Stanley, Inc. (SXE)
F2Q09 Earnings Call
October 30, 2008 5:00 pm ET
Lawrence Delaney, Jr. - Investor Relations Counsel
Philip O. Nolan - Chairman of the Board, President, Chief Executive Officer
Brian J. Clark - Chief Financial Officer, Corporate Treasurer
William R. Loomis - Stifel, Nicolaus & Co.
Edward S. Caso - Wachovia Securities
Tim Quillin - Stephens, Inc.
Brian Gesuale - Raymond James & Associates
Cai von Rumohr – Cowen and Company
Michael Lewis – BB&T Capital Markets
Stefan Mykytiuk – Pike Place Capital
Brian Kinstlinger – Sidoti & Company
[Brian Kowalchek – Pantera Capital Management]
Erik R. Olbeter – Pacific Crest Securities
Tim Quillin - Stephens, Inc.
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I would now like to turn the presentation over to your host for today’s conference, Mr. Larry Delaney, Investor Relations Counsel.
Lawrence Delaney, Jr.
Thanks for joining us for Stanley’s fiscal second quarter 2009 conference call. Here today are Stanley’s Chairman, President and CEO Phil Nolan and Executive Vice President and Chief Financial Officer Brian Clark. Phil will begin with an overview of the company’s second quarter operating results. Brian will then go through the financial results and issue guidance for Stanley’s fiscal third quarter 2009 and update full year fiscal 2009 guidance. We’ll then take your questions.
Before we get started I’d like to remind our listeners that our comments today will contain forward-looking statements and information based on management’s current expectations. Such forward-looking statements are subject to certain risks, uncertainties and assumptions. Information about risks that could affect the company’s financial results is available in the Risk Factors section of Stanley’s Form 10K for the fiscal year ended March 31, 2008 and the other reports the company files with the SEC.
In addition, today’s cal will include discussions of certain non-GAAP financial measures including EBITDA and organic revenue growth. Tables reconciling our non-GAAP financial measures are available in our earnings press release available under the Investor Relations section of the company’s website at www.stanleyassociates.com.
With that I’ll turn the call over to Phil Nolan.
Philip O. Nolan
I’d like to thank all of you for joining us this evening. Stanley posted another quarter of strong revenue growth and even greater margin improvement. Second quarter fiscal 2009 revenue came in at $190 [inaudible] guidance we issued on our last earnings call. Net income for the quarter was $8.7 million versus $6.3 million a year ago which equals diluted earnings per share of $0.37 up from $0.27 for Q2 of last year. Q2 EPS exceeded the high end of our guidance by $0.04.
Bookings for the second quarter were $213.1 million equating to a Q2 book-to-bill of 1.1 to 1 which was a bit higher than we told you to expect. We can also report that the third quarter has started out strong with over $250 million in bookings thus far. We are awaiting customer approval to make public announcements on a number of these awards so I won’t be able to discuss any specifics with you, but we are pleased to have that kind of momentum at the beginning of the quarter.
Our contract backlog at September 26 was approximately $2.1 billion up 4% sequentially over Q1 and more than 53% year-over-year. Our qualified pipeline currently exceeds $4.1 billion following a very successful period of new business awards for Stanley. As of today we have nearly $290 million in proposals submitted and we expect to submit another 19 proposals of $190 million or more in the next six to nine months.
It has been just over 100 days since we announced the closing of our acquisition of Oberon Associates. I can report t hat the integration process is proceeding at pace and that we expect them to be essentially fully integrated by the end of our fiscal year. We’ve been pleased with the contribution this acquisition has made to our overall performance thus far and have already made good progress in recognizing business development synergies from the combined companies.
During the quarter we announced the award of a $45 million systems integrator task order under our previously announced INSCOM Futures ID/IQ contract. Under this task order we will assist the INSCOM Futures Directorate in managing and coordinating a cohesive effort to focus technology development and insertion into the INSCOM mission. This is truly mission critical work and we’re proud to count it as a growing business area.
We also saw additional plus ups to this vehicle as well as strong intelligence operations and training activity at Fort Huachuca during the last quarter. We have talked frequently in the past about our passport services, USCIS and army equipment RESET as important growth drivers so I’d like to update you on each of these individually.
As we projected last quarter passport services revenues were down both sequentially and year-over-year. In Q2 we worked closely with the state department to put additional infrastructure in place to handle the projected increase in passport demand that we believe will come with the June 2009 land and sea provisions of the Western Hemisphere travel initiative.
The department state is in the process of opening a larger national passport center in Portsmouth, New Hampshire and building another passport adjudication facility that will join our recently opened book and production facility in Tucson, Arizona. Also, the department has announced plans to add additional gateway agencies which are essentially storefront facilities designed to service walk-in traffic.