NEWPORT BEACH, Calif., Oct. 25 /PRNewswire/ -- SM&A Corporation
(Nasdaq: WINS), the nation's premier provider of integrated proposal
management, systems engineering and information technology solutions, today
announced financial results for the third quarter and nine months ended
September 30, 1999.
Results of Operations
Revenues for the three months ended September 30, 1999 increased 32% to
$27.2 million compared to $20.6 million for the third quarter of 1998.
Continued strong demand for its consulting services and favorable growth in
its product sales were cited by the company as the primary factors driving
revenue growth. For the nine month period ended September 30, 1999 revenues
grew to $79.4 million from $43.9 million for the same period a year ago, an
81% increase.
SM&A experienced narrower than expected gross margins due to a higher mix
in revenues of lower margin services such as subcontract revenue and other
billable costs, and its inability to pass-through annual merit costs increases
for its labor force to certain time and materials contracts. Gross margins
for the three months ended September 30, 1999 were 37.4% versus 41.2% for the
third quarter of 1998, a decrease of 380 basis points. For the nine month
period ended September 30, 1999, gross margins were 40.3% versus 43.0% for the
same period a year ago, a decrease of 270 basis points.
Selling, general and administrative costs (not including the amortization
of goodwill) were slightly higher, primarily due to the costs associated with
the relocation of two of the Company's three anchor locations to state-of-the-
art modern facilities during the past six months and the overall increase in
employee fringe benefits, primarily healthcare costs. For the three months
ended September 30, 1999 selling, general and administrative expenses (not
including the amortization of goodwill) were $6.2 million, or 23% of revenue
compared to $5.3 million, or 26% of revenue for the same period a year ago, a
16% increase. For the nine month period ended September 30, 1999, selling,
general and administrative expenses (not including amortization of goodwill)
increased to $17.0 million versus $9.8 million for the same period a year ago,
representing a 75% increase.
Net income for the three months ended September 30, 1999 was $2.1 million,
or $.13 per basic and diluted share, when compared to $1.7 million, or $.10
per basic and diluted share, a 21% increase over the comparable period last
year. Net income per diluted share for the three months ended September 30,
1999 increased 30% over the comparable period last year. For the nine month
period ended September 30, 1999, net income increased to $8.1 million, or $.49
per basic and diluted share, when compared to $5.9 million, or $.38 per basic
and diluted share for the same period a year ago, representing a 38% increase.
Net income per basic and diluted share for the nine months ended September 30,
1999 increased 29% over the comparable period last year.
Commenting on the results, Michael Piraino, SM&A's President and Chief
Operating Officer, stated, "We are delighted with our record revenue and the
growth in our operating results, which are considerably above the results from
the same period a year ago. However, we were dissatisfied that we were unable
to achieve our more aggressive growth plans." Piraino further added, "We are
taking the required measures, including (i) our recently announced
reorganization, (ii) a re-emphasis on the quality assurance associated with
our software development efforts and (iii) continuing to focus on our
financial, accounting and information services infrastructure, to grow our
company into the new millenium."
About SM&A
With over 760 highly talented employees, representing growth of over 21%
so far this year, SM&A provides integrated proposal management and strategy
support, high-end systems engineering, program integration and information
technology products and services to aerospace, defense, communications, and
engineering companies. Statements herein concerning the company's growth and
strategies may include forward-looking statements. The company's actual
results may differ materially from those suggested as a result of various
factors, including, without limitation, the company's ability to recruit and
retain qualified technical personnel; identify, acquire, and integrate
suitable acquisition candidates; obtain sufficient working capital to support
such growth; and compete successfully with existing and future competitors.
Interested parties should refer to the disclosure set forth under the caption
"Risk Factors" and elsewhere in the company's Form 10-K for the year ended
December 31, 1998 and Form 10-Q for the quarter ended June 30, 1999, for
additional information regarding risks affecting the company's financial
condition and results of operations. Additional information on SM&A is now
available via the Internet's World Wide Web at http://www.smawins.com. For
more investor information via facsimile, please call 1-800-PRO-INFO and enter
client code SM&A.
SM&A Corporation and Subsidiaries
Consolidated Statements of Income
(in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
Net revenues $27,183 $20,546 $79,424 $43,889
Cost of revenues 17,027 12,077 47,429 25,025
Gross profit 10,156 8,469 31,995 18,864
SG&A expenses 6,182 5,343 17,035 9,756
Amortization of goodwill 322 302 952 388
Operating income 3,652 2,824 14,008 8,720
Interest expense, net (154) (13) (244) 1,185
Earnings before
income taxes 3,498 2,811 13,764 9,905
Income tax expense 1,447 1,112 5,681 4,030
Net income $2,051 $1,699 $8,083 $5,875
Diluted net income
per share $0.13 $0.10 $ 0.49 $0.38
Shares used in computing
diluted net income
per share 16,371 16,794 16,420 15,618
SM&A Corporation and Subsidiaries
Consolidated Balance Sheets
(In thousands)
September 30, December 31,
1999 1998
(unaudited)
ASSETS
Cash and cash equivalents $442 $454
Accounts receivable, net 18,740 15,326
Costs and estimated earnings in
excess of billings on contracts
in progress, net 13,040 7,545
Prepaid expenses and other
current assets 5,004 2,644
Total current assets 37,226 25,969
Property and equipment, net 4,363 2,390
Other assets 8,233 5,079
Goodwill 36,574 32,886
TOTAL ASSETS $86,396 $66,324
LIABILITIES & SHAREHOLDERS' EQUITY
Trade accounts payable $2,910 $2,495
Accrued salaries, wages and
payroll taxes 5,190 6,585
Other liabilities 1,050 910
Total current liabilities 9,150 9,990
Long term debt 21,517 -
Other long term liabilities 1,225 1,005
TOTAL LIABILITIES 31,892 10,995
Total shareholders' equity 54,504 55,329
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $86,396 $66,324
SOURCE SM&A Corporation
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Related links:
http://www.smawins.com
CONTACT:
Michael A. Pirainom, President and COO of
SM&A Corporation, 949-975-1550
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