DRS TECHNOLOGIES REPORTS RECORD THIRD QUARTER AND NINE-MONTH RESULTS
09 Feb 07. DRS Technologies, Inc. (NYSE: DRS) today reported record financial results for the fiscal 2007 third quarter and nine-month period, which ended December 31, 2006. Results for both periods included significant increases in revenues, operating income, net earnings and earnings per share. A quarterly record in new contracts received for products and services increased the company’s funded backlog at the end of the period to a new high.
“DRS posted excellent results for the three- and nine-month periods,” said Mark S. Newman, DRS Technologies’ chairman, president and chief executive officer. “Strong new order flow during the third quarter contributed to a record funded backlog at December 31 that exceeded $3bn for the first time. The results year to date place the company in an exceptional position to complete the fiscal year in outstanding form.”
Fiscal 2007 Third Quarter Results
Fiscal 2007 third quarter revenues were $680.4m, 75 percent higher than revenues of $389.5m for last year’s third quarter. The company’s organic revenue growth was strong, accounting for approximately 12.6 percent of the sales increase, with the balance of the increase attributable to the company’s acquisition of Engineered Support Systems, Inc. (ESSI) completed in the fourth quarter of fiscal 2006.
Operating income of $76.6m in the quarter was 71 percent higher than the $44.8m reported for the third quarter of fiscal 2006. The increase was attributable to the higher overall sales volume. The operating margin (operating income as a percentage of sales) for the fiscal 2007 third quarter was 11.3 percent.
Earnings before interest, taxes, depreciation and amortization (EBITDA) were $95.3m for the fiscal 2007 three-month period, 73 percent higher than EBITDA of $55.0m reported for the third quarter a year earlier. EBITDA as a percentage of sales for the fiscal 2007 third quarter was 14.0 percent.
Interest and other expense (income), net for the third quarter of fiscal 2007 was $29.8m, compared with $10.3m for the same quarter a year ago. The increase was due to higher interest expense related to borrowings associated with financing the ESSI acquisition.
The effective income tax rate for the fiscal 2007 third quarter was approximately 25 percent, compared with approximately 42 percent for last year’s third quarter.
Net earnings for the third quarter of fiscal 2007 were $35.1m, 78 percent above net earnings of $19.7m for the same quarter last year.
Diluted earnings per share (EPS) for the fiscal 2007 third quarter were $0.86, compared with $0.69 for the same quarter last year. Fiscal 2007 third quarter diluted EPS included a reduction of $0.02 per share from the company’s application of the provisions of Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards No. 123R (SFAS 123R), “Share-Based Payment,” effective April 1, 2006. Fiscal 2007 third quarter diluted EPS was based on weighted average diluted shares outstanding of 40.7 m, compared with 28.7 m shares for the same quarter a year earlier.
Net cash provided by operating activities for the third quarter of fiscal 2007 was $29.3m, compared with $24.5m for the third quarter last year. Free cash flow (net cash provided by operating activities less capital expenditures) was $18.4m for the third quarter of fiscal 2007, versus $14.4m for the fiscal 2006 third quarter. Capital expenditures were $10.9m for the third quarter of fiscal 2007, compared with $10.1 m for the same quarter last year.
New Contract Awards and Backlog
DRS secured a quarterly record of $1.10bn in new orders for products and services during the third quarter of fiscal 2007, 263 percent above bookings for the comparable prior-year period. Funded backlog at December 31, 2006 climbed to a record $3.14bn, 91 percent above $1.64bn in funded backlog at the same time las