Attached files
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| 8-K - FORM 8-K - SECOND QUARTER 2011 RESULTS - DYNAMICS RESEARCH CORP | form8-k.htm |
Exhibit 99.1
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News Release |
DYNAMICS RESEARCH CORPORATION
TWO TECH DRIVE, ANDOVER, MASSACHUSETTS 01810-2434 TEL. 978/289-1500 www.drc.com
DRC REPORTS SECOND QUARTER 2011 RESULTS
--- Sharply Rising Proposal Pipeline and Recent Acquisition Support Solid Growth Expectations ---
Andover, Mass. - July 27, 2011 - Dynamics Research Corporation (Nasdaq: DRCO), a leading provider of innovative management consulting, engineering, and information technology services and solutions to federal and state governments, today announced operating results for the second quarter ended June 30, 2011.
Financial Results
The Company reported income from continuing operations, excluding transaction costs of $2.2 million, for the second quarter of 2011 of $2.7 million, or $0.27 per diluted share, up 6.2 percent from $2.6 million, or $0.26 per diluted share, for the second quarter of 2010. Revenue for the second quarter of 2011 was $68.5 million compared with $65.3 million for the same period in 2010. Second quarter 2011 federal business revenue was up 7.6 percent compared with the same period a year ago.
For the six month period ended June 30, 2011 income from continuing operations, excluding second quarter transaction costs, was $5.4 million, or $0.54 per diluted share, compared with $5.3 million, or $0.53 per diluted share, for the same period in 2010. For the six months ended June 30, 2011 revenue was $138.0 million compared with $133.9 million for the same period in 2010. Federal business revenue for the six month period rose 5.9 percent compared with the same period a year ago.
Business Highlights
“The merger of DRC and High Performance Technologies, Inc. (HPTi) on June 30, 2011 was a transformational event for our Company. One of the best run firms in our industry, HPTi brings tremendous competitive and complementary strengths to DRC in terms of talent, technical capabilities, and market presence,” said Jim Regan, DRC’s chairman and chief executive officer. “We are now able to offer a portfolio of management consulting and high end information technology solutions well matched with federal sector demand, even as Congress and the administration seek to control spending, and enabling us to pursue larger, more complex prime contract opportunities requiring advanced information technology and systems engineering solutions, such as cloud computing.
“We continued to report strong financial performance in the second quarter of 2011, with operating margins of 7.2 percent, excluding transaction costs, and cash generated from operating activities of $9.4 million. Additionally, our total new business raw pipeline now stands at more than $4 billion, including HPTi. DRC’s overall expertise, combined with a strong presence in some of the best funded federal sectors, underlies our confidence in the Company’s ability to capitalize on market opportunities and growth prospects going forward.”
Company Guidance
The Company’s estimate for 2011 full year revenue is in the range of $328 to $334 million. The Company’s estimates for 2011 also are in the range of at $1.24 to $1.30 per diluted share, excluding one-time transaction costs incurred in the second quarter of 2011 of $0.13 per share. For the third quarter of 2011, the Company anticipates revenue in the range of $95 to $97 million and earnings per diluted share of $0.30 to $0.33.
Conference Call
The Company will conduct a second quarter 2011 conference call tomorrow, July 28, 2011 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 800-642-1687, replay passcode #76474604, beginning at 1:00 p.m. ET on July 28, 2011.
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. The Company assumes no obligation to update any forward-looking information.
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DYNAMICS RESEARCH CORPORATION
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CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (unaudited)
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(in thousands, except share and per share data)
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Three Months Ended
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June 30,
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2011
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2010
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Revenue
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$ | 68,472 | $ | 65,308 | ||||
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Cost of revenue
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58,045 | 55,111 | ||||||
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Gross profit
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10,427 | 10,197 | ||||||
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Selling, general and administrative expenses
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6,809 | 5,080 | ||||||
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Amortization of intangible assets
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374 | 386 | ||||||
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Operating income
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3,244 | 4,731 | ||||||
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Interest expense, net
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(768 | ) | (367 | ) | ||||
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Other income (expense), net
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67 | (30 | ) | |||||
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Income from continuing operations before provision for income taxes
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2,543 | 4,334 | ||||||
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Provision for income taxes
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1,106 | 1,755 | ||||||
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Income from continuing operations
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1,437 | 2,579 | ||||||
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Effect of discontinued operations, net of tax
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- | 173 | ||||||
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Net income
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$ | 1,437 | $ | 2,752 | ||||
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Earnings per share (1)
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Basic
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Income from continuing operations
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$ | 0.14 | $ | 0.26 | ||||
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Effect of discontinued operations, net of tax
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- | 0.02 | ||||||
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Net income
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$ | 0.14 | $ | 0.28 | ||||
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Diluted
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Income from continuing operations
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$ | 0.14 | $ | 0.26 | ||||
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Effect of discontinued operations, net of tax
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- | 0.02 | ||||||
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Net income
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$ | 0.14 | $ | 0.27 | ||||
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Weighted average shares outstanding
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Basic
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10,050,545 | 9,896,738 | ||||||
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Diluted
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10,194,171 | 10,070,809 | ||||||
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(1) Totals may not add due to rounding
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DYNAMICS RESEARCH CORPORATION
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CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (unaudited)
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(in thousands, except share and per share data)
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Six Months Ended
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June 30,
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2011
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2010
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Revenue
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$ | 137,996 | $ | 133,892 | ||||
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Cost of revenue
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116,805 | 112,938 | ||||||
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Gross profit
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21,191 | 20,954 | ||||||
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Selling, general and administrative expenses
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12,478 | 11,036 | ||||||
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Amortization of intangible assets
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748 | 771 | ||||||
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Operating income
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7,965 | 9,147 | ||||||
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Interest expense, net
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(1,020 | ) | (743 | ) | ||||
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Other income, net
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163 | 83 | ||||||
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Income from continuing operations before provision for income taxes
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7,108 | 8,487 | ||||||
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Provision for income taxes
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2,963 | 3,171 | ||||||
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Income from continuing operations
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4,145 | 5,316 | ||||||
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Effect of discontinued operations, net of tax
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- | 305 | ||||||
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Net income
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$ | 4,145 | $ | 5,621 | ||||
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Earnings per share
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Basic
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Income from continuing operations
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$ | 0.42 | $ | 0.54 | ||||
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Effect of discontinued operations, net of tax
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- | 0.03 | ||||||
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Net income
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$ | 0.42 | $ | 0.57 | ||||
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Diluted
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Income from continuing operations
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$ | 0.41 | $ | 0.53 | ||||
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Effect of discontinued operations, net of tax
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- | 0.03 | ||||||
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Net income
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$ | 0.41 | $ | 0.56 | ||||
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Weighted average shares outstanding
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Basic
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9,971,411 | 9,858,538 | ||||||
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Diluted
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10,145,738 | 10,042,916 | ||||||
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DYNAMICS RESEARCH CORPORATION
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CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
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(in thousands)
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June 30,
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December 31,
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2011
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2010
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Assets
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Current assets
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Cash and cash equivalents
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$ | 8,590 | $ | 30,163 | ||||
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Contract receivables, net
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77,857 | 48,394 | ||||||
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Prepaid expenses and other current assets
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3,619 | 2,924 | ||||||
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Total current assets
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90,066 | 81,481 | ||||||
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Noncurrent assets
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Property and equipment, net
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16,489 | 12,219 | ||||||
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Goodwill
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209,855 | 97,641 | ||||||
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Intangible assets, net
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21,785 | 2,533 | ||||||
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Deferred tax asset
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- | 585 | ||||||
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Other noncurrent assets
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5,462 | 3,757 | ||||||
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Total noncurrent assets
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253,591 | 116,735 | ||||||
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Total assets
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$ | 343,657 | $ | 198,216 | ||||
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Liabilities and stockholders' equity
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Current liabilities
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Current portion of long-term debt
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$ | 11,000 | $ | 8,000 | ||||
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Accounts payable
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28,349 | 16,883 | ||||||
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Accrued compensation and employee benefits
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22,436 | 18,046 | ||||||
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Deferred tax liability
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2,205 | 2,418 | ||||||
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Other accrued expenses
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4,111 | 4,617 | ||||||
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Total current liabilities
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68,101 | 49,964 | ||||||
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Long-term liabilities
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Long-term debt
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133,021 | 14,000 | ||||||
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Deferred tax liability
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648 | - | ||||||
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Other long-term liabilities
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28,108 | 27,067 | ||||||
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Total stockholders' equity
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113,779 | 107,185 | ||||||
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Total liabilities and stockholders' equity
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$ | 343,657 | $ | 198,216 | ||||
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DYNAMICS RESEARCH CORPORATION
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SUPPLEMENTAL INFORMATION (unaudited)
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(dollars in thousands)
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Contract revenues were earned from the following sectors:
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Three Months Ended
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Six Months Ended
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June 30,
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June 30,
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2011
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2010
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2011
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2010
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National defense and intelligence agencies
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$ | 47,471 | $ | 40,626 | $ | 95,282 | $ | 84,896 | ||||||||
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Homeland security
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11,322 | 13,244 | 23,610 | 26,173 | ||||||||||||
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Federal civilian agencies
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5,782 | 6,152 | 11,590 | 12,126 | ||||||||||||
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Total revenue from federal agencies
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64,575 | 60,022 | 130,482 | 123,195 | ||||||||||||
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State and local government agencies
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3,886 | 5,284 | 7,500 | 10,678 | ||||||||||||
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Other
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11 | 2 | 14 | 19 | ||||||||||||
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Total revenue
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$ | 68,472 | $ | 65,308 | $ | 137,996 | $ | 133,892 | ||||||||
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Revenues by contract type as a percentage of contract revenue were as follows:
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Three Months Ended
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Six Months Ended
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June 30,
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June 30,
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| 2011 | 2010 | 2011 | 2010 | |||||||||||||
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Fixed price, including service-type contracts
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51 | % | 44 | % | 50 | % | 45 | % | ||||||||
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Time and materials
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30 | 35 | 30 | 34 | ||||||||||||
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Cost reimbursable
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19 | 21 | 20 | 21 | ||||||||||||
| 100 | % | 100 | % | 100 | % | 100 | % | |||||||||
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Prime contract
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76 | % | 72 | % | 75 | % | 72 | % | ||||||||
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Sub-contract
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24 | 28 | 25 | 28 | ||||||||||||
| 100 | % | 100 | % | 100 | % | 100 | % | |||||||||
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Three Months Ended
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Six Months Ended
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June 30,
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June 30,
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| 2011 | 2010 | 2011 | 2010 | |||||||||||||
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Net cash provided by (used in) operating activities - continuing operations
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$ | 9,394 | $ | 1,963 | $ | (109 | ) | $ | 15,050 | |||||||
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Capital expenditures
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$ | 542 | $ | 1,111 | $ | 862 | $ | 3,581 | ||||||||
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Depreciation
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$ | 842 | $ | 878 | $ | 1,707 | $ | 1,764 | ||||||||
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Bookings
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$ | 54,730 | $ | 52,922 | $ | 113,753 | $ | 130,143 | ||||||||
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June 30,
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December 31,
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| 2011 | 2010 | |||||||||||||||
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Total backlog (1)
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$ | 831,994 | $ | 400,881 | ||||||||||||
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Funded backlog (2)
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$ | 161,621 | $ | 133,516 | ||||||||||||
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Employees
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1,673 | 1,298 | ||||||||||||||
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(1) Total backlog includes $478,842 from HPTi
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(2) Funded backlog includes $60,247 from HPTi
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CONTACT:
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Darrow Associates, Inc.
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Investors:
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Chris Witty
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646.438.9385
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cwitty@darrowir.com
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Sage Communications
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Media:
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Duyen "Jen" Truong
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703.584.5645
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duyent@aboutsage.com
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