SRA Announces Financial Results for Fourth Quarter and Fiscal Year 2009
FAIRFAX, Va., Aug. 12 /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 fourth quarter and fiscal year (FY) 2009, which ended June 30, 2009.
For the quarter, revenue was $402.0 million, up 4.5% from $384.8 million in the June 2008 quarter. Organic revenue growth for the same period was 3.5%. Operating income for the quarter was $29.0 million, for an operating margin of 7.2%. Net income was $17.5 million, for a net margin of 4.3%. Diluted earnings per share (DEPS) for the quarter were $0.30, down $0.02 year over year.
For the full fiscal year, revenue was $1.541 billion, up 2.2% from $1.507 billion in FY 2008. Organic revenue growth for the same period was 0.7%. Operating income for the year was $99.9 million, for an operating margin of 6.5%. Net income was $58.0 million, for a net margin of 3.8%. DEPS for the year were $1.01, down $0.23 year over year.
SRA President and CEO Stan Sloane said, “We’re pleased to have made progress in our business execution during the second half of FY09. Organic revenue growth and operating margins were higher in Q4 than in any prior quarter during the year. Having won over $2.3 billion of new business in FY09, we’ve improved our revenue visibility for FY10 and established a solid foundation for growth.”
Executive Vice President and CFO Rick Nadeau added, “Our Q4 financial results reflected effective cost containment across the company and improving performance in our Era business. Cash flow from operations was $60 million in Q4, and our net debt balance was $300 thousand as of June 30, 2009.”
Contract Awards
SRA won new business in the third quarter with potential value of $434 million, if all option years are exercised. As of June 30, 2009, the company’s backlog of signed business orders was $4.1 billion, up 5% year-over-year, and the funded portion of backlog was $762 million.
Major highlights of competitive contract awards in the quarter include:
- Classified Contract. SRA was awarded a $68 million contract in support of a classified customer.
- Department of Defense, Joint Staff Information Network. The company won a 31-month, $63 million task order to provide systems integration services for the Pentagon’s Joint Staff Information Network. Awarded under the ENCORE II contract vehicle, the task order involves system and application upgrades, as well as communications infrastructure support.
- Environmental Protection Agency (EPA). The EPA awarded SRA two recompete task orders under its Software Engineering and Specialized Scientific Support contract. The task orders have a combined value of $30 million and cover a range of technical and program support services.
SRA was also awarded several multiple-award, indefinite delivery, indefinite quantity (ID/IQ) contracts in the June quarter. ID/IQ wins are not included in the company’s quarterly bookings figure, but they provide a solid foundation for future growth.
- U.S. Army, Program Executive Office Enterprise Information Systems (PEO EIS). PEO EIS named SRA one of the awardees of its Program Management Support Services-2 (PMSS-2) contract, which covers a variety services related to information technology and program support.
- Department of Homeland Security (DHS), National Communications System (NCS). SRA was one of the prime contractors selected by DHS for a five-year ID/IQ contract with a combined ceiling value of $388 million. Task orders under this contract will involve support for emergency communications and operations.
Forward Guidance
The company is issuing initial revenue and earnings guidance for Fiscal Year 2010. 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. The guidance assumes a FY 2010 diluted share count of 58.6 million.
Fiscal Year (FY) Ending Change from
Measure June 30, 2010 FY 2009 to 2010
-------------------------------------------------------------------
Revenue $1.585 billion to
$1.645 billion 3% to 7%
-------------------------------------------------------------------
Diluted earnings $1.15 to $1.25 14% to 24%
per share
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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 (www.sra.com). A replay of the conference call will be available approximately two hours after the conclusion of the call through August 26, 2009 by dialing 866-373-9228 (U.S./Canada) or 203-369-0280 (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 6,900 employees serving clients from 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 contracts 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 12, 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 August 12, 2009.
Consolidated Statements of Operations (Unaudited)
(in thousands, except share and per share amounts)
Three Months Ended Year Ended
30-Jun-09 30-Jun-08 30-Jun-09 30-Jun-08
--------- --------- --------- ---------
Revenue $401,950 $384,789 $1,540,556 $1,506,933
Operating costs and
expenses:
Cost of services 293,130 284,207 1,123,868 1,121,913
Selling, general
and administrative 71,353 63,842 287,853 240,340
Depreciation and
amortization 8,484 6,442 30,021 25,263
Gain on sale of
Constella Futures
Holding, LLC - - (1,939) -
Acquired in-process
research
and development - - 900 -
-- -- --- --
Total operating
costs and
expenses 372,967 354,491 1,440,703 1,387,516
------- ------- --------- ---------
Operating income 28,983 30,298 99,853 119,417
Interest expense (694) (1,072) (5,526) (3,288)
Interest income 431 887 2,283 4,261
Gain on sale of
Mantas, Inc. - 892 - 892
-- --- -- ---
Income before taxes 28,720 31,005 96,610 121,282
Provision for income
taxes 11,237 12,234 38,610 48,018
------ ------ ------ ------
Net income $17,483 $18,771 $58,000 $73,264
======= ======= ======= =======
Earnings per share:
Basic $0.31 $0.33 $1.03 $1.27
===== ===== ===== =====
Diluted $0.30 $0.32 $1.01 $1.24
===== ===== ===== =====
Weighted-average shares:
Basic 56,331,705 57,463,961 56,315,718 57,566,645
========== ========== ========== ==========
Diluted 57,388,438 58,886,594 57,481,742 59,277,059
========== ========== ========== ==========
Consolidated Balance Sheets (Unaudited)
(in thousands)
As of
30-Jun-09 30-Jun-08
--------- ---------
Current assets:
Cash and cash equivalents $74,683 $229,260
Accounts receivable, net 356,261 344,974
Inventories, net 6,786 -
Prepaid expenses and other 37,707 65,353
Deferred income taxes, current 13,924 11,544
------ ------
Total current assets 489,361 651,131
------- -------
Property, plant and equipment,
net 38,130 37,949
------ ------
Other assets:
Goodwill 490,481 395,766
Identified intangibles, net 43,235 36,813
Deferred income taxes,
noncurrent 1,272 3,217
Deferred compensation trust 6,494 7,747
Other assets 25,320 3,892
------ -----
Total other assets 566,802 447,435
------- -------
Total assets $1,094,293 $1,136,515
========== ==========
Current liabilities:
Accounts payable and accrued
expenses $137,443 $163,927
Accrued payroll and employee
benefits 111,296 99,742
Billings in excess of revenue
recognized 16,598 15,111
Total current liabilities 265,337 278,780
------- -------
Long-term liabilities:
Long-term debt 75,000 150,000
Deferred compensation liability 6,494 7,747
Other long-term liabilities 5,842 7,052
----- -----
Total long-term liabilities 87,336 164,799
------ -------
Total liabilities 352,673 443,579
------- -------
Stockholders' equity 741,620 692,936
------- -------
Total liabilities and
stockholders' equity $1,094,293 $1,136,515
========== ==========
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
Year Ended
30-Jun-09 30-Jun-08
--------- ---------
Cash flows from operations:
Net income $58,000 $73,264
Adjustments to reconcile net
income to net cash flow from
operations:
Depreciation and amortization 30,021 25,263
Stock-based compensation 10,660 10,148
Deferred income taxes 1,550 (738)
Gain on sales (1,939) (892)
Loss on disposal of property
and equipment - 788
Acquired in-process research
and development 900 -
Working capital changes, net
of the effect of
acquisitions and
divestitures (8,556) (24,036)
------ -------
Net cash flow from
operations 90,636 83,797
------ ------
Cash flows from investing activities:
Capital expenditures (15,057) (10,763)
Payments to Spectrum Solutions
Group, Inc. shareholders (9,396) -
Acquisitions, net of cash
acquired (132,275) (189,714)
Proceeds from sale of Constella
Futures Holding, LLC 14,320 -
Proceeds from sale of Mantas,
Inc. - 892
-- ---
Net cash used in
investing
activities (142,408) (199,585)
-------- --------
Cash flows from financing activities:
Issuance of common stock 4,600 15,027
Excess tax benefit of stock
option exercises 1,075 4,667
Net repayments under short-term
credit facilities (9,910) -
Borrowings under credit
facility 75,000 230,000
Repayments under credit
facility (150,000) (80,000)
Payment of financing costs - (1,081)
Reissuance of treasury stock 399 679
Purchase of treasury stock (22,042) (36,278)
------- -------
Net cash (used in)
provided by
financing
activities (100,878) 133,014
-------- -------
Effect of exchange rate changes
on cash and cash equivalents (1,927) -
------- --
Net (decrease) increase in cash
and cash equivalents (154,577) 17,226
Cash and cash equivalents,
beginning of period 229,260 212,034
------- -------
Cash and cash equivalents, end of
period $74,683 $229,260
======= ========
Supplemental disclosures of cash
flow information:
Cash paid during the period:
Interest $5,761 $2,656
====== ======
Income taxes $36,451 $51,390
======= =======
Cash received during the period:
Interest $2,643 $4,376
====== ======
Income taxes $938 $961
==== ====
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
30-Jun-09 30-Jun-08 % Increase
--------- --------- ----------
Total Revenue, as reported $401,950 $384,789 4.5%
Plus: Revenue from acquired
companies for the comparable
prior year period 21,477
Less: Revenue from divested
companies for the comparable
prior year period (17,857)
-------
Organic Revenue $401,950 $388,409 3.5%
======== ======== ===
SOURCE SRA International, Inc.