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Vangent, Inc. Announces Third Quarter 2008 Results ARLINGTON, VA--(MARKET WIRE)--Nov 12, 2008 -- Vangent, Inc., a leading global provider of
information management and strategic business process outsourcing
services,
today announced its third quarter 2008 results.
Vangent reported revenue of $133.4 million for the three months ended September 27, 2008, up $3.8 million, or 3% compared to the three months ended September 29, 2007. This improvement primarily reflects higher revenue from the Government Group, which increased 5% or $5.1 million largely due to new contract awards with the Department of Defense Military Health System. On a year-to-date basis, revenue grew 11% to $400.8 million compared to $362.5 million in the same period in 2007. Vangent's net loss improved to $0.5 million for the three months ended September 27, 2008 compared to a loss of $1.4 million for the comparable period a year ago. Adjusted EBITDA was $20.3 million for the three months ended September 27, 2008, compared to $22.1 million in the comparable period a year ago. On a year-to-date basis, Adjusted EBITDA increased 11% to $52.2 million compared to $46.9 million in the same period in 2007. "We are pleased with our third quarter results as we continued our growth in revenue and secured a significant amount of new business," said Mac Curtis, President and Chief Executive Officer of Vangent. "We were particularly pleased with the strength of our Health business where we added new Military Health System customers in the vital clinical area of the Department of Defense." Contract Awards & Backlog Vangent booked $66.5 million of new business in the third quarter, which includes $8.7 million in add-ons to existing contracts. Year to date, Vangent booked $292.0 million in new business, including $90.7 million in add-on business to existing contracts. Vangent's current new business pipeline stands at $3.2 billion as of September 27, 2008, which includes over $100.0 million of potential fourth quarter 2008 awards. Vangent's total contract backlog, which is the amount of revenue the company expects to realize over the remaining term of the contracts, including the base period and all option years, was $1.6 billion at September 27, 2008. Vangent's firm contract backlog, which is the value of the base period plus all currently exercised options, was $518.1 million at September 27, 2008. Vangent's contract performance with Centers for Medicare & Medicaid Services ("CMS") is at an all time high as preparation for the annual open enrollment period -- November 15th through December 31st -- is fully underway. Mr. Curtis continued, "We gained solid momentum this quarter with important new business wins in each of our business segments. Beyond our success in the healthcare arena, we also won an important new contract with the Department of Education and made significant progress in our International business." Liquidity, Cash Flow and Balance Sheet Information Total debt decreased from $428.8 million at September 29, 2007 to $420.4 million at September 27, 2008. Cash and cash equivalents were $18.1 million at September 27, 2008 compared to $15.0 million at September 29, 2007, an increase of $3.1 million or 21%. Vangent's total liquidity, which includes $49.6 million available under its revolving credit facility, was $67.7 million. Q3 2008 Financial Results Conference Call: Will take place on Wednesday, November 12 at 11:00 am ET. Interested parties may call (888) 694-4702 and request the "Vangent Q3 2008 Financial Results Conference Call," conference ID # 71552401. Audio Replay: A replay of the earnings call can be heard after 2 p.m. on November 12, 2008 until November 17, 2008. To hear the replay, dial (800) 642-1687 and enter the same conference ID # 7155240. For interested parties outside the U.S. and Canada, dial (706) 645-9291 and enter the same conference ID #. Vangent's third quarter financials including the Management Discussion and Analysis will be made available on the company's website at www.vangent.com following the completion of the Vangent Q3 2008 Results Conference Call. About Vangent, Inc. With over 6,000 employees worldwide, Vangent, Inc. is a global provider of Consulting, Systems Integration, Human Capital Management and Strategic Business Process Outsourcing services to the U.S. federal and international governments, higher education institutions and corporations. Clients include the Centers for Medicare & Medicaid Services, the U.S. Departments of Defense, Education, Health and Human Services, Labor, State and the U.S. Office of Personnel Management, as well as Fortune 500 companies. Headquartered in Arlington, Virginia, the company has offices throughout the U.S. and in the U.K., Canada, Mexico, Venezuela and Argentina. Forward-Looking Statements This press release contains forward-looking statements. Forward-looking statements are those that do not relate solely to historical fact. They include, but are not limited to, any statement that may predict, forecast, indicate or imply future results, performance, achievements or events. Words such as, but not limited to, "believe," "expect," "anticipate," "estimate," "intend," "plan," "targets," "projects," "likely," "will," "would," "could" and similar expressions or phrases identify forward-looking statements. All forward-looking statements involve risks and uncertainties. The occurrence of the events described, and the achievement of the expected results, depend on many events, some or all of which are not predictable or within our control. In light of these risks and uncertainties, expected results or other anticipated events or circumstances discussed in this press release might not occur. We undertake no obligation, and specifically decline any obligation, to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Financial Summary (unaudited)
(in millions)
Three Months Ended Nine Months Ended
------------------------ ------------------------
September September September September
29, 27, 29, 27,
2007 2008 2007 2008
----------- ----------- ----------- -----------
Revenue $ 129.6 $ 133.4 $ 362.5 $ 400.8
Net Loss (1.4) (0.5) (20.4) (11.4)
Adjusted EBITDA 22.1 20.3 46.9 52.2
December September
31, 27,
2007 2008
----------- -----------
Cash and Cash Equivalents $ 26.1 $ 18.1
Long-Term Debt 428.2 420.4
Contract Backlog 1,769.9 1,630.1
Firm Contract Backlog 408.4 518.1A reconciliation between certain non-GAAP financial measures and reported financial results is provided as an attachment to this press release. Revenue, Net Loss and Adjusted EBITDA for the nine months ended September 29, 2007 represents the mathematical addition of the Predecessor Entity for the period January 1 to February 14, 2007 and the Successor Entity for the period February 15, 2007 to September 29, 2007.
Vangent, Inc. (formerly Pearson Government Solutions Business)
Condensed Consolidated Statements of Operations
(in thousands)
(unaudited)
Successor Predecessor Successor
Entity Entity Entity
-------------------- --------- --------------------
Three Three Period Period Nine
Months Months January 1 February Months
Ended Ended to 15 to Ended
September September February September September
29, 27, 14, 29, 27,
2007 2008 2007 2007 2008
--------- --------- --------- --------- ---------
Revenue $ 129,610 $ 133,391 $ 58,833 $ 303,656 $ 400,800
Cost of revenue 103,983 106,470 48,187 254,096 329,570
--------- --------- --------- --------- ---------
Gross profit 25,627 26,921 10,646 49,560 71,230
General and
administrative
expenses 11,544 12,445 9,383 29,982 38,702
Selling and
marketing expenses 4,190 3,757 1,940 11,039 11,963
--------- --------- --------- --------- ---------
Operating income
(loss) 9,893 10,719 (677) 8,539 20,565
Interest expense 10,091 8,719 34 24,651 26,895
Interest income (360) (185) (44) (561) (634)
--------- --------- --------- --------- ---------
Income (loss) before
income taxes 162 2,185 (667) (15,551) (5,696)
Provision (benefit)
for income taxes 1,566 2,632 (292) 4,502 5,728
--------- --------- --------- --------- ---------
Net loss $ (1,404) $ (447) $ (375) $ (20,053) $ (11,424)
========= ========= ========= ========= =========
Vangent, Inc. (formerly Pearson Government Solutions Business)
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
December September
31, 2007 27, 2008
----------- -----------
Assets
Current assets:
Cash and cash equivalents $ 26,093 $ 18,091
Trade receivables, net 112,292 111,718
Other receivables and prepaid items 15,470 14,958
----------- -----------
Total current assets 153,855 144,767
Property and equipment, net 27,579 30,023
Goodwill and intangible assets, net 499,900 487,077
Deferred debt financing costs and other 12,734 10,845
----------- -----------
Total assets $ 694,068 $ 672,712
=========== ===========
Liabilities and Stockholder's Equity
Current liabilities:
Current portion of long-term debt $ 7,325 $ -
Accounts payable and accrued expenses 63,248 59,888
Accrued interest 8,547 3,395
Other 5,296 6,635
----------- -----------
Total current liabilities 84,416 69,918
Long-term debt, net of current portion 420,875 420,366
Other liabilities 8,488 12,613
----------- -----------
Total liabilities 513,779 502,897
Stockholder's equity 180,289 169,815
----------- -----------
Total liabilities and stockholder's equity $ 694,068 $ 672,712
=========== ===========
Vangent, Inc. (formerly Pearson Government Solutions Business)
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Predecessor Successor
Entity Entity
--------- --------------------
Period Period Nine
January 1 February 15 Months
to to Ended
February September September
14, 29, 27,
2007 2007 2008
--------- --------- ---------
Cash flows from operating activities
Net loss $ (375) $ (20,053) $ (11,424)
Depreciation and amortization 2,369 20,753 26,326
Equity-based compensation expense 1,477 475 839
Deferred income taxes (19) 3,749 4,889
Net change in operating assets and
liabilities (22,348) 11,069 (9,688)
--------- --------- ---------
Net cash (used in) provided by operating
activities (18,896) 15,993 10,942
--------- --------- ---------
Cash flows from investing activities
Acquisition, net of cash acquired - (615,206) (3,892)
Capital expenditures (3,727) (4,412) (6,796)
--------- --------- ---------
Net cash used in investing activities (3,727) (619,618) (10,688)
--------- --------- ---------
Cash flows from financing activities
Proceeds from issuance of common stock - 203,466 -
Proceeds from issuance of long-term debt - 445,000 -
Repayment of long-term debt - (16,200) (7,834)
Debt financing costs - (14,013) -
Investment from parent and other 13,271 (131) (205)
--------- --------- ---------
Net cash provided by (used in) financing
activities 13,271 618,122 (8,039)
Effect of exchange rate changes on cash
and cash equivalents (166) 499 (217)
--------- --------- ---------
Net (decrease) increase in cash and cash
equivalents (9,518) 14,996 (8,002)
Cash and cash equivalents, beginning of
period 11,713 - 26,093
--------- --------- ---------
Cash and cash equivalents, end of period $ 2,195 $ 14,996 $ 18,091
========= ========= =========
Vangent, Inc. (formerly Pearson Government Solutions Business)
Reconciliation of GAAP to Non-GAAP Measures
(in thousands)
(unaudited)
Twelve
Three Months Ended Nine Months Ended Months
-------------------- -------------------- Ended
September September September September September
29, 27, 29, 27, 27,
2007 2008 2007 2008 2008
--------- --------- --------- --------- ---------
Net loss $ (1,404) $ (447) $ (20,428) $ (11,424) $ (13,420)
Provision for income
taxes 1,566 2,632 4,210 5,728 7,723
Interest expense,
net 9,731 8,534 24,080 26,261 35,613
Depreciation and
amortization 8,256 8,961 23,122 26,326 35,097
--------- --------- --------- --------- ---------
EBITDA 18,149 19,680 30,984 46,891 65,013
Equity-based
compensation
expense 475 248 1,952 839 1,273
TSA adjustment 94 21 1,244 57 141
Net transition and
contract settlement
costs 3,131 66 11,896 3,493 9,096
Management fee 276 285 813 872 973
--------- --------- --------- --------- ---------
Adjusted EBITDA $ 22,125 $ 20,300 $ 46,889 $ 52,152 $ 76,496
========= ========= ========= ========= =========The net loss of $20.4 million for the nine months ended September 29, 2007, represents the mathematical addition of the net loss of $0.4 million for the Predecessor Entity for the period January 1 to February 14, 2007, and the net loss of $20.0 million for the Successor Entity for the period February 15 to September 29, 2007. EBITDA is defined as net income (loss) before interest, income taxes, and depreciation and amortization. Management uses this measure as an indicator of operating performance. EBITDA is not an indicator of financial performance under generally accepted accounting principles (“GAAP”) or a measure of liquidity and may not be comparable to similarly captioned information reported by other companies. In addition, it should not be considered as an alternative to, or more meaningful than, income (loss) before income taxes, cash flows from operating activities, or other traditional indicators of operating performance. Adjusted EBITDA is adjusted to exclude (i) equity-based compensation expense, (ii) non-recurring contract settlement costs, (iii) legal expenses payable by Pearson in connection with an investigation into a contract awarded to NCS Pearson, Inc. by the Transportation Security Administration (“TSA”) in 2002 and all potential reserves related to the potential settlement of such claim, and (iv) certain costs resulting from our separation from Pearson plc net of certain overhead and infrastructure costs. Contact: Contact:
Eileen Cassidy Rivera
Email Contact
Source: Vangent, Inc.
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