ANDOVER, Mass., July 28, 2010 (GLOBE NEWSWIRE) -- Dynamics Research Corporation (Nasdaq:DRCO), a leading provider of innovative management consulting, engineering, technical and information technology services and solutions to federal and state governments, today announced operating results for the second quarter ended June 30, 2010.
Financial Results
The Company reported income from continuing operations for the second quarter of 2010 of $2.6 million, or $0.26 per diluted share, up 18.6 percent from $2.2 million, or $0.22 per diluted share, for the second quarter of 2009. Revenue for the second quarter of 2010 was $65.3 million compared with $68.1 million for the same period in 2009. Excluding the expiration of restricted 8(a) contracts assumed with the Kadix acquisition in 2008, second quarter 2010 revenue for the Federal business was down 0.8% compared with the same period a year ago.
For the six month period ended June 30, 2010 income from continuing operations was $5.3 million, or $0.53 per diluted share, compared with $4.1 million, or $0.42 per diluted share, for the same period in 2009. For the six months ended June 30, 2010 revenue was $133.9 million compared with $135.3 million for the same period in 2009. Excluding the expiration of restricted 8(a) contracts assumed with the Kadix acquisition in 2008, revenue for the Federal business during the six month period rose 3.4% compared with the same period a year ago.
Business Highlights
"We remain well positioned in growth sectors of the Federal market and are aggressively pursuing new business in these target markets, as evidenced by $63 million in new business contract awards for the first half of the year and $377 million in submitted new business bids awaiting award – a record for DRC. Although top line growth is lower than we had anticipated primarily due to insourcing and a delay in contract awards, the prospects for accelerated revenue growth are strong. We also are pleased with the nearly one-and-a-half points of operating margin expansion reported this quarter versus a year ago," said Jim Regan, DRC's chairman and chief executive officer. "We continued to generate solid positive cash flow, as our federal business receivables days outstanding dropped to 65, down another three days from the first quarter of 2010."
In other matters the Company reported the sale of the Metrigraphics unit effective July 19, 2010, which was classified as a discontinued operation for financial reporting purposes as of December 31, 2009. The financial effect of the sale is reflected in second quarter 2010 operating results.
Also, the Company noted that an agreement in principle had been reached regarding an outstanding Fair Labor Standards Act claim, the effect of which was accrued on the Company's June 30, 2010 balance sheet.
Company Guidance
The Company's estimate for revenue for 2010 is in the range of $271 to $278 million. Regarding earnings from continuing operations for 2010, the Company anticipates results to be in the range of $1.18 to $1.24 per diluted share. For the third quarter of 2010 the Company anticipates revenue in the range of $67 to $69 million and earnings from continuing operations per diluted share of $0.27 to $0.30.
Conference Call
The Company will conduct a second quarter 2010 conference call tomorrow, July 29, 2010 at 10:00 a.m. ET. The call will be available via telephone at (877) 303-4382 and accessible via Web cast at www.drc.com. Recorded replays of the conference call will be available on Dynamics Research Corporation's investor relations home page at www.drc.com and by telephone at (800) 642-1687, passcode #87022919, beginning at 1:00 p.m. ET on July 29, 2010.
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 June 30, |
||||
| 2010 | 2009 | |||
| Revenue | $ 65,308 | $ 68,128 | ||
| Cost of revenue | 55,111 | 57,015 | ||
| Gross profit | 10,197 | 11,113 | ||
| Selling, general and administrative expenses | 5,080 | 6,211 | ||
| Amortization of intangible assets | 386 | 972 | ||
| Operating income | 4,731 | 3,930 | ||
| Interest expense, net | (367) | (477) | ||
| Other income (expense), net | (30) | 282 | ||
| Income from continuing operations before provision for income taxes | 4,334 | 3,735 | ||
| Provision for income taxes | 1,755 | 1,561 | ||
| Income from continuing operations | 2,579 | 2,174 | ||
| Effect of discontinued operations, net of tax | 173 | (124) | ||
| Net income | $ 2,752 | $ 2,050 | ||
| Earnings per share (1) | ||||
| Basic | ||||
| Income from continuing operations | $ 0.26 | $ 0.23 | ||
| Effect of discontinued operations, net of tax | 0.02 | (0.01) | ||
| Net income | $ 0.28 | $ 0.21 | ||
| Diluted | ||||
| Income from continuing operations | $ 0.26 | $ 0.22 | ||
| Effect of discontinued operations, net of tax | 0.02 | (0.01) | ||
| Net income | $ 0.27 | $ 0.21 | ||
| Weighted average shares outstanding | ||||
| Basic | 9,896,738 | 9,610,428 | ||
| Diluted | 10,070,809 | 9,729,721 | ||
| (1) Totals may not add due to rounding | ||||
| ATTACHMENT II | ||||
| DYNAMICS RESEARCH CORPORATION | ||||
| CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (unaudited) | ||||
| (in thousands, except share and per share data) | ||||
|
Six Months Ended June 30, |
||||
| 2010 | 2009 | |||
| Revenue | $ 133,892 | $ 135,331 | ||
| Cost of revenue | 112,938 | 112,958 | ||
| Gross profit | 20,954 | 22,373 | ||
| Selling, general and administrative expenses | 11,036 | 12,522 | ||
| Amortization of intangible assets | 771 | 1,945 | ||
| Operating income | 9,147 | 7,906 | ||
| Interest expense, net | (743) | (1,096) | ||
| Other income, net | 83 | 321 | ||
| Income from continuing operations before provision for income taxes | 8,487 | 7,131 | ||
| Provision for income taxes | 3,171 | 3,000 | ||
| Income from continuing operations | 5,316 | 4,131 | ||
| Effect of discontinued operations, net of tax | 305 | (310) | ||
| Net income | $ 5,621 | $ 3,821 | ||
| Earnings per share | ||||
| Basic | ||||
| Income from continuing operations | $ 0.54 | $ 0.43 | ||
| Effect of discontinued operations, net of tax | 0.03 | (0.03) | ||
| Net income | $ 0.57 | $ 0.40 | ||
| Diluted | ||||
| Income from continuing operations | $ 0.53 | $ 0.42 | ||
| Effect of discontinued operations, net of tax | 0.03 | (0.03) | ||
| Net income | $ 0.56 | $ 0.39 | ||
| Weighted average shares outstanding | ||||
| Basic | 9,858,538 | 9,611,783 | ||
| Diluted | 10,042,916 | 9,727,387 | ||
| ATTACHMENT III | ||||
| DYNAMICS RESEARCH CORPORATION | ||||
| CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) | ||||
| (in thousands) | ||||
|
June 30, 2010 |
December 31, 2009 |
|||
| Assets | ||||
| Current assets | ||||
| Cash and cash equivalents | $ 7,411 | $ 55 | ||
| Contract receivables, net | 61,928 | 72,569 | ||
| Prepaid expenses and other current assets | 5,104 | 5,702 | ||
| Discontinued operations | 2,026 | 2,058 | ||
| Total current assets | 76,469 | 80,384 | ||
| Noncurrent assets | ||||
| Property and equipment, net | 13,053 | 13,915 | ||
| Goodwill | 97,641 | 97,641 | ||
| Intangible assets, net | 3,303 | 4,074 | ||
| Deferred tax asset | 4,129 | 4,252 | ||
| Other noncurrent assets | 3,057 | 3,335 | ||
| Total noncurrent assets | 121,183 | 123,217 | ||
| Total assets | $ 197,652 | $ 203,601 | ||
| Liabilities and stockholders' equity | ||||
| Current liabilities | ||||
| Current portion of long-term debt | $ 8,000 | $ 8,000 | ||
| Accounts payable | 14,986 | 18,299 | ||
| Accrued compensation and employee benefits | 15,426 | 16,357 | ||
| Deferred taxes | 4,638 | 7,046 | ||
| Other accrued expenses | 4,381 | 3,708 | ||
| Discontinued operations | 300 | 186 | ||
| Total current liabilities | 47,731 | 53,596 | ||
| Long-term liabilities | ||||
| Long-term debt | 18,000 | 23,973 | ||
| Other long-term liabilities | 30,988 | 31,936 | ||
| Total stockholders' equity | 100,933 | 94,096 | ||
| Total liabilities and stockholders' equity | $ 197,652 | $ 203,601 | ||
| ATTACHMENT IV | ||||
| DYNAMICS RESEARCH CORPORATION | ||||
| SUPPLEMENTAL INFORMATION (unaudited) | ||||
| (dollars in thousands) | ||||
| Contract revenues were earned from the following sectors: | ||||
| Three Months Ended | Six Months Ended | |||
| June 30, | June 30, | |||
| 2010 | 2009 | 2010 | 2009 | |
| National defense and intelligence agencies | $ 40,406 | $ 39,722 | $ 84,481 | $ 78,783 |
| Homeland security | 13,209 | 13,674 | 26,140 | 26,762 |
| Federal civilian agencies | 6,406 | 7,864 | 12,573 | 16,793 |
| Total revenue from federal agencies | 60,021 | 61,260 | 123,194 | 122,338 |
| State and local government agencies | 5,285 | 6,487 | 10,679 | 12,304 |
| Other | 2 | 381 | 19 | 689 |
| Total revenue | $ 65,308 | $ 68,128 | $ 133,892 | $ 135,331 |
| Revenues by contract type as a percentage of contract revenue were as follows: | ||||
| Three Months Ended | Six Months Ended | |||
| June 30, | June 30, | |||
| 2010 | 2009 | 2010 | 2009 | |
| Fixed price, including service-type contracts | 44% | 38% | 45% | 37% |
| Time and materials | 35 | 44 | 34 | 45 |
| Cost reimbursable | 21 | 18 | 21 | 18 |
| 100% | 100% | 100% | 100% | |
| Prime contract | 72% | 71% | 72% | 71% |
| Sub-contract | 28 | 29 | 28 | 29 |
| 100% | 100% | 100% | 100% | |
| Three Months Ended | Six Months Ended | |||
| June 30, | June 30, | |||
| 2010 | 2009 | 2010 | 2009 | |
| Net cash provided by operating activities - continuing operations | $ 1,963 | $ 5,086 | $ 15,050 | $ 8,532 |
| Capital expenditures | $ 1,111 | $ 545 | $ 3,581 | $ 768 |
| Depreciation | $ 878 | $ 703 | $ 1,764 | $ 1,440 |
| Bookings | $ 52,922 | $ 66,324 | $ 130,143 | $ 122,151 |
| June 30, | December 31, | |||
| 2010 | 2009 | |||
| Total backlog | $ 362,304 | $ 434,475 | ||
| Funded backlog | $ 150,609 | $ 158,518 | ||
| Employees | 1,369 | 1,469 | ||