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NCI, Inc. Reports Record Fourth Quarter and Year End 2010 Financial Results

^{Published on 2011-02-16 13:15:36 - 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 fourth quarter and year ended December 31, 2010. The table below is a summary of our financial results:

Reported Results

For the fourth quarter of 2010, NCI reported record revenue of $171 million compared to $125 million for the fourth quarter of 2009, with a revenue growth rate of approximately 37%. Operating income for the fourth quarter of 2010 was $11.8 million, compared to $11.5 million for the fourth quarter of 2009. Operating margin of 6.9% for the fourth quarter of 2010 compared with an operating margin of 9.2% for the same period in 2009. Net income for the fourth quarter of 2010 was $6.9 million, compared to $6.7 million for the same period in 2009. However, the fourth quarter and full year 2009 results contained a one-time gain of $2.3 million related to the resolution of the contingent liability associated with the earn-out from the acquisition of TRS Consulting completed in the third quarter of 2009. Excluding this gain only, our fourth quarter 2009 adjusted operating margin was 7.4%. Diluted earnings per share were $0.50 per share for the fourth quarter of 2010 compared to $0.49 per share for the fourth quarter of 2009. The effective tax rate for the fourth quarter of 2010 and 2009 was 40.7%. Diluted shares outstanding for the fourth quarter of 2010 were 13.9 million shares compared to 13.8 million shares for the fourth quarter of 2009.

For the full year of 2010, NCI reported revenue of $581 million compared to $469 million for 2009 with an organic revenue growth rate of approximately 22%. We define our organic revenue growth rate as the increase in revenue, from period to period, excluding the effect of acquisitions. Operating income for 2010 was $39.8 million, or an operating margin of 6.8%, compared to $37.6 million, or an operating margin of 8.0%, for 2009. The full year 2009 results contained a one-time gain of $2.3 million related to the resolution of the contingent liability associated with the earn-out from the acquisition of TRS Consulting completed in the third quarter of 2009. Excluding this gain only, our full year 2009 adjusted operating margin was 7.5%. Net income for 2010 was $23.9 million, compared to $22.2 million in 2009. Diluted earnings per share for 2010 were $1.72 per share, compared to $1.61 per share for 2009. Diluted shares outstanding for 2010 were 13.9 million and 2009 were 13.8 million.

CEO Comments

Charles K. Narang, NCIa™s Chairman and CEO, said, a2010 was a very successful year for NCI in many ways. Most importantly, we met our long-standing objective and crossed over the $500 million in revenue mark. With this foundation in place, we are now focused on reaching $1 billion in revenue within the next three to five years. While the macro environment presents some challenges, we have a seasoned management team, a robust portfolio of GWAC/IDIQ contracts, a cadre of skilled and talented employees, and a reputation for superior customer satisfaction to navigate the current headwinds.a

Business Highlights

NCIa™s President, Terry Glasgow, stated, aWe are very pleased to have delivered 22% organic revenue growth in 2010. This makes the 6^th consecutive year since becoming a public company that we have delivered double digit organic revenue growth a" averaging approximately 16% organic revenue growth over that period of time. In addition, we are very pleased with the overall execution of our business operations and with the outstanding reputation we have built with our customers. We believe we are well positioned for future growth in our targeted business areas.a

Key Metrics

NCI reported total backlog at the end of 2010 of $1,301 million, of which $302 million was funded backlog. This compares to total backlog of $1,501 million at the end of 2009, which included $250 million in funded backlog. During the fourth quarter of 2010, approximately 91% of revenue was from prime contracts. Time-and-materials contracts accounted for 49% of revenue, cost-plus contracts accounted for 12% of revenue, and fixed-price contracts accounted for 39% of revenue for the fourth quarter of 2010. Our customer mix for the fourth quarter of 2010 reflects approximately 94% of revenue from the Department of Defense and Intelligence customers, and approximately 6% of revenue from federal civilian agencies. Days sales outstanding in accounts receivable, or DSO, for the quarter was 71 days.

Outlook

The table below summarizes the guidance ranges for the first quarter of 2011 and guidance for the full year 2011. 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 our fourth quarter and year ended 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 4051244. 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 at 8 p.m. ET 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 4051244. 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 9001:2008 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 2,600 employees and more than 100 locations worldwide. For more information, visit our Web site at [ www.nciinc.com ], or e-mail [ mcrystal@nciinc.com ].

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; Federal Governmental shutdowns (such as that which occurred during the Federal Governmenta™s 1996 fiscal year) and other potential delays in the Government appropriations process; risk of a Federal Government use of funding agencies through a Continuing Resolution instead of a budget appropriation, which may cause our customers within those agencies to defer or reduce work under our current contracts; 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; 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) the Governmenta™s ainsourcinga of previously contracted support services and the realignment of funds to other non-defense related programs; and (vii) 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.