SRA Announces Financial Results for Third Quarter of Fiscal Year 2008

FAIRFAX, Va. , May 6 /PRNewswire-FirstCall/ -- SRA International, Inc. (NYSE: SRX), a leading provider of technology and strategic consulting services and solutions to government organizations, today announced operating results for the third...


FAIRFAX, Va. , May 6 /PRNewswire-FirstCall/ -- SRA International, Inc. (NYSE: SRX), a leading provider of technology and strategic consulting services and solutions to government organizations, today announced operating results for the third quarter of fiscal year 2008, which ended March 31, 2008 .

Revenue for the quarter was $376.0 million, up 18% from $317.6 million in the March 2007 quarter. Operating income for the quarter was $29.6 million, for an operating margin of 7.9%. Net income was $18.0 million, for a net margin of 4.8%. Diluted earnings per share for the quarter were $0.30, up $0.04 year-over-year.

SRA President and CEO Stan Sloane said, "We were pleased to win nearly three times the volume of contract awards that we won in the same quarter last year. Some of these programs will take time to ramp up because of protested award decisions, but they are a positive indicator for future growth."

"We're also enthusiastic about our agreement to acquire Era Corporation, which we announced last week. Era fits nicely into our plan to increase the product-based component of our business and continue to expand our international footprint. We look forward to completing the transaction and joining forces with an air surveillance market leader."

CFO and Executive Vice President for Operations Steve Hughes added, "Third quarter revenue grew 18% year-over-year, while the low-margin rebillable component declined as planned. This improvement in the business mix led to better operating margins. Operating margin increased to 7.9% in the quarter, 70 basis points better than a year ago."

New Business Awards

The Company won new business in the third quarter with potential value of $503 million, if all options are exercised. As of March 31, 2008 , the Company's backlog of signed business orders was $3.9 billion, an increase of 11% year-over-year.

The Company was also awarded several multiple-award, indefinite delivery/indefinite quantity (ID/IQ) contracts in the March quarter. ID/IQ vehicles are not included in the Company's quarterly bookings total, but they provide a solid foundation for future growth.

Share Repurchase

In accordance with a repurchase authority established by its Board of Directors in 2007, SRA executed an open market share buyback during the March quarter. The Company repurchased about 754,000 shares of its stock in the quarter, deploying a total of $17.3 million in cash. The average share price for repurchased shares was $22.91. Although the Company's acquisition program remains its top priority for capital deployment, management may elect to continue opportunistic use of its repurchase authority in the future.

Forward Guidance

The Company is updating its forward guidance for the fourth quarter and full fiscal year 2008. The table below represents management's current expectations about the Company's future financial performance, based on information available at this time. The forward guidance in this table does not include any effect for the pending acquisition of Era Corporation or any acquisitions SRA might make in the future.

The updated revenue guidance is lower than previously issued guidance primarily because of a reduced direct material revenue forecast. Given the consistent June quarter Diluted EPS range, the implied profit margins are higher in this revised guidance. These changes are consistent with the higher labor services component of revenue in the latest forecast.

Conference Call

SRA senior management will hold a conference call to discuss these operating results and forward guidance today at 5:00 PM Eastern. Interested parties may listen to the conference call by dialing 888-287-9905 (U.S./ Canada ) or 706-643-7540 (Other) with passcode 42439207. The conference call will be Webcast simultaneously through a link on the SRA Web site (www.sra.com). A replay of the conference call will be available approximately two hours after the conclusion of the call from May 6 through May 20, 2008 by dialing 800-642-1687 (U.S./ Canada ) or 706-645-9291 (Other) and entering passcode 42439207.

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