NEWS
2007
SRA Announces Financial Results for First Quarter of Fiscal Year 2008
- Revenue up 20% year over year to $364 million
- Operating income up 31% to $29.9 million
- Diluted EPS up $0.05 to $0.31
- $829 million of contract awards
FAIRFAX, Va., Nov. 7 /PRNewswire-FirstCall/ -- SRA International, Inc.
(NYSE: SRX), a leading provider of technology and strategic consulting
services and solutions to federal government organizations, today announced
operating results for the first quarter of fiscal year 2008, which ended
September 30, 2007.
Revenue for the quarter was $364.1 million, up 20% from $304.0 million in
the September 2006 quarter. Operating income for the quarter was $29.9
million, for an operating margin of 8.2%. Net income was $18.5 million, for a
net margin of 5.1%. Diluted earnings per share for the quarter were $0.31, up
$0.05 year over year.
These first quarter financial results include the effect of the Constella
Group acquisition as of August 9, 2007. Constella contributed about $30
million of revenue and was accretive to earnings per share.
SRA President and CEO Stan Sloane said, "We're pleased to see solid
returns on our marketing and sales investments. Despite the challenging
market conditions, we've bolstered our backlog with a number of valuable wins,
and we've continued to devote more resources to the next wave of bid
opportunities."
CFO and Executive Vice President for Operations Stephen Hughes added, "One
of the tenets of our strategic plan is to drive G&A cost efficiencies to
increase our investment in business and employee development and to expand
margins, and we were highly successful on those fronts in the quarter. Cash
flows were also strong as we held Days Sales Outstanding to 69 days, equaling
our best figure to date."
New Business Awards
The Company won new business in the first quarter with potential value of
$829 million, if all options are exercised. As of September 30, 2007, the
Company's backlog of signed business orders was $4.0 billion, an increase of
10% year over year. Constella's contract backlog is included in that total.
Major highlights of recent competitive contract awards include:
-- U.S. Navy, Space and Naval Warfare Systems Command (SPAWAR). The Navy
awarded SRA a five-year, $80 million task order to provide program and
acquisition management support to its Networks, Information Assurance
and Enterprise Services Program Office in San Diego.
-- Department of Justice. SRA won a three-year, $59 million task order to
continue implementing an enterprise-wide infrastructure architecture
for the Justice Department. Services include systems engineering,
network management, software development and information assurance.
-- Small Business Administration (SBA), Disaster Credit Management System
(DCMS). SRA was awarded a four-year, $30 million task order to host
the DCMS, a Web-enabled loan processing system that the Company has had
a separate contract to operate and maintain since 2002. This new task
order involves program management and managed network, security,
storage and disaster recovery services for the system.
-- Department of Homeland Security (DHS), Sector Specific Agency Executive
Management Office (SSA EMO). DHS awarded SRA a five-year, $25 million
task order to provide programmatic and technical support to the SSA
EMO, which coordinates national infrastructure protection programs.
-- U.S. Central Command (USCENTCOM), Joint Intelligence Operations Center.
SRA won a 3.5-year, $22 million task order to provide intelligence
planning and analysis support to USCENTCOM.
SRA was also awarded several multiple-award, indefinite delivery,
indefinite quantity (ID/IQ) contracts in the September quarter. ID/IQ wins
are not included in the Company's quarterly bookings figure, but they provide
a solid foundation for future growth. The largest ID/IQ that the Company won
in the September quarter was Alliant, a General Services Administration
contract vehicle with a $50 billion ceiling value over 10 years. The contract
is currently under protest.
Forward Guidance
SRA is providing forward guidance for the second quarter and fiscal year
2008. 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 SRA might make in the future.
Measure Quarter Ending Fiscal Year Ending
December 31, 2007 June 30, 2008
Revenue (in millions) $370-$380 $1,500-$1,560
Diluted EPS At least $0.28 $1.20-$1.26
Diluted Share Equivalents (in millions) 59.6 59.8
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) 287-9905
(U.S./Canada) or (706) 643-7540 (Other) with passcode 19411259. 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 November 21,
2007 by dialing (800) 642-1687 (U.S./Canada) or (706) 645-9291 (Other) and
entering passcode 19411259.
About SRA International, Inc.
SRA is a leading provider of technology and strategic consulting services
and solutions -- including systems design, development, and integration; and
outsourcing and managed services -- to clients in national security, civil
government, and health care and public health markets. The Company also
delivers business solutions for contingency and disaster response planning,
information assurance, business intelligence, environmental strategies,
enterprise architecture, infrastructure management, and wireless integration.
FORTUNE(R) magazine has chosen SRA as one of the "100 Best Companies to
Work For" for eight consecutive years. The Company's 6,300 employees serve
clients from its headquarters in Fairfax, Virginia, 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 guidance about future financial results and
statements about the estimated value of 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 as a result of various
important factors, including: our dependence on our contracts with federal
government agencies, particularly within the U.S. Department of Defense, for
substantially all of our revenue; our dependence on our GSA schedule contracts
and our position as a prime contractor on government-wide acquisition
contracts to grow our business; our ability to attract and retain skilled
employees; any reductions in or reallocations of the U.S. defense budget or
the budgets for civil government agencies; the market price of the company's
stock prevailing from time to time; the nature of other investment
opportunities presented to the company from time to time; the company's cash
flows from operations; and other factors discussed in our latest quarterly
report on Form 10-K filed with the Securities and Exchange Commission on
August 16, 2007. In addition, the forward-looking statements included in this
press release represent our views as of November 7, 2007. 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 November 7, 2007.
Condensed Consolidated Statements of Operations (Unaudited)
(in thousands, except share and per share amounts)
Three Months Ended
30-Sep-07 30-Sep-06
Revenue $364,127 $304,034
Operating costs and expenses:
Cost of services 274,969 228,059
Selling, general and administrative 53,118 48,404
Depreciation and amortization 6,167 4,740
Total operating costs and expenses 334,254 281,203
Operating income 29,873 22,831
Interest expense (853) (10)
Interest income 1,599 1,853
Income before taxes 30,619 24,674
Provision for income taxes 12,160 9,553
Net income $18,459 $15,121
Earnings per share:
Basic $0.32 $0.27
Diluted $0.31 $0.26
Weighted-average shares:
Basic 57,287,034 55,981,631
Diluted 59,152,948 57,964,502
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands)
As of
9/30/07 6/30/07
Current assets:
Cash and cash equivalents $103,070 $212,034
Restricted funds 855 -
Short-term investments 85 85
Accounts receivable, net 321,819 262,409
Prepaid expenses and other 27,538 26,285
Deferred income taxes, current 11,174 5,860
Total current assets 464,541 506,673
Property and equipment, net 41,385 36,685
Other assets:
Goodwill 387,484 256,530
Identified intangibles, net 44,372 30,849
Deferred income taxes, noncurrent 6,947 8,163
Deferred compensation trust 8,588 8,784
Other assets 10,714 -
Total other assets 458,105 304,326
Total assets $964,031 $847,684
Current liabilities:
Accounts payable and accrued expenses $135,485 $110,897
Accrued payroll and employee benefits 81,447 81,711
Billings in excess of revenue recognized 17,993 16,980
Total current liabilities 234,925 209,588
Long-term liabilities:
Long-term debt 50,000 -
Other long-term liabilities 25,641 12,641
Total long-term liabilities 75,641 12,641
Total liabilities 310,566 222,229
Stockholders' equity 653,465 625,455
Total liabilities and stockholders'
equity $964,031 $847,684
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
Three Months Ended
9/30/07 9/30/06
Cash flows from operating activities:
Net income $18,459 $15,121
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 6,167 4,740
Stock-based compensation 2,183 3,275
Deferred income taxes (4,098) (550)
Working capital changes, net of the
effect of acquisitions (1,203) 22,135
Net cash provided by operating
activities 21,508 44,721
Cash flows from investing activities:
Capital expenditures (1,794) (3,652)
Sales and maturities of investments - 4,922
Acquisition of Constella Group, LLC,
net of cash acquired (185,812) -
Net cash (used in) provided by
investing activities (187,606) 1,270
Cash flows from financing activities:
Issuance of common stock 6,134 1,689
Tax benefits of stock option exercises 1,462 895
Borrowings (repayments) under credit
facility, net of associated financing
costs 49,676 -
Purchase of treasury stock (138) -
Net cash provided by financing
activities 57,134 2,584
Net (decrease) increase in cash and cash
equivalents (108,964) 48,575
Cash and cash equivalents, beginning of
period 212,034 173,564
Cash and cash equivalents, end of period $103,070 $222,139
Supplemental disclosures of cash flow
information:
Cash paid during the period:
Interest $400 $10
Income taxes $7,989 $7,221
Cash received during the period:
Interest $1,769 $1,616
Income taxes $84 $314
Reconciliation Between Total Revenue Growth and Organic Revenue Growth
(Unaudited)
(in thousands)
Organic revenue growth, as presented, measures revenue growth adjusted for
the impact of acquisitions. The Company believes that this non-GAAP financial
measure provides useful information because it allows investors to better
assess the underlying growth rate of the Company's existing business. This
non-GAAP financial measure should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with GAAP.
Three Months Ended
9/30/07 9/30/06 % Increase
Total Revenue, as reported $364,127 $304,034 19.8%
Plus: Revenue from acquired companies
for the comparable prior year period - 40,826
Organic Revenue $364,127 $344,860 5.6%
SOURCE SRA International, Inc.
CONTACT:
David Keffer
Vice President
Investor Relations
+1-703-502-7731
david_keffer@sra.com
or
Stephen Hughes
CFO and Executive
VP, Operations
+1-703-502-7732
steve_hughes@sra.com
both of SRA
International, Inc.