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NCI Inc. Reports Operating Results (10-Q)

November 04, 2010 | About:
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10qk

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NCI Inc. (NCIT) filed Quarterly Report for the period ended 2010-09-30.

Nci Inc. has a market cap of $276.2 million; its shares were traded at around $19.98 with a P/E ratio of 12.1 and P/S ratio of 0.6. Nci Inc. had an annual average earning growth of 33.6% over the past 5 years.NCIT is in the portfolios of Paul Tudor Jones of The Tudor Group, Chuck Royce of Royce& Associates.

Highlight of Business Operations:

For the three months ended September 30, 2010, total revenue increased by 29.6%, or $38.6 million, over the same period a year ago. Our organic revenue growth rate, which reflects our increase in revenue from year to year excluding the effect of acquisitions, for the quarter ended September 30, 2010, was 28.4%. This increase was due to new contact awards, including numerous new tasks orders under our GWAC contract vehicles, primarily under TEIS, NETCENTS, and ITES-2S, including Defense Information Systems Agency (DISA) BRAC and other BRAC-related awards under TEIS, as well as growth on existing programs, particularly the NETCOM EMS and PEO Soldier contracts. These increases were offset by revenue reductions due to tasks that have been completed and lower product-related sales under NETCENTS. During the third quarter of 2010, our DISA BRAC contract accounted for 22.3%, or $37.6 million, and our PEO Soldier contract accounted for 14.1%, or $23.7 million, of our revenue. During the third quarter of 2009, PEO Soldier accounted for 10.0%, or $13.0 million, of our revenue. DISA BRAC was awarded during 2010 and no revenue was generated during 2009.

Net interest expense was approximately $0.1 million for the quarters ended September 30, 2010 and 2009. During the third quarter of 2010, we had an average outstanding loan balance of $31.3 million which accrued interest at approximately 1.3%. During the third quarter of 2009, we had an average outstanding loan balance of $35.5 million which accrued interest at approximately 1.3%.

For the nine months ended September 30, 2010, total revenue increased 19.4%, or $66.6 million, over the same period a year ago. Our organic revenue growth rate, which reflects our increase in revenue from year to year excluding the effect of acquisitions, for the nine months ended September 30, 2010, was 16.7%. This increase is the result of new contract awards and task orders under our GWAC contract vehicles, including DISA BRAC and other BRAC-related program under TEIS, and significant increases on some existing programs, particularly PEO Soldier. These increases were offset by revenue reductions due to contracts that have ended and significantly lower product-related sales under NETCENTS. During the first nine months of 2010, our DISA BRAC contract accounted for 9.5%, or $39.2 million, and our PEO Soldier contract accounted for 12.6%, or $51.9 million, of our revenue. During the first nine months of 2009, PEO Soldier accounted for 10.0%, or $34.3 million, of our revenue. DISA BRAC was awarded during 2010 and no revenue was generated during 2009.

Amortization of intangible assets was approximately $1.8 million for the nine months ended September 30, 2010, and $1.5 million for the same period during 2009. The increase is due to the timing of amortization of intangible assets over their estimated lives from our acquisitions.

Net interest expense was approximately $0.4 million for the nine months ended September 30, 2010, as compared to $0.5 million for the same period in the prior year. During the first nine months of 2010, we had an average outstanding loan balance of $32.4 million which accrued interest at approximately 1.3%. During the first nine months of 2009, we had an average outstanding loan balance of $34.3 million which accrued interest at approximately 1.3%.

At September 30, 2010 and December 31, 2009, our estimated backlog was $1,426 million and $1,501 million, respectively, of which $330 million and $250 million, respectively, was funded. We define backlog as our estimate of the remaining future revenue from existing signed contracts over the remaining base contract performance period and from the option periods of those contracts, assuming the exercise of all related options. We define funded backlog as the portion of backlog for which funding currently is appropriated and obligated to us under a contract or other authorization for payment signed by an authorized purchasing agency, less the amount of revenue we have previously recognized. Our backlog does not include any estimate of future potential delivery orders that might be awarded under our GWAC or other multiple-award contract vehicles. Additional information on how we determine backlog is included in our Annual Report on Form 10-K for the year ended December 31, 2009 filed with the SEC.

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