SRA earnings rise in 3Q

SRA International officials reported quarterly revenue and earnings growth in excess of 40 percent and said they have larger deals in the pipeline. But investors expected a slightly higher fourth quarter forecast.

The integrator posted revenue of $226 million for its fiscal third quarter, which ended March 31. That’s a 41 percent increase compared with last year’s figure. Company officials also announced a 2-for-1 stock split, effective May 27.

Diluted earnings per share increased to 52 cents, a growth of 41 percent compared with last year’s number for the same period. Wall Street analysts, on average, expected the company to earn 51 cents per share in the quarter, according to Zacks Investment Research.

However, the company's fourth-quarter could fall slightly below what some observers predict. SRA officials expect per-share earnings ranging from 51 cents to 53 cents for the quarter ending June 30. But Zacks’ latest analyst survey prior to this week’s report produced a consensus forecast of at least 53 cents per share.

SRA's stock price today fell to $62.61, down more than 7 percent from the previous day's close. The stock had been rising for most of this year and last week reached an all-time closing high of $67.71, up almost 25 percent since late January.

During the third quarter, SRA captured deals worth a potential $359 million. Those include a Missile Defense Agency task order, awarded through the General Services Administration’s Millennia vehicle, valued at $86 million for five years. In addition, SRA won a task order to support the Office of Child Support Enforcement’s Federal Parent Locator Service, a $60 million project awarded through the National Institutes of Health’s Chief Information Officers Solutions and Partners 2i program.

And under the Justice Department's Information Technology Support Services-3 program, SRA won a $24.6 million task order for database management systems and services. So far, SRA has captured three task orders worth $31 million through the Justice contract vehicle.

Renny DiPentima, SRA's chief executive officer, said the total value of potential opportunities for which the company might compete had grown to $7.5 billion as of March 31, a 47 percent boost compared with last year’s level. As for individual deals, SRA pursued nine projects in excess of $100 million a year ago. Now, the company has 17 opportunities of that size, DiPentima said.

"We continue to see many promising opportunities," he said.

SRA, which recently completed the purchase of Touchstone Consulting Group, will continue to pursue acquisitions, said Barry Landew, SRA's senior vice president of corporate development. "We continue to have discussions with a number of firms," he said.

SRA officials said the company’s revenue sweet spot for acquisitions has grown slightly to $50 million and above. But the company will pursue companies of smaller size and those with revenue in excess of $100 million, officials said.

Touchstone, the company’s latest acquisition, has $27 million in revenue.