July 31, 2013

ManTech Announces Financial Results for Second Quarter of 2013

  • Revenue: $605.1 million
  • Operating Income: $38.7 million
  • Diluted EPS: $0.58
  • Cash Flow from Operations: $32 million
  • Dividends: $0.21 per share authorized for September

FAIRFAX, Va., July 31, 2013 (GLOBE NEWSWIRE) -- ManTech International Corporation (Nasdaq:MANT) (www.mantech.com), a leading provider of innovative technologies and solutions for mission-critical national security programs, today announced financial results for the second quarter of fiscal year 2013, which ended June 30, 2013.

"Our cyber, intelligence and other critical technology businesses are thriving, and our control of indirect costs is driving competitiveness and profitability," said ManTech Chairman and Chief Executive Officer George J. Pedersen. "ManTech is managing the business well through this difficult current environment. Even as we address a reduction in requirements for warfighter support in Afghanistan, our reputation and contract portfolio in critical areas, such as cyber, intelligence, information technology and health care, and our strong balance sheet position us for future growth. We currently have operations in 18 countries around the world that enable ManTech to respond to customer requirements quickly and efficiently."

Summary Operating Results

Revenues for the quarter were $605.1 million, compared to $638.9 million in the second quarter of fiscal year 2012. Total revenues supporting missions other than Overseas Contingency Operations (OCO) in Afghanistan increased year-over-year, especially in strategic investment areas indicated. Revenues supporting OCO declined $41 million compared to the second quarter of 2012, as the result of the completion of a mobile communications contract and fewer other direct costs (ODCs) on the S-3 contract with the U.S. Army Communications and Electronics Command (CECOM).

Operating income was $38.7 million for the quarter. Operating margin of 6.4 percent, up 80 basis points from last quarter, reflected a higher mix of direct labor, excellent award fees stemming from strong program execution, and indirect cost management. Net income was $21.6 million for the quarter, which resulted in diluted earnings per share of $0.58.

Cash Management and Capital Deployment

Cash flow from operations for the quarter was $32 million or 1.5 times net income. Days sales outstanding (DSO) were 76 days, consistent with the first quarter of 2013. During the quarter, the company paid $7.8 million, or $0.21 per share, to its common stockholders of record as of June 7, 2013. As of June 30, 2013, the company had $194 million in cash and cash equivalents, up from $172 million at the end of the first quarter. The company has $200 million in debt with no borrowings on its $500 million revolving-credit facility.

The Board of Directors has declared that the company will pay a cash dividend of $0.21 per share on September 20, 2013 to all common stockholders of record as of September 6, 2013 as part of its regular quarterly cash dividend program. Future declarations of dividends and their record and payment dates are subject to the final determination of ManTech's Board of Directors.

Contract Awards

Contract awards (bookings) totaled $368 million in the quarter, representing a book-to-bill ratio of 0.6. The majority of the awards consist of classified programs for intelligence customers, most of which were for new work for ManTech. The company's backlog of business at the end of quarter was $5.3 billion, of which $1.2 billion was funded.

Forward Guidance

The company is updating its expected financial performance for 2013 based on first half results and a revised forward outlook. The company now expects to achieve revenue, net income and diluted earnings per share as specified in the table below.

   
Measure Fiscal 2013 Guidance
Revenue (million) $2,400
Net Income (million) $81.0
Diluted Earnings Per Share $2.18

ManTech Chief Financial Officer Kevin M. Phillips said, "Based on requirements levied on us, we have begun to draw down our staff supporting Mine Resistant Ambush Protected (MRAP) vehicles in Afghanistan. In anticipation of an eventual drawdown, we proactively managed our indirect structure, and our general and administrative expense is at its lowest level in three years. The drop in OCO support has masked the vibrancy of the remainder of our business. Taken together, our cyber and intelligence businesses will grow in excess of 15 percent organically this year and generate more revenue and more than double the earnings of our OCO business. As OCO requirements diminish, the remaining businesses within ManTech will drive growth in revenue, earnings and cash flow."

Conference Call

ManTech executive management will hold a conference call on July 31, 2013, at 5 p.m. Eastern to discuss the financial results and outlook and answer questions. Analysts may participate on the conference call by dialing 877-638-9567 (domestic) or 253-237-1032 (international) and entering passcode 96001500. The conference call will be webcast simultaneously to the public through a link on the Investor Relations section of the ManTech website (http://investor.mantech.com). A replay of the conference call will be available on the ManTech website approximately two hours after the conclusion of the conference call.

About ManTech International Corporation

ManTech is a leading provider of innovative technologies and solutions for mission-critical national security programs for the intelligence community; the Departments of Defense, State, Homeland Security, Energy and Justice, including the Federal Bureau of Investigation (FBI); the health and space communities; and other U.S. federal government customers. We provide support to critical national security programs for approximately 50 federal agencies through approximately 1,000 current contracts. ManTech's expertise includes command, control, communications, computers, intelligence, surveillance and reconnaissance (C4ISR) solutions and services; cyber security; global logistics support; information technology (IT) modernization and sustainment; intelligence/counter-intelligence solutions and support; systems engineering; test and evaluation; environmental, range and sustainability services; and healthcare analytics and IT. ManTech supports major national missions, such as military readiness and wellness, terrorist threat detection, information security and border protection. Additional information on ManTech can be found at www.mantech.com.

Forward-Looking Information

Statements and assumptions made in this press release, which do not address historical facts, constitute "forward-looking" statements that ManTech 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," "expect," "intend," "anticipate," "believe," or "estimate," or the negative of these terms or words of similar import are intended to identify forward-looking statements.

These forward-looking statements are inherently subject to risks and uncertainties, and actual results and outcomes may differ materially from the results and outcomes we anticipate. Factors that could cause actual results to differ materially from the results we anticipate, include, but are not limited to, the following: adverse changes or delays in U.S. government spending for programs we support due to cost cutting and efficiency initiatives, changing mission priorities (including the withdrawal from Afghanistan) and other efforts to reduce federal government spending generally; uncertainty regarding the timing and nature of government action to complete the budget process and otherwise address budgetary constraints, sequestration, or other factors; failure to compete effectively for new contract awards or to retain existing U.S. government contracts; failure to obtain option awards, task orders or funding under contracts; delays in the competitive bidding process caused by competitors' protests of contract awards received by us or other factors; failure to realize the full amount of our backlog or adverse changes in the timing of receipt of revenues under contracts included in backlog; renegotiation, modification or termination of our contracts, or failure to perform in conformity with contract terms or our expectations; adverse changes in our mix of contract types; disruption of our business or damage to our reputation resulting from security breaches in customer systems, internal systems or service failures (including as a result of cyber or other security threats) or employee or subcontractor misconduct; adverse changes in business conditions that may cause our investments in recorded goodwill to become impaired; failure to maintain strong relationships with other contractors; failure to successfully integrate recently acquired companies or businesses into our operations or to realize any accretive or synergistic effects from such acquisitions; failure to successfully identify and execute future acquisitions; non-compliance with, or adverse changes in, complex U.S. government procurement laws, regulations or processes; adverse results of U.S. government audits or other investigations of our government contracts; and adverse changes in our financing arrangements, such as increases in interest rates and restrictions imposed by our outstanding indebtedness, including the ability to meet financial covenants, or inability to obtain new or additional financing. These and other risk factors are more fully discussed in the section entitled "Risks Factors" in ManTech's Annual Report on Form 10-K previously filed with the Securities and Exchange Commission on Feb. 22, 2013, Item 1A of Part II of our Quarterly Reports on Form 10-Q, and, from time to time, in ManTech's other filings with the Securities and Exchange Commission.

The forward-looking statements included herein are only made as of the date of this press release, and ManTech 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.

     
     
MANTECH INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands Except Share Amounts)
     
  (unaudited)
  June 30,
2013
December 31,
2012
ASSETS    
CURRENT ASSETS:    
Cash and cash equivalents $193,578 $134,896
Receivables—net 512,010 548,309
Prepaid expenses and other 15,438 27,185
Contractual inventory  --  34,762
Total Current Assets 721,026 745,152
     
Goodwill 871,019 861,912
Other intangibles—net 160,672 167,910
Property and equipment—net 27,882 28,588
Employee supplemental savings plan assets 28,514 27,352
Other assets 10,186 10,995
TOTAL ASSETS $1,819,299 $1,841,909
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
CURRENT LIABILITIES:    
Accounts payable and accrued expenses $238,195 $315,582
Accrued salaries and related expenses 65,433 52,364
Billings in excess of revenue earned 13,024 15,031
Deferred income taxes—current 1,229 4,266
Total Current Liabilities 317,881 387,243
     
Long-term debt 200,000 200,000
Deferred income taxes—non-current 66,593 50,645
Accrued retirement 29,484 29,390
Other long-term liabilities 11,183 9,403
TOTAL LIABILITIES 625,141 676,681
     
COMMITMENTS AND CONTINGENCIES    
     
STOCKHOLDERS' EQUITY:    
Common stock, Class A—$0.01 par value; 150,000,000 shares authorized; 24,205,326 and 24,093,832 shares issued at June 30, 2013 and December 31, 2012; 23,961,213 and 23,849,719 shares outstanding at June 30, 2013 and December 31, 2012 242 241
Common stock, Class B—$0.01 par value; 50,000,000 shares authorized; 13,192,845 and 13,192,845 shares issued and outstanding at June 30, 2013 and December 31, 2012  132 132
Additional paid-in capital 421,555 417,917
Treasury stock, 244,113 and 244,113 shares at cost at June 30, 2013 and December 31, 2012 (9,158) (9,158)
Retained earnings 782,387 756,241
Accumulated other comprehensive income (loss) (149) (145)
Unearned employee stock ownership plan shares (851)  -- 
TOTAL STOCKHOLDERS' EQUITY 1,194,158 1,165,228
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,819,299 $1,841,909
         
MANTECH INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In Thousands Except Per Share Amounts)
         
  (unaudited) (unaudited)
  Three months ended
June 30,
Six months ended
June 30,
  2013 2012 2013 2012
REVENUES $605,129 $638,937 $1,251,137 $1,315,446
Cost of services 523,039 544,110 1,085,336 1,126,977
General and administrative expenses 43,419 49,947 90,759 97,894
OPERATING INCOME 38,671 44,880 75,042 90,575
Interest expense (4,062) (4,009) (8,113) (8,157)
Interest income 113 67 226 139
Other income (expense), net (90) (103) (44) (88)
INCOME FROM OPERATIONS BEFORE INCOME TAXES  34,632 40,835 67,111 82,469
Provision for income taxes (13,081) (16,090) (25,380) (32,082)
NET INCOME $21,551 $24,745 $41,731 $50,387
BASIC EARNINGS PER SHARE:        
Class A basic earnings per share $0.58 $0.67 $1.13 $1.37
Weighted average common shares outstanding 23,910 23,697 23,871 23,670
Class B basic earnings per share $0.58 $0.67 $1.13 $1.37
Weighted average common shares outstanding 13,193 13,193 13,193 13,193
DILUTED EARNINGS PER SHARE:        
Class A diluted earnings per share $0.58 $0.67 $1.12 $1.36
Weighted average common shares outstanding 23,940 23,736 23,908 23,726
Class B diluted earnings per share $0.58 $0.67 $1.12 $1.36
Weighted average common shares outstanding 13,193 13,193 13,193 13,193
     
MANTECH INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
     
  (unaudited)
  Six months ended
June 30,
  2013 2012
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net income  $ 41,731  $ 50,387
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization  15,332  37,296
Deferred income taxes  11,647  3,626
Stock-based compensation  2,778  4,431
Gain on sale of property and equipment  (400)  --
Excess tax benefits from the exercise of stock options  (46)  (43)
Change in assets and liabilities—net of effects from acquired businesses:    
Receivables-net  37,705  26,095
Contractual inventory  34,762  --
Prepaid expenses and other  11,625  8,320
Accounts payable and accrued expenses  (77,730)  (16,064)
Accrued salaries and related expenses  12,493  (3,053)
Billings in excess of revenue earned  (2,007)  (22,036)
Accrued retirement  94  (232)
Other  1,154  2,120
Net cash flow from operating activities  89,138  90,847
     
CASH FLOWS FROM INVESTING ACTIVITIES:    
Acquisition of businesses-net of cash acquired  (11,382)  (62,188)
Purchases of property and equipment   (3,762)  (4,438)
Investment in capitalized software for internal use  (1,249)  (1,693)
Proceeds from sale of property and equipment  400  --
Proceeds from sale of investment  239  185
Proceeds from disposition of a business  --  1,799
Net cash flow from investing activities  (15,754)  (66,335)
     
CASH FLOWS FROM FINANCING ACTIVITIES:    
Dividends paid  (15,577)  (15,492)
Proceeds from exercise of stock options  829  1,115
Excess tax benefits from the exercise of stock options  46  43
Net cash flow from financing activities   (14,702)  (14,334)
     
NET CHANGE IN CASH AND CASH EQUIVALENTS  58,682  10,178
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD  134,896  114,483
CASH AND CASH EQUIVALENTS, END OF PERIOD  $ 193,578  $ 124,661

ManTech-F

CONTACT: ManTech International Corporation

         Stuart Davis, (703) 218-8269

         stuart.davis@mantech.com

ManTech International Corporation

Source: ManTech International Corporation

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