ManTech International Corporation today announced financial results for the first quarter of fiscal year 2015, which ended March 31, 2015.
"ManTech began the year with improved margin performance driven by strong direct labor delivery in support of critical missions," said ManTech Chairman and Chief Executive Officer George J. Pedersen. "We expect revenues to increase through acquisitions and new business awards with greater certainty around funding in our markets. Contract activity across the industry is starting to increase, and more high-quality companies are becoming available for acquisition. We are excited by the acquisition of Welkin Associates, Ltd., formerly a wholly-owned subsidiary of CSC, which provides high-end engineering services to the Intelligence Community and DoD, and we are actively looking at other promising acquisition candidates to accelerate ManTech's growth."
Summary Operating Results
Revenues for the quarter were $370.3 million, down from $411.4 million in the fourth quarter of 2014, primarily due to reduced subcontractor and materials requirements related to ManTech's support in Afghanistan and other countries in the region. In-theater staffing today is about 300 people compared to about 2,400 in early 2013. Annualized direct labor was up compared to the fourth quarter of 2014 after adjusting for 2 fewer working days in the quarter. Support for Overseas Contingency Operations contributed roughly $23 million in revenues in the quarter, down about $8 million from the fourth quarter of 2014.
Operating income for the quarter was $20 million, essentially unchanged from the first quarter of 2014. Quarterly operating margin of 5.4% increased 100 basis points from the first quarter of 2014, as the result of direct labor mix, strong contract performance, and improved cost management. For the quarter net income was $12 million and diluted earnings per share were $0.31, up 22.0% and 19.2%, respectively, compared to the first quarter of 2014 as a result of margin expansion as well as reduced interest expense from redeeming Senior Notes in the second quarter of 2014.
Cash Management and Capital Deployment
Cash flow from operations for the quarter was $26 million or 2.2 times net income. Days sales outstanding (DSO) were 87 days. DSO temporarily increased while upgrading the company's financial management system.
During the quarter, the company paid $7.9 million, or $0.21 per share, to its common stockholders of record as of March 6, 2015. As of March 31, 2015, the company had $44 million in cash and cash equivalents and no outstanding borrowings on its $500 million revolving-credit facility, which provides the company with the financial capacity to pursue acquisitions, issue dividends, and maintain a strong balance sheet.
After the close of the quarter, the company acquired Welkin Associates. The acquisition will enable ManTech to pursue large engineering and support opportunities throughout the Intelligence Community and the Department of Defense. The acquisition brings highly skilled employees, virtually all directly supporting intelligence missions. Welkin will become part of ManTech's Mission, Cyber and Intelligence Solutions Group.
The Board of Directors has declared that the company will pay a cash dividend of $0.21 per share on June 19, 2015, to all common stockholders of record as of June 5, 2015, as part of its regular quarterly cash dividend program. Future declarations of dividends and their record and payment dates are subject to the final determination of ManTech's Board of Directors.
Contract Awards
Contract awards (bookings) totaled $149 million in the quarter, representing a book-to-bill ratio of 0.4. Approximately 44% of the awards were for new business, primarily in the areas of health, software support, and systems engineering. Proposal activity remains high, and during the quarter the company identified $2 billion in additional proposals that it expects to submit in 2015. The company's backlog of business at the end of quarter was $3.0 billion, of which $0.9 billion was funded.
