NCI's (NCIT) CEO Brian Clark on Q4 2015 Results - Earnings Call Transcript

| About: NCI, Inc. (NCIT)

NCI, Inc. (NASDAQ:NCIT)

Q4 2015 Earnings Conference Call

February 10, 2016 04:30 PM ET

Executives

Brian Clark - President and CEO

Lucas Narel - CFO

Marco de Vito - COO

Larry Delaney - Investor Relations Counsel

Joelle Shreves - Director of Marketing and Corporate Communications

Analysts

William Loomis - Stifel, Nicolaus & Company, Inc.

Lucy Guo - Cowen and Company

Kwan Kim - SunTrust Robinson Humphrey

Mark Jordan - Noble Financial Group

Tobey Sommer - SunTrust Robinson Humphrey

Operator

Good day, ladies and gentlemen and welcome to the NCI Incorporated Fourth Quarter 2015 Financial Results Conference Call. My name is Jessica and I'll be your conference operator today. This call is being recorded.

I’d now like to turn the presentation over to your host for today's call, Joelle Shreves, Director of Marketing and Corporate Communications. Please proceed, Joelle Shreves.

Joelle Shreves

Good evening and thank you for participating in NCI's conference call today. By now, you should have a copy of the press releases we issued a short time ago. If not, it is available on our Web site at www.nciinc.com.

With us are our President and CEO, Brian Clark; and Chief Financial Officer, Lucas Narel, both of whom will deliver prepared remarks. Our Chief Operating Officer, Marco de Vito; and Investor Relations Counsel, Larry Delaney are here to participate on the Q&A portion of the call.

Before we begin our discussion, it is important we remind you that on this call we will make statements that do not address historical facts and are thus forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to factors that could cause actual results to differ materially from anticipated results and included the risks and uncertainties identified in our earnings press release under the caption forward-looking statement.

For a full discussion of these factors and other risks and uncertainties, please refer to the section titled Risk Factors in NCI's Form 10-K and Form 10-Q filed with the Securities and Exchange Commission. Also, we undertake no obligation to update any of the forward-looking statements made on this call.

I’ll turn the call over now to Brian Clark.

Brian Clark

Okay. Thanks, Joelle. I will begin with an overview of fourth quarter results and then hand it over to Lucas who will provide more detail on the numbers and issue guidance for Q1 and fiscal 2016. I will then come back online to provide additional color of our guidance and trends we’re seeing in the business around bid and proposal activity in particular.

Fourth quarter revenue was up 13% year-over-year at $84 million and was driven by revenues added from Computech contracts, as well as new wins and growth in existing programs in 2015, offset partially by contracts completed during the year.

PEO Soldier revenue under the restructured and expanded program we won in the third quarter was already up by more than a $1 million over the fourth quarter of last year. Looking forward we project approximately $40 million in PEO Soldier revenue in 2016, up more than $8 million over 2015. And we expect our PEO Soldier program to reach a quarterly run rate of more than $10 million by the end of this year.

Another large contract, our cyber network operations and securities support or CNOSS in support of the Army’s network enterprise technology command, paid significant progress during the fourth quarter and reaching staffing targets on additional task orders that were awarded to us in the third and fourth quarters.

As it relates to our previously issued guidance, we exceeded the high end of the range largely because of higher than expected revenues generated by additional tasking under our CNOSS contract and higher than expected PEO Soldier revenue during the fourth quarter.

Q4 earnings per share were $0.26 which exceeded the high end of guidance by $0.04. EPS was higher than forecast as a result of better operating performance and cost efficiencies to count the $0.02 to the EPS [indiscernible]. The other $0.02 came as a result of a lower effective income tax rate and Lucas will explain further.

Q4 yielded another quarter of strong bookings totaling $130 million or 1.5 times revenue. After the award of PEO Soldier in Q3, the fourth quarter followed with bookings consisting of both new awards and funding increases and extensions for several of our DoD and federal civilian programs.

Bookings for the full-year totaled $441 million or 1.3 times revenue. Our waiting decisions on several $50 million plus bids during the remainder of 2016, several of which could come in the first half of the year. When I come back online I will explain how this scenario figured into our initial guidance for the year. And we’re seeing positive trends in our business development pursuits in both federal civilian, and DoD markets and I will outline some of these shortly.

With that, I’ll turn the call over to Lucas.

Lucas Narel

Okay. Thanks, Brian. Good evening. For the fourth quarter of 2015, NCI reported revenue of $84 million compared with $74.4 million in the fourth quarter of 2014, an increase of 12.9%. Revenue from NCI's PEO Soldier program contributed $8.8 million or 10.5% of total revenue in the fourth quarter of 2015, compared with $7.6 million or 10.2% of total revenue in the prior year.

Contracts where NCI is the prime contractor accounted for 92% of revenue in the fourth quarter unchanged sequentially and unchanged year-over-year.

DoD and Intel contracts made up 63% of total revenue in the fourth quarter while federal civilian contracts comprised 37%. Share of DoD and Intel contract was up 4 percentage points sequentially, whereas the federal civilian share was up 10 percentage points year-over-year. The DoD and Intel share increased sequentially largely because of the size of the PEO Soldier program, and additional task orders are ordered under our NETCOM, CNOSS contract. The Federal Civilian share was up year-over-year primarily as a result of revenue derived from contracts with the SEC and the IRS.

Fixed price contracts accounted for 25% of revenue, down 3 percentage points sequentially and down 11 percentage points year-over-year. Time-and-material contracts were 21% of revenue, down 2 percentage point sequentially and up 5 percentage points from the fourth quarter of last year.

The increase in revenue from T&M contracts year-over-year was primarily due to the acquisition of Computech. Cost plus fee contracts accounted for 54% of revenue, up 5 percentage point sequentially and up 6 percentage points year-over-year. The increase in the cost plus fee percentage is a result of the increased scope of PEO Soldier and CNOSS.

EBITDA for the fourth quarter was $7.5 million or 8.9% of revenue compared with $5.6 million or 7.5% of revenue for the fourth quarter of 2014. EBITDA and EBITDA margin for the fourth quarter of 2015 improved primarily as a result of higher margin revenue from our agile software development contracts, increased direct labor utilization and improved direct cost mix. EBITDA for the year was $28.3 million or 8.5% of revenue compared with $20.3 million or 6.4% of revenue for fiscal year 2014.

On a GAAP basis operating income for the fourth quarter of 2015 was $5.6 million compared with $4.2 million for the fourth quarter of 2014. Operating margin for the fourth quarter of 2015 was 6.6% compared with 5.6% for the same period of the previous year. Operating income and margin increased primarily as a result of the factors affecting EBITDA, offset by higher amortization of purchase intangible assets. Operating income for 2015 was $20.7 million or 6.2% of revenue compared with $14.5 million or 4.6% of revenue for 2014.

Net income for the fourth quarter of 2015 was $3.5 million or $0.26 per share compared with $2.4 million for the fourth quarter of 2014 or $0.18 per share. Net income for the full-year was $12.2 million or $0.89 per share compared with $8.5 million or $0.63 per share in 2014.

As Brian mentioned, $0.02 for the EPS outperformance came from improved contract performance. The higher direct labor and improved direct cost mix provided operating leverage and lift for the bottom line. The lower tax rate generated another $0.02. We successfully innovated contracts and completed changes to our corporate tax structure, which allowed us to better realize tax benefits and improved our overall effective income tax rate. The effective income tax rate further benefit from changes in the state tax apportionments and changes in state tax rate.

Cash flow provided by operating activities for fiscal year 2015 was $24.5 million. Capital expenditures were $2.7 million, resulting in free cash flow of $21.8 million or 1.8 times net income in 2015.

Day sales outstanding or DSO at December 31, 2015 was 66 days compared with 59 days at September 30, 2015 and 65 days at December 31, 2014. This sequential increase in DSO was due to reduced collections of receivables because of the late funding on a few contracts.

NCI reported total backlog at December 31 2015 of $502 million of which a $147 million was funded. This compares with total backlog at December 31 2014 of $410 million of which a $184 million was funded.

And now moving on to guidance. For the first quarter of 2016, we expect revenues to be approximately $80 million to $86 million and diluted earnings per share to be $0.21 to $0.23 on a weighted average diluted share count of 13.9 million shares. We expect full-year 2016 revenue to be in the range of $330 million to $354 million and diluted earnings per share to be $0.86 to $1 on a weighted average diluted share count of 13.9 million shares.

Brian will go into little more details on the assumptions behind our guidance ranges. We expect interest expense for the first quarter to be approximately $200,000 and $700,000 for the full-year. Depreciation and amortization is expected to be $1.9 million for the first quarter and $7.2 million for the full-year.

Stock comp expense is expected to be approximately $350,000 in the first quarter and about $1.1 million for the full-year. The forecast and annual effective income tax rate of approximately 39.7%. We will keep you updated as necessary and I will now turn the call back over to Brian.

Brian Clark

Okay. I want to start with some more detail on our fiscal 2016 guidance. Note that the midpoint of our top line range is $342 million; a full-year 2016 revenue midpoint assumes approximately 76% coming from existing contracts, 15% from recompetes and 9% from new business awards.

The number to watch here is revenue coming from new business awards in 2016. I will talk more in a few minutes about this. We’ve submitted and are working on including some recompetes with expanded scopes of work. It could be awarded in the first half of the year. The win of one or more of those contracts could begin generating meaningful revenue in 2016 even after taking into account the normal protest cycle.

As I mentioned, our full-year revenue assumption also includes key contracts reaching their projected run rates later in the year. These include PEO Soldier and CNOSS most notably.

As for EPS, the midpoint of our 2016 annual EPS guidance is $0.93. Our FY16 EPS midpoint number implies the EBITDA of approximately $30 million or 8.6% of revenue.

The timing of the award of larger contracts will be a major factor in driving scale, operating leverage, and ultimately margin performance, especially in the second half of this year. We are seeing several favorable trends in our business development pursuits. As of today’s call, we were approximately $750 million of bids we’re working on or have already submitted.

And we’re encouraged by the flow of RP’s across all business areas. We currently expect to submit bids aggregating over $1.5 billion during 2016. I believe a few trends, they’re special mention. We are well positioned to pursue a number of enterprise IT and infrastructure support to opportunities and both the DoD and federal civilian space.

We’ve also expanded our pipeline to include opportunities that leverage our agile software and agile OEM capabilities, both as standalone opportunities and as a component of larger pursuits.

In addition, we’re pursuing work with new DoD and federal civilian customers who requirements line well for our core competencies. We also see opportunities for expansion of the scope of work we perform for existing customers. Areas of growth include engineering work, agile O&M and cyber security to name a few.

Our T&M contract for example, which is a key vehicle under which we provide engineering support has been extended until 2020, providing badly needed run rate for clients looking to use of this vehicle. And with only three contract holders and a history of winning more than our fair share of tax, we anticipate that this to be a path for additional new growth.

Lastly, we’re devoting significant resources and the energy to in pursuit of IDIQ’s both on existing vehicles as well as new ones. The suite of IDIQ vehicle is held by NCI, has been discriminated for us over the years. They provide the tax orders underlying a significant portion of our revenue base. These vehicles are key to providing a quick contractual path to supporting both new and existing clients.

Next, I’d like to provide NCI’s perspective on the current procurement environment and the industry trends. We believe that 2015 was a stabilizing year, in which the rapid decline in federal IT services budgets leveled out for the most part. As we move into this year, we see pockets of opportunities for growth, now that there is greater budget certainty. And finally we expect to see incremental movement away from LPTA as clients increasingly recognize the level of support they need is frequently not found through LPTA awards.

We will take some time, however, for this trend to be meaningfully reversed. But we’re seeing evidence of the realization that while price considerations are still at the forefront, it should not be the overwhelmingly deciding factor for which much of the work is being procured to the LPTA in recent years.

To sum up, we’re more optimistic about NCI’s chances in the early stages of an improving procurement client and we’re focusing on bidding and winning procurements that are ideally suited for our size and capabilities.

And with that, operator, we’re happy to open-up the call to any questions.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] And we will first to Bill Loomis with Stifel.

William Loomis

Hi. Thank you. Good job guys. Just looking at recompetes over the next couple of years. First on Computech’s large FCC contract, what’s the status with that in terms of hitting the ceiling and potential recompete on that program.

Brian Clark

Sure. Bill, we expect to burn all of the ceiling on that. As a matter of fact that was the ceiling hit was increased on it to get us through or closer to the period of performance end day which is September of 2017. So that was part of our bookings in the fourth quarter as well. In terms of other recompetes that are coming up, we’ve got, I guess, probably about in the next -- in this next year or so as you could probably expect that say it’s probably about a third of our business or so. But if you look at the length of contract vehicles that’s about what you would expect to see at any given point in time. Actually I’d say probably little bit less, because as part of that is going to be some of the work that we have with -- we do a CMS and program integrity. The ZPIC contracts are now being recompeted under a new umbrella contract which will now be called UPICs is all -- we can go through all those explanations, they look and smell the same except that there will be fewer of them and will be larger than the scope will be increased on them. But those will begin to be awarded as early as the next couple of months and will extend out through 2017. So that will be the most meaningful piece of it and that -- on that scenario that we’re extremely well positioned and very comfortable with. I wouldn’t say there is anything else of any great consequence, maybe another 5% or 10% across the rest in business that we’d see in terms of recompetes for this year.

William Loomis

Okay. So on SEC contract, does that ceiling increase get you what through ’16 or all the way to September 17?

Brian Clark

It’s again -- I think our current burn rate will get us close to the end of ’17. I mean I think that in a way this contract has operated its over the -- it had this -- this contract for a couple of decades or more now and it's -- the funding kind of comes in as the priorities and requirements are defined, so it kind of -- it goes through surges and lows if you will, to meet the requirements that they have and it have the history of continually having ceilings being increased and additional funding put onto to meet what are the requirements are. So I don’t know if that really helps, but I guess, what I can tell you is, they’ve done pretty much exactly what we expected would happen. So we’re on track as far as we’re concerned.

William Loomis

Okay, great. And then just one more just kind of a follow-up, because you’ve mentioned some of the ceiling increase came in the fourth quarter, what was the big components with $130 million in awards in the quarter?

Brian Clark

Yes, so I will split it for you a couple of ways. In terms of customer mix, it was about -- it was roughly half and half, slightly more on the civilian side, but very close to 50-50 between civilian and DoD customers. And in terms of new versus extensions, the new work was about 25% of that number. The balance of it were contract extensions, funding increases, ceiling increases like in the case of the SEC contract which is both ceiling and funding. But that’s how I’d cut it for you.

William Loomis

Okay. So the bulk of the civilian one was the SEC ceiling increase on that contract been?

Brian Clark

Yes.

William Loomis

Okay. Great. Thank you.

Brian Clark

Yes, we see an increase there. I mean, we also had increases on our CMS work and something as well. But the increase on the SEC will be the biggest piece, followed by some extensions on our CMS work. Also some new work on -- actually was an extension with new work on with the IRS of $5 million.

William Loomis

Okay. All right. Thanks, Brian.

Brian Clark

Sure.

Operator

We will take our next question from Gautam Khanna with Cowen and Company.

Lucy Guo

Good evening. It’s Lucy Guo on for Gautam. First question is in the $750 million of bids to be submitted, I think you’ve talked about three or four that are bigger than $50 million. Can you just update us on that and anything specific you can point to?

Brian Clark

Right. Well, so we don’t -- we never talk about specific pursuits that we’re actually working on, so I won’t go into that. What I would like to give you some better insight into, I can tell you that $750 million is a combination of bids that we currently submitted in pending awards and also things that we’re actively writing proposals on that will be in, in the next -- will certainly be and we would expect before the end of the quarter over or earlier. And that -- and I believe that $750 million it’s probably about half and half. Half within now and half is -- will be in the next four or five weeks as we look at it.

Lucy Guo

And how many of those are $50 million price opportunities?

Brian Clark

There is currently three in that are currently submitted and there will be with other two more we’re going.

Lucy Guo

Great. And I was reading an article about this DoD scholarship award for $100 million plus, that’s under protest. When do you expect that to be resolved, and is that in backlog or not?

Brian Clark

That is not in backlog. And I’m actually glad you asked that question Lucy, because I want to make sure that people are clear about the impact of that contract. That’s a program that we have -- was a recompete for us, work that we’ve done for a number of years. What you have to understand about that award value when you look at it -- when you look at it is that, there’s a -- about a $100 million plug that’s in there that is not -- that wasn’t even part of our numbers previously had to do with how that contract is administered. So the way -- in other words let me say its differently the way to think about it is, the award looks more like about $12 million to $14 million is what the real contract value that you would actually paid for. So it’s significantly smaller than the $100 million number that you’re looking at. So, we were not awarded the contract. As we got our debrief and looked at our understanding of what we are at least able to see in a debrief in terms of what, how that decision was made, and we felt we had sufficient grounds for to protest it, and so we’ll see. We did get a -- when we filed the protest we as expected received a stay and so our work continues. The work that we’ve currently been doing is extended and continues on while we resolve that protest, and they would expect to -- we expect that that will be resolved in probably this from here, probably another two months or so until they -- till resolve that.

Lucy Guo

Understand.

Brian Clark

But we’ve not heard anything else in between -- anything else at this point.

Lucy Guo

Got it. And then last question before I pass it on is, on DSOs being 66 days. You’re not the only one experiencing delays its only at the calendar year because of holidays and such. Is there anything you can point to in particular and how much of the payments were pushed out into Q1?

Lucas Narel

Yes, Lucy, this is Lucas. There’s really nothing in particular. We usually do see a little bit of a lag in the fourth quarter. There are a couple of programs that we’ve been focusing on since about November to get some issues resolved. Much of that -- some of those have been resolved already and the others are in the work. So we expect that to come back around certainly before we report next time after the end of Q1. So don’t anticipate any long-term problems on that front.

Lucy Guo

Can you size it for us, how much may you book in Q1 or after?

Lucas Narel

With regards to what? You’re talking about cash flow conversion?

Lucy Guo

Yes, that is right. We’ve been loosing cash.

Lucas Narel

Yes, I mean, the DSO we had for Q4, I wouldn’t say it was poor, obviously mid 60s is pretty good I think for the space. I would expect it to get back below to what we saw this year into the low 60s or maybe even the high 50s. But overall I’d say, obviously we had a great year for cash flow conversion at 1.8 times. I’d expect that to be the similar case for the full year in ’16, particularly you see Q2 and Q3 being stronger quarters for us, for that.

Lucy Guo

Sounds great. Thanks very much.

Lucas Narel

Sure.

Operator

We’ll now go next to Tobey Sommer with SunTrust.

Kwan Kim

Good evening. This is Kwan Kim on for, Tobey. I got a question on your current view in the marketplace in light of recent industry consolidation. Could you give us an update on what the field looks like for strategic acquisitions? You mentioned that your primary interest is that hoping to acquire previously. I was wondering what your views are given the recent developments. Thank you.

Brian Clark

Sure. I mean it’s a secret. You look around and see a lot of consolidation going on all around us, and I think that everybody in the space today is looking at which side of the conversation they need to be on, right. Are they going to be a consolidator or are they going to be consolidated with somebody. I think its -- I don’t know if it really does anything to us one way or the other. I think it’s yet to be seen. It’s interesting that, if you rollback a few years ago you had -- if you looked at the -- there was only really one very large pure play and that was SDIC [ph] and yet the defense primes had their services units but they were part of a larger, a broader organization. And now you’re going to end up with a handful of these very, very large services plays. When you look at the widest Lockheed comp -- Lockheed services combination with CACI in the [indiscernible] assess business SDIC agility. I mean, you’re looking at, there’s just a lot of very large services pure plays that didn’t exit previously. So, I think it remains to be seen what that’s going to mean in terms of competition and everything else, but I don’t think it -- we don’t view that as negative from our standpoint. And I think as far as the broader M&A space are still, there’s still, I’d say a healthy pipeline of opportunities out there. We’re certainly engaged in a lot of those discussions in terms of looking at things, a broad range of things to look at. Things that are smaller, tuck-ins they just provide some additional capability or customer penetration where it makes sense. But our clear focus has been on looking at things that are much more significant needle moving. And I think there is also -- we're also in an interesting time where there a lot of larger -- a lot of companies in that mid-tier space. I think we may see some more. We’ve seen some in the past year. I think we’ll continue to see some more merger of equal type transactions or more significant transactions we’ve seen in the past. But that’s just my guess in terms of what I would anticipate we’ll see. But I think the activity will continue to be there.

Kwan Kim

Okay. And a question on operating margins. Looking forward should we expect it to stay at around the mid 6% range or do you have a higher midterm target you should consider? Thank you.

Lucas Narel

Yes, I think -- this is Lucas, again. I think that’s a pretty safe place to be right around there. I mean, we might see some fluctuations based on the quarter with the level of pass-throughs that may or may come in, sometimes those are unexpected. But yes, I think between 6.3% and 6.7% is probably a good place to be.

Kwan Kim

Okay. Thank you.

Operator

We’ll now take a question from Mark Jordan with Noble Financial.

Mark Jordan

Thank you. Good afternoon, gentlemen. You stated that you had an assumption $7.2 million depreciation and amortization for ’16. What would be the pure amortization piece, and what would be CapEx expectations for ’16?

Lucas Narel

Sure, the amortization of intangibles we expect to be about $3.7 million of that, so a little bit better than half, and the rest would be depreciation or amortization of fixed assets and leaseholds.

Mark Jordan

And the CapEx number for ’16?

Lucas Narel

CapEx, probably similar to what we did this year, about $2.5 million to $2.8 million.

Mark Jordan

Okay. Thank you. When you were talking about the package of $750 million [indiscernible] were either in or these embedded in the coming weeks. When you talk about $1.5 billion for 2016, or is there double counting there? Is half of that $750 million in the $1.5 billion or are they two separate groups?

Brian Clark

No, I didn’t -- yes, sorry Mark, that was confusing. Let me just break it down; make it a little bit easier. So call it -- we’ll do $1.5 billion maybe a little bit more in all of this year. More currently working on about $350 million, $400 million of that right now, and we’ve already got about $350 million or so that’s -- that has been submitted. So the $350 million that’s already been submitted that was -- they’re at the end of last year that we’ll go on top of that, we’ll bid about another $1 billion and that would bid about a $1.5 billion inside this year. We’re currently working on about roughly a quarter of that.

Mark Jordan

Okay.

Brian Clark

Did that make it more clear?

Mark Jordan

Yes, thank you. Final question for me, you gave the special dividend that you declared here at the end of the year. Should one assume that the board will review that again same time next year?

Brian Clark

I think that’s -- I guess, I’d say that’s a fair assumption. I mean, its -- we’re not going to get into -- our intention isn’t to pay dividends in a manner that would be inconsistent with focusing on a growth store and being able to leverage our balance sheet. But I think well we can return some of that capital to shareholders, we’ll evaluate it. I think that that’s the right way to think about it. I think the next time we would evaluate it would be this time next year I don’t see us going to anything where we’d be looking at quarterly or semi-annual dividends. But I think we’ll certainly evaluate this time next year based on how the results shakeout.

Mark Jordan

Okay. Thank you very much.

Brian Clark

Sure.

Operator

[Operator Instructions] And we’ll take our next question from Tobey Sommer with SunTrust.

Tobey Sommer

Thanks. It’s Tobey Sommer for Tobey Sommer.

Brian Clark

The real Tobey Sommer?

Tobey Sommer

Yes. I had a question for you about the budget deal. What impact do you expect it to have on your market, and when do you think that impact will be most visible and kind of how, what times do we see? You talked about LPTA and move away from that, that you expect to last for a while. But what other things might we hear from you that would characterize some sort of impact from the budget deal?

Brian Clark

Well, I think, and I’ll let Marco probably jump in it too as well. I think the -- I look at from a little -- stepping back into a little bit higher level from the budget deal, we’re not usually in there looking for line item appropriations in a lot of cases, but its just more the certainty that the budgets are going to be there, the money is going to be there. The customers in the contracting shops can put our fees out with confidence that they can put them out when -- with the requirements they need and fund them at the levels that they believe that they need to do them and get that work done. When you’ve got -- when you’re constantly under this chokehold or the continuing resolutions or threats of government shutdowns and sequesters and everything else, it just caused everybody -- the whole thing to come to a grinding halt in a lot of cases, and work just -- the irony of it, I’ve said this before. The irony of it is, and a lot of times what happens is then, they’re just stuck in the cycle of continually extending work rather than re-competing it, and by the share active re-competing work generally they will save money, because I don’t -- I don’t think you’re going to find a whole lot of contracts out there that get re-competed at a value that’s at or above the last time that they were competed. But I think that’s, a lot of our -- the optimism that we’re expressing here in terms of how things will go is, I think it has to do a lot more with just the general issue that we’ve got. Budget deal is in place. Funding is there, and so they can start to take these actions with more confidence versus trying to wait and see what they actually have, and in the meantime just continuing to do these incremental extensions and just drags everything out.

Marco de Vito

It’s Marco. I would agree that the biggest problem we’ve had in the past couple of years has been the uncertainty that our customers have faced, and the [indiscernible] caused. We’ve actually seen a couple of deals here in the last few weeks that have moved to the left and come out a little sooner than we expected. And I think that that’s a reflection of comfort level of our customers that while they may not have the amount of money they would like, they know how much money they’re going to have and they’re going forward in spending it. So that helps us I think all in this market space.

Tobey Sommer

Yes, I guess, I can't remember hearing opportunities getting, coming out before plan in a long time in my conference call. Still would you -- do you think that industry call, book-to-bills should be generally improving throughout this year. I know you guys had $1.5 million in the quarter and that’s pretty down good. But do you think that there is a kind of a bias towards better ones this year?

Brian Clark

Well, that’s certainly the sentiment in the marketplace. I think you’d have to ask everybody else what they think. I think for us, in our size and it can really be depending on a meaningful award. It happens to pop in a particular quarter or year or something it gets delayed and you don’t get it. I mean, so we can whips all around in terms of those, how that scoreboard may look in any given point in time. But our expectation is that, we’re going to have a more reasonable, more reliable set of things that we’re going to go after that we, in terms of that they’ll actually come out when they say that -- or come out within some -- within a reasonable range of when they’re expected out and that they’ll work on getting those things adjudicated and awarded on a -- the more reasonable time schedule than we’ve seen in the past several years.

Tobey Sommer

Thank you very much.

Brian Clark

Sure.

Operator

This concludes the question-and-answer-session. I will now turn the call back over to Brian Clark.

Brian Clark

Okay, thanks everybody for taking the time to join us this afternoon. If you have follow-up questions or anything additional after the call, certainly feel free to get in contact with Larry Delaney and we'll get back to you and get those questions answered or information provided. Thanks again.

Operator

This concludes today's conference. Thank you for your participation.

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