSat Express, Globecomm Systems would have reported net income of $1.4 million, or $0.11 per diluted share, for the nine months ended March 31, 2001.
The Company’s consolidated EBITDA for the nine months ended March 31, 2001 was $0.1 million, compared to a consolidated EBITDA loss of $3.6 million for the corresponding period in the prior year. This positive consolidated EBITDA level reflects an increase in gross margins partially offset by an increase in operating expenses. Consolidated gross margins for the first nine months of fiscal 2001 grew to 21.3%, compared to 13.3% in the corresponding period in the prior year. This increase is attributable to NetSat Express’ increased utilization of network capacity.
Commenting on the quarter, David Hershberg, Chief Executive Officer of Globecomm, said, “We are pleased to report that our consolidated revenues for the fiscal third quarter grew 30.6% over last year’s third quarter. These results came on top of what has been a strong nine months for the Company, in terms of solid revenue growth.
“During the quarter we announced several contract awards. We were awarded a contract to provide construction, installation and testing of digital satellite receive racks required by Fox Broadcasting Company’s affiliates to facilitate state-of-the-art digital television broadcast reception. Globecomm was also awarded an outsource contract from an independent IT solutions integrator to provide equipment and services needed to double the IT integrator’s capability for delivering voice and data recovery services via satellite in the event of a disaster that compromises or destroys existing Call Center sector facilities.
“Additionally, NetSat signed a $5.7 million contract with Al-Harbi International to expand Internet service offerings in the Middle East. The contract will utilize some of NetSat’s leased transponder space on the Telstar 12 satellite. This contract was in addition to a $12 million five-year service contract announced in April 2000 to provide Digital Video Broadcasting services in the Middle East.
“All of these contracts point to Globecomm’s ability to both develop and win new end-to-end solutions business and its ability to supply customers’ communications requirements. They also represent the combined synergies of NetSat Express and Globecomm Systems as Globecomm continues its evolution from an infrastructure provider into a total end-to-end communications solutions provider.
