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Management Comments:
CIBER posted positive cash flow for the 63rd consecutive quarter, continuing its 100% track record of generating quarterly positive cash flow as a public company. Additionally, CIBER's new $155 million credit facility gives the company ample liquidity to support growth with reasonable covenants that allow for operational flexibility.
CIBER's diversified global operations in 18 countries on 4 continents have served as a strategic bulwark in mitigating the global economic recession. With an average of 20 years of industry experience, the Company's seasoned management team continues to effectively provide the leadership required during this challenging economic environment. Well versed in difficult decision making, the company has weathered the economic storm by lowering SG&A costs until recovery signs are evident, while at the same time taking advantage of opportunities to add quality employees that become available during these periods.
"Our third quarter results continued to reflect the global economic malaise. However, beginning in September we have seen more customer activity, stable headcounts and new contracts, particularly in the U.S. Federal Government Division and our international operations," said Mac Slingerlend, CIBER's President and Chief Executive Officer. "Cash collections were strong in 3Q09 and our new 3-year bank facility is a solid underpinning to our financial resources. Although we were frustrated to settle a non-substantiated legal action in late September, we assured ourselves of no greater negative consequences. We are now focused on sequential quarterly improvements in overall business levels."
Sequential Quarterly Results: 3Q09 as Compared to 2Q09
-- Revenue of $256.4 million for 3Q09 compares to $260.6 million for 2Q09.
This 1.6% sequential decrease primarily reflects seasonal holidays and
vacations.
-- Operating income (net of $2.5 million of one-time charges; discussed
below) of $7.0 million for 3Q09 compares to $7.5 million for 2Q09.
Prior to the one-time charges, operating income actually increased by
approximately $2.0 million, or 27%, from the second quarter to the third
quarter.
-- 3Q09 GAAP EPS of $0.05 per share, net of $0.03 per share of non
recurring charges, compares to $0.07 per share for 2Q09. Before the
charges, the $0.01 per share sequential improvement reflects the cost
savings undertaken by the Company and improved results in the U.S. ERP
and European Divisions.
-- EBITDA for 3Q09 of $12.3 million, or $14.8 million prior to the non
recurring charges, compares to $13.0 million for 2Q09.
Non Recurring 3Q09 Charges
-- The Company was compelled to settle a lawsuit in the quarter that had
previously been considered not meaningful. The 2 1/2 year old suit from
a 5 year ago matter was expected to be dismissed against the Company.
The Company's request to be released from all charges only achieved a
partial dismissal. In mid-September, the trial commenced. Given the
sizable sums sought by the Plaintiffs and joint liability of the
multiple defendants, the Company concluded it was appropriate to avoid
any further inclusion in this matter. The Company paid $2-2.25 million
in total settlement and legal fees to be dismissed, admitting no fault.
-- In securing a new, improved three-year credit facility, the Company
accelerated unamortized fees and costs of the prior facility by
approximately $0.3 million.
On a combined basis these two non recurring charges adversely impacted Q309 by approximately $0.03 per share.
3Q09 Operational Highlights
Custom Solutions Division (Including Indian Operations)
-- Efforts to pursue larger wins by combining teams from branch offices and
Strategic Practices are now a more organized focus.
-- Most new IT spending has been business intelligence and maintenance
oriented, with new development generally on hold at corporate clients.
That said, a few clients have commented that they are just now
commencing new development.
-- Indian operations continue to build headcount and utilization.
IT Outsourcing Division
-- Vibrancy in our longer-term contracts IT Outsourcing Division continued
in the quarter, with the signing of a new $48.0 million, 6-year
contract, in addition to several smaller wins. The large contract
covers full IT operations and service desk solutions for a major
quasi-governmental financial institution. This Division also shared in
wins in Europe during the quarter and early in the fourth quarter.
U.S. ERP Division
-- The Oracle ERP Practice remains stable, with public sector clients more
active now than higher education work.
-- The U.S. SAP Practice had smaller wins in the quarter, but has a
sizeable, diversified pipeline and it is kicking-off joint lead
activities with specific verticals with its SAP partnership.
-- Our Lawson Practice remains positive in their healthcare and public
sector verticals pipeline.
Federal Government Division
-- After a slow contract start to the third quarter, this Division finished
the quarter with a flurry, which continued into October.
-- Renewals, recompetes and extensions support this revenue base while
incremental prime contractor wins are being sought.
European Division
-- The July-August summer holiday combination was a greater challenge in
2009, as utilization levels were already under greater pressure.
However, beginning September, utilization improved meaningfully.
-- Wins in Norway, Germany and the UK led the quarterly activity, with
European IT Outsourcing wins commencing in September and the current
quarter.
Eastern Asia & Pacific Operations
-- Australia/New Zealand operations remained profitable while material
projects continued to be pipeline-oriented.
-- China operations saw greater offshore support activity for European and
U.S. customers as it builds its domestic base.
Balance Sheet Highlights (September 30, 2009)
-- In August, the Company completed its refinancing of an intermediate term
credit support with a new three-year, $155 million facility led by Bank
of America, a new lender to our lender group. The syndicated bank group
included all of the former participants, except the agent, plus an
additional bank. The new facility extended the maturity and is more
flexible in its covenant structure.
-- Cash was $56.2 million and long-term debt was $92.9 million.
-- DSOs for services were 65 days, a one day sequential improvement.
Bookings Data
Bookings for the third quarter were $265 million, representing a 1.1:1 book-to-bill ratio.
Outlook
The Company currently believes that the fourth quarter will be sequentially better than the September quarter, and now anticipates 2009 fiscal revenue of $1.0351.040 billion and, net of the current quarter's $0.03/share nonrecurring charges, fiscal GAAP EPS of $0.25-0.26/share.
Conference Call and Webcast
A webcast to discuss the Company's financial results and outlook will be held at 11:00 a.m. EST on Tuesday, October 27, 2009 and may be heard live by visiting the Investor Relations portion of the Company website at www.ciber.com/cbr/. To participate in the call, dial 877-941-0843 within the United States, and 480629-9644 internationally, using the conference ID number 4170518. A replay of the conference call will be available for 30 days by dialing 800-406-7325 within the United States, and 303-590-3030 internationally, using the ID number 4170518. The replay will also be available on CIBER's website.
About CIBER, Inc.
CIBER, Inc. (NYSE: CBR | Quote | Chart | News | PowerRating) is a pure-play international IT outsourcing and software implementation and integration consultancy with superior value-priced services and reliable delivery for both private and government sector clients. CIBER's services are offered globally on a project- or strategic-staffing basis, in both custom and enterprise resource planning (ERP) package environments, and across all technology platforms, operating systems and infrastructures. Founded in 1974 and headquartered in Greenwood Village, Colo., CIBER now serves client businesses from over 40 U.S. offices, 25 European offices and seven offices in Asia/Pacific. Operating in 18 countries, with more than 8,500 employees and annual revenue of $1.1 billion, CIBER and its IT specialists continuously build and upgrade clients' systems to "competitive advantage status." CIBER is included in the Russell 2000 Index and the S&P Small Cap 600 Index. CIBER, the Reliable Global IT Services Partner. www.ciber.com.
Forward-Looking and Cautionary Statements
Statements contained in this release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, as discussed in the Company's filings with the Securities and Exchange Commission. CIBER undertakes neither intention nor obligation to publicly update or revise any forward-looking statements. CIBER and the CIBER logo are trademarks or registered trademarks of CIBER, Inc. CopyrightA(C) 2009.
CIBER, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
In thousands, except Three Months Ended Nine Months Ended
per share data Sept. 30, Sept. 30,
2008 2009 2008 2009
---- ---- ---- ----
Consulting services $286,004 $245,113 $867,484 $743,170
Other revenue 13,962 11,254 44,525 32,276
------ ------ ------ ------
Total revenue 299,966 256,367 912,009 775,446
------- ------- ------- -------
Cost of consulting services 209,515 184,028 632,811 559,121
Cost of other revenue 8,170 7,382 28,850 20,557
Selling, general and
administrative expenses 67,464 56,417 200,000 169,879
Amortization of intangible
assets 1,604 1,506 4,823 4,371
----- ----- ----- -----
Operating income 13,213 7,034 45,525 21,518
Other expense, net 2,778 2,074 11,510 2,930
----- ----- ------ -----
Income before income taxes 10,435 4,960 34,015 18,588
Income tax expense 3,003 1,401 11,844 6,023
----- ----- ------ -----
Consolidated net income 7,432 3,559 22,171 12,565
Net income noncontrolling
interests 197 54 824 139
--- -- --- ---
Net income attributable to
CIBER, Inc. $7,235 $3,505 $21,347 $12,426
====== ====== ======= =======
Earnings per share - diluted $0.12 $0.05 $0.35 $0.18
===== ===== ===== =====
Weighted average shares -
diluted 60,791 69,809 60,485 67,573
====== ====== ====== ======
For the three months ended September 30, 2008 and 2009, respectively,
earnings per share - basic were $0.12 and $0.05 and weighted average
shares - basic were 60,032 and 69,664.
For the nine months ended September 30, 2008 and 2009, respectively,
earnings per share - basic were $0.36 and $0.18 and weighted average
shares - basic were 60,098 and 67,484.
CIBER, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
In thousands December September
31, 30,
2008 2009
---- ----
Assets
------
Current assets:
Cash and cash equivalents $48,849 $56,247
Accounts receivable, net 235,066 216,658
Prepaid expenses and other current assets 20,633 24,177
Deferred income taxes 4,883 7,189
----- -----
Total current assets 309,431 304,271
Property and equipment, net 27,372 26,710
Intangible assets, net 449,813 457,965
Other assets 10,904 13,011
------ ------
Total assets $797,520 $801,957
======== ========
Liabilities and Shareholders' Equity
------------------------------------
Current liabilities:
Accounts payable $35,373 $27,301
Accrued compensation and related liabilities 62,437 66,275
Other accrued expenses and liabilities 44,514 63,656
Income taxes payable 1,874 11,299
----- ------
Total current liabilities 144,198 168,531
Long-term bank debt 165,710 92,865
Deferred income taxes 34,288 36,400
------ ------
Total liabilities 344,196 297,796
Total shareholders' equity 453,324 504,161
------- -------
Total liabilities and shareholders' equity $797,520 $801,957
======== ========
CIBER, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended
September 30,
-------------
In thousands 2008 2009
---- ----
Operating activities:
Net income $22,171 $12,565
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 9,513 9,007
Amortization of intangible assets 4,823 4,371
Other, net 27,492 35,399
------ ------
Net cash provided by operating activities 63,999 61,342
------ ------
Investing activities:
Acquisitions, net of cash acquired (7,790) (4,258)
Purchases of property and equipment, net (10,837) (7,960)
Other 233 -
--- ---
Net cash used in investing activities (18,394) (12,218)
------- -------
Financing activities:
Employee stock purchases and options exercised 3,559 1,871
Purchases of treasury stock (7,519) (3,877)
Borrowings (payments) on long-term bank debt, net 42,155 (63,882)
Retirement of debentures (68,779) -
Sales of common stock - 23,220
Other, net (5,558) (3,687)
------ ------
Net cash used in financing activities (36,142) (46,355)
------- -------
Effect of foreign exchange rate changes on cash (1,839) 4,629
------ -----
Net increase in cash and cash equivalents 7,624 7,398
Cash and cash equivalents, beginning of period 31,717 48,849
------ ------
Cash and cash equivalents, end of period $39,341 $56,247
======= =======
Selected Financial Information
Unaudited Reconciliation of Non-GAAP and Segment Financial Measures
I. Reconciliation of Revenue Growth Components ($ in millions)
Sequential Three Months Ended
----------------------------------------------------------
June 30, Foreign Sept. 30,
Divisions 2009 Organic Acquired Exchange Total 2009
--------- ---- ------- -------- -------- ----- ----
Custom Sols & ITO $113.1 -5.8% -% -% -5.8% $106.5
U.S. ERP 32.3 -3.1 - - -3.1 31.3
Federal 29.9 -2.7 - - -2.7 29.1
Europe 85.3 -1.3 - 6.2 4.9 89.5
---- ---- --- --- --- ----
$260.6 -3.6% -% 2.0% -1.6% $256.4
====== ==== === === ==== ======
Three Months Ended
---------------------------------------------------------
Sept. 30, Foreign Sept. 30,
Divisions 2008 Organic Acquired Exchange Total 2009
--------- ---- ------- -------- -------- ----- ----
Custom Sols & ITO $133.2 -21.0% 1.0% -% -20.0% $106.5
U.S. ERP 30.1 4.0 - - 4.0 31.3
Federal 31.4 -7.3 - - -7.3 29.1
Europe 105.3 -7.3 - -7.7 -15.0 89.5
----- ---- --- ---- ----- ----
$300.0 -12.2% 0.4% -2.7% -14.5% $256.4
====== ==== === === ==== ======
Nine Months Ended
---------------------------------------------------------
Sept. 30, Foreign Sept. 30,
Divisions 2008 Organic Acquired Exchange Total 2009
--------- ---- ------- -------- -------- ----- ----
Custom Sols & ITO $401.2 -17.0% 0.9% -% -16.1% $336.6
U.S. ERP 93.1 -0.2 - - -0.2 92.9
Federal 96.7 -9.1 - - -9.1 87.9
Europe 321.0 -3.4 0.2 -16.4 -19.6 258.0
----- ---- --- ----- ----- -----
$912.0 -9.7% 0.5% -5.8% -15.0% $775.4
====== ==== === === ==== ======
II. EBITDA Reconciliation to Net Income ($ in thousands)
Three Months Ended Nine Months Ended
------------------------------ --------------------
Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30,
2008 2009 2009 2008 2009
---- ---- ---- ---- ----
Net Income Attributable
to CIBER $7,235 $4,656 $3,505 $21,347 $12,426
Net Income
Noncontrolling Interest 197 53 54 824 139
--- --- --- --- ---
Consolidated Net Income 7,432 4,709 3,559 22,171 12,565
Income Tax 3,003 2,206 1,401 11,844 6,023
----- ----- ----- ------ -----
Pre-Tax Income 10,435 6,915 4,960 34,015 18,588
Other Expense, net 2,778 553 2,074 11,510 2,930
----- --- ----- ------ -----
Operating Income 13,213 7,468 7,034 45,525 21,518
Share Based Comp. 977 1,093 817 2,537 2,986
Amortization 1,604 1,457 1,506 4,823 4,371
Depreciation 3,253 3,000 2,982 9,513 9,007
----- ----- ----- ----- -----
EBITDA $19,047 $13,018 $12,339 $62,398 $37,882
======= ======= ======= ======= =======
III. Segment Operating Results Analysis
Operating Results Analysis
($ in millions)
Three Months Ended Nine Months Ended
Revenue Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2008 2009 2008 2009
$ % $ % $ % $ %
---------------------------------------------------
Custom Sols & ITO (1)
---------------------
Commercial/ITO $107.3 36 $83.9 33 $308.5 34 $267.1 35
State & Local 25.9 8 22.6 9 92.7 10 69.5 9
---- --- ---- --- ---- -- ---- ---
Sub 133.2 44 106.5 42 401.2 44 336.6 44
U.S. ERP (2)
------------
Commercial 16.4 5 11.9 5 41.9 5 37.2 5
State & Local 13.7 5 19.3 7 51.2 5 55.7 7
---- --- ---- --- ---- --- ---- ---
Sub 30.1 10 31.3 12 93.1 10 92.9 12
Federal 31.4 11 29.1 11 96.7 11 87.9 11
Europe (3) 105.3 35 89.5 35 321.0 35 258.0 33
----- --- ---- --- ----- --- ----- ---
Total $300.0 100% $256.4 100% $912.0 100% $775.4 100%
====== === ====== === ====== === ====== ===
Three Months Ended Nine Months Ended
EBITA Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2008 2009 2008 2009
$ % $ % $ % $ %
-------------------------------------------------
Custom Sols & ITO (1)
---------------------
Commercial/ITO - - - -
State & Local - - - -
--- --- --- ---
Sub $13.5 10 $7.0 7 $40.3 10 $22.5 7
U.S. ERP (2)
-------------
Commercial - - - -
State & Local - - - -
--- --- --- ---
Sub (1.7) (6) 2.8 9 0.1 0 6.4 7
Federal 2.8 9 1.5 5 7.1 7 4.9 5
Europe (3) 7.3 7 4.8 5 23.7 8 13.2 5
Corporate (7.1) (2) (7.6) (3) (20.9) (2) (21.1) (3)
----- --- ---- --- ----- --- ------ ---
EBITA 14.8 5 8.5 3 50.3 6 25.9 3
-----
Amortization (1.6) (1) 1.5 - (4.8) (1) 4.4 -
----- --- --- --- ---- --- --- ---
Operating Income $13.2 4% $7.0 3% $45.5 5% $21.5 3%
===== === ==== === ===== === ===== ===
Note: India operations are in Custom Solutions and Asia Pacific
operations are in Europe; Custom Solutions also includes domestic
eliminations.
(1) These Divisions have been combined and prior revenue partially
reclassified, accordingly, margins cannot be accurately separated.
(2) This activity has always been operated together; highlighting State &
Local revenue will assist the overall view of CIBER's public sector
emphasis.
(3) Public sector business also exists in the European Division, both
national and local; it is approximately 5% of these revenues.
SOURCE CIBER, Inc.
http://www.ciber.com
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