Integral Systems Announces Financial Results for the Second Quarter of Fiscal Year 2009
Revenue and Gross Margin Remain Strong – Overhead Costs Driven by Infrastructure Investment
Revenue for the quarter was
Year-to-date revenue was
The higher SG&A costs that the Company has experienced this year are the result of conscious efforts to solidify the Company’s infrastructure, build a robust business development function, and ensure compliance in all material respects in the Company’s financial, information systems, security, and quality control operations.
QUARTER HIGHLIGHTS
- Awarded contract with B-SAT to provide turnkey satellite control system
- Awarded contract with Mitsubishi Electronic Corporation to provide integrated environment for satellite operations and mission analysis
- Awarded NOAA contract modification to complete the modernization of the Polar Acquisition and Control Subsystem (PACS) command, control, and communications ground system
- Awarded CCS-C two-year contract extension
- Acquired satID intellectual property and assets
- Achieved CMMI Maturity Level 3 certification for Government Systems Group
- Completed contractor purchasing systems review (CPSR) resulting in approved purchasing system for government contracting
- Established Integral Systems Europe –
United Kingdom , bringing earth station and antenna integration capability to the Integral Systems family
“We are encouraged by our revenue and gross profit growth given the current economic climate,” said
Higginbotham concluded, “We continue to see significant new opportunities in our core markets and are making excellent progress in growing them both here and abroad. Looking ahead, the new business opportunity pipeline is robust and lays the foundation for solid bookings for the rest of this fiscal year and into fiscal year 2010.”
Mr. Higginbotham, Chief Executive Officer, and Mr.
About Integral Systems
Integral Systems, Inc., applies more than 25 years experience to provide integrated technology solutions for SATCOM-interfaced networks. Customers have relied on the Integral Systems family of companies (Integral Systems Europe, Lumistar, Inc., Newpoint Technologies, Inc., RT Logic, and SAT Corporation) to deliver on time and on budget for more than 250 satellite missions. Our dedication to customer service has solidified long-term relationships with the U.S. Air Force, NASA, NOAA, and nearly every satellite operator in the world. Integral Systems is listed in Forbes’ Top 200 Small Companies in America for 2008. For more information visit www.integ.com.
Except for statements of historical facts, this news release contains forward-looking statements about the Company, including but not necessarily limited to the Company’s financial projections, all of which are based on the Company’s current expectations. There can be no assurance that the Company’s projections will in fact be achieved and these projections do not reflect any acquisitions or divestitures that may occur in the future. The forward-looking statements contained in this news release are subject to additional risks and uncertainties, including the Company’s reliance on contracts and subcontracts funded by the U.S. government, intense competition in the ground systems industry, the competitive bidding process to which the Company’s government and commercial contracts are subject, the Company’s dependence on the satellite industry for most of its revenues, rapid technological changes in the satellite industry, the Company’s acquisition strategy and those other risks noted in the Company’s SEC filings. The Company assumes no obligation to update or revise any forward-looking statements appearing in this news release.
INTEGRAL SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 27, 2009 and September 30, 2008
(in thousands of dollars, except share amounts)
March 27, September 30,
2009 2008
--------- ----------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $2,233 $15,026
Accounts receivable, net of allowance for
doubtful accounts 13,490 16,688
Unbilled revenues 28,046 18,656
Prepaid expenses and other current assets 3,314 2,542
Income tax receivable 6,369 4,782
Deferred contract costs 5,940 6,558
Inventory 9,718 7,237
----- -----
Total current assets 69,110 71,489
Property and equipment, net 19,816 17,634
Goodwill 54,075 51,414
Intangible assets, net 7,182 -
Other assets 10,883 6,666
-------- --------
Total assets $161,066 $147,203
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $6,039 $7,163
Accrued expenses 15,342 16,650
Short term debt 12,602 -
Deferred revenue 11,075 12,403
------ ------
Total current liabilities 45,058 36,216
Other non-current liabilities 402 946
--- ---
Total liabilities 45,460 37,162
Stockholders' equity:
Common stock, $.01 par value, 80,000,000
shares authorized, and 17,269,109 and
17,246,034 shares issued and outstanding
at March 27, 2009 and September 30, 2008,
respectively 173 173
Additional paid-in capital 64,512 62,608
Retained earnings 50,919 47,249
Accumulated other comprehensive income 2 11
- --
Total stockholders' equity 115,606 110,041
-------- --------
Total liabilities and stockholders'
equity $161,066 $147,203
======== ========
INTEGRAL SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands of dollars, except per share amounts)
Three Months Ended Six Months Ended
---------------------- ----------------------
March 27, March 31, March 27, March 31,
2009 2008 2009 2008
---------- ---------- ---------- ----------
(Unaudited) (Unaudited)
Revenue $42,768 $37,704 $81,238 $71,664
Cost of revenue 26,444 26,828 51,493 48,240
------ ------ ------ ------
Gross profit 16,324 10,876 29,745 23,424
------ ------ ------ ------
Operating expense:
Selling, general &
administrative 11,307 5,882 22,833 12,402
Research & development 773 618 1,368 1,328
--- --- ----- -----
Total operating expense 12,080 6,500 24,201 13,730
------ ----- ------ ------
Income from operations 4,244 4,376 5,544 9,694
Other income, net (72) 265 (65) 200
--- --- --- ---
Income before income taxes 4,172 4,641 5,479 9,894
----- ----- ----- -----
Provision for income taxes 1,527 1,601 1,809 1,802
----- ----- ----- -----
Net income $2,645 $3,040 $3,670 $8,092
====== ====== ====== ======
Comprehensive income:
Cumulative currency
translation adjustment (33) 88 (9) 36
--- -- -- --
Total comprehensive income $2,612 $3,128 $3,661 $8,128
====== ====== ====== ======
Weighted average number of
common shares - Basic 17,298 18,334 17,289 18,548
====== ====== ====== ======
Earnings per share - Basic $0.15 $0.17 $0.21 $0.44
===== ===== ===== =====
Weighted average number of
common shares - Diluted 17,333 18,496 17,394 18,680
====== ====== ====== ======
Earnings per share - Diluted $0.15 $0.16 $0.21 $0.43
===== ===== ===== =====
INTEGRAL SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands of dollars, except per share amounts)
Three Months Ended Six Months Ended
------------------ ----------------
March 27, March 31, March 27, March 31,
2009 2008 2009 2008
--------- --------- --------- ---------
(unaudited) (unaudited)
Revenue:
Government Systems $24,039 $20,108 $42,061 $35,550
Commercial Systems 5,563 4,391 11,672 9,717
Space Communications
Systems 15,464 15,052 31,516 29,388
Elimination of
intersegment sales (2,298) (1,847) (4,011) (2,991)
------ ------ ------ ------
Total revenue 42,768 37,704 81,238 71,664
------ ------ ------ ------
Cost of revenue:
Government Systems 14,975 16,236 28,725 27,655
Commercial Systems 4,224 3,366 8,947 6,697
Space Communications
Systems 9,543 9,073 17,832 16,879
Elimination of
intersegment sales (2,298) (1,847) (4,011) (2,991)
------ ------ ------ ------
Total cost of
revenue 26,444 26,828 51,493 48,240
------ ------ ------ ------
Gross profit:
Government Systems 9,064 3,872 13,336 7,895
Gross Margin 37.7% 19.3% 31.7% 22.2%
Commercial Systems 1,339 1,025 2,725 3,020
Gross Margin 24.1% 23.3% 23.3% 31.1%
Space Communications
Systems 5,921 5,979 13,684 12,509
Gross Margin 38.3% 39.7% 43.4% 42.6%
---- ---- ---- ----
Total gross profit 16,324 10,876 29,745 23,424
------ ------ ------ ------
Gross Margin 38.2% 28.8% 36.6% 32.7%
Operating expense:
Government Systems 5,108 2,487 10,538 5,917
Commercial Systems 1,256 1,127 2,378 2,266
Space Communications
Systems 5,716 2,886 11,285 5,547
----- ----- ------ -----
Total operating
expense 12,080 6,500 24,201 13,730
------ ----- ------ ------
Income from operations:
Government Systems 3,956 1,385 2,798 1,978
Operating margin 16.5% 6.9% 6.7% 5.6%
Commercial Systems 83 (102) 347 754
Operating margin 1.5% -2.3% 3.0% 7.8%
Space Communications
Systems 205 3,093 2,399 6,962
Operating margin 1.3% 20.5% 7.6% 23.7%
--- ---- --- ----
Total income from
operations $4,244 $4,376 $5,544 $9,694
------ ------ ------ ------
Operating margin 9.9% 11.6% 6.8% 13.5%
INTEGRAL SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of dollars)
Six Months Ended
----------------
March 27, 2009 March 31, 2008
-------------- --------------
(Unaudited)
Cash flows from
operating activities:
Net income $3,670 $8,092
Adjustments to reconcile net income to
net cash (used in) provided by operating
activities:
Depreciation and amortization 1,637 1,042
Bad debt expense 6 (150)
Stock-based compensation 1,649 369
Changes in operating assets and liabilities
Accounts receivable 3,527 (4,799)
Unbilled revenue (13,612) 7,133
Prepaid expenses and other current
assets (686) 410
Deferred contract costs 618 (5,466)
Inventories (1,850) (1,330)
Income taxes receivable (2,142) (2,212)
Accounts payable (1,115) (2,040)
Accrued expenses (1,302) 318
Deferred revenue (1,509) 6,578
Other 238 -
--- -
Net cash (used in) provided by operating
activities (10,871) 7,945
Cash flows from investing activities:
Acquisitions of fixed assets (1,554) (2,133)
Acquisition of satID (10,941) -
Other investing activities - 557
- ---
Net cash used in investing activities (12,495) (1,576)
Cash flows from financing activities:
Proceeds from issuance of common stock 76 2,566
Common stock repurchases - (23,501)
Employee stock purchases 178 -
Proceeds from line of credit borrowing 10,311 -
Payments on capital lease obligations (11) -
--- -
Net cash provided by (used in) financing
activities 10,554 (20,935)
Net decrease in cash and cash equivalents (12,812) (14,566)
Effect of exchange rate changes on cash 19 (20)
Cash and cash equivalents - beginning of period 15,026 23,894
------ ------
Cash and cash equivalents - end of period $2,233 $9,308
====== ======
Supplemental disclosures of cash flow
information:
Income taxes paid $3,290 $4,012
Interest expense paid $8 $4
SOURCE Integral Systems, Inc.