Highlights:

- First Quarter revenues up 21% to $208.7 million;

- First Quarter operating income up 31%, operating margin a record 9.0%; and

- Record diluted EPS of $0.45 for first quarter exceeds guidance.

ARLINGTON, Va., Aug. 4 /PRNewswire-FirstCall/ -- Stanley, Inc. (NYSE: SXE), a leading provider of systems integration and professional services to the U.S. federal government, today announced healthy revenue growth and strong profitability for its first quarter of fiscal year 2010 ended June 26, 2009. The company also lowered fiscal year 2010 revenue and earnings guidance based on delayed award activity.

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First-quarter revenues were within company guidance, and diluted EPS exceeded the high end of company guidance by $0.02. Stanley's revenue growth for the first quarter resulted primarily from U.S. Marine Corps and Joint Strike Fighter program office network operations and cyber security efforts; support for the U.S. Central Command's biometrics programs in Iraq and Afghanistan; provision of information technology and professional services for various Department of Defense customers; and support services to the U.S. Army Intelligence and Security Command.

First-Quarter Fiscal Year 2010 Results:

Revenues for the first quarter ended June 26, 2009, were $208.7 million, an increase of 21 percent over first-quarter fiscal year 2009 revenues of $172.6 million. Organic revenue growth(1) was 5 percent. EBITDA(2) was $21.6 million for the quarter, an increase of 34 percent over EBITDA of $16.1 million in the year-ago quarter, driven by organic revenue growth, the acquisition of Oberon Associates, Inc. in July 2008 and improved EBITDA margin. EBITDA margin for the first quarter was 10.3 percent compared with 9.4 percent a year earlier, due primarily to a greater proportion of more profitable time-and-materials and fixed-price contracts, as opposed to cost-plus-fee contracts. Operating income was $18.7 million, up 31 percent from $14.3 million in the same quarter of last fiscal year. Operating margin was 9.0 percent versus 8.3 percent in the first quarter of fiscal 2009. The increases in operating income and margin resulted primarily from the factors improving EBITDA, partially offset by the amortization of purchased intangibles related to the acquisition of Oberon.

Net income for the quarter was $10.7 million versus $8.3 million a year ago. Diluted earnings per share for the quarter were $0.45 compared with diluted earnings per share of $0.35 for the first quarter of fiscal year 2009.

Contract backlog at June 26, 2009, was $2.0 billion, essentially unchanged from both fourth-quarter and first-quarter fiscal year 2009 contract backlog.

First-Quarter Fiscal Year 2010 and Recent Operational Highlights:

• First-quarter bookings totaled $207 million, equating to a book-to-bill ratio of 1.0:1.
• Among recent new business awards and additional tasking:
• A $120 million, three-year, time-and-materials contract to continue system and software engineering support to the U.S. Army Communications-Electronics Command;
• A $13 million, one-year, proof-of-concept contract to collect voice samples in support of a U.S. Army biometric effort;
• A $10 million, two-year, time-and-materials contract to provide program management, acquisition management, systems engineering and logistics management services in support of special logistics projects for the Naval Sea Logistics Center;
• An $8 million, five-year, firm-fixed-price contract to provide technical services to support and maintain the U.S. Marine Corps Systems Command Total Force Retention System;
• A $6 million modification to the Joint Strike Fighter contract for cyber security and operational test and evaluation network support;
• More than $2 million in new awards by the Defense Information Systems Agency for operational support to the U.S. Army Intelligence Center Language and Technology Office and systems engineering for reprogrammable ultra high frequency satellite communications combat radios; and
• More than $2 million in modifications to the U.S. Marine Corps Common Logistics Command and Control System and Storage and Retrieval Asset Tracking System contracts for support in Afghanistan.
  

Cash flow from operations for the first quarter of fiscal year 2010 was $9.4 million. Days sales outstanding for the first quarter was 84 days, up from 79 days for the fourth quarter of fiscal year 2009.

"Stanley continues to post record operating margins and net income as we see more favorable contract mix and realize greater operational efficiencies," said Phil Nolan, Stanley's chairman, president and CEO. "Although we have lowered our revenue and earnings expectations for fiscal year 2010, we believe our strong pipeline of new business opportunities positions us well for continued top-line growth in the coming quarters, especially as several large key procurements are ultimately awarded."

Management's Outlook:

Based on the company's current contract backlog and management's estimate as to future tasking and contract awards, Stanley is issuing guidance for its second quarter of fiscal 2010 and updating guidance for full fiscal year 2010.