|By Business Wire||
|July 30, 2014 04:04 PM EDT||
NCI, Inc. (NASDAQ: NCIT), a leading provider of information technology (IT), engineering, logistics, and professional solutions and services to U.S. Federal Government agencies, today announced its financial and operating results for the second quarter ended June 30, 2014.
Second quarter 2014 revenue exceeded the midpoint of management’s guidance range issued last quarter. Diluted earnings per share (EPS) exceeded the high end of guidance by $0.02.
Second Quarter 2014 Results
For the second quarter of 2014, NCI reported revenue of $77.8 million compared with second quarter 2013 revenue of $83.0 million, a decrease of 6.2%. The year-over-year decline was primarily the result of the expiration of certain task orders and contracts, and, to a lesser extent, reductions in scope of work.
Operating income for the second quarter of 2014 was $4.1 million compared with $3.3 million in the second quarter of last year. Operating margin was 5.3% for the second quarter of this year and 4.0% for the second quarter of 2013. The increase in year-over-year operating income and margin resulted from improved contract performance, increased direct labor utilization and lower overhead costs.
Net income for the second quarter of 2014 was $2.4 million, or 18 cents per diluted share, compared with $1.8 million, or 14 cents per diluted share, for the second quarter of last year. The year-over-year increase in net income was attributable to improved operating income, lower interest expense, and a lower effective income tax rate. Diluted EPS increased for the second quarter of 2014 as a result of improved net income, partially offset by higher weighted average diluted shares outstanding.
Days sales outstanding (DSO) for the second quarter ended June 30, 2014, was 66 days, compared with 68 days at March 31, 2014, and 74 days at December 31, 2013.
Net cash provided by operating activities was $13.7 million for the six months ended June 30, 2014, $12.6 million of which was generated in the second quarter.
NCI reported total backlog at June 30, 2014, of $362 million, of which $125 million was funded. This compared with total backlog of $440 million at March 31, 2014, of which $159 million was funded.
Based on the company’s current contract backlog and management’s estimate as to future tasking and contract awards, NCI is issuing guidance for the third quarter of 2014 and updating guidance previously issued for fiscal year 2014. The table below represents management’s current expectations about future financial performance based on information available at this time:
|Revenue||$70 million–$76 million||$304 million–$316 million|
|Diluted projected share count||13.8 million||13.8 million|
“NCI continued to meet or exceed operating results expectations in the second quarter. We also posted impressive cash flow from operations during the quarter,” said Charles K. Narang, NCI’s Chairman and CEO. “However, bookings continue to pose a challenge for NCI. We are doing everything possible to rebuild NCI’s backlog in the second half of 2014 and into the first half of 2015. We remain confident that we have the pieces in place to win significant new business awards in the coming months.”
“We expect to submit bids for contracts worth approximately $1 billion throughout the remainder of 2014, including three to four opportunities each valued at more than $100 million,” said NCI’s President, Brian J. Clark. “We’ve also added increased energy and focus in pursuing acquisitions that would complement NCI’s core capabilities or add new ones in promising areas of federal spending. We believe that such a move would help shore up our backlog, add significant revenue, and provide valuable synergies to improve our profitability going forward.”
Conference Call Information
As previously announced, NCI will conduct a conference call today at 4:30 p.m. EDT to discuss second quarter 2014 results and guidance for the third quarter and fiscal year 2014.
Analysts and institutional investors may listen to the conference call by dialing (888) 510-1786 (United States/Canada) or (719) 457-2697 (international) with pass code 1970700. The conference call will be provided simultaneously as a webcast through a link on the NCI website (www.nciinc.com).
A replay of the conference call will be available approximately two hours after the conclusion of the call through August 14, 2014, by dialing (877) 870-5176 (United States/Canada) or (858) 384-5517 (international) and entering pass code 1970700.
About NCI, Inc.
NCI is a leading provider of enterprise solutions and services to U.S. defense, intelligence, health care, and civilian government agencies. The company has the expertise and proven track record to solve its customers’ most important and complex mission challenges through technology and innovation. NCI’s team of highly skilled professionals focuses on delivering cost-effective solutions and services in the areas of cybersecurity and information assurance; engineering and logistics support; enterprise information management and advanced analytics; cloud computing and IT infrastructure optimization; health IT and medical support; IT service management; software and systems development/integration; and modeling, simulation, and training. Headquartered in Reston, Virginia, NCI has approximately 1,900 employees operating at more than 100 locations worldwide. NCI: Trust. Integrity. Performance. For more information, visit www.nciinc.com or email [email protected]. Like us on Facebook and follow us on Twitter (@nciinc_) and LinkedIn.
Forward-Looking Statement: Statements and assumptions made in this press release that do not address historical facts constitute “forward-looking” statements that NCI believes to be within the definition in the Private Securities Litigation Reform Act of 1995 and involve risks and uncertainties, many of which are outside of our control. Words such as “may,” “will,” “intends,” “should,” “expects,” “plans,” “projects,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue,” or “opportunity,” or the negative of these terms or words of similar import are intended to identify forward-looking statements.
Such statements are subject to factors that could cause actual results to differ materially from anticipated results. The factors that could cause actual results to differ materially from those anticipated include, but are not limited to, the following: our dependence on our contracts with Federal Government agencies, particularly within the U.S. Department of Defense, for substantially all of our revenue; a reduction in the overall U.S. Defense budget, volatility in spending authorizations for Defense- and Intelligence-related programs by the U.S. Federal Government or a shift in spending to programs in areas where we do not currently provide services; Federal Government shutdowns (such as that which occurred during the Federal Government’s 1996 and 2014 fiscal years), other delays in the Federal Government appropriations process, or budgetary cuts resulting from Congressional committee recommendations or automatic sequestration under the Budget Control Act of 2011 (as amended by the American Taxpayer Relief Act of 2012 and the Consolidated Appropriations Act of 2014), risk of contract performance or termination; failure to achieve contract awards in connection with recompetes for present business and/or competition for new business; adverse results of Federal Government audits of our government contracts; Government contract procurement (such as bid protest, small business set asides, etc.) and termination risks; competitive factors such as pricing pressures and competition to hire and retain employees (particularly those with security clearances); Federal Government agencies awarding contracts on a technically acceptable/lowest cost basis in order to reduce expenditures; failure to successfully identify and integrate future acquired companies or businesses into our operations or to realize any accretive or synergistic effects from such acquisitions or to effectively integrate acquisitions appropriate to the achievement of our strategic plans; economic conditions in the United States, including conditions that result from terrorist activities or war; material changes in laws or regulations applicable to our businesses, particularly legislation affecting (i) government contracts for services, (ii) outsourcing of activities that have been performed by the government, (iii) government contracts containing organizational conflict of interest (OCI) clauses, (iv) delays related to agency specific funding freezes, (v) competition for task orders under Government Wide Acquisition Contracts (GWACs), agency-specific Indefinite Delivery/Indefinite Quantity (IDIQ) contracts and/or schedule contracts with the General Services Administration; and (vi) our own ability to achieve the objectives of near-term or long-range business plans, including internal systems failures. These and other risk factors are more fully discussed in the section titled “Risk Factors” in NCI's Form 10-K filed with the Securities and Exchange Commission (SEC), and from time to time, in other filings with the SEC, such as our Forms 8-K and Forms 10-Q.
Any projections of revenue, margins, expenses, earnings, tax provisions, cash flows, benefit obligations, or share repurchases, and any statements of the plans, strategies and objectives of management for future operations, the execution of cost reduction programs, and restructuring and integration plans are also subject to factors that could cause actual results to differ materially from anticipated results.
The forward-looking statements included in this news release are only made as of the date of this news release, and NCI undertakes no obligation to publicly update any of the forward-looking statements made herein, whether as a result of new information, subsequent events or circumstances, or changes in expectations or otherwise.
|CONDENSED CONSOLIDATED STATEMENTS OF INCOME|
(in thousands, except per share data)
|Three months ended June 30,||Six months ended June 30,|
|Cost of revenue||65,929||71,991||143,932||152,468|
|General and administrative expenses||6,364||6,129||
|Depreciation and amortization||1,450||1,527||
|Total operating expenses||73,743||79,647||160,594||167,603|
|Interest expense, net||82||248||
|Income before income taxes||4,020||3,076||6,127||6,410|
|Provision for income taxes||1,594||1,265||
|Earnings per common and common equivalent share:|
|Weighted average shares outstanding||13,623||12,825||13,365||12,818|
|Net income per share||$||0.18||$||0.14||$||0.27||$||0.30|
|Weighted average shares outstanding||13,771||12,825||13,762||12,818|
|Net income per share||$||0.18||$||0.14||$||0.27||$||0.30|
|CONDENSED CONSOLIDATED BALANCE SHEETS|
(in thousands, except par values)
|Cash and cash equivalents||$||12,624||$||50|
|Accounts receivable, net||56,250||63,991|
|Deferred tax assets, net||3,276||3,217|
|Prepaid expenses and other current assets||3,255||2,941|
|Total current assets||75,405||70,199|
|Property and equipment, net||8,612||9,752|
|Deferred tax assets, net||39,888||39,990|
|Intangible assets, net||4,530||5,340|
|Liabilities and stockholders’ equity:|
|Accrued salaries and benefits||16,034||16,645|
|Other accrued expenses||5,947||4,578|
|Total current liabilities||38,850||41,188|
|Other long-term liabilities||3,452||3,399|
|Class A common stock, $0.019 par value—37,500 shares authorized; 9,170 shares issued and 8,252 shares outstanding as of June 30, 2014, and 9,142 shares issued and 8,226 shares outstanding as of December 31, 2013||174||174|
|Class B common stock, $0.019 par value—12,500 shares authorized; 4,700 shares issued and outstanding as of June 30, 2014 and December 31, 2013||89||89|
|Additional paid-in capital||
|Treasury stock at cost—917 shares of Class A common stock as of June 30, 2014 and December 31, 2013||(8,331||)||(8,331||)|
|Total stockholders’ equity||88,009||81,807|
|Total liabilities and stockholders’ equity||$||130,311||127,394|
|CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS|
|Six months ended June 30,|
|Cash flows from operating activities:|
|Adjustments to reconcile net income to net cash provided by operating activities:|
|Depreciation and amortization||
|Deferred income taxes||43||(6||)|
|Changes in operating assets and liabilities:|
|Accounts receivable, net||7,741||(810||)|
|Prepaid expenses and other assets||
|Accrued expenses and other liabilities||78||551|
|Net cash provided by operating activities||13,695||8,207|
|Cash flows from investing activities:|
|Purchases of property and equipment||
|Net cash used in investing activities||
|Cash flows from financing activities:|
|Borrowings under credit facility||42,496||60,300|
|Repayments on credit facility||(43,496||)||(67,800||)|
|Proceeds from exercise of stock options||191||—|
|Shares repurchased for tax withholdings on vesting of restricted shares||(69||)||—|
|Net cash used in financing activities||(878||)||(7,500||)|
|Net change in cash and cash equivalents||12,574||253|
|Cash and cash equivalents, beginning of period||50||763|
|Cash and cash equivalents, end of period||$||12,624||$||1,016|
|Supplemental disclosure of cash flow information:|
|Cash paid during the period for:|
|Non-cash investing and finance activities during the period for:|
|Leasehold improvements acquired under tenant improvement funds||706||—|
1 As previously disclosed, in the first quarter of 2014, NCI recognized $1.5 million, or $0.07 per diluted share, of accelerated stock compensation expense. Diluted EPS estimates for fiscal year 2014 exclude the effects of the accelerated stock compensation expense. NCI believes that removing the effects of the accelerated stock compensation expense from operating income, net income, and earnings per share portrays NCI’s estimated fiscal year 2014 financial results in a more consistent manner. The company’s position is that this non-GAAP financial measure provides useful information because it allows management and investors to better assess NCI’s comparable financial results absent the expense. This non-GAAP financial measure should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. Actual results for the first six months of 2014 presented in the table “Condensed Consolidated Statements of Income” contained in today’s press release include the effects of the accelerated stock compensation expense.
SYS-CON Events announced today that Cloudian, Inc., the leading provider of hybrid cloud storage solutions, will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Cloudian, Inc., is a Foster City, California - based software company specializing in cloud storage software. The main product is Cloudian, an Amazon S3-compliant cloud object storage platform, the bedrock of cloud computing systems, that enables c...
Dec. 22, 2014 12:45 PM EST Reads: 340
ScriptRock makes GuardRail, a DevOps-ready platform for configuration monitoring. Realizing we were spending way too much time digging up, cataloguing, and tracking machine configurations, we began writing our own scripts and tools to handle what is normally an enormous chore. Then we took the concept a step further, giving it a beautiful interface and making it simple enough for our bosses to understand. We named it GuardRail after its function - to allow businesses to move fast and stay sa...
Dec. 22, 2014 12:30 PM EST Reads: 1,051
SYS-CON Media announced today that Sematext launched a popular blog feed on DevOps Journal with over 6,000 story reads over the weekend. DevOps Journal is focused on this critical enterprise IT topic in the world of cloud computing. DevOps Journal brings valuable information to DevOps professionals who are transforming the way enterprise IT is done. Sematext is a globally distributed organization that builds innovative Cloud and On Premises solutions for performance monitoring, alerting an...
Dec. 22, 2014 12:00 PM EST Reads: 1,024
Leysin American School is an exclusive, private boarding school located in Leysin, Switzerland. Leysin selected an OpenStack-powered, private cloud as a service to manage multiple applications and provide development environments for students across the institution. Seeking to meet rigid data sovereignty and data integrity requirements while offering flexible, on-demand cloud resources to users, Leysin identified OpenStack as the clear choice to round out the school's cloud strategy. Additional...
Dec. 22, 2014 11:15 AM EST Reads: 1,997
The BPM world is going through some evolution or changes where traditional business process management solutions really have nowhere to go in terms of development of the road map. In this demo at 15th Cloud Expo, Kyle Hansen, Director of Professional Services at AgilePoint, shows AgilePoint’s unique approach to dealing with this market circumstance by developing a rapid application composition or development framework.
Dec. 22, 2014 11:00 AM EST Reads: 1,432
SYS-CON Events announced today that Windstream, a leading provider of advanced network and cloud communications, has been named “Silver Sponsor” of SYS-CON's 16th International Cloud Expo®, which will take place on June 9–11, 2015, at the Javits Center in New York, NY. Windstream (Nasdaq: WIN), a FORTUNE 500 and S&P 500 company, is a leading provider of advanced network communications, including cloud computing and managed services, to businesses nationwide. The company also offers broadband, p...
Dec. 22, 2014 11:00 AM EST Reads: 2,342
SYS-CON Events announced today Isomorphic Software, the global leader in high-end, web-based business applications, will exhibit at SYS-CON's DevOps Summit 2015 New York, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Isomorphic Software is the global leader in high-end, web-based business applications. We develop, market, and support the SmartClient & Smart GWT HTML5/Ajax platform, combining the productivity and performance of traditional desktop software ...
Dec. 22, 2014 09:00 AM EST Reads: 1,361
In high-production environments where release cycles are measured in hours or minutes — not days or weeks — there's little room for mistakes and no room for confusion. Everyone has to understand what's happening, in real time, and have the means to do whatever is necessary to keep applications up and running optimally. DevOps is a high-stakes world, but done well, it delivers the agility and performance to significantly impact business competitiveness.
Dec. 21, 2014 07:00 PM EST Reads: 1,026
"Our premise is Docker is not enough. That's not a bad thing - we actually love Docker. At ActiveState all our products are based on open source technology and Docker is an up-and-coming piece of open source technology," explained Bart Copeland, President & CEO of ActiveState Software, in this SYS-CON.tv interview at DevOps Summit at Cloud Expo®, held Nov 4-6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
Dec. 21, 2014 06:00 PM EST Reads: 2,052
The Internet of Things is not new. Historically, smart businesses have used its basic concept of leveraging data to drive better decision making and have capitalized on those insights to realize additional revenue opportunities. So, what has changed to make the Internet of Things one of the hottest topics in tech? In his session at @ThingsExpo, Chris Gray, Director, Embedded and Internet of Things, discussed the underlying factors that are driving the economics of intelligent systems. Discover ...
Dec. 21, 2014 02:00 PM EST Reads: 2,419
"BSQUARE is in the business of selling software solutions for smart connected devices. It's obvious that IoT has moved from being a technology to being a fundamental part of business, and in the last 18 months people have said let's figure out how to do it and let's put some focus on it, " explained Dave Wagstaff, VP & Chief Architect, at BSQUARE Corporation, in this SYS-CON.tv interview at @ThingsExpo, held Nov 4-6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
Dec. 21, 2014 01:00 PM EST Reads: 2,027
The major cloud platforms defy a simple, side-by-side analysis. Each of the major IaaS public-cloud platforms offers their own unique strengths and functionality. Options for on-site private cloud are diverse as well, and must be designed and deployed while taking existing legacy architecture and infrastructure into account. Then the reality is that most enterprises are embarking on a hybrid cloud strategy and programs. In this Power Panel at 15th Cloud Expo (http://www.CloudComputingExpo.com...
Dec. 21, 2014 11:30 AM EST Reads: 2,443
Verizon Enterprise Solutions is simplifying the cloud-purchasing experience for its clients, with the launch of Verizon Cloud Marketplace, a key foundational component of the company's robust ecosystem of enterprise-class technologies. The online storefront will initially feature pre-built cloud-based services from AppDynamics, Hitachi Data Systems, Juniper Networks, PfSense and Tervela. Available globally to enterprises using Verizon Cloud, Verizon Cloud Marketplace provides a one-stop shop fo...
Dec. 21, 2014 11:00 AM EST Reads: 2,020
The move in recent years to cloud computing services and architectures has added significant pace to the application development and deployment environment. When enterprise IT can spin up large computing instances in just minutes, developers can also design and deploy in small time frames that were unimaginable a few years ago. The consequent move toward lean, agile, and fast development leads to the need for the development and operations sides to work very closely together. Thus, DevOps become...
Dec. 21, 2014 10:00 AM EST Reads: 2,076
SYS-CON Events announced today that IDenticard will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. IDenticard™ is the security division of Brady Corp (NYSE: BRC), a $1.5 billion manufacturer of identification products. We have small-company values with the strength and stability of a major corporation. IDenticard offers local sales, support and service to our customers across the United States and Canada...
Dec. 21, 2014 10:00 AM EST Reads: 2,179
SYS-CON Events announced today that AIC, a leading provider of OEM/ODM server and storage solutions, will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. AIC is a leading provider of both standard OTS, off-the-shelf, and OEM/ODM server and storage solutions. With expert in-house design capabilities, validation, manufacturing and production, AIC's broad selection of products are highly flexible and are conf...
Dec. 21, 2014 06:30 AM EST Reads: 2,016
AppZero has announced that its award-winning application migration software is now fully qualified within the Microsoft Azure Certified program. AppZero has undergone extensive technical evaluation with Microsoft Corp., earning its designation as Microsoft Azure Certified. As a result of AppZero's work with Microsoft, customers are able to easily find, purchase and deploy AppZero from the Azure Marketplace. With just a few clicks, users have an Azure-based solution for moving applications to the...
Dec. 20, 2014 09:00 AM EST Reads: 1,065
“In the past year we've seen a lot of stabilization of WebRTC. You can now use it in production with a far greater degree of certainty. A lot of the real developments in the past year have been in things like the data channel, which will enable a whole new type of application," explained Peter Dunkley, Technical Director at Acision, in this SYS-CON.tv interview at @ThingsExpo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
Dec. 20, 2014 08:00 AM EST Reads: 1,433
The cloud is becoming the de-facto way for enterprises to leverage common infrastructure while innovating and one of the biggest obstacles facing public cloud computing is security. In his session at 15th Cloud Expo, Jeff Aliber, a global marketing executive at Verizon, discussed how the best place for web security is in the cloud. Benefits include: Functions as the first layer of defense Easy operation –CNAME change Implement an integrated solution Best architecture for addressing network-l...
Dec. 20, 2014 05:00 AM EST Reads: 1,379