NCI, Inc. (NASDAQ: NCIT), a leading provider of information technology (IT), engineering, logistics, and professional services and solutions to U.S. Federal Government agencies, today announced its financial and operating results for the third quarter ended September 30, 2013.
Third quarter 2013 revenue was at the high end of management’s guidance range issued last quarter. Diluted EPS exceeded the high end of guidance by $0.04.
Third Quarter 2013 Results
For the three months ended September 30, 2013, total revenue decreased by 11.9%, or $10.5 million, to $77.9 million, compared with the same period a year ago. The decrease was due to $3.1 million of lower revenue attributable to services provided under NCI’s PEO Soldier contract as well as $7.4 million of reductions in scope of work, including the impact of sequestration, and the expiration of certain task orders and contracts, partially offset by revenue from new awards and growth on existing programs. During the third quarter of 2013, NCI’s PEO Soldier program accounted for 14% of revenue compared with 16% of revenue for the same period in 2012.
General and administrative expenses decreased 6.9%, or $0.4 million, for the three months ended September 30, 2013, compared with the same period a year ago. The decrease was primarily due to lower compensation expense as a result of reduced headcount, partially offset by continued investment in business development initiatives.
GAAP operating income for the third quarter of 2013 was $3.5 million compared with a GAAP operating loss for the third quarter of 2012 of $91.7 million. GAAP operating income for the third quarter of 2013 included a $0.9 million gain from the resolution of a purchase contingency related to the AdvanceMed acquisition in April 2011. GAAP operating loss for the third quarter of 2012 included costs resulting from a goodwill impairment charge of $92.8 million and a cash tender offer of approximately $2.3 million for certain out-of-the-money stock options held by current and former NCI employees. Excluding the effects of these items, NCI reported adjusted operating income of $2.6 million for the third quarter of 2013 and $3.4 million for the third quarter of 2012
. Adjusted operating margin was 3.3% for the third quarter of 2013 and 3.8% for the third quarter of 2012. Adjusted operating income and margin for the third quarter of 2013 decreased due to lower revenue and the reduced absorption of indirect costs on the lower revenue base, respectively.
GAAP net income for the third quarter of 2013 was $2.0 million compared with a GAAP net loss for the third quarter of 2012 of $55.2 million. Excluding the impact of the purchase contingency gain, adjusted net income for the third quarter of 2013 was $1.4 million. Excluding the impact of the impairment charge and stock option tender offer, adjusted net income for the third quarter of 2012 was $1.8 million. The decrease in adjusted net income year over year is attributable to the factors affecting operating income, partially offset by lower interest expense.