ManTech Announces Financial Results for Fourth Quarter and Fiscal Year 2009

Revenue: $542.1 million (up 10%) for Q4, $2.02 billion (up 8%) for fiscal year Operating Margin: 8.7% (up 30 bps) for Q4, 8.9% (up 70 bps) for fiscal year Net Income: $29.5 million (up 20%) for Q4, $111.8 million (up 24%) for fiscal year Diluted EPS: $0.82 (up 19%) for fourth quarter, $3.11 (up 22%) for fiscal year FY10 guidance: double-digit growth in organic revenue, net income, and EPS FAIRFAX, Va., Feb 24, 2010 (BUSINESS WIRE) -- ManTech International Corporation (NASDAQ: MANT), a leading provider of innovative technologies and solutions for mission-critical national security programs, today announced financial results for the fourth quarter and fiscal year 2009, which ended December 31, 2009. "I am pleased to report that ManTech closed fiscal year 2009 in strong fashion, as we accelerated organic growth, expanded operating margin and profitability, and continued our focus on cash management," said George J. Pedersen, ManTech Chairman and Chief Executive Officer. "Our acquisition of Sensor Technologies Inc. in January and recent large competitive awards position us to deliver organic growth and enhance shareholder value in 2010. I believe that our strategy to focus on high-end defense and intelligence work and to support our customers' missions around the globe in about 40 countries will continue to drive growth and differentiate ManTech in the marketplace." Summary Operating Results Revenues for the quarter were $542.1 million, up 10 percent from $494.7 million in the fourth quarter of fiscal year 2008. Revenues for the year were $2.02 billion, up 8 percent from $1.87 billion in fiscal year 2008. Organic growth was 8 percent for the quarter and 6 percent for the fiscal year, driven primarily by expansions in the Company's in-theater logistics support and cyber security services. Operating income for the quarter was $47.4 million (8.7 percent of revenue), up 15 percent from $41.4 million (8.4 percent of revenue) in the fourth quarter of fiscal year 2008. Growth in quarterly operating margin percentage was driven by improved contract fees as well as a more efficient indirect cost structure. Full-year operating income was $179.1 million (8.9 percent of revenue), up 17 percent from $153.4 million (8.2 percent of revenue) in fiscal year 2008. Net income for the quarter was $29.5 million, up 20 percent from $24.6 million in the fourth quarter of fiscal year 2008. Net income grew more rapidly than operating income because of a drop in the effective tax rate from 40 percent in the fourth quarter of fiscal year 2008 to 37.7 percent as a result of favorable fluctuations in deferred compensation assets. Full-year net income was $111.8 million, up 24 percent from $90.3 million in fiscal year 2008. Diluted earnings per share for the quarter were $0.82, up 19 percent from $0.69 in the fourth quarter of fiscal year 2008, driven by the increase in net income offset by a slightly higher share count compared to the prior year quarter. Diluted earnings per share for the year were $3.11, up 22 percent from $2.55 in fiscal year 2008. Cash Management and Capital Deployment Cash flow from operations for the quarter was $34 million (or 1.1 times net income), up from $10 million in the fourth quarter of fiscal year 2008. Cash collections continued to be strong as days sales outstanding (DSO) were 66 days, two days higher sequentially and an eight-day improvement year-over-year. For the year, cash flow from operations was $132 million (or 1.2 times net income), up 4 percent from $127 million in fiscal year 2008. As of December 31, 2009, the company had $86 million in cash and cash equivalents and no long-term debt. After the close of the quarter, the Company acquired Sensor Technologies Inc. (STI), a leading provider of C4ISR services to the U.S. Army, for $242 million. Contract Awards Contract awards (bookings) totaled $574 million in the fourth quarter and $1.95 billion for the fiscal year, representing a book-to-bill ratio of 1.1 and 1.0 for the fourth quarter and fiscal year, respectively. Large, competitive definite delivery contract awards received during the quarter include: U.S. Army Electronic Proving Ground (EPG) Testing Support. Under afive-year, $286 million contract from EPG, ManTech will support testing for Command, Control, Communications, Computers and Intelligence (C4I), navigation, and sensor systems for reliability, availability and maintainability, electromagnetic interference/compatibility, and security. ManTech personnel will support EPG in Forts Huachuca, Hood, Bliss, and Lewis as well as Aberdeen and Yuma Proving Grounds and White Sands Missile Range. Defense Advanced Research Projects Agency (DARPA)Director's Office Support. ManTech received a five-year, $42 million contract to continue its Systems Engineering and Technical Assistance (SETA) support of Technology Transition and Strategic Support program for the DARPA Director's Office. Intelligence Support Services for Multi-National Force-Iraq(MNF-I). On asubcontract to L-3 for about $40 million, ManTech will provide the MNF-I with counterintelligence support, intelligence analysis and media exploitation analysis. ManTech personnel work closely with troops in the field and are among the first to see and evaluate digital media seized during military operations. The bookings total excludes awards in the quarter with an active protest as well as multiple-award indefinite delivery/indefinite quantity (ID/IQ) contracts where ManTech has no history of performance. After the quarter closed, the government awarded ManTech a $99 million single-award ID/IQ to provide systems engineering support to the Department of Homeland Security's Secure Border Initiative after overturning the previous incumbent's protest. The company's backlog of business at the end of fiscal year 2009 was $3.8 billion, of which $1.1 billion was funded. As compared to the end of fiscal year 2008, total backlog decreased 5 percent and funded backlog decreased 8 percent, driven primarily by strong demand in advance of the recompete of the in-theater logistics support business. As of December 31, 2009, STI had funded and total backlog of $0.3 billion and $1.0 billion, respectively. On a pro-forma basis, the combined companies had $1.4 billion funded and $4.8 billion total backlog to support growth in 2010 and beyond. "We are starting to see the fruits of our strategy to build on our great foundation of cash generation and redirect resources to top-line growth initiatives," said Lawrence B. Prior, III, ManTech President and Chief Operating Officer. "We have added more than 800 employees since the last earnings call, and we are demonstrating on a daily basis that we can take away market share. The recent Quadrennial Defense Review and FY11 Presidential Budget submission make it clear that we are absolutely in the growth markets in the federal government." Forward Guidance ManTech enters fiscal year 2010 with a healthy backlog and a strong market position, and the company expects to achieve revenue, net income, and diluted earnings per share within the ranges specified in the table below. The guidance includes the acquisition of STI, but it assumes no future acquisitions or divestitures. Measure Fiscal 2010 Guidance Revenue (million) $2,630 - $2,850 Net Income (million) $128 - $138 Diluted Earnings Per Share $3.50 - $3.75 Kevin M. Phillips, ManTech Chief Financial Officer commented, "We feel confident forecasting robust growth for fiscal year 2010. Because of the increased levels and variability of material purchases in our revenue as we provide direct support to our customers in theater, we have moved to a policy of providing annual guidance with quarterly updates as appropriate. Still, we are totally committed to providing potential investors with sufficient information to make informed decisions based on our business prospects." Conference Call ManTech executive management will hold a conference call today at 5 p.m. Eastern to discuss the financial results and outlook and answer questions. Analysts and institutional investors may participate on the conference call by dialing (888) 791-4324 (domestic) or (913) 981-4904 (international) and entering passcode 8846208. The conference call will be webcast simultaneously to the public through a link on the Investor Relations section of the ManTech web site (http://www.mantech.com). A replay of the conference call will be available by telephone approximately one hour after conclusion of the call through March 10, 2010 by dialing (888) 203-1112 (domestic) or (719) 457-0820 (international) and entering passcode 8846208. In addition, a replay of the webcast will be available on the ManTech web site approximately two hours after the conclusion of the conference call. About ManTech Headquartered in Fairfax, Virginia with approximately 8,800 professionals, 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 and Justice; the Space Community; the National Oceanic and Atmospheric Administration; and other U.S. federal government customers. ManTech's expertise includes systems engineering, systems integration, enterprise architecture, cyber security, information assurance, intelligence operations and analysis support, network and critical infrastructure protection, information operations and information warfare support, information technology, communications integration, global logistics and supply chain management, and service oriented architectures. Additional information on ManTech can be found at http://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," "intends," "should," "expects," "plans," "projects," "anticipates," "believes," "estimates," "predicts," "potential," "continue," or "opportunity," or the negative of these terms or words of similar import are intended to identify forward-looking statements. These forward-looking statements are subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from those anticipated, including, without limitation: adverse changes in U.S. government spending priorities; failure to retain existing U.S. government contracts, win new contracts, or win recompetes; adverse results of U.S. government audits of our government contracts; risks associated with complex U.S. government procurement laws and regulations; adverse effect of contract consolidations; risk of contract performance or termination; failure to obtain option awards, task orders or funding under contracts; adverse changes in our mix of contract types; 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 identify, execute or effectively integrate future acquisitions; risks of financing, such as increases in interest rates and restrictions imposed by our credit agreement; risks related to an inability to obtain new or additional financing; and competition. These and other risk factors are more fully discussed in the section entitled "Risks Factors" in ManTech's Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 27, 2009, and, from time to time, in ManTech's other filings with the Securities and Exchange Commission, including among others, its reports on Form 10-Q. The forward-looking statements included in this news release 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 CONSOLIDATED BALANCE SHEETS (Dollars in Thousands, Except Per Share Amounts) December 31, 2009 2008 (unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 86,190 $ 4,375 Receivables--net 399,239 407,248 Prepaid expenses and other 11,182 14,200 Total Current Assets 496,611 425,823 Property and equipment--net 14,498 16,563 Goodwill 488,217 479,516 Other intangibles--net 73,684 78,710 Employee supplemental savings plan assets 21,065 14,771 Other assets 6,672 6,329 TOTAL ASSETS $ 1,100,747 $ 1,021,712 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of debt $ - $ 44,100 Accounts payable and accrued expenses 157,358 157,407 Accrued salaries and related expenses 55,429 75,121 Billings in excess of revenue earned 7,737 8,451 Total Current Liabilities 220,524 285,079 Accrued retirement 22,033 15,930 Other long-term liabilities 6,877 7,769 Deferred income taxes--non-current 33,848 32,398 TOTAL LIABILITIES 283,282 341,176 COMMITMENTS AND CONTINGENCIES - - STOCKHOLDERS' EQUITY: Common stock, Class A--$0.01 par value; 150,000,000 shares authorized; 22,602,110 and 21,765,004 shares issued at December 31, 2009 and 2008; 22,359,070 and 21,521,964 shares outstanding at December 31, 2009 and 2008 226 218 Common stock, Class B--$0.01 par value; 50,000,000 shares authorized; 13,605,345 and 13,958,345 shares issued and outstanding at December 31, 2009 and 2008 136 140 Additional paid-in capital 362,730 336,454 Treasury stock, 243,040 shares at cost at December 31, 2009 and 2008 (9,114 ) (9,114 ) Retained earnings 464,742 352,978 Accumulated other comprehensive loss (172 ) (140 ) Unearned Employee Stock Ownership Plan Shares (1,083 ) - TOTAL STOCKHOLDERS' EQUITY 817,465 680,536 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,100,747 $ 1,021,712 MANTECH INTERNATIONAL CORPORATION CONSOLIDATED STATEMENTS OF INCOME (In Thousands Except Per Share Amounts) Three months ended December 31, Twelve months ended December 31, 2009 (unaudited) 2008 (unaudited) 2009 (unaudited) 2008 REVENUES $ 542,066 $ 494,709 $ 2,020,334 $ 1,870,879 Cost of services 450,651 410,143 1,668,763 1,565,198 General and administrative expenses 44,004 43,196 172,492 152,323 OPERATING INCOME 47,411 41,370 179,079 153,358 Interest expense (220 ) (405 ) (1,141 ) (3,978 ) Interest income 54 101 215 812 Other income (expense), net 96 122 355 (233 ) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 47,341 41,188 178,508 149,959 Provision for income taxes (17,825 ) (16,589 ) (66,744 ) (59,667 ) NET INCOME $ 29,516 $ 24,599 $ 111,764 $ 90,292 BASIC EARNINGS PER SHARE: Class A basic earnings per share $ 0.82 $ 0.69 $ 3.13 $ 2.58 Weighted average common shares outstanding 22,318 21,470 21,980 20,982 Class B basic earnings per share $ 0.82 $ 0.69 $ 3.13 $ 2.58 Weighted average common shares outstanding 13,605 13,958 13,707 14,046 DILUTED EARNINGS PER SHARE: Class A diluted earnings per share $ 0.82 $ 0.69 $ 3.11 $ 2.55 Weighted average common shares outstanding 22,596 21,821 22,278 21,413 Class B diluted earnings per share $ 0.82 $ 0.69 $ 3.11 $ 2.55 Weighted average common shares outstanding 13,605 13,958 13,707 14,046 MANTECH INTERNATIONAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) Year Ended December 31, 2009 2008 (unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 111,764 $ 90,292 Adjustments to reconcile net income to net cash provided by operating activities: Stock-based compensation 8,289 6,626 Excess tax benefits from the exercise of stock options (1,121 ) (6,446 ) Deferred income taxes (201 ) 8,157 Depreciation and amortization 17,747 17,323 Change in assets and liabilities--net of effects from acquired and disposed businesses: Receivables-net 9,296 (62,513 ) Prepaid expenses and other 4,640 (223 ) Accounts payable and accrued expenses 997 59,888 Accrued salaries and related expenses (20,050 ) 11,768 Billings in excess of revenue earned (714 ) 85 Accrued retirement 6,103 (3,043 ) Other (4,503 ) 5,352 Net cash flow from operating activities 132,247 127,266 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (4,021 ) (5,050 ) Investment in capitalized software for internal use (2,218 ) (2,742 ) Proceeds from note receivable - 5,126 Acquisition of businesses, net of cash acquired (13,775 ) (36,496 ) Net cash flow from investing activities (20,014 ) (39,162 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from exercise of stock options 12,561 22,677 Excess tax benefits from the exercise of stock options 1,121 6,446 Net (decrease) increase in borrowing under lines of credit, net of associated origination fees (44,100 ) (120,900 ) Net cash flow from financing activities (30,418 ) (91,777 ) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 81,815 (3,673 ) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 4,375 8,048 CASH AND CASH EQUIVALENTS, END OF PERIOD $ 86,190 $ 4,375 SOURCE: ManTech International Corporation ManTech International Corporation Stuart Davis Corporate EVP, Strategy and Communications (703) 218-8269 stuart.davis@mantech.com