NCI, Inc. (ticker: NCIT, exchange: NASDAQ Global Market (.O))
News Release -
31-Jul-2007
NCI, Inc. Reports Solid Second Quarter 2007 Financial Results
- Revenues up 39% to $66.7 million
- Operating income up 52% to $4.8 million
- Operating margin increases to 7.2%
- Second quarter EPS up 47% to $0.22
RESTON, Va.--(BUSINESS WIRE)--July 31, 2007--NCI, Inc.
(NASDAQ:NCIT), a provider of information technology services and
solutions to U.S. federal government agencies, announced today results
for the second quarter of 2007. The table below is a summary of our
financial results:
Q2: 2007 YTD: 2007
----------------------------------------------------------------------
Revenues $66.7 million $131.0 million
----------------------------------------------------------------------
Operating income $4.8 million $9.5 million
----------------------------------------------------------------------
Operating margin 7.2% 7.2%
----------------------------------------------------------------------
Net income $3.0 million $5.9 million
----------------------------------------------------------------------
Diluted EPS (GAAP) $0.22 $0.44
----------------------------------------------------------------------
Reported Results
For the second quarter of 2007, NCI reported revenues of $66.7
million compared to $47.9 million for the second quarter of 2006. This
represents a growth rate of approximately 39%, and an organic revenue
growth rate of 25%, and is primarily due to new task orders under
NCI's GWAC contract vehicles as well as growth on existing programs
and the acquisition of Operational Technologies Services, Inc. (OTS)
and Karta Technologies, Inc. (Karta). Operating income for the second
quarter of 2007 was $4.8 million, compared to $3.2 million for the
second quarter of 2006. The increase was due to the higher volume of
revenue on a year-over-year basis and the leveraging of indirect costs
over a larger revenue base. This resulted in an operating margin of
7.2% for the second quarter of 2007 compared to 6.6% for the same
period in 2006. Net income for the second quarter was $3.0 million,
compared to $2.0 million for the same period in 2006. Diluted earnings
per share for the second quarter were $0.22, compared to $0.15 per
share for the comparable period in 2006. The effective tax rate for
the second quarter of 2007 was 39.5%. Diluted shares outstanding were
approximately 13.5 million shares for both the second quarters of 2007
and 2006.
For the first six months of 2007, NCI reported revenues of $131.0
million, compared to $93.9 for the first six months of 2006. Operating
income for the first six months of 2007 was $9.5 million, or an
operating margin of 7.2%, compared to $5.8 million, or an operating
margin of 6.2%, for the first six months of 2006. Net income for the
first six months of 2007 was $5.9 million, compared to $3.7 million
for the same period in 2006. Diluted earnings per share for the first
six months of 2007 were $0.44 per share, compared to $0.28 per share
for the comparable period in 2006. Diluted shares outstanding were
approximately 13.5 million shares for both the first halves of 2007
and 2006.
CEO Comments
Charles K. Narang, NCI's Chairman and CEO, said, "We are pleased
to report a very successful quarter in which we achieved strong
financial performance and expanded our market presence with the
closing of the acquisition of Karta Technologies, Inc. We are
delighted with the business positioning this acquisition affords us.
Together with the acquisition of Operational Technologies, Inc. in the
first quarter of this year, we are confident that the combination of
all three entities will provide NCI with an excellent platform for
organic growth in 2008 and beyond."
Business Highlights
NCI's president and COO, Terry Glasgow, stated, "During the second
quarter we continued to deliver outstanding business results in our
core business areas. The year-over-year improvement in our key
financial metrics reflects the focus we have on business development
activities to achieve long-term sustainable organic growth. The
acquisition of Karta Technologies represents an important step in
achieving our long-term growth objectives."
Key Metrics
NCI reported total backlog for the second quarter of 2007 of $755
million, of which $137 million was funded backlog. This compares to
total backlog of $545 million at the end of the second quarter of
2006, including $71 million in funded backlog. Of the $210 million
increase in total backlog, approximately $155 million resulted from
the acquisition of Karta. During the second quarter of 2007,
approximately 80% of revenue was from prime contracts.
Time-and-materials contracts accounted for 41% of revenue, cost-plus
contracts accounted for 32% of revenue, and fixed-price contracts
accounted for 27% of revenue for the second quarter of 2007. Our
customer mix for the second quarter of 2007 reflects approximately 82%
of revenues from the Department of Defense and Intelligence customers
and approximately 18% of revenues from federal civilian agencies.
Outlook
The table below summarizes the guidance ranges for the third
quarter and full year of 2007. This outlook does not reflect the
impact of any future acquisitions, but does reflect the acquisitions
of OTS and Karta.
3rd Quarter 2007 Full Year 2007
----------------------------------------------------------------------
Revenue $82 million - $87 million $290 million - $300 million
----------------------------------------------------------------------
Diluted Earnings
Per Share $0.20 - $0.22 $0.84 - $0.90
----------------------------------------------------------------------
Conference Call Information
NCI, Inc.'s executive management will hold a conference call today
at 5 p.m. EDT, to discuss second quarter 2007 results and answer
questions. Interested parties may access the call by dialing (877)
704-5380 (domestic) or (913) 312-1294 (international). The
confirmation code for the live call is 9834299. The conference call
will be webcast (listen only) simultaneously via the Internet at
www.nciinc.com.
A replay of the call will be available beginning at 8 p.m. EDT
today and will remain available for a two-week period. To access the
replay, call (888) 203-1112 (domestic) or (719) 457-0820
(international). The confirmation code for the replay is 9834299. A
replay webcast will also be available on NCI, Inc.'s website shortly
after the conclusion of the call.
About NCI, Inc.:
NCI is a leading provider of information technology services and
solutions to U.S. federal government agencies. As an ISO 9001
certified company, NCI's award-winning expertise encompasses areas
critical to its customers' mission objectives including enterprise
systems management, information assurance, network engineering, and
systems development and integration. Headquartered in Reston,
Virginia, NCI has approximately 1,900 employees and 50 locations
worldwide. For more information, visit our website at www.nciinc.com,
or e-mail mcrystal@nciinc.com.
Forward-Looking Statement: Statements and assumptions made in this
press release, which do not address historical facts, constitute
"forward-looking" statements that NCI believes to be within the
definition in the Private Securities Litigation Reform Act of 1995 and
involve risks and uncertainties, many of which are outside of our
control. Words such as "may," "will," "intends," "should," "expects,"
"plans," "projects," "anticipates," "believes," "estimates,"
"predicts," "potential," "continue," or "opportunity," or the negative
of these terms or words of similar import are intended to identify
forward-looking statements.
Such statements are subject to factors that could cause actual
results to differ materially from anticipated results. The factors
that could cause actual results to differ materially from those
anticipated include, but are not limited to, the following: our
dependence on our contracts with federal government agencies,
particularly within the U.S. Department of Defense, for substantially
all of our revenue; continued funding of U.S. Government, based on a
change in spending patterns, or in the event of a priority need for
funds, such as homeland security, the war on terrorism or rebuilding
Iraq; risk of contract performance or termination; failure to achieve
contract awards in connection with recompetes for present business
and/or competition for new business; government contract procurement
(such as bid protest, small business set asides, etc.) and termination
risks; competitive factors such as pricing pressures and competition
to hire and retain employees (particularly those with security
clearances); failure to successfully integrate Operational
Technologies Services, Inc., Karta Technologies, Inc. and future
acquired companies or businesses into our operations or to realize any
accretive or synergistic effects from such acquisitions; failure to
identify, execute and effectively integrate acquisitions appropriate
to the achievement of our strategic plans; economic conditions in the
United States, including conditions that result from terrorist
activities or war; material changes in laws or regulations applicable
to our businesses, particularly legislation affecting (i) government
contracts for services, (ii) outsourcing of activities that have been
performed by the government, (iii) delays related to agency specific
funding freezes, (iv) competition for task orders under Government
Wide Acquisition Contracts (GWACS) and/or schedule contracts with the
General Services Administration; and (v) expensing of stock options;
and our own ability to achieve the objectives of near term or long
range business plans. These and other risk factors are more fully
discussed in the section entitled "Risks Factors" in NCI's Form 10-K
filed with the Securities and Exchange Commission (SEC) for the period
ended December 31, 2006, and from time to time, in other filings with
the SEC such as our Forms 8-K and Forms 10-Q.
The forward-looking statements included in this news release are
only made as of the date of this news release and NCI undertakes no
obligation to publicly update any of the forward-looking statements
made herein, whether as a result of new information, subsequent events
or circumstances, changes in expectations or otherwise.
NCI, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(amounts in thousands, except per share data)
Three months ended Six months ended
June 30, June 30,
2007 2006 2007 2006
--------- -------- --------- --------
Revenue $66,703 $47,857 $130,994 $93,891
Operating costs and expenses:
Cost of revenue (exclusive of
depreciation and amortization,
shown separately below) 58,237 41,096 113,746 80,566
General and administrative
expense 3,078 2,939 6,658 6,193
Depreciation and amortization 356 406 726 816
Amortization of intangible
assets 217 242 400 488
-------- ------- -------- -------
Total operating costs and
expenses 61,888 44,683 121,530 88,063
-------- ------- -------- -------
Operating income 4,815 3,174 9,464 5,828
Interest income 212 208 354 325
Interest expense (58) (19) (82) (45)
-------- ------- -------- -------
Income before income taxes 4,969 3,363 9,736 6,108
Income tax expense 1,961 1,316 3,843 2,391
-------- ------- -------- -------
Net income $ 3,008 $ 2,047 $ 5,893 $ 3,717
======== ======= ======== =======
Earnings per common and common
equivalent share:
Basic:
Weighted average shares
outstanding 13,328 13,328 13,328 13,328
Net income per share $ 0.23 $ 0.15 $ 0.44 $ 0.28
======== ======= ======== =======
Diluted:
Weighted average shares and
equivalent shares outstanding 13,524 13,503 13,516 13,502
Net income per share $ 0.22 $ 0.15 $ 0.44 $ 0.28
======== ======= ======== =======
NCI, INC.
CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except per share data)
June 30, December 31,
2007 2006
----------- ------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 8,680 $ 13,930
Accounts receivable, net 74,940 65,841
Deferred tax assets 1,809 1,678
Prepaid expenses and other current assets 699 1,280
----------- ------------
Total current assets 86,128 82,729
Property and equipment, net 5,272 4,925
Other assets 866 785
Deferred tax assets, net 499 552
Intangible assets, net 1,892 381
Goodwill 79,298 17,427
----------- ------------
Total assets $173,955 $106,799
=========== ============
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 22,033 $ 22,712
Accrued salaries and benefits 12,435 9,036
Other accrued expenses/liabilities 5,766 3,402
Deferred revenue 2,596 1,259
----------- ------------
Total current liabilities 42,830 36,409
Line of credit, net of current portion 55,000 --
Other liabilities 112 168
Deferred rent 3,379 3,636
----------- ------------
Total liabilities 101,321 40,213
----------- ------------
Stockholders' equity:
Class A common stock, $0.019 par value--
37,500,000 shares authorized; 7,027,760
shares issued and outstanding 134 134
Class B common stock, $0.019 par value--
12,500,000 shares authorized; 6,300,000
shares issued and outstanding 120 120
Additional paid-in capital 57,626 57,580
Deferred compensation (398) (507)
Retained earnings 15,152 9,259
----------- ------------
Total stockholders' equity 72,634 66,586
----------- ------------
Total liabilities and stockholders' equity $173,955 $106,799
=========== ============
NCI, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(amounts in thousands)
Six months ended June 30,
-------------------------
2007 2006
------------- -----------
Cash flows from operating activities
Net income $ 5,893 $ 3,717
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,126 1,304
(Gain) on sale and disposal of property
and equipment -- (1)
Non-cash stock compensation expense 154 57
Deferred income taxes (77) 1,426
Changes in operating assets and
liabilities:
Accounts receivable, net 7,776 3,685
Prepaid expenses and other assets 915 (336)
Accounts payable (3,774) 1,630
Accrued expenses/other current
liabilities 1,682 (385)
Deferred rent (232) (203)
------------- -----------
Net cash provided by operating activities 13,463 10,894
------------- -----------
Cash flows from investing activities
Purchase of property and equipment (443) (177)
Proceeds from sale of property and equipment -- 4
Cash paid for acquisitions, net of cash
received (73,146) --
------------- -----------
Net cash used in investing activities (73,589) (173)
------------- -----------
Cash flows from financing activities
Proceeds from line of credit 55,000 --
Principal payments under capital lease
obligations (124) (147)
Distributions to stockholders -- (5,866)
------------- -----------
Net cash provided by (used in) financing
activities 54,876 (6,013)
------------- -----------
Net change in cash and cash equivalents (5,250) 4,708
Cash and cash equivalents, beginning of year 13,930 12,323
------------- -----------
Cash and cash equivalents, end of period $ 8,680 $17,031
============= ===========
Supplemental disclosure of cash flow
information
Cash paid during the period for:
Interest $ 82 $ 45
============= ===========
Income taxes $ 3,645 $ 26
============= ===========
Supplemental disclosure of noncash
activities:
Equipment acquired under capital leases $ 2 $ 156
============= ===========
CONTACT: NCI, Inc.
Maureen Crystal, 703-707-6777
mcrystal@nciinc.com
SOURCE: NCI, Inc.
|
NCI, Inc.
