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
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
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.
-- Environmental Protection Agency (EPA), Office of Research and Development (ORD). SRA was awarded a prime contract on the seven-year, $200 million Software Engineering and Specialized Scientific Support (SES3) blanket purchase agreement (BPA) for the EPA. The Company has since won two task orders under the BPA, with a combined value of $32 million. -- U.S. Army, Program Executive Office Enterprise Information Systems (PEO EIS). PEO EIS named SRA one of five awardees of the Program Management Support Services-2 (PMSS-2) contract, which has a total value of approximately $478 million over five years. The award decision has been protested, and task order activity will not begin until the protest has been resolved.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
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.
Measure Quarter Ending Fiscal Year Ending June 30, 2008 June 30, 2008 Revenue (in millions) $370-$390 $1,492-$1,512 Diluted EPS $0.31-$0.33 $1.23-$1.25 Diluted Share Equivalents (in millions) 59.4 59.4The 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.
About SRA International, Inc.
SRA is a leading provider of technology and strategic consulting services and solutions -- including systems design, development, and integration; and outsourcing and managed services -- to clients in national security, civil government, and health care and public health markets. The Company also delivers business solutions for contingency and disaster response planning, information assurance, business intelligence, environmental strategies, enterprise architecture, infrastructure management, and wireless integration.
FORTUNE(R) magazine has chosen SRA as one of the "100 Best Companies to Work For" for nine consecutive years. The Company's 6,400 employees serve clients from its headquarters in Fairfax, Virginia , and offices around the world. For additional information on SRA, please visit www.sra.com.
Any statements in this press release about future expectations, plans, and prospects for SRA, including guidance about future financial results and statements about the estimated value of contracts and work to be performed, and other statements containing the words "estimates," "believes," "anticipates," "plans," "expects," "will," and similar expressions, constitute forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including: our dependence on our contracts with federal government agencies, particularly within the U.S. Department of Defense, for substantially all of our revenue; our dependence on our GSA schedule contracts and our position as a prime contractor on government-wide acquisition contracts to grow our business; our ability to attract and retain skilled employees; any reductions in or reallocations of the U.S. defense budget or the budgets for civil government agencies; the market price of the company's stock prevailing from time to time; the nature of other investment opportunities presented to the company from time to time; the company's cash flows from operations; and other factors discussed in our latest quarterly report on Form 10-Q filed with the Securities and Exchange Commission on February 7, 2008 . In addition, the forward-looking statements included in this press release represent our views as of May 6, 2008 . We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so. These forward- looking statements should not be relied upon as representing our views as of any date subsequent to May 6, 2008 .
Condensed Consolidated Statements of Operations (Unaudited) (in thousands, except share and per share amounts) Three Months Ended Nine Months Ended 31-Mar-08 31-Mar-07 31-Mar-08 31-Mar-07 Revenue $376,002 $317,586 $1,122,144 $942,665 Operating costs and expenses: Cost of services 276,708 237,684 837,706 710,485 Selling, general and administrative 63,508 51,588 176,498 148,921 Depreciation and amortization 6,230 5,535 18,821 15,585 Total operating costs and expenses 346,446 294,807 1,033,025 874,991 Operating income 29,556 22,779 89,119 67,674 Interest expense (611) (7) (2,216) (27) Interest income 886 1,180 3,374 4,514 Gain on sale of Mantas, Inc. - - - 3,674 Income before taxes 29,831 23,952 90,277 75,835 Provision for income taxes 11,788 8,979 35,784 29,058 Net income $18,043 $14,973 $54,493 $46,777 Earnings per share: Basic $0.31 $0.26 $0.95 $0.83 Diluted $0.30 $0.26 $0.92 $0.80 Weighted-average shares: Basic 57,852,369 56,696,382 57,600,872 56,299,701 Diluted 59,468,955 58,383,305 59,407,213 58,261,389 Condensed Consolidated Balance Sheets (Unaudited) (in thousands) As of 31-Mar-08 30-Jun-07 Current assets: Cash and cash equivalents $136,517 $212,034 Restricted cash 1,126 - Accounts receivable, net 341,450 262,409 Prepaid expenses and other 21,029 26,370 Deferred income taxes, current 10,764 5,860 Total current assets 510,886 506,673 Property and equipment, net 37,875 36,685 Other assets: Goodwill 394,153 256,530 Identified intangibles, net 39,314 30,849 Deferred income taxes, noncurrent 6,266 8,163 Deferred compensation trust 7,650 8,784 Other assets 16,185 - Total other assets 463,568 304,326 Total assets $1,012,329 $847,684 Current liabilities: Accounts payable and accrued expenses $118,699 $110,897 Accrued payroll and employee benefits 85,566 81,711 Billings in excess of revenue recognized 14,224 16,980 Total current liabilities 218,489 209,588 Long-term liabilities: Long-term debt 80,000 - Other long-term liabilities 26,861 12,641 Total long-term liabilities 106,861 12,641 Total liabilities 325,350 222,229 Stockholders' equity 686,979 625,455 Total liabilities and stockholders' equity $1,012,329 $847,684 Condensed Consolidated Statements of Cash Flows (Unaudited) (in thousands) Nine Months Ended 31-Mar-08 31-Mar-07 Cash flows from operating activities: Net income $54,493 $46,777 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 18,821 15,585 Stock-based compensation 7,322 8,451 Deferred income taxes (1,372) (625) Gain on sale of Mantas, Inc. - (3,674) Loss on disposal of property and equipment 744 - Working capital changes, net of the effect of acquisitions (38,453) 7,708 Net cash provided by operating activities 41,555 74,222 Cash flows from investing activities: Capital expenditures (6,754) (10,289) Sales and maturities of investments - 9,749 Acquisition of Spectrum Solutions Group, net of cash acquired - (8,000) Acquisition of RABA Technologies, net of cash acquired - (94,237) Acquisition of Constella Group, LLC, net of cash acquired (189,714) - Proceeds from sale of Mantas, Inc. - 3,674 Net cash used in investing activities (196,468) (99,103) Cash flows from financing activities: Issuance of common stock 11,916 8,057 Tax benefits of stock option exercises 4,725 6,004 Borrowings (repayments) under credit facility, net of associated financing costs 79,676 - Reissuance of treasury stock 679 1,245 Purchase of treasury stock (17,600) (84) Net cash provided by financing activities 79,396 15,222 Net decrease in cash and cash equivalents (75,517) (9,659) Cash and cash equivalents, beginning of period 212,034 173,564 Cash and cash equivalents, end of period $136,517 $163,905 Supplemental disclosures of cash flow information: Cash paid during the period: Interest $1,885 $27 Income taxes $40,970 $30,820 Cash received during the period: Interest $3,670 $4,617 Income taxes $757 $438 Reconciliation Between Total Revenue Growth and Organic Revenue Growth (Unaudited) (in thousands) Organic revenue growth, as presented, measures revenue growth adjusted for the impact of acquisitions. The Company believes that this non-GAAP financial measure provides useful information because it allows investors to better assess the underlying growth rate of the Company's existing business. This non-GAAP financial measure should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. Three Months Ended 31-Mar-08 31-Mar-07 % Increase Total Revenue, as reported $376,002 $317,586 18.4% Plus: Revenue from acquired companies for the comparable prior year period - 49,604 Organic Revenue $376,002 $367,190 2.4%SOURCE SRA International, Inc.
