Highlights From Continuing Operations for the Third Quarter 2013 Include:
• Revenue of $215.1 million, a 2% increase, flat in constant currency
• Operating income of $0.5 million, before $14.0 million charge associated with previously announced restructuring program, representing an operating income margin of 0.2%
• Net loss from continuing operations of $13.5 million, or net income from continuing operations of $1.4 million before restructuring charges and CFO transition costs, or $0.02 per share
• Operating cash flow from continuing operations of $12.7 million
President and Chief Executive Officer Dave Peterschmidt said,"Third quarter results reflected a continuation of the trends we discussed in the second quarter. We made steady progress on the shift in our business mix to more ISV and Managed Services projects. As a result, we believe in our ability to grow the business in a consistent and profitable way going forward."
Mike Lehman, Chief Financial Officer, commented,"I am confident that there are numerous opportunities to improve our overall business model. I believe the operational disciplines and processes within North America are quite solid. The focus is now squarely on investing in and maintaining our core ADM business. On the international front, there are multiple opportunities for margin expansion. As part of the restructuring and transformation, I am encouraged by the adoption of best practices and a renewed focus on utilization and use of global delivery resources. All transitions take time, but I am encouraged by the energy and focus I see here."
Market Highlights in the Third Quarter Include:
• A world leader in automobile and equipment rental selected Ciber to implement Infor’s M3 equipment service management and rental software worldwide. Ciber will assist with replacing the company’s existing equipment rental management systems with a comprehensive solution for managing assets, projects, rentals and sales.
• One of the largest municipal electric utilities in the U.S. selected Ciber to implement SuccessFactors, an, SAP-owned, cloud-based solution for talent management. The engagement will support strategic human resources and safety for this supplier of electricity to more than one million customers.
• One of the world’s largest online retailers of books and media extended its contract with Ciber for support of SAP software and the organization’s business warehouse. The engagement will be staffed with employees from Ciber’s SAP Center of Excellence in Germany.
• A world-renowned resort operator expanded its managed services contracts with Ciber. In addition to an ongoing business analysis managed services engagement, Ciber now is providing managed services for program and project management. The multi-million dollar contracts are scheduled to run for three years.
Third-Quarter Financial Results from Continuing Operations
Revenue of $215.1 million increased 2%, or flat in constant currency, compared with last year’s third quarter. Sequentially from the second quarter of 2013, revenue was down 2% in U.S. dollars, and down 3% in constant currency.
Gross margin for the third quarter was 25.1%, compared with 25.3% in last year’s third quarter and 25.4% in the second quarter of 2013.
Selling, general and administrative expenses (SG&A) in the third quarter were $53.5 million. Excluding CFO transition costs, SG&A in the third quarter was $50.9 million, a $2.0 million or 4% increase from the third quarter of last year, and a 1% increase sequentially.
Third quarter 2013 operating income from continuing operations of $0.5 million, before restructuring charges of $14.0 million, yielded an operating margin of 0.2%, compared to 2.0% in the prior-year third quarter, and 2.6% compared to the second quarter of 2013.
Net income from continuing operations, before restructuring charges and CFO transition costs, for the third quarter of 2013 was $1.4 million, or $0.02 per share. Including restructuring and CFO transition costs, net loss from continuing operations was $13.5 million in the quarter. Last year’s third quarter net income from continuing operations was $195 thousand, or break-even on a per diluted share basis. For the second quarter of 2013, net income from continuing operations, before restructuring charges, was $3.4 million, or $0.04 per diluted share.
Revenue in the International division was $110.9 million for the third quarter of 2013, which was up nearly 9% compared to the year-ago third quarter, and up 5% in constant currency. Compared to the second quarter of 2013, International revenue was down 3% in both USD and constant currency. Operating margin of 4.1% was up 30 basis points compared to the third quarter of 2012 and down 120 basis points from the second quarter of 2013.
The North American division posted revenue of $104.9 million, down 4% from the year-ago third quarter and down 2% compared to the second quarter of 2013. Operating margin of 8.1% improved 90 basis points from the year-ago third quarter and 10 basis points from the second quarter of 2013.
Capital Deployment and Liquidity
Ciber’s cash balance at the end of the third quarter of 2013 was $32.9 million. The outstanding balance on the credit facility was $17.6 million.
Cash flow used in operating activities (continuing operations) year-to-date through September 30 was $4 million, an improvement of $28 million versus the prior year. Days Sales Outstanding (DSO) were 63 days. Capital expenditures totaled $4.1 million in the quarter.
For a recap of historical comparisons, please refer to Ciber's most recent SEC filings on forms 10-Q and 8-K. These filings may be found in the Investor Relations section of the Company's website at ciber.com/cbr.
Investor and Analyst Conference Call
Ciber President and Chief Executive Officer Dave Peterschmidt invites you to participate in a conference call or audiocast today at 8:30 am. Eastern Time to discuss the Company’s financial results.
The live audiocast of the conference call will be available to the public at ciber.com/cbr. To participate in the conference call, dial 866-318-8611 (U.S.) or +1-617-399-5130 (outside the U.S.) ten minutes prior to the start of the call and provide the operator with the pass code 89918145.
A replay of the call and audiocast will be available one hour after the call ends through November 28, 2013. To access the telephone replay, dial 888-286-8010 (U.S.) or +1-617-801-6888 (outside the U.S.) and use the pass code 14204006. The webcast replay will be available at ciber.com/cbr.
Non-GAAP Financial Information
Ciber presents a number of non-GAAP measurements because management believes that these metrics provide meaningful supplemental information in addition to the GAAP metrics and provide comparability and consistency to prior periods. These non-GAAP measurements include: third quarter 2013 revenue change year-over-year adjusted for currency; third quarter 2013 year-to-date revenue change year-over-year adjusted for currency; third quarter 2013 sequential revenue change adjusted for currency; international third quarter 2013 revenue change year-over-year adjusted for currency; International third quarter 2013 year-to-date revenue change year-over-year adjusted for currency; International third quarter 2013 sequential revenue change adjusted for currency; third quarter 2013 SG&A expenses adjusted for CFO transition costs; third quarter 2013 operating income and operating margin adjusted for restructuring charges and CFO transition costs; second quarter 2013 operating margin adjusted for restructuring charges and CFO transition costs; third quarter 2012 operating margin adjusted for restructuring charges and CFO transition costs; third quarter 2013 net loss from continuing operations and net loss per share from continuing operations adjusted for restructuring charges and CFO transition costs; second quarter 2013 net income from continuing operations and net income per diluted share from continuing operations adjusted for restructuring charges and CFO transition costs; and third quarter 2012 net income from continuing operations and net income per diluted share from continuing operations adjusted for restructuring charges and CFO transition costs. Reconciliations of non-GAAP to comparable GAAP measures are available in the schedules accompanying this release. These reconciliations may also be found in the Investor Relations section of the Company's website.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 relating to our operations, results of operations and other matters that are based on our current expectations, estimates, forecasts and projections. Words, such as “anticipate,” “believe,” “could,” “expect,” “estimate,” “intend,” “may,” “opportunity,” “plan,” “positioned,” “potential,” “project,” “should,” and “will” and similar expressions, are intended to identify these forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Forward-looking statements are based on assumptions as to future events that may not prove to be accurate. Risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by our forward-looking statements include, but are not limited to, risks that: our results of operations may be adversely affected if we are unable to execute on the key elements of our strategic plan; we may experience declines in revenue and profitability if we do not accurately estimate the cost of engagements conducted on a fixed-price basis; a data security or privacy breach could adversely affect our business; our business could be adversely affected if our clients are not satisfied with our services, and we could face damage to our professional reputation and/or legal liability; our future success depends on our ability to continue to retain and attract qualified sales, delivery and technical employees; our results of operations can be adversely affected by economic conditions and the impacts of economic conditions on our clients' operations and technology spending; if we are unable to collect our receivables, our results of operations and cash flows could be adversely affected; our Credit Agreement, an asset-based loan facility, limits our operational and financial flexibility; our revenues, operating results and profitability will vary from quarter to quarter, which may result in increased volatility in the price of our stock; termination of a contract by a significant client and/or cancellation with short notice could adversely affect our results of operations; our international operations are susceptible to different financial and operational risks than our domestic operations; the IT services industry, in the U.S. and internationally, is highly competitive, with increased focus on offshore capability and we may not be able to compete effectively; our presence in India may expose us to operational risks due to regulatory, economic, political, and other uncertainties; if we are not able to anticipate and keep pace with rapid changes in technology, our business will be negatively affected; we could incur additional losses due to further impairment in the carrying value of our goodwill; we depend on contracts with various public sector agencies for a significant portion of our revenue and, if the spending policies or budget priorities of these agencies change, we could lose revenue; unfavorable government audits could require us to adjust previously reported operating results, to forego anticipated revenue and subject us to penalties and sanctions; our services or solutions could infringe upon the intellectual property rights of others, or we might lose our ability to utilize rights we claim in intellectual property or the intellectual property of others; possible future consideration on the sale of certain contracts and assets associated with our information technology outsourcing practice may not be realized; we have adopted anti-takeover defenses that could make it difficult for another company to acquire control of Ciber or limit the price investors might be willing to pay for our stock, thus affecting the market price of our securities. For a more detailed discussion of these factors, see the information under the “Risk Factors” heading in our Annual Report on Form 10-K for the year ended December 31, 2012, Form 10-Q for the quarter ended June 30, 2013 and other documents filed with or furnished to the Securities and Exchange Commission. We undertake no obligation to publicly update any forward-looking statements in light of new information or future events. Readers are cautioned not to put undue reliance on forward-looking statements.
About Ciber, Inc.
Ciber (ciber.com) is a leading global IT consulting company with some 6,700 consultants and contractors in North America, Europe and Asia/Pacific, and approximately $1 billion in annual revenue. Client focused and results driven, Ciber partners with organizations to develop technology strategies and solutions that deliver tangible business value. Founded in 1974, the company trades on the New York Stock Exchange (NYSE: CBR).
Christian Mezger - Investor Relations
P: 303-267-3857 - E: cmezger[.]ciber.com.