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 fourth quarter and fiscal year (FY) 2010,
which ended June 30, 2010.
For the quarter, revenue was $424.6 million, up 5.6% from $402.0
million in the June 2009 quarter. Organic revenue growth for the
same period was 4.8%. Operating income for the quarter was $33.9
million, for an operating margin of 8.0%. Net income was $20.9
million, for a net margin of 4.9%. Diluted earnings per share
(DEPS) for the quarter were $0.36, up $0.06 year over year.
For the full fiscal year, revenue was $1.667 billion, up 8.2%
from $1.541 billion in FY 2009. Organic revenue growth for the same
period was 8.3%. Operating income for the year was $61.1 million,
net income was $18.4 million, and DEPS were $0.32. Reported figures
include several unusual items, including asset impairment charges
of $61.3 million related to the Era business. Adjusted for the
impact of these unusual items, operating income was $123.3 million,
for an operating margin of 7.4%, net income was $75.8 million, and
DEPS were $1.31, up $0.30 year over year.
A reconciliation between the adjusted results and the reported
results is provided below.
SRA President and CEO Stan Sloane said, “We’re pleased to report
financial results in the fourth quarter that exceed our prior
guidance ranges. Our pipeline of opportunities continues to grow,
and now includes a record $2.7 billion of pending bids. Our backlog
of signed business orders has grown 10% year-over-year, providing a
solid foundation for revenue growth in fiscal year 2011.”
Executive Vice President and CFO Rick Nadeau added, “We had a
second consecutive quarter of strong cash flow from operations,
driven by further improvement in days sales outstanding. We are
focused on maintaining this high level of performance as we enter
fiscal year 2011.”
Contract Awards
SRA won new business in the fourth quarter with potential value
of $250 million, if all option years are exercised. In fiscal year
2010, SRA won new business with a total potential value of $2.35
billion, for a book to bill ratio of 1.4. As of June 30, 2010, the
company’s backlog of signed business orders was $4.45 billion, up
10% year-over-year, and the funded portion of backlog was $772
million.
Major highlights of competitive contract awards in the quarter
include:
- Federal Aviation
Administration (FAA). The company was awarded a contract to
continue supporting the airport technology R&D
technical/engineering support program. This single award indefinite
delivery, indefinite quantity (IDIQ) contract is an important
component of our work at the FAA, and has an estimated total dollar
value of $57 million over five years.
SRA was also awarded several multiple-award, IDIQ contracts in
the fourth quarter, which are not included in the company’s
quarterly bookings figure, but are expected to drive growth over
time. These include:
- United States Special
Operations Command (USSOCOM). The company won the Global
Battlestaff and Program Support (GBPS) contract from USSOCOM at
MacDill Air Force Base in Tampa, Fla. The multiple-award IDIQ
contract has an estimated value of $1.5 billion over five years, if
all options are exercised.
- Department of Defense’s
Defense Intelligence Agency (DIA). SRA was selected as one of
six major awardees for the Solutions for the Information Technology
Enterprise (SITE) program. The multiple-award IDIQ contract has a
ceiling of $6.6 billion over five years, if all options are
exercised.
Forward Guidance
The company is issuing initial revenue and earnings guidance for
Fiscal Year 2011. 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 includes the effect of the Sentech acquisition that
closed in July, but does not include any effect for acquisitions or
divestitures that SRA might make in the future. The guidance
assumes that the FY 2011 diluted weighted-average shares
outstanding is 58.0 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 1.3% of net income.
Measure
Fiscal Year Ending
June 30, 2011
Revenue $1.77 billion to $1.82 billion
Diluted earnings per share $1.36 to
$1.44
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 888-790-3103 (U.S./Canada) or 630-395-0282 (Other) with
passcode 1256593. The conference call will be Webcast
simultaneously through a link on the SRA Web site
(www.sra.com/investors/). A replay of the conference call will be
available approximately two hours after the conclusion of the call
on August 11 through August 25 by dialing 888-568-0661
(U.S./Canada) or 203-369-3202 (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 and
commercial clients 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 7,100 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 August 11, 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 August 11,
2010.
Consolidated Statements of
Operations (Unaudited) (in thousands, except share
amounts) Three Months Ended Year Ended
30-Jun-10 30-Jun-09 30-Jun-10
30-Jun-09 Revenue $ 424,607 $ 401,950 $ 1,666,629 $
1,540,556 Operating costs and expenses: Cost of services (a)
317,286 300,235 1,260,216 1,152,465 Selling, general and
administrative (a) 66,715 64,248 257,224 259,256 Depreciation and
amortization 6,741 7,346 28,253 28,883 Impairment of goodwill and
long-lived assets - 1,138 61,315 1,138 Settlement of claims against
Era sellers - - (3,361 ) - Sale of Constella Futures Holding, LLC -
- 1,889 (1,939 ) Acquired in-process research and development
- - -
900 Total operating costs and expenses 390,742
372,967 1,605,536
1,440,703 Operating income 33,865 28,983 61,093
99,853 Interest expense (169 ) (694 ) (1,306 ) (5,526 ) Interest
income 464 431 1,855
2,283 Income before income taxes 34,160
28,720 61,642 96,610 Provision for income taxes 13,272
11,237 43,227
38,610 Net income $ 20,888 $ 17,483
$ 18,415 $ 58,000 Earnings per
share: Basic $ 0.36 $ 0.31 $ 0.32
$ 1.02 Diluted $ 0.36 $ 0.30 $
0.32 $ 1.01 (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 fiscal years 2005 through 2009
is disclosed in our Form 10-K.
Reconciliation Between Reported
Net Income and Net Income used in the Calculation of Earnings Per
Share (Unaudited)
(in thousands)
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. The adoption of this guidance reduced previously
reported basic earnings per share for the year ended June 30, 2009
by one cent.
Three Months Ended Year
Ended 30-Jun-10 30-Jun-09 30-Jun-10
30-Jun-09 Net income, as reported $ 20,888 $
17,483 $ 18,415 $ 58,000 Less: allocation of earnings to
unvested restricted shares 238 200 215
670 Net income for the computation of earnings per
share $ 20,650 $ 17,283 $ 18,200 $ 57,330
Basic weighted-average shares outstanding 56,867
56,332 56,721 56,316 Diluted
weighted-average shares outstanding 57,498
56,737 57,259 56,823 Basic earnings per
share $ 0.36 $ 0.31 $ 0.32 $ 1.02 Diluted earnings
per share $ 0.36 $ 0.30 $ 0.32 $ 1.01
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands) As of 30-Jun-10
30-Jun-09 Current assets: Cash and cash equivalents $ 98,113
$ 74,683 Accounts receivable, net 354,825 356,261 Inventories, net
6,866 6,786 Prepaid expenses and other 25,752 37,707 Deferred
income taxes 15,057 13,924 Total current
assets 500,613 489,361 Property, plant and equipment, net 33,626
38,130 Goodwill 438,995 490,481 Identified intangibles, net 35,063
43,235 Deferred compensation trust 7,182 6,494 Other long-term
assets 18,236 26,592 Total assets $ 1,033,715
$ 1,094,293 Current liabilities: Accounts payable and
accrued expenses $ 101,573 $ 137,443 Accrued payroll and employee
benefits 123,617 111,296 Billings in excess of revenue recognized
17,023 16,598 Total current liabilities
242,213 265,337 Long-term debt - 75,000 Deferred compensation
liability 7,182 6,494 Deferred income taxes 7,280 - Other long-term
liabilities 5,477 5,842 Total liabilities
262,152 352,673 Stockholders' equity
771,563 741,620 Total
liabilities and stockholders' equity $ 1,033,715 $ 1,094,293
Condensed Consolidated
Statements of Cash Flows (Unaudited) (in thousands)
Three Months Ended Year Ended 30-Jun-10
30-Jun-09 30-Jun-10 30-Jun-09
Cash flows from operating activities: Net income $ 20,888 $ 17,483
$ 18,415 $ 58,000 Adjustments to reconcile net income to net cash
provided by operating activities: Depreciation and amortization
6,741 7,346 28,253 28,883 Stock-based compensation 2,272 2,206
9,032 10,660 Deferred income taxes 1,420 821 8,438 1,550 Impairment
of goodwill and long-lived assets - 1,138 61,315 1,138 Settlement
of claims against Era sellers - - (3,361 ) - Sale of Constella
Futures Holding, LLC - - 1,889 (1,939 ) Acquired in-process
research and development - - - 900 Gain realized from forward
exchange contracts (1,733 ) - (2,965 ) - Changes in assets and
liabilities, net of the effect of acquisitions and divestitures
29,214 31,361 (24,316 )
(8,556 ) Net cash provided by operating activities
58,802 60,355 96,700
90,636 Cash flows from investing
activities: Capital expenditures (3,220 ) (4,206 ) (13,366 )
(15,057 ) Payments to Spectrum Solutions Group, Inc. shareholders -
(2,375 ) - (9,396 ) Acquisitions, net of cash acquired - - (8,611 )
(132,275 ) Proceeds from sale of Constella Futures Holding, LLC - -
- 14,320 Settlement of Era purchase price - - 12,500 - Collections
on note receivable - - 5,330 - Proceeds from forward exchange
contracts 1,733 - 2,965
- Net cash used in investing activities
(1,487 ) (6,581 ) (1,182 )
(142,408 ) Cash flows from financing activities:
Issuance of common stock 880 1,747 4,192 4,600 Excess tax benefit
of stock option exercises 32 682 146 1,075 Borrowings under credit
facility - - 115,000 75,000 Repayments under credit facility -
(75,000 ) (190,000 ) (150,000 ) Net repayments under other
short-term credit facilities - (7,983 ) - (9,910 ) Reissuance of
treasury stock - - 462 399 Purchase of treasury stock (243 )
(202 ) (1,233 ) (22,042 ) Net
cash provided by (used in) financing activities 669
(80,756 ) (71,433 ) (100,878 )
Effect of exchange rate
changes on cash and cash equivalents (359 )
(521 ) (655 ) (1,927 ) Net increase
(decrease) in cash and cash equivalents 57,625 (27,503 ) 23,430
(154,577 ) Cash and cash equivalents, beginning of period
40,488 102,186 74,683
229,260 Cash and cash equivalents, end of
period $ 98,113 $ 74,683 $ 98,113
$ 74,683
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 30-Jun-10
30-Jun-09 % Increase Revenue, as
reported $ 424,607 $ 401,950 5.6 % Plus: Revenue
of acquired companies for the comparable prior year period
3,400
Organic
Revenue $ 424,607 $ 405,350 4.8 %
Year Ended 30-Jun-10 30-Jun-09
% Increase Revenue, as reported $
1,666,629 $ 1,540,556 8.2 % Plus: Revenue of acquired
companies for the comparable prior year period 10,413 Less: Revenue
of divested companies for the comparable prior year period
(11,940 )
Organic Revenue
$ 1,666,629 $ 1,539,029 8.3 %
Reconciliation of Non-GAAP
Financial Measures (Unaudited)
(in thousands, except share and per share amounts)
The financial measures shown
below, including operating income, as adjusted, net income, as
adjusted and diluted earnings per share, as adjusted, are non-GAAP
financial measures. We believe these non-GAAP measures
provide investors with useful supplemental information regarding
underlying business trends and performance of our ongoing
operations and are useful for period-over-period comparisons of
such operations. These measures are not calculated
through the application of GAAP and are not the required form of
disclosure by the Securities and Exchange Commission
(SEC). As such, they should not be considered as
substitutes for the most directly comparable GAAP measures and
should not be used in isolation, but in conjunction with these GAAP
measures. The use of any non-GAAP measure may produce results that
vary from the GAAP measure and may not be comparable to a similarly
defined non-GAAP measure used by other companies.
Reconciliations to the most directly comparable GAAP financial
measures are included in the table below.
Adjusted for Impairment & Unusual Items
Quarter Ended Quarter Ended Quarter
Ended Quarter Ended Year Ended
30-Sep-09 31-Dec-09 31-Mar-10
30-Jun-10 30-Jun-10 Operating income
(loss), as reported $ 29,987 $ 28,116 $ (30,875 ) $ 33,865 $ 61,093
Add: Impairment of goodwill and long-lived assets - - 61,315 -
61,315 Less: Settlement of claims against Era sellers - - (3,361 )
- (3,361 ) Add: Sale of Constella Futures Holding, LLC - 1,889 - -
1,889 Add: Facility exit charge - 1,893
- 439
2,332 Non-GAAP operating income, as adjusted $ 29,987
$ 31,898 $ 27,079 $
34,304 $ 123,268 Net income
(loss), as reported $ 18,050 $ 19,188 $ (39,711 ) $ 20,888 18,415
Add: Impairment of goodwill and long-lived assets - - 61,315 -
61,315 Less: Settlement of claims against Era sellers - - (3,361 )
- (3,361 ) Add: Sale of Constella Futures Holding, LLC - 1,889 - -
1,889 Add: Facility exit charge - 1,893 - 439 2,332 Less: Income
tax effect of the items above - (1,471 ) (523 ) (171 ) (2,165 )
Less: Prior-year income tax benefits -
(1,560 ) (1,109 ) -
(2,669 ) Non-GAAP net income, as adjusted $ 18,050 $ 19,939
$ 16,611 $ 21,156 $ 75,756 Less: allocation of earnings to unvested
restricted shares (208 ) (243 )
(197 ) (240 ) (888 ) Non-GAAP net
income for the computation of earnings per share $ 17,842
$ 19,696 $ 16,414 $ 20,916
$ 74,868 Diluted weighted-average
shares outstanding, as reported 57,102 57,171 56,766 57,498 57,259
Add: Dilutive effect of stock equivalents -
- 481 -
- Non-GAAP diluted weighted-average shares
outstanding 57,102 57,171
57,247 57,498
57,259
Diluted earnings (loss) per share, as reported $ 0.31
$ 0.33 $ (0.70 ) $ 0.36
$ 0.32 Non-GAAP diluted earnings per share, as
adjusted $ 0.31 $ 0.34 $ 0.29
$ 0.36 $ 1.31
Sra (NYSE:SRX)
Historical Stock Chart
From Jun 2024 to Jul 2024
Sra (NYSE:SRX)
Historical Stock Chart
From Jul 2023 to Jul 2024