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ANDOVER, Mass., Nov. 1, 2011 (GLOBE NEWSWIRE) -- Dynamics Research Corporation (Nasdaq:DRCO), a leading provider of innovative management consulting, science, engineering, and information technology services and solutions to federal and state governments, today announced operating results for the third quarter ended September 30, 2011. Financial Results
The Company reported income from continuing operations for the third quarter of 2011 of $3.3 million, or $0.32 per diluted share, up from $3.0 million, or $0.30 per diluted share, for the third quarter of 2010. Revenue for the third quarter of 2011 was $96.4 million, up from $68.4 million for the same period in 2010, reflecting the Company's merger with High Performance Technologies Inc. (HPTi), which closed on June 30, 2011. Third quarter 2011 federal business revenue was up 3.4 percent compared with the same period a year ago on a pro forma basis, as if HPTi had been owned by DRC in both periods.
For the nine month period ended September 30, 2011 income from continuing operations, excluding second quarter transaction costs, was $8.7 million, or $0.86 per diluted share, compared with $8.3 million, or $0.83 per diluted share, for the same period in 2010. For the nine months ended September 30, 2011 revenue was $234.4 million compared with $202.3 million for the same period in 2010. Business Highlights
"We are pleased to report our first full quarter with High Performance Technologies as a DRC operating group," said Jim Regan, DRC's chairman and chief executive officer. "The integration of HPTi into DRC is proceeding very successfully, and for the combined companies we ended the quarter with the highest backlog in DRC's history. Even given the general market uncertainties tied to the Congressional budget process, we believe that DRC, now more than ever, is well positioned with the right customers and contract vehicles to succeed going forward.
"We are seeing continued demand for our high end information technology solutions and management consulting services within the cyber security, healthcare, homeland security, intelligence and financial regulatory markets. Third quarter results once again showed the strength of our market presence, with operating margins of 9.2 percent and cash generation from operations of $14.3 million. As a result we have accelerated the de-levering of our balance sheet, prepaying $15 million of debt in the quarter.
"From a business development viewpoint our pipeline of opportunities remains robust — with total backlog of $841 million, including funded backlog of $214 million, which represents more than six months of revenue. With a third quarter book-to-bill ratio of 1.7-to-1.0 and a 1.1-to-1.0 trailing twelve months ratio, funded bookings in the quarter were strong based on a 98 percent re-compete win rate and nearly $60 million of new business contract wins in the quarter." Company Guidance
The Company's estimate for 2011 full year revenue is in the range of $326 to $330 million. The Company's estimate for 2011 earnings are in the range of $1.24 to $1.27 per diluted share, excluding one-time transaction costs incurred in the second quarter of 2011, which represented $0.13 per share. For the fourth quarter of 2011, the Company anticipates revenue in the range of $91.5 to $95 million and earnings per diluted share of $0.38 to $0.41. Conference Call
The Company will conduct a third quarter 2011 conference call tomorrow, November 2, 2011 at 10:00 a.m. ET. The call will be available by telephone at 877-303-4382 and accessible by webcast at www.drc.com. Recorded replays of the conference call will be available on the Company's website and by telephone at 800-585-8367, replay passcode # 18576450, beginning at 1:00 p.m. ET on November 2, 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
September 30,
2011 2010
Revenue
$ 96,379
$ 68,420
Cost of revenue
78,941
57,630
Gross profit
17,438
10,790
Selling, general and administrative expenses
7,041
5,197
Amortization of intangible assets
1,553
385
Operating income
8,844
5,208
Interest expense, net
(3,027)
(339)
Other income (expense), net
(157)
151
Income from continuing operations before provision for income taxes
5,660
5,020
Provision for income taxes
2,382
2,014
Income from continuing operations
3,278
3,006
Effect of discontinued operations, net of tax
--
87
Net income
$ 3,278
$ 3,093
Earnings per share
Basic
Income from continuing operations
$ 0.32
$ 0.30
Effect of discontinued operations, net of tax
--
0.01
Net income
$ 0.32
$ 0.31
Diluted
Income from continuing operations
$ 0.32
$ 0.30
Effect of discontinued operations, net of tax
--
0.01
Net income
$ 0.32
$ 0.31
Weighted average shares outstanding
Basic
10,244,868
9,937,470
Diluted
10,314,413
10,060,980
ATTACHMENT II
DYNAMICS RESEARCH CORPORATION CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (unaudited) (in thousands, except share and per share data)
Nine Months Ended
September 30,
2011 2010
Revenue
$ 234,375
$ 202,312
Cost of revenue
195,746
170,568
Gross profit
38,629
31,744
Selling, general and administrative expenses
19,519
16,233
Amortization of intangible assets
2,301
1,156
Operating income
16,809
14,355
Interest expense, net
(4,047)
(1,082)
Other income, net
6
234
Income from continuing operations before provision for income taxes
12,768
13,507
Provision for income taxes
5,345
5,185
Income from continuing operations
7,423
8,322
Effect of discontinued operations, net of tax
--
392
Net income
$ 7,423
$ 8,714
Earnings per share
Basic
Income from continuing operations
$ 0.74
$ 0.84
Effect of discontinued operations, net of tax
--
0.04
Net income
$ 0.74
$ 0.88
Diluted
Income from continuing operations
$ 0.73
$ 0.83
Effect of discontinued operations, net of tax
--
0.04
Net income
$ 0.73
$ 0.87
Weighted average shares outstanding
Basic
10,060,585
9,879,905
Diluted
10,205,603
10,057,211
ATTACHMENT III
DYNAMICS RESEARCH CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (in thousands)
September 30, December 31,
2011 2010
Assets
Current assets
Cash and cash equivalents
$ 3,417
$ 30,163
Contract receivables, net
74,731
48,394
Prepaid expenses and other current assets
3,725
2,924
Total current assets
81,873
81,481
Noncurrent assets
Property and equipment, net
15,993
12,219
Goodwill
210,895
97,641
Intangible assets, net
20,232
2,533
Deferred tax asset
--
585
Other noncurrent assets
4,314
3,757
Total noncurrent assets
251,434
116,735
Total assets
$ 333,307
$ 198,216
Liabilities and stockholders' equity
Current liabilities
Current portion of long-term debt
$ 11,688
$ 8,000
Accounts payable
28,227
16,883
Accrued compensation and employee benefits
25,747
18,046
Deferred tax liability
2,762
2,418
Other accrued expenses
6,041
4,617
Total current liabilities
74,465
49,964
Long-term liabilities
Long-term debt
114,976
14,000
Deferred tax liability
637
--
Other long-term liabilities
26,015
27,067
Total stockholders' equity
117,214
107,185
Total liabilities and stockholders' equity
$ 333,307
$ 198,216
ATTACHMENT IV
DYNAMICS RESEARCH CORPORATION SUPPLEMENTAL INFORMATION (unaudited) (dollars in thousands)
Contract revenues were earned from the following sectors:
Three Months Ended Nine Months Ended
September 30, September 30,
2011 2010 2011 2010
National defense and intelligence agencies
$ 59,479
$ 45,464
$ 154,761
$ 130,360
Homeland security
12,963
13,533
36,573
39,706
Federal civilian agencies
20,148
5,438
31,738
17,564
Total revenue from federal agencies
92,590
64,435
223,072
187,630
State and local government agencies
3,774
3,980
11,274
14,658
Other
15
5
29
24
Total revenue
$ 96,379
$ 68,420
$ 234,375
$ 202,312
Revenues by contract type as a percentage of contract revenue were as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
2011 2010 2011 2010
Fixed price, including service-type contracts
46%
45%
48%
45%
Time and materials
33
34
31
34
Cost reimbursable
21
21
21
21
100%
100%
100%
100%
Prime contract
82%
73%
78%
72%
Sub-contract
18
27
22
28
100%
100%
100%
100%
Three Months Ended Nine Months Ended
September 30, September 30,
2011 2010 2011 2010
Net cash provided by (used in) operating activities - continuing operations
$ 14,277
$ 16,421
$ 14,278
$ 31,471
Capital expenditures
$ 663
$ 685
$ 1,525
$ 4,266
Depreciation
$ 1,067
$ 896
$ 2,774
$ 2,660
Bookings
$ 160,881
$ 95,445
$ 274,634
$ 225,588
September 30, December 31,
2011 2010
Total backlog
$ 840,957
$ 400,881
Funded backlog
$ 213,995
$ 133,516
Employees
1,604
1,298
CONTACT: Investors: Chris Witty
Darrow Associates, Inc.
646.438.9385
cwitty@darrowir.com
Media: Duyen "Jen" Truong
Sage Communications (for DRC)
703.584.5645
duyent@aboutsage.com
