--- Core Federal Revenue Up 6 Percent; Earnings from Continuing Operations Up 35 Percent ---
--- Company Reaffirms 2010 Revenue and Earnings Growth Projections ---
Andover, Mass. – April 28, 2010 - 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 first quarter of 2010.
Financial Results
The Company reported income from continuing operations of $2.7 million, or $0.28 per diluted share, for the first quarter of 2010, up from $2.0 million, or $0.20 per diluted share, for the first quarter of 2009.
Revenue for the first quarter of 2010 was $68.6 million, as compared with $67.2 million for the same period in 2009. The 2010 period included $0.4 million in revenues derived from 8(a) contracts received with the Kadix Systems acquisition compared with $2.8 million for the 2009 period. Absent the effect of the 8(a) contracts, federal revenue grew 5.8 percent in the first quarter of 2010 compared with the same period in 2009. Overall, reported revenue including state government clients grew 2.1 percent on a year-over-year comparison.
Income from discontinued operations was $0.1 million, or $0.01 per diluted share, for the first quarter of 2010, compared with a loss of $0.2 million, or $0.02 per diluted share, for the first quarter of 2009.
The Company generated $13.1 million in cash from operating activities in the first quarter of 2010, having received $8.0 million in payments from the State of Tennessee during the quarter. Days sales outstanding for the federal business was 68 at the end of the first quarter, down from 73 at December 31, 2009.
Business Highlights
“The Company’s strong operating performance for the quarter stemmed from healthy contract activity, including several important new business awards in the quarter. We posted a 1.1-to-1.0 book-to-bill ratio, and ended the period with a funded backlog equating to 7.5 months of revenue and strong cash flow,” said Jim Regan, DRC’s chairman and chief executive officer. “Indirect operating costs were down significantly versus last year, contributing to the sharp earnings improvement. Looking ahead, we have a large pipeline of bids awaiting award and are focused on accelerating growth in our target markets – homeland security, healthcare, high priority defense
programs, cyber security, financial regulation, and intelligence agencies. We continue to be very optimistic about the outlook for 2010.”
Company Guidance
The Company reaffirms its estimates for revenue and earnings from continuing operations for 2010, with revenue projected to be in the range of $277 to $286 million and earnings from continuing operations estimated to be in the range of $1.18 to $1.26 per diluted share. Operating margin expectations for 2010 continue to be between 7.7 and 7.9 percent.
For the second quarter of 2010, revenues and earnings from continuing operations per diluted share are forecast to be $65 to $68 million and $0.24 to $0.27, respectively.
Conference Call
The Company will conduct a first quarter 2010 conference call on Thursday, April 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 #67398280, beginning at 1:00 p.m. ET April 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 including the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2009. The Company assumes no obligation to update any forward-looking information.
