Anteon (NYSE:ANT)
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Anteon International Corporation (NYSE:ANT), a leading
information technology, systems integration and engineering services
company, announced today its operating results for the third quarter
ended September 30, 2005.
Financial Results
Anteon's revenues for the third quarter of 2005 increased 17.3% to
$382.1 million from $325.6 million for the comparable period in 2004.
The organic revenue growth rate for the quarter was 15.8%. Operating
income for the third quarter increased 27.8% to $35.4 million from
$27.7 million for the comparable period in 2004. Net income for the
third quarter increased 24.4% to $21.0 million versus $16.8 million in
the comparable period in 2004. Earnings per share on a fully diluted
basis was $0.55 versus $0.45 in the comparable quarter in 2004, an
increase of 22.2%. Free cash flow for the third quarter was $13.1
million, and days sales outstanding at September 30, 2005 was 75 days.
Anteon's revenues for the nine months ended September 30, 2005
increased 19.9% to $1.1 billion from $917.9 million reported in the
comparable period in 2004. The organic revenue growth rate for the
nine months ended September 30, 2005 was 16.6%. Operating income for
the nine months ended September 30, 2005 increased 32.2% to $100.6
million versus $76.1 million for the comparable period in 2004. Net
income for the nine months ended September 30, 2005 increased 31.5% to
$59.0 million from $44.8 million for the comparable period in 2004.
Earnings per share on a fully diluted basis was $1.56 versus $1.21 in
the first nine months of 2004, an increase of 28.9%.
A reconciliation between certain non-GAAP financial measures
discussed above and reported financial results is provided as an
attachment to this press release.
New Business
New orders during the quarter totaled $451 million, including:
-- A $29.8 million contract from the Department of Interior
Minerals Management Service to provide systems integration and
application development support to their offshore operations
in Alaska, the Gulf of Mexico, and the Pacific;
-- A $26.5 million contract from the U.S. Navy Space and Naval
Warfare Systems Center to provide C4ISR systems development,
systems engineering and software development support for their
Joint and National Systems Division;
-- A $25.7 million contract from the U.S. Naval Sea Systems
Command for ship repair and modernization of Mine
Countermeasures Class Ships;
-- An $18.7 million contract from the U.S. Air Force to provide
services and software integration for weapon system life cycle
management; and
-- A $9.8 million contract from the U.S. Air Force to provide
analytical modeling, simulation and training support to Joint
Military Planning and Training Events.
Company Guidance
The Company provides guidance for the fourth quarter 2005 and
updates its full year 2005 guidance as summarized in the table below.
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2005 FINANCIAL GUIDANCE
Dollars and shares in millions, except per share amounts
--------------------------------------------------------
Q4 2005 Full Year 2005
------- --------------
Revenues $385-$400 $1,486-$1,501
Weighted Avg. Shares
Outstanding 37.9 37.8
Tax Rate 37.8% 37.9%
Fully Diluted Earnings
Per Share Meet or exceed $0.54 Meet or exceed $2.10
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CEO Comments
Joseph M. Kampf, President and Chief Executive Officer of Anteon,
said, "Anteon had a very strong third quarter. In almost every case,
our three- and nine-month financial metrics set new record highs. As a
result of this strong trend line, and our confidence in Q4
performance, we are again raising our guidance for 2005. Anteon's full
year 2005 revenue guidance is now between $1.486 - $1.501 billion and
full year fully diluted earnings per share is now expected to meet or
exceed $2.10. I am also pleased with the strength of our qualified
pipeline and continued opportunity for new business growth."
Conference Call
Anteon has scheduled a conference call for 10:00 a.m. Eastern
Daylight Time TODAY, October 26, 2005, during which senior management
will discuss third quarter results and respond to questions. The
conference call will be Webcast listen only via Anteon's website at
www.anteon.com.
A telephone replay of the call also will be available beginning at
1:00 p.m. Eastern Daylight Time on October 26, 2005, until midnight
November 2, 2005. To access the replay, call 877-519-4471 U.S. or
973-341-3080 international. The confirmation code for access to the
replay is 6568554. A replay will also be available on Anteon's website
shortly after the conclusion of the call.
About Anteon
Anteon, headquartered in Fairfax, Virginia, is a leading
information technology company serving the U.S. Federal government and
international customers. Anteon designs, integrates, maintains, and
upgrades state-of-the-art systems for national defense, intelligence,
homeland security, and other high priority government missions. Anteon
provides numerous government clients with the systems integration,
strategy and program management, systems engineering, operations
services, and simulation and training skills necessary to manage the
development and operations of their mission critical systems. The
Company was founded in 1976 and currently employs over 9,500 employees
in more than 100 offices worldwide. Anteon consistently ranks among
the top information technology integrators based on independent
surveys, and has been named to the Forbes List of the 400 Best Big
Companies in 2005, earning distinction on the Forbes Platinum List.
Anteon is included in the Standard & Poor's MidCap 400 Index. For more
information, visit www.anteon.com.
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995:
The statements contained in this release which are not historical
facts are forward-looking statements that are subject to risks and
uncertainties that could cause actual results to differ materially
from those set forth in, or implied by, forward-looking statements.
The Company has tried, whenever possible, to identify these
forward-looking statements using words such as "projects,"
"anticipates," "believes," "estimates," "expects," "plans," "intends,"
and similar expressions. Similarly, statements herein that describe
the Company's business strategy, outlook, objectives, plans,
intentions or goals are also forward-looking statements. The risks and
uncertainties involving forward-looking statements include the
Company's dependence on continued funding of U.S. government programs,
government contract procurement and termination risks, including risks
associated with protests, and other risks described in the Company's
Securities and Exchange Commission filings. These statements reflect
the Company's current beliefs and are based upon information currently
available to it. Be advised that developments subsequent to this
release are likely to cause these statements to become outdated with
the passage of time. The Company does not currently intend, however,
to update the guidance provided today prior to its next earnings
release.
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ANTEON INTERNATIONAL CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months ended September 30, 2005 and 2004
($ in thousands, except EPS)
Three Three
Months Months
Ended Ended
September September Percentage
2005 2004 Change
--------- ---------
Revenues $382,050 $325,581 17.3%
Costs of revenues 327,381 280,898
General and administrative expenses 18,615 16,473
Amortization of intangible assets 685 542
--------- ---------
Operating income 35,369 27,668 27.8%
Operating margin 9.3% 8.5%
Other income 102 939
Interest expense 2,214 1,831
Minority interest (5) 9
--------- ---------
Pretax income 33,252 26,785 24.1%
Income tax 12,290 9,936
--------- ---------
Net income $ 20,962 $ 16,849 24.4%
========= =========
After tax margin 5.5% 5.2%
Cash flow from operations 14,852 17,784 (16.5%)
Tax rate 37.0% 37.1%
Basic shares 37,107 35,817
Diluted shares 37,857 37,253
EPS, basic $ 0.56 $ 0.47 19.1%
EPS, diluted $ 0.55 $ 0.45 22.2%
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
for the nine months ended September 30, 2005 and 2004
($ in thousands, except EPS)
Nine
Nine Months Months
Ended Ended
September September Percentage
2005 2004 Change
----------- --------- ----------
Revenues $1,100,627 $917,892 19.9%
Costs of revenues 940,588 791,152
General and administrative expenses 57,355 48,720
Amortization of intangible assets 2,057 1,901
----------- ---------
Operating Income 100,627 76,119 32.2%
Operating margin 9.1% 8.3%
Other income 1,009 943
Interest expense 6,534 5,575
Minority interest (58) (26)
----------- ---------
Pretax income 95,044 71,461 33.0%
Income tax 36,084 26,613
----------- ---------
Net income $ 58,960 $ 44,848 31.5%
=========== =========
After tax margin 5.4% 4.9%
Cash flow from operations 86,429 48,246 79.1%
Tax rate 38.0% 37.2%
Basic shares 36,682 35,630
Diluted shares 37,884 37,201
EPS, basic $ 1.61 $ 1.26 27.8%
EPS, diluted $ 1.56 $ 1.21 28.9%
ANTEON INTERNATIONAL CORPORATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
($ in thousands)
As of
September As of
30, 2005 December
(unaudited) 31, 2004 $Change
----------- --------- --------
ASSETS
Cash and cash equivalents $ 32,612 $ 4,103 $28,509
Short term investments 42,525 -- 42,525
Accounts receivable, net 317,881 317,296 585
Other current assets 15,462 17,205 (1,743)
Property and equipment, net 14,495 12,920 1,575
Goodwill 241,965 242,066 (101)
Intangible and other assets, net 17,631 19,836 (2,205)
----------- --------- --------
Total assets $ 682,571 $613,426 $69,145
=========== ========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable/accrued expenses and
other current liabilities $ 168,261 $154,031 $14,230
Indebtedness 163,350 184,388 (21,038)
Deferred revenue 14,984 13,764 1,220
Other long-term liabilities 14,040 13,685 355
----------- --------- --------
Total liabilities 360,635 365,868 (5,233)
Minority interest in subsidiaries 340 282 58
Stockholders' equity 321,596 247,276 74,320
----------- --------- --------
Total liabilities and stockholders'
equity $ 682,571 $613,426 $69,145
=========== ========= ========
ANTEON INTERNATIONAL CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
($ in thousands)
For the nine
months ended
September 30,
2005 2004
-------- --------
OPERATING ACTIVITIES:
Net income $58,960 $44,848
Adjustments to reconcile net income to net cash
provided by operating activities:
Gain on settlement of subordinated notes payable -- (1,327)
Gain on reversal of an acquisition reserve (900) --
Depreciation and amortization on property and
equipment, intangibles and financing fees 5,662 5,368
Restricted stock compensation 28 --
Deferred income taxes 1,475 343
Minority interest in earnings of subsidiaries 58 26
Changes in assets and liabilities 21,146 (1,012)
-------- --------
Net Cash Provided By Operating Activities 86,429 48,246
-------- --------
INVESTING ACTIVITIES:
Purchases of property, equipment and other
assets (4,674) (2,846)
Purchases of short term investments (71,025) --
Proceeds from short term investments 28,500 --
Costs of acquisitions, net of cash acquired -- (43,295)
Other 101 --
-------- --------
Net Cash Used For Investing Activities (47,098) (46,141)
-------- --------
FINANCING ACTIVITIES
Principal payment on subordinated notes payable -- (1,350)
Principal payments on Term Loan B (1,238) (1,125)
Proceeds from Term Loan B -- 16,125
Deferred financing fees -- (294)
Net proceeds (payments)on revolving credit
facility (19,800) (4,400)
Redemption of senior subordinated notes payable -- (1,876)
Principal payment under capital lease
obligations (166) (240)
Proceeds from issuance of common stock, net of
expense 10,382 3,614
-------- --------
Net Cash Provided/ (Used For) Financing Activities (10,822) 10,454
-------- --------
CASH AND CASH EQUIVALENTS:
Net Increase in cash and cash equivalents 28,509 12,559
Cash and cash equivalents, beginning of period 4,103 2,088
-------- --------
Cash and cash equivalents, end of period $32,612 $14,647
-------- --------
RECONCILIATION BETWEEN TOTAL REVENUE GROWTH AND ORGANIC REVENUE GROWTH
($ in thousands)
Q1 Q2 Q3 Q3 YTD
--------- --------- --------- -----------
2004 Revenue $288,150 $304,161 $325,581 $ 917,892
2005 Revenue 349,982 368,595 382,050 1,100,627
--------- --------- --------- -----------
Total Revenue Growth over
2004 21.5% 21.2% 17.3% 19.9%
Less: 2004 IMSI and STI
Revenues -- -- (7,791) (7,791)
--------- --------- --------- -----------
Adjusted 2004 Revenues (a) 288,150 304,161 317,790 910,101
--------- --------- --------- -----------
2005 Revenue 349,982 368,595 382,050 1,100,627
Less: 2005 IMSI and STI
Revenues (12,430) (13,273) (14,135) (39,838)
--------- --------- --------- -----------
Adjusted Total 2004
Revenue (b) $337,552 $355,322 $367,915 $1,060,789
========= ========= ========= ===========
Organic Revenue Growth over
2004 (b-a)/a 17.1% 16.8% 15.8% 16.6%
(1) The Company defines organic growth as the increase in revenues
excluding the revenues associated with acquisition, divestitures
and closures of businesses in comparable periods. The Company
believes that organic growth is a useful supplemental measure to
revenue. The Company uses organic growth as part of its evaluation
of core operating results and underlying trends.
RECONCILIATION OF CASH FLOW FROM OPERATIONS TO FREE CASH FLOW
(in thousands)
Free Cash Flow Q1 2005 Q2 2005 Q3 2005 Q3 YTD
---------------------------------- -------- -------- -------- --------
Cash flow from operations $51,713 $19,864 $14,852 $86,429
Less: capital expenditures (1,538) (1,431) (1,705) (4,674)
-------- -------- -------- --------
Free cash flow (2) $50,175 $18,433 $13,147 $81,755
======== ======== ======== --------
(2) The Company believes that free cash flow is a useful supplemental
measure of cash available to the Company after the payments for
the capital expenditures.
NET DEBT RECONCILIATION
($ in thousands)
Net Debt Q3 2005 Q2 2005 Q1 2005
----------------------------------------- -------- --------- ---------
Revolving credit facility $ -- $ -- $ --
Term Loan B 163,350 163,763 164,175
-------- --------- ---------
Total: 163,350 163,763 164,175
Less: cash (32,612) (30,125) (35,145)
Short term investments (42,525) (30,000) --
-------- --------- ---------
Net debt $88,213 $103,638 $129,030
======== ========= =========
(3) The Company believes that net debt is a useful measure of actual
indebtedness of the Company.
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