Highlights:
- Revenues up 38%, 24% organic(1), to $203.6 million;
- Operating income up 43%, operating margin 8.6%;
- Diluted EPS of $0.41; and
- Company raises Fiscal Year 2009 revenue and earnings guidance.
ARLINGTON, Va., Jan. 29 /PRNewswire-FirstCall/ -- Stanley, Inc. (NYSE: SXE), a leading provider of systems integration and professional services to the U.S. federal government, today announced record revenues and earnings for its third fiscal quarter ended December 26, 2008.
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Third-quarter revenues exceeded the high end of company guidance by $1.6 million, and diluted EPS exceeded the high end of company guidance by $0.04. During the period, the company benefited from increased revenues from its continued support to the Department of Homeland Security, the provision of IT services for various Department of Defense customers, and increased revenue resulting from the acquisition of Oberon Associates, Inc. (Oberon) in July 2008.
Third Quarter Fiscal Year 2009 Results:
Revenues for the third quarter ended December 26, 2008 were $203.6 million, an increase of 38 percent over third quarter fiscal year 2008 revenues of $147.1 million. Organic revenue growth was 24 percent. EBITDA(2) was $20.3 million for the quarter, an increase of 45 percent over EBITDA of $14.0 million in the year-ago quarter, driven by organic revenue growth as well as the acquisition of Oberon. EBITDA margin for the third quarter was 10.0 percent compared with 9.5 percent a year earlier, due primarily to a greater proportion of more profitable time-and-materials and fixed-price contracts, as opposed to cost-plus-fee contracts. Operating income was $17.5 million, up 43 percent from $12.2 million in the same quarter of last fiscal year. Operating margin was 8.6 percent versus 8.3 percent in the third quarter of fiscal 2008. The increases in operating income and margin resulted primarily from the factors improving EBITDA, offset by the amortization of purchased intangibles related to the acquisition of Oberon.
Net income for the quarter was $9.7 million versus $6.8 million a year ago. Diluted earnings per share for the quarter were $0.41 compared with diluted earnings per share of $0.29 for the third quarter of fiscal year 2008.
Contract backlog at December 26, 2008 was $2.1 billion, essentially unchanged from second quarter of fiscal year 2009 contract backlog at September 26, 2008 and an increase of 65 percent from third-quarter fiscal year 2008 contract backlog of $1.3 billion at December 31, 2007.
Third Quarter Fiscal Year 2009 and Recent Operational Highlights:
- Third-quarter bookings totaled $254 million, equating to a book-to-bill ratio of 1.2:1.
- Among the new business awards and additional tasking in the third quarter:
- A $119 million, five-year, firm-fixed price contract to support the Secret Internet Protocol Routed Network for the U.S. Marine Corps Network Operations and Security Center;
- A $29.5 million, two-year, time-and-materials contract to continue support to the Fire Support Software Engineering Division of the U.S. Army Software Engineering Center, Command and Control Software Directorate;
- A $112 million, four-year, firm-fixed price tactical biometrics system task order for the Field Sustainment Support Division of the U.S. Army Communications-Electronics Life Cycle Management Command;
- A $37.9 million, four-year, cost-plus-fixed-fee task order to continue to provide in-service engineering services for the PM DoD Biometrics; and
- A $12 million contract supporting intelligence operations.
- Stanley advanced to #70 on FORTUNE magazine's 2009 "100 Best Companies to Work For" list.
Nine Month Fiscal Year 2009 Results:
For the nine months ended December 26, 2008, revenue increased 32 percent to $567.2 million compared with $430.8 million for the same period in the prior fiscal year. Organic revenue growth for the first nine months of fiscal year 2009 was 23 percent. EBITDA for the nine-month period ended December 26, 2008 increased 42 percent to $55.4 million compared with $39.1 million for the first nine months of fiscal year 2008, driven by organic revenue growth as well as the acquisition of Oberon. EBITDA margin for the nine months of fiscal year 2009 was 9.8 percent, up from 9.1 percent for the same period a year earlier. EBITDA margin increased primarily as a result of a greater proportion of more profitable time-and-materials contracts, as opposed to cost-plus-fee contracts, and continued efficiencies realized in the company's general and administrative infrastructure on a higher revenue base. Operating income for the first nine months of fiscal year 2009 was $48.1 million, an increase of 42 percent over operating income of $33.9 million reported a year earlier. Operating margin for the first nine months of fiscal year 2009 was 8.5 percent compared with 7.9 percent in the first nine months of fiscal year 2008. Operating income and margin increased year over year primarily as a result of the factors improving EBITDA and EBITDA margin, offset by the amortization of purchased intangibles related to the acquisition of Oberon.
Net income for the nine months of fiscal year 2009 was $26.7 million compared with net income for the same period last year of $18.5 million. Diluted earnings per share for the first nine months of fiscal year 2009 were $1.12 compared with diluted earnings per share of $0.79 for the first nine months of fiscal year 2008.
Cash flow from operations for the first nine months of fiscal year 2009 was $38.5 million. Days sales outstanding (DSO) for the third quarter was 78 days, down from 80 days for the second quarter of fiscal year 2009.
"Stanley continued to deliver outstanding results in the third quarter of fiscal 2009, with record revenues and earnings and continued strong margin performance," said Phil Nolan, Stanley's chairman, president and CEO. "New contract wins and expansion of existing contracts in the third quarter give us confidence that we will finish the current fiscal year in strong fashion and provide a solid platform for the future."
Management's Outlook:
Based on the company's current contract backlog and management's estimate as to future tasking and contract awards, Stanley is issuing guidance for its fiscal year 2009 fourth quarter and full fiscal year. The table below represents management's current expectations about future financial performance, based on information available at this time:
Fourth Quarter Fiscal Fiscal Year 2009
Year 2009 Ending Ending
March 31, 2009 March 31, 2009
Revenues $206 - $213 million $773 - $780 million
Diluted EPS $0.41 - $0.43 $1.53 - $1.55
Diluted projected share count 23.8 - 23.9 million 23.8 - 23.9 million
As previously announced, Stanley will conduct a conference call today at 5:00 p.m. EST to discuss fiscal third-quarter 2009 results. To obtain the dial-in number, please contact Rashida Gofney at (703) 310-3209. The conference call will be broadcast simultaneously on the Investor Relations page of the company's website, www.stanleyassociates.com. Investors are advised to log on to the website at least 15 minutes prior to the call to register, download and install any necessary audio software. An archive of the webcast will be available for one week following the live event.
About Stanley
Stanley (NYSE: SXE) is a provider of information technology services and solutions to U.S. defense and federal civilian government agencies. Stanley offers its customers systems integration solutions and expertise to support their mission-essential needs at any stage of program, product development or business lifecycle through five service areas: systems engineering, enterprise integration, operational logistics, business process outsourcing, and advanced engineering and technology. Headquartered in Arlington, Va., the company has more than 4,700 employees at over 100 locations in the U.S. and worldwide. Stanley has been recognized by FORTUNE(R) magazine as one of the "100 Best Companies to Work For" from 2007 through 2009. Please visit www.stanleyassociates.com for more information.
Any statements in this press release about our future expectations, plans and prospects, including statements containing the words "estimates," "anticipates," "plans," "expects" 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 discussed in our Annual Report on Form 10-K for the fiscal year ended March 31, 2008, our Quarterly Reports on Form 10-Q for the fiscal quarters ended June 27, 2008 and September 26, 2008, as filed with the Securities and Exchange Commission (SEC), and additional filings we make with the SEC. In addition, the forward-looking statements included in this press release represent our views as of the date of this release. We assume no obligation to update publicly or revise any forward-looking statements made herein or any other forward-looking statements made by us, whether as a result of new information, future events or otherwise.
(1) Organic revenue growth, as presented, measures revenue growth
adjusted for the impact of acquisitions. Stanley 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. Please
see the reconciliation table at the end of this release.
(2) EBITDA is a non-GAAP measure that is defined as GAAP net income
(loss) plus other expense (income), interest expense, income taxes,
and depreciation and amortization. We have provided EBITDA because we
believe it is a commonly used measure of financial performance in
comparable companies and is provided to help investors evaluate
companies on a consistent basis, as well as to enhance an
understanding of our operating results. EBITDA should not be
construed as either an alternative to net income as an indicator of
our operating performance or as an alternative to cash flows as a
measure of liquidity. Please refer to the table at the end of this
release that reconciles GAAP net income to EBITDA.
Condensed Consolidated Statements of Income
(unaudited)
(in thousands, except per share amounts)
Three Months Ended Nine Months Ended
December 26, December 31, December 26, December 31,
2008 2007 2008 2007
Revenues $203,597 $147,083 $567,242 $430,803
Operating costs and
expenses:
Cost of revenues 170,091 123,660 475,775 363,538
Selling, general
and administrative 13,220 9,431 36,103 28,181
Amortization of
deferred
compensation 62 62 187 205
Depreciation and
amortization 2,741 1,694 7,044 5,005
Total operating
costs and
expenses 186,114 134,847 519,109 396,929
Operating income 17,483 12,236 48,133 33,874
Other income (expense):
Other income 17 10 20 16
Interest expense -
net (1,970) (919) (4,141) (3,120)
Total other expenses (1,953) (909) (4,121) (3,104)
Income before taxes 15,530 11,327 44,012 30,770
Provision for income
taxes (5,852) (4,576) (17,289) (12,320)
Net income $9,678 $6,751 $26,723 $18,450
Earnings per share:
Basic $0.42 $0.31 $1.17 $0.84
Diluted $0.41 $0.29 $1.12 $0.79
Weighted-average shares:
Basic 22,832 22,129 22,785 22,021
Diluted 23,818 23,552 23,798 23,340
Condensed Consolidated Balance Sheets
(unaudited)
(in thousands, except share and per share data)
December 26, March 31,
2008 2008
Assets
Current Assets:
Cash $5,542 $271
Accounts receivable - net 183,181 160,928
Prepaid and other current assets 6,463 4,644
Total current assets 195,186 165,843
Property and equipment - net 18,147 12,894
Goodwill 262,692 113,615
Intangible assets - net 17,135 8,088
Deferred taxes - 3,343
Other assets 2,558 2,272
Total assets $495,718 $306,055
Liabilities and Stockholders' Equity
Current liabilities:
Line of credit $142,869 $-
Accounts payable 26,591 29,628
Accrued expenses and other liabilities 77,291 62,649
Current portion of long-term debt 1,000 1,000
Income taxes payable - 5,836
Total current liabilities 247,751 99,113
Long-term debt - net of current portion 35,000 35,500
Other long-term liabilities 11,041 4,738
Total liabilities 293,792 139,351
Commitments and contingencies:
Stockholders' equity
Common stock, $0.01 par value -
200,000,000 shares authorized;
23,513,718 and 22,822,697 issued,
respectively 235 228
Additional paid-in capital 92,346 83,970
Retained earnings 110,927 84,204
Accumulated other comprehensive loss (1,000) (929)
Deferred compensation (582) (769)
Total stockholders' equity 201,926 166,704
Total liabilities and stockholders'
equity $495,718 $306,055
Organic Revenue Growth Reconciliation
(unaudited)
(in thousands)
Three Months Ended
December 26, 2008 December 31, 2007 Percent Growth
Total revenues,
as reported $203,597 $147,083 38%
Plus: Revenues from
acquired companies for
the comparable
prior year period - 17,743
Organic revenues $203,597 $164,826 24%
Nine Months Ended
December 26, 2008 December 31, 2007 Percent Growth
Total revenues,
as reported $567,242 $430,803 32%
Plus: Revenues from
acquired companies for
the comparable
prior year period - 30,934
Organic revenues $567,242 $461,737 23%
EBITDA Reconciliation
(unaudited)
(in thousands)
Three Months Ended Nine Months Ended
December 26, December 31, December 26, December 31,
2008 2007 2008 2007
Net income $9,678 $6,751 $26,723 $18,450
Provision for
income taxes 5,852 4,576 17,289 12,320
Interest expense -
net 1,970 919 4,141 3,120
Other income (17) (10) (20) (16)
Depreciation and
amortization 2,741 1,694 7,044 5,005
Amortization of
deferred
compensation 62 62 187 205
EBITDA 20,286 13,992 55,364 39,084
Revenue $203,597 $147,083 $567,242 $430,803
EBITDA Margin 10.0% 9.5% 9.8% 9.1%
