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NCI, Inc. Reports Solid Third Quarter 2010 Financial Results

^{Published on 2010-11-03 16:00:30 - Market Wire}
 

RESTON, Va.--([ BUSINESS WIRE ])--NCI, Inc. (NASDAQ:NCIT), a leading provider of information technology (IT), engineering, logistics, and professional services and solutions to U.S. Federal Government agencies, announced today results for the third quarter of 2010. The table below is a summary of our financial results:

Third Quarter Reported Results

For the third quarter of 2010, NCI reported record revenues of $169 million, compared to $130 million for the third quarter of 2009. This represents a growth rate of 30% and an organic growth rate of 28%, which reflects our increase in revenue from year to year excluding the effect of acquisitions. Operating income for the third quarter of 2010 was $10.1 million, compared to $9.4 million for the third quarter of 2009. Operating margin of 6.0% for the third quarter of 2010 compares with an operating margin of 7.2% for the same period in 2009. Net income for the third quarter was $6.1 million, compared to $5.6 million for the same period in 2009. Diluted earnings per share for the third quarter of 2010 were $0.44 per share, compared to $0.41 per share for the comparable period in 2009. The effective tax rate for the third quarter of 2010 was approximately 38.6% as compared to 39.4% during the third quarter of 2009. Diluted shares outstanding for the third quarter of 2010 were approximately 13.9 million, compared to 13.8 million for the third quarter of 2009.

CEO Comments

Charles K. Narang, NCIa™s Chairman and CEO, said, aWe are pleased to report another solid quarter, including strong revenue growth of 30% and organic growth of 28%. During the quarter we continued to execute on our strategic objectives in the face of challenging market conditions. We continue to believe that we are building a strong, viable business platform that will deliver outstanding results over the next several years.a

Business Highlights

NCIa™s President, Terry Glasgow, stated, aIn the third quarter, we won a number of important new contracts that will support our long-term growth. The tempo of operations is very high; the leadership team is focused; and we are moving out to achieve our corporate goals. We are focused on delivering solid organic growth, building long-term sustainable positions with important customers, and producing good operating margins.a

Key Metrics

NCI reported a record total backlog for the third quarter of 2010 of $1,426 million, of which $330 million was funded backlog. This compares to total backlog of $1,259 million at the end of the third quarter of 2009, including $267 million in funded backlog. During the third quarter of 2010, approximately 90% of revenue was from prime contracts. Time-and-materials contracts accounted for 65% of revenue, cost-plus contracts accounted for 11%, and fixed-price contracts accounted for 24% of revenue for the third quarter of 2010. Our customer mix for the third quarter of 2010 reflects approximately 93% from the Department of Defense and Intelligence customers, approximately and 7% from federal civilian agencies. Days sales outstanding in accounts receivable, or DSO, for the quarter was 70 days.

Outlook

The table below summarizes the guidance ranges for the fourth quarter and full year of 2010. This outlook does not reflect the impact of any future acquisitions.

Conference Call Information

NCI, Inc.a™s executive management will hold a conference call today at 5 p.m. ET, to discuss third quarter 2010 results and answer questions. Interested parties may access the call by dialing (877) 704-5380(domestic) or (913) 312-1294 (international). The confirmation code for the live call is 4794119. The conference call will be webcast (listen only) simultaneously via the Internet at [ www.nciinc.com ].

A replay of the call will be available beginning around 7 p.m. today and will remain available for a two-week period. To access the replay, call (888) 203-1112(domestic) or (719) 457-0820(international). The confirmation code for the replay is 4794119. A replay webcast will also be available on NCI, Inc.a™s website shortly after the conclusion of the call.

About NCI, Inc.:

NCI is a leading provider of information technology (IT), engineering, logistics, and professional services and solutions to U.S. Federal Government agencies. We have ISO 9001:2009 and other industry-leading and globally recognized certifications. NCIa™s award-winning expertise encompasses areas critical to its customersa™ mission objectives, including enterprise systems management; network engineering; cybersecurity and information assurance; software development and systems engineering; program management, acquisition, and lifecycle support; engineering and logistics; health IT/medical transformation; and training and simulation. The company is a member of the Russell 2000 and S&P Small Cap 600 indexes, and was recently named to FORTUNE Magazinea™s 2010 a100 Fastest-Growing Companiesa list. Headquartered in Reston, Virginia, NCI has approximately 2,700 employees and more than 100 locations worldwide.

Forward-Looking Statement:Statements and assumptions made in this press release, which do not address historical facts, constitute aforward-lookinga 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 amay,a awill,a aintends,a ashould,a aexpects,a aplans,a aprojects,a aanticipates,a abelieves,a aestimates,a apredicts,a apotential,a acontinue,a or aopportunity,a 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; continued funding of U.S. Government, based on a change in spending priorities, or in the event of a priority need for funds, such as homeland security, the war on terrorism or rebuilding Iraq; 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); 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; adverse results of U.S. Government audits of our Government contracts; 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 IDIQ contracts and/or schedule contracts with the General Services Administration; and (vi) the Governmenta™s ainsourcinga of previously contracted support services and the realignment of funds to other non-defense related programs; impact of the current credit market conditions and our ability to replace our current credit facility on or before it expires on March 14, 2011 with rates currently assumed to be greater than the current rate structure; 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 aRisks Factorsa 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.

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, changes in expectations or otherwise.