09 Feb 06. DRS Technologies, Inc. (NYSE: DRS) today reported record financial results for the third quarter and nine-month period of fiscal 2006 ended December 31, 2005.
“DRS reported a strong third quarter, with higher revenues, operating income, earnings and diluted earnings per share than the same quarter in the prior year,” said Mark S. Newman, chairman, president and chief executive officer of DRS Technologies. “Funded backlog at the end of the quarter was 25 percent higher than at the same time last year, providing continuing momentum toward a strong close for the fiscal year.”
Fiscal 2006 Third Quarter Results
Fiscal 2006 third quarter revenues were $389.5m, 15 percent higher, (2005: $338.2m). Organic revenue growth accounted for approximately 6.0 percent of the increase, with the balance of revenue growth attributable to the benefit of a full three months of sales from an acquisition completed in the third quarter of fiscal 2005, and the addition of sales from acquisitions completed in the first quarter of fiscal 2006. Operating income of $44.8m was 14 percent above the (2005: $39.2m) and as a percentage of sales was 11.5 percent. Record operating income for the third quarter of fiscal 2006 was attributable to higher sales volume and the strong performance of the company’s operating segments. Net earnings before interest, taxes, depreciation and amortization (EBITDA) were $55.0m for the fiscal 2006 three-month period, 14 percent higher (2005: $48.1m). Fiscal 2006 third quarter EBITDA as a percentage of sales was 14.1 percent.
Net earnings for the third quarter of fiscal 2006 were up 17 percent to $19.7 m, or $0.69 per diluted share, on weighted average diluted shares outstanding of
28.7m. For the third quarter last year, earnings from continuing operations were
$16.8m, or $0.60 per diluted share, on 28.0 million weighted average diluted shares outstanding.
Free cash flow (net cash provided by operating activities of continuing operations less capital expenditures) was $14.4 million for the third quarter, compared with $25.6m for the same quarter of fiscal 2005. Fiscal 2006 third quarter free cash flow reflected the impact of higher tax payments and higher interest expense as a result of the company’s fiscal 2005 $200 million debt offering of 6-7/8 percent senior subordinated
DRS also announced that its board of directors has declared a quarterly cash dividend of $.03 per share on the company’s common stock.
The dividend is payable on March 30, 2006 to stockholders of record as of the close of business on March 15, 2006.
“On January 31, we completed the acquisition of Engineered Support Systems, Inc.
(ESSI) for $43.00 per share in cash and stock. Simultaneously, DRS moved from the Standard & Poor’s Small-Cap 600 Index to the Standard & Poor’s Mid-Cap 400 Index,“ said Mr. Newman. “The addition of Engineered Support Systems to DRS has created a strong, diverse company with a significant business base of products, systems and services focused on military force sustainment, technical and logistics support, integrated military electronics and field support equipment with broad access to a variety of government funding accounts, including operations and maintenance (O&M) and procurement. The combination of the two companies firmly establishes DRS Technologies as a leading total solutions provider of defense products and services with approximately $2.9 billion in annual revenues expected for fiscal 2007. This acquisition strengthens our strategic position, deepens our program participation and expands customer relationships with all of the military services, while providing new opportunities for growth in intelligence and homeland security markets.”
DRS financed the cash portion of the acquisition by utilizing existing excess cash on hand, bank borrowings and $900 million of new debt securities, including $350 million aggregate principal amount of 6.625 percent senior notes due 2016,