ANDOVER, Mass., July 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 second quarter ended June 30, 2009.
Financial Results
The Company reported revenue of $69.6 million for the second quarter of 2009 as compared with $55.3 million for the same period in 2008. Reported revenue rose 26 percent on a year-over-year basis, including organic revenue growth of 4.2 percent. Net income for the second quarter of 2009 was $2.1 million, or $0.21 per diluted share, up 31 percent from $1.6 million, or $0.17 per diluted share, for the second quarter of 2008.
For the six months ended June 30, 2009 revenue was $138.2 million compared with $111.8 million for the same period in 2008. For the six month period ended June 30, 2009 net income was $3.8 million, or $0.39 per diluted share, compared with a net loss of $3.6 million for the same period in 2008, which included a first quarter 2008 provision for litigation of $8.8 million, which reduced earnings by $0.70 per diluted share. Excluding the litigation provision net income would have been $3.1 million, or $0.32 per diluted share for the six months ended June 30, 2008.
Business Highlights
"Our positive financial performance, resulting from growth within our existing business base, continues to provide evidence of the Company's improved market positioning," said Jim Regan, DRC's chairman and chief executive officer. "Revenue rose four percent organically, operating profit climbed 40 percent over the second quarter of 2008, and EBITDA of $5.7 million improved 39% on a year-over-year basis, while our federal business receivable days outstanding dropped to 79 from 84 last quarter -- driving stronger than anticipated free cash flow of $4.2 million.
"In addition, Federal services procurement and proposal activity is high, and we anticipate winning our share of these competitions in the coming quarter, particularly in our targeted growth markets - Homeland Security, the Federal Financial Civilian Agencies, Health Care, Human Capital Management and Training, Business Transformation, and Cyber-Security. As the new administration executes its agenda, we look forward to further growth within these critical areas this year and next."
Company Guidance
The Company's estimate for revenue for 2009 is in the range of $281 to $286 million. Regarding earnings for 2009 the Company anticipates results to be in the range of $0.94 to $0.98 per diluted share. For the third quarter of 2009 the Company anticipates revenue in the range of $69 to $71 million and earnings per diluted share of $0.23 to $0.25.
Conference Call
The Company will conduct a second quarter 2009 conference call tomorrow, July 30, 2009 at 10:00 a.m. ET. The call will be available via telephone at (888) 397-5350, 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 12:01 p.m. ET July 30, 2009 through 11:59 p.m. ET August 13, 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 July 29, 2009.
DYNAMICS RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (unaudited)
(in thousands, except share and per share data)
Three Months Ended
June 30,
-------------------------
2009 2008
------------ ------------
Contract revenue $ 68,128 $ 53,708
Product sales 1,520 1,585
------------ ------------
Total revenue 69,648 55,293
------------ ------------
Cost of contract revenue 57,015 45,599
Cost of product sales 1,572 1,393
------------ ------------
Total cost of revenue 58,587 46,992
------------ ------------
Gross profit on contract revenue 11,113 8,109
Gross profit (loss) on product sales (52) 192
------------ ------------
Total gross profit 11,061 8,301
Selling, general and administrative expenses 6,388 5,147
Amortization of intangible assets 972 510
------------ ------------
Operating income 3,701 2,644
Interest expense, net (477) (142)
Other income, net 282 239
------------ ------------
Income before provision for income taxes 3,506 2,741
Provision for income taxes 1,456 1,112
------------ ------------
Net income $ 2,050 $ 1,629
============ ============
Earnings per common share
Basic $ 0.21 $ 0.17
Diluted $ 0.21 $ 0.17
Weighted average shares outstanding
Basic 9,610,428 9,443,347
Diluted 9,729,721 9,724,839
DYNAMICS RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (unaudited)
(in thousands, except share and per share data)
Six Months Ended
June 30,
-------------------------
2009 2008
------------ ------------
Contract revenue $ 135,331 $ 108,481
Product sales 2,856 3,290
------------ ------------
Total revenue 138,187 111,771
------------ ------------
Cost of contract revenue 112,958 91,811
Cost of product sales 3,090 2,998
------------ ------------
Total cost of revenue 116,048 94,809
------------ ------------
Gross profit on contract revenue 22,373 16,670
Gross profit (loss) on product sales (234) 292
------------ ------------
Total gross profit 22,139 16,962
Selling, general and administrative expenses 12,845 10,548
Provision for litigation -- 8,819
Amortization of intangible assets 1,945 1,019
------------ ------------
Operating income (loss) 7,349 (3,424)
Interest expense, net (1,096) (281)
Other income, net 321 168
------------ ------------
Income (loss) before provision for income
taxes 6,574 (3,537)
Provision for income taxes 2,753 90
------------ ------------
Net income (loss) $ 3,821 $ (3,627)
============ ============
Earnings (loss) per common share
Basic $ 0.40 $ (0.38)
Diluted $ 0.39 $ (0.38)
Weighted average shares outstanding
Basic 9,611,783 9,430,607
Diluted 9,727,387 9,430,607
DYNAMICS RESEARCH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands)
June 30, December 31,
2009 2008
------------ ------------
Assets
Current assets
Cash and cash equivalents $ 6,622 $ 7,111
Contract receivables, net 73,044 71,438
Prepaid expenses and other current assets 3,326 2,491
------------ ------------
Total current assets 82,992 81,040
------------ ------------
Noncurrent assets
Property and equipment, net 8,596 9,349
Goodwill 97,641 97,641
Intangible assets, net 5,434 7,379
Deferred tax asset 10,298 10,396
Other noncurrent assets 3,028 3,125
------------ ------------
Total noncurrent assets 124,997 127,890
------------ ------------
Total assets $ 207,989 $ 208,930
============ ============
Liabilities and stockholders' equity
Current liabilities
Current portion of long-term debt $ 8,000 $ 8,000
Accounts payable 16,611 18,095
Accrued compensation and employee benefits 16,082 13,644
Deferred taxes 3,248 2,670
Other accrued expenses 22,384 24,760
------------ ------------
Total current liabilities 66,325 67,169
Long-term liabilities
Long-term debt 26,000 30,000
Other long-term liabilities 29,695 30,286
Total stockholders' equity 85,969 81,475
------------ ------------
Total liabilities and stockholders'
equity $ 207,989 $ 208,930
============ ============
DYNAMICS RESEARCH CORPORATION
SUPPLEMENTAL INFORMATION (unaudited)
(dollars in thousands)
Contract revenues were earned
from the following sectors:
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2009 2008 2009 2008
--------- --------- --------- ---------
National defense and
intelligence agencies $ 36,542 $ 37,159 $ 73,735 $ 78,105
Federal civilian agencies 11,044 6,798 21,841 13,432
Homeland security 13,674 1,622 26,762 2,948
State and local government
agencies 6,487 7,365 12,304 12,609
Other 381 764 689 1,387
--------- --------- --------- ---------
$ 68,128 $ 53,708 $135,331 $108,481
========= ========= ========= =========
Revenues by contract type as a
percentage of contract
revenue were as follows:
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2009 2008 2009 2008
--------- --------- --------- ---------
Time and materials 44% 46% 45% 50%
Cost reimbursable 18 21 18 20
Fixed price, including
service-type contracts 38 33 37 30
--------- --------- --------- ---------
100% 100% 100% 100%
========= ========= ========= =========
Prime contract 71% 64% 71% 62%
Sub-contract 29 36 29 38
--------- --------- --------- ---------
100% 100% 100% 100%
========= ========= ========= =========
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2009 2008 2009 2008
--------- --------- --------- ---------
Net cash provided by operating
activities $ 4,742 $ 3,873 $ 8,108 $ 5,497
Capital expenditures $ 561 $ 411 $ 827 $ 813
Depreciation $ 752 $ 719 $ 1,536 $ 1,419
Bookings $ 68,087 $ 65,200 $125,479 $128,250
June 30, December 31,
2009 2008
--------- ---------
Funded backlog $138,325 $149,201
Employees 1,477 1,503
DYNAMICS RESEARCH CORPORATION
NON-GAAP CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited) (in thousands, except share and per share data)
Six Months
Ended
June 30,
2008
------------
Contract revenue $ 108,481
Product sales 3,290
------------
Total revenue 111,771
------------
Cost of contract revenue 91,811
Cost of product sales 2,998
------------
Total cost of revenue 94,809
------------
Gross profit on contract revenue 16,670
Gross profit on product sales 292
------------
Total gross profit 16,962
Selling, general and administrative expenses 10,548
Amortization of intangible assets 1,019
------------
Non-GAAP operating income 5,395
Interest expense, net (281)
Other income, net 168
------------
Non-GAAP income before provision for income taxes 5,282
Non-GAAP provision for income taxes 2,214
------------
Non-GAAP net income $ 3,068
============
Earnings per common share
Basic $ 0.33
Diluted $ 0.32
Weighted average shares outstanding
Basic 9,430,607
Diluted 9,721,165
DYNAMICS RESEARCH CORPORATION
RECONCILIATION OF NON-GAAP MEASURES
(in thousands, except share and per share data)
Six Months
Ended
June 30,
2008
------------
GAAP operating loss $ (3,424)
Provision for litigation 8,819
------------
Non-GAAP operating income $ 5,395
============
GAAP loss before provision for income taxes $ (3,537)
Provision for litigation 8,819
------------
Non-GAAP income before provision for income taxes $ 5,282
============
GAAP provision for income taxes $ 90
Tax benefit for provision for litigation 2,124
------------
Non-GAAP provision for income taxes $ 2,214
============
GAAP net loss $ (3,627)
Provision for litigation, net of tax benefit 6,695
------------
Non-GAAP net income $ 3,068
============
Earnings (loss) per common share
GAAP Basic $ (0.38)
Per share effect of provision for litigation 0.71
------------
Non-GAAP Basic $ 0.33
============
GAAP Diluted $ (0.38)
Per share effect of provision for litigation 0.70
------------
Non-GAAP Diluted $ 0.32
============
GAAP Weighted average shares outstanding
Basic and diluted 9,430,607
Weighted average shares outstanding
Basic and GAAP diluted 9,430,607
Non-GAAP Diluted 9,721,165