- The Washington Times - Tuesday, January 7, 2003

Analysts say Veridian Corp. will become a "dominant force" in the national-security market this year as the Arlington company increases contract wins from the Defense Department and intelligence community.
The information-based-systems company yesterday announced a $123 million contract awarded by the U.S. Navy to support E-2C Hawkeye and C-2A Greyhound aircraft.
While the contract is not a large revenue maker for the company, it should strengthen the company's standing in the security and defense arenas, said John Mahoney, an analyst with Raymond James Financial Inc.
"Veridian has shown substantial organic revenue growth over deals with the Navy and is well-positioned to be a dominant force in the defense and security markets in the next year," said Mr. Mahoney, who rated the company a "strong buy."
Company sales accelerated last year with its acquisition of Signal Corp., a Fairfax information-technology company. "Veridian was able to integrate Signal into its operations pretty quickly and smoothly, which will likely boost fourth-quarter earnings," he said.
Veridian posted an 11 percent increase in sales for the third quarter ended Oct. 31 to $191.8 million from $172.4 million a year earlier. The company forecast revenues to hit $250 million by the fourth quarter.
Earnings rose 97.5 percent for the third quarter to $14.4 million (21 cents per diluted share) from $7.29 million (loss of 42 cents per share) last year.
But the $300 million debt the company incurred to buy Signal prompted Brian Kinstlinger, an information-technology-services analyst with Sidoti & Co. LLC, to keep his neutral rating of the company.
Veridian shares closed at $20.83 yesterday on the New York Stock Exchange, up 98 cents from $19.85 on Friday. Since going public six months ago, the company's stock has grown 19 percent after hitting an all-time low of $17.50.
"The company stock has increased in value despite entering a negative market in August," said Michael Legg, senior vice president of Jefferies & Co. Inc. "That really says a lot about where the company is going in the future."
Mr. Legg also rated Veridian a "buy." He said he expects that the company will pay off its debt in three to five years.
"The debt is a balance-sheet risk to investors, but the company's expansion in sales, and Signal, are good indicators of a positive outcome for the fourth quarter and the year," he said.
David Langstaff, Veridian president and chief executive, said the company also planned to target more contracts in the private sector and with state law enforcement divisions.
"Most of our revenue is outsourced work by the Defense Department, armed services and intelligence community, but we are pushing to integrate our services in the civilian side as well," Mr. Langstaff said. "It's part of promoting our brand and gaining more investor confidence for a company that's fairly young in the market."

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