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8-K - FORM 8-K - Vangent, Inc. | c14513e8vk.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE | Contact: Eileen Cassidy Rivera | |
eileen.rivera@vangent.com |
VANGENT, INC. ANNOUNCES FOURTH QUARTER AND
FULL YEAR 2010 FINANCIAL RESULTS
FULL YEAR 2010 FINANCIAL RESULTS
- Full Year 2010 Highlights -
Revenue Increased 30% Over 2009 to $761.8 Million
Operating Income Grew to $51.9 Million and Adjusted EBITDA Grew 36% to
$95.1 Million
Revenue Increased 30% Over 2009 to $761.8 Million
Operating Income Grew to $51.9 Million and Adjusted EBITDA Grew 36% to
$95.1 Million
- Fourth Quarter 2010 Highlights -
Revenue Increased 2% to $176.4 Million
Operating Income Grew to $4.6 Million and Adjusted EBITDA Increased 9% to
$21.3 Million
Revenue Increased 2% to $176.4 Million
Operating Income Grew to $4.6 Million and Adjusted EBITDA Increased 9% to
$21.3 Million
Arlington, VA March 23, 2011 Vangent, Inc., a leading global provider of information
management and strategic business process services, today announced results for the fourth quarter
and year ended December 31, 2010.
Full Year 2010 Results and Highlights
Total revenue from continuing operations for the year ended December 31, 2010 was $761.8 million,
an increase of $177.9 million or 30% over the prior year.
Revenue growth for the full year 2010 was primarily attributable to Vangents work on the U.S.
Census contract, the acquisition of Buccaneer Computer Systems and Services, Inc. and contracts
with the U.S. Department of Education, which are reflected in the Government Group results, plus
the ramp-up of a contract in the International Group.
Operating income for the year ended December 31, 2010 increased 117% to $51.9 million compared to
$23.9 million in the prior year. The strong growth in operating income was primarily due to
increased revenue from Vangents contracts with the U.S. Census and the U.S. Department of
Education as well as the acquisition of Buccaneer.
Vangent reported net income of $40.0 million for the year ended December 31, 2010 compared to a net
loss of $34.0 million in the prior year. The change is primarily due to the strong year-over-year
operating income results and the reversal in the fourth quarter of 2010 of a tax valuation
allowance related to deferred tax assets.
Adjusted EBITDA increased 36% to $95.1 million for the full year ended December 31, 2010 compared
to $70.1 million for 2009. The increase in Adjusted EBITDA was primarily attributable to the
increase in operating income.
Vangents total contract backlog, which is the amount of revenue the Company expects to realize
over the remaining term of the contracts, including the base period and all option years, totaled
$1.9 billion at December 31, 2010. Vangents funded backlog, the portion for which funding has
been authorized, totaled $416.3 million.
Total debt as of December 31, 2010 was $406.8 million. During the fourth quarter of 2010, Vangent
repaid the $16 million in borrowings drawn on the credit facility for the acquisition of Buccaneer.
Cash and cash equivalents were $27.2 million at December 31, 2010. Net cash provided by operating
activities for continuing operations was $72.8 million for the year ended December 31, 2010, an
increase of $23.4 million compared to the prior year due to cash flows from the 2010 U.S. Census
contract. Vangents total liquidity, which includes $49.8 million available under its credit
facility, was $77.0 million.
Fourth Quarter 2010 Results and Highlights
Total revenue from continuing operations for the three months ended December 31, 2010 was $176.4
million, an increase of $3.9 million or 2% compared to $172.5 million in the fourth quarter of
2009. The increase in total revenue was primarily attributable to Vangents acquisition of
Buccaneer in the third quarter of 2010 which offset lower revenue on the U.S. Census contract.
Operating income for the three months ended December 31, 2010 was $4.6 million compared to a net
loss of $0.3 million for the same period in 2009. Impairment charges for goodwill and intangible
assets were lower for 2010 compared to 2009.
Net income for the three months ended December 31, 2010 was $38.5 million compared to a net loss of
$23.6 million in the same period in 2009. The increase in net income for the fourth quarter of
2010 primarily resulted from a tax benefit from continuing operations of $37.1 million which
reflects the reversal of a previously established valuation allowance for deferred tax assets as
well as the improved operating results.
Adjusted EBITDA increased $1.8 million to $21.3 million for the fourth quarter of 2010, compared to
$19.4 million for the fourth quarter of 2009. The increase in Adjusted EBITDA was primarily
attributable to the Buccaneer acquisition.
This was a pivotal year for Vangent. The acquisition of Buccaneer has gone extremely well. Our
successful execution of the U.S. Census contract, combined with stellar operations and superior
delivery across the organization, contributed to the best year on record for customer satisfaction
and results, stated Mac Curtis, President and CEO of Vangent. We ended 2010 with strong top and
bottom line performance and a solid working capital and cash management position, paving the way
for another successful year when our government customers need Vangent more than ever. With our
long track record of helping the government reduce costs and improve efficiencies, we are excited
about opportunities that are top of mind with the U.S. Congress such as fraud detection and
prevention, data center consolidation and other cost-saving initiatives that drive
pay-for-performance in health care.
Discontinued Operations
As previously reported, in the fourth quarter of 2009, Vangent completed an evaluation of its
international business and committed to a plan to sell its business operations in Latin America.
The consolidated financial statements have been revised for all periods presented to report
Vangents Latin American business as discontinued operations.
In 2010, Vangent completed the sales of its operations in Mexico and Argentina. Vangent completed
the sale of its operations in Venezuela in February 2011.
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Fourth Quarter and Full Year 2010 Financial Results Conference Call
The conference call will take place on March 23, 2011 at 4:30 pm ET. Interested parties may call
(888) 329-8889 and request the Vangent Fourth Quarter and Full Year 2010 Financial Results
Conference Call, conference ID # 1638322.
Audio Replay
A replay of the earnings call can be heard after 7:30 p.m. on March 23, 2011 until April 6, 2011.
To hear the replay, dial (888) 203-1112 and enter the same conference ID # 1638322.
Vangents fourth quarter and full year 2010 financial statements including its annual report on
Form 10K will be made available on the companys website at
www.vangent.com in connection with
Vangent Fourth Quarter and Full Year 2010 Financial Results Conference Call.
About Vangent, Inc.
With more than 7,000 employees worldwide, Vangent, Inc. is a global provider of consulting, systems
integration, human capital management and strategic business process services to the U.S. federal
and international governments, higher education institutions and corporations. Clients include the
Centers for Medicare & Medicaid Services, the U.S. Departments of Defense, Education, Health and
Human Services, State, Labor and Veterans Affairs; U.S. Census Bureau and the U.S. Office of
Personnel Management, as well as Fortune 500 companies.
Forward-Looking Statements
This press release contains forward-looking statements. Forward-looking statements are those that
do not relate solely to historical fact. They include, but are not limited to, any statement that
may predict, forecast, indicate or imply future results, performance, achievements or events. Words
such as, but not limited to, believe, expect, anticipate, estimate, intend, plan,
targets, projects, likely, will, would, could and similar expressions or phrases
identify forward-looking statements. All forward-looking statements involve risks and
uncertainties. The occurrence of the events described, and the achievement of the expected results,
depend on many events, some or all of which are not predictable or within our control. In light of
these risks and uncertainties, expected results or other anticipated events or circumstances
discussed in this press release might not occur. We undertake no obligation, and specifically
decline any obligation, to publicly update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
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Vangent, Inc.
Condensed Consolidated Statements of Operations
(in thousands)
Condensed Consolidated Statements of Operations
(in thousands)
(Unaudited) | ||||||||||||||||
Three Months Ended | Years Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Revenue |
$ | 176,392 | $ | 172,544 | $ | 761,841 | $ | 583,986 | ||||||||
Cost of revenue |
152,014 | 146,085 | 639,377 | 490,500 | ||||||||||||
Gross profit |
24,378 | 26,459 | 122,464 | 93,486 | ||||||||||||
General and administrative expenses |
10,462 | 10,874 | 45,354 | 40,387 | ||||||||||||
Selling and marketing expenses |
4,021 | 4,684 | 19,905 | 18,003 | ||||||||||||
Impairment of goodwill and indefinite-life intangible
asset |
5,320 | 11,227 | 5,320 | 11,227 | ||||||||||||
Operating income (loss) |
4,575 | (326 | ) | 51,885 | 23,869 | |||||||||||
Interest expense, net |
7,839 | 8,903 | 31,140 | 34,289 | ||||||||||||
Income (loss) from continuing operations
before income taxes |
(3,264 | ) | (9,229 | ) | 20,745 | (10,420 | ) | |||||||||
Provision (benefit) for income taxes |
(37,084 | ) | 1,727 | (31,486 | ) | 6,794 | ||||||||||
Income (loss) from continuing operations |
33,820 | (10,956 | ) | 52,231 | (17,214 | ) | ||||||||||
Income (loss) from discontinued operations, net of tax |
4,728 | (12,636 | ) | (12,228 | ) | (16,794 | ) | |||||||||
Net income (loss) |
38,548 | (23,592 | ) | 40,003 | (34,008 | ) | ||||||||||
Net loss attributed to noncontrolling interest |
(35 | ) | | (26 | ) | | ||||||||||
Net income (loss) attributable to Vangent |
$ | 38,583 | $ | (23,592 | ) | $ | 40,029 | $ | (34,008 | ) | ||||||
Statements of Operations Data as a Percent of Revenue |
||||||||||||||||
Revenue |
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Cost of revenue |
86.2 | 84.7 | 83.9 | 84.0 | ||||||||||||
Gross profit margin |
13.8 | 15.3 | 16.1 | 16.0 | ||||||||||||
General and administrative expenses |
5.9 | 6.3 | 6.0 | 6.9 | ||||||||||||
Selling and marketing expenses |
2.3 | 2.7 | 2.6 | 3.1 | ||||||||||||
Impairment of goodwill and indefinite-life intangible
asset |
3.0 | 6.5 | 0.7 | 1.9 | ||||||||||||
Operating income margin |
2.6 | (0.2 | ) | 6.8 | 4.1 | |||||||||||
Interest expense and other, net |
4.5 | 5.1 | 4.1 | 5.9 | ||||||||||||
Income (loss) before income taxes |
(1.9 | ) | (5.3 | ) | 2.7 | (1.8 | ) | |||||||||
Provision (benefit) for income taxes |
(21.1 | ) | 1.0 | (4.2 | ) | 1.1 | ||||||||||
Income (loss) from continuing operations |
19.2 | (6.3 | ) | 6.9 | (2.9 | ) | ||||||||||
Income (loss) from discontinued operations, net of tax |
2.7 | (7.4 | ) | (1.6 | ) | (2.9 | ) | |||||||||
Net income (loss) |
21.9 | (13.7 | ) | 5.3 | (5.8 | ) | ||||||||||
Net loss attributed to noncontrolling interest |
| | | | ||||||||||||
Net income (loss) attributable to Vangent |
21.9 | % | (13.7 | )% | 5.3 | % | (5.8 | )% | ||||||||
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Vangent, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
Condensed Consolidated Balance Sheets
(in thousands)
December 31, | ||||||||
2010 | 2009 | |||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 27,194 | $ | 44,638 | ||||
Trade receivables, net |
122,940 | 109,846 | ||||||
Prepaid expenses and other assets |
12,572 | 10,353 | ||||||
Assets of discontinued operations |
329 | 15,036 | ||||||
Total current assets |
163,035 | 179,873 | ||||||
Property and equipment, net |
28,031 | 25,124 | ||||||
Intangible assets, net |
150,847 | 151,860 | ||||||
Goodwill |
297,076 | 268,212 | ||||||
Deferred tax asset |
21,923 | | ||||||
Deferred debt financing costs and other |
8,823 | 8,433 | ||||||
Assets of discontinued operations |
| 6,727 | ||||||
Total assets |
$ | 669,735 | $ | 640,229 | ||||
Liabilities and Equity |
||||||||
Current liabilities: |
||||||||
Current portion of long-term debt |
$ | 1,401 | $ | 13,534 | ||||
Accounts payable and accrued liabilities |
80,672 | 64,849 | ||||||
Accrued interest payable |
7,781 | 8,186 | ||||||
Deferred tax liability |
| 5,628 | ||||||
Deferred revenue |
7,964 | 3,976 | ||||||
Liabilities of discontinued operations |
1,880 | 7,521 | ||||||
Total current liabilities |
99,698 | 103,694 | ||||||
Long-term debt, net of current portion |
405,353 | 406,832 | ||||||
Other long-term liabilities |
5,453 | 7,194 | ||||||
Deferred tax liability |
1,860 | 12,144 | ||||||
Liabilities of discontinued operations |
| 502 | ||||||
Total liabilities |
512,364 | 530,366 | ||||||
Total equity |
157,371 | 109,863 | ||||||
Total liabilities and equity |
$ | 669,735 | $ | 640,229 | ||||
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Vangent, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
Condensed Consolidated Statements of Cash Flows
(in thousands)
Years Ended | ||||||||
December 31, | ||||||||
2010 | 2009 | |||||||
Cash flows from operating activities |
||||||||
Net income (loss) |
$ | 40,003 | $ | (34,008 | ) | |||
Loss from discontinued operations, net of tax |
(12,228 | ) | (16,794 | ) | ||||
Income (loss) from continuing operations |
52,231 | (17,214 | ) | |||||
Depreciation and amortization |
34,798 | 31,883 | ||||||
Deferred income taxes |
(32,591 | ) | 5,822 | |||||
Impairment of goodwill and indefinite-life intangible asset |
5,320 | 11,227 | ||||||
Other non-cash charges |
3,398 | 3,208 | ||||||
Net changes in operating assets and liabilities, excluding effect of acquisition: |
||||||||
Trade receivables |
5,177 | 14,401 | ||||||
Prepaid expenses and other assets |
(338 | ) | 2,852 | |||||
Accounts payable and other liabilities |
4,788 | (2,751 | ) | |||||
Continuing operations, net |
72,783 | 49,428 | ||||||
Discontinued operations, net |
(1,892 | ) | (9,041 | ) | ||||
Net cash provided by operating activities |
70,891 | 40,387 | ||||||
Cash flows from investing activities |
||||||||
Acquisition, net of cash acquired |
(60,153 | ) | | |||||
Capital expenditures |
(12,449 | ) | (10,682 | ) | ||||
Continuing operations, net |
(72,602 | ) | (10,682 | ) | ||||
Discontinued operations, net |
(516 | ) | (5,101 | ) | ||||
Net cash used in investing activities |
(73,118 | ) | (15,783 | ) | ||||
Cash flows from financing activities |
||||||||
Repayment of senior secured term loan |
(13,612 | ) | | |||||
Deferred debt financing costs and other |
(2,192 | ) | (188 | ) | ||||
Net cash used in financing activities, continuing operations |
(15,804 | ) | (188 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents |
(38 | ) | 34 | |||||
Net increase (decrease) in cash and cash equivalents |
(18,069 | ) | 24,450 | |||||
Total cash and cash equivalents, beginning of year |
45,584 | 21,134 | ||||||
Total cash and cash equivalents, end of year |
27,515 | 45,584 | ||||||
Less: Cash and cash equivalents, discontinued operations |
321 | 946 | ||||||
Cash and cash equivalents, continuing operations |
$ | 27,194 | $ | 44,638 | ||||
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Vangent, Inc.
Reconciliation of GAAP to Non-GAAP Measures (Unaudited)
(in thousands)
Reconciliation of GAAP to Non-GAAP Measures (Unaudited)
(in thousands)
Three Months Ended | Years Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Net income (loss) |
$ | 38,548 | $ | (23,593 | ) | $ | 40,003 | $ | (34,008 | ) | ||||||
Provision (benefit) for income taxes |
(37,084 | ) | 1,727 | (31,486 | ) | 6,794 | ||||||||||
Interest expense, net of interest income |
7,885 | 8,895 | 31,246 | 34,281 | ||||||||||||
Depreciation and amortization |
10,095 | 8,051 | 34,798 | 31,883 | ||||||||||||
EBITDA |
19,444 | (4,920 | ) | 74,561 | 38,950 | |||||||||||
(Income) loss from discontinued operations,
net of tax |
(4,728 | ) | 12,637 | 12,228 | 16,794 | |||||||||||
Impairment of goodwill and indefinite-life
intangible asset |
5,320 | 11,227 | 5,320 | 11,227 | ||||||||||||
Equity-based compensation expense |
145 | 273 | 896 | 1,048 | ||||||||||||
Management fee and expenses |
298 | 315 | 1,278 | 1,289 | ||||||||||||
Other |
785 | (84 | ) | 789 | 810 | |||||||||||
Adjusted EBITDA, excluding pro forma
results of acquisition |
$ | 21,264 | $ | 19,448 | $ | 95,072 | $ | 70,118 | ||||||||
EBITDA is defined as net income (loss) before interest, income taxes, and depreciation and
amortization. Management uses this measure as an indicator of operating performance. EBITDA is
not an indicator of financial performance under U.S. generally accepted accounting principles
(GAAP) or a measure of liquidity and may not be comparable to similarly captioned information
reported by other companies. In addition, it should not be considered as an alternative to, or
more meaningful than, income (loss) before income taxes, cash flows from operating activities, or
other traditional indicators of operating performance.
Adjusted EBITDA is a financial measure used to calculate the consolidated leverage ratio, one of
the more restrictive financial covenants under the senior secured credit facility. Adjusted EBITDA,
as defined in the senior secured credit facility, excludes (i) discontinued operations, (ii)
impairment charges, (iii) equity-based compensation expense, (iv) management fee and expenses paid
to Veritas Capital, and (v) other items as defined in the senior secured credit facility, including
an adjustment to include the pre-acquisition EBITDA results of the acquired company for the
calculation of the consolidated leverage ratio. The adjustment to EBITDA for the pre-acquisition
results of Buccaneer was $6,574 for the year ended December 31, 2010, resulting in Adjusted EBITDA,
including the pro forma results of Buccaneer, of $101,646 for the year ended December 31, 2010.
# # #
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