Contract wins, revenue rise highlight SRA’s second quarter results

Company reports $434.8 million in revenue, a 5.3 percent increase from previous Q2

SRA International Inc. today reported $434.8 million in revenue in the second quarter of its fiscal 2011 for a 5.3 percent increase from $412.8 million in the December 2009 quarter.

Organic revenue growth for the quarter, which ended Dec. 31, was 1.1 percent.

Operating income for the quarter was $31.7 million, for an operating margin of 7.3 percent.

Income from continuing operations was $19.8 million, for a net margin of 4.5 percent. Operating cash flow was $29.8 million.

During the quarter, SRA incurred a severance charge of $1.8 million in connection with a reduction in its indirect labor force, a company statement said.

The actions resulted in a reduction to the annual selling, general and administrative expenses of $10 million. The savings will phase in over the March quarter, and the full effect will be felt in the June quarter, the statement added.

SRA won $270 million in new business in the second quarter.

As of Dec. 31, the backlog of signed business orders was $4.84 billion, up 9 percent year-over-year, and the funded portion of backlog was $1 billion, up 20 percent year-over-year, the company said.

Contract awards in the quarter included a task order from the Special Operations Research, Development and Acquisition Center Program Executive Office-Fixed Wing under the Special Operations Command Global Battlestaff and Program Support vehicle. The task order is valued at $15.3 million with a period of performance of five years.

SRA also was included in several multiple-award, indefinite-delivery, indefinite quantity (IDIQ) contracts in the second quarter, which are not included in the company’s quarterly bookings figure, but are expected to drive growth over time. These include:

Platinum Solutions, which was recently acquired by SRA, won a prime position on the FBI Technology Supplies and Support Services, a multiple-award IDIQ contract with a total ceiling value of $30 billion over 8 years.

“Our pipeline of opportunities in the federal market is robust. We are taking proactive steps to ensure our continued competitiveness, and are committed to delivering organic growth,” SRA President and CEO Stan Sloane said in the announcement.

“Operating cash flow was strong in the quarter. We completed the acquisition of Platinum Solutions in November, and completed the quarter with approximately $60 million in cash and no debt,” added Executive Vice President and CFO Rick Nadeau.

Last month SRA confirmed it had retained the investment bank Houlihan Lokey to provide advice “after a series of inquiries regarding the company’s willingness to consider offers.”

SRA Chairman Ernst Volgenau, who owns more than a majority of voting shares and the power over any possible sale or merger, said in that announcement that the retention of advisers did not reflect a decision that the company is or will be for sale.

Volgenau’s statement followed a London newspaper report that Serco Group of Britain had pulled out of early-stage talks about acquiring the company for around $2 billion.

SRA International, of Fairfax, Va., ranks No. 30 on Washington Technology’s 2010 Top 100 list of the largest federal government contractors.

About the Author

David Hubler is the former print managing editor for GCN and senior editor for Washington Technology. He is freelance writer living in Annandale, Va.

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