Phil Calamia is stepping down as KEYW Holding's CFO to "pursue other opportunities." Mike Alber, formerly the CFO of defense IT contractor Engility, will be the company's new CFO, effective June 13.
CEO Bill Weber: "With KEYW’s transition to a pure-play intelligence solutions-focused company nearing completion, I am pleased that Mike Alber chose to join KEYW as our CFO. Mike’s significant experience in the government solutions industry and large public companies will serve the company well."
Shares rose 5.9% in regular trading ahead of the announcement, which comes two weeks after KEYW jumped in response to a Q1 beat.
Considering KEYW Holding's (KEYW -4.2%) plans to divest its Hexis Cyber Solutions unit a mixed blessing, RBC's Robert Stallard has downgraded shares to Sector Perform, and cut his target by $4 to $7.
Stallard admits Hexis (unlike KEYW's profitable Government Solutions unit) has been a cash drain, as KEYW invested heavily to grow the business in the face of tough competition. But he also thinks unloading Hexis will prevent KEYW from receiving the kind of valuation premiums given to growth-stage tech companies.
KEYW Holding (KEYW +21.3%) used its Q4 report to state it's "exploring strategic alternatives" for its Hexis Cyber Solutions unit, which is responsible for the company's HawkEye G threat-detection and malware-removal solution.
KEYW adds it's "in the advanced stages" of the review process, and expects to make an announcement in the coming weeks. The news comes shortly after KEYW announced it's selling its systems engineering and technical assistance (SETA) business for $12M in cash. Commercial Cyber Solutions revenue totaled $5.6M in Q4 (+54% Y/Y).
The company's core Government Solutions unit saw revenue rise 7.4% Y/Y to $75.1M, with adjusted EBITDA margin dropping 30 bps to to 12.1%. On its earnings call (transcript), KEYW guided for 2016 Government Solutions revenue of $280M-$305M - that compares with 2015 revenue of $286M after excluding SETA and the commercial ops. Adjusted EBITDA margin is expected to be in a 10%-13% range.
CEO William Weber: "Within two to three years, our goal is to be solidly entrenched in six or seven of the intelligence community agencies with a foothold in an additional three or four more. We believe this expanded presence will add significant organic growth in new revenue, generate sustainable EBITDA margins in the low to mid-teens ... We believe our KeyRadar software defined radar, Typhoon, our cyber operations platform and our Mosaic open-source content curation product to name then just a few will be gateways to services contracts with key Intel community customers."
KEYW Holding now expects 4%-6% 2015 revenue growth for its core Government Solutions segment; prior guidance was for 4%-8% growth. Revenue guidance for the Commercial segment (Hexis/HawkEye G) is now at $13M-$15M vs. a prior $15M; it was at $25M prior to the Q2 report.
Government Solutions is still expected to see a 12%-14% adjusted EBITDA margin. The adjusted EBITDA loss forecast for Commercial has been lowered to $30M-$32M from $30M-$34M.
Government Solutions revenue rose 2.9% Y/Y to $78.1M; Commercial revenue was roughly flat at $3M. GAAP operating expenses rose by $3.1M Y/Y to $28.3M. HawkEye G installations have risen to 36 from 30 from the time of the Q2 report, with revenue-generating customers rising to 18 from 16.
Shares have plunged to $6.24 after hours. The 52-week low is $5.60.