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DRS TECHNOLOGIES POWERS AHEAD

05 Aug 04. DRS Technologies, Inc. (NYSE: DRS – News) today reported record financial results for the first quarter ended June 30, 2004. Results included significant gains in revenues, operating income, net earnings and free cash flow. Fiscal 2005 first quarter record new orders for products and services increased funded backlog at the end of the period to a first quarter high.

Fiscal 2005 First Quarter Results

Fiscal 2005 first quarter revenues were $300.7m, an 80 percent increase over revenues of $167.2m for last year’s first quarter. Record revenues for the three-month period primarily were attributable to strong organic growth and the addition of sales from the company’s acquisition of Integrated Defense Technologies, Inc. (IDT) completed during the third quarter of fiscal 2004. Organic revenue growth accounted for approximately 29 percent of the increase in the quarter.

Operating income of $29.8m was 82 percent higher than the $16.4m reported for the same quarter of fiscal 2004. Record operating income for the first quarter of fiscal 2005 was attributable to the higher overall sales volume and the solid performance of the company’s operating segments. Operating income as a percentage of sales was 9.9 percent, compared with 9.8 percent for the same three-month period in the prior fiscal year.

Earnings before interest, taxes, depreciation and amortization (EBITDA) were $40.0m for the first quarter, 89 percent higher than EBITDA of $21.1m reported for the comparable period a year earlier. EBITDA as a percentage of sales was 13.3 percent, compared with 12.6 percent for the same period a year earlier.

Net earnings for the first three months of fiscal 2005 were 61 percent higher than a year ago at $11.8m, or $0.43 per diluted share, compared with last year’s first quarter net earnings of $7.3m, or $0.32 per diluted share. First quarter net earnings per share were 34 percent higher than a year ago, despite the 20 percent increase in weighted average diluted shares outstanding for the first quarter of 27.5 million, compared with 22.9 million a year earlier. The increase in shares was principally due to shares issued in connection with company’s acquisition of Integrated Defense Technologies, Inc. (IDT) in the third quarter of fiscal 2004. Free cash flow (net cash provided by operating activities less capital expenditures) for the first quarter of fiscal 2005 was strong at $17.3m.

“DRS began fiscal 2005 with exceptional first quarter results, achieving new records for the period in key financial metrics,” said Mark S. Newman, chairman, president and chief executive officer of DRS Technologies. “Additionally, bookings for the quarter were very strong, reflecting several competitively secured, multi-year contracts that will be key to the ongoing strength of our core businesses for the next several years. These new programs, coupled with a robust level of new orders for other products and services, excellent performance demonstrated during the period and rapid pace of the IDT acquisition integration, have enhanced our outlook, enabling us to raise our guidance for fiscal 2005.”

New Contract Awards and Backlog

DRS secured a first quarter record of $355.3m in new orders for products and services during the first three months of fiscal 2005, reflecting an 84 percent increase over bookings for the comparable prior-year period. Funded backlog at June 30, 2004 climbed to $1.27bn, 42 percent above $893.9m in funded backlog at the end of the first quarter of fiscal 2004. During the first quarter of fiscal 2005, the company’s C4I segment booked $159.4m in new orders, including: A competitively awarded, multi-year, indefinite delivery/indefinite quantity (IDIQ) contract to produce rugged Applique Computer Systems for the U.S. Army’s Force XXI Battle Command, Brigade and Below (FBCB2) program supporting Blue Force Tracking requirements; An award to provide electrical plant equipment design work for the Navy’s nex

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