Diamond Management & Technology Consultants, Inc. (NASDAQ: DTPI), a premier global management and technology consulting firm, today announced results for its second quarter of fiscal year 2009 (ended September 30, 2008).
Financial Review
Net revenue for the second quarter ended September 30, 2008 was $40.5 million, compared with $38.8 million in the prior quarter, and $45.3 million for the same period last year.
"Our Company performed well in this environment. On a sequential basis, we grew net revenue, improved our profitability, generated positive free cash flow, and continued to add new clients," said Adam Gutstein, President and CEO of Diamond.
The Company reported income from continuing operations before income taxes of $2.1 million in the second quarter, compared with a loss from continuing operations before income taxes of $1.0 million in the prior quarter and income from continuing operations before income taxes of $5.6 million reported in the second quarter of the prior fiscal year. Income from continuing operations after income taxes was $0.5 million, compared with income from continuing operations after income taxes of $0.7 million in the prior quarter and $2.9 million in the same period last year.
The Company reported diluted earnings per share from continuing operations of $0.02, compared with $0.03 per diluted share in the prior quarter and $0.09 per diluted share in the same period last year. Diluted weighted average shares outstanding decreased to 26.4 million shares from 27.3 million in the prior quarter and 32.0 million in the year-ago period.
Adjusted EBITDA (income from continuing operations before interest, taxes, depreciation, amortization and stock-based compensation expense) was $6.2 million in the second quarter of fiscal year 2009.
Free cash flow (cash flow provided by operating activities less capital expenditures) in the second quarter of fiscal year 2009 was $4.7 million, compared with negative $3.2 million in the prior quarter and $3.0 million in the year-ago period. The Company ended the second quarter with cash and cash equivalents of $47.1 million and no borrowings.
Share Repurchase
During the second quarter, the Company repurchased approximately 1.1 million shares at an average price of $5.07 for a total payout of $5.7 million. As of September 30, 2008, the remaining stock repurchase authorization outstanding was over $29 million.
Business Metrics
The Company served 64 clients during the second quarter of fiscal year 2009, compared with 69 clients served in the first quarter and 63 in the second quarter last year. The Company added 10 new clients in the second quarter, compared to 24 clients in the first quarter and 20 clients in the year-ago period. The top five clients represented 35% of revenue during the second quarter of fiscal year 2009 compared to 34% in the prior quarter and 39% in the year-ago period.
The Company ended the second quarter with 495 client-serving professionals, compared with 469 in the prior quarter and 518 in the year-ago period. Chargeability was 66% in the second quarter of fiscal year 2009, compared with 59% in the prior quarter and 60% in the year-ago period. Annualized net revenue per professional was $336 thousand, compared with $317 thousand in the prior quarter and $357 thousand in the year-ago period. Annualized voluntary attrition was 9% in the second quarter, compared with 25% in the prior quarter and 21% in the second quarter last year.
Revenue by industry practice in the second quarter was: Financial Services: 29%; Insurance: 24%; Healthcare: 18%; Enterprise: 22%; Telecom: 4%; and Public Sector: 3%.
Business Outlook
Third Quarter 2009
The Company expects third quarter net revenue to be in the range of $39 to $41 million, pretax income of $1.5 to $2 million, Adjusted EBITDA in the range of $5.5 to $6 million and GAAP EPS to be in the range of $0.01 to $0.02 per diluted share. The Company expects its reported tax expense to be in a range of $1.2 million to $1.5 million and its weighted average share count to be approximately 26 million shares. Free cash flow is expected to be $4 million to $6 million.
Conference Call
Diamond will host a conference call today, November 6, 2008 at 8:00 am CT to discuss the results of the quarter. The dial-in number for the conference call is 800-761-0069 for North American callers and 212-231-2929 for international callers. The replay will be available until November 13, 2008 and can be accessed by calling 402-977-9140, then entering passcode number 21396241. The call will be broadcast live and archived on Diamond's web site at www.diamondconsultants.com.
About Diamond
Diamond is a management and technology consulting firm. Recognizing that information and technology shape market dynamics, Diamond's small teams of experts work across functional and organizational boundaries to improve growth and profitability. Since the greatest value in a strategy, and its highest risk, resides in its implementation, Diamond also provides proven execution capabilities. We deliver three critical elements to every project: fact-based objectivity, spirited collaboration, and sustainable results.
Diamond is headquartered in Chicago, with offices in New York, Washington, D.C., Hartford, London, and Mumbai. Diamond is publicly traded on the NASDAQ Global Select Market under the symbol "DTPI." To learn more, visit www.diamondconsultants.com.
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