ManTech International Corporation (Nasdaq:MANT), a leading provider
of innovative technologies and solutions for mission-critical
national security programs, today announced financial results for
the fourth quarter and full fiscal year 2018, which ended
December 31, 2018.
"Our talented employees' unrelenting support of our
customers' missions led to another year of exceptional performance.
For the third consecutive year, ManTech organically grew its
revenues, increased profits, delivered strong cash flow and
expanded backlog. We continued to win landmark programs to provide
customers with differentiated solutions across cyber, enterprise IT
and systems engineering. As we move into 2019, the market
opportunity remains robust and we are well positioned to provide
continued thought leadership in support of our customers," said
ManTech President and Chief Executive Officer Kevin M.
Phillips.
Summary Operating Results
|
Three Months Ended December 31, |
|
Year Ended December 31, |
(In Millions Except Per
Share Amounts) |
2018 |
|
2017 |
|
2018 |
|
2017 |
Revenue |
$497.1 |
|
$462.3 |
|
$1,958.6 |
|
$1,717.0 |
Operating Income |
$28.6 |
|
$25.7 |
|
$112.7 |
|
$98.2 |
Operating Income
Margin |
5.8% |
|
5.6% |
|
5.8% |
|
5.7% |
Depreciation and
Amortization |
$12.5 |
|
$10.4 |
|
$52.6 |
|
$33.8 |
Depreciation and
Amortization % of Revenue |
2.5% |
|
2.3% |
|
2.7% |
|
2.0% |
Net Income |
$20.2 |
|
$68.4 |
|
$82.1 |
|
$114.1 |
Diluted Earnings Per
Share |
$0.50 |
|
$1.73 |
|
$2.06 |
|
$2.91 |
Adjusted Net Income
(1) |
$20.2 |
|
$17.8 |
|
$82.1 |
|
$63.5 |
Adjusted Diluted
Earnings Per Share (1) |
$0.50 |
|
$0.45 |
|
$2.06 |
|
$1.62 |
(1) Information about ManTech's use of non-GAAP
financial information is provided under "Non-GAAP Financial
Measures."
As a result of increased demand for our services
and solutions, revenues for the quarter were $497.1 million, up 8%
organically compared to the fourth quarter of 2017. Revenues for
the year were $1.96 billion, up 14% compared to 2017. For the year,
revenue growth was driven by a combination of organic expansion
from recent contract awards and acquisitions.
Operating income was $28.6 million for the quarter,
up 11% compared to the fourth quarter of 2017. For the year,
operating income was $112.7 million, up 15% compared to 2017.
Operating margin was up compared to the fourth quarter of 2017 and
also up for the year compared to 2017.
The 2017 fourth quarter results included a tax
benefit of $51 million from the re-measurement of our existing
deferred tax assets and liabilities due to the enactment of the Tax
Cuts and Jobs Act of 2017. This re-measurement caused by the Tax
Act in 2017, a one-time item, has been removed from adjusted net
income and adjusted earnings per share for 2017, however, no
adjustments have been made to 2018. Net income was up 14% compared
to adjusted net income from the fourth quarter of 2017, and for the
year net income was up 29% compared to 2017 adjusted net income.
Diluted earnings per share was up 11% compared to adjusted diluted
earnings per share from the fourth quarter of 2017 and for the year
diluted earnings per share was up 27% compared to 2017 adjusted
diluted earnings per share.
Cash Management and Capital
Deployment
|
Three Months Ended December 31, |
|
Year Ended December 31, |
(Dollars In
Millions) |
2018 |
|
2017 |
|
2018 |
|
2017 |
Net Income |
$20.2 |
|
$68.4 |
|
$82.1 |
|
$114.1 |
Cash Flow From (Used
In) Operations |
-$0.8 |
|
$37.7 |
|
$93.4 |
|
$153.0 |
Operating Cash Flow
Multiple of Net Income |
—x |
|
0.6x |
|
1.1x |
|
1.3x |
Capital
Expenditures |
$5.9 |
|
$28.0 |
|
$35.1 |
|
$38.9 |
Days Sales Outstanding
(DSO) |
73 |
|
61 |
|
|
|
|
Cash and Cash
Equivalents, End of Period |
$5.3 |
|
$9.5 |
|
|
|
|
Current and Long Term
Debt, End of Period |
$7.5 |
|
$31.0 |
|
|
|
|
For the year, cash flow from operations totaled $93
million. Days sales outstanding (DSO) were 73 days, an increase of
12 days compared to the fourth quarter of 2017.
During the quarter, the Company paid $9.9 million,
or $0.25 per share, as part of its regular cash dividend program to
its common stockholders of record as of December 7, 2018. As
of December 31, 2018, the Company had $5.3 million in cash and
cash equivalents and $7.5 million of outstanding borrowings on its
$500 million revolving-credit facility, which provides the Company
with ample financial capacity to pursue acquisitions and issue
dividends while maintaining a strong balance sheet.
The Company has increased the amount of its
quarterly cash dividend from $0.25 to $0.27 per share. The Board of
Directors has declared a quarterly dividend of $0.27 to be paid on
March 22, 2019 to all common stockholders of record as of
March 8, 2019, as part of its regular quarterly cash dividend
program. Based on the average of recent trading prices the new
annual yield is approximately 1.9%. Future declarations of
dividends and their record and payment dates are subject to the
final determination of ManTech's Board of Directors.
Contract Awards
Contract awards (bookings) totaled $610 million in
the quarter, representing a book-to-bill ratio of 1.2. Nearly 80%
of the awards won in the quarter were with classified customers for
recompetes and contract expansions. For the year, contract awards
totaled $3.4 billion for a book-to-bill ratio of 1.8. In 2018,
approximately 62% of the awards were for new business. Book-to-bill
ratios for both the quarter and the year reflect a healthy awards
environment and ManTech's strong market positioning. Proposal
activity remains robust and the Company expects contract awards to
continue at a healthy pace in 2019.
Forward Guidance
The Company expects to achieve revenue, net income,
and diluted earnings per share in 2019 as specified in the table
below.
Measure |
Fiscal 2019
Guidance |
Revenue (billion) |
$2.05B
- $2.15B |
Net
Income (million) |
$86.9M
- $92.1M |
Diluted Earnings per Share |
$2.15
- $2.28 |
The guidance is supported by a backlog of business
at the end of the year of $8.4 billion, including $1.3 billion of
funded backlog, as well as a strong pipeline of new opportunities
and improving government funding levels.
ManTech Chief Financial Officer Judith L. Bjornaas
said, “I am pleased with our strong finish to 2018. The momentum of
the business gives me confidence in forecasting continued growth in
2019. We will remain focused on program execution excellence and
delivering solutions that meet our customers' mission critical
needs."
Conference Call
ManTech executive management will hold a conference
call on February 20, 2019, at 5 p.m. Eastern to discuss the
financial results and outlook and answer questions. Analysts may
participate on the conference call by dialing (877) 638-9567
(domestic) or (253) 237-1032 (international) and entering passcode
3146346. The conference call will be webcast simultaneously to the
public through a link on the Investor Relations section of the
ManTech website (http://investor.mantech.com). A replay of the
conference call will be available on the ManTech website
approximately 2 hours after the conclusion of the conference
call.
About ManTech International
Corporation
ManTech provides mission-focused technology
solutions and services for U.S. defense, intelligence community and
federal civilian agencies. In business more than 50 years, we
excel in full-spectrum cyber, data collection & analytics,
enterprise IT, systems and software engineering solutions that
support national and homeland security. Additional information
about ManTech can be found at www.mantech.com.
Forward-Looking Information
Statements and assumptions made in this press
release, which do not address historical facts, constitute
“forward-looking” statements that ManTech believes to be within the
definition in the Private Securities Litigation Reform Act of 1995
and involve risks and uncertainties, many of which are outside of
our control. Words such as “may,” “will,” “expect,” “intend,”
“anticipate,” “believe,” or “estimate,” or the negative of these
terms or words of similar import, are intended to identify
forward-looking statements.
These forward-looking statements are inherently
subject to risks and uncertainties, and actual results and outcomes
may differ materially from the results and outcomes we anticipate.
Factors that could cause actual results to differ materially from
the results we anticipate include, but are not limited to, the
following: failure to maintain our relationship with the U.S.
government, or compete effectively for contract awards; inability
to recruit and retain sufficient number of employees with
specialized skill sets or necessary security clearances who are in
great demand and limited supply; adverse changes in U.S. government
spending for programs we support, whether due to changing mission
priorities, socio-economic policies, cost reduction initiatives by
our customers, or other federal budget constraints generally;
disruption of our business or damage to our reputation resulting
from security breaches in customer systems, internal systems
(including as a result of cyber or other security threats), or
employee misconduct; failure to realize the full amount of our
backlog or adverse changes in the timing of receipt of revenues
under contracts included in backlog; issues relating to competing
effectively for awards procured through the competitive bidding
process; failure to obtain option awards, task orders or funding
under contracts; renegotiation, modification or termination of our
contracts, or failure to perform in conformity with contract terms
or our expectations; failure to successfully integrate acquired
companies or businesses into our operations or to realize any
accretive or synergistic effects from such acquisitions;
non-compliance with, or adverse changes in, complex U.S. government
laws, procurement regulations or processes; and adverse results of
U.S. government audits or other investigations of our government
contracts. These and other risk factors are more fully discussed in
the section entitled "Risk Factors" in ManTech's Annual Report on
Form 10-K previously filed with the Securities and Exchange
Commission on Feb. 23, 2018, Item 1A of Part II of our Quarterly
Reports on Form 10-Q, and, from time to time, in ManTech's other
filings with the Securities and Exchange Commission.
The forward-looking statements included herein are
only made as of the date of this press release, and ManTech
undertakes no obligation to publicly update any of the
forward-looking statements made herein, whether as a result of new
information, subsequent events or circumstances, changes in
expectations or otherwise.
MANTECH INTERNATIONAL
CORPORATIONCONSOLIDATED BALANCE
SHEETS(In Thousands Except Share and Per Share
Amounts)
|
(unaudited) |
|
December 31, |
|
2018 |
|
2017 |
ASSETS |
|
|
|
Cash and cash
equivalents |
$ |
5,294 |
|
|
$ |
9,451 |
|
Receivables—net |
405,378 |
|
|
311,410 |
|
Prepaid expenses |
23,398 |
|
|
22,933 |
|
Other current
assets |
5,915 |
|
|
23,370 |
|
Total
Current Assets |
439,985 |
|
|
367,164 |
|
Goodwill |
1,085,806 |
|
|
1,084,560 |
|
Other intangible
assets—net |
171,962 |
|
|
194,348 |
|
Property and
equipment—net |
51,427 |
|
|
46,082 |
|
Employee supplemental
savings plan assets |
30,501 |
|
|
33,555 |
|
Investments |
11,830 |
|
|
11,843 |
|
Other assets |
12,360 |
|
|
6,923 |
|
TOTAL
ASSETS |
$ |
1,803,871 |
|
|
$ |
1,744,475 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
LIABILITIES |
|
|
|
Accounts payable and
accrued expenses |
$ |
126,066 |
|
|
$ |
122,405 |
|
Accrued salaries and
related expenses |
89,058 |
|
|
87,064 |
|
Contract
liabilities |
28,209 |
|
|
18,816 |
|
Total
Current Liabilities |
243,333 |
|
|
228,285 |
|
Long term debt |
7,500 |
|
|
31,000 |
|
Deferred income
taxes |
108,956 |
|
|
97,194 |
|
Accrued retirement |
30,999 |
|
|
34,517 |
|
Other long-term
liabilities |
11,889 |
|
|
10,505 |
|
TOTAL
LIABILITIES |
402,677 |
|
|
401,501 |
|
COMMITMENTS AND
CONTINGENCIES |
|
|
|
STOCKHOLDERS'
EQUITY |
|
|
|
Common stock, Class
A—$0.01 par value; 150,000,000 shares authorized; 26,817,513 and
26,285,773 shares issued at December 31, 2018 and 2017; 26,573,400
and 26,041,660 shares outstanding at December 31, 2018 and
2017 |
268 |
|
|
263 |
|
Common stock, Class
B—$0.01 par value; 50,000,000 shares authorized; 13,188,045 and
13,189,245 shares issued and outstanding at December 31, 2018 and
2017 |
132 |
|
|
132 |
|
Additional paid-in
capital |
506,970 |
|
|
492,030 |
|
Treasury stock, 244,113
and 244,113 shares at cost at December 31, 2018 and 2017 |
(9,158 |
) |
|
(9,158 |
) |
Retained earnings |
903,084 |
|
|
860,027 |
|
Accumulated other
comprehensive loss |
(102 |
) |
|
(320 |
) |
TOTAL
STOCKHOLDERS' EQUITY |
1,401,194 |
|
|
1,342,974 |
|
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY |
$ |
1,803,871 |
|
|
$ |
1,744,475 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MANTECH INTERNATIONAL
CORPORATIONCONSOLIDATED STATEMENTS OF
INCOME(In Thousands Except Per Share
Amounts)
|
(unaudited) |
|
(unaudited) |
|
Three months ended December 31, |
|
Year Ended December 31, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
REVENUES |
$ |
497,072 |
|
|
$ |
462,285 |
|
|
$ |
1,958,557 |
|
|
$ |
1,717,018 |
|
Cost of
services |
427,595 |
|
|
394,592 |
|
|
1,678,100 |
|
|
1,463,599 |
|
General
and administrative expenses |
40,884 |
|
|
41,964 |
|
|
167,715 |
|
|
155,225 |
|
OPERATING
INCOME |
28,593 |
|
|
25,729 |
|
|
112,742 |
|
|
98,194 |
|
Interest
expense |
(371 |
) |
|
(510 |
) |
|
(2,378 |
) |
|
(1,375 |
) |
Interest
income |
76 |
|
|
15 |
|
|
161 |
|
|
104 |
|
Other
income, net |
17 |
|
|
84 |
|
|
80 |
|
|
319 |
|
INCOME FROM
OPERATIONS BEFORE INCOME TAXES AND EQUITY METHOD
INVESTMENTS |
28,315 |
|
|
25,318 |
|
|
110,605 |
|
|
97,242 |
|
(Provision) benefit for
income taxes |
(8,118 |
) |
|
43,089 |
|
|
(28,530 |
) |
|
16,859 |
|
Equity in earnings
(losses) of unconsolidated subsidiaries |
(5 |
) |
|
(37 |
) |
|
22 |
|
|
40 |
|
NET
INCOME |
$ |
20,192 |
|
|
$ |
68,370 |
|
|
$ |
82,097 |
|
|
$ |
114,141 |
|
|
|
|
|
|
|
|
|
BASIC EARNINGS
PER SHARE: |
|
|
|
|
|
|
|
Class A
common stock |
$ |
0.51 |
|
|
$ |
1.75 |
|
|
$ |
2.08 |
|
|
$ |
2.94 |
|
Class B
common stock |
$ |
0.51 |
|
|
$ |
1.75 |
|
|
$ |
2.08 |
|
|
$ |
2.94 |
|
DILUTED
EARNINGS PER SHARE: |
|
|
|
|
|
|
|
Class A
common stock |
$ |
0.50 |
|
|
$ |
1.73 |
|
|
$ |
2.06 |
|
|
$ |
2.91 |
|
Class B
common stock |
$ |
0.50 |
|
|
$ |
1.73 |
|
|
$ |
2.06 |
|
|
$ |
2.91 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MANTECH INTERNATIONAL
CORPORATIONCONSOLIDATED STATEMENTS OF CASH
FLOWS(In Thousands)
|
(unaudited) |
|
Year endedDecember
31, |
|
2018 |
|
2017 |
CASH FLOWS FROM
(USED IN) OPERATING ACTIVITIES: |
|
|
|
Net income |
$ |
82,097 |
|
|
$ |
114,141 |
|
Adjustments to
reconcile net income to net cash flows from operating
activities: |
|
|
|
Depreciation and amortization |
52,569 |
|
|
33,792 |
|
Deferred
income taxes |
11,762 |
|
|
(24,815 |
) |
Stock-based compensation expense |
5,073 |
|
|
6,319 |
|
Loss on
sale and retirement of property and equipment |
75 |
|
|
76 |
|
Equity in
earnings of unconsolidated subsidiaries |
(22 |
) |
|
(40 |
) |
Change in assets and
liabilities—net of effects from acquired businesses: |
|
|
|
Receivables-net |
(87,098 |
) |
|
18,643 |
|
Prepaid
expenses |
(613 |
) |
|
(3,619 |
) |
Other
current assets |
17,411 |
|
|
(2,622 |
) |
Employee
supplemental savings plan asset |
1,754 |
|
|
(4,172 |
) |
Accounts
payable and accrued expenses |
5,327 |
|
|
(541 |
) |
Accrued
salaries and related expenses |
2,095 |
|
|
13,095 |
|
Contract
liabilities |
6,110 |
|
|
1,177 |
|
Accrued
retirement |
(3,518 |
) |
|
3,936 |
|
Other |
417 |
|
|
(2,412 |
) |
Net cash flow
from operating activities |
93,439 |
|
|
152,958 |
|
|
|
|
|
CASH FLOWS FROM
(USED IN) INVESTING ACTIVITIES: |
|
|
|
Purchases of property
and equipment |
(30,114 |
) |
|
(31,118 |
) |
Acquisition of
businesses-net of cash acquired |
(5,279 |
) |
|
(177,193 |
) |
Deferred contract
costs |
(5,233 |
) |
|
(2,877 |
) |
Investment in
capitalized software for internal use |
(5,018 |
) |
|
(7,744 |
) |
Proceeds from corporate
owned life insurance |
1,300 |
|
|
— |
|
Payments to acquire
investments |
— |
|
|
(110 |
) |
Proceeds from sale of
property and equipment |
— |
|
|
3 |
|
Net cash used
in investing activities |
(44,344 |
) |
|
(219,039 |
) |
|
|
|
|
CASH FLOWS FROM
(USED IN) FINANCING ACTIVITIES: |
|
|
|
Borrowings under
revolving credit facility |
575,500 |
|
|
136,500 |
|
Repayments under
revolving credit facility |
(599,000 |
) |
|
(105,500 |
) |
Dividends paid |
(39,624 |
) |
|
(32,705 |
) |
Proceeds from exercise
of stock options |
12,595 |
|
|
13,624 |
|
Payment consideration
to tax authority on employee's behalf |
(2,723 |
) |
|
— |
|
Debt issuance
costs |
— |
|
|
(1,323 |
) |
Net cash flow
from (used in) financing activities |
(53,252 |
) |
|
10,596 |
|
NET CHANGE IN
CASH AND CASH EQUIVALENTS |
(4,157 |
) |
|
(55,485 |
) |
CASH AND CASH
EQUIVALENTS, BEGINNING OF PERIOD |
9,451 |
|
|
64,936 |
|
CASH AND CASH
EQUIVALENTS, END OF PERIOD |
$ |
5,294 |
|
|
$ |
9,451 |
|
Non-GAAP Financial Measures
To supplement the review of ManTech's
consolidated financial statements presented on a GAAP basis, the
Company has provided non-GAAP calculations of certain financial
measures. These measures include adjusted net income and adjusted
diluted earnings per share. Each of these calculations excludes the
impact of the re-measurement of deferred tax assets and
liabilities, and therefore is considered a non-GAAP financial
measure. We believe these are important calculations to help
investors understand actual results compared to guidance and
expectations communicated prior to the enactment of the Tax Act.
All adjustments described have been made only to the fourth quarter
of 2017 and full year 2017 results, no adjustments were made to
2018 results.
(In Thousands Except Per Share
Amounts) |
|
(unaudited) |
|
Three months ended December 31, |
|
Year Ended December 31, |
|
2017 |
|
2017 |
INCOME FROM
OPERATIONS BEFORE INCOME TAXES AND EQUITY METHOD
INVESTMENTS |
$ |
25,318 |
|
|
$ |
97,242 |
|
Benefit for income
taxes |
43,089 |
|
|
16,859 |
|
Effective
income tax rate |
(170.4 |
)% |
|
(17.3 |
)% |
Non-GAAP adjustment for
2017 Tax Cuts and Jobs Act |
(50,605 |
) |
|
(50,605 |
) |
Adjusted non-GAAP
provision for income taxes |
(7,516 |
) |
|
(33,746 |
) |
Adjusted
non-GAAP effective income tax rate |
29.7 |
% |
|
34.7 |
% |
Equity in earnings
(losses) of unconsolidated subsidiaries |
(37 |
) |
|
40 |
|
ADJUSTED NET
INCOME |
$ |
17,765 |
|
|
$ |
63,536 |
|
|
|
|
|
ADJUSTED BASIC
EARNINGS PER SHARE: |
|
|
|
Class A
common stock |
$ |
0.45 |
|
|
$ |
1.63 |
|
Class B
common stock |
$ |
0.45 |
|
|
$ |
1.63 |
|
ADJUSTED
DILUTED EARNINGS PER SHARE: |
|
|
|
Class A
common stock |
$ |
0.45 |
|
|
$ |
1.62 |
|
Class B
common stock |
$ |
0.45 |
|
|
$ |
1.62 |
|
|
|
|
|
|
|
|
|
ManTech-F
ManTech International Corporation
|
|
Investor
Relations |
|
Judy
Bjornaas |
Stephen Vather |
Executive Vice President and CFO |
Executive Director, Corporate Development |
(703)
218-8269 |
(703)
218-6093 |
Investor.Relations@ManTech.com |
Stephen.Vather@ManTech.com |
|
|
Media |
|
Sue
Cushing |
|
Vice
President, Corporate Communications |
|
(703)
814-8369 |
|
Sue.Cushing@ManTech.com |
|
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