ANDOVER, Mass., April 29, 2009 (GLOBE NEWSWIRE) -- Dynamics Research Corporation (Nasdaq:DRCO), a leading provider of innovative management consulting, engineering, technical and information technology services and solutions to federal and state governments, today announced operating results for the first quarter ended March 31, 2009.
Financial Results
The Company reported revenue of $68.5 million for the first quarter of 2009 as compared with $56.5 million for the same period in 2008. Reported revenue rose 21 percent on a year-over-year basis, including organic revenue growth of 5 percent. Net income for the first quarter of 2009 was $1.8 million, or $0.18 per diluted share, up from $1.4 million, or $0.15 per diluted share, for the first quarter of 2008, excluding a litigation provision in the first quarter of 2008 of $6.7 million, net of taxes. Reported results for the first quarter of 2008, including the litigation provision, reflected a net loss of $5.3 million, or $0.56 per share.
Business Highlights
"We are very pleased to be reporting our eleventh consecutive quarter of improving operating results, which exceeded our guidance expectations in terms of both revenue growth and earnings improvement," said Jim Regan, DRC's chairman and chief executive officer. "Organic revenue rose five percent, operating profit was up 33 percent over the first quarter of 2008, excluding the litigation provision in the 2008 results, EBITDA of $5.4 million was up 40% on a year-over-year basis, and cash generated by operating activities of $3.4 million was strong."
"While federal services procurement activity was modest in the quarter, we anticipate that proposal activity will pick up as the year progresses and believe we are well positioned for success in these competitions. We remain focused on a selected number of targeted growth markets -- Homeland Security, the Federal Financial Civilian Agencies, Health Care, Human Capital Management and Training, Business Transformation, and Cyber-Security -- where we are seeing strong demand for our services and solutions. By focusing on providing differentiated, high-value solutions and services to clients in our target markets, we are confident in our ability to expand in these markets and successfully respond to Federal priorities," added Regan.
Company Guidance
The Company's estimate for revenue for 2009 is in the range of $280 to $290 million, unchanged from previous estimates. Regarding earnings for 2009 the Company anticipates results to be in the range of $0.90 to $1.00 per diluted share, also unchanged from previous estimates. For the second quarter of 2009, the Company anticipates revenue in the range of $69 to $71 million and earnings per diluted share of $0.19 to $0.21.
Conference Call
The Company will conduct a first quarter 2009 conference call tomorrow, April 30, 2009 at 10:00 a.m. ET. The call will be available via telephone at (800)357-9448 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 (888)203-1112, passcode #9435179, beginning at 2:01 p.m. ET April 30, 2009 through 11:59 p.m. ET May 14, 2009.
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.
The non-GAAP measures used by the Company exclude the provision for litigation charges and related effect for income taxes. The required reconciliations and other disclosures for the non-GAAP measures used by the Company are set forth later in this press release and/or the Current Report on Form 8-K to be filed with the SEC on April 29, 2009.
ATTACHMENT I DYNAMICS RESEARCH CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (in thousands, except share and per share data) Three Months Ended March 31, ---------------------- 2009 2008 ---------- ---------- Contract revenue $ 67,203 $ 54,773 Product sales 1,336 1,705 ---------- ---------- Total revenue 68,539 56,478 ---------- ---------- Cost of contract revenue 55,943 46,212 Cost of product sales 1,518 1,605 ---------- ---------- Total cost of revenue 57,461 47,817 ---------- ---------- Gross profit on contract revenue 11,260 8,561 Gross profit (loss) on product sales (182) 100 ---------- ---------- Total gross profit 11,078 8,661 Selling, general and administrative expenses 6,457 5,401 Provision for litigation -- 8,819 Amortization of intangible assets 973 509 ---------- ---------- Operating income (loss) 3,648 (6,068) Interest expense, net (619) (139) Other income (expense) 39 (71) ---------- ---------- Income (loss) before provision for income taxes 3,068 (6,278) Provision (benefit) for income taxes 1,297 (1,022) ---------- ---------- Net income (loss) $ 1,771 $ (5,256) ========== ========== Earnings (loss) per common share Basic $ 0.18 $ (0.56) Diluted $ 0.18 $ (0.56) Weighted average shares outstanding Basic 9,604,895 9,436,054 Diluted 9,711,084 9,436,054 ATTACHMENT II DYNAMICS RESEARCH CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (in thousands) March 31, December 31, 2009 2008 ----------- ----------- Assets Current assets Cash and cash equivalents $ 4,383 $ 7,111 Contract receivables, net 71,761 71,438 Prepaid expenses and other current assets 3,401 2,491 ----------- ----------- Total current assets 79,545 81,040 ----------- ----------- Noncurrent assets Property and equipment, net 8,821 9,349 Goodwill 97,641 97,641 Intangible assets, net 6,406 7,379 Deferred tax asset 10,369 10,396 Other noncurrent assets 3,042 3,125 ----------- ----------- Total noncurrent assets 126,279 127,890 ----------- ----------- Total assets $ 205,824 $ 208,930 =========== =========== Liabilities and stockholders' equity Current liabilities Current portion of long-term debt $ 8,000 $ 8,000 Accounts payable 17,720 18,095 Accrued compensation and employee benefits 13,419 13,644 Deferred taxes 3,492 2,670 Other accrued expenses 20,898 24,760 ----------- ----------- Total current liabilities 63,529 67,169 ----------- ----------- Long-term liabilities Long-term debt 28,296 30,000 Other long-term liabilities 30,523 30,286 Total stockholders' equity 83,476 81,475 ----------- ----------- Total liabilities and stockholders' equity $ 205,824 $ 208,930 =========== =========== ATTACHMENT III DYNAMICS RESEARCH CORPORATION SUPPLEMENTAL INFORMATION (unaudited) (dollars in thousands) Contract revenues were earned from the following sectors: Three Months Ended March 31, ------------------------ 2009 2008 ----------- ----------- National defense and intelligence agencies $ 36,107 $ 40,946 Federal civilian agencies 12,194 6,634 Homeland security 12,804 1,326 State and local government agencies 5,817 5,244 Other 281 623 ----------- ----------- $ 67,203 $ 54,773 =========== =========== Revenues by contract type as a percentage of contract revenue were as follows: Three Months Ended March 31, ------------------------ 2009 2008 ----------- ----------- Time and materials 46% 55% Cost reimbursable 17 19 Fixed price, including service-type contracts 37 26 ----------- ----------- 100% 100% ==== ==== Prime contract 72% 54% Sub-contract 28 46 ----------- ----------- 100% 100% ==== ==== Three Months Ended March 31, ------------------------ 2009 2008 ----------- ----------- Net cash provided by operating activities $ 3,366 $ 1,832 Capital expenditures $ 266 $ 402 Depreciation $ 784 $ 700 Bookings $ 57,392 $ 63,050 March 31, December 31, 2009 2008 ----------- ----------- Funded backlog $ 142,148 $ 149,201 Employees 1,481 1,503 ATTACHMENT IV DYNAMICS RESEARCH CORPORATION NON-GAAP CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (unaudited) (in thousands, except share and per share data) Three Months Ended March 31, 2008 ------------------ Contract revenue $ 54,773 Product sales 1,705 ------------------ Total revenue 56,478 ------------------ Cost of contract revenue 46,212 Cost of product sales 1,605 ------------------ Total cost of revenue 47,817 ------------------ Gross profit on contract revenue 8,561 Gross profit (loss) on product sales 100 ------------------ Total gross profit 8,661 Selling, general and administrative expenses 5,401 Amortization of intangible assets 509 ------------------ Non-GAAP operating income 2,751 Interest expense, net (139) Other expense, net (71) ------------------ Non-GAAP income before provision for income taxes 2,541 Non-GAAP provision for income taxes 1,102 ------------------ Non-GAAP net income $ 1,439 ================== Earnings per common share Basic $ 0.15 Diluted $ 0.15 Weighted average shares outstanding Basic 9,436,054 Diluted 9,728,042 ATTACHMENT V DYNAMICS RESEARCH CORPORATION RECONCILIATION OF NON-GAAP MEASURES (in thousands, except share and per share data) Three Months Ended March 31, 2008 ------------------ GAAP operating loss $ (6,068) Provision for litigation 8,819 ------------------ Non-GAAP operating income $ 2,751 ================== GAAP loss before provision for income taxes $ (6,278) Provision for litigation 8,819 ------------------ Non-GAAP income before provision for income taxes $ 2,541 ================== GAAP benefit for income taxes $ (1,022) Tax benefit for provision for litigation 2,124 ------------------ Non-GAAP provision for income taxes $ 1,102 ================== GAAP net loss $ (5,256) Provision for litigation, net of tax benefit 6,695 ------------------ Non-GAAP net income $ 1,439 ================== Earnings (loss) per common share GAAP Basic $ (0.56) Per share effect of provision for litigation 0.71 ------------------ Non-GAAP Basic $ 0.15 ================== GAAP Diluted $ (0.56) Per share effect of provision for litigation 0.70 ------------------ Non-GAAP Diluted $ 0.15 ================== GAAP Weighted average shares outstanding Basic and diluted 9,436,054 Weighted average shares outstanding Basic and GAAP diluted 9,436,054 Non-GAAP Diluted 9,728,042