VIENNA, Va., April 21 /PRNewswire/ -- GRC International (NYSE: GRH) today
announced a 42 percent increase in operating income on internally generated
revenue growth of 21 percent for the third quarter of fiscal 1998 compared
with the third quarter of last year. This strong growth is the result of
increasing demand for the company's professional services and high-quality
technical staff, and management's recent efforts to reposition the company to
win new business opportunities.
GRC International CEO Jim Roth said, "I am very pleased with the results
of this quarter. Our more than $35 million in revenues -- a $6 million
improvement over last year's third quarter -- represents one of the best
quarters for continuing operations in the company's 37-year history and
reaffirms that GRC International is a highly competitive and extremely skilled
participant in the multi-billion dollar professional and information
technology services industry.
"Revenue growth of 21 percent over last year's third quarter demonstrates
the strength of the demand for our services and our ability to deliver those
services. Operating income jumped by 42 percent to $1.5 million. Maximum
contract backlog rose to approximately $500 million during the quarter --
numerically the highest level in the company's history. Operating margin rose
from 3.5 percent to 4.2 percent. We reduced interest expense and will
continue to do so as we remain focused on long-term debt reduction.
"GRC International now has momentum. I expect revenues will continue to
rise at a double-digit pace at least through the fourth quarter, compared to
last year's fourth quarter. Over the longer period, operating margins should
continue to rise towards the 5 percent range driven by continuing improvements
in operating efficiencies. The maximum contract backlog trend line is
expected to continue to build as we develop new ways to work with our
customers. I also expect we will further expand our existing customer base in
the Department of Defense and widen our services into new areas of the federal
government and commercial markets.
"Coupled with these positive trends, we should see continuing improvement
in our balance sheet. Since June 1997, we have reduced long-term debt net of
cash from almost $30 million to approximately $23 million. During this
nine-month period, our debt-to-total-capital leverage has declined from almost
70 percent to approximately 50 percent. By the end of this fiscal year, I
anticipate long-term debt will come down to approximately $21 million for a
debt-to-total capital leverage of 45 percent."
The company also announced that subsequent to the close of the quarter the
remainder of the $4 million convertible debenture that it issued in
January 1997, was fully converted and sold, further reducing long-term debt.
"In short, GRCI is on an exciting growth path. Thanks to the efforts of
our employees, 1,200 of the best professional and technical staff in the
industry, I look forward to an execution of our strategy to expand our
services into new customers and markets, improve operating results and reduce
our debt under the leadership of the company's new president, Gary Denman,
when he takes on the CEO role as planned in July."
Operating Results
Net income for the third quarter ending March, 31,1998, was $3.6 million,
or 36 cents per share, on revenues of $35.3 million. This compares with net
income of $516,000, or 6 cent per share, on revenues of $29.3 million during
the third quarter of fiscal 1997.
Operating income was $1.5 million before net interest expense of $425,000
and a tax benefit of $2.5 million. This compares with operating income of
$1.0 million last year before net interest expense of $445,000 and a tax
benefit of $8.3 million. Operating margins expanded to 4.2 percent this year
from 3.5 percent last year.
Newly elected GRC International President Gary Denman said, "The revenue
growth and operating improvement primarily were the result of three factors:
(1) an experienced and focused management team; (2) the company's ability to
attract and retain revenue-generating technical and professional staff to work
its growing contract backlog, and (3) the company's ability to assume lead
positions on major government information technology contracts and generate
additional subcontractor revenues, such as the U.S. Army's Global Combat
Support System." (See GRCI news release dated April 13, 1998, at
http://www.grci.com/NYSE/GRCI_NYSE_98_0413.shtml for details on this project.)
Net income for the nine months ending March, 31,1998, was $7.5 million, or
77 cents per share, compared with a net loss of $21.2 million, or a loss of
$2.27 per share. Revenues for the nine months just completed were
$92.2 million, a 6.8 percent increase over the corresponding nine-month period
last year when the company reported revenues of $86.4 million.
GRC International's third quarter 1998 earnings conference call will be
conducted on Tuesday, April 21, 1998, at 9 a.m. Eastern time. You may
participate in the conference call by dialing 888-282-8357 approximately five
minutes before the conference call is scheduled to begin. The conference call
password is "GRCI."
GRC International Inc., with headquarters in Vienna, Va., provides
knowledge-based professional services and high-quality technology-based
product solutions to government and commercial customers. GRC International
is a publicly traded company listed on the New York Stock Exchange under the
symbol GRH. Additional details about the company can be obtained on the
Internet at http://www.grci.com/.
Forward-looking statements contained in this release are subject to risks
and uncertainties that could cause actual results to differ materially. These
risks and uncertainties include the company's dependence on continued funding
of U.S. Department of Defense programs and the company's ability to fill
required staff positions to service the contracts granted under those
programs; government contract procurement and termination risks; and other
risks described in the company's Securities and Exchange Commission filings.
GRC International, Inc.
Consolidated Condensed Statements of Income
(in thousands, except for per share data)
(unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
1998 1997 1998 1997
Revenues $35,307 $29,311 $92,177 $86,348
Cost of services 29,310 24,336 75,866 71,105
Indirect costs and other costs 4,517 3,936 12,226 12,111
Operating income 1,480 1,039 4,085 3,132
Interest (expense), net (425) (445) (1,452) (922)
Income from continuing operations
before benefit for income taxes 1,055 594 2,633 2,210
Benefit for income taxes 2,493 8,200 4,078 8,200
Income from continuing operations 3,548 8,794 6,711 10,410
Gain (loss) from discontinued
operations (Net of tax) -- (8,278) 758 (31,611)
Net Income (Loss) $ 3,548 $ 516 $ 7,469 $(21,201)
Basic income (loss) per common share:
Continuing operations $ 0.36 $ 0.94 $ 0.69 $ 1.12
Discontinued operations $ -- $ (0.88) $ 0.08 $ (3.39)
Net income (loss) $ 0.36 $ 0.06 $ 0.77 $ (2.27)
Number of shares used
in EPS calculation 9,803 9,342 9,737 9,328
Diluted income (loss) per common share:
Continuing operations $ 0.35 $ 0.89 $ 0.68 $ 1.09
Discontinued operations $ -- $ (0.83) $ 0.07 $ (3.29)
Net income (loss) $ 0.35 $ 0.06 $ 0.75 $ (2.20)
Number of shares used in
EPS calculation 10,266 10,203 10,260 9,847
Consolidated Balance Sheets
(Condensed and unaudited)
(in thousands)
March 31, June 30,
1998 1997
Assets
Current assets(a) $35,618 $39,271
Property and equipment, net 9,444 10,553
Goodwill and other
intangible assets, net 2,127 2,409
Deferred software costs, net 378 461
Deferred taxes(a) 12,503 8,896
Other assets 4,424 4,374
Total assets $64,494 $65,964
Liabilities and stockholders' equity
Net liabilities of discontinued operations $ 202 $ 4,591
Other current liabilities 18,616 18,812
Long-term debt 22,779 28,153
Other non-current liabilities 1,286 1,332
Stockholders' equity 21,611 13,076
Total liabilities and stockholders' equity $64,494 $65,964
(a) Total deferred tax assets, current and long-term, amounted to
$15.2 million at March 31, 1998, and $11.6 million at
June 30, 1997.
SOURCE GRC International Inc.
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Related links:
http://www.grci.com
http://www.grci.com/NYSE/GRCI_NYSE_98_0413.shtml
Company News On-Call: http://www.prnewswire.com or
fax, 800-758-5804, ext. 320275
CONTACT:
Wayne Jackson, Director, Corporate
Communications of GRC, 703-506-5038
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