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National Technical Systems Inc. Reports Operating Results (10-Q)

September 13, 2010 | About:
10qk

10qk

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National Technical Systems Inc. (NTSC) filed Quarterly Report for the period ended 2010-07-31.

National Technical Systems Inc. has a market cap of $72.28 million; its shares were traded at around $7.5799 with a P/E ratio of 16.84 and P/S ratio of 0.59. National Technical Systems Inc. had an annual average earning growth of 12.5% over the past 10 years.NTSC is in the portfolios of Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

For the six months ended July 31, 2010, consolidated revenues increased by $13,229,000 or 23.0% when compared to the same period in fiscal 2010. Organic growth of $8,133,000 or 14.2% was primarily due to continued strong performance in the aerospace and defense markets as a result of the Company s investments in additional capability and capacity. Acquisition growth of $5,096,000 or 8.9% was from the purchase of Unitek Technical Services on November 30, 2009.

Other income was $3,189,000 for the six months ended July 31, 2010, compared to other income of $135,000 for the same period in the prior year. The income in the current year was primarily due to the gain on the sale of the Company s Virginia property of $3,017,000 and the net gain recognized from insurance recovery of $836,000 related to fires at the Company s Fullerton and Plano facilities in the prior year, partially offset by adjustments to the earn-out for Unitek Technical Services and other non-recurring expenses.

Net income for the six months ended July 31, 2010 was $4,539,000 compared to $1,392,000 for the same period in fiscal 2010, an increase of $3,147,000 or 226.1%. This increase was primarily due to the $3,054,000 increase in other income and the $2,311,000 increase in operating income, partially offset by higher income taxes.

Net cash provided by operating activities of $5,560,000 in the six months ended July 31, 2010 primarily consisted of net income of $4,539,000, adjusted for non-cash items of $3,608,000, share-based compensation of $317,000, undistributed earnings of affiliate of $201,000, tax benefit from stock options exercised of $167,000, changes in working capital of $110,000 and other adjustments of $51,000, partially offset by gain on sale of assets of $3,017,000, deferred income taxes of $220,000, recoveries of receivables of $134,000 and gain on investments of $62,000. Net cash provided by operating activities of $2,948,000 in the six months ended July 31, 2009 primarily consisted of net income of $1,392,000 adjusted for non-cash items of $3,597,000 in depreciation and amortization, write off of receivables of $276,000, share-based compensation of $135,000, life insurance premium of $37,000, undistributed earnings of affiliate of $28,000 and loss on retirement of assets of 8,000, offset by changes in working capital of $2,194,000, deferred income taxes $171,000 and gain on investments of $160,000.

Net cash used in investing activities in the six months ended July 31, 2010 of $4,823,000 was primarily attributable to capital spending of $6,403,000 and cash used for acquisitions related earn-out payments of $2,149,000, investment in retirement funds of $375,000 and investment in life insurance of $15,000, partially offset by proceeds from sale of property of $2,293,000 and proceeds from sale of life insurance of $1,826,000. Net cash used in investing activities in the six months ended July 31, 2009 of $3,813,000 was primarily attributable to capital spending of $3,185,000, investment in retirement funds of $351,000, acquisitions of businesses, net of cash acquired of $159,000 and investment in life insurance of $118,000.

Net cash used in financing activities in the six months ended July 31, 2010 of $2,817,000 consisted of repayment of debt of $4,010,000, cash dividends paid of $710,000, net cash dividends paid by NQA, Inc. of $99,000, partially offset by proceeds from borrowing of $1,524,000 and proceeds from stock options exercised of $478,000. Net cash used in financing activities in the six months ended July 31, 2009 of $2,592,000 consisted of repayment of debt of $4,304,000, cash dividends paid of $558,000 and common stock repurchase of $58,000, partially offset by proceeds from borrowing of $2,328,000.

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