Markets
BUSINESS NEWS
- Market News
- Earnings
- Recalls
- Recession Watch
- Tech News
- Financial Crisis
- Madoff Scandal
- BloggingStocks
- Luxist
- Money Videos
INVESTING
- Stock Quotes
- Stock Charts
- Stock Ticker
- Currencies
- Portfolio
- Stock Screener
- Broker Center
- Mutual Fund Center
- ETF Center
- Money
- 24/7 Wall St.
- Financial Glossary
PERSONAL FINANCE AT WALLETPOP
- Bargains
- Banking
- Budget
- Calculators
- College Finance
- Community
- Credit
- Deals
- Debt
- Economizer
- Food
- Home
- Fraud
- Insurance
- Interest Rates
- Loans
- Mortgages
- Real Estate
- Recalls
- Recession
- Retirement
- Saving
- Simplification
- Specials
- Taxes
SMALL BUSINESS
Diamond Reports Second Quarter Fiscal Year 2010 Results
Second Quarter Net Revenue Increased 15% Sequentially to $43.6 Million Third Quarter Net Revenue Expected to Be $43.5 Million to $45.5 Million
CHICAGO, Nov. 4, 2009 (GLOBE NEWSWIRE) -- Diamond Management & Technology Consultants, Inc. (Nasdaq:DTPI), a premier global management and technology consulting firm, today announced results for its second quarter of fiscal year 2010 (ended September 30, 2009).
* Second quarter net revenue was $43.6 million compared with $37.9 million in the first quarter of fiscal year 2010 and $40.5 million in the second quarter of fiscal year 2009. * Second quarter diluted earnings from continuing operations was $0.07 per share, compared with $0.03 per share in the first quarter of fiscal year 2010 and $0.02 per share in the second quarter of fiscal year 2009. * Second quarter free cash flow was $10.8 million, compared with $3.6 million in the first quarter of fiscal year 2010 and $4.7 million in the second quarter of fiscal year 2009. * Third quarter net revenue is expected to be in the range of $43.5 million to $45.5 million.
"We delivered a strong second quarter on nearly all dimensions, driven by increased demand in both the U.S. and the U.K.," said Adam Gutstein, President and CEO of Diamond. "This has been a difficult economic period for us and most companies, and we believe that the worst is behind us. Today, demand is healthy, our client relationships are excellent, our industry knowledge and offerings are strong, and our people continue to be among the very best."
Financial Review
The Company's second quarter financial results are summarized as follows:
---------------------------------------------------------------------
Financial Results ($ in millions except Earnings per Share)
---------------------------------------------------------------------
Q2 FY10 Q1 FY10 Q2 FY09
---------------------------------------------------------------------
Net Revenue $ 43.6 $ 37.9 $ 40.5
---------------------------------------------------------------------
Income from Continuing Operations
before Income Tax (Pretax Income) $ 3.7 $ 1.9 $ 2.1
---------------------------------------------------------------------
Diluted Earnings Per Share from
Continuing Operations $ 0.07 $ 0.03 $ 0.02
---------------------------------------------------------------------
Free Cash Flow $ 10.8 $ 3.6 $ 4.7
---------------------------------------------------------------------
EBITDA $ 4.0 $ 2.4 $ 2.4
---------------------------------------------------------------------
Second Quarter 2010
Net revenue for the quarter ended September 30, 2009 was $43.6 million, up 15%, or 14% on a constant currency basis, compared with $37.9 million in the first quarter of fiscal year 2010 and up 8%, or 9% on a constant currency basis, compared with $40.5 million reported in the second quarter of the prior fiscal year.
Pretax income was $3.7 million in the second quarter compared with $1.9 million in the first quarter of fiscal year 2010 and $2.1 million in the second quarter of fiscal year 2009.
Income from continuing operations after taxes was $1.8 million, or $0.07 per diluted share. This compares with $0.8 million, or $0.03 per diluted share in the first quarter of fiscal year 2010 and $0.5 million, or $0.02 per diluted share in the second quarter of fiscal year 2009. Diluted weighted average shares outstanding was 27.7 million, compared with 27.4 million in the first quarter of fiscal year 2010 and 26.4 million in the second quarter of fiscal year 2009.
The effective tax rate was 51% in the second quarter compared with 55% in the first quarter of fiscal year 2010 and 75% in the second quarter of fiscal year 2009.
EBITDA (defined as income from continuing operations before interest, taxes, depreciation and amortization) was $4.0 million in the second quarter of fiscal year 2010 compared with $2.4 million in the first quarter of fiscal year 2010 and $2.4 million in the second quarter of fiscal year 2009.
Free cash flow (cash flow provided by operating activities less capital expenditures) in the second quarter of fiscal year 2010 was $10.8 million compared with $3.6 million in the first quarter and $4.7 million in the second quarter of fiscal year 2009. The Company ended the quarter with a cash and cash equivalents balance of $54.4 million.
Business Metrics
The Company's business metrics are summarized as follows:
---------------------------------------------------------------------
Business Metrics
---------------------------------------------------------------------
Q2 FY10 Q1 FY10 Q2 FY09
---------------------------------------------------------------------
Total Clients 61 61 64
---------------------------------------------------------------------
Top 5 Client Concentration
(% of Net Revenue) 37% 34% 35%
---------------------------------------------------------------------
New Clients Added 8 10 10
---------------------------------------------------------------------
Revenue Generated from New Clients 1% 6% 5%
---------------------------------------------------------------------
Client-Serving Professionals
(Quarter End) 486 441 495
---------------------------------------------------------------------
Revenue per Professional
(Annualized, $ in thousands) $376 $335 $336
---------------------------------------------------------------------
Chargeability 76% 74% 66%
---------------------------------------------------------------------
Voluntary Attrition (Annualized) 8% 13% 9%
---------------------------------------------------------------------
Total Headcount (Quarter End) 598 551 611
---------------------------------------------------------------------
---------------------------------------------------------------------
Revenue by Industry
---------------------------------------------------------------------
Q2 FY10 Q1 FY10 Q2 FY09
---------------------------------------------------------------------
Financial Services 31% 33% 28%
---------------------------------------------------------------------
Insurance 27% 24% 24%
---------------------------------------------------------------------
Healthcare 21% 19% 18%
---------------------------------------------------------------------
Enterprise* 17% 18% 27%
---------------------------------------------------------------------
Public Sector 4% 6% 3%
---------------------------------------------------------------------
*The enterprise vertical includes telecommunications, consumer
packaged goods, travel and entertainment, retail and distribution,
and manufacturing and logistics.
---------------------------------------------------------------------
Business Outlook
Third Quarter 2010
"We had a successful first half, and we feel good about the state of our business today. While it is difficult to know how long the economy will take to establish a solid footing, it is in transition, and we are pointed to a return to double digit annual revenue growth, pretax margins, and free cash flow as a percent of revenue," continued Gutstein.
The Company expects third quarter net revenue to be in the range of $43.5 to $45.5 million, pretax income of $3.7 to $4.3 million and GAAP EPS to be in the range of $0.07 to $0.08 per diluted share. The Company expects its stock based compensation expense to be $1.3 million, tax expense to be in a range of $1.9 to $2.1 million, and its weighted average share count to be approximately 27.5 million shares. Free cash flow is expected to be negative $8 million to negative $6 million.
Conference Call
Diamond will host a conference call today, November 4, 2009, at 8:00 a.m. CT to discuss the results of the quarter. The dial-in number for the conference call is 1-800-738-1032 for North American callers and 212-231-2904 for international callers. The replay will be available until November 11, 2009, and can be accessed by calling 402-977-9140, then entering passcode number 21440192. The call will be broadcast live and archived on Diamond's web site at www.diamondconsultants.com.
About Diamond
Clients trust Diamond Management & Technology Consultants, Inc. (Nasdaq:DTPI) to help their companies grow, improve margins, and increase the productivity of their investments. Working together to design and execute business strategies that capitalize on changing market forces and technology, Diamond's consultants are experts in helping clients attract and retain customers, increase the value of their information, and plan and execute projects that turn strategy into measurable results.
Diamond's capabilities are rooted in deep strategy, technology, operations, and industry experience. The firm's approach to client service is based on objectivity, collaboration, and an unwavering commitment to its clients' best interests. Headquartered in Chicago, Diamond has offices in New York, Washington, D.C, Hartford, London, and Mumbai. To learn more visit: www.diamondconsultants.com.
Forward-Looking Statements
Statements in this press release that do not involve strictly historical or factual matters are forward-looking statements within the meaning of the "safe harbor" provisions of the federal securities laws. Forward-looking statements involve estimates, projections, assumptions, risks and uncertainties and speak only as of the date of this release based on information available to the Company as of the date of this release, and the Company assumes no obligation to update any forward-looking statements. Actual results may differ materially from the results projected in any forward-looking statement. For a discussion of some of the risks and uncertainties that could cause actual results to differ materially, please refer to the risks and uncertainties identified in our filings with the SEC.
Non-GAAP Financial Measures
This press release includes non-GAAP financial measures. For a description of these non-GAAP financial measures, including the reasons management believes the non-GAAP measures are useful to investors, and reconciliations of these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), please see the section entitled "Unaudited Reconciliations of GAAP to Non-GAAP Financial Measures."
DIAMOND MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
For the Three Months For the Six Months
Ended September 30, Ended September 30,
----------------------- -----------------------
2008 2009 2008 2009
----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenue:
Net revenue $ 40,506 $ 43,582 $ 79,319 $ 81,474
Reimbursable expenses 5,651 8,085 10,402 15,164
----------- ----------- ----------- -----------
Total revenue 46,157 51,667 89,721 96,638
Project personnel
expenses:
Project personnel
costs before
reimbursable
expenses 29,479 31,610 59,889 60,232
Reimbursable expenses 5,651 8,085 10,402 15,164
----------- ----------- ----------- -----------
Total project
personnel expenses 35,130 39,695 70,291 75,396
----------- ----------- ----------- -----------
Gross margin 11,027 11,972 19,430 21,242
----------- ----------- ----------- -----------
Other operating
expenses:
Professional
development and
recruiting 1,719 1,378 3,996 2,084
Marketing and sales 1,300 506 1,942 1,047
Management and
administrative
support 6,327 6,399 13,014 12,501
Restructuring
recovery (284) -- (284) --
----------- ----------- ----------- -----------
Total other
operating
expenses 9,062 8,283 18,668 15,632
----------- ----------- ----------- -----------
Income from operations 1,965 3,689 762 5,610
Other income
(expense), net 131 16 285 (3)
----------- ----------- ----------- -----------
Income from continuing
operations before
income taxes 2,096 3,705 1,047 5,607
Income tax expense
(benefit) 1,575 1,877 (194) 2,932
----------- ----------- ----------- -----------
Income from continuing
operations after
income taxes 521 1,828 1,241 2,675
Discontinued
operations:
Gain from
discontinued
operations, net of
income taxes -- 90 -- 175
----------- ----------- ----------- -----------
Net income 521 1,918 1,241 2,850
=========== =========== =========== ===========
Basic income per share
of common stock:
Income from
continuing
operations $ 0.02 $ 0.07 $ 0.05 $ 0.10
Income from
discontinued
operations -- 0.00 - 0.01
----------- ----------- ----------- -----------
Net income $ 0.02 $ 0.07 $ 0.05 $ 0.10
=========== =========== =========== ===========
Diluted income per
share of common
stock:
Income from
continuing
operations $ 0.02 $ 0.07 $ 0.05 $ 0.10
Income from
discontinued
operations -- 0.00 -- 0.01
----------- ----------- ----------- -----------
Net income $ 0.02 $ 0.07 $ 0.05 $ 0.10
=========== =========== =========== ===========
Shares used in
computing basic
income per share of
common stock 26,119 27,240 26,544 27,250
Shares used in
computing diluted
income per share of
common stock 26,432 27,715 26,923 27,594
The following amounts of stock-based compensation expense ("SBC") are
included in each of the respective expense categories reported above:
For the Three Months For the Six Months
Ended September 30, Ended September 30,
----------------------- -----------------------
2008 2009 2008 2009
----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Project personnel
costs before
reimbursable
expenses $ 3,082 $ 898 $ 6,073 $ 1,739
Professional
development and
recruiting 31 8 57 20
Marketing and sales 69 118 146 209
Management and
administrative
support 624 311 1,240 684
----------- ----------- ----------- -----------
Total SBC 3,806 1,335 7,516 2,652
=========== =========== =========== ===========
DIAMOND MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, September 30,
2009 2009
------------- -------------
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 46,112 $ 54,408
Accounts receivable, net of allowance
of $566 and $644 as of March 31 and
September 30, 2009, respectively 15,872 16,590
Deferred tax asset - current portion 6,747 1,447
Prepaid expenses and other current
assets 2,802 3,623
------------- -------------
Total current assets 71,533 76,068
Restricted cash 4,099 4,103
Computers, equipment, leasehold
improvements and software, net 4,280 3,675
Deferred tax asset - long-term portion 7,757 6,275
Other assets 1,480 1,348
------------- -------------
Total assets $ 89,149 $ 91,469
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,595 $ 2,824
Income taxes payable - current portion 1,493 460
Accrued compensation 4,269 14,738
Accrued benefits 2,481 3,583
Other accrued liabilities 3,623 3,895
------------- -------------
Total current liabilities 16,461 25,500
Deferred rent - long term portion 1,593 1,768
Net tax indemnification obligation 368 236
Accrued income tax liabilities -
long-term portion 687 605
------------- -------------
Total liabilities 19,109 28,109
Commitments and contingencies
Stockholders' equity:
Common stock, net, 27,202 and 27,039
shares issued and outstanding as of
March 31 and September 30, 2009,
respectively 516,937 510,892
Accumulated other comprehensive loss (4,636) (4,287)
Accumulated deficit (442,261) (443,245)
------------- -------------
Total stockholders' equity 70,040 63,360
------------- -------------
Total liabilities and stockholders'
equity $ 89,149 $ 91,469
============= =============
DIAMOND MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
For the Three Months For the Six Months
Ended September 30, Ended September 30,
----------------------- -----------------------
2008 2009 2008 2009
----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Cash flows from
operating activities:
Net income $ 521 $ 1,918 $ 1,241 $ 2,850
Adjustments to
reconcile net income
to net cash provided
by operating
activities:
Restructuring
recovery $ (284)$ -- (284) --
Depreciation and
amortization 440 352 891 841
Stock-based
compensation 3,806 1,335 7,516 2,652
Deferred income taxes 412 (58) (48) 6,781
Excess tax benefits
from employee stock
plans (3) (25) (17) (30)
Changes in assets
and liabilities:
Accounts receivable (3,699) (1,632) (4,238) (612)
Prepaid expenses
and other (752) (655) (860) (765)
Accounts payable 123 (550) (1,025) (1,454)
Accrued
compensation 1,805 10,150 (2,843) 10,481
Income taxes
payable 787 (671) (647) (7,183)
Restructuring
accrual -- -- (55) --
Other assets and
liabilities 2,073 774 2,841 1,451
----------- ----------- ----------- -----------
Net cash provided by
operating activities 5,229 10,938 2,472 15,012
----------- ----------- ----------- -----------
Cash flows from
investing activities:
Decrease (increase)
in restricted cash (14) (3) 3,100 (5)
Capital expenditures,
net (520) (180) (1,006) (660)
----------- ----------- ----------- -----------
Net cash provided by
(used in) investing
activities (534) (183) 2,094 (665)
----------- ----------- ----------- -----------
Cash flows from
financing activities:
Stock option and
employee stock
purchase plan
proceeds 529 498 1,095 895
Payment of employee
withholding taxes
from equity
transactions (95) (155) (896) (261)
Common stock cash
dividends -- (1,911) -- (3,832)
Excess tax benefits
from employee stock
plans 3 25 17 30
Purchase of treasury
stock (5,666) (2,819) (10,530) (3,099)
----------- ----------- ----------- -----------
Net cash used in
financing activities (5,229) (4,362) (10,314) (6,267)
----------- ----------- ----------- -----------
Effect of exchange
rate changes on cash (483) (60) (417) 216
----------- ----------- ----------- -----------
Net increase
(decrease) in cash
and cash equivalents (1,017) 6,333 (6,165) 8,296
Cash and cash
equivalents at
beginning of period 48,119 48,075 53,267 46,112
----------- ----------- ----------- -----------
Cash and cash
equivalents at end
of period $ 47,102 $ 54,408 $ 47,102 $ 54,408
=========== =========== =========== ===========
Non-cash financing
activities:
Treasury stock
repurchase
obligation $ 544 $ 531 $ 544 $ 531
DIAMOND MANAGEMENT & TECHNOLOGY CONSULTANTS, INC.
UNAUDITED RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands)
RECONCILIATION OF INCOME FROM CONTINUING OPERATIONS
AFTER INCOME TAXES TO EBITDA (1):
For the Three Months Ended
----------------------------------
Sept. 30, June 30, Sept. 30,
2009 2009 2008
---------- ---------- ----------
(Unaudited) (Unaudited) (Unaudited)
Income from continuing operations
after income taxes $ 1,828 $ 847 $ 521
Depreciation and amortization 352 489 440
Interest income, net (20) (10) (131)
Income tax expense 1,877 1,055 1,575
---------- ---------- ----------
EBITDA $ 4,037 $ 2,381 $ 2,405
========== ========== ==========
(1) EBITDA, defined as income from continuing operations before
interest, taxes, depreciation and amortization, is not a measure
of financial performance under U.S. generally accepted accounting
principles (GAAP). Management believes EBITDA is a useful
indicator of the Company's financial and operating performance
and its ability to generate cash flows from operations that are
available for share repurchases and capital expenditures.
Investors should recognize that EBITDA might not be comparable to
similarly-titled measures of other companies. This measure should
be considered in addition to, and not as a substitute for or
superior to, any measure of performance prepared in accordance
with GAAP.
RECONCILIATION OF CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES TO FREE CASH FLOW (1):
For the Three Months Ended
-----------------------------------------
September 30, June 30, September 30,
2009 2009 2008
------------- ------------- -------------
(Unaudited) (Unaudited) (Unaudited)
Net cash provided by
operating activities $ 10,938 $ 4,074 $ 5,229
Capital expenditures (180) (480) (520)
------------- ------------- -------------
Free cash flow $ 10,758 $ 3,594 $ 4,709
============= ============= =============
(1) Free cash flow, defined as net cash provided by (used in)
operating activities less capital expenditures, is a non-GAAP term.
Management believes that by providing more visibility on free cash
flow and reconciling to net cash provided by (used in) operating
activities, the Company provides a consistent metric from which the
quality of its business may be monitored. This measure should be
considered in addition to, and not as a substitute for or superior
to, any measure of performance prepared in accordance with GAAP.
CONTACT: Diamond Management & Technology Consultants, Inc.
Investor Contact:
Margaret Boyce
312-255-5784
margaret.boyce@diamondconsultants.com
Media Contact:
David Moon
312-255-4560
david.moon@diamondconsultants.com