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ManTech Announces Financial Results for Third Quarter of 2021

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  • MANT
  • Revenue: $638 million

  • EBITDA Margin: 11.4%

  • Diluted EPS: $0.93, up 27% from the third quarter of 2020

  • Adjusted Diluted EPS: $1.01, up 22% from the third quarter of 2020

  • Cash Flow from Operations: $139 million (3.6 times Net Income)

  • Bookings of $716 million resulting in a book-to-bill ratio of 1.1

  • Gryphon Technologies acquisition expands digital and systems engineering capabilities across the Department of Defense

HERNDON, Va., Nov. 02, 2021 (GLOBE NEWSWIRE) -- ManTech International Corporation (Nasdaq: MANT), a leading provider of innovative technologies and solutions for mission-critical national security programs, today announced financial results for the third quarter of fiscal year 2021, which ended September 30, 2021.

"In the third quarter, we delivered strong profitability and robust cash flow. However, we experienced revenue growth below expectations during the quarter as we continue to navigate a complex industry operating environment over the near term. The fundamental drivers for our long-term growth remain favorable and we are focused on leveraging our differentiated portfolio and capabilities to convert on our pipeline. We are pleased to deploy capital to create shareholder value. The acquisition of Gryphon Technologies further strengthens our long-term competitive position, adding differentiated digital and systems engineering capabilities across the Department of Defense," said ManTech Chairman, Chief Executive Officer and President Kevin M. Phillips.

Summary Operating Results

Three months ended
September 30,

(In Millions Except Per Share Amounts)

2021

2020

Revenue

$637.8

$636.2

Operating Income

$53.3

$39.3

Net Income

$38.0

$29.7

Diluted EPS

$0.93

$0.73

Non-GAAP Financial Measures*

EBITDA

$72.8

$57.5

EBITDA Margin

11.4%

9.0%

Adjusted Net Income

$41.3

$33.6

Adjusted Diluted EPS

$1.01

$0.83

*Information about ManTech's use of non-GAAP financial measures, including a reconciliation of the non-GAAP financial measures to the most comparable financial measures calculated and presented in accordance with GAAP, is provided under "Non-GAAP Financial Measures."

Revenue was $638 million, flat compared to the third quarter of 2020.

Operating income was $53.3 million for the quarter, up 35% from the third quarter of 2020. Net income was $38.0 million and diluted earnings per share ("EPS") was $0.93, up 28% and 27% from the third quarter of 2020, respectively.

EBITDA was $72.8 million for the quarter, up 27% from the third quarter of 2020, representing an EBITDA margin of 11.4% for the quarter. Adjusted net income was $41.3 million and adjusted diluted EPS was $1.01, up 23% and 22% from the third quarter of 2020, respectively.

Cash Management and Capital Deployment

For the quarter, cash from operations totaled $139 million. Days sales outstanding (DSO) were 55 days, an increase of 1 day compared to the third quarter of 2020.

During the quarter, the Company paid $15.5 million, or $0.38 per share, as part of its regular cash dividend program to its common stockholders of record as of September 10, 2021. As of September 30, 2021, the Company had $145.4 million in cash and cash equivalents and no outstanding borrowings under its revolving-credit facility and delayed draw term loan facility. The Company has ample financial capacity to continue funding organic investments, pursue growth-oriented acquisitions and issue dividends while maintaining a strong balance sheet.

The Board of Directors has declared a quarterly dividend of $0.38 to be paid December 17, 2021, to all common stockholders of record as of December 3, 2021, as part of the Company's regular quarterly cash dividend program. Future declarations of dividends and their record and payment dates are subject to the final determination of ManTech's Board of Directors.

Contract Awards

Contract awards (bookings) totaled $716 million in the quarter, representing a book-to-bill ratio of 1.1. ManTech's notable single-award contracts in the quarter include:

  • Systems Engineering and Integration for the U.S. Space Force. ManTech was awarded a 10-year contract totaling $476 million to continue its support for a wide array of mission critical space launch programs with launch service integration, fleet surveillance and certification for space and missile systems.

  • Naval Submarine and Surface Signature Silencing Programs for the Navy. ManTech was awarded a 5-year contract totaling $51 million to continue providing engineering services, data collection, reduction, analysis and reporting for submarine and surface ship acoustical trials.

The Company also received a number of additional contract awards in the quarter including several extensions to existing contracts and new contracts from various customers.

The Company’s backlog of business at quarter end was $10.1 billion including $1.3 billion of funded backlog.

Forward Guidance

The Company is adjusting the range of its 2021 guidance for revenue, adjusted net income and adjusted diluted earnings per share as specified in the table below.

Measure

Fiscal 2021 Guidance

Revenue (million)

$2,550 - $2,575

Adjusted Net Income* (million)

$150.2 - $152.2

Adjusted Diluted EPS*

$3.66 - $3.71

*Information about ManTech's use of non-GAAP financial measures is provided under "Non-GAAP Financial Measures"

Adjusted net income and adjusted diluted EPS exclude amortization of acquired intangibles and the related tax impact. The Company does not provide a reconciliation of forward-looking adjusted net income and adjusted diluted EPS, due to inherent difficulty in forecasting and quantifying these non-GAAP exclusions that are necessary for such reconciliation without unreasonable efforts. Material changes to any one of these items could have significant effect on future GAAP results.

ManTech Chief Financial Officer Judith L. Bjornaas said, "Our continued execution has led to strong profitability that is reflected in our revised guidance for the remainder of the year. Despite our changes to revenue guidance, we remain optimistic about ManTech’s opportunity to drive long-term growth. We are also pleased with our ability to deploy capital and remain focused on utilizing our balance sheet to further strengthen our portfolio strategically."

Conference Call

ManTech executive management will hold a conference call on November 2, 2021, at 5 p.m. Eastern to discuss the financial results and outlook and answer questions. Analysts may participate on the conference call by dialing (877) 638-9567 (domestic) or (253) 237-1032 (international) and entering passcode 4774879. The conference call will be webcast simultaneously to the public through a link on the Investor Relations section of the ManTech website (http://investor.mantech.com). A replay of the conference call will be available on the ManTech website approximately 2 hours after the conclusion of the conference call.

About ManTech International Corporation

ManTech provides mission-focused technology solutions and services for U.S. defense, intelligence community and federal civilian agencies. In business more than 50 years, we excel in full-spectrum cyber, data collection & analytics, enterprise IT, systems and software engineering solutions that support national and homeland security. Additional information about ManTech can be found at www.mantech.com.

Forward-Looking Information

Statements and assumptions made in this press release, which do not address historical facts, constitute “forward-looking” statements that ManTech believes to be within the definition in the Private Securities Litigation Reform Act of 1995 and involve risks and uncertainties, many of which are outside of our control. Words such as “may,” “will,” “expect,” “intend,” “anticipate,” “believe,” or “estimate,” or the negative of these terms or words of similar import, are intended to identify forward-looking statements.

These forward-looking statements are inherently subject to risks and uncertainties, and actual results and outcomes may differ materially from the results and outcomes we anticipate. Factors that could cause actual results to differ materially from the results we anticipate include, but are not limited to, the following: failure to maintain our relationship with the U.S. government, or the failure to compete effectively for new contract awards or to retain existing U.S. government contracts; adverse changes in U.S. government spending for programs we support, whether due to changing mission priorities, failure to pass fiscal year budget or enact stopgap spending measures through Continuing Resolutions, failure to increase or suspend U.S. debt ceiling, socio-economic policies or federal budget constraints generally; disruptions to our business or damage to our reputation resulting from cyberattacks and other security threats; disruptions to our business resulting from the COVID-19 pandemic or other similar global health epidemics, pandemics and/or other disease outbreaks, including the requirement for vaccination of our workforce; inability to recruit and retain a sufficient number of employees with specialized skill sets or necessary security clearances who are in great demand and limited supply; failure to compete effectively for awards procured through the competitive bidding process, and the adverse impact of delays resulting from our competitors' protest of new contracts that are awarded to us; failure to obtain option awards, task orders or funding under contracts; the government renegotiating, modifying or terminating our contracts; failure to comply with, or adverse change in, complex U.S. government laws and procurement regulations; adverse results in U.S. government audits or other investigations of our government contracts; failure to successfully integrate acquired companies or businesses into our operations or to realize any accretive or synergistic effects from such acquisitions; adverse changes in business conditions that may cause our investments in recorded goodwill to become impaired; and failure to mitigate risk associated with conducting business internationally. These and other risk factors are more fully discussed in the section entitled "Risk Factors" in ManTech's Annual Report on Form 10-K previously filed with the Securities and Exchange Commission on Feb. 19, 2021, Item 1A of Part II of our Quarterly Reports on Form 10-Q, and, from time to time, in ManTech's other filings with the Securities and Exchange Commission.

The forward-looking statements included herein are only made as of the date of this press release, and ManTech undertakes no obligation to publicly update any of the forward-looking statements made herein, whether as a result of new information, subsequent events or circumstances, changes in expectations or otherwise.

MANTECH INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands Except Share and Per Share Amounts)

(unaudited)

September 30,
2021

December 31,
2020

ASSETS

Cash and cash equivalents

$

145,414

$

41,193

Receivables—net

389,403

400,621

Prepaid expenses

30,752

26,243

Taxes receivable—current

17,838

21,968

Other current assets

8,339

6,354

Total Current Assets

591,746

496,379

Goodwill

1,238,090

1,237,894

Other intangible assets—net

182,234

202,231

Property and equipment—net

127,042

121,296

Operating lease right of use assets

79,266

94,825

Employee supplemental savings plan assets

40,996

37,848

Investments

11,555

11,549

Other assets

13,232

11,642

TOTAL ASSETS

$

2,284,161

$

2,213,664

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES

Accounts payable

$

164,387

$

142,360

Accrued salaries and related expenses

121,767

123,953

Contract liabilities

34,442

37,218

Operating lease obligations—current

31,291

30,105

Accrued expenses and other current liabilities

8,924

15,177

Total Current Liabilities

360,811

348,813

Deferred income taxes

152,586

141,638

Operating lease obligations—long term

67,306

80,242

Accrued retirement

34,841

36,310

Long-term debt

15,000

Other long-term liabilities

12,215

12,249

TOTAL LIABILITIES

627,759

634,252

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY

Common stock, Class A—$0.01 par value; 150,000,000 shares authorized; 27,803,379 and 27,538,474 shares issued at September 30, 2021 and December 31, 2020; 27,559,266 and 27,294,361 shares outstanding at September 30, 2021 and December 31, 2020

278

275

Common stock, Class B—$0.01 par value; 50,000,000 shares authorized; 13,176,695 and 13,176,695 shares issued and outstanding at September 30, 2021 and December 31, 2020

132

132

Additional paid-in capital

562,159

545,717

Treasury stock, 244,113 and 244,113 shares at cost at September 30, 2021 and December 31, 2020

(9,158

)

(9,158

)

Retained earnings

1,103,243

1,042,676

Accumulated other comprehensive loss

(252

)

(230

)

TOTAL STOCKHOLDERS' EQUITY

1,656,402

1,579,412

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

2,284,161

$

2,213,664

MANTECH INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In Thousands Except Per Share Amounts)

(unaudited)
Three months ended
September 30,

(unaudited)
Nine months ended
September 30,

2021

2020

2021

2020

REVENUE

$

637,821

$

636,196

$

1,919,623

$

1,879,600

Cost of services

536,205

538,000

1,631,790

1,597,764

General and administrative expenses

48,343

58,855

143,477

164,011

OPERATING INCOME

53,273

39,341

144,356

117,825

Interest expense

(606

)

(310

)

(1,326

)

(1,597

)

Interest income

36

40

115

227

Other (expense), net

(92

)

(29

)

(225

)

(51

)

INCOME FROM OPERATIONS BEFORE INCOME TAXES AND EQUITY METHOD INVESTMENTS

52,611

39,042

142,920

116,404

Provision for income taxes

(14,655

)

(9,303

)

(36,026

)

(28,037

)

Equity in losses of unconsolidated subsidiaries

(1

)

(1

)

NET INCOME

$

37,956

$

29,739

$

106,893

$

88,366

BASIC EARNINGS PER SHARE:

Class A common stock

$

0.93

$

0.74

$

2.63

$

2.19

Class B common stock

$

0.93

$

0.74

$

2.63

$

2.19

DILUTED EARNINGS PER SHARE:

Class A common stock

$

0.93

$

0.73

$

2.61

$

2.18

Class B common stock

$

0.93

$

0.73

$

2.61

$

2.18

MANTECH INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)

(unaudited)
Nine months ended
September 30,

2021

2020

CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:

Net income

$

106,893

$

88,366

Adjustments to reconcile net income to net cash flow from (used in) operating activities:

Depreciation and amortization

57,438

51,281

Noncash lease expense

27,002

20,738

Stock-based compensation expense

11,516

8,533

Deferred income taxes

10,948

11,127

Change in allowance for bad debts

(3,499

)

5,244

Contract loss reserve

(372

)

Change in assets and liabilities—net of effects from acquired businesses:

Receivables—net

14,638

10,877

Taxes receivable—current

4,130

(5,825

)

Prepaid expenses

(3,843

)

(7,838

)

Other current assets

1,180

(1,333

)

Employee supplemental savings plan asset

(3,375

)

(2,042

)

Other long-term assets

(3,775

)

(1,939

)

Accounts payable

24,850

23,490

Operating lease obligations

(26,465

)

(22,102

)

Accrued expenses and other current liabilities

(6,753

)

(925

)

Contract liabilities

(2,292

)

12,438

Accrued salaries and related expenses

(2,123

)

29,812

Accrued retirement

(1,469

)

(2,328

)

Other long-term liabilities

100

Other

49

(169

)

Net cash flow from operating activities

205,050

217,133

CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:

Purchases of property and equipment

(41,199

)

(53,685

)

Proceeds from corporate owned life insurance

227

4,137

Investment in capitalized software

(5,193

)

Proceeds from sale of property and equipment

869

Net cash (used in) investing activities

(40,972

)

(53,872

)

CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:

Borrowing under credit agreement

207,500

285,500

Repayments under credit agreement

(222,500

)

(322,000

)

Dividends paid

(46,332

)

(38,689

)

Proceeds from exercise of stock options

8,020

5,918

Debt issuance costs

(3,315

)

Payment consideration to tax authority on employees' behalf

(3,092

)

(1,014

)

Principal paid on financing leases

(138

)

(118

)

Net cash (used in) financing activities

(59,857

)

(70,403

)

NET CHANGE IN CASH AND CASH EQUIVALENTS

104,221

92,858

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

41,193

8,854

CASH AND CASH EQUIVALENTS, END OF PERIOD

$

145,414

$

101,712

Non-GAAP Financial Measures (Unaudited)

To supplement the review of ManTech's consolidated financial statements presented on a GAAP basis, the Company has provided non-GAAP calculations of certain financial measures. ManTech uses and refers to EBITDA, EBITDA margin, adjusted net income and adjusted EPS, all of which are non-GAAP financial measures. These non-GAAP financial measures have limitations as an analytical tool and should not be considered in isolation or as a substitute for the comparable GAAP measures.

ManTech’s management believes that these non-GAAP financial measures provide additional useful information regarding the Company’s operational and financial results. These non-GAAP financial measures eliminate the effect of non-cash items such as depreciation of tangible assets and amortization of intangible assets primarily recognized in business combinations as well as the effect of discrete tax items which we do not believe are indicative of our core operating performance. These non-GAAP financial measures are considered important and frequently utilized by investors and financial analysts covering ManTech’s industry. The Company’s computation of its non-GAAP financial measures may not be comparable to similarly titled measures reported by other companies, thus limiting their use for comparability.

The following tables present selected financial data, including the reconciliation of the non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP.

EBITDA is calculated by excluding depreciation and amortization expense, interest expense, interest income, other expense, income taxes and equity in losses of unconsolidated subsidiaries from net income.

EBITDA margin is calculated by dividing EBITDA by revenue.

Three months ended
September 30,

(In Thousands)

2021

2020

NET INCOME

$

37,956

$

29,739

Equity in losses (earnings) of unconsolidated subsidiaries

Provision for income taxes

14,655

9,303

INCOME FROM OPERATIONS BEFORE INCOME TAXES AND EQUITY METHOD INVESTMENTS

$

52,611

$

39,042

Other expense (income), net

92

29

Interest income

(36

)

(40

)

Interest expense

606

310

Depreciation and amortization

19,551

18,127

EBITDA

$

72,824

$

57,468

EBITDA Margin

11.4

%

9.0

%

Adjusted net income is calculated by excluding the following items and the related tax impacts from net income: (i) amortization of acquired intangible assets and (ii) discrete tax items.

Adjusted diluted EPS is calculated by dividing adjusted net income by the diluted weighted average number of shares outstanding.

Three months ended
September 30,

(In Thousands Except Per Share Amounts)

2021

2020

NET INCOME

$

37,956

$

29,739

Amortization of acquired intangibles

4,667

5,130

Adjustments for tax effect

(1,302

)

(1,221

)

ADJUSTED NET INCOME

$

41,321

$

33,648

ADJUSTED DILUTED EPS

Class A common stock

$

1.01

$

0.83

Class B common stock

$

1.01

$

0.83

Note: Figures may not add due to rounding.

Investor Relations

Media

Stephen Vather

Sheila Blackwell

VP, M&A and Investor Relations

VP, Enterprise Marketing & Communications

(703) 218-6093

(301) 717-7345

Stephen.Vather@ManTech.com

Sheila.Blackwell@ManTech.com