SOURCE: Vangent
Vangent, Inc. Announces Second Quarter 2008 Results
ARLINGTON, VA--(Marketwire - August 12, 2008) - Vangent, Inc., a leading global provider of information management and strategic business process outsourcing services, today announced its second quarter 2008 results.
"We are pleased with our second quarter results, which were consistent with our expectations," said Mac Curtis, President and Chief Executive Officer of Vangent. "On a quarter over quarter basis, revenue and profitability for the second quarter were relatively stable, providing a solid position for the second half of the year which is the busiest time for Vangent."
Curtis continued, "On a year to date basis, revenue was up $34.5 million, we reduced our net loss by $8 million and increased our Adjusted EBITDA by $7.1 million in the first six months of the year. We are excited about the solid traction we gained so far this year and look forward to a successful 2008 and beyond."
Financial Summary (unaudited)
(Dollars in Millions)
Three Months Ended Year-to-Date
-------------------------- --------------------------
June 30, June 28, June 30, June 28,
2007 2008 2007 2008
------------ ------------ ------------ ------------
Revenue $ 121.6 $ 123.9 $ 232.9 $ 267.4
Net Loss (10.2) (8.6) (19.0) (11.0)
Adjusted EBITDA 12.9 12.1 24.8 31.9
Credit Agreement
Adjusted EBITDA 15.5 12.1 30.5 31.9
December 31, June 28,
2007 2008
------------ ------------
Cash and Cash
Equivalents $ 26.1 $ 30.4
Long -Term Debt 428.2 420.4
Contract Backlog 1,769.9 1,789.4
Firm Contract
Backlog 408.4 649.2
A reconciliation between certain non-GAAP financial measures and reported
financial results is provided as an attachment to this press release.
Q2 2008 Financial Results Conference Call: Will take place on Tuesday, August 12 at 11:00 am ET. Interested parties may call (888) 694-4702 and request the "Vangent Q2 2008 Financial Results Conference Call," conference ID # 56353005.
Audio Replay: A replay of the earnings call can be heard after 2 p.m. on August 12, 2008 until August 19, 2008. To hear the replay, dial (800) 642-1687 and enter the same conference ID # 56353005. For interested parties outside the U.S. and Canada, dial (706) 645-9291 and enter the same conference ID #.
Vangent's second 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 Q2 2008 Results Conference Call.
About Vangent, Inc.
With over 5,000 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 and Labor; 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. Additional information can be found at: www.vangent.com.
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.
Vangent, Inc. (formerly Pearson Government Solutions Business)
Condensed Consolidated Statements of Operations
(in thousands)
(unaudited)
Predecessor
Successor Entity Entity Successor Entity
-------------------- --------- --------------------
Three Three Period Period Six
Months Months January 1 February Months
Ended Ended to 15 to Ended
June 30, June 28, February 14, June 30, June 28,
2007 2008 2007 2007 2008
--------- --------- --------- --------- ---------
Revenue $ 121,584 $ 123,934 $ 58,833 $ 174,046 $ 267,409
Cost of revenue 102,712 105,934 48,187 150,113 223,100
--------- --------- --------- --------- ---------
Gross profit 18,872 18,000 10,646 23,933 44,309
General and
administrative
expenses 12,944 12,473 9,383 18,438 26,257
Selling and
marketing expenses 4,544 4,075 1,940 6,849 8,206
--------- --------- --------- --------- ---------
Operating income
(loss) 1,384 1,452 (677) (1,354) 9,846
Interest expense 9,795 8,958 34 14,560 18,176
Interest income (201) (181) (44) (201) (449)
--------- --------- --------- --------- ---------
Loss before income
taxes (8,210) (7,325) (667) (15,713) (7,881)
Provision (benefit)
for income taxes 1,984 1,228 (292) 2,936 3,096
--------- --------- --------- --------- ---------
Net loss $ (10,194) $ (8,553) $ (375) $ (18,649) $ (10,977)
========= ========= ========= ========= =========
Vangent, Inc. (formerly Pearson Government Solutions Business)
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
December June
31, 2007 28, 2008
--------- ---------
Assets
Current assets:
Cash and cash equivalents $ 26,093 $ 30,426
Trade receivables, net 112,292 98,799
Other receivables and prepaid items 15,470 20,355
--------- ---------
Total current assets 153,855 149,580
Property and equipment, net 27,579 32,678
Goodwill and intangible assets, net 499,900 492,859
Deferred debt financing costs and other 12,734 11,936
--------- ---------
Total assets $ 694,068 $ 687,053
========= =========
Liabilities and Stockholder's Equity
Current liabilities:
Current portion of long-term debt $ 7,325 $ -
Accounts payable and accrued expenses 63,248 69,371
Accrued interest 8,547 8,007
Other 5,296 4,103
--------- ---------
Total current liabilities 84,416 81,481
Long-term debt, net of current portion 420,875 420,366
Other liabilities 8,488 13,655
--------- ---------
Total liabilities 513,779 515,502
Stockholder's equity 180,289 171,551
--------- ---------
Total liabilities and stockholder's equity $ 694,068 $ 687,053
========= =========
Vangent, Inc. (formerly Pearson Government Solutions Business)
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Predecessor
Entity Successor Entity
--------- --------------------
Period Period Six
January 1 February 15 Months
to to Ended
February 14, June 30, June 28,
2007 2007 2008
--------- --------- ---------
Cash flows from operating activities
Net loss $ (375) $ (18,649) $ (10,977)
Depreciation and amortization 2,369 13,353 17,365
Equity-based compensation expense 1,477 - 592
Deferred income taxes (19) 2,337 2,913
Net change in operating assets and
liabilities (22,348) 26,116 11,283
--------- --------- ---------
Net cash (used in) provided by operating
activities (18,896) 23,157 21,176
--------- --------- ---------
Cash flows from investing activities
Acquisition, net of cash acquired - (615,206) (3,936)
Capital expenditures (3,727) (2,082) (5,041)
--------- --------- ---------
Net cash used in investing activities (3,727) (617,288) (8,977)
--------- --------- ---------
Cash flows from financing activities
Proceeds from issuance of common stock - 203,466 -
Proceeds from issuance of long term debt,
net of repayments - 429,400 (7,834)
Debt financing costs - (14,013) -
Investment from parent and other 13,271 (110) (138)
--------- --------- ---------
Net cash provided by (used in) financing
activities 13,271 618,743 (7,972)
Effect of exchange rate changes on cash
and cash equivalents (166) 389 106
--------- --------- ---------
Net (decrease) increase in cash and cash
equivalents (9,518) 25,001 4,333
Cash and cash equivalents, beginning of
period 11,713 - 26,093
--------- --------- ---------
Cash and cash equivalents, end of period $ 2,195 $ 25,001 $ 30,426
========= ========= =========
Vangent, Inc. (formerly Pearson Government Solutions Business)
Reconciliation of GAAP to Non-GAAP Measures
(in thousands)
(unaudited)
Twelve
Three Months Ended Year-to-Date Months
-------------------- -------------------- Ended
June 30, June 28, June 30, June 28, June 28,
2007 2008 2007 2008 2008
--------- --------- --------- --------- ---------
Net loss $ (10,194) $ (8,553) $ (19,024) $ (10,977) $ (14,377)
Provision for income
taxes 1,984 1,228 2,644 3,096 6,657
Interest expense,
net 9,594 8,777 14,349 17,727 36,810
Depreciation and
amortization 8,912 8,946 14,867 17,365 34,392
--------- --------- --------- --------- ---------
EBITDA 10,296 10,398 12,836 27,211 63,482
Equity-based
compensation
expense - 345 1,477 592 1,501
TSA adjustment 12 16 1,151 36 213
Net transition and
contract settlement
costs 2,288 1,011 8,765 3,426 12,161
Management fee 287 306 537 587 964
--------- --------- --------- --------- ---------
Adjusted EBITDA 12,883 12,076 24,766 31,852 78,321
CMS contract
normalization 2,704 - 5,817 - -
TSA expenses (46) - (35) 19 148
--------- --------- --------- --------- ---------
Credit Agreement
Adjusted EBITDA $ 15,541 $ 12,076 $ 30,548 $ 31,871 $ 78,469
========= ========= ========= ========= =========
The net loss of $19.0 million for the six months ended June 30, 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 $18.6 million for the Successor Entity for the period
February 15 to June 30, 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.
Credit Agreement Adjusted EBITDA is adjusted to normalize the operating income of a certain HHS contract and to exclude TSA related expenses.