Integral Systems Announces Financial Results for the Second Quarter of Fiscal Year 2009
Integral Systems Announces Financial Results for the Second Quarter of Fiscal Year 2009
Revenue and Gross Margin Remain Strong - Overhead Costs Driven by Infrastructure Investment
LANHAM, Md., May 4 /PRNewswire-FirstCall/ -- Integral Systems, Inc. (NASDAQ:ISYS) ("Company") today reported financial results for the second quarter of fiscal 2009.
Revenue for the quarter was $42.8 million, up 13.4% over 2008. Gross margin for the quarter was 38.2% compared to 28.8% for the same period last year. Second quarter 2009 income from operations was $4.2 million compared to $4.4 million recorded in the second quarter of the last fiscal year. The decline in operating income reflects higher selling, general, and administrative (SG&A) costs. Diluted earnings per share for the second quarter of 2009 was $0.15 compared to $0.16 per share for the second quarter of fiscal 2008.
Year-to-date revenue was $81.2 million, up 13.4% over 2008. Gross margin for the first two quarters of 2009 was 36.6% compared to 32.7% for the same period last year. Year-to-date operating income declined $4.2 million over 2008 due to higher SG&A expenses. Year-to-date 2009 earnings per share was $0.21 compared to $0.43 per share in 2008.
The higher SG&A costs that the Company has experienced this year are the result of conscious efforts to solidify the Company's infrastructure, build a robust business development function, and ensure compliance in all material respects in the Company's financial, information systems, security, and quality control operations.
QUARTER HIGHLIGHTS -- Awarded contract with B-SAT to provide turnkey satellite control system -- Awarded contract with Mitsubishi Electronic Corporation to provide integrated environment for satellite operations and mission analysis -- Awarded NOAA contract modification to complete the modernization of the Polar Acquisition and Control Subsystem (PACS) command, control, and communications ground system -- Awarded CCS-C two-year contract extension -- Acquired satID intellectual property and assets -- Achieved CMMI Maturity Level 3 certification for Government Systems Group -- Completed contractor purchasing systems review (CPSR) resulting in approved purchasing system for government contracting -- Established Integral Systems Europe - United Kingdom, bringing earth station and antenna integration capability to the Integral Systems family
"We are encouraged by our revenue and gross profit growth given the current economic climate," said John Higginbotham, Chief Executive Officer of Integral Systems. "The increased SG&A costs relate to nearly completed compliance initiatives and investments made to expand business development activities. We are diligently managing the Company's cost structure to minimize discretionary expenditures and drive efficiency across the organization."
Higginbotham concluded, "We continue to see significant new opportunities in our core markets and are making excellent progress in growing them both here and abroad. Looking ahead, the new business opportunity pipeline is robust and lays the foundation for solid bookings for the rest of this fiscal year and into fiscal year 2010."
Mr. Higginbotham, Chief Executive Officer, and Mr. William Bambarger, the Company's Chief Financial Officer, will host the Company's second quarter earnings results conference call today, May 4, 2009, at 11:00 AM EDT. Interested parties are invited to join the call by calling 800-920-9723, ID number 21421850. A replay of the conference call can be heard from 1:00 PM ET Monday, May 4, 2009 through 1:00 PM ET Wednesday, May 6, 2009 by dialing 800-633-8284 or 402-977-9140. Ask for reservation number 21421850.
About Integral Systems
Integral Systems, Inc., applies more than 25 years experience to provide integrated technology solutions for SATCOM-interfaced networks. Customers have relied on the Integral Systems family of companies (Integral Systems Europe, Lumistar, Inc., Newpoint Technologies, Inc., RT Logic, and SAT Corporation) to deliver on time and on budget for more than 250 satellite missions. Our dedication to customer service has solidified long-term relationships with the U.S. Air Force, NASA, NOAA, and nearly every satellite operator in the world. Integral Systems is listed in Forbes' Top 200 Small Companies in America for 2008. For more information visit www.integ.com.
Except for statements of historical facts, this news release contains forward-looking statements about the Company, including but not necessarily limited to the Company's financial projections, all of which are based on the Company's current expectations. There can be no assurance that the Company's projections will in fact be achieved and these projections do not reflect any acquisitions or divestitures that may occur in the future. The forward-looking statements contained in this news release are subject to additional risks and uncertainties, including the Company's reliance on contracts and subcontracts funded by the U.S. government, intense competition in the ground systems industry, the competitive bidding process to which the Company's government and commercial contracts are subject, the Company's dependence on the satellite industry for most of its revenues, rapid technological changes in the satellite industry, the Company's acquisition strategy and those other risks noted in the Company's SEC filings. The Company assumes no obligation to update or revise any forward-looking statements appearing in this news release.
INTEGRAL SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS March 27, 2009 and September 30, 2008 (in thousands of dollars, except share amounts) March 27, September 30, 2009 2008 --------- ---------- (unaudited) Assets Current assets: Cash and cash equivalents $2,233 $15,026 Accounts receivable, net of allowance for doubtful accounts 13,490 16,688 Unbilled revenues 28,046 18,656 Prepaid expenses and other current assets 3,314 2,542 Income tax receivable 6,369 4,782 Deferred contract costs 5,940 6,558 Inventory 9,718 7,237 ----- ----- Total current assets 69,110 71,489 Property and equipment, net 19,816 17,634 Goodwill 54,075 51,414 Intangible assets, net 7,182 - Other assets 10,883 6,666 -------- -------- Total assets $161,066 $147,203 ======== ======== Liabilities and Stockholders' Equity Current liabilities: Accounts payable $6,039 $7,163 Accrued expenses 15,342 16,650 Short term debt 12,602 - Deferred revenue 11,075 12,403 ------ ------ Total current liabilities 45,058 36,216 Other non-current liabilities 402 946 --- --- Total liabilities 45,460 37,162 Stockholders' equity: Common stock, $.01 par value, 80,000,000 shares authorized, and 17,269,109 and 17,246,034 shares issued and outstanding at March 27, 2009 and September 30, 2008, respectively 173 173 Additional paid-in capital 64,512 62,608 Retained earnings 50,919 47,249 Accumulated other comprehensive income 2 11 - -- Total stockholders' equity 115,606 110,041 -------- -------- Total liabilities and stockholders' equity $161,066 $147,203 ======== ======== INTEGRAL SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands of dollars, except per share amounts) Three Months Ended Six Months Ended ---------------------- ---------------------- March 27, March 31, March 27, March 31, 2009 2008 2009 2008 ---------- ---------- ---------- ---------- (Unaudited) (Unaudited) Revenue $42,768 $37,704 $81,238 $71,664 Cost of revenue 26,444 26,828 51,493 48,240 ------ ------ ------ ------ Gross profit 16,324 10,876 29,745 23,424 ------ ------ ------ ------ Operating expense: Selling, general & administrative 11,307 5,882 22,833 12,402 Research & development 773 618 1,368 1,328 --- --- ----- ----- Total operating expense 12,080 6,500 24,201 13,730 ------ ----- ------ ------ Income from operations 4,244 4,376 5,544 9,694 Other income, net (72) 265 (65) 200 --- --- --- --- Income before income taxes 4,172 4,641 5,479 9,894 ----- ----- ----- ----- Provision for income taxes 1,527 1,601 1,809 1,802 ----- ----- ----- ----- Net income $2,645 $3,040 $3,670 $8,092 ====== ====== ====== ====== Comprehensive income: Cumulative currency translation adjustment (33) 88 (9) 36 --- -- -- -- Total comprehensive income $2,612 $3,128 $3,661 $8,128 ====== ====== ====== ====== Weighted average number of common shares - Basic 17,298 18,334 17,289 18,548 ====== ====== ====== ====== Earnings per share - Basic $0.15 $0.17 $0.21 $0.44 ===== ===== ===== ===== Weighted average number of common shares - Diluted 17,333 18,496 17,394 18,680 ====== ====== ====== ====== Earnings per share - Diluted $0.15 $0.16 $0.21 $0.43 ===== ===== ===== ===== INTEGRAL SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands of dollars, except per share amounts) Three Months Ended Six Months Ended ------------------ ---------------- March 27, March 31, March 27, March 31, 2009 2008 2009 2008 --------- --------- --------- --------- (unaudited) (unaudited) Revenue: Government Systems $24,039 $20,108 $42,061 $35,550 Commercial Systems 5,563 4,391 11,672 9,717 Space Communications Systems 15,464 15,052 31,516 29,388 Elimination of intersegment sales (2,298) (1,847) (4,011) (2,991) ------ ------ ------ ------ Total revenue 42,768 37,704 81,238 71,664 ------ ------ ------ ------ Cost of revenue: Government Systems 14,975 16,236 28,725 27,655 Commercial Systems 4,224 3,366 8,947 6,697 Space Communications Systems 9,543 9,073 17,832 16,879 Elimination of intersegment sales (2,298) (1,847) (4,011) (2,991) ------ ------ ------ ------ Total cost of revenue 26,444 26,828 51,493 48,240 ------ ------ ------ ------ Gross profit: Government Systems 9,064 3,872 13,336 7,895 Gross Margin 37.7% 19.3% 31.7% 22.2% Commercial Systems 1,339 1,025 2,725 3,020 Gross Margin 24.1% 23.3% 23.3% 31.1% Space Communications Systems 5,921 5,979 13,684 12,509 Gross Margin 38.3% 39.7% 43.4% 42.6% ---- ---- ---- ---- Total gross profit 16,324 10,876 29,745 23,424 ------ ------ ------ ------ Gross Margin 38.2% 28.8% 36.6% 32.7% Operating expense: Government Systems 5,108 2,487 10,538 5,917 Commercial Systems 1,256 1,127 2,378 2,266 Space Communications Systems 5,716 2,886 11,285 5,547 ----- ----- ------ ----- Total operating expense 12,080 6,500 24,201 13,730 ------ ----- ------ ------ Income from operations: Government Systems 3,956 1,385 2,798 1,978 Operating margin 16.5% 6.9% 6.7% 5.6% Commercial Systems 83 (102) 347 754 Operating margin 1.5% -2.3% 3.0% 7.8% Space Communications Systems 205 3,093 2,399 6,962 Operating margin 1.3% 20.5% 7.6% 23.7% --- ---- --- ---- Total income from operations $4,244 $4,376 $5,544 $9,694 ------ ------ ------ ------ Operating margin 9.9% 11.6% 6.8% 13.5% INTEGRAL SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands of dollars) Six Months Ended ---------------- March 27, 2009 March 31, 2008 -------------- -------------- (Unaudited) Cash flows from operating activities: Net income $3,670 $8,092 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Depreciation and amortization 1,637 1,042 Bad debt expense 6 (150) Stock-based compensation 1,649 369 Changes in operating assets and liabilities Accounts receivable 3,527 (4,799) Unbilled revenue (13,612) 7,133 Prepaid expenses and other current assets (686) 410 Deferred contract costs 618 (5,466) Inventories (1,850) (1,330) Income taxes receivable (2,142) (2,212) Accounts payable (1,115) (2,040) Accrued expenses (1,302) 318 Deferred revenue (1,509) 6,578 Other 238 - --- - Net cash (used in) provided by operating activities (10,871) 7,945 Cash flows from investing activities: Acquisitions of fixed assets (1,554) (2,133) Acquisition of satID (10,941) - Other investing activities - 557 - --- Net cash used in investing activities (12,495) (1,576) Cash flows from financing activities: Proceeds from issuance of common stock 76 2,566 Common stock repurchases - (23,501) Employee stock purchases 178 - Proceeds from line of credit borrowing 10,311 - Payments on capital lease obligations (11) - --- - Net cash provided by (used in) financing activities 10,554 (20,935) Net decrease in cash and cash equivalents (12,812) (14,566) Effect of exchange rate changes on cash 19 (20) Cash and cash equivalents - beginning of period 15,026 23,894 ------ ------ Cash and cash equivalents - end of period $2,233 $9,308 ====== ====== Supplemental disclosures of cash flow information: Income taxes paid $3,290 $4,012 Interest expense paid $8 $4
First Call Analyst:
FCMN Contact:
Source: Integral Systems, Inc.
CONTACT: Bill Bambarger, Chief Financial Officer, +1-301-731-4233, Ext.
1244; or Media: Kathryn Herr, Vice President, Marketing and Communications,
+1-301-731-4233, Ext. 1104, kherr@integ.com, both of Integral Systems, Inc.
Web Site: http://www.integ.com/
Profile: International Entertainment
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