-- Fourth Quarter Revenue Up 26
Percent -- -- Continued Strong Cash Flow Driving Rapid Debt
Reduction --
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 fourth
quarter and year ended December 31, 2011.
Financial Results
The Company reported net income from continuing operations for
the fourth quarter of 2011 of $4.0 million, or $0.39 per diluted
share, the same as the fourth quarter of 2010. For the full year
2011 net income from continuing operations was $12.8 million, or
$1.25 per diluted share, excluding transaction related costs of
$2.2 million incurred in the second quarter of 2011, up from $12.3
million, or $1.22 per diluted share, in 2010. Including transaction
costs, 2011 net income was $11.5 million, or $1.12 per diluted
share. Earnings before interest, taxes, depreciation, and
amortization (EBITDA) was $43.6 million for the year on a pro-forma
basis, as if the merger with High Performance Technologies, Inc.
(HPTi) had occurred on January 1, 2011.
For the fourth quarter of 2011 revenue was $88.2 million, up 26
percent from $69.8 million in the fourth quarter of 2010,
reflecting the addition of HPTi. For the year 2011 revenue was
$322.6 million, up 19 percent from $272.1 million for
2010.
Free cash flow was $13.9 million and $26.6 million for the
fourth quarter and full year 2011, respectively. Free cash
flow yield, expressed as a percentage of revenue, was better than 8
percent for the full year 2011.
Business Highlights
The Company also reported that its pipeline of qualified new
business contract opportunities currently stands at $839 million,
up 48 percent from a year ago.
"With the merger of DRC and High Performance Technologies in
2011, we embraced a tremendous, transformational opportunity for
our employees, customers and investors alike," said Jim Regan,
DRC's chairman and chief executive officer. "In just six
months, since consummating the transaction at the end of June, we
have successfully completed the organizational and systems
integration of these two great entities, reduced debt assumed with
the merger by $30 million, and built a pipeline of potential new
business totaling some $4.3 billion -- more than double the amount
a year ago.
"While DRC is stronger than it's ever been, federal government
fiscal challenges have dampened our growth outlook somewhat and
impacted our financial results. Recognizing and responding to
these challenges, we have built a large and growing pipeline of
qualified new business opportunities, which at this point has
yielded $243 million of bids submitted and awaiting award. As we
look ahead we are among the best positioned professional services
companies in the federal market and will remain so for 2012 and
beyond. We have outstanding capabilities and strengths in
cloud computing, systems engineering, high performance computing,
cyber security, healthcare, and homeland security. With this
unique portfolio and an extremely talented workforce, we will
navigate the coming quarters and continue to build a bright future
for DRC."
Company Guidance
Earnings are estimated to be in the range of $1.06 to $1.14 per
diluted share for the full year 2012 and between $0.16 and $0.18
for the first quarter of 2012.
The Company's estimate of revenue for 2012 is in the range of
$353 to $363 million, reflecting anticipated top-line growth of 9
to 13 percent. For the first quarter of 2012, revenue is
projected at $83 to $86 million, reflecting growth of 19 to 24
percent.
EBITDA is estimated to be in the range of $37 to $39 million for
2012, enabling the Company to pay down debt by an estimated
additional $30 million over the course of the year.
Conference Call
The Company will conduct its fourth quarter and year-end 2011
conference call on Thursday, February 23, 2012 at 10:00 a.m.
ET. The call will be available by telephone at 877-303-4382,
and accessible by webcast at http://www.drc.com. Recorded replays
of the conference call will be available on Dynamics Research
Corporation's investor relations home page at http://www.drc.com
and by telephone at 800-585-8367, replay passcode #42634161,
beginning at 1:00 p.m. ET on February 23, 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.
The Company assumes no obligation to update any forward-looking
information.
Non-GAAP Financial Information
DRC discloses the following information (i) net income and
diluted earnings per share excluding transaction costs, (ii)
earnings before interest, taxes, depreciation and amortization, and
(iii) free cash flow, which are not recognized measures under
GAAP. When evaluating DRC's financial results investors should
evaluate each adjustment to reported GAAP financial measures in the
reconciliations provided in Appendix V as additional information
and not use these non-GAAP financial measures as alternatives to
reported GAAP financial measures. DRC presents these financial
measures because the Company believes they provide 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 December 31, |
|
2011 |
2010 |
Revenue |
$ 88,222 |
$ 69,753 |
Cost of revenue |
70,221 |
57,607 |
Gross profit |
18,001 |
12,146 |
|
|
|
Selling, general and administrative
expenses |
6,950 |
5,301 |
Amortization of intangible assets |
1,491 |
385 |
Operating income |
9,560 |
6,460 |
Interest expense, net |
(2,881) |
(2) |
Other income, net |
116 |
219 |
Income from continuing operations before
provision for income taxes |
6,795 |
6,677 |
Provision for income taxes |
2,761 |
2,686 |
Net income |
$ 4,034 |
$ 3,991 |
|
|
|
Earnings per share: |
|
|
Basic |
$ 0.39 |
$ 0.40 |
Diluted |
$ 0.39 |
$ 0.39 |
|
|
|
Weighted average shares outstanding: |
|
|
Basic |
10,263,300 |
9,975,884 |
Diluted |
10,318,477 |
10,137,032 |
|
|
|
|
|
ATTACHMENT II |
|
|
|
DYNAMICS RESEARCH
CORPORATION |
CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS (unaudited) |
(in thousands, except
share and per share data) |
|
|
Twelve Months
Ended December 31, |
|
2011 |
2010 |
Revenue |
$ 322,597 |
$ 272,065 |
Cost of revenue |
265,967 |
228,175 |
Gross profit |
56,630 |
43,890 |
|
|
|
Selling, general and administrative
expenses |
26,469 |
21,534 |
Amortization of intangible assets |
3,792 |
1,541 |
Operating income |
26,369 |
20,815 |
Interest expense, net |
(6,928) |
(1,084) |
Other income, net |
122 |
453 |
Income from continuing operations before
provision for income taxes |
19,563 |
20,184 |
Provision for income taxes |
8,106 |
7,871 |
Income from continuing operations |
11,457 |
12,313 |
Effect of discontinued operations, net of
tax |
-- |
392 |
Net income |
$ 11,457 |
$ 12,705 |
|
|
|
Earnings per share: |
|
|
Basic |
|
|
Income from continuing
operations |
$ 1.13 |
$ 1.24 |
Effect of discontinued
operations, net of tax |
-- |
0.04 |
Net income |
$ 1.13 |
$ 1.28 |
Diluted |
|
|
Income from continuing
operations |
$ 1.12 |
$ 1.22 |
Effect of discontinued
operations, net of tax |
-- |
$ 0.04 |
Net income |
$ 1.12 |
$ 1.26 |
|
|
|
Weighted average shares outstanding: |
|
|
Basic |
10,108,907 |
9,893,322 |
Diluted |
10,219,408 |
10,078,937 |
|
|
|
|
|
ATTACHMENT III |
|
|
|
DYNAMICS RESEARCH
CORPORATION |
|
|
CONDENSED CONSOLIDATED
BALANCE SHEETS (unaudited) |
|
|
(in
thousands) |
|
|
|
|
|
|
December 31,
2011 |
December 31,
2010 |
Assets |
|
|
Current assets |
|
|
Cash and cash equivalents |
$ 3,908 |
$ 30,163 |
Contract receivables, net |
66,466 |
48,394 |
Prepaid expenses and other
current assets |
2,566 |
2,924 |
Total current assets |
72,940 |
81,481 |
Noncurrent assets |
|
|
Property and
equipment, net |
15,265 |
12,219 |
Goodwill |
211,805 |
97,641 |
Intangible
assets, net |
18,741 |
2,533 |
Deferred tax
asset |
497 |
585 |
Other noncurrent
assets |
4,312 |
3,757 |
Total noncurrent
assets |
250,620 |
116,735 |
Total assets |
$ 323,560 |
$ 198,216 |
|
|
|
Liabilities and stockholders' equity |
|
|
Current liabilities |
|
|
Current portion of long-term
debt |
$ 12,375 |
$ 8,000 |
Accounts payable |
24,504 |
16,883 |
Accrued compensation and
employee benefits |
24,902 |
18,046 |
Deferred taxes |
3,383 |
2,418 |
Other accrued expenses |
8,556 |
4,617 |
Total current liabilities |
73,720 |
49,964 |
Long-term liabilities |
|
|
Long-term debt |
102,453 |
14,000 |
Other long-term
liabilities |
33,066 |
27,067 |
Total stockholders' equity |
114,321 |
107,185 |
Total liabilities and
stockholders' equity |
$ 323,560 |
$ 198,216 |
|
|
|
|
|
|
|
|
|
ATTACHMENT IV |
|
|
|
|
|
DYNAMICS RESEARCH
CORPORATION |
|
|
|
|
SUPPLEMENTAL
INFORMATION (unaudited) |
|
|
|
|
(dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract revenues were earned
from the following sectors: |
|
|
|
|
Three
Months Ended December 31, |
Twelve
Months Ended December 31, |
|
2011 |
2010 |
2011 |
2010 |
National defense and
intelligence agencies |
$ 50,969 |
$ 49,344 |
$ 205,730 |
$ 179,704 |
Homeland security |
12,082 |
10,762 |
48,655 |
50,468 |
Federal civilian agencies |
21,698 |
6,337 |
53,436 |
23,901 |
Total revenue from federal
agencies |
84,749 |
66,443 |
307,821 |
254,073 |
State and local government
agencies |
3,465 |
3,257 |
14,739 |
17,915 |
Other |
8 |
53 |
37 |
77 |
Total revenue |
$ 88,222 |
$ 69,753 |
$ 322,597 |
$ 272,065 |
|
|
|
|
|
Revenues by contract type as a
percentage of contract revenue were as follows: |
|
|
|
|
Three
Months Ended December 31, |
Twelve
Months Ended December 31, |
|
2011 |
2010 |
2011 |
2010 |
Fixed price, including
service-type contracts |
48% |
50% |
48% |
47% |
Time and materials |
34 |
29 |
32 |
32 |
Cost reimbursable |
18 |
21 |
20 |
21 |
|
100% |
100% |
100% |
100% |
|
|
|
|
|
Prime contract |
84% |
74% |
79% |
73% |
Sub-contract |
16 |
26 |
21 |
27 |
|
100% |
100% |
100% |
100% |
|
|
|
|
Three
Months Ended December 31, |
Twelve
Months Ended December 31, |
|
2011 |
2010 |
2011 |
2010 |
Net cash provided by operating activities -
continuing operations |
$ 14,082 |
$ 9,860 |
$ 28,360 |
$ 41,331 |
Capital expenditures |
$ 189 |
$ 183 |
$ 1,714 |
$ 4,449 |
Depreciation |
$ 1,049 |
$ 904 |
$ 3,823 |
$ 3,564 |
Bookings |
$ 61,506 |
$ 46,555 |
$ 336,140 |
$ 272,143 |
|
|
|
|
|
|
December 31,
2011 |
December 31,
2010 |
|
|
Total backlog |
$ 801,932 |
$ 400,881 |
|
|
Funded backlog |
$ 183,336 |
$ 133,516 |
|
|
Employees |
1,534 |
1,295 |
|
|
|
|
|
ATTACHMENT V |
|
|
DYNAMICS RESEARCH
CORPORATION |
|
NON-GAAP CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS (unaudited) |
|
(in thousands, except
share and per share data) |
|
|
|
|
Twelve Months Ended
December 31, 2011 |
Revenue |
$ 322,597 |
Cost of revenue |
265,967 |
Gross profit |
56,630 |
|
|
Non-GAAP selling, general and administrative
expenses |
24,766 |
Amortization of intangible assets |
3,792 |
Non-GAAP operating income |
28,072 |
Non-GAAP interest expense, net |
(6,395) |
Other income, net |
122 |
Income from continuing operations before
provision for income taxes |
21,799 |
Provision for income taxes |
9,046 |
Non-GAAP net income |
$ 12,753 |
|
|
Non-GAAP earnings per share: |
|
Non-GAAP Basic |
$ 1.26 |
Non-GAAP Diluted |
$ 1.25 |
|
|
Weighted average shares outstanding |
|
Basic |
10,108,907 |
Diluted |
10,219,408 |
|
|
|
|
ATTACHMENT VI |
|
DYNAMICS RESEARCH
CORPORATION |
|
|
RECONCILIATION OF
NON-GAAP MEASURES |
|
|
(in thousands, except
share and per share data) |
|
|
|
|
|
|
Twelve Months Ended
December 31, 2011 |
|
GAAP selling, general and administrative
expenses |
$ 26,469 |
|
Operating transaction costs |
(1,703) |
|
Non-GAAP selling, general and
administrative |
$ 24,766 |
|
|
|
|
GAAP operating income |
$ 26,369 |
|
Operating transaction costs |
1,703 |
|
Non-GAAP operating income |
$ 28,072 |
|
|
|
|
GAAP interest expense, net |
$ (6,928) |
|
Non operating transaction costs |
533 |
|
Non-GAAP interest expense, net |
$ (6,395) |
|
|
|
|
GAAP income from continuing operations before
provision for income taxes |
$ 19,563 |
|
Total transaction costs |
2,236 |
|
Non-GAAP income from continuing operations
before provision for income taxes |
$ 21,799 |
|
|
|
|
GAAP provision for income taxes |
$ 8,106 |
|
Tax benefit for transaction costs |
940 |
|
Non-GAAP provision for income taxes |
$ 9,046 |
|
|
|
|
GAAP income from continuing operations |
$ 11,457 |
|
Total transaction costs, net of taxes |
1,296 |
|
Non-GAAP income from continuing
operations |
$ 12,753 |
|
|
|
|
Earnings per share |
|
|
GAAP Basic |
$ 1.13 |
|
Per share effect
of transaction costs |
0.13 |
|
Non-GAAP Basic |
$ 1.26 |
|
|
|
|
GAAP Diluted |
$ 1.12 |
|
Per share effect of transaction
costs |
0.13 |
|
Non-GAAP Diluted |
$ 1.25 |
|
|
|
|
Weighted average shares outstanding |
|
|
Basic |
10,108,907 |
|
Diluted |
10,219,408 |
|
|
|
EARNINGS BEFORE
INTEREST, TAXES, DEPRECIATION AND AMORTIZATION |
|
|
Twelve Months Ended
December 31, 2011 |
|
DYNAMICS RESEARCH
CORPORATION (DRC) |
|
|
Net income |
$ 11,457 |
|
Plus: |
|
|
Interest expense, net (less
non-operating transaction costs) |
6,395 |
|
Provision for income taxes |
8,106 |
|
Depreciation expense |
3,823 |
|
Amortization expense |
3,792 |
|
Stock compensation expense |
686 |
|
Transaction costs |
2,236 |
|
Less: Non-cash items increasing net
income |
(676) |
|
EBITDA - DRC |
$ 35,819 |
|
|
|
|
HIGH PERFORMANCE
TECHNOLOGIES, INC. (HPTi) |
|
|
(for the six month period ending June 30,
2011) |
|
|
Net income |
$ 5,659 |
|
Plus: |
|
|
Interest income, net |
(21) |
|
Provision for income taxes |
144 |
|
Depreciation expense |
333 |
|
Stock compensation expense |
1,631 |
|
EBITDA - HPTi |
$ 7,746 |
|
Combined EBITDA (DRC and
HPTi) |
$ 43,565 |
|
|
FREE CASH
FLOW |
|
Twelve Months Ended
December 31, 2011 |
Three Months Ended
December 31, 2011 |
Net cash provided by operating activities -
continuing operations |
$ 28,360 |
$ 14,082 |
Less: Additions to property and
equipment |
(1,714) |
(189) |
Free cash flow |
$ 26,646 |
$ 13,893 |
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
Dynamics Research Corp. (MM) (NASDAQ:DRCO)
Historical Stock Chart
From Apr 2024 to May 2024
Dynamics Research Corp. (MM) (NASDAQ:DRCO)
Historical Stock Chart
From May 2023 to May 2024