ANDOVER, Mass., April 24, 2012 (GLOBE NEWSWIRE) -- 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 first quarter of 2012.
Financial Results
The Company reported net income of $1.8 million, or $0.17 per diluted share, for the first quarter of 2012, compared with $2.7 million, or $0.27 per diluted share, for the first quarter of 2011. Earnings before interest, taxes, depreciation, and amortization (EBITDA) for the first quarter of 2012 was $7.9 million, or 9.2 percent of revenue, up 29 percent from $6.1 million, or 8.7 percent of revenue, for the first quarter a year ago.
Revenue for the first quarter of 2012 was $85.9 million, up 24 percent from $69.5 million for the same period in 2011, reflecting the Company's merger with High Performance Technologies, Inc. ("HPTi") on June 30, 2011.
Net cash used in operating activities for the seasonally weak first quarter was $1.6 million, comparing favorably with $9.5 million used in the first quarter of 2011, reflecting improved working capital management.
Business Highlights
"Operating results for the first quarter were in line with expectations and reflected solid EBITDA and cash flow performance for the first quarter, typically the lowest quarter of the year for earnings and cash flow. Earnings for the quarter, however, were lower than the same period a year ago, primarily due to higher amortization and interest expense resulting from the HPTi merger," said Jim Regan, DRC's chairman and chief executive officer.
"Continuing deferral of procurement decisions and program cuts, together with intensified price competition, have caused us to further reduce our expectations for 2012. Notwithstanding these challenges, we possess an array of highly differentiated capabilities in areas such as cloud and mobile computing, cyber security, health informatics, data analytics and business transformation. We are confident that this expertise, along with strong positions in growth segments of the federal market and a broad portfolio of contract vehicles, will provide a solid foundation for growth as federal budget challenges stabilize and demand increases for the services DRC provides. This expectation is supported by a qualified pipeline which now totals $852 million, including $309 million in bids submitted and awaiting award."
Company Guidance
The Company's estimate for revenue for 2012 is in the range of $328 to $336 million. Regarding earnings from continuing operations for 2012, the Company anticipates results to be in the range of $0.68 to $0.76 per diluted share. For the second quarter of 2012, the Company anticipates revenue in the range of $81 to $84 million and earnings from continuing operations per diluted share of $0.14 to $0.16. EBITDA is estimated to be in the range of $31 to $33 million for 2012.
Conference Call
The Company will conduct a first quarter 2012 conference call on Wednesday, April 25, 2012 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 800-585-8367, passcode #68573207, beginning at 1:00 p.m. ET April 25, 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 including the Company's Annual Report on Form 10-K for the year ended December 31, 2011. The Company assumes no obligation to update any forward-looking information.
Non-GAAP Financial Information
DRC discloses earnings before interest, taxes, depreciation and amortization, which is not recognized measures under GAAP. We have provided a reconciliation of EBITDA, adjusted to conform to the definition used in our loan agreements, in Attachment IV of this announcement. When evaluating DRC's financial results investors should evaluate each adjustment to reported GAAP financial measures in the reconciliation as additional information and not use this non-GAAP financial measure as alternatives to reported GAAP financial measures. DRC presents this financial measure because the Company believes it provides 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 | ||
| March 31, | ||
| 2012 | 2011 | |
| Revenue | $ 85,869 | $ 69,524 |
| Cost of revenue | 72,273 | 58,760 |
| Gross profit | 13,596 | 10,764 |
| Selling, general and administrative expenses | 6,891 | 5,669 |
| Amortization of intangible assets | 1,031 | 374 |
| Operating income | 5,674 | 4,721 |
| Interest expense, net | (2,779) | (252) |
| Other income, net | 135 | 96 |
| Income from continuing operations before provision for income taxes | 3,030 | 4,565 |
| Provision for income taxes | 1,239 | 1,857 |
| Net income | $ 1,791 | $ 2,708 |
| Earnings per share: | ||
| Basic | $ 0.17 | $ 0.27 |
| Diluted | $ 0.17 | $ 0.27 |
| Weighted average shares outstanding: | ||
| Basic | 10,419,343 | 9,973,442 |
| Diluted | 10,464,125 | 10,174,186 |
| ATTACHMENT II | ||
| DYNAMICS RESEARCH CORPORATION | ||
| CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) | ||
| (Dollars in thousands) | ||
| March 31, | December 31, | |
| 2012 | 2011 | |
| Assets | ||
| Current assets | ||
| Cash and cash equivalents | $ 10 | $ 3,908 |
| Contract receivables, net | 70,840 | 66,466 |
| Prepaid expenses and other current assets | 3,425 | 2,566 |
| Total current assets | 74,275 | 72,940 |
| Noncurrent assets | ||
| Property and equipment, net | 14,538 | 15,265 |
| Goodwill | 211,805 | 211,805 |
| Intangible assets, net | 17,710 | 18,741 |
| Deferred tax asset | -- | 497 |
| Other noncurrent assets | 4,170 | 4,312 |
| Total noncurrent assets | 248,223 | 250,620 |
| Total assets | $ 322,498 | $ 323,560 |
| Liabilities and stockholders' equity | ||
| Current liabilities | ||
| Current portion of long-term debt | $ 13,063 | $ 12,375 |
| Accounts payable | 28,639 | 24,504 |
| Accrued compensation and employee benefits | 19,507 | 24,902 |
| Deferred tax liability | 3,655 | 3,383 |
| Other accrued expenses | 6,836 | 8,556 |
| Total current liabilities | 71,700 | 73,720 |
| Long-term liabilities | ||
| Long-term debt | 102,215 | 102,453 |
| Deferred tax liability | 665 | -- |
| Other long-term liabilities | 31,627 | 33,066 |
| Total stockholders' equity | 116,291 | 114,321 |
| Total liabilities and stockholders' equity | $ 322,498 | $ 323,560 |
| ATTACHMENT III | ||
| DYNAMICS RESEARCH CORPORATION | ||
| SUPPLEMENTAL INFORMATION (unaudited) | ||
| (Dollars in thousands) | ||
| Contract revenues were earned from the following sectors: | ||
| Three Months Ended | ||
| March 31, | ||
| 2012 | 2011 | |
| National defense and intelligence agencies | $ 50,525 | $ 47,811 |
| Homeland security | 11,446 | 12,288 |
| Federal civilian agencies | 19,969 | 5,808 |
| Total revenue from federal agencies | 81,940 | 65,907 |
| State and local government agencies | 3,912 | 3,614 |
| Other | 17 | 3 |
| Total revenue | $ 85,869 | $ 69,524 |
| Revenues by contract type as a percentage of contract revenue were as follows: | ||
| Three Months Ended | ||
| March 31, | ||
| 2012 | 2011 | |
| Fixed price, including service-type contracts | 46% | 49% |
| Time and materials | 34 | 29 |
| Cost reimbursable | 20 | 22 |
| 100% | 100% | |
| Prime contract | 85% | 74% |
| Sub-contract | 15 | 26 |
| 100% | 100% | |
| Three Months Ended | ||
| March 31, | ||
| 2012 | 2011 | |
| Net cash used in operating activities | $ (1,620) | $ (9,503) |
| Capital expenditures | $ 92 | $ 320 |
| Depreciation | $ 1,014 | $ 865 |
| Bookings | $ 58,335 | $ 59,023 |
| March 31, | December 31, | |
| 2012 | 2011 | |
| Total backlog | $ 717,358 | $ 801,932 |
| Funded backlog | $ 151,897 | $ 183,336 |
| Employees | 1,461 | 1,534 |
| ATTACHMENT IV | ||
| DYNAMICS RESEARCH CORPORATION | ||
| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | ||
| ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (ADJUSTED EBITDA) (unaudited) | ||
| (Dollars in thousands) | ||
| As presented, adjusted EBITDA is defined as follows: | ||
| Three Months Ended | ||
| March 31, | ||
| 2012 | 2011 | |
| Net income | $ 1,791 | $ 2,708 |
| Add: | ||
| Interest expense, net | 2,779 | 252 |
| Provision for income taxes | 1,239 | 1,857 |
| Depreciation expense | 1,014 | 865 |
| Amortization expense | 1,031 | 374 |
| Share-based compensation | 176 | 187 |
| Less: amortization of deferred gain on sale of building | (169) | (169) |
| Adjusted EBITDA(1) | $ 7,861 | $ 6,074 |
| Adjusted EBITDA, as a percent of revenue | 9.2% | 8.7% |
| (1) We have calculated adjusted EBITDA to conform with the definition of EBITDA provided in our loan agreements to help investors understand that component of our debt covenant calculations. We may have calculated EBITDA differently than it is calculated by other companies. | ||