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ATS Corporation Announces Financial Results for the Third Quarter Ended September 30, 2009MCLEAN, Va. --(Business Wire)-- ATS Corporation ("ATSC" or the "Company") (OTCBB:ATCT), a leading information technology company that delivers innovative technology solutions to government and commercial organizations, today announced operating results for the third quarter ended September 30, 2009. Third Quarter Results ATSC reported revenue of $32.1 million for the third quarter of 2009. Revenue for the third quarter increased by 0.1% over third quarter 2008 revenue of $32.0 million. Operating income for the quarter was $3.9 million and the net income for the quarter was $2.0 million or $0.09 per diluted share, compared to an operating loss of $55.8 million and a net loss of $51.0 million for the third quarter of 2008. The operating and net losses incurred in the third quarter of 2008 were due to a $56.8 million, non-cash goodwill and intangible asset impairment charge. EBITDA (1) was $4.7 million for this year's third quarter, resulting in an EBITDA margin of 14.7%, compared to $3.4 million, or a margin of 10.5% for the third quarter of 2008. Backlog as of September 30, 2009 was approximately $153.1 million, of which $51.8 million was funded. Days sales outstanding ("DSO") were 61 at the end of the third quarter of fiscal year 2009. As of September 30, 2009, ATSC's balance sheet included debt of $18.5 million on its revolving credit facility and approximately $3.2 million in promissory notes related to the acquisitions of Potomac Management Group, Inc. and Number Six Software, Inc. Additionally, the balance sheet included $50.6 million in stockholders' equity. Nine-Month Results ATSC reported revenue of $89.5 million for the first nine months of 2009. Operating income for the first nine months of 2009 was $8.3 million and the net income for the period was $3.6 million or $0.16 per diluted share, compared to an operating loss of $53.7 million and a net loss of $50.6 million for the first nine months of 2008. The 2008 results reflect the impairment charge incurred in the third quarter of 2008, as discussed under "Third Quarter Results". EBITDA (1) was $10.7 million for the first nine months of 2009, resulting in an EBITDA margin of 11.9%, compared to an Adjusted EBITDA (2) of $9.6 million, or a margin of 9.6% for the first nine months of 2008. Third Quarter Highlights and Management Comments Third quarter new bookings totaled $30 million, primarily from add-ons or additional funding from the Department of Housing and Urban Development, the Pension Benefit Guaranty Corporation ("PBGC"), the Defense Logistics Agency, and the Defense Technology Security Administration, among others. Within our commercial business, we expanded our work with several customers, primarily Fannie Mae; and we began new engagements with Neustar, Inc. and Perceptive Software, Inc. Additionally, the Company won a new award after the close of the third quarter to provide software development services to PBGC, valued at $12.2 million over 5 years. ATSC President and Chief Executive Officer Dr. Edward H. Bersoff stated, "We are extremely pleased to report strong results for the third quarter. For the second consecutive quarter, our revenues and profits have grown and we've generated strong cash flow. The revenue growth represents an increase in each of our market areas. Our third quarter new bookings reflect expanded work with the Company's largest and longest standing customers and we are happy to continue our exceptionally strong track record of customer satisfaction. As a consequence, rather than re-competing many of our long-term contracts, several of our clients continue to provide us with quarterly continued funding on a non-competitive basis. And as further testament to solid client relationships, our new $12 million award with PBGC was additive to our current base of business with that customer. As we have discussed in earlier periods, we also saw our Fannie Mae business further recover in the third quarter, and that business is now operating at comparable levels to last year's revenue for this customer." Dr. Bersoff added further comments on the Company's financial performance, "We were very pleased with our margin performance in the third quarter and ability to expand our year to date EBITDA margins to 11.9%, even with an increase in our investment in business development of approximately 16% in the first nine months of this year compared to the same period last year. We will continue to invest in business development to support our long term growth objectives. We have also improved our DSO which were at 61 days at the end of the third quarter of 2009, a drop from 67 days at the end of the second quarter of 2009 and a drop of 25 days from the end of 2008. As a result of the strong profits and improvements in cash flow, we paid down another $6.5 million in debt this quarter." Dr. Bersoff concluded, "We believe our strong financial performance for the quarter provides strong momentum for sustaining our organic growth and increasing shareholder value as we end the year and enter 2010." Management's Revised Outlook Based on ATSC's year to date profit margins, the Company is updating its EBITDA (1) guidance for 2009. The Company is now increasing its EBITDA (1) forecast for the year to be between $12 million and $13.5 million. The Company is reiterating its revenue guidance range of $121 million and $125 million. Dr. Bersoff commented, "We have consistently exceeded our target EBITDA and EBITDA margins each quarter of 2009 and expect to end the year with EBITDA margins for the full year well in excess of industry norms." Conference Call ATSC will conduct a third quarter conference call on Monday, November 9, 2009 at 5:00 p.m. ET. The dial-in number for the live teleconference is (866) 847-7863, conference ID # 1410276. For international participants, please call into 011-800-4040-2020 and use the same conference ID #. A recorded replay of the teleconference will also be available on the Company website (www.atsc.com) for one year from the conference call date. About ATS Corporation ATSC is a leading provider of software and systems development, systems integration, infrastructure management and outsourcing, information sharing, training and consulting to the Department of Defense, Federal civilian agencies, public safety and national security customers, as well as commercial enterprises. Headquartered in McLean, Virginia, the Company has more than 600 employees at 10 locations across the country. Any statements in this press release about future expectations, plans, and prospects for ATSC, including statements about the estimated value of the contract and work to be performed, and other statements containing the words "estimates," "believes," "anticipates," "plans," "expects," "will," and similar expressions, constitute forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including: our dependence on our contracts with federal government agencies for the majority of our revenue, our dependence on our GSA (News - Alert) schedule contracts and our position as a prime contractor on government-wide acquisition contracts to grow our business, and other factors discussed in our latest annual report on Form 10-K filed with the Securities and Exchange Commission on March 16, 2009. In addition, the forward-looking statements included in this press release represent our views as of November 9, 2009. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to November 9, 2009. Additional information about ATSC may be found at www.atsc.com. (1) EBITDA is a non-GAAP measure that is defined as GAAP net income plus other expense, interest expense, income taxes, and depreciation and amortization. We have provided EBITDA because we believe it is a commonly used measure of financial performance in comparable companies and is provided to help investors evaluate companies on a consistent basis, as well as to enhance an understanding of our operating results. EBITDA is not a recognized term under U.S. GAAP and does not purport to be an alternative to net income as a measure of operating performance or the cash flows from operating activities as a measure of liquidity. Please refer to the table at the bottom of the statement of operations in this release that reconciles GAAP net income to EBITDA. (2) Adjusted EBITDA is defined as EBITDA adjusted for one time severance expenses not expected to be reflected in the ongoing performance of ATSC. Adjusted EBITDA is not a recognized term under U.S. GAAP and does not purport to be an alternative to net income as a measure of operating performance or the cash flows from operating activities as a measure of liquidity. Please refer to the table at the end of this release that reconciles GAAP net income to adjusted EBITDA. ATS Corporation Consolidated Statements of Operations (unaudited) Three Months Nine Months Ended September 30, Ended September 30, 2009 2008 2009 2008 (unaudited) (unaudited) (unaudited) (unaudited) Revenue $ 32,074,434 $ 32,032,605 $ 89,497,757 $ 100,694,902 Operating costs and expenses Direct costs 21,342,643 22,551,682 59,990,312 67,785,098 Selling, general and administrative expenses 6,089,196 7,007,507 18,908,327 24,222,018 Depreciation and amortization 772,275 1,505,705 2,324,018 5,582,615 Impairment charge 56,772,541 56,772,541 Total operating costs and expenses 28,204,114 87,837,435 81,222,657 154,362,272 Operating income (loss) 3,870,320 (55,804,830 ) 8,275,100 (53,667,370 ) Other (expense) income Interest, net (597,742 ) (896,913 ) (2,164,426 ) (2,646,049 ) Other income (loss) 60,037 (13,458 ) 60,037 52,714 Income (loss) before income taxes 3,332,615 (56,715,201 ) 6,170,711 (56,260,705 ) Income tax expense (benefit) 1,340,816 (5,759,836 ) 2,581,535 (5,647,221 ) Net income (loss) $ 1,991,799 $ (50,955,365 ) $ 3,589,176 $ (50,613,484 ) Weighted average number of shares outstanding basic 22,741,726 22,381,860 22,648,962 20,825,206 diluted 22,846,549 22,381,860 22,697,864 20,825,206 Net income (loss) per share basic $ 0.09 $ (2.28 ) $ 0.16 $ (2.43 ) diluted $ 0.09 $ (2.28 ) $ 0.16 $ (2.43 ) Reconciliation of GAAP Net Income to EBITDA (1) and EBITDA (2) Three Months Nine Months Ended September 30, Ended September 30, 2009 2008 2009 2008 (unaudited) (unaudited) (unaudited) (unaudited) Net Income $ 1,991,799 $ (50,955,365 ) $ 3,589,176 $ (50,613,484 ) Adjustments Depreciation and amortization 772,275 1,505,705 2,324,018 5,582,615 Impairment charge 56,772,541 56,772,541 Interest 597,742 896,913 2,164,426 2,646,049 Taxes 1,340,816 (5,759,836 ) 2,581,535 (5,647,221 EBITDA (1) 4,702,632 2,459,958 81,222,657 8,740,500 890,516 890,516 Adjusted EBITDA (2) 4,702,632 3,350,474 10,659,155 9,631,016 ATS Corporation Consolidated Balance Sheets September 30, December 31, 2009 2008 (unaudited) (audited) ASSETS Current assets Cash $ 398,866 $ 364,822 Accounts receivable, net 23,062,128 29,268,647 Prepaid expenses 717,246 537,974 Other current assets 4,775 22,771 Deferred income taxes, current 1,009,985 1,321,890 Total current assets 25,193,000 31,516,104 Property and equipment, net 3,174,644 3,712,340 Goodwill 55,370,011 59,128,648 Intangible assets, net 6,653,777 8,304,686 Restricted cash 1,323,930 1,316,530 Other assets 190,357 387,897 Deferred income taxes 2,026,296 2,003,348 Total assets $ 93,932,015 $ 106,369,553 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 21,205,176 $ 2,583,333 Capital leases - current portion 22,927 86,334 Accounts payable and accrued expenses 7,833,839 10,224,266 Accrued salaries and related taxes 4,150,549 2,999,576 Accrued vacation 2,646,060 2,220,865 Income taxes payable, net 775,373 600,121 Deferred revenue 1,509,019 1,745,352 Deferred rent - current portion 320,498 379,520 Total current liabilities 38,463,441 20,839,367 Long-term debt - net of current portion 458,333 34,492,558 Capital leases - net of current portion 745 Deferred rent - net of current portion 2,700,109 2,842,171 Other long-term liabilities (at fair value) 1,695,569 2,283,256 Total liabilities 43,317,452 60,458,097 Shareholders' equity: Preferred stock $0.0001 par value, 1,000,000 shares authorized, and no shares issued and outstanding Common stock $0.0001 par value, 100,000,000 shares authorized, 31,082,865 and 30,867,304 shares issued, respectively, and 22,746,232 and 22,524,549 shares outstanding, respectively 3,109 3,087 Additional paid-in capital 131,412,907 130,767,038 Treasury stock, at cost, 8,344,633 and 8,342,755 shares held, respectively (30,276,223 ) (30,272,007 ) Accumulated deficit (49,601,646 ) (53,190,822 ) Accumulated other comprehensive loss (net of tax benefit of $650,251 and $887,416, respectively) (923,584 ) (1,395,840 ) Total shareholders' equity 50,614,563 45,911,456 Total liabilities and shareholders' equity $ 93,932,015 $ 106,369,553 ATS Corporation Consolidated Statements of Cash Flows (unaudited) Nine months Ended September 30, 2009 2008 (unaudited) (unaudited) Cash flows from operating activities Net income (loss) $ 3,589,176 $ (50,613,484 ) Adjustments to reconcile net income (loss) to net cash from operating activities: Depreciation and amortization 2,324,018 5,582,615 Impairment charge 56,772,541 Stock-based compensation 519,462 618,634 Deferred income taxes (87,772 ) (8,029,350 ) Deferred rent (201,085 ) (23,574 ) Gain on disposal of equipment (2,373 ) Provision for bad debt 432,703 23,781 Changes in assets and liabilities, net of adjustments related to other comprehensive loss: Accounts receivable 5,773,814 (78,539 ) Prepaid expenses and other current assets (179,273 ) 160,306 Restricted cash (7,400 ) (30,192 ) Other assets 215,537 (1,014,469 ) Accounts payable and other accrued expenses (2,550,401 ) 639,364 Accrued salaries and related taxes 1,150,973 (596,350 ) Accrued vacation 425,195 144,523 Accrued interest 358,433 240,391 Income taxes payable and receivable 238,095 1,738,485 Other current liabilities (236,333 ) (200,866 ) Other long-term liabilities (45,976 ) Net cash provided by operating activities 11,765,142 5,285,467 Cash flows from investing activities Purchase of property and equipment (135,414 ) (151,280 ) Proceeds from disposals of equipment 21,352 Proceeds from release of escrows 3,758,637 Acquisitions of businesses - net of cash acquired 155,891 Net cash provided by investing activities 3,623,223 25,963 Cash flows from financing activities Borrowings on line of credit 45,760,848 47,868,284 Payments on line of credit (59,947,409 ) (53,128,697 ) Issuance of notes payable 139,176 Payments on notes payable (1,364,996 ) (2,174,357 ) Payments on capital leases (64,152 ) (74,516 ) Proceeds from stock issued pursuant to Employee Stock Purchase Plan 126,428 211,813 Payments to repurchase stock (4,216 ) Proceeds from exchange of stock for warrants, net of expense 234,135 Net cash used in financing activities (15,354,321 ) (7,063,338 ) Net increase (decrease) in cash 34,044 (1,751,908 ) Cash, beginning of period 364,822 1,901,977 Cash, end of period $ 398,866 $ 150,069 Supplemental disclosures: Cash paid or received during the period for: Income taxes paid $ 2,436,380 $ 2,340,704 Income tax refunds 12,148 1,917,399 Interest paid 1,861,649 2,463,804 Interest received 48,256 28,227 Non-cash investing and financing activities and adjustment to other comprehensive loss: Unrealized other comprehensive income (loss) on interest rate swap, net of tax 350,522 201,274 |
