-- Revenue of $318 Million -- Diluted EPS of $0.26 FAIRFAX, Va.,
May 2 /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 third quarter of fiscal year 2007, which
ended March 31, 2007. Revenue for the quarter was $317.6 million,
up 7% from $296.1 million in the March 2006 quarter. Operating
income for the quarter was $22.8 million, and net income was $15.0
million. Diluted earnings per share for the quarter were $0.26. SRA
President and Chief Executive Officer Stan Sloane stated, "I'm
pleased to have the opportunity to lead SRA into its next stage of
growth and development. The Company has an outstanding culture and
a reputation for excellence, and I plan to leverage those qualities
as we enter new areas of the market." Chief Financial Officer
Stephen Hughes added, "Margins improved compared with last quarter
based on solid contract execution and good cost management.
Operating cash flows were also strong, totaling more than 1.7 times
operating income. Market conditions remain challenging in the short
term, but we're driving efficiency in other areas of the Company to
fund new business development. This will enable us to continue
building a strong platform for growth when the environment
improves." New Business Awards The Company won new business in the
third quarter with potential value of $172 million, if all options
are exercised. The Company's backlog of signed business orders is
$3.5 billion, an increase of 9% over the March 2006 quarter. Major
highlights of recent competitive contract awards include: -- U.S.
Marine Corps, Integrated Digital Environment. Under this five-
year, $33 million contract, SRA will create a collaborative digital
workspace for the Marine Corps Systems Command. The Company will
integrate commercial off-the-shelf (COTS) products and provide
services ranging from requirements analysis to systems engineering
in order to develop a secure, accessible solution. -- State of
California, Office of Homeland Security (OHS). SRA has received an
extension and expansion of its existing work for the California
OHS. The additional $30 million contract value will support a
broader range of counterterrorism data collection and analysis
through 2010. -- Federal Aviation Administration (FAA), ABA
Financial Support Services. SRA was awarded a role as a
subcontractor to the Joint Venture of Tantus Technologies and
OnPoint Consulting on the $89 million small business contract for
ABA Financial Support Services at the FAA. The Company will provide
COTS integration and development services to enhance the agency's
financial management systems and processes. SRA was also awarded
several multiple-award, indefinite delivery, indefinite quantity
(ID/IQ) contracts in the March quarter. These wins are not included
in the Company's quarterly bookings figure, but they provide a
solid foundation for future growth. -- Defense Information Systems
Agency (DISA), Encore II. SRA was named one of the six large
business awardees of the Encore II contract, which has a $12.2
billion ceiling value over ten years. The award has been protested,
and task orders will not be released under the contract until the
matter is resolved. -- Office of Personnel Management (OPM),
Training and Management Assistance. The OPM awarded SRA one of its
Training and Management Assistance contracts to provide strategic
human capital and learning solutions. Under this vehicle, the
Company will deliver a full range of customized training and human
resource management solutions to maximize organizational
performance government-wide. -- General Services Administration
(GSA), Networx Universal. SRA is a member of the AT&T team that
was awarded one of three positions on the Networx Universal
contract, which has a $20 billion ceiling value over 10 years. SRA
will work with AT&T to compete for task orders to provide
telecommunications, networking and other technology services. In
addition, as of March 31, 2007, the Company has approximately $1.6
billion of pending bids outstanding. Share Repurchase Authorization
The Company also announced that its Board of Directors has given
the CEO, on behalf of the Company, the authority to repurchase up
to $40 million of the Company's class A common stock. Any such
repurchases would be executed from time to time on the open market
or in privately negotiated transactions, at the CEO's discretion.
"We believe our stock represents an attractive long-term
investment, so we appreciate the flexibility to use a portion of
our cash for share repurchases," said Sloane. "Acquisitions are
currently our top priority for capital deployment, but we'll
continue to evaluate when and if a share repurchase makes sense."
The timing and amount of any shares repurchased would be determined
based on the evaluation of market conditions and other factors.
Repurchases could also be made under a Rule 10b5-1 plan, which
would permit shares to be repurchased when the Company might
otherwise be precluded from doing so under insider trading laws. If
and when initiated, a repurchase could be suspended or discontinued
at any time. Any repurchased shares would be available for use in
connection with the Company's stock incentive plan and for other
corporate purposes. Forward Guidance The Company is updating its
forward guidance for the fourth quarter and full 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
does not include any effect for acquisitions SRA might make in the
future. Measure Quarter Ending Fiscal Year Ending June 30, 2007
June 30, 2007 Revenue (in millions) $310-$330 $1,253-$1,273 Diluted
EPS $0.26-$0.27 $1.06-$1.07 Diluted Share Equivalents (in millions)
58.9 58.4 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 eight consecutive years. The Company's
5,200 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 contracts and work to be performed, the CEO's
authority to repurchase shares of class A common stock on behalf of
the Company, the potential use of any repurchased shares and the
source of funding, 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; the market price of the company's stock
prevailing from time to time; the nature of other investment
opportunities presented to the company from time to time; the
company's cash flows from operations; and other factors discussed
in our latest quarterly report on Form 10-Q filed with the
Securities and Exchange Commission on February 2, 2007. In
addition, the forward-looking statements included in this press
release represent our views as of May 2, 2007. 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 May 2, 2007. Condensed Consolidated Statements of
Operations (Unaudited) (in thousands, except share and per share
amounts) Three Months Ended Nine Months Ended 31-Mar-07 31-Mar-06
31-Mar-07 31-Mar-06 Revenue $317,586 $296,098 $942,665 $882,106
Operating costs and expenses: Cost of services 237,684 220,256
710,485 661,500 Selling, general and administrative 51,588 48,134
148,921 137,237 Depreciation and amortization 5,535 4,689 15,585
13,342 Total operating costs and expenses 294,807 273,079 874,991
812,079 Operating income 22,779 23,019 67,674 70,027 Interest
income, net 1,173 826 4,487 2,596 Gain on sale of Mantas, Inc. - -
3,674 - Income before taxes 23,952 23,845 75,835 72,623 Provision
for income taxes 8,979 9,062 29,058 27,547 Net income $14,973
$14,783 $46,777 $45,076 Earnings per share: Basic $0.26 $0.27 $0.83
$0.82 Diluted $0.26 $0.26 $0.80 $0.78 Weighted-average shares:
Basic 56,696,382 55,371,625 56,299,701 54,815,017 Diluted
58,383,305 57,947,723 58,261,389 57,627,037 Condensed Consolidated
Balance Sheets (Unaudited) (in thousands) As of 3/31/07 6/30/06
Current assets: Cash and cash equivalents $163,905 $173,564
Short-term investments 85 9,834 Accounts receivable, net 257,741
266,160 Prepaid expenses and other 38,673 23,382 Deferred income
taxes, current 2,022 4,839 Total current assets 462,426 477,779
Property and equipment, net 38,083 37,462 Other assets: Goodwill
256,762 169,334 Identified intangibles, net 32,718 26,169 Deferred
income taxes, noncurrent 6,904 3,462 Deferred compensation trust
8,226 7,768 Total other assets 304,610 206,733 Total assets
$805,119 $721,974 Current liabilities: Accounts payable and accrued
expenses $115,405 $115,545 Accrued payroll and employee benefits
70,992 59,463 Billings in excess of revenue recognized 2,812 3,204
Total current liabilities 189,209 178,212 Long-term liabilities:
Other long-term liabilities 12,163 10,465 Total long-term
liabilities 12,163 10,465 Total liabilities 201,372 188,677
Stockholders' equity 603,747 533,297 Total liabilities and
stockholders' equity $805,119 $721,974 Condensed Consolidated
Statements of Cash Flows (Unaudited) (in thousands) Nine Months
Ended 3/31/07 3/31/06 Cash flows from operating activities: Net
income $46,777 $45,076 Adjustments to reconcile net income to net
cash provided by operating activities: Depreciation and
amortization 15,585 13,342 Stock-based compensation 8,451 9,742
Deferred income taxes (625) 602 Gain on sale of Mantas, Inc.
(3,674) - Working capital changes 7,708 (12,487) Net cash provided
by operating activities 74,222 56,275 Cash flows from investing
activities: Capital expenditures (10,289) (7,782) Sales and
maturities of investments 9,749 20,696 Acquisition of Galaxy
Scientific Corporation, net of cash acquired - (95,645) Acquisition
of Spectrum Solutions Group, net of cash acquired (8,000) (8,802)
Acquisition of RABA Technologies, net of cash acquired (94,237) -
Proceeds from sale of Mantas, Inc. 3,674 - Net cash used in
investing activities (99,103) (91,533) Cash flows from financing
activities: Issuance of common stock 8,057 11,053 Tax benefits of
stock option exercises 6,004 11,711 Reissuance of treasury stock
1,245 3,990 Purchase of treasury stock (84) - Net cash provided by
financing activities 15,222 26,754 Net decrease in cash and cash
equivalents (9,659) (8,504) Cash and cash equivalents, beginning of
period 173,564 162,973 Cash and cash equivalents, end of period
$163,905 $154,469 Supplemental disclosures of cash flow
information: Cash paid during the period: Income taxes $30,820
$22,229 Cash received during the period: Interest $3,297 $2,966
Income taxes $438 $766 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
3/31/07 3/31/06 %Increase Total Revenue, as reported $317,586
$296,098 7.3% Plus: Revenue from acquired companies for the
comparable prior year period - 15,660 Organic Revenue $317,586
$311,758 1.9% DATASOURCE: SRA International, Inc. CONTACT: David
Keffer, Director, Investor Relations, +1-703-502-7731, , or Stephen
Hughes, Executive Vice President and CFO, +1-703-502-7732, , both
of SRA International, Inc. Web site: http://www.sra.com/
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