Exhibit 99.1
CIBER, Inc.
6363 S. Fiddler’s Green Circle, Suite 1400
Greenwood Village, CO 80111
www.ciber.com
Contacts: | | |
Investors: | | Media: |
Gary Kohn | | Robin Caputo |
303-625-5256 | | 303-267-3876 |
gkohn@ciber.com | | rcaputo@ciber.com |
CIBER REPORTS THIRD QUARTER RESULTS
Revenue Growth Continues to Accelerate
GREENWOOD VILLAGE, CO, Nov. 4, 2010— CIBER, Inc. (NYSE: CBR), a global information technology consulting, services and outsourcing company, today reported results for the third quarter of 2010.
Highlights for the third quarter 2010:
· Revenue growth of 4% compared to last year’s third quarter, the strongest in 7 quarters
· Constant currency adjusted revenue growth was 6%
· Operating income was $7.1 million
· Net income attributable to CIBER was $3.4 million, or $0.05 per share
· Cash on hand at quarter end of $51 million
· Year-to-date cash flow from operations of $7 million
Dave Peterschmidt, President and Chief Executive Officer of CIBER said, “Our top-line growth is evidence that the market is healthy and I am pleased to see that client renewals, new wins and improving demand continue to drive our revenue growth. I am not pleased however that our lack of strategic focus and poor operational execution has impeded our ability to translate this top-line growth into greater profits or cash flow. I have already begun the process of addressing this with the development of a strategic plan and the implementation of operational regimens that will help us deliver improved, predictable and sustainable performance in 2011 and beyond.”
Third Quarter Consolidated Results
In the third quarter, revenue was in line with expectations at $265.9 million, up 4% from last year’s third quarter, or up 6% on a constant currency basis. The Segmenta acquisition completed in 2010 added 1% to revenue growth in the quarter. The International, Custom Solutions and U.S. ERP segments, which comprise more than 80% of consolidated revenue, drove the majority of the revenue growth.
Gross margin for the quarter was 24.6%, compared to 25.3% in last year’s third quarter and 25.1% in the second quarter of this year. Gross margin was impacted year-over-year by investments for future revenue growth
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particularly in the International segment where CIBER is expanding its service offerings to small- and medium- sized businesses running SAP in Germany. Additionally, the increased use of subcontractors utilized to fill demand reduced gross margin in the quarter.
Operating income was $7.1 million, up 2%, or down 23% excluding a $2.2 million pre-tax non-recurring litigation settlement incurred in the third quarter of 2009. Third quarter operating income margin was 2.7%, flat compared with last year’s third quarter. Excluding the litigation settlement, the third quarter 2009 operating margin was 3.6%. The settlement charge was included in 2009’s selling, general and administrative expense, and was not included in operating segment results.
Earnings per share were $0.05 in the third quarter compared to earnings per share in the same period last year of $0.05 or $0.07 excluding the litigation settlement.
The third quarter tax rate was 32% compared to 28% in last year’s third quarter. The higher tax rate was primarily the result of changes to the mix of taxable income across geographies with varying tax rates. Management continues to expect a full-year tax rate in the range of 25% to 29%.
Capital Deployment and Liquidity
CIBER’s total cash balance at quarter end was $51 million. Cash provided by operating activities was $7.1 million for the first nine months of 2010. Capital expenditures for the quarter and nine months were $3.1 million and $9.6 million, respectively.
Days sales outstanding, or DSOs, for services were 71 days at September 30, 2010 compared to 65 days at September 30, 2009.
The outstanding balance on CIBER’s senior credit facility at September 30, 2010 was $93.1 million, compared to $100.8 million at June 30, 2010 and $97.5 million as of December 31, 2009.
Outlook
Management reaffirmed its expectation for 2010 revenue of at least $1.060 billion and expects 2010 EPS of at least $0.20 excluding the goodwill impairment and the executive change charges incurred in the second quarter 2010. GAAP EPS is expected to be a loss of no greater than $1.02 for the full year 2010. These EPS estimates do not account for any future charges that may be incurred as a result of management’s continued review of the business as well as customer relationships.
Peterschmidt commented on the outlook, “We have tightened our standards governing the quality of engagements that CIBER will accept, understanding the impact that write-offs and other surprises have had on our creditability. I am eager to pursue higher quality engagements with the goal of growing revenue, increasing margins and improving collectability of receivables. I remain committed to delivering improved, sustained and predictable performance. “
Investor and Analyst Conference Call
CIBER President and Chief Executive Officer Dave Peterschmidt invites you to participate in a conference call today at 11:00 a.m. Eastern Time to discuss the Company’s third quarter 2010 financial results.
To participate in the conference call, dial 866-510-0710 (U.S.) or +1-617-597-5378 (outside the U.S.) ten minutes prior to the start of the call and provide the operator with the pass code 75564263. This conference call will also be available via webcast at www.ciber.com/cbr. A replay of the call and webcast will be available one
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hour after the call ends through Dec. 4, 2010. To access the telephone replay, dial 888-286-8010 (U.S.) or +1-617-801-6888 (outside the U.S.) and use the pass code 10217597. The webcast replay will be available at www.ciber.com/cbr.
Non-GAAP Financial Information
CIBER presents a number of non-GAAP measurements because management believes that these metrics provide meaningful supplemental information in addition to the GAAP metrics and provide comparability and consistency to prior periods. These non-GAAP measurements include revenue change constant currency adjusted; operating income change, operating income margin, and earnings per share excluding the third quarter 2009 litigation settlement; and 2010 earnings per share guidance excluding goodwill impairment and executive charges.
Reconciliations of non-GAAP to comparable GAAP measures are available in the accompanying schedules and in the Investor Relations section of the Company’s website at www.ciber.com/cbr.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 relating to our operations, results of operations and other matters that are based on our current expectations, estimates, forecasts and projections. Words, such as “anticipate,” “believe,” “could,” “expect,” “estimate,” “intend,” “may,” “opportunity,” “plan,” “potential,” “project,” “should,” and “will” and similar expressions, are intended to identify forward-looking statements. For example, we make certain forward-looking statements regarding our current estimates for revenue and profitability for the Company for 2010. These statements reflect a number of risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by our forward-looking statements. These risks include, without limitation, risks that: (1) economic and political conditions, including regulatory or legislative action, adversely affect us or our clients’ businesses and levels of business activity; (2) we cannot expand and develop our services and solutions in response to changes in technology and client demand; (3) we cannot compete effectively in the highly competitive consulting, systems integration and technology and outsourcing markets; (4) our work in the government contracting environment exposes us to additional risks; (5) our clients may terminate their contracts with us or be unable or unwilling to pay us for our services which may impact our accounting assumptions; (6) our outsourcing services subject us to operational and financial risk; (7) the type and level of technology spending by our clients may change; (8) we cannot maintain favorable pricing and utilization rates; (9) legal liability may result from solutions or services we provide; (10) we cannot anticipate the cost and complexity of performing our work or we are not able to control our costs; (11) our global operations are subject to complex risks, some of which might be beyond our control, including, but not limited to, fluctuations in foreign exchange rates; (12) we cannot balance our resources with client demand or hire sufficient employees with the required skills and background; (13) we may incur liability from our subcontractors’ or other third parties’ failure to deliver their project contributions on time or at all; (14) we cannot manage the organizational challenges associated with our size; (15) consolidation in the industries that we serve could adversely affect our business; (16) our ability to attract and retain business depends on our reputation in the marketplace; (17) our share price could fluctuate due to numerous factors, including variability in revenues, operating results and profitability; and/or (18) other factors discussed from time to time in the Company’s news releases and public statements, as well as the risks, uncertainties and other factors discussed under the “Risk Factors” heading in the Form 10-Q and our most recent annual report on Form 10-K and other documents filed with or furnished to the Securities and Exchange Commission. Most of these factors are beyond our ability to predict or control. Forward-looking statements are not guarantees of performance and speak only as of the date they are made, and we undertake no obligation to publicly update any forward-looking statements in light of new information or future events. Readers are cautioned not to put undue reliance on forward-looking statements.
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About CIBER, Inc.
CIBER, Inc. is a global information technology consulting, services and outsourcing company applying practical innovation through services and solutions that deliver tangible results for both commercial and government clients. Services include application development and management, ERP implementation, change management, project management, systems integration, infrastructure management and end-user computing, as well as strategic business and technology consulting. Founded in 1974 and headquartered in Greenwood Village, Colorado, CIBER has more than 8,000 employees. We operate in 19 countries, serving clients from 14 Global Solution Centers and 70 local offices in North America, Europe and Asia/Pacific. Annual revenue in 2009 exceeded $1.0 billion. CIBER trades on the New York Stock exchange (NYSE: CBR), and is included in the Russell 2000 Index and the S&P Small Cap 600 Index. For more information, visit www.ciber.com.
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CIBER, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
| | Three Months Ended
September 30, | | Nine Months Ended
September 30, | |
| | 2010 | | 2009 | | 2010 | | 2009 | |
REVENUES | | | | | | | | | |
Consulting services | | $ | 254,891 | | $ | 245,113 | | $ | 761,414 | | $ | 743,170 | |
Other revenue | | 10,991 | | 11,254 | | 32,551 | | 32,276 | |
Total revenues | | 265,882 | | 256,367 | | 793,965 | | 775,446 | |
| | | | | | | | | |
OPERATING EXPENSES | | | | | | | | | |
Cost of consulting services | | 192,760 | | 184,028 | | 576,126 | | 559,121 | |
Cost of other revenue | | 7,584 | | 7,382 | | 20,234 | | 20,557 | |
Selling, general and administrative | | 57,310 | | 56,417 | | 179,109 | | 169,879 | |
Goodwill impairment | | — | | — | | 112,000 | | — | |
Amortization of intangible assets | | 1,087 | | 1,506 | | 3,361 | | 4,371 | |
Total operating expenses | | 258,741 | | 249,333 | | 890,830 | | 753,928 | |
| | | | | | | | | |
OPERATING INCOME (LOSS) | | 7,141 | | 7,034 | | (96,865 | ) | 21,518 | |
| | | | | | | | | |
Interest income | | 70 | | 233 | | 194 | | 644 | |
Interest expense | | (1,624 | ) | (1,735 | ) | (5,088 | ) | (4,358 | ) |
Other income (expense), net | | (608 | ) | (572 | ) | 14 | | 784 | |
| | | | | | | | | |
INCOME (LOSS) BEFORE INCOME TAXES | | 4,979 | | 4,960 | | (101,745 | ) | 18,588 | |
Income tax expense (benefit) | | 1,615 | | 1,401 | | (27,347 | ) | 6,023 | |
| | | | | | | | | |
CONSOLIDATED NET INCOME (LOSS) | | 3,364 | | 3,559 | | (74,398 | ) | 12,565 | |
Net income (loss) attributable to noncontrolling interests | | (38 | ) | 54 | | (552 | ) | 139 | |
| | | | | | | | | |
NET INCOME (LOSS) ATTRIBUTABLE TO CIBER, INC. | | $ | 3,402 | | $ | 3,505 | | $ | (73,846 | ) | $ | 12,426 | |
| | | | | | | | | |
Earnings (loss) per share: | | | | | | | | | |
Basic | | $ | 0.05 | | $ | 0.05 | | $ | (1.06 | ) | $ | 0.18 | |
Diluted | | $ | 0.05 | | $ | 0.05 | | $ | (1.06 | ) | $ | 0.18 | |
| | | | | | | | | |
Weighted average shares outstanding: | | | | | | | | | |
Basic | | 69,734 | | 69,664 | | 69,492 | | 67,484 | |
Diluted | | 69,929 | | 69,809 | | 69,492 | | 67,573 | |
CIBER, Inc.
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
(Unaudited)
| | September 30,
2010 | | December 31,
2009 | |
ASSETS | | | | | |
Current assets: | | | | | |
Cash and cash equivalents | | $ | 51,496 | | $ | 67,424 | |
Accounts receivable, net of allowances of $3,944 and $3,192, respectively | | 246,875 | | 213,100 | |
Prepaid expenses and other current assets | | 29,924 | | 22,727 | |
Deferred income taxes | | 7,600 | | 6,627 | |
Total current assets | | 335,895 | | 309,878 | |
| | | | | |
Property and equipment, net of accumulated depreciation of $67,151 and $57,958, respectively | | 26,151 | | 24,830 | |
Goodwill | | 341,615 | | 450,739 | |
Other intangible assets, net | | 3,464 | | 5,159 | |
Other assets | | 10,214 | | 12,650 | |
| | | | | |
TOTAL ASSETS | | $ | 717,339 | | $ | 803,256 | |
| | | | | |
LIABILITIES AND EQUITY | | | | | |
Liabilities: | | | | | |
Current liabilities: | | | | | |
Current portion of long-term debt | | $ | 10,878 | | $ | 10,697 | |
Accounts payable | | 34,254 | | 33,981 | |
Accrued compensation and related liabilities | | 74,035 | | 65,747 | |
Deferred revenue | | 19,034 | | 17,634 | |
Income taxes payable | | 12,312 | | 10,402 | |
Other accrued expenses and liabilities | | 45,598 | | 34,563 | |
Total current liabilities | | 196,111 | | 173,024 | |
| | | | | |
Long-term debt | | 83,952 | | 87,500 | |
Deferred income taxes | | 6,807 | | 36,486 | |
Other long-term liabilities | | 5,613 | | — | |
Total liabilities | | 292,483 | | 297,010 | |
| | | | | |
Commitments and contingencies | | | | | |
| | | | | |
Equity: | | | | | |
CIBER, Inc. shareholders’ equity: | | | | | |
Preferred stock, $0.01 par value, 1,000 shares authorized, no shares issued | | — | | — | |
Common stock, $0.01 par value, 100,000 shares authorized, 74,487 shares issued | | 745 | | 745 | |
Treasury stock, at cost, 4,698 and 5,005 shares, respectively | | (26,919 | ) | (30,069 | ) |
Additional paid-in capital | | 323,934 | | 322,999 | |
Retained earnings | | 123,037 | | 199,668 | |
Accumulated other comprehensive income | | 4,269 | | 12,193 | |
Total CIBER, Inc. shareholders’ equity | | 425,066 | | 505,536 | |
Noncontrolling interests | | (210 | ) | 710 | |
Total equity | | 424,856 | | 506,246 | |
| | | | | |
TOTAL LIABILITIES AND EQUITY | | $ | 717,339 | | $ | 803,256 | |
CIBER, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| | Nine Months Ended September 30, | |
| | 2010 | | 2009 | |
CASH FLOWS FROM OPERATING ACTIVITIES | | | | | |
Consolidated net income (loss) | | $ | (74,398 | ) | $ | 12,565 | |
Adjustments to reconcile consolidated net income (loss) to net cash provided by operating activities: | | | | | |
Goodwill impairment | | 112,000 | | — | |
Depreciation | | 8,998 | | 9,007 | |
Amortization of intangible assets | | 3,361 | | 4,371 | |
Deferred income tax expense (benefit) | | (31,197 | ) | 764 | |
Provision for doubtful receivables | | 2,085 | | 1,926 | |
Share-based compensation expense | | 3,239 | | 2,986 | |
Other, net | | 3,462 | | 1,499 | |
Changes in operating assets and liabilities, net of acquisitions: | | | | | |
Accounts receivable | | (37,068 | ) | 22,253 | |
Other current and long-term assets | | (4,485 | ) | (411 | ) |
Accounts payable | | 735 | | (8,865 | ) |
Accrued compensation and related liabilities | | 7,216 | | 1,180 | |
Other current and long-term liabilities | | 12,651 | | 7,424 | |
Income taxes payable/refundable | | 525 | | 6,643 | |
Net cash provided by operating activities | | 7,124 | | 61,342 | |
| | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES | | | | | |
Acquisitions, net of cash acquired | | (3,527 | ) | (4,258 | ) |
Purchases of property and equipment, net | | (9,646 | ) | (7,960 | ) |
Net cash used in investing activities | | (13,173 | ) | (12,218 | ) |
| | | | | |
CASH FLOWS FROM FINANCING ACTIVITIES | | | | | |
Borrowings on long-term debt | | 283,644 | | 466,788 | |
Payments on long-term debt | | (288,366 | ) | (530,670 | ) |
Sale of common stock, net of $194 of issuance costs | | — | | 23,220 | |
Employee stock purchases and options exercised | | 1,665 | | 1,871 | |
Purchases of treasury stock | | (2,444 | ) | (3,877 | ) |
Excess tax benefits from share-based compensation | | 58 | | — | |
Credit facility origination/amendment fees paid | | (685 | ) | (3,465 | ) |
Acquisition of noncontrolling interest | | (1,558 | ) | — | |
Other, net | | — | | (222 | ) |
Net cash used in financing activities | | (7,686 | ) | (46,355 | ) |
Effect of foreign exchange rate changes on cash and cash equivalents | | (2,193 | ) | 4,629 | |
Net increase (decrease) in cash and cash equivalents | | (15,928 | ) | 7,398 | |
Cash and cash equivalents, beginning of period | | 67,424 | | 48,849 | |
Cash and cash equivalents, end of period | | $ | 51,496 | | $ | 56,247 | |
CIBER, Inc.
SUMMARY SEGMENT DATA
(Dollars in thousands)
(Unaudited)
Summary Segment Analysis
| | Three Months Ended September 30, | | Nine Months Ended September 30, | |
| | 2010 | | 2009 | | Change | | 2010 | | 2009 | | Change | |
Revenues: | | | | | | | | | | | | | |
International | | $ | 91,977 | | $ | 87,249 | | 5 | % | $ | 272,596 | | $ | 253,254 | | 8 | % |
Custom Solutions | | 95,308 | | 90,731 | | 5 | % | 277,434 | | 286,098 | | (3 | )% |
U.S. ERP | | 33,550 | | 32,074 | | 5 | % | 104,437 | | 94,586 | | 10 | % |
Federal | | 28,913 | | 29,157 | | (1 | )% | 91,383 | | 87,877 | | 4 | % |
IT Outsourcing | | 19,655 | | 18,881 | | 4 | % | 55,891 | | 56,913 | | (2 | )% |
Total segment revenues | | 269,403 | | 258,092 | | 4 | % | 801,741 | | 778,728 | | 3 | % |
Corporate/Inter-segment | | (3,521 | ) | (1,725 | ) | | | (7,776 | ) | (3,282 | ) | | |
Total revenues | | $ | 265,882 | | $ | 256,367 | | 4 | % | $ | 793,965 | | $ | 775,446 | | 2 | % |
| | | | | | | | | | | | | |
Operating income (loss): | | | | | | | | | | | | | |
International | | $ | 4,568 | | $ | 5,225 | | (13 | )% | $ | 12,574 | | $ | 13,997 | | (10 | )% |
Custom Solutions | | 7,196 | | 6,456 | | 11 | % | 20,653 | | 20,504 | | 1 | % |
U.S. ERP | | 1,653 | | 3,172 | | (48 | )% | 7,492 | | 6,975 | | 7 | % |
Federal | | 1,519 | | 1,486 | | 2 | % | 4,033 | | 4,804 | | (16 | )% |
IT Outsourcing | | (231 | ) | (822 | ) | 72 | % | (707 | ) | (1,155 | ) | 39 | % |
Total segment operating income | | 14,705 | | 15,517 | | (5 | )% | 44,045 | | 45,125 | | (2 | )% |
Corporate expenses | | (6,477 | ) | (6,977 | ) | | | (25,549 | ) | (19,236 | ) | | |
Goodwill impairment | | — | | — | | | | (112,000 | ) | — | | | |
Amortization of intangible assets | | (1,087 | ) | (1,506 | ) | | | (3,361 | ) | (4,371 | ) | | |
Total operating income (loss) | | $ | 7,141 | | $ | 7,034 | | | | $ | (96,865 | ) | $ | 21,518 | | | |
Segments as Percent of Segment Revenue and Segment Operating Income
(excluding Corporate/Inter-segment and corporate expenses, goodwill impairment and amortization)
| | Three Months Ended September 30, | | Nine Months Ended September 30, | |
| | 2010 | | 2009 | | 2010 | | 2009 | |
Revenues: | | | | | | | | | |
International | | 34 | % | 34 | % | 34 | % | 33 | % |
Custom Solutions | | 35 | % | 35 | % | 35 | % | 37 | % |
U.S. ERP | | 13 | % | 13 | % | 13 | % | 12 | % |
Federal | | 11 | % | 11 | % | 11 | % | 11 | % |
IT Outsourcing | | 7 | % | 7 | % | 7 | % | 7 | % |
Total segment revenues | | 100 | % | 100 | % | 100 | % | 100 | % |
| | | | | | | | | |
Operating income: | | | | | | | | | |
International | | 31 | % | 34 | % | 29 | % | 31 | % |
Custom Solutions | | 49 | % | 42 | % | 47 | % | 45 | % |
U.S. ERP | | 11 | % | 20 | % | 17 | % | 16 | % |
Federal | | 10 | % | 9 | % | 9 | % | 11 | % |
IT Outsourcing | | (1 | )% | (5 | )% | (2 | )% | (3 | )% |
Total segment operating income | | 100 | % | 100 | % | 100 | % | 100 | % |
Segment Operating Margins
(excluding corporate expenses, goodwill impairment and amortization)
| | Three Months Ended September 30, | | Nine Months Ended September 30, | |
| | 2010 | | 2009 | | 2010 | | 2009 | |
Operating margin: | | | | | | | | | |
International | | 5 | % | 6 | % | 5 | % | 6 | % |
Custom Solutions | | 8 | % | 7 | % | 7 | % | 7 | % |
U.S. ERP | | 5 | % | 10 | % | 7 | % | 7 | % |
Federal | | 5 | % | 5 | % | 4 | % | 5 | % |
IT Outsourcing | | (1 | )% | (4 | )% | (1 | )% | (2 | )% |
Total segment operating income | | 5 | % | 6 | % | 5 | % | 6 | % |
CIBER, Inc.
NON-GAAP FINANCIAL INFORMATION
(Dollars in thousands, except per share amounts)
(Unaudited)
CIBER reports its financial results in accordance with generally accepted accounting principles (“GAAP”). However, management believes that certain non-GAAP financial measures used in managing our business may provide users of this financial information with additional meaningful comparisons between current results and prior reported results. Certain of the information set forth in this press release constitutes non-GAAP financial measures within the meaning of Regulation G adopted by the Securities and Exchange Commission. We have presented below a reconciliation of these measures to the most directly comparable GAAP financial measure. The presentation of this additional information is not meant to be considered in isolation or as a substitute for comparable amounts determined in accordance with GAAP in the United States.
Constant Currency Revenue Growth
| | Three months ended | |
| | September 30, 2010 | |
| | | |
GAAP Revenue Growth | | 4 | % |
Foreign exchange impact | | 2 | % |
Constant currency revenue growth | | 6 | % |
Operating Income Margin
| | Three months ended | | Three months ended | | Growth/ | |
| | September 30, 2010 | | September 30, 2009 | | (Decline) | |
| | | | | | | |
GAAP operating income | | $ | 7,141 | | $ | 7,034 | | 2 | % |
Litigation settlement - Q3 2009 | | — | | 2,215 | | n/a | |
Operating income excluding litigation settlement | | $ | 7,141 | | $ | 9,249 | | (23 | )% |
| | | | | | | |
GAAP operating income margin | | 2.7 | % | 2.7 | % | | |
| | | | | | | |
Operating income margin excluding litigation settlement | | n/a | | 3.6 | % | | |
Earnings Per Share
| | Three months ended | | Three months ended | |
| | September 30, 2010 | | September 30, 2009 | |
| | | | | |
GAAP earnings per share | | $ | 0.05 | | $ | 0.05 | |
Litigation settlement - Q3 2009 | | — | | 0.02 | |
Earnings per share excluding litigation settlement | | $ | 0.05 | | $ | 0.07 | |
Fiscal Year 2010 Earnings Per Share Outlook
| | Per share | |
| | | |
2010 GAAP earnings per share guidance | | $ | (1.02 | ) |
Q2 2010 goodwill impairment and executive change impact | | 1.22 | |
2010 earnings per share guidance | | $ | 0.20 | |
