Ciber reports Q1 2014 results
Highlights From Continuing Operations for the First Quarter 2014 include:
1. Revenue of $218.0 million, a 1% decrease in U.S. dollars and constant currency versus the prior year
2. Operating income of $6.9 million, representing an operating income margin of 3.2%
3. Net income from continuing operations of $4.1 million, or $4.0 million before restructuring, or $0.05 per share
4. Operating cash flow used in continuing operations of $30.5 million
President and chief executive officer, Dave Peterschmidt, said, "With a good fourth quarter and continuation of positive trends in the first quarter, we are encouraged by evidence that our initiatives are having a visible impact on both revenues and costs. At a strategic level, we see a significant opportunity as we transition the company to growth."
Christian Mezger, chief financial officer, commented, "We made visible progress in a number of areas of the business in the first quarter, and we see opportunities to continue to leverage this momentum through 2014. Our restructuring initiatives are beginning to deliver the benefits we set out to achieve. Gross margins improved year over year and held sequentially and SG&A declined as a percent of revenue. As a result, operating margins grew to over 3%."
Market Highlights in the First Quarter Include:
1. Clariant, a leading global specialty chemical company represented by more than 100 Group companies and some 18,000 employees, selected Ciber to oversee a pilot implementation of an SAP production execution system.
2. Malmberg, one of the largest educational publishers in the Netherlands, has re-selected Ciber to deliver and scale a flexible private cloud infrastructure plus application management services for all current and new digital learning environments. Malmberg's adaptive-learning environments are currently serving around 1 million users in primary, secondary and professional education.
3. The State of Nevada Gaming Control Board engaged Ciber to migrate its mission critical OpenVMS Alpha Systems into a new custom solution to be created by Ciber’s Application Development and Maintenance practice. Ciber was selected based on its years of custom application development experience, methodologies and code accelerators to use in developing this new system, which will house records required to monitor all gaming organizations within the state.
4. C. Hoare & Co., the oldest private bank in the United Kingdom, chose Ciber to implement Microsoft Dynamics CRM to manage key processes and reap significant efficiency gains through this investment.
5. The University of Texas System engaged Ciber to implement higher education ERP software and a portal interaction hub. Part of a shared services environment, the new solution will serve two academic institutions: The University of Texas Rio Grande Valley and the University of Texas of the Permian Basin.
First Quarter Financial Results from Continuing Operations
Revenue of $218.0 million decreased 1% in U.S. dollars and constant currency, compared with last year’s first quarter. Sequentially from the fourth quarter of 2013, revenue was down 2% in both U.S. dollars and constant currency.
Gross margin for the first quarter was 25.9%, compared with 25.2% in last year’s first quarter and 26.0% in the fourth quarter of 2013.
Selling, general and administrative expenses (SG&A) in the first quarter were $49.6 million, a decrease of 1% from the first quarter of last year, and a 4% decrease sequentially.
First quarter 2014 operating income from continuing operations of $6.9 million, before restructuring, yielded an operating margin of 3.2%, compared to 2.3% in the prior-year first quarter, and 2.8% in the fourth quarter of 2013.
Net income from continuing operations, before restructuring, for the first quarter of 2014 was $4.0 million, or $0.05 per share. Including restructuring, net income from continuing operations was $4.1 million in the quarter. Last year’s first quarter net income from continuing operations, before restructuring, was $1.8 million, or $0.02 on a per share basis.
For the fourth quarter of 2013, net income from continuing operations, before restructuring, was $3.0 million, or $0.04 per share.
Revenue in the International division was $115.0 million for the first quarter of 2014, which was up 2% compared to the year-ago first quarter, and 1% in constant currency. Compared to the fourth quarter of 2013, International revenue was down 3%, and 4% in constant currency. Operating margin of 5.9% was up 150 basis points compared to the first quarter of 2013 and down 70 basis points from the fourth quarter of 2013.
The North American division posted revenue of $103.5 million, down 3% from the year-ago first quarter and down 1% compared to the fourth quarter of 2013. Operating margin of 8.2% improved 60 basis points from the year-ago first quarter and 20 basis points from the fourth quarter of 2013.
Capital Deployment and Liquidity
Ciber’s cash balance at the end of the first quarter of 2014 was $25.5 million. The outstanding balance on the credit facility was $10.6 million.
Cash flow used in operating activities (continuing operations) year-to-date through March 31 was $30.5 million, an increase of $3.3 million versus the prior year. Days Sales Outstanding (DSO) were 63 days. Capital expenditures totaled $2.1 million in the quarter.