Fourth Quarter Earnings From Continuing Operations Up 21 Percent
Federal Business Revenue Grew 11 Percent
ANDOVER, Mass., Feb. 16, 2011 (GLOBE NEWSWIRE) -- Dynamics Research Corporation (Nasdaq:DRCO), a leading provider of innovative management consulting, engineering and information technology services and solutions to federal and state governments, today announced operating results for the fourth quarter and year ended December 31, 2010.
Financial Results
The Company reported net income from continuing operations for the fourth quarter of 2010 of $4.0 million, up 21 percent from $3.3 million for the same period in 2009. Earnings from continuing operations per diluted share for the fourth quarter of 2010 were $0.39, up 18 percent from $0.33 for the same period in 2009.
For the full year 2010 net income from continuing operations was $12.3 million, up 19 percent from $10.3 million for 2009. Earnings from continuing operations per diluted share were $1.22, up 15 percent from $1.06 for 2009. Net Income for 2010, including discontinued operations, was $12.7 million, or $1.26 per diluted share.
For the fourth quarter of 2010 revenue was $69.8 million, up 6 percent from $65.8 million in the fourth quarter of 2009. Federal revenue was $66.4 million for the fourth quarter of 2010, up 11 percent from $60 million for the same period a year ago.
For the year 2010 revenue was $272.1 million, as compared with $268.7 million for 2009. Federal revenue for 2010 of $254.1 million was up 4 percent over 2009 revenue of $244.3 million.
Business Highlights
"We're very pleased with our performance in the quarter, ending the year with strong momentum heading into 2011," said Jim Regan, DRC's chairman and chief executive officer. "We saw double-digit growth in federal sector revenue during the period and continued to bid on a significant number of new business opportunities. Our raw pipeline of $1.7 billion has risen 30% in the past 12 months, and we currently have $373 million in bids submitted and awaiting award. In addition, we ended the year with $30 million in cash, driven by federal DSO's of 55 days, and generated cash flow from operating activities of over $40 million. We look forward to another year of improved performance in 2011."
Company Guidance
The Company reaffirms guidance issued on February 8, 2011.
Earnings for the full year 2011 are estimated to be in the range of $1.25 to $1.32 per diluted share, reflecting an increase of 5 to 10 percent over 2010 excluding a one-time tax benefit of 3 cents received in the first quarter of 2010. Earnings per diluted share are forecast to be between $0.25 and $0.27 for the first quarter of 2011, up 4 to 13 percent over the first quarter of 2010 excluding the one-time tax benefit received in the prior-year period. The Company's estimate of revenue for 2011 is in the range of $281 to $289 million, reflecting anticipated top-line growth for DRC's federal business of 5 to 8 percent. For the first quarter of 2011, revenue is projected at $68 to $70 million, reflecting growth in the Company's federal business of 3 to 6 percent. These projections exclude the effects of future acquisitions and assume a tax rate of approximately 40 percent.
Conference Call
The Company will conduct its fourth quarter and year-end 2010 conference call on Thursday, February 17, 2011 at 10:00 a.m. ET. The call will be available by telephone at 877-303-4382, and accessible by webcast at http://www.drc.com. Recorded replays of the conference call will be available on Dynamics Research Corporation's investor relations home page at http://www.drc.com and by telephone at 800-642-1687, replay passcode #41431225, beginning at 1:00 p.m. ET on February 17, 2011.
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. The Company assumes no obligation to update any forward-looking information.
Attachment I | ||
DYNAMICS RESEARCH CORPORATION | ||
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (unaudited) | ||
(in thousands, except share and per share data) | ||
Three Months Ended | ||
December 31, | ||
2010 | 2009 | |
Revenue | $ 69,753 | $ 65,826 |
Cost of revenue | 57,607 | 53,854 |
Gross profit | 12,146 | 11,972 |
Selling, general and administrative expenses | 5,301 | 5,477 |
Amortization of intangible assets | 385 | 551 |
Operating income | 6,460 | 5,944 |
Interest expense, net | (2) | (494) |
Other income, net | 219 | 106 |
Income from continuing operations before provision for income taxes | 6,677 | 5,556 |
Provision for income taxes | 2,686 | 2,270 |
Income from continuing operations | 3,991 | 3,286 |
Effect of discontinued operations, net of tax | -- | 110 |
Net income | $ 3,991 | $ 3,396 |
Earnings per share | ||
Basic | ||
Income from continuing operations | $ 0.40 | $ 0.34 |
Effect of discontinued operations, net of tax | -- | 0.01 |
Net income | $ 0.40 | $ 0.35 |
Diluted | ||
Income from continuing operations | $ 0.39 | $ 0.33 |
Effect of discontinued operations, net of tax | -- | 0.01 |
Net income | $ 0.39 | $ 0.34 |
Weighted average shares outstanding | ||
Basic | 9,975,884 | 9,753,555 |
Diluted | 10,137,032 | 9,981,292 |
Attachment II | ||
DYNAMICS RESEARCH CORPORATION | ||
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (unaudited) | ||
(in thousands, except share and per share data) | ||
Twelve Months Ended | ||
December 31, | ||
2010 | 2009 | |
Revenue | $ 272,065 | $ 268,661 |
Cost of revenue | 228,175 | 223,694 |
Gross profit | 43,890 | 44,967 |
Selling, general and administrative expenses | 21,534 | 23,754 |
Amortization of intangible assets | 1,541 | 3,305 |
Operating income | 20,815 | 17,908 |
Interest expense, net | (1,084) | (2,024) |
Other income, net | 453 | 691 |
Income from continuing operations before provision for income taxes | 20,184 | 16,575 |
Provision for income taxes | 7,871 | 6,262 |
Income from continuing operations | 12,313 | 10,313 |
Effect of discontinued operations, net of tax | 392 | (141) |
Net income | $ 12,705 | $ 10,172 |
Earnings per share (1) | ||
Basic | ||
Income from continuing operations | $ 1.24 | $ 1.08 |
Effect of discontinued operations, net of tax | 0.04 | (0.01) |
Net income | $ 1.28 | $ 1.06 |
Diluted | ||
Income from continuing operations | $ 1.22 | $ 1.06 |
Effect of discontinued operations, net of tax | 0.04 | (0.01) |
Net income | $ 1.26 | $ 1.04 |
Weighted average shares outstanding | ||
Basic | 9,893,322 | 9,551,614 |
Diluted | 10,078,937 | 9,772,722 |
(1) Amounts may not add due to rounding. |
Attachment III | ||
DYNAMICS RESEARCH CORPORATION | ||
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) | ||
(in thousands) | ||
December 31, | December 31, | |
2010 | 2009 | |
Assets | ||
Current assets | ||
Cash and cash equivalents | $ 30,163 | $ 55 |
Contract receivables, net | 48,394 | 72,569 |
Prepaid expenses and other current assets | 2,924 | 5,702 |
Discontinued operations | -- | 2,058 |
Total current assets | 81,481 | 80,384 |
Noncurrent assets | ||
Property and equipment, net | 12,219 | 13,915 |
Goodwill | 97,641 | 97,641 |
Intangible assets, net | 2,533 | 4,074 |
Deferred tax asset | 585 | 4,252 |
Other noncurrent assets | 3,757 | 3,335 |
Total noncurrent assets | 116,735 | 123,217 |
Total assets | $ 198,216 | $ 203,601 |
Liabilities and stockholders' equity | ||
Current liabilities | ||
Current portion of long-term debt | $ 8,000 | $ 8,000 |
Accounts payable | 16,883 | 18,299 |
Accrued compensation and employee benefits | 18,046 | 16,357 |
Deferred taxes | 2,418 | 7,046 |
Other accrued expenses | 4,617 | 3,708 |
Discontinued operations | -- | 186 |
Total current liabilities | 49,964 | 53,596 |
Long-term liabilities | ||
Long-term debt | 14,000 | 23,973 |
Other long-term liabilities | 27,067 | 31,936 |
Total stockholders' equity | 107,185 | 94,096 |
Total liabilities and stockholders' equity | $ 198,216 | $ 203,601 |
Attachment IV | |||||
DYNAMICS RESEARCH CORPORATION | |||||
SUPPLEMENTAL INFORMATION (unaudited) | |||||
(dollars in thousands) | |||||
Contract revenues were earned from the following sectors: | |||||
Three Months Ended | Twelve Months Ended | ||||
December 31, | December 31, | ||||
2010 | 2009 | 2010 | 2009 | ||
National defense and intelligence agencies | $ 49,344 | $ 40,402 | $ 179,704 | $ 163,244 | |
Homeland security | 10,762 | 13,124 | 50,468 | 54,627 | |
Federal civilian agencies | 6,337 | 6,446 | 23,901 | 26,475 | |
Total revenue from federal agencies | 66,443 | 59,972 | 254,073 | 244,346 | |
State and local government agencies | 3,257 | 5,744 | 17,915 | 23,990 | |
Other | 53 | 110 | 77 | 325 | |
Total revenue | $ 69,753 | $ 65,826 | $ 272,065 | $ 268,661 | |
Revenues by contract type as a percentage of contract revenue were as follows: | |||||
Three Months Ended | Twelve Months Ended | ||||
December 31, | December 31, | ||||
2010 | 2009 | 2010 | 2009 | ||
Fixed price, including service-type contracts | 50% | 45% | 47% | 40% | |
Time and materials | 29 | 36 | 32 | 42 | |
Cost reimbursable | 21 | 19 | 21 | 18 | |
100% | 100% | 100% | 100% | ||
Prime contract | 74% | 71% | 73% | 71% | |
Sub-contract | 26 | 29 | 27 | 29 | |
100% | 100% | 100% | 100% | ||
Three Months Ended | Twelve Months Ended | ||||
December 31, | December 31, | ||||
2010 | 2009 | 2010 | 2009 | ||
Net cash provided by operating activities - continuing operations | $ 9,860 | $ 7,614 | $ 41,331 | $ 8,208 | |
Capital expenditures | $ 183 | $ 2,989 | $ 4,449 | $ 5,185 | |
Depreciation | $ 904 | $ 807 | $ 3,564 | $ 2,987 | |
Bookings | $ 46,555 | $ 73,736 | $ 272,143 | $ 282,311 | |
December 31, | December 31, | ||||
2010 | 2009 | ||||
Total backlog | $ 400,881 | $ 434,475 | |||
Funded backlog | $ 133,516 | $ 158,518 | |||
Employees | 1,298 | 1,469 |