SI International [SINT] yesterday said that its net income fell 24 percent in the second quarter despite strong sales growth as delays in several programs crimped margins.
The company also announced this week that its planned $25 million acquisition of government services provider Arrowpoint Corp. has been terminated by mutual agreement.
For the quarter SI International said net income fell 24 percent to $3.8 million, $29 cents earnings per share (EPS), from $5 million (38 cents EPS) a year ago. Income was dampened by delays in next-generation Internet work for the federal government, work for the Energy Department and in enterprise program management work for the National Security Agency that was awarded in April, according to Stephens Inc. analyst Tim Quillin. On top of that, work the company is doing for the United States Patent and Trademark Office is also hampering profits, he said.
Sales for the quarter were up 20 percent to $142.8 million from $118.8 million a year ago, with 12 percent of the growth organic.
As for the rest of the year, SI International lowered its earnings expectations, with net income expected to be between $15.4 million and $16.4 million, down from previous guidance of between $18.9 million and $20.2 million. The company did tighten its sales guidance at the upper end of the range to between $570 million and $580 million.
“We are pleased that our revenue performance in the back half of this year will be strong and will position us well for 2009,” Brad Antle, SI International’s president and CEO, said in a statement. “At the same time, we have some profit issues that have led us to reduce earnings for the second half of the year. We have a plan to resolve these issues in 2008.”