RESTON, Va.--(BUSINESS WIRE)--NCI, Inc. (NASDAQ: NCIT), a leading provider of information technology (IT) and professional services and solutions to U.S. Federal Government agencies, today announced its financial and operating results for the second quarter ended June 30, 2016.
Second-quarter 2016 revenue was within management’s guidance range issued last quarter. Diluted earnings per share (EPS) was at the midpoint of guidance.
Second-Quarter 2016 Results
For the three months ended June 30, 2016, revenue decreased by 4.5%, or $3.9 million, from the same period a year ago. This decrease was principally due to completed contracts and reductions in staffing and scope of work on certain contracts. The decrease was partially offset by higher revenues derived under the expanded PEO Soldier program, the Cyber Network Operations and Security Support (CNOSS) program, and new contract awards in the past year.
NCI’s PEO Soldier program accounted for $13.6 million, or 16.6% of revenue, in the second quarter of 2016, up $5.4 million from $8.2 million, or 9.6% of revenue, in the second quarter of 2015. NCI’s CNOSS program accounted for $9.3 million, or 11.4% of revenue, in the second quarter of 2016, up $3.6 million from $5.7 million, or 6.6% of revenue, in the second quarter of 2015.
Earnings before interest, taxes, depreciation and amortization (EBITDA)1 for the second quarter was $7.2 million, or 8.8% of revenue, compared with $7.2 million, or 8.4% of revenue, for the same period in 2015. EBITDA margin for the second quarter of 2016 improved primarily as a result of higher direct labor contribution and more efficient absorption of indirect costs.
Operating income for the second quarter of 2016 was $5.5 million compared with $5.3 million for the second quarter of 2015. Operating margin for the second quarter of 2016 was 6.7% compared with 6.2% for the second quarter of 2015. Operating income and margin increased as a result of the factors affecting EBITDA and EBITDA margin, respectively, and lower depreciation and amortization and acquisition-related expenses compared with the same period last year.
Net income for the second quarter of 2016 was $3.2 million compared with $3.0 million for the second quarter of 2015. Net income increased due to the factors affecting operating income and lower interest expense in the quarter. Diluted EPS for the second quarter of 2016 was $0.23 compared with $0.22 for the second quarter of 2015.
Days sales outstanding (DSO) were 60 days at June 30, 2016, compared with 75 days at March 31, 2016. The decrease in DSO was mostly attributable to the resolution of certain invoice issues that affected first-quarter results.
Cash flow provided by operating activities for the three and six months ended June 30, 2016, was $13.7 million and $5.5 million. Capital expenditures were $0.5 million and $0.8 million for the three and six months ended June 30, 2016, resulting in free cash flow of $13.2 million and $4.7 million, respectively.
NCI reported total backlog at June 30, 2016, of $507 million, of which $120 million was funded, compared with total backlog at March 31, 2016, of $501 million, of which $147 million was funded. Net bookings for the second quarter were $88 million, equating to 1.1 times revenue. Trailing 12-month bookings were $509 million, equating to 1.5 times revenue.
Management’s Outlook
Based on the company’s current contract backlog and management’s estimate of future tasking and contract awards, NCI is issuing guidance for its third quarter and updating guidance for full fiscal year 2016. The table below represents management’s current expectations about future financial performance based on information available at this time:
“NCI posted solid bookings and increased profitability in the second quarter of 2016. Our PEO Soldier and CNOSS contracts both continued to grow and contribute to bottom-line results. In addition, NCI’s previously announced win of a position on the $2.5 billion IDIQ for the Centers for Medicare and Medicaid Services (CMS) and the first task order award under this vehicle are positive developments for our health and program integrity business,” said NCI’s president and CEO, Brian J. Clark. “We continue, however, to be challenged with the timing of procurements and the anticipated revenue and earnings contribution of new business awards as well as lower-than-expected materials revenue.
“We still expect to submit approximately $1.5 billion of bids in 2016,” added Clark. “A number of prospective awards in the second half could add to 2016 bookings while contributing more meaningfully to revenue in 2017. We also are actively pursuing potential strategic transactions that include both smaller, opportunistic acquisitions and transformative deals that would give NCI a significant near-term increase in scale.”
About NCI, Inc.:
NCI is a leading provider of enterprise solutions and services to U.S. defense, intelligence, health and civilian government agencies. The company has the expertise and proven track record to solve its customers’ most important and complex mission challenges through technology and innovation. NCI’s team of highly skilled professionals focuses on delivering cost-effective solutions and services in the areas of agile development and integration; cybersecurity and information assurance; engineering and logistics; big data and data analytics; IT infrastructure optimization and service management; and health and program integrity. Headquartered in Reston, Virginia, NCI has approximately 2,000 employees operating at more than 100 locations worldwide. NCI: Trust. Integrity. Performance. For more information, visit www.nciinc.com or emailinvestor@nciinc.com. Like us on Facebook and follow us on Twitter (@nciinc_) and LinkedIn.
