GTEC Reports Second Quarter 2010 Financial Results
Revenue of $49.2 million
Diluted earnings per share of $0.23
Q2 Bookings of $42 million
2010 Guidance impacted by delayed award decisions
MCLEAN, Va., Aug. 5 /PRNewswire-FirstCall/ -- Global Defense Technology & Systems, Inc. (Nasdaq: GTEC), a provider of mission-critical, technology-based systems, solutions and services for national security agencies and programs of the U.S. government, today announced its second quarter 2010 financial results.
Second Quarter 2010 Results – Profit Above Expectations
Revenue for the second quarter 2010 was $49.2 million. The Company's revenue from the Technology and Intelligence Services (TIS) and Force Mobility and Modernization Systems (FMMS) segments was $24.0 million and $25.2 million, respectively. Total segment operating income was $6.0 million, or 12.2% of segment revenues. Unallocated corporate expenses totaled $2.4 million. This resulted in operating income for the second quarter 2010 of $3.5 million, or 7.2% of revenue, and diluted earnings per share (EPS) of $0.23.
"Our second quarter results reflect GTEC's focus on delivering bottom line results despite a number of challenges to our top line. Continued delays in contract awards for our FMMS business pushed a portion of our revenue into 2011 while delays in customer decisions in our fast growing TIS business have slowed the extraordinary growth we anticipated in 2010," said John Hillen, President & CEO of GTEC. "Our business development pipeline continues to expand and the contract awards anticipated during the remainder of the year provide strong growth prospects for 2011 above our long term targets of 10 to 15 percent."
Business Highlights – Contract Awards Momentum
Contract awards totaled $42 million for the second quarter 2010, with a $9 million five-year task order coming from a classified contract supporting the Intelligence Community. Additionally, during the quarter GTEC was awarded an approximately $27 million contract from the U.S. Army for field feeding systems.
GTEC's contract award momentum continued into the third quarter of 2010 in the TIS segment with the receipt of a $6 million five-year task order under our Department of Justice counterterrorism contract and a $47 million five-year extension of a classified intelligence analysis subcontract. The Company's qualified business development pipeline is currently over $3.2 billion and there is over $300 million in pending awards across our business which we anticipate being decided by the end of calendar year 2010.
As of June 30, 2010, GTEC had total backlog of $590 million and funded backlog of $120 million.
Balance Sheet Metrics – Solid Cash Flow
As of June 30, 2010, GTEC had $1.7 million of cash and no debt based on $2.0 million in operating cash flow during the quarter.
Jim Allen, Executive Vice President & CFO of GTEC, noted, "We anticipate strong cash flow in the third quarter as we bill and collect receivables from our FMMS customers for fixed price work that was recently completed and performed in the first and second quarter."
Forward Guidance – Revised Full Year Outlook
GTEC's third quarter 2010 and full year 2010 guidance is summarized in the table below. GTEC's guidance does not include the assumption of any future acquisitions.
"Given the contracting delays we have experienced in 2010 across our business development pipeline and particularly within our FMMS expeditionary camp solutions business, we have assumed that only $25 million of the $60 million in orders anticipated earlier in the year is converted to revenue in 2010," said John Hillen.
3rd Quarter 2010 |
Full Year 2010 |
||
Revenue |
$53 - $57 million |
$220 - $228 million |
|
Diluted EPS |
$0.22 - $0.25 |
$0.87 - $0.93 |
|
Weighted Average Shares Outstanding – Diluted |
9.16 million |
9.16 million |
|
Key Guidance Assumptions
- $25 million in revenue from expeditionary camp solution order(s) expected to be awarded in August 2010
- Net interest expense of $40,000 in the third quarter and $130,000 for full year 2010
- Tax rate of 39.7% for the third and fourth quarters before a one-time tax benefit of $0.05 in the third quarter related to a legal reorganization to utilize an existing net operating loss
Conference Call
GTEC executive management will hold a conference call today at 5:00 p.m. ET, to discuss second quarter 2010 results and answer questions. Interested parties may access the call by dialing 800-299-9630 (domestic) or +1 617-786-2904 (international) and entering passcode 93652179. The conference call will be Webcast (audio only) simultaneously via the Investor Relations page of GTEC's website at www.gtec-inc.com. Interested parties should dial in or log on approximately 10 minutes prior to the start of the call.
A replay of the call will be available beginning at 8:00 p.m. ET today and will remain available through midnight ET, August 19, 2010. To access the replay, call (888) 286-8010 (domestic) or +1 (617) 801-6888 (international). The confirmation code for the replay is 27364401. A replay will also be available via the Investor Relations page of GTEC's website approximately 3 hours after the conclusion of the call.
About Global Defense Technology & Systems, Inc.
Global Defense Technology & Systems, Inc. (GTEC) provides mission-critical, technology-based systems, solutions and services for national security agencies and programs of the U.S. government. Our services and solutions are integral parts of mission-critical programs run by the Department of Defense, Intelligence Community, Department of Homeland Security, federal law enforcement agencies, and other parts of the federal government charged with national security responsibilities. Learn more about Global Defense Technology & Systems at www.gtec-inc.com.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this announcement other than historical data and information constitute forward-looking statements that involve risks and uncertainties. A number of factors could cause our actual results, performance, achievements or industry results to differ materially from the results, performance or achievements expressed or implied by such forward-looking statements. Some of these factors include, but are not limited to, the risk factors set forth in Global Defense Technology & Systems, Inc.'s (GTEC) Annual Report on Form 10-K, and such other filings that GTEC makes with the Securities and Exchange Commission from time to time. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward-looking statements. All forward-looking statements speak only as of the date hereof and GTEC undertakes no obligation to update such forward-looking statements in the future except as required by law.
Investor Relations: |
Joseph Cormier |
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t: +1.703.883.2771 |
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Media Contact: |
Lauren Peduzzi |
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t: +1.703.738.2861 |
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GLOBAL DEFENSE TECHNOLOGY & SYSTEMS, INC. |
||||
CONSOLIDATED BALANCE SHEETS |
||||
(UNAUDITED) |
||||
(in thousands, except share and per share amounts) |
||||
As of |
As of |
|||
June 30, |
December 31, |
|||
2010 |
2009 |
|||
Assets |
||||
Current assets |
||||
Cash and cash equivalents |
$ 1,738 |
$ 7 |
||
Accounts receivable, net |
49,254 |
50,691 |
||
Due from affiliates |
364 |
1,109 |
||
Prepaid expenses and other current assets |
1,240 |
1,238 |
||
Deferred tax assets |
589 |
324 |
||
Income taxes receivable |
308 |
3,543 |
||
Total current assets |
53,493 |
56,912 |
||
Property and equipment, net |
3,509 |
3,441 |
||
Intangible assets, net |
19,140 |
21,268 |
||
Goodwill |
24,373 |
24,373 |
||
Deferred tax assets |
6,140 |
6,295 |
||
Other assets |
442 |
222 |
||
Total assets |
$ 107,097 |
$ 112,511 |
||
Liabilities and Stockholders' Equity |
||||
Current liabilities |
||||
Accounts payable |
$ 10,286 |
$ 13,040 |
||
Accrued expenses |
6,966 |
9,521 |
||
Advance payments on contracts |
526 |
517 |
||
Interest rate swap liability |
- |
106 |
||
Total current liabilities |
17,778 |
23,184 |
||
Deferred rent |
303 |
289 |
||
Bank loans, net of current |
- |
3,686 |
||
Total liabilities |
18,081 |
27,159 |
||
Stockholders' Equity |
||||
Common stock, par value $0.01 per share, 90,000,000 |
91 |
91 |
||
Additional paid-in capital |
88,685 |
88,178 |
||
Retained earnings (accumulated deficit) |
240 |
(2,917) |
||
Total stockholders' equity |
89,016 |
85,352 |
||
Total liabilities and stockholders' equity |
$ 107,097 |
$ 112,511 |
||
GLOBAL DEFENSE TECHNOLOGY & SYSTEMS, INC. |
||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||
(UNAUDITED) |
||||||||
(in thousands, except share and per share amounts) |
||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||
2010 |
2009 |
2010 |
2009 |
|||||
Revenue |
||||||||
Products |
$ 25,232 |
$ 31,332 |
$ 46,486 |
$ 59,010 |
||||
Services |
23,990 |
22,095 |
48,629 |
44,030 |
||||
Total revenue |
49,222 |
53,427 |
95,115 |
103,040 |
||||
Operating costs and expenses |
||||||||
Cost of revenue - products |
18,917 |
26,777 |
36,546 |
49,229 |
||||
Cost of revenue - services |
20,235 |
18,065 |
41,047 |
36,435 |
||||
Selling, general and administrative expenses |
5,813 |
4,807 |
10,425 |
9,253 |
||||
Amortization of intangible assets |
722 |
2,089 |
2,128 |
4,178 |
||||
Total operating costs and expenses |
45,687 |
51,738 |
90,146 |
99,095 |
||||
Operating income |
3,535 |
1,689 |
4,969 |
3,945 |
||||
Other income (expense) |
||||||||
Interest income |
3 |
1 |
6 |
3 |
||||
Interest expense |
(47) |
(491) |
(55) |
(1,000) |
||||
Income before income taxes |
3,491 |
1,199 |
4,920 |
2,948 |
||||
Provision for income taxes |
(1,428) |
(558) |
(1,763) |
(1,388) |
||||
Net income |
$ 2,063 |
$ 641 |
$ 3,157 |
$ 1,560 |
||||
Earnings per share |
||||||||
Basic |
$ 0.23 |
$ 0.11 |
$ 0.35 |
$ 0.26 |
||||
Diluted |
$ 0.23 |
$ 0.11 |
$ 0.34 |
$ 0.26 |
||||
Weighted average common shares outstanding |
||||||||
Basic |
9,036,432 |
6,000,000 |
9,036,432 |
6,000,000 |
||||
Diluted |
9,150,197 |
6,055,152 |
9,156,163 |
6,027,898 |
||||
GLOBAL DEFENSE TECHNOLOGY & SYSTEMS, INC. |
||||||||
SELECTED SEGMENT INFORMATION |
||||||||
(UNAUDITED) |
||||||||
(in thousands) |
||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||
2010 |
2009 |
2010 |
2009 |
|||||
Revenue |
||||||||
TIS Segment |
$ 23,990 |
$ 22,095 |
$ 48,629 |
$ 44,030 |
||||
FMMS Segment |
25,232 |
31,332 |
46,486 |
59,010 |
||||
Total revenue |
$ 49,222 |
$ 53,427 |
$ 95,115 |
$ 103,040 |
||||
Operating income |
||||||||
TIS Segment |
$ 1,976 |
$ 1,831 |
$ 3,917 |
$ 3,897 |
||||
FMMS Segment |
4,005 |
3,272 |
6,182 |
7,104 |
||||
Unallocated Corporate expenses |
(2,446) |
(3,414) |
(5,130) |
(7,056) |
||||
Total operating income |
$ 3,535 |
$ 1,689 |
$ 4,969 |
$ 3,945 |
||||
Operating margin |
||||||||
TIS Segment |
8.2% |
8.3% |
8.1% |
8.9% |
||||
FMMS Segment |
15.9% |
10.4% |
13.3% |
12.0% |
||||
Total segment |
12.2% |
9.6% |
10.6% |
10.7% |
||||
GLOBAL DEFENSE TECHNOLOGY & SYSTEMS, INC. |
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CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||
(UNAUDITED) |
||||
(in thousands) |
||||
Six Months Ended June 30, |
||||
2010 |
2009 |
|||
Cash flows from operating activities |
||||
Net income |
$ 3,157 |
$ 1,560 |
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Adjustments to reconcile net income to net cash provided by |
||||
Depreciation and amortization |
500 |
497 |
||
Amortization of intangible assets |
2,128 |
4,178 |
||
Equity-based compensation |
507 |
153 |
||
Gain from change in fair value of interest rate swap |
(106) |
(50) |
||
Deferred income taxes |
(110) |
(818) |
||
Change in operating assets and liabilities |
||||
Accounts receivable |
1,437 |
(12,986) |
||
Due to/from affiliates |
745 |
(399) |
||
Prepaid expenses and other assets |
5 |
(184) |
||
Income taxes receivable |
3,235 |
9,218 |
||
Accounts payable |
(2,754) |
(4,624) |
||
Accrued expenses |
(2,555) |
597 |
||
Accrued interest on loans from affiliates |
- |
1,404 |
||
Advance payments on contracts |
9 |
(4,001) |
||
Deferred rent |
14 |
37 |
||
Net cash provided by (used in) operating activities |
6,212 |
(5,418) |
||
Cash flows from investing activities |
||||
Purchases of property and equipment |
(481) |
(681) |
||
Net cash used in investing activities |
(481) |
(681) |
||
Cash flows from financing activities |
||||
Proceeds from overline note |
- |
3,000 |
||
Payments under term loan |
- |
(1,800) |
||
Net (payments) borrowings under revolving line of credit |
(3,686) |
5,013 |
||
Payments of financing costs |
(314) |
- |
||
Advances to affiliates |
- |
(1,319) |
||
Net cash (used in) provided by financing activities |
(4,000) |
4,894 |
||
Increase (decrease) in cash and cash equivalents |
1,731 |
(1,205) |
||
Cash and cash equivalents, beginning of period |
7 |
1,422 |
||
Cash and cash equivalents, end of period |
$ 1,738 |
$ 217 |
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SOURCE Global Defense Technology & Systems, Inc.
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