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 second quarter of fiscal year (FY) 2010,
which ended December 31, 2009.
Revenue for the quarter was $413.5 million, up 12.0% from $369.3
million in the December 2008 quarter. All of the revenue growth was
organic. Operating income for the quarter was $28.1 million, for an
operating margin of 6.8%. Net income was $19.2 million, for a net
margin of 4.6%. Diluted earnings per share (DEPS) for the quarter
were $0.33.
SRA President and CEO Stan Sloane said, “We’re proud to report
strong organic growth and continued improvement in cost management
and execution. We are focused on making investments in business
development to spur growth, and our backlog and pipeline of
opportunities are robust.”
Executive Vice President and CFO Rick Nadeau added, “Given our
solid results and business momentum we are raising our guidance for
expected revenue and earnings for fiscal year 2010.”
Operating income in the December quarter reflects a facility
exit charge in the contract research organization (CRO) business of
approximately $1.7 million, and a charge of $1.9 million resulting
from the resolution of senior net asset note arbitration related to
our divestiture of the Futures business which we sold in September
2008. However, the effect of these items on earnings per share is
largely offset by tax credits related to prior years, which reduce
income tax expense in the period by approximately $1.8 million.
While the restructuring charge and the Futures arbitration charge
had an adverse effect on operating income, the total impact of
these items including the tax credits was to reduce diluted
earnings per share by approximately half a penny.
Contract Awards
SRA won new business in the second quarter with potential value
of $412 million, if all option years are exercised, representing a
book to bill ratio of 1.0. Year to date, SRA has won new business
with a total potential value of $1.3 billion, for a book to bill
ratio of 1.6. As of December 31, 2009, the company’s backlog of
signed business orders was $4.4 billion, up 13% year-over-year, and
the funded portion of backlog was $845 million.
Major highlights of competitive contract awards in the quarter
include:
- Food and Drug Administration
(FDA). The company was awarded the Mission Accomplishment and
Regulatory Compliance Services (MARCS) Integration Contract (MIC).
The single-award indefinite delivery, indefinite quantity contract
has a total ceiling value of $98 million over a five-year period of
performance.
- Department of Homeland
Security, National Cyber Security Division (NCSD). The company
won a contract to provide mission support to the NCSD, including
activities required to improve information systems security across
the entire federal government enterprise from software assurance,
critical infrastructure protection and global supply chain security
to cyber education, exercises and workforce development. The NCSD
Mission Support Services contract totals $50 million for one base
year plus four option years, if exercised.
- Center for Disease Control
and Prevention (CDC). The company was awarded a contract to
provide program development, management and support for the
National Center for Public Health Informatics, or NCPHI. The
contract, which involves a series of 12 task areas, has an
estimated value of $21 million over three years if all options are
exercised. This award was originally announced in February 2009,
but the award was subsequently protested. During the December
quarter the protest was resolved in SRA’s favor.
Completion of PQA Acquisition
SRA completed the acquisition of Perrin Quarles Associates (PQA)
on January 31, 2010. PQA is a privately held environmental
consulting firm that specializes in environmental program
development and implementation support for the public sector, with
a major focus on air quality and climate change. The total purchase
price was approximately $9 million.
Forward Guidance
The company is updating revenue and earnings guidance for Fiscal
Year 2010 previously provided on November 4, 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 or divestitures that SRA might make in the
future. The guidance assumes that the FY 2010 diluted
weighted-average shares outstanding is 57.4 million, excluding
unvested restricted stock awards, and that the allocation of
earnings to unvested restricted shares used in the calculation of
diluted earnings per share is approximately 1.2% of net income.
Measure
Fiscal Year (FY) Ending
June 30, 2010
Change from
FY 2009 to 2010
Revenue $1.63 billion to $1.665 billion
6% to 8% Diluted earnings per share
$1.22 to $1.29 21% to 28%
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 800-779-8164 (U.S./Canada) or 312-470-7006 (Other) with
passcode 9186448. The conference call will be Webcast
simultaneously through a link on the SRA Web site (www.sra.com). A
replay of the conference call will be available approximately two
hours after the conclusion of the call on February 8 through
February 26 by dialing 800-839-4571 (U.S./Canada) or 203-369-4013
(Other) and entering passcode 1978.
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; cyber
security; disaster response planning; enterprise resource planning;
environmental strategies; IT systems, infrastructure and managed
services; logistics; public health preparedness; public safety;
strategic management consulting; systems engineering; and wireless
integration.
SRA and its subsidiaries employ more than 7,000 employees
serving clients from its headquarters in Fairfax, Va., and offices
around the world. For additional information on SRA, please visit
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 Feb. 8, 2010. 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 Feb. 8,
2010.
Condensed Consolidated
Statements of Operations (Unaudited) (in thousands, except
per share amounts) Three Months Ended
Six Months Ended 31-Dec-09 31-Dec-08
31-Dec-09 31-Dec-08 Revenue $ 413,496 $
369,323 $ 830,995 $ 761,678 Operating costs and expenses: Cost of
services (a) 312,700 275,090 630,240 570,555 Selling, general and
administrative (a) 63,449 67,520 126,277 131,085 Depreciation and
amortization 7,342 7,415 14,486 14,293 Sale of Constella Futures
Holding, LLC 1,889 - 1,889 (1,939 ) Acquired in-process research
and development - (200 ) -
900 Total operating costs and expenses
385,380 349,825 772,892
714,894 Operating income 28,116 19,498
58,103 46,784 Interest expense (345 ) (2,155 ) (828 ) (3,935 )
Interest income 565 631
973 1,403 Income before income taxes
28,336 17,974 58,248 44,252 Provision for income taxes 9,148
7,144 21,010
18,008 Net income $ 19,188 $ 10,830
$ 37,238 $ 26,244 Earnings per
share: Basic $ 0.33 $ 0.19 $ 0.65
$ 0.46 Diluted $ 0.33 $ 0.19 $
0.64 $ 0.46 (a) Beginning in fiscal
2010, the Company reclassified the portion of rent and facility
costs, as well as stock-based compensation expense related to
employees who perform work directly for the Company’s clients from
the caption “selling, general and administrative" expenses to the
caption “cost of services.” All prior period balances have been
reclassified to conform to the current period presentation. The
impact of this reclassification on the five most recent completed
fiscal years is disclosed in our Form 10-Q that was filed with the
SEC today.
Condensed Consolidated Balance Sheets
(Unaudited) (in thousands) As
of 31-Dec-09 30-Jun-09 Current assets:
Cash and cash equivalents $ 41,330 $ 74,683 Accounts receivable,
net 411,457 356,261 Inventories, net 8,196 6,786 Prepaid expenses
and other 45,135 37,707 Deferred income taxes 14,052
13,924 Total current assets 520,170
489,361 Property, plant and equipment, net 36,688
38,130 Other assets: Goodwill 494,137 490,481
Identified intangibles, net 37,921 43,235 Deferred income taxes -
1,272 Deferred compensation trust 7,632 6,494 Other assets
17,966 25,320 Total other assets 557,656
566,802 Total assets $ 1,114,514 $
1,094,293 Current liabilities: Accounts payable and accrued
expenses $ 113,618 $ 137,443 Accrued payroll and employee benefits
113,918 111,296 Billings in excess of revenue recognized
23,695 16,598 Total current liabilities
251,231 265,337 Long-term liabilities:
Long-term debt 60,000 75,000 Deferred compensation liability 7,632
6,494 Deferred income taxes 5,336 - Other long-term liabilities
5,819 5,842 Total long-term liabilities
78,787 87,336 Total liabilities 330,018
352,673 Stockholders' equity
784,496 741,620 Total liabilities and
stockholders' equity $ 1,114,514 $ 1,094,293
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands) Six Months Ended
31-Dec-09 31-Dec-08 Cash flows from operating
activities: Net income $ 37,238 $ 26,244 Adjustments to reconcile
net income to net cash provided by operating activities:
Depreciation and amortization 14,486 14,293 Stock-based
compensation 4,610 5,362 Deferred income taxes 6,833 (2,312 ) Sale
of Constella Futures Holding, LLC 1,889 (1,939 ) Acquired
in-process research and development - 900 Gain realized from
forward exchange contracts (433 ) - Changes in assets and
liabilities, net of the effect of acquisitions and divestitures
(82,027 ) (34,246 ) Net cash (used in)
provided by operating activities (17,404 )
8,302 Cash flows from investing activities: Capital
expenditures (7,739 ) (8,869 ) Payments to Spectrum Solutions
Group, Inc. shareholders - (7,016 ) Acquisitions, net of cash
acquired - (132,246 ) Proceeds from sale of Constella Futures
Holding, LLC - 14,320 Collections on note receivable 5,330 -
Proceeds from forward exchange contracts 433
- Net cash used in investing activities (1,976
) (133,811 ) Cash flows from financing
activities: Issuance of common stock 2,012 2,265 Excess tax benefit
of stock option exercises 34 108 Borrowings under credit facility
55,000 75,000 Repayments under credit facility (70,000 ) (50,000 )
Net repayments under other short-term credit facilities - (1,569 )
Purchase of treasury stock (940 ) (21,824 )
Net cash (used in) provided by financing activities (13,894
) 3,980 Effect of
exchange rate changes on cash and cash equivalents (79 ) (767 )
Net decrease in cash and cash equivalents (33,353 ) (122,296
) Cash and cash equivalents, beginning of period 74,683
229,260 Cash and cash equivalents, end
of period $ 41,330 $ 106,964
Supplemental disclosures of cash flow information: Cash paid during
the period: Interest $ 733 $ 3,093 Income
taxes $ 24,374 $ 26,667 Cash received during
the period: Interest $ 954 $ 1,740 Income
taxes $ 296 $ 342
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 growth rate is intended to
represent our organic, or non-acquisitive, growth 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-Dec-09 31-Dec-08 %
Increase Revenue, as reported $ 413,496 $
369,323 12.0 % Plus: Revenue of acquired companies for the
comparable prior year period - Less: Revenue of divested companies
for the comparable prior year period -
Organic Revenue $ 413,496
$ 369,323 12.0 %
Six Months Ended 31-Dec-09
31-Dec-08 % Increase Revenue,
as reported $ 830,995 $ 761,678 9.1 % Plus: Revenue of
acquired companies for the comparable prior year period 4,752 Less:
Revenue of divested companies for the comparable prior year period
(11,940 )
Organic Revenue $ 830,995 $ 754,490
10.1 %
Reconciliation Between
Reported Net Income and Net Income used in the Calculation of
Earnings Per Share (Unaudited) (in thousands, except share
and per share amounts) In accordance with Accounting
Standards Codification (ASC) section 260 Earnings Per Share, we are
required to allocate a portion of our earnings to any outstanding
unvested restricted share awards that qualify as participating
securities as defined in that standard. The Company's unvested
restricted stock awards are excluded from both the basic and
diluted weighted average shares outstanding.
Three Months Ended Six Months Ended
31-Dec-09 31-Dec-08 31-Dec-09
31-Dec-08 Net income, as reported $ 19,188 $ 10,830 $
37,238 $ 26,244 Less: allocation of earnings to unvested
restricted shares 233 136 438
296 Net income for the computation of earnings per share $
18,955 $ 10,694 $ 36,800 $ 25,948 Basic
weighted-average shares outstanding 56,684,452
56,122,367 56,625,585 56,364,444 Diluted
weighted-average shares outstanding 57,171,070
56,568,895 57,136,691 56,986,840 Basic
earnings per share $ 0.33 $ 0.19 $ 0.65 $ 0.46
Diluted earnings per share $ 0.33 $ 0.19 $ 0.64 $
0.46
Sra (NYSE:SRX)
Historical Stock Chart
From Jun 2024 to Jul 2024
Sra (NYSE:SRX)
Historical Stock Chart
From Jul 2023 to Jul 2024