Boston, MA 05/12/2014 (wallstreetpr) – TeleCommunication Systems, Inc. (NASDAQ:TSYS) sustained its operating margin and improved its liquidity in first quarter results ended March 31, 2014, compared to prior year period.
Sustain margins
Revenues were down by 10% to $85.1 million from $94.8 million in the first quarter 2013, primarily due to lower revenues from both the Government and Commercial segments.
Government services revenue was $27.6 million, down by 8.5% versus $36.1 million in 1Q2013, as a result of the drawdown of Afghanistan on-field personnel. But, the increase in systems revenue partly offset the decline. Commercial services revenue was down by ~3% to $34.6 million due to lower subscriptions of carrier applications and non-recurring projects from 2013, partly offset by increase in systems revenues resulted in higher location platform sales and systems (Nextgen 9-1-1) deployment revenue.
The declining revenues compressed the operating margins year over year. During 1Q2014, adjusted EBITDA was $8.0 million versus $9.5 million in 1Q2013. However, adjusted net income was marginally improved to $2.2 million (1Q2013:$2.1 million) as a result of lower tax benefit.
Liquidity improvement
TeleCommunication Systems, Inc. (NASDAQ:TSYS) generated ~$8 million of cash from its operation as a result of lower working capital. In addition, lower debt repayment versus prior year period generated positive net cash. The Company’s liquidity includes total debt of $145.9 million and cash balance of $65.3 million. Total debt to equity ratio during the period was 1.33x.
Backlog
As of March 31, 2014, funded contract backlog was $291.2 million including customers from federal agencies and wireless carriers. The Company expects ~$165.6 million from funded contracts in last 12 months. But, unfunded backlogs declined as satellite systems contracts of $680 million expired during 1Q2014.
Conclusion
TeleCommunication Systems, Inc. (NASDAQ:TSYS) mostly depends on government contracts, so, any changes in federal policies may delay the procurement process for its products and services. As a result, a quarter on quarter revenue may affect, however, strong relationships with its key customers like government and military and leading wireless operators continue to support the Company’s services.
