DYNAMICS RESEARCH CORPORATION
REPORTS FOURTH QUARTER AND YEAR-END 2008 RESULTS
--- Double-Digit Revenue and Earnings Growth Projected for 2009 ---
Andover, Mass. - March 2, 2009 - - 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 fourth quarter and year ended December 31, 2008.
Financial Results
The Company reported revenue of $67.6 million for the fourth quarter of 2008 as compared with $56.5 million for the same period in 2007. Reported revenue rose 20 percent on a year-over-year basis, including organic revenue growth of 6.7 percent. Net income for the fourth quarter of 2008 was $2.6 million, or $0.27 per diluted share, up from $2.5 million, or $0.26 per diluted share, for the fourth quarter of 2007.
For the year ended December 31, 2008 revenue was $242.8 million compared with $229.6 million for 2007. The net loss for the year ended December 31, 2008 was $1.3 million, or $0.13 per diluted share, which included an after-tax provision for litigation totaling $9.1 million, or $0.93 per diluted share, net of $5.8 million in expected tax benefits related to the provision. Excluding the litigation provisions in 2008 and 2007, net income would have been $7.8 million, or $0.80 per diluted share, for the year ended December 31, 2008, compared with $7.2 million, or $0.75 per diluted share, for 2007.
Business Highlights
“We are pleased with this quarter’s financial result’s and continue to see an increasing percentage of revenues coming from our targeted, higher-margin growth markets. The positive effects of this fundamental change in our business base are clearly evident in our financial results,” said Jim Regan, DRC’s chairman and chief executive officer. “In the quarter just ended internally generated revenue growth was up 350 basis points over the prior year period, while the Company’s direct margin remained strong at 42.3 percent and operating margin reached 7.6 percent. For the full year 2008 the book-to-bill ratio was 1.1 to 1; our operating margin was 5.9 percent, up 40 basis points over 2007; and DRC generated $20 million of earnings before interest, taxes, depreciation, amortization and the litigation provision.”
“Having just completed our tenth consecutive quarter of improving operating performance and with strong backlog”, Regan continued “DRC remains on track for solid organic revenue growth and margin expansion in 2009.”
On August 1, 2008 the Company acquired Kadix Systems, LLC. At the acquisition date, the annualized Kadix revenue base was in excess of $40 million. Kadix, a rapidly growing high-end management consulting firm, maintains practice specialties in organizational change, human capital, information technology, public and environmental health and learning and organization development and is focused on the U.S. Department of Homeland Security (DHS), Marine Corps information technology, military medical health, and federal civilian markets.
Company Guidance
As previously announced, the Company’s estimate for revenue for 2009 is in the range of $280 to $290 million. Regarding earnings for 2009 the Company anticipates results to be in the range of $0.90 to $1.00 per diluted share. For the first quarter of 2009 the Company anticipates revenue in the range of $66 to $68 million and earnings per diluted share of $0.15 to $0.17.
Conference Call
The Company will conduct a fourth quarter and year-end 2008 conference call today, March 2, 2009 at 10:00 a.m. ET. The call will be available via telephone at (877) 856-1958, 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 (888) 203-1112, passcode #6218438, beginning at 1:00 p.m. ET March 2, 2009 through 11:59 p.m. ET March 9, 2009.
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.
The non-GAAP measures used by the Company exclude the provision for litigation charges and related effect for income taxes. The required reconciliations and other disclosures for the non-GAAP measures used by the Company are set forth later in this press release and/or the Current Report on Form 8-K to be filed with the SEC on March 2, 2009.
