EX-99.1 2 a05-4043_1ex99d1.htm EX-99.1

Exhibit 99.1

 

GTSI Achieves Record 4th Quarter and Yearly Sales

 

Growth Rate Outpaces Federal IT Market Expansion

 

CHANTILLY, VA. – February 23, 2005 – GTSIÒ Corp. (Nasdaq: GTSI), a leading government information technology solutions aggregator, today announced financial results for the quarter and year ended December 31, 2004, and monthly sales (see attached tables).

 

Fourth Quarter Financial Results

 

For the fourth quarter 2004, GTSI reported sales of $327.9 million, a 4.9% increase over the same period a year ago and reported net income of $2.7 million ($0.29 per diluted share).  Operating expenses were $34.1 million up 12.4%, driven primarily by increased employee expenses associated with growth in marketing and sales, expenses associated with the Sarbanes-Oxley (SOX) government mandate and completion of the build-out of an enterprise resource planning (ERP) system.

 

Gross margin in the fourth quarter of 2004 increased 17.1% from the same period a year ago, primarily due to increased revenue and higher margin percentages.

 

For comparative purposes, it is important to note that during the fourth quarter of 2003 the company took a one-time special charge of $6.0 million for a write-off associated with the development and implementation of an enterprise resource planning system.  Excluding the one-time special charge in 2003, net income would have been $4.0 million ($0.44 per diluted share).

 

Year-end Financial Results

 

For the year, GTSI reported sales of $1,076.1 million, a 12.8% increase over last year and reported net income of $10.3 million ($1.09 per diluted share).  Operating expenses were $110.9 million.  One large one-time factor which helped increase annual net income was a reversal of certain aged accrued liabilities of $10.1 million in the third quarter of 2004.

 

Crossing the Billion Dollar Threshold

 

“Throughout the year the men and women of GTSI continually accepted the challenges presented to them, driving the company to new heights.  Our federal government customers are increasingly relying on GTSI to meet their information technology needs as evidenced in our overall annual sales growth rate,” said Dendy Young, Chairman and Chief Executive Officer of GTSI.  “The expectations for 2005 will be even greater for our GTSI team.  We must drive new profitable business with a keen eye on margin expansion as well as top-line growth.  By delivering new solutions and financing options we will help our customers meet the significant pent up demand for IT.”

 

Due to the significant growth in our leasing operations during the year, the Company has established a lease subsidiary, GTSI Financial Services (GFS).  With increased budget scrutiny, GFS provides a valuable capital funding alternative for customers to undertake new IT initiatives without delaying critical infrastructure investments.  GFS is expected to play an increased role at GTSI in the coming year.

 

The company’s customer mix in 2004 was 35% Department of Defense, 40% Civilian agencies and departments, 20% prime contractors, and 5% state and local government business.

 

Leading revenue-generating offerings for the year were mobile and desktop computers, enterprise computers, software, networking, services and enterprise storage.  GTSI’s top revenue generating partners for 2004 included Panasonic, HP, Sun, Cisco, and Microsoft.

 


 

Government Marketplace Update

 

“For the first time in many years, the calendar year begins with full funding of all federal agencies,” said Mr. Young.  “We feel that GTSI can continue to significantly outpace the federal IT market growth rate by capturing new market share.  In nearly every discussion with our customers the one overwhelming concern they all have is maintaining and building IT infrastructure.”

 

The Bush Administration continues to make IT investments a priority.  In its recently released IT budget for FY 2006 beginning in October 2005, the Administration is requesting a 7.1% spending increase.  IT for the Department of Defense is expected to grow 4.9% and civilian agencies 9.0%. The rise in civilian agencies’ budgets is concentrated at the Department of Homeland Security, Department of Justice, and the Department of Veterans Affairs.

 

According to a recent study by INPUT, a government market intelligence firm, 45% of the federal governments’ IT workforce will be 50 years or older in FY 2008.  As more of these workers retire, the government will increasingly rely on solutions providers to help bridge the gap between retirees and the need to continue to support essential IT programs.  Because of this factor, GTSI’s services division will continue to work with the customer sales teams to seek out new opportunities related to product offerings.

 

Operations and Financial Update

 

As was announced in July 2004, GTSI has initiated a strategic growth plan designed to double revenue, increase margin, and improve productivity.  GTSI made significant progress in the second half of 2004, growing its sales organization, introducing new processes to improve pricing and margin, and initiating activities to increase productivity.

 

Tom Mutryn, GTSI’s Senior Vice President and Chief Financial Officer, commented, “GTSI ended the year in excellent financial condition, with no long-term debt and record stockholders’ equity of $92.1 million ($9.81 per share).  Expenses associated with compliance for SOX 404 and our new ERP system resulted in a significant drain on resources.  Direct expenses in 2004 associated with SOX 404 compliance totaled approximately $2 million, while the company spent close to an equal sum on our ERP system.  And these do not include the opportunity costs of our people working on these activities.”

 

In the fourth quarter, the company completed virtually all of the build-out of its ERP system.  Significant testing, documentation and training are currently underway, and the company anticipates going live in the second quarter of 2005.  The system is expected to provide improved management information and facilitate efforts to realize better operating efficiencies.

 

December 2004 and January 2005 Monthly Sales

 

Sales for December 2004 were $127 million, representing a 25.2% increase of average daily sales from December 2003 of $106.3 million.  Month-end total backlog for December was $86.8 million or a 15.6% decrease versus $102.8 million for the same period last year while net bookings for December 2004 totaled $61.1 million as compared to $65.1 million for December 2003, a 1.7% decrease.

 

Sales for January 2005 were $54.8 million, representing a 6.2% decrease of average daily sales from January 2004 of $58.4 million.  Month-end total backlog for January was $83.1 million or a 7.3% decrease versus $89.6 million for the same period last year, while net bookings for January 2005 totaled $51.1 million as compared to $45.2 million for January 2004, a 13.1% increase (see attached table).

 

Conference Call

 

An investor conference call to discuss fourth quarter and full year results is scheduled for 11:00 a.m. Eastern Time February 23, 2005.  Interested parties are invited to participate by calling 800-247-9979 or 973-409-9254, no pass code is required.  In addition, you may access the webcast on GTSI’s Investor Relations page (www.gtsi.com/ir).

 


 

Webcast will be available for replay through February 23, 2006.  To listen to the live call on the Internet, go to the web site at least 15 minutes early to register, download and install any necessary audio software.  A replay will be available following the conclusion of the call until 6:00 pm EST, February 28, 2005.  To access the replay, please dial 877-519-4471 or 973-341-3080, pass code 5702067.

 

About GTSI Corp.

 

GTSI Corp. is an information technology (IT) solutions leader, focusing exclusively on Federal, State, and Local government customers worldwide.  For two decades, GTSI has served those customers by teaming with global IT leaders like Panasonic, Cisco, Sun Microsystems, HP, and Microsoft.  Offering a broad range of products and services, an extensive contract portfolio, and ISO 9001:2000 standard for quality management GTSI uses its Technology Practices to deliver “best of breed” solutions that help government customers do their job more effectively.  GTSI is headquartered in Northern Virginia, outside of Washington, D.C. Further information about the Company is available at GTSI.com/About.

 

Except for historical information, all of the statements, expectations, beliefs and assumptions contained in the foregoing are “forward-looking statements” (within the meaning of the Private Securities Litigation Reform Act of 1995) that involve a number of risks and uncertainties. It is possible that the assumptions made by management — including, but not limited to, those relating to revenue, margins, operating results and net income, and the effect of new contracts as well as new vendor relationships — may not materialize. Actual results may differ materially from those projected or implied in any forward-looking statements.  In addition to the above factors, other important factors that could cause actual results to differ materially are those listed in the Company’s most recent report on Form 10–K and included from time to time in other documents filed by the Company with the Securities and Exchange Commission.

 

GTSI and GTSI.com are registered trademarks of GTSI Corp. in the U.S. and other countries.  All trade names are the property of their respective owners.

 

GTSI Contact:

Paul Liberty

Area Vice President, Corporate Affairs & Investor Relations

703.502.2540

paul.liberty@gtsi.com

 

### ### ###

 


 

GTSI Corp.

Consolidated Statements of Operations

(in thousands, except per share data)

 

 

 

Three Months Ended
December 31,

 

Change from 2003

 

 

 

2004

 

2003

 

Actual

 

Percentage

 

 

 

 

 

 

 

 

 

 

 

Sales

 

$

327,891

 

$

312,457

 

$

15,434

 

4.9

%

Cost of sales

 

292,228

 

282,001

 

10,227

 

3.6

%

Gross margin

 

35,663

 

30,456

 

5,207

 

17.1

%

 

 

 

 

 

 

 

 

 

 

Operating expenses excluding special charge

 

34,132

 

24,392

 

9,740

 

39.9

%

Special charge

 

—

 

5,972

 

(5,972

)

100.0

%

Operating expenses

 

34,132

 

30,364

 

3,768

 

12.4

%

 

 

 

 

 

 

 

 

 

 

Income from operations

 

1,531

 

92

 

1,439

 

1564.1

%

 

 

 

 

 

 

 

 

 

 

Interest and other income, net

 

2,760

 

515

 

2,245

 

435.9

%

Income before income taxes

 

4,291

 

607

 

3,684

 

606.9

%

 

 

 

 

 

 

 

 

 

 

Income tax provision

 

1,546

 

284

 

1,262

 

444.4

%

Net income

 

$

2,745

 

$

323

 

$

2,422

 

749.8

%

 

 

 

 

 

 

 

 

 

 

Basic net income per share

 

$

0.31

 

$

0.04

 

$

0.27

 

675.0

%

Diluted net income per share

 

$

0.29

 

$

0.04

 

$

0.25

 

625.0

%

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

8,881

 

8,343

 

538

 

6.4

%

Diluted

 

9,451

 

9,208

 

243

 

2.6

%

 


 

 

 

Years Ended
December 31,

 

Change from 2003

 

 

 

2004

 

2003

 

Actual

 

Percentage

 

 

 

 

 

 

 

 

 

 

 

Sales

 

$

1,076,148

 

$

954,118

 

$

122,030

 

12.8

%

Cost of sales

 

954,143

 

857,334

 

96,809

 

11.3

%

Gross margin

 

122,005

 

96,784

 

25,221

 

26.1

%

 

 

 

 

 

 

 

 

 

 

Operating expenses excluding special charge

 

110,855

 

88,347

 

22,508

 

25.5

%

Special charge

 

—

 

5,972

 

(5,972

)

100.0

%

Operating expenses

 

110,855

 

94,319

 

16,536

 

17.5

%

 

 

 

 

 

 

 

 

 

 

Income from operations

 

11,150

 

2,465

 

8,685

 

352.3

%

 

 

 

 

 

 

 

 

 

 

Interest and other income, net

 

5,569

 

2,832

 

2,737

 

96.6

%

Income before income taxes

 

16,719

 

5,297

 

11,422

 

215.6

%

 

 

 

 

 

 

 

 

 

 

Income tax provision

 

6,455

 

2,118

 

4,337

 

204.8

%

Net income

 

$

10,264

 

$

3,179

 

$

7,085

 

222.9

%

 

 

 

 

 

 

 

 

 

 

Basic net income per share

 

$

1.18

 

$

0.38

 

$

0.80

 

210.5

%

Diluted net income per share

 

$

1.09

 

$

0.35

 

$

0.74

 

211.4

%

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

8,664

 

8,349

 

315

 

3.8

%

Diluted

 

9,388

 

9,116

 

272

 

3.0

%

 


 

GTSI Corp.

Condensed Consolidated Balance Sheets

(in thousands)

 

 

 

December 31,

 

December 31,

 

Change from December 31, 2003

 

 

 

2004

 

2003

 

Actual

 

Percentage

 

ASSETS

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

Cash

 

$

397

 

$

177

 

$

220

 

124.3

%

Accounts receivable, net

 

210,606

 

181,988

 

28,618

 

15.7

%

Merchandise inventories

 

59,184

 

55,987

 

3,197

 

5.7

%

Other current assets

 

9,616

 

15,490

 

(5,874

)

-37.9

%

Total current assets

 

279,803

 

253,642

 

26,161

 

10.3

%

Property and equipment, net

 

15,183

 

10,670

 

4,513

 

42.3

%

Other assets

 

1,400

 

4,449

 

(3,049

)

-68.5

%

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

$

296,386

 

$

268,761

 

$

27,625

 

10.3

%

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

Notes payable to banks

 

$

1,179

 

$

12,813

 

$

(11,634

)

-90.8

%

Accounts payable

 

173,218

 

152,435

 

20,783

 

13.6

%

Accrued liabilities

 

23,950

 

19,491

 

4,459

 

22.9

%

Accrued warranties

 

2,429

 

4,555

 

(2,126

)

-46.7

%

Total current liabilities

 

200,776

 

189,294

 

11,482

 

6.1

%

Other liabilities

 

3,473

 

1,522

 

1,951

 

128.2

%

Total liabilities

 

204,249

 

190,816

 

13,433

 

7.0

%

Stockholders’ equity

 

92,137

 

77,945

 

14,192

 

18.2

%

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

296,386

 

$

268,761

 

$

27,625

 

10.3

%

 


 

GTSI Corp.

 

 

 

Business Days
in Month (1)

 

Sales ($ in
Millions)

 

Year-over-Year
Change
Average Daily
Sales

 

Month-End
Total Backlog
($ in Millions)

 

Year-over-Year
Change

 

Monthly Bookings
($ in Millions)

 

Year-over-Year
Change
Average Daily
Bookings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

January 2002

 

22

 

$

46.8

 

—

 

$

72.2

 

—

 

$

42.4

 

—

 

February 2002

 

19

 

50.3

 

—

 

99.7

 

—

 

77.8

 

—

 

March 2002

 

20

 

79.6

 

—

 

93.5

 

—

 

73.4

 

—

 

April 2002

 

22

 

46.0

 

—

 

102.8

 

—

 

55.3

 

—

 

May 2002

 

22

 

61.4

 

—

 

115.3

 

—

 

73.9

 

—

 

June 2002

 

20

 

93.6

 

—

 

118.4

 

—

 

96.7

 

—

 

July 2002

 

22

 

74.2

 

—

 

121.9

 

—

 

77.7

 

—

 

August 2002

 

22

 

82.6

 

—

 

131.2

 

—

 

91.9

 

—

 

September 2002

 

20

 

120.0

 

—

 

203.6

 

—

 

192.4

 

—

 

October 2002

 

23

 

104.5

 

—

 

161.2

 

—

 

62.1

 

—

 

November 2002

 

19

 

94.0

 

—

 

106.6

 

—

 

39.4

 

—

 

December 2002

 

21

 

81.7

 

—

 

91.3

 

—

 

66.4

 

—

 

January 2003

 

22

 

53.5

 

14.3

%

92.5

 

28.1

%

54.7

 

29.0

%

February 2003

 

19

 

55.8

 

10.9

%

85.1

 

-14.6

%

48.4

 

-37.8

%

March 2003

 

21

 

69.6

 

-16.7

%

72.2

 

-22.8

%

56.7

 

-26.4

%

April 2003

 

22

 

48.3

 

5.0

%

89.8

 

-12.7

%

65.9

 

19.2

%

May 2003

 

20

 

60.4

 

8.2

%

86.8

 

-24.7

%

57.4

 

-14.6

%

June 2003

 

21

 

81.0

 

-17.6

%

106.2

 

-10.3

%

100.4

 

-1.1

%

July 2003

 

22

 

75.5

 

1.8

%

116.5

 

-4.4

%

85.8

 

10.4

%

August 2003

 

21

 

65.4

 

-17.1

%

131.6

 

0.3

%

80.5

 

-8.2

%

September 2003

 

21

 

132.2

 

4.9

%

228.3

 

12.1

%

228.9

 

13.3

%

October 2003

 

23

 

113.0

 

8.1

%

192.9

 

19.7

%

77.6

 

25.0

%

November 2003

 

18

 

93.2

 

4.7

%

144.0

 

35.1

%

44.3

 

18.7

%

December 2003

 

22

 

106.3

 

24.2

%

102.8

 

12.6

%

65.1

 

-6.4

%

January 2004

 

21

 

58.4

 

14.4

%

89.6

 

-3.1

%

45.2

 

-13.4

%

February 2004

 

19

 

52.3

 

-6.3

%

83.1

 

-2.4

%

45.8

 

-5.4

%

March 2004

 

23

 

67.9

 

-10.9

%

98.0

 

35.7

%

82.8

 

33.3

%

April 2004

 

22

 

73.8

 

52.8

%

123.0

 

37.0

%

98.8

 

49.9

%

May 2004

 

20

 

72.2

 

19.5

%

132.9

 

53.1

%

82.1

 

43.0

%

June 2004

 

22

 

93.0

 

9.6

%

155.0

 

46.0

%

115.1

 

9.4

%

July 2004

 

21

 

89.5

 

24.2

%

173.0

 

48.5

%

107.5

 

31.3

%

August 2004

 

22

 

84.9

 

23.9

%

192.8

 

46.5

%

104.7

 

24.2

%

September 2004

 

21

 

156.2

 

18.2

%

257.0

 

12.6

%

220.4

 

-3.7

%

October 2004

 

21

 

107.7

 

4.4

%

207.8

 

7.7

%

58.5

 

-17.4

%

November 2004

 

20

 

93.2

 

-10.0

%

152.7

 

6.0

%

38.1

 

-22.6

%

December 2004

 

21

 

127.0

 

25.2

%

86.8

 

-15.6

%

61.1

 

-1.7

%

January 2005

 

21

 

54.8

 

-6.2

%

83.1

 

-7.3

%

51.1

 

13.1

%

 

(1) All percentage calculations are based on data per business day calculations