The IT Group Reports First Quarter Financial Results in Line With Expectations

Debt Paydown Strategy Progressing Well



Apr 25, 2001, 01:00 ET from The IT Group

    PITTSBURGH, April 25 /PRNewswire/ -- The IT Group, Inc. (NYSE:   ITX) ("the
 Company") announced today first quarter 2001 results.  Net income was $0.6
 million, or $0.05 per diluted share.  Cash earnings for the quarter were $0.16
 per share and operating cash flow was $31.4 million.  Revenues for the quarter
 were $333.5 million.  As previously announced, results in the Company's
 cyclically-low first quarter were negatively impacted by severe weather
 conditions.
 
     Outlook
     Anthony J. DeLuca, chief executive officer and president stated, "After
 a challenging first quarter affected by weather-impacted progress on
 construction projects, we currently believe we can achieve our earnings
 plan for the year of $0.85 to $0.90 per share and cash earnings of $1.25 to
 $1.30 per share.  Although the Company's current market trends remain stable,
 we are proceeding carefully as a general economic slowdown may cause clients
 to delay project funding.  We have deferred discretionary capital spending and
 implemented cost-reduction actions."
 
     Debt Reduction Strategy
     "The Company remains highly focused on its 2001 debt reduction plan of
 $90 to $100 million.  With over $8 million of project claims collected,
 $13 million of excess land sales under contract, receipt of an additional
 $4 million Iron Mountain Mines advance payment, $25 million of reduced
 trailing business acquisition costs in 2001, progress toward improved working
 capital management and anticipated operating results, we continue to believe
 that our debt reduction target for the year should be achieved," Mr. DeLuca
 said.
     As further evidence of the success of our accelerated claims settlement
 strategy, the Company recently obtained a court judgment of approximately
 $10 million, including pre-judgment interest and costs, in connection with a
 breach-of-contract lawsuit against a competitor.  The judgment is subject to
 appeal.
 
     Backlog Remains Strong
     Contract backlog remains strong at a quarter-end level of $4.6 billion.
 "More importantly, the funding of our backlog is running above recent
 historical levels.  Further, bid opportunities remain strong, while
 substantial contract awards are pending," Mr. DeLuca concluded.
     The IT Group, Inc. is a leading provider of consulting, facilities
 management, water, engineering & construction and remediation services
 addressing the infrastructure needs of both private and public sector clients.
 More information on The IT Group can be found on the Internet at
 http://www.theitgroup.com . The IT Group's common stock and depositary shares
 are traded on the New York Stock Exchange under the symbols ITX and ITXpr,
 respectively.
 
     Statements regarding the intentions, beliefs, expectations or predictions
 of The IT Group, Inc. (the Company) and its management, including, but not
 limited to, those statements denoted by the words "anticipate," "believe,"
 "expect," "should," "confidence" and similar expressions are forward-looking
 statements that reflect the current views of The IT Group and its management
 about future events and are subject to certain risks, uncertainties and
 assumptions.  Actual results could differ materially from those projected in
 such forward-looking statements as a result of a number of factors, including,
 but not limited to, competition and pricing pressures, bidding opportunities
 and success, the ability of the Company to negotiate and otherwise realize the
 amounts of project and legacy claims, including the uncertainty of the
 prospects of litigation including success in connection with post-verdict
 proceeding and appeals, the ability to manage subcontracted work, the ability
 to attract and retain qualified personnel, the ability to manage costs and
 margins, the availability of Federal funding in the Company's outsourced
 services business, the ability to close real estate restoration transactions
 (including those for its excess land, the contracts for which are subject to
 customary closing conditions, including due diligence), the Company's ability
 to utilize tax loss carry forwards, management of the Company's cash
 resources, particularly in light of the Company's substantial and variable
 leverage, funding of backlog, matters affecting contracting and engineering
 business generally, such as seasonal work, the impact of weather and clients'
 timing of projects.
 
                               THE IT GROUP, INC.
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                 (In thousands, except per share data and DSO)
 
                                                        Quarter Ended
                                               March 30, 2001    March 31, 2000
 
     Revenues                                      $333,492          $317,145
 
     Cost of revenues                               293,176           274,722
 
     Gross margin                                    40,316            42,423
 
     SG&A                                            12,814            13,862
 
     Operating income before goodwill                27,502            28,561
 
     Goodwill                                         5,030             4,636
 
     Operating income                                22,472            23,925
 
     Interest expense, net                           18,923            16,055
 
     Pretax income                                    3,549             7,870
 
     Provision for income taxes                       1,366             3,030
 
     Net income                                       2,183             4,840
 
     Less preferred stock dividends                  (1,590)           (1,590)
 
     Net income applicable to
       common stock                                    $593            $3,250
 
     Net income per common share diluted (a)          $0.05             $0.14
 
     Cash earnings per share diluted  (b)             $0.16             $0.23
 
     Weighted-average common shares
       outstanding diluted                           28,056            28,971
 
 
                              SUMMARY FINANCIAL DATA
                                            March 30, 2001    March 31, 2000
 
     Operating cash flow (c)                       $31,363           $32,106
 
     Total debt                                    $676,786          $690,443
 
     Accounts receivable (d)                       $376,922          $426,759
 
     Trailing business acquisition costs             $7,357           $13,851
 
     Cash interest expense                          $17,652           $15,481
 
     Capital expenditures                            $3,944            $6,162
 
     Days sales outstanding (DSO)                        94               113
 
     Notes:
     (a) Diluted earnings per share includes the dilutive effect of common
         equivalent shares and assumes the conversion of 6% convertible
         preferred stock.
     (b) Cash earnings per share is net income applicable to common plus
         goodwill net-of-tax.
     (c) Operating cash flow represents earnings before, interest, taxes,
         depreciation, and amortization.
     (d) Accounts receivable is net of billings in excess and allowance for
         doubtful accounts.
 
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SOURCE The IT Group
    PITTSBURGH, April 25 /PRNewswire/ -- The IT Group, Inc. (NYSE:   ITX) ("the
 Company") announced today first quarter 2001 results.  Net income was $0.6
 million, or $0.05 per diluted share.  Cash earnings for the quarter were $0.16
 per share and operating cash flow was $31.4 million.  Revenues for the quarter
 were $333.5 million.  As previously announced, results in the Company's
 cyclically-low first quarter were negatively impacted by severe weather
 conditions.
 
     Outlook
     Anthony J. DeLuca, chief executive officer and president stated, "After
 a challenging first quarter affected by weather-impacted progress on
 construction projects, we currently believe we can achieve our earnings
 plan for the year of $0.85 to $0.90 per share and cash earnings of $1.25 to
 $1.30 per share.  Although the Company's current market trends remain stable,
 we are proceeding carefully as a general economic slowdown may cause clients
 to delay project funding.  We have deferred discretionary capital spending and
 implemented cost-reduction actions."
 
     Debt Reduction Strategy
     "The Company remains highly focused on its 2001 debt reduction plan of
 $90 to $100 million.  With over $8 million of project claims collected,
 $13 million of excess land sales under contract, receipt of an additional
 $4 million Iron Mountain Mines advance payment, $25 million of reduced
 trailing business acquisition costs in 2001, progress toward improved working
 capital management and anticipated operating results, we continue to believe
 that our debt reduction target for the year should be achieved," Mr. DeLuca
 said.
     As further evidence of the success of our accelerated claims settlement
 strategy, the Company recently obtained a court judgment of approximately
 $10 million, including pre-judgment interest and costs, in connection with a
 breach-of-contract lawsuit against a competitor.  The judgment is subject to
 appeal.
 
     Backlog Remains Strong
     Contract backlog remains strong at a quarter-end level of $4.6 billion.
 "More importantly, the funding of our backlog is running above recent
 historical levels.  Further, bid opportunities remain strong, while
 substantial contract awards are pending," Mr. DeLuca concluded.
     The IT Group, Inc. is a leading provider of consulting, facilities
 management, water, engineering & construction and remediation services
 addressing the infrastructure needs of both private and public sector clients.
 More information on The IT Group can be found on the Internet at
 http://www.theitgroup.com . The IT Group's common stock and depositary shares
 are traded on the New York Stock Exchange under the symbols ITX and ITXpr,
 respectively.
 
     Statements regarding the intentions, beliefs, expectations or predictions
 of The IT Group, Inc. (the Company) and its management, including, but not
 limited to, those statements denoted by the words "anticipate," "believe,"
 "expect," "should," "confidence" and similar expressions are forward-looking
 statements that reflect the current views of The IT Group and its management
 about future events and are subject to certain risks, uncertainties and
 assumptions.  Actual results could differ materially from those projected in
 such forward-looking statements as a result of a number of factors, including,
 but not limited to, competition and pricing pressures, bidding opportunities
 and success, the ability of the Company to negotiate and otherwise realize the
 amounts of project and legacy claims, including the uncertainty of the
 prospects of litigation including success in connection with post-verdict
 proceeding and appeals, the ability to manage subcontracted work, the ability
 to attract and retain qualified personnel, the ability to manage costs and
 margins, the availability of Federal funding in the Company's outsourced
 services business, the ability to close real estate restoration transactions
 (including those for its excess land, the contracts for which are subject to
 customary closing conditions, including due diligence), the Company's ability
 to utilize tax loss carry forwards, management of the Company's cash
 resources, particularly in light of the Company's substantial and variable
 leverage, funding of backlog, matters affecting contracting and engineering
 business generally, such as seasonal work, the impact of weather and clients'
 timing of projects.
 
                               THE IT GROUP, INC.
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                 (In thousands, except per share data and DSO)
 
                                                        Quarter Ended
                                               March 30, 2001    March 31, 2000
 
     Revenues                                      $333,492          $317,145
 
     Cost of revenues                               293,176           274,722
 
     Gross margin                                    40,316            42,423
 
     SG&A                                            12,814            13,862
 
     Operating income before goodwill                27,502            28,561
 
     Goodwill                                         5,030             4,636
 
     Operating income                                22,472            23,925
 
     Interest expense, net                           18,923            16,055
 
     Pretax income                                    3,549             7,870
 
     Provision for income taxes                       1,366             3,030
 
     Net income                                       2,183             4,840
 
     Less preferred stock dividends                  (1,590)           (1,590)
 
     Net income applicable to
       common stock                                    $593            $3,250
 
     Net income per common share diluted (a)          $0.05             $0.14
 
     Cash earnings per share diluted  (b)             $0.16             $0.23
 
     Weighted-average common shares
       outstanding diluted                           28,056            28,971
 
 
                              SUMMARY FINANCIAL DATA
                                            March 30, 2001    March 31, 2000
 
     Operating cash flow (c)                       $31,363           $32,106
 
     Total debt                                    $676,786          $690,443
 
     Accounts receivable (d)                       $376,922          $426,759
 
     Trailing business acquisition costs             $7,357           $13,851
 
     Cash interest expense                          $17,652           $15,481
 
     Capital expenditures                            $3,944            $6,162
 
     Days sales outstanding (DSO)                        94               113
 
     Notes:
     (a) Diluted earnings per share includes the dilutive effect of common
         equivalent shares and assumes the conversion of 6% convertible
         preferred stock.
     (b) Cash earnings per share is net income applicable to common plus
         goodwill net-of-tax.
     (c) Operating cash flow represents earnings before, interest, taxes,
         depreciation, and amortization.
     (d) Accounts receivable is net of billings in excess and allowance for
         doubtful accounts.
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X07273541
 
 SOURCE  The IT Group