DRC Reports First Quarter 2012 Results
24 Abril 2012 - 9:32PM
Dynamics Research Corporation (Nasdaq:DRCO), a leading provider of
innovative management consulting, engineering, science and
information technology services and solutions to federal and state
governments, today announced operating results for the first
quarter of 2012.
Financial Results
The Company reported net income of $1.8 million, or $0.17 per
diluted share, for the first quarter of 2012, compared with $2.7
million, or $0.27 per diluted share, for the first quarter of 2011.
Earnings before interest, taxes, depreciation, and amortization
(EBITDA) for the first quarter of 2012 was $7.9 million, or 9.2
percent of revenue, up 29 percent from $6.1 million, or 8.7 percent
of revenue, for the first quarter a year ago.
Revenue for the first quarter of 2012 was $85.9 million, up 24
percent from $69.5 million for the same period in 2011, reflecting
the Company's merger with High Performance Technologies, Inc.
("HPTi") on June 30, 2011.
Net cash used in operating activities for the seasonally weak
first quarter was $1.6 million, comparing favorably with $9.5
million used in the first quarter of 2011, reflecting improved
working capital management.
Business Highlights
"Operating results for the first quarter were in line with
expectations and reflected solid EBITDA and cash flow performance
for the first quarter, typically the lowest quarter of the year for
earnings and cash flow. Earnings for the quarter, however, were
lower than the same period a year ago, primarily due to higher
amortization and interest expense resulting from the HPTi merger,"
said Jim Regan, DRC's chairman and chief executive officer.
"Continuing deferral of procurement decisions and program cuts,
together with intensified price competition, have caused us to
further reduce our expectations for 2012. Notwithstanding these
challenges, we possess an array of highly differentiated
capabilities in areas such as cloud and mobile computing, cyber
security, health informatics, data analytics and business
transformation. We are confident that this expertise, along with
strong positions in growth segments of the federal market and a
broad portfolio of contract vehicles, will provide a solid
foundation for growth as federal budget challenges stabilize and
demand increases for the services DRC provides. This expectation is
supported by a qualified pipeline which now totals $852 million,
including $309 million in bids submitted and awaiting award."
Company Guidance
The Company's estimate for revenue for 2012 is in the range of
$328 to $336 million. Regarding earnings from continuing
operations for 2012, the Company anticipates results to be in the
range of $0.68 to $0.76 per diluted share. For the second
quarter of 2012, the Company anticipates revenue in the range of
$81 to $84 million and earnings from continuing operations per
diluted share of $0.14 to $0.16. EBITDA is estimated to be in
the range of $31 to $33 million for 2012.
Conference Call
The Company will conduct a first quarter 2012 conference call on
Wednesday, April 25, 2012 at 10:00 a.m. ET. The call will be
available via telephone at 877-303-4382, and accessible via Web
cast at www.drc.com. Recorded replays of the conference call
will be available on Dynamics Research Corporation's investor
relations home page at www.drc.com and by telephone at
800-585-8367, passcode #68573207, beginning at 1:00 p.m. ET April
25, 2012.
About Dynamics Research Corporation
Dynamics Research Corporation (DRC) is a leading provider of
mission-critical technology management services and solutions for
government programs. DRC offers the capabilities of a large
company and the responsiveness of a small company, backed by a
history of excellence and customer satisfaction. Founded in
1955, DRC is a publicly held corporation (Nasdaq:DRCO) and
maintains more than 25 offices nationwide with major offices in
Andover, Massachusetts and the Washington, D.C. area. For more
information please visit our website at www.drc.com.
Safe Harbor
Safe harbor statements under the Private Securities Litigation
Reform Act of 1995: Some statements contained or implied in this
news release, may be considered forward-looking statements, which
by their nature are uncertain. Consequently, actual results could
materially differ. For more detailed information concerning how
risks and uncertainties could affect the Company's financial
results, please refer to DRC's most recent filings with the SEC
including the Company's Annual Report on Form 10-K for the year
ended December 31, 2011. The Company assumes no obligation to
update any forward-looking information.
Non-GAAP Financial Information
DRC discloses earnings before interest, taxes, depreciation and
amortization, which is not recognized measures under GAAP. We
have provided a reconciliation of EBITDA, adjusted to conform to
the definition used in our loan agreements, in Attachment IV of
this announcement. When evaluating DRC's financial results
investors should evaluate each adjustment to reported GAAP
financial measures in the reconciliation as additional information
and not use this non-GAAP financial measure as alternatives to
reported GAAP financial measures. DRC presents this financial
measure because the Company believes it provides investors with
important supplemental information to assist them in assessing
DRC's financial results.
|
ATTACHMENT I |
|
|
|
DYNAMICS RESEARCH
CORPORATION |
CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS (unaudited) |
(In thousands, except
share and per share data) |
|
|
|
|
Three Months
Ended |
|
March
31, |
|
2012 |
2011 |
Revenue |
$ 85,869 |
$ 69,524 |
Cost of revenue |
72,273 |
58,760 |
Gross profit |
13,596 |
10,764 |
|
|
|
Selling, general and administrative
expenses |
6,891 |
5,669 |
Amortization of intangible assets |
1,031 |
374 |
Operating income |
5,674 |
4,721 |
Interest expense, net |
(2,779) |
(252) |
Other income, net |
135 |
96 |
Income from continuing operations before
provision for income taxes |
3,030 |
4,565 |
Provision for income taxes |
1,239 |
1,857 |
Net income |
$ 1,791 |
$ 2,708 |
|
|
|
Earnings per share: |
|
|
Basic |
$ 0.17 |
$ 0.27 |
Diluted |
$ 0.17 |
$ 0.27 |
|
|
|
Weighted average shares outstanding: |
|
|
Basic |
10,419,343 |
9,973,442 |
Diluted |
10,464,125 |
10,174,186 |
|
ATTACHMENT II |
|
|
|
DYNAMICS RESEARCH
CORPORATION |
CONDENSED CONSOLIDATED
BALANCE SHEETS (unaudited) |
(Dollars in
thousands) |
|
|
|
|
March 31, |
December 31, |
|
2012 |
2011 |
Assets |
|
|
Current assets |
|
|
Cash and cash equivalents |
$ 10 |
$ 3,908 |
Contract receivables, net |
70,840 |
66,466 |
Prepaid expenses and other current
assets |
3,425 |
2,566 |
Total current assets |
74,275 |
72,940 |
Noncurrent assets |
|
|
Property and equipment, net |
14,538 |
15,265 |
Goodwill |
211,805 |
211,805 |
Intangible assets, net |
17,710 |
18,741 |
Deferred tax asset |
-- |
497 |
Other noncurrent assets |
4,170 |
4,312 |
Total noncurrent assets |
248,223 |
250,620 |
Total assets |
$ 322,498 |
$ 323,560 |
|
|
|
Liabilities and stockholders' equity |
|
|
Current liabilities |
|
|
Current portion of long-term debt |
$ 13,063 |
$ 12,375 |
Accounts payable |
28,639 |
24,504 |
Accrued compensation and employee
benefits |
19,507 |
24,902 |
Deferred tax liability |
3,655 |
3,383 |
Other accrued expenses |
6,836 |
8,556 |
Total current liabilities |
71,700 |
73,720 |
Long-term liabilities |
|
|
Long-term debt |
102,215 |
102,453 |
Deferred tax liability |
665 |
-- |
Other long-term liabilities |
31,627 |
33,066 |
Total stockholders' equity |
116,291 |
114,321 |
Total liabilities and stockholders'
equity |
$ 322,498 |
$ 323,560 |
|
ATTACHMENT
III |
|
|
|
DYNAMICS RESEARCH
CORPORATION |
SUPPLEMENTAL
INFORMATION (unaudited) |
(Dollars in
thousands) |
|
|
|
Contract revenues were earned
from the following sectors: |
|
|
|
|
Three Months
Ended |
|
March
31, |
|
2012 |
2011 |
National defense and intelligence
agencies |
$ 50,525 |
$ 47,811 |
Homeland security |
11,446 |
12,288 |
Federal civilian agencies |
19,969 |
5,808 |
Total revenue from federal agencies |
81,940 |
65,907 |
State and local government agencies |
3,912 |
3,614 |
Other |
17 |
3 |
Total revenue |
$ 85,869 |
$ 69,524 |
|
|
|
Revenues by contract type as a
percentage of contract revenue were as follows: |
|
|
|
|
Three Months
Ended |
|
March
31, |
|
2012 |
2011 |
Fixed price, including service-type
contracts |
46% |
49% |
Time and materials |
34 |
29 |
Cost reimbursable |
20 |
22 |
|
100% |
100% |
|
|
|
Prime contract |
85% |
74% |
Sub-contract |
15 |
26 |
|
100% |
100% |
|
|
|
|
Three Months
Ended |
|
March
31, |
|
2012 |
2011 |
Net cash used in operating activities |
$ (1,620) |
$ (9,503) |
Capital expenditures |
$ 92 |
$ 320 |
Depreciation |
$ 1,014 |
$ 865 |
Bookings |
$ 58,335 |
$ 59,023 |
|
|
|
|
March 31, |
December 31, |
|
2012 |
2011 |
Total backlog |
$ 717,358 |
$ 801,932 |
Funded backlog |
$ 151,897 |
$ 183,336 |
Employees |
1,461 |
1,534 |
|
ATTACHMENT IV |
|
|
|
DYNAMICS RESEARCH
CORPORATION |
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES |
ADJUSTED EARNINGS
BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (ADJUSTED
EBITDA) (unaudited) |
(Dollars in
thousands) |
|
|
|
As presented, adjusted EBITDA is defined as
follows: |
|
|
|
|
|
|
Three Months
Ended |
|
March
31, |
|
2012 |
2011 |
Net income |
$ 1,791 |
$ 2,708 |
Add: |
|
|
Interest expense, net |
2,779 |
252 |
Provision for income taxes |
1,239 |
1,857 |
Depreciation expense |
1,014 |
865 |
Amortization expense |
1,031 |
374 |
Share-based compensation |
176 |
187 |
Less: amortization of deferred gain on
sale of building |
(169) |
(169) |
Adjusted EBITDA(1) |
$ 7,861 |
$ 6,074 |
Adjusted EBITDA, as a percent of revenue |
9.2% |
8.7% |
|
|
|
(1) We have calculated
adjusted EBITDA to conform with the definition of EBITDA provided
in our loan agreements to help investors understand that component
of our debt covenant calculations. We may have calculated
EBITDA differently than it is calculated by other
companies. |
CONTACT: Investors: Chris Witty
Darrow Associates, Inc.
646.438.9385
cwitty@darrowir.com
Media: Duyen "Jen" Truong
Sage Communications (for DRC)
703.584.5645
duyent@aboutsage.com
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