Ciber: An Underfollowed Smallcap Gem

Ciber Inc. (NYSE:CBR). Closed on March 20, 2008 at $4.66.

52-week range: $4.20 [1/25/08] - $9.03 [6/1/07]

Ciber provides information technology [IT] system integration consulting as well as other IT services to both governmental and corporate entities worldwide. It offers IT project solutions and IT staffing. CBR also resells third-party IT hardware and software.

The company reached a milestone in 2007 with revenues breaking the $1 billion mark for the first time. Earnings hit their highest level of the past eight years at $0.48 /share – up 20% year-over-year. Even with the slow U.S. economy the consensus view for 2008 is $0.55 – up 14.5%.

The company has been buying in shares, and has just authorized an additional $10 million buyback on February 27, 2008. A company director signaled his bullishness with a 20,000 share open-market purchase @ $4.72 /share on February 28, 2008.

Despite all the positive news Ciber shares are trading below their lows from April of 2003 right through 2007. They sell for a fraction of their almost $7/share book value and at just 9.7x trailing earnings.

CBR's valuation has never been this low in its entire history.

Officers and directors own about 11% of the company.

Other Major Holders [as of Dec. 31, 2007]:

Year-end closing price: $6.11

Dimensional Fund Advisors: 8.98%

Barclays Global Investors: 7.05%

Pzena Invest. Mgt: 6.48%

AXA Financial: 5.04%

Vanguard Group: 3.43%

Royce & Associates: 3.33%

State Street Corp: 2.53%

Over the past 5 years [2002 – 2007]:

Sales per share went from $9.49 to $16.37
Cash Flow / share grew from $0.40 to $0.76
EPS more than doubled going from $0.22 to $0.48

Ciber has typically commanded a P/E multiple of 16 – 23. Even 15x this year's $0.55 estimate leads me to a target price of $8.25 or plus 77% from Thursday's closing quote.

Is that a reasonable expectation? CBR shares have hit peak prices of $7.40 - $11.70 during each calendar year since 1999. Even a return to their 2008 high of $6.20 would give us a 33% gain from here.

Ciber is an under-followed small-cap gem. CBR shares trade near 6-year lows despite the best sales and earnings in eight years.

Where else can you find a solid, growth company at < 10x last year's and 8.5x projected 2008 earnings?

Disclosure: Author has a long position in Ciber shares.

Comments

[Paul Price:]

This looks like a very cheap stock. I'm buying.

2008 Mar 24 05:37 PM

[market wiz:]

Have traded this stock since 2001--selling @7-8,
buying below 6--was lucky to pick up 2000 @ 4.24 on break...
Expect up on technicals, fundamentals or even HP or Oracle, or an unknown Indian tech company to step up to the plate...I mean come on: $1BILLION in revs for 1/4, think I'll call an Indian I know..

2008 Mar 26 04:22 PM

[Paul Price:]

Ciber has started moving. Shares closed yesterday at $5.23 [up 29.3% from the $4.20 close atthe the original posting time].

My target remains unchanged.

2008 Apr 02 05:40 AM

[eternal pon...:]

4.87 now, and looking like it's headed lower. Think I can pick this up for sub-$4 soon?

2008 Apr 11 02:36 PM

[kend:]

Why so quiet on this blog and the yahoo message board? All must be fearful of the upcoming earnings release.

2008 Apr 15 09:58 PM

[Paul Price:]

CIBER Reports Strong First Quarter 2008 Results
Thursday April 24, 8:18 am ET
Revenue Increases 14% (7% organic); EPS Increases 9%


GREENWOOD VILLAGE, Colo., April 24 /PRNewswire-FirstCall/ -- CIBER, Inc. (NYSE: CBR - News), today announced its results for the first quarter of 2008, ended March 31st.


First Quarter 2008 Highlights
-- Record revenue of $294.5 million was $35.3 million (14%) higher than
1Q07, 7% of which was organic growth.

-- Operating income of $14.9 million was 17% greater than the
$12.7 million of the first quarter of 2007.

-- EBITDA (see appended table) was $20.3 million, a $2.7 million
(16%) increase compared to 1Q07.

-- Cash Flow Provided by Operating Activities was a very strong
$25.0 million versus a negative $8.7 million in 1Q07.

-- Net income of $7.2 million was 9% higher than 1Q07 net income of
$6.6 million.

-- GAAP EPS of $0.12 per share was 9% higher than the year earlier
quarter of $0.11 per share.


Management Comments

"2008 has commenced very solidly, particularly in organic revenue growth, setting a new record for quarterly revenue. Strong results, especially in Europe and our US Commercial Division, contributed to first quarter strength," said Mac Slingerlend, CIBER's President and Chief Executive Officer. "We are very encouraged in the US as we begin the second quarter with headcount stability, recent wins in our Commercial and Federal Divisions and the pipelines in our ERP and our public sector divisions. We believe the momentum of our operations will counter the negative economic forces that prevail in a few of the territories in which we operate."


1Q08 Operational Highlights

US Commercial Division
-- Revenue in this Division increased both sequentially and
year-over-year. Operating contributions grew 19% year-over-year.
-- Several sizable wins, collectively approximating $175 million, many
with offshore delivery participation, keyed the quarter's
Commercial Division wins.


European Division
-- Continued headcount growth, broad demand, and the weaker US dollar
all contributed to a solid quarter. Revenue increased
40% quarter-over-quarter, 22% of which was organic. Operating
contribution increased 78% at the EBITA line.
-- Improved results in most areas of our European operations, provided
balanced growth in operating contributions and gained the highest
Divisional revenue quarter in its history.


State & Local Government Division
-- Significant receivable collections ($9.9 million) on aged City of
New Orleans receivables contributed to the quarter's strong cash
flow.
-- Reduction in lower margin subcontractors offset by additional
consultants at better margins will help gross margins in the second
quarter.


Federal Government Division
-- Critical first time audit approval of our Federal accounting system
in mid-March opens the path to more "prime" bidding by CIBER.
-- Recompete wins in the quarter helped stabilize the base of
operations for 2008.


CIBER Enterprise Solutions Division (CES) (US ERP)
-- Wins totaling $27 million in the Oracle Practice alone in the
quarter included the City & County of San Francisco, the University
of Wisconsin and two universities.
-- The large Pennsylvania Turnpike SAP project remains on schedule for
delivery later this year.
-- We continued to invest in our domestic SAP project delivery
procedures, which held back operating contributions in this
Division.


Eastern Asia-Pacific Operations
-- New work in various verticals commenced in India in the March 2008
quarter.
-- Australia gained two SAP wins in the retail sector, both with VAR
license participation.


Pipeline and Wins Data

CIBER's pipeline (US only) at March 31, 2008 was approximately $3.3 billion, a $0.4 billion (14%) increase from year-end 2007. Wins (including Europe) were approximately $370 million for the quarter, a solid 1.25:1 book-to-bill ratio.


Balance Sheet Highlights (March 31, 2008)
-- Working capital was flat with December 2007, at $174.8 million.
-- DSOs on services, aided by New Orleans/FEMA collections, improved
2 days sequentially to 70 days.
-- Treasury stock purchases were 800,000 shares at $5.08 per share. A
new authorization to buy up to $10 million in shares was announced in
February.
-- The Company purchased $61 million of its convertible debentures in
the quarter: at March 31st CIBER owned $84 million of the
$175 million debentures, the balance of which is putable to the
Company in December 2008.


2Q08 and 2008 Outlook
-- Second Quarter 2008
CIBER believes the second quarter of 2008 will achieve revenue of
$290-300 million and GAAP EPS of $0.13-0.15 per share.

-- Fiscal 2008
The Company is increasing its fiscal 2008 revenue guidance to
$1.150 and $1.175 billion (6-9% greater than 2007) and increasing its
annual GAAP EPS at $0.54-0.57 (15-21% greater than 2007) per share.


Conference Call and Webcast

A webcast to discuss the company's financial results and outlook will be held at 11:00 a.m. ET on Thursday, April 24, 2008 and may be heard live by visiting the Investor Relations portion of the company website at www.ciber.com/cbr/. To participate in the call, dial 800-218-9073 within the United States, and 303-262-2137 internationally, using the conference ID number 11111653. A replay of the conference call will be available through May 24, 2008 by dialing 800-405-2236 within the United States, and 303-590-3000 internationally, using the ID number 11111653. The replay will also be available on CIBER's website.

About CIBER, Inc.

CIBER, Inc. (NYSE: CBR - News) is a pure-play international system integration consultancy with superior value-priced services and reliable delivery for both private and government sector clients. CIBER's services are offered globally on a project- or strategic-staffing basis, in both custom and enterprise resource planning (ERP) package environments, and across all technology platforms, operating systems and infrastructures. Founded in 1974 and headquartered in Greenwood Village, Colo., CIBER now serves client businesses from over 60 U.S. offices, 25 European offices and seven offices in Asia/Pacific. Operating in 18 countries, with more than 8,000 employees and annual revenue over $1 billion, CIBER and its IT specialists continuously build and upgrade clients' systems to "competitive advantage status." CIBER is included in the Russell 2000 Index and the S&P Small Cap 600 Index. CIBER, ALWAYS ABLE. www.ciber.com. CIBER and the CIBER logo are trademarks or registered trademarks of CIBER, Inc. Copyright© 2008.

Forward-Looking and Cautionary Statements

Statements contained in this release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, as discussed in the company's filings with the Securities and Exchange Commission. CIBER undertakes neither intention nor obligation to publicly update or revise any forward-looking statements.




CIBER, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)

Three Months Ended
In thousands, except per share data March 31,
2007 2008
Consulting services $244,958 $281,163
Other revenue 14,227 13,301
Total revenue 259,185 294,464

Cost of consulting services 179,878 205,120
Cost of other revenue 9,279 8,379
Selling, general and administrative expenses 55,980 64,491
Amortization of intangible assets 1,391 1,571
Operating income 12,657 14,903
Other expense, net 2,153 3,137
Income before income taxes 10,504 11,766
Income tax expense 3,939 4,589
Net income $6,565 $7,177

Earnings per share - diluted $0.11 $0.12

Weighted average shares - diluted 62,073 60,322

For the three months ended March 31, 2007 and 2008, respectively, earnings per share - basic were $0.11 and $0.12 and weighted average shares - basic were 61,520 and 60,263.




CIBER, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)

In thousands December 31, March 31,
2007 2008
Assets
Current assets:
Cash and cash equivalents $31,717 $38,536
Accounts receivable, net 269,070 264,306
Prepaid expenses and other current assets 24,032 24,349
Deferred income taxes 9,384 11,417
Total current assets 334,203 338,608

Property and equipment, net 27,297 27,647
Intangible assets, net 475,677 480,939
Other assets 11,936 11,640
Total assets $849,113 $858,834

Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $35,538 $33,674
Accrued compensation and related liabilities 54,837 58,901
Current portion of long-term bank debt 9,108 3,355
Other accrued expenses and liabilities 53,493 62,396
Income taxes payable 5,447 5,451
Total current liabilities 158,423 163,777

Long-term bank debt 49,810 101,458
Debentures 152,000 90,985
Deferred income taxes 31,857 34,345
Total liabilities 392,090 390,565

Minority interest 2,464 2,943

Shareholders' equity 454,559 465,326
Total liabilities and shareholders' equity $849,113 $858,834



CIBER, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)

Three Months Ended
March 31,
In thousands 2007 2008

Operating activities:
Net income $6,565 $7,177
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 2,846 3,055
Amortization of intangible assets 1,391 1,571
Other, net (19,519) 13,171
Net cash provided by (used in) operating
activities (8,717) 24,974

Investing activities:
Acquisition, net of cash acquired (1,365) (498)
Purchases of property and equipment, net (2,218) (2,971)
Net cash used in investing activities (3,583) (3,469)

Financing activities:
Employee stock purchases and options exercised 1,519 440
Purchases of treasury stock (5,265) (4,067)
Borrowings on long-term bank debt, net 3,503 45,658
Retirement of debentures - (58,979)
Other 74 113
Net cash used in financing activities (169) (16,835)

Effect of foreign exchange rate changes on cash (204) 2,149
Net increase (decrease) in cash and cash
equivalents (12,673) 6,819
Cash and cash equivalents, beginning of period 33,319 31,717
Cash and cash equivalents, end of period $20,646 $38,536



Selected Financial Information
Unaudited Reconciliation of Non-GAAP and Segment Financial Measures

I. Reconciliation of Revenue Growth Components
(Quarters Ended)
($ in Millions)

March 31, Foreign March 31,
2007 Organic Acquired Exchange Total 2008

Commercial $91.2 2.2 % 0.0 % 0.0 % 2.2 % $93.2

Europe 71.2 21.5 2.0 16.7 40.2 99.8

State & Local Gov. 35.5 7.0 0.0 0.0 7.0 38.0

Federal Gov. 34.1 -6.2 0.0 0.0 -6.2 32.0

US ERP (CES) 27.2 1.1 14.7 0.0 15.8 31.5

$259.2 6.9 % 2.1 % 4.6 % 13.6 % $294.5



II. Segment Operating Results Analysis

For the Quarters Ended March 31, 2007 and 2008
($ in millions)

Three Months Ended
March 31, 2007 March 31, 2008
% of % of
Revenue By Divisions Amount Revenue Amount Revenue

Commercial* $91.2 35 % $93.2 31 %
Europe* 71.2 28 99.8 34
State & Local Gov. 35.5 14 38.0 13
Federal Gov. 34.1 13 32.0 11
US ERP (CES) 27.2 10 31.5 11
Total $259.2 100 % $294.5 100 %


% of % of
Operating Income Revenue Revenue

Commercial* $7.9 9 % $9.4 10 %
Europe* 3.6 5 6.4 6
State & Local Gov. 3.6 10 3.2 8
Federal Gov. 2.6 8 1.4 4
US ERP (CES) 2.0 7 1.7 5
Corporate Expense (5.6) (2) (5.6) (2)
EBITA $14.1 5 % $16.5 6 %
Amortization Expense (1.4) (-) (1.6) (1)
Operating Income $12.7 5 % $14.9 5 %

* Commercial includes India's results and domestic eliminations; Europe
includes Eastern Asia/Pacific results.



III. EBITDA Reconciliation to Net Income

(Quarters Ended)
(000's omitted)

March 31, 2007 March 31, 2008

Net Income $6,565 $7,177
Income Tax 3,939 4,589
Pre-Tax Income 10,504 11,766
Other Expense, net 2,153 3,137
Operating Income 12,657 14,903
Share Based Comp. 655 769
Amortization 1,391 1,571
Depreciation 2,846 3,055
EBITDA $17,549 $20,298




----------------------...
Source: CIBER, Inc.


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2008 Apr 24 08:56 AM

[kend:]

Great day. Great quarter; however, I'm still down 2/sh.

2008 Apr 24 08:12 PM

[InvestingPe...:]

We retain a bullish outlook on CIBER (CBR). Since our recommendation of the company on March 19, 2008, CBR has accounted a 25.73% return as of April 25, 2008. You can find out recommendation here:

investingpennies.com/i...

2008 Apr 26 08:45 PM