SM&A Profit Drops

SM&A (WINS) posted a drop in fourth-quarter earnings as a major client reduced orders.

The Newport Beach, Calif., provider of business strategy and proposal-development services made 4 cents a share for the quarter ended Dec. 31, down from 13 cents a year ago. Revenue fell to $16.5 million from $18.2 million a year earlier.

"As we reported in January, several factors hindered our fourth-quarter financial performance," said President Cathy McCarthy. "We entered the fourth quarter with the potential for revenue shortfall resulting from a client who is experiencing budget pressure on one of their programs. This budget pressure continued throughout the quarter and impacted our ability to continue to service the client at the levels maintained during the first nine months of the year.

"We felt there was an opportunity to offset this revenue pressure with additional competition-management contracts in our pipeline," McCarthy added. "However, a number of procurement delays late in the quarter affected our ability to overcome the revenue pressure. In addition, our loss of focus on building our performance-assurance business, and the resulting insufficient pipeline from this service line, contributed to the revenue shortfall."

"The fourth-quarter results were unacceptable, and we've moved aggressively to address the issues impacting our growth," continued McCarthy. "Our goal is to begin to regain momentum during the second half of 2006. To illustrate the Board's and Management's confidence in our plan, we've increased our share repurchase authorization by a further $10 million."

Late Thursday, SM&A fell 4 cents to $7.11.

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