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Why KeyW Shares Got Demolished Today

What happened

Shares of KeyW (NASDAQ: KEYW) got demolished today, down by 34.3% as of 12:31 p.m. EDT, after the company reported  third-quarter earnings. Both top and bottom line results came up short  of expectations for the company, which supplies engineering and technology solutions to the intelligence and national security communities.

So what

Revenue in Q3 came in at $122.4 million, shy of the $129.4 million in sales that analysts were modeling for. That translated to a GAAP net loss of $0.08 per share. Bookings to backlog totaled $273 million for the quarter, which included a $136 million, two-year deal with an intelligence community customer.

Image source: Getty Images.

KeyW paid down $11.7 million of debt during the quarter, and closed it with $17.3 million of cash and equivalents. The company is in compliance with all relevant debt covenants.

Now what

"KeyW's third quarter produced solid bookings, and our pipeline remains robust; however, our financial results for the third quarter of 2017 fell short of expectations and that does not meet the standard I expect here at KeyW. Our third quarter shortfall was primarily due to product and service solutions awards that moved out to the fourth quarter of 2017 as well as 2018," said CEO Bill Weber.

The national security solutions company reduced its guidance for  2017. Revenue for the year is now expected to fall in a range of $435 million to $445 million, down from a prior range of $455 million to $485 million. Adjusted EBITDA margin for 2017 should be 8% to 9%, down from a prior forecast of 10% to 11%.

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Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.