Andover, Mass. - November 1, 2011 - 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.
