* Revenue of $304 Million, Up 8% From September 2005 Quarter
FAIRFAX, Va., Nov. 1 /PRNewswire-FirstCall/ -- SRA International,
Inc. (NYSE:SRX), a leading provider of technology and strategic
consulting services and solutions to federal government
organizations, today announced operating results for the first
quarter of fiscal year 2007, which ended September 30, 2006.
Revenue for the quarter was $304.0 million, up 8% from $280.7
million in the September 2005 quarter. Operating income for the
quarter was $22.8 million, slightly better than the September 2005
quarter. Net income for the quarter was $15.1 million, up 5% from
$14.4 million in the September 2005 quarter. Diluted earnings per
share for the quarter were $0.26, up 4% from $0.25 in the September
2005 quarter. On October 25, 2006, the Company completed its
acquisition of RABA Technologies, LLC, a privately held provider of
high-end technical services to intelligence community customers.
Also in October, Mantas Inc., a commercial company spun off by SRA
in 2001, was sold to i-flex solutions, an information technology
(IT) services firm. As a minority shareholder in Mantas, SRA will
recognize a pre-tax gain on the sale of more than $3.6 million in
the December 2006 quarter. Renny DiPentima, SRA President and Chief
Executive Officer, stated, "We're pleased that we exceeded our
revenue forecast and met our EPS guidance for the September
quarter. Our record new business wins and our large volume of bid
proposals still outstanding reflect strong returns on our
investments in business development. We're also looking forward to
working with the RABA Technologies team to enhance our presence in
the intelligence community." Chief Financial Officer Stephen Hughes
added, "We delivered solid operating results, and we continued to
improve our cash management. Days sales outstanding improved from
81 days to 76 days, and cash flows from operations were about three
times net income." New Business Awards The Company won new business
in the first quarter with potential value of $867 million, if all
options are exercised. The Company's backlog of signed business
orders is $3.6 billion, an increase of 13% over the September 2005
quarter. Major highlights of competitive contract awards during the
quarter include: * U.S. Army National Guard, Enterprise Operations
and Security Services. SRA won a five-year, $173 million contract
to continue delivering enterprise operations and security services
for the nationwide network of the Army National Guard. Under this
task order, SRA will manage the communications infrastructure that
delivers information in support of command and control,
mobilization, readiness training and distance learning. * U.S. Army
Communications-Electronics Command (CECOM), Rapid Response
Contract. SRA received twelve task order awards under the CECOM
Rapid Response contract (CR2), which enables quick deployment of
critical systems to satisfy the nation's security, defense and
business needs. The total value of CR2 task orders awarded to SRA
in the September quarter was $112 million. * U.S. Department of
Homeland Security. The Company was awarded three contracts to
deliver IT and professional services for the Department of Homeland
Security. The combined value of these contracts, which include
program support and consulting services for different areas of the
Department, was approximately $89 million. * U.S. Department of
Defense, Defense Technical Information Center. SRA won a five-year,
$31 million contract to provide information technology in support
of the Director of Defense Research and Engineering at the Defense
Technical Information Center. Services will include program
management, business process reengineering, enterprise architecture
and data standardization. * Pension Benefit Guaranty Corporation
(PBGC), Premium and Practitioner System. PBGC awarded SRA a
six-year, $12 million contract to design, develop and implement a
software system that will process payments for the pension plans it
insures. The program will involve customization and implementation
of commercial off-the-shelf software products. * U.S. Department of
the Treasury, Internal Revenue Service (IRS). SRA's largest
subcontract win in the first quarter was a task order under the
Total Information Processing Support Services-3 contract (TIPSS-3),
in support of the IRS's Joint Operations Center. With a value of
$56 million over five years, this win enables the Company to
continue performing IT and business process support services for
this valuable customer. SRA was also awarded several
multiple-award, indefinite delivery, indefinite quantity (ID/IQ)
contracts in the September quarter. These wins do not contribute to
the Company's quarterly bookings figure, but they provide a solid
foundation for future growth. * U.S. Department of Health and Human
Services, Centers for Medicare and Medicaid Services (CMS). The
Department of Health and Human Services selected SRA as a
participant on a ten-year ID/IQ contract with a potential value for
all participants of $1 billion. Services will include the
development, integration, operations and maintenance of systems and
applications for the Medicare beneficiary contact center. * U.S.
Office of Personnel Management (OPM). The Company won a BPA to
provide the OPM with technology support services for agency-wide
program initiatives in seven different technical areas, including
enterprise architecture and software development. SRA has already
won an $8 million network services task order, the first awarded
under this contract. * U.S. Agency for International Development
(USAID). SRA was an awardee of a USAID BPA called Principal
Resource for Information Management Enterprise-wide (Prime) 3.4.
This $300 million contract will cover a range of software
development and support services. SRA also received an additional
award of $73 million on the Prime 2.2 contract in the September
quarter, which will enable the Company to continue performing work
on existing tasks for the next year or more. In addition, as of
September 30, 2006, the Company has approximately $1.4 billion of
pending bids outstanding. Forward Guidance The Company is issuing
guidance for the second quarter and fiscal year 2007. The table
below represents management's current expectations about the
Company's future financial performance, based on information
available at this time. The forward guidance in the table below
includes the effect of the October 25, 2006 acquisition of RABA
Technologies, but it does not include any effect for acquisitions
SRA might make in the future. Also note that the December quarter
and fiscal year 2007 EPS guidance includes the one-time, pre-tax
gain of more than $3.6 million related to the sale of Mantas Inc.
noted above. Measure Quarter Ending Fiscal Year Ending December 31,
2006 June 30, 2007 Revenue (in millions) $310-$320 $1,330-$1,370
Diluted EPS At least $0.30 $1.20-$1.28 Diluted Share Equivalents
(in millions) 58.5 58.7 About SRA International, Inc. SRA is a
leading provider of technology and strategic consulting services
and solutions -- including systems design, development, and
integration; and outsourcing and managed services -- to clients in
national security, civil government, and health care and public
health markets. The Company also delivers business solutions for
contingency and disaster response planning, information assurance,
business intelligence, environmental strategies, enterprise
architecture, infrastructure management, and wireless integration.
FORTUNE(R) magazine has chosen SRA as one of the "100 Best
Companies to Work For" for seven consecutive years. The Company's
5,100 employees serve clients from its headquarters in Fairfax,
Virginia, and offices across the country. For additional
information on SRA, please visit http://www.sra.com/. Any
statements in this press release about future expectations, plans,
and prospects for SRA, including statements about the estimated
value of the contract and work to be performed, and other
statements containing the words "estimates," "believes,"
"anticipates," "plans," "expects," "will," and similar expressions,
constitute forward-looking statements within the meaning of The
Private Securities Litigation Reform Act of 1995. Actual results
may differ materially from those indicated by such forward-looking
statements as a result of various important factors, including: our
dependence on our contracts with federal government agencies,
particularly within the U.S. Department of Defense, for
substantially all of our revenue; our dependence on our GSA
schedule contracts and our position as a prime contractor on
government-wide acquisition contracts to grow our business; our
ability to attract and retain skilled employees; any reductions in
or reallocations of the U.S. defense budget or the budgets for
civil government agencies; and other factors discussed in our
latest quarterly report on Form 10-K filed with the Securities and
Exchange Commission on August 25, 2006. In addition, the
forward-looking statements included in this press release represent
our views as of November 1, 2006. We anticipate that subsequent
events and developments will cause our views to change. However,
while we may elect to update these forward-looking statements at
some point in the future, we specifically disclaim any obligation
to do so. These forward-looking statements should not be relied
upon as representing our views as of any date subsequent to
November 1, 2006. Condensed Consolidated Statements of Operations
(Unaudited) (in thousands, except share and per share amounts)
Three Months Ended 9/30/06 9/30/05 Revenue $304,034 $280,695
Operating costs and expenses: Cost of services 228,059 210,240
Selling, general and administrative 48,404 43,657 Depreciation and
amortization 4,740 4,010 Total operating costs and expenses 281,203
257,907 Operating income 22,831 22,788 Interest income, net 1,843
733 Income before taxes 24,674 23,521 Provision for income taxes
9,553 9,131 Net income $15,121 $14,390 Earnings per share: Basic
$0.27 $0.27 Diluted $0.26 $0.25 Weighted-average shares: Basic
55,981,631 54,263,817 Diluted 57,964,502 57,408,033 Condensed
Consolidated Balance Sheets (Unaudited) (in thousands) As of
9/30/06 6/30/06 Current assets: Cash and cash equivalents $222,139
$173,564 Short-term investments 4,912 9,834 Accounts receivable,
net 252,861 266,160 Prepaid expenses and other 21,394 23,382
Deferred income taxes, current 3,950 4,839 Total current assets
505,256 477,779 Property and equipment, net 37,663 37,462 Other
assets: Goodwill 169,334 169,334 Identified intangibles, net 24,880
26,169 Deferred income taxes, noncurrent 4,901 3,462 Deferred
compensation trust 8,088 7,768 Total other assets 207,203 206,733
Total assets $750,122 $721,974 Current liabilities: Accounts
payable and accrued expenses $114,003 $115,545 Accrued payroll and
employee benefits 67,577 59,463 Billings in excess of revenue
recognized 2,629 3,204 Total current liabilities 184,209 178,212
Long-term liabilities: Other long-term liabilities 11,636 10,465
Total long-term liabilities 11,636 10,465 Total liabilities 195,845
188,677 Stockholders' equity 554,277 533,297 Total liabilities and
stockholders' equity $750,122 $721,974 Condensed Consolidated
Statements of Cash Flows (Unaudited) (in thousands) Three Months
Ended 9/30/06 9/30/05 Cash flows from operating activities: Net
income $15,121 $14,390 Adjustments to reconcile net income to net
cash provided by operating activities: Depreciation and
amortization 4,740 4,010 Stock-based compensation 3,275 3,080
Deferred income taxes (550) (1,889) Working capital changes 22,135
(7,491) Net cash provided by operating activities 44,721 12,100
Cash flows from investing activities: Capital expenditures (3,652)
(2,775) Sales and maturities of investments 4,922 2,636 Acquisition
of Galaxy Scientific Corporation, net of cash acquired - (95,645)
Net cash provided by (used in) investing activities 1,270 (95,784)
Cash flows from financing activities: Issuance of common stock
1,689 4,727 Tax benefits of stock option exercises 895 4,438 Net
cash provided by financing activities 2,584 9,165 Net increase
(decrease) in cash and cash equivalents 48,575 (74,519) Cash and
cash equivalents, beginning of period 173,564 162,973 Cash and cash
equivalents, end of period $222,139 $88,454 Supplemental
disclosures of cash flow information: Cash paid during the period:
Income taxes $7,221 $2,572 Cash received during the period:
Interest $1,616 $983 Income taxes $314 $16 Reconciliation Between
Total Revenue Growth and Organic Revenue Growth (Unaudited) (in
thousands) Organic revenue growth, as presented, measures revenue
growth adjusted for the impact of acquisitions. The Company
believes that this non-GAAP financial measure provides useful
information because it allows investors to better assess the
underlying growth rate of the Company's existing business. This
non-GAAP financial measure should not be considered in isolation or
as a substitute for measures of performance prepared in accordance
with GAAP. Three Months Ended 9/30/06 9/30/05 Growth Total Revenue,
as reported $304,034 $280,695 8.3% Plus: Revenue from acquired
companies for the comparable prior year period - 4,713 Organic
Revenue $304,034 $285,408 6.5% DATASOURCE: SRA International, Inc.
CONTACT: David Keffer, Director, Investor Relations,
+1-703-502-7731, , or Stephen Hughes, Executive Vice President and
CFO, +1-703-227-8350, , both of SRA International, Inc. Web site:
http://www.sra.com/
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