SRX Sra International

- Revenue of $377 million and Diluted EPS of $0.25 FAIRFAX, Va., May 7 /PRNewswire-FirstCall/ -- SRA International, Inc. (NYSE:SRX), a leading provider of technology and strategic consulting services and solutions to government organizations and commercial clients, today announced operating results for the third quarter of fiscal year (FY) 2009, which ended March 31, 2009. Revenue for the quarter was $376.9 million, up 0.2% from $376.0 million in the March 2008 quarter. Operating income for the quarter was $24.1 million, for an operating margin of 6.4%. Net income was $14.3 million, for a net margin of 3.8%. Diluted earnings per share (DEPS) for the quarter were $0.25, down $0.05 year over year. SRA President and CEO Stan Sloane said, "We're pleased to have made progress in our financial results this quarter, and our contract awards indicate solid business momentum as we approach the end of fiscal year 2009. We had several key recompete wins in Q3, as well as our largest new award in over four years." Executive Vice President and COO Tim Atkin added, "We saw improvement in a number of areas in the third quarter. Program performance was solid across the company, and we effectively managed our SG&A expenses. In addition, our voluntary attrition rate reached its lowest level in over four years." Contract Awards SRA won new business in the third quarter with potential value of $805 million, if all option years are exercised. As of March 31, 2009, the company's backlog of signed business orders was $4.2 billion, up 8% year-over-year. Funded backlog increased 3% year-over-year to $808 million. Major highlights of competitive contract awards in the quarter include: -- U.S. European Command (USEUCOM) and U.S. Africa Command (USAFRICOM). SRA was awarded a five-year, $216 million task order to provide communications and information technology services in support of USEUCOM and USAFRICOM. Based in Stuttgart, Germany, the program involves life cycle support for networks, software, command, control, communication and computer systems. -- Government Accountability Office (GAO), Information Systems and Technology Services (ISTS) Phoenix Program. The company won a five-year, $117 million recompete task order to provide information technology (IT) infrastructure and software support for GAO. Under this program, SRA will continue to enhance the efficiency and security of GAO's network infrastructure. -- Naval Surface Warfare Center (NSWC), Indian Head Division. SRA was awarded a five-year, $40 million task order on the Seaport-e contract to provide command, control, communications, computers, intelligence, surveillance and reconnaissance (C4ISR) technology services for the NSWC. -- U.S. Coast Guard. The Coast Guard awarded SRA a five-year, $30 million contract to continue its implementation of a human resources software system. The system went live in 2008 and serves over 50,000 Coast Guard military retirees and annuitants. SRA was also awarded several multiple-award, indefinite delivery, indefinite quantity (ID/IQ) contracts in the March quarter. ID/IQ wins are not included in the company's quarterly bookings figure, but they provide a solid foundation for future growth. -- General Services Administration (GSA), Alliant. The company was awarded a prime position on the Alliant contract vehicle, which has a $50 billion ceiling value over ten years for all awardees. Administered by GSA, the contract will cover a full scope of IT services across the federal government. -- U.S. Army, Program Executive Office for Simulation Training and Instrumentation (PEO STRI). SRA was one of the prime contractors selected for a ten-year, $17 billion Simulation and Training Omnibus Contract (STOC II) by PEO STRI. Task orders under the contract vehicle will involve life cycle management services for military training and testing systems. Forward Guidance The company is reaffirming the revenue and earnings guidance for Fiscal Year 2009 that it issued on February 5, 2009. 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 this table does not include any effect for acquisitions that SRA might make in the future. Measure Fiscal Year (FY) Ending Change from June 30, 2009 FY 2008 to 2009 Revenue $1.51 billion to $1.54 billion 0% to 2% Diluted earnings per share $0.94 to $1.00 -19% to -24% Conference Call SRA senior management will hold a conference call to discuss these operating results and forward guidance today at 5:00 PM Eastern. Interested parties may listen to the conference call by dialing 888-603-9073 (U.S./Canada) or 210-234-0078 (Other) with passcode SRX. The conference call will be Webcast simultaneously through a link on the SRA Web site (http://www.sra.com/). A replay of the conference call will be available approximately two hours after the conclusion of the call through May 21, 2009 by dialing 800-934-9697 (U.S./Canada) or 203-369-3395 (Other) and entering passcode 9458. About SRA International, Inc. SRA and its subsidiaries are dedicated to solving complex problems of global significance for government organizations serving the national security, civil government and global health markets. Founded in 1978, the company and its subsidiaries have expertise in such areas as air surveillance and air traffic management; contract research organization (CRO) services; cybersecurity; disaster response planning; enterprise resource planning; environmental strategies; IT systems, infrastructure and managed services; logistics; public health preparedness; strategic management consulting; systems engineering; and wireless integration. FORTUNE(R) magazine has chosen SRA as one of the "100 Best Companies to Work For" for ten consecutive years. The company and its subsidiaries employ more than 6,800 employees serving clients from headquarters in Fairfax, Va., and offices around the world. 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. In addition, the forward-looking statements included in this press release represent our views as of May 7, 2009. 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 7, 2009. Condensed Consolidated Statements of Operations (Unaudited) (in thousands, except share and per share amounts) Three Months Ended Nine Months Ended 31-Mar-09 31-Mar-08 31-Mar-09 31-Mar-08 --------- --------- --------- --------- Revenue $376,928 $376,002 $1,138,606 $1,122,144 Operating costs and expenses: Cost of services 274,866 276,708 830,738 837,706 Selling, general and administrative 70,732 63,508 216,500 176,498 Depreciation and amortization 7,244 6,230 21,537 18,821 Gain on sale of Constella Futures Holding, LLC - - (1,939) - Acquired in-process research and development - - 900 - --- --- --- --- Total operating costs and expenses 352,842 346,446 1,067,736 1,033,025 ------- ------- --------- --------- Operating income 24,086 29,556 70,870 89,119 Interest expense (897) (611) (4,832) (2,216) Interest income 449 886 1,852 3,374 --- --- ----- ----- Income before taxes 23,638 29,831 67,890 90,277 Provision for income taxes 9,365 11,788 27,373 35,784 ----- ------ ------ ------ Net income $14,273 $18,043 $40,517 $54,493 ======= ======= ======= ======= Earnings per share: Basic $0.25 $0.31 $0.72 $0.95 ===== ===== ===== ===== Diluted $0.25 $0.30 $0.70 $0.92 ===== ===== ===== ===== Weighted-average shares: Basic 56,202,281 57,852,369 56,310,389 57,600,872 ========== ========== ========== ========== Diluted 57,278,959 59,468,955 57,512,843 59,407,213 ========== ========== ========== ========== Condensed Consolidated Balance Sheets (Unaudited) (in thousands) As of 31-Mar-09 30-Jun-08 --------- --------- Current assets: Cash and cash equivalents $102,185 $229,260 Restricted cash 149 1,194 Accounts receivable, net 348,266 344,974 Inventories, net 3,850 - Prepaid expenses and other 42,337 64,159 Deferred income taxes, current 10,228 11,544 ------ ------ Total current assets 507,015 651,131 ------- ------- Property, plant and equipment, net 38,417 37,949 ------ ------ Other assets: Goodwill 491,212 395,766 Identified intangibles, net 46,153 36,813 Deferred income taxes, noncurrent 4,035 3,217 Deferred compensation trust 5,771 7,747 Notes receivable and other assets 25,232 3,892 ------ ----- Total other assets 572,403 447,435 ------- ------- Total assets $1,117,835 $1,136,515 ========== ========== Current liabilities: Accounts payable and accrued expenses $115,411 $163,927 Accrued payroll and employee benefits 98,343 99,742 Billings in excess of revenue recognized 14,955 15,111 Short-term borrowings 8,502 - ----- --- Total current liabilities 237,211 278,780 ------- ------- Long-term liabilities: Long-term debt 150,000 150,000 Other long-term liabilities 11,983 14,799 ------ ------ Total long-term liabilities 161,983 164,799 ------- ------- Total liabilities 399,194 443,579 ------- ------- Stockholders' equity 718,641 692,936 ------- ------- Total liabilities and stockholders' equity $1,117,835 $1,136,515 ========== ========== Condensed Consolidated Statements of Cash Flows (Unaudited) (in thousands) Nine Months Ended 31-Mar-09 31-Mar-08 --------- --------- Cash flows from operating activities: Net income $40,517 $54,493 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 21,537 18,821 Stock-based compensation 8,454 7,322 Deferred income taxes 729 (1,372) Gain on sale of Constella Futures Holding, LLC (1,939) - Loss on disposal of property and equipment - 744 Acquired in-process research and development 900 - Working capital changes, net of the effect of acquisitions and divestitures (39,917) (38,453) ------- ------- Net cash provided by operating activities 30,281 41,555 ------ ------ Cash flows from investing activities: Capital expenditures (10,851) (6,754) Payments to Spectrum Solutions Group, Inc. shareholders (7,021) - Acquisitions, net of cash acquired (132,275) (189,714) Issuance of notes receivable (17,526) - Proceeds from sale of Constella Futures Holding, LLC 31,846 - ------ --- Net cash used in investing activities (135,827) (196,468) -------- -------- Cash flows from financing activities: Issuance of common stock 2,853 11,916 Excess tax benefit of stock option exercises 393 4,725 Net repayments under short-term credit facilities (1,927) - Borrowings under credit facility 75,000 80,000 Repayments under credit facility (75,000) - Payment of financing costs - (324) Reissuance of treasury stock 398 679 Purchase of treasury stock (21,840) (17,600) ------- ------- Net cash (used in) provided by financing activities (20,123) 79,396 ------- ------ Effect of exchange rate changes on cash and cash equivalents (1,406) - ------ --- Net decrease in cash and cash equivalents (127,075) (75,517) Cash and cash equivalents, beginning of period 229,260 212,034 ------- ------- Cash and cash equivalents, end of period $102,185 $136,517 ======== ======== Supplemental disclosures of cash flow information: Cash paid during the period: Interest $5,062 $1,885 ====== ====== Income taxes $31,964 $40,970 ======= ======= Cash received during the period: Interest $2,208 $3,670 ====== ====== Income taxes $379 $757 ==== ==== Reconciliation Between Total Revenue and Organic Revenue (Unaudited) (in thousands) Organic revenue, as presented, is computed by comparing our reported revenue for the current period to revenue for the same period in the prior year adjusted to include revenue of acquired businesses for the pre-acquisition period of the prior year. In arriving at prior-year revenue, we include the revenue of acquired companies and remove the revenue of divested companies for the prior-year periods comparable to the current-year periods for which the companies are included in our reported revenue. The resulting rate is intended to represent our organic, or non-acquisitive, growth or decline year-over-year, including comparable period growth or decline attributable to acquired companies. We believe that this non-GAAP financial measure provides useful information because it allows investors to better assess the underlying growth rate of our business, including the post-acquisition activity of acquired companies. This non-GAAP financial measure is not used for any other purpose and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. Three Months Ended 31-Mar-09 31-Mar-08 % Increase --------- --------- ---------- Total Revenue, as reported $376,928 $376,002 0.2% Plus: Revenue from acquired companies for the comparable prior year period 16,346 Less: Revenue from divested companies for the comparable prior year period (17,975) ------- Organic Revenue $376,928 $374,373 0.7% ======== ======== === DATASOURCE: SRA International, Inc. CONTACT: Dave Keffer, VP, Investor Relations, +1-703-502-7731, Web Site: http://www.sra.com/

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