EX-99.1 2 a05-7541_1ex99d1.htm EX-99.1

 

Exhibit 99.1

 

 

 

GTSI Reports First Quarter Results

 

Continues Investment in Sales & Marketing to Meet Growing Federal IT Market

 

CHANTILLY, VA. — April 28, 2005 — GTSIÒ Corp. (Nasdaq: GTSI), a leading government information technology solutions aggregator, today announced financial results for the quarter ended March 31, 2005, and monthly sales (see attached tables).

 

For the first quarter 2005, GTSI reported sales of $157 million, a 12% decline over the same period a year ago, and reported a net loss of $5.8 million ($0.65 per diluted share).  Selling, general and administrative expenses were $28.3 million, up 30%, driven primarily by the company’s strategy to grow its marketing and sales organizations, and expenses associated with the implementation of an enterprise resource planning (ERP) system.

 

Gross margin dollars in the first quarter of 2005 were flat with the same period a year ago, while gross margin percentage increased 140 basis points to 11.5% due to product mix and improved pricing.

 

Booked revenue for the quarter was up 2% and backlog at the end of the quarter increased by 9.5% year-over-year even though the year started with backlogs substantially down from the prior year.  During the quarter backlog grew $20.5 million.

 

“The first quarter is traditionally the weakest for GTSI.  In addition, the strategic decision we made in mid-2004 to rapidly accelerate our hiring of new employees is having an impact on the first half of 2005 due to higher expenses,” said Dendy Young, Chairman and Chief Executive Officer of GTSI.  “This expansion of resources will help us to take advantage of growing IT budgets, especially at the federal government level.  While it takes a certain amount of time for our newly hired sales professionals to reach full productivity, we remain convinced that these investments in people will enable GTSI to take full advantage of the anticipated growth in federal IT spending and to grow our market share.”

 

In March, INPUT, a leading IT research firm, presented a comprehensive report outlining its forecast for federal IT spending until 2009.  INPUT estimates that budgets will grow on a compounded annual growth rate of 6.6% to $80.7 billion.

 

As a company that generates 95% of its sales from the federal government, it is important to note that GTSI generally achieves more than two-thirds of its sales during the second half of the year due to the federal government fiscal year-end of September 30th.

 

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 continued to make strides in the first quarter of 2005 by growing its sales organization, vigorously enforcing new pricing processes to improve margin, and continuing activities related to increasing productivity.

 

 


 

Tom Mutryn, GTSI’s Senior Vice President and Chief Financial Officer, commented, “GTSI continues to have a very strong balance sheet with no long-term debt and stockholders’ equity of $86.8 million ($9.59 per share(1)).  In addition to the expenses associated with hiring, the company continued to invest in the deployment of a new ERP system which resulted in a significant impact on the bottom line.”

(1) Shareholders’ equity of $86.8 million divided by common stock shares outstanding of 9,046,893 at March 31, 2005 equals $9.59 per share.

 

In the first quarter, the company completed the build-out of its ERP system.  On April 19th, the system went live.  It is anticipated that the ERP will help provide a more robust technology platform to manage the business and increase productivity as compared to the unsupportable legacy platform.

 

March 2005 Monthly Sales

 

Sales for March 2005 were $59.2 million, representing a 12.8% decline of average daily sales from March 2004 of $67.9 million.  Month-end total backlog for March was $107.3 million or a 9.5% increase versus $98 million for the same period last year while net bookings for March 2005 totaled $71 million as compared to $82.8 million for March 2004, a 14.3% decrease.

 

Last year in the month of March, the company closed several large transactions, resulting in an unusually strong month, with a 33% increase in bookings compared to 2003.

 

Changes to Credit Facility

 

On April 27 GTSI’s lead lender GE Commercial Distribution Finance approved an increase in the company’s credit facility from $125 million to $165 million.  In addition to increasing the amount of the facility, GTSI added Wachovia and M&T Bank to the lender syndicate, which also includes SunTrust Bank.  The added capacity will allow GTSI to accommodate expected growth in floor-planning and short-term borrowing needs.

 

Authorized Share Buyback Program

 

At its regularly scheduled quarterly meeting, GTSI’s Board of Directors approved an increase to the company’s share repurchase program.  “The Board’s authorization of a share repurchase program reflects their confidence in the management and its strategic goals, as well as their belief that GTSI represents an attractive investment,” said Mr. Young.

 

The increased authorization was for $7.3 million which, combined with the remaining $2.7 million available under previous authorizations, results in $10 million available for repurchase.

 

If and when the company repurchases shares, it will do so on the open market, through block trades or otherwise.  The amount of share repurchases, and the timing of purchases, will be based upon capital requirements, general business conditions and other factors.  The company may hold the repurchased shares in treasury for general corporate purchases, including issuances under GTSI’s employee stock purchase plan.

 

Conference Call

 

An investor conference call to discuss first quarter results is scheduled for 11:00 a.m. Eastern Time April 28, 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 April 28, 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, May 4, 2005.  To access the replay, please dial 877-519-4471 or 973-341-3080, pass code 5968197.

 

 


 

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.

Unaudited Condensed Consolidated Statements of Operations

(in thousands, except per share data)

 

 

 

Three Months
March 31,

 

Change from 2004

 

 

 

2005

 

2004

 

Actual

 

Percentage

 

Sales

 

$

157,001

 

$

178,623

 

$

(21,622

)

-12.1

%

Cost of sales

 

138,922

 

160,541

 

(21,619

)

-13.5

%

Gross margin

 

18,079

 

18,082

 

(3

)

0.0

%

Selling, general, and administrative expenses

 

28,291

 

21,697

 

6,594

 

30.4

%

Loss from operations

 

(10,212

)

(3,615

)

(6,597

)

-182.5

%

Interest and other income, net

 

729

 

1,333

 

(604

)

-45.3

%

Loss before income taxes

 

(9,483

)

(2,282

)

(7,201

)

-315.6

%

Income tax benefit

 

(3,673

)

(901

)

(2,772

)

-307.7

%

Net loss

 

$

(5,810

)

$

(1,381

)

$

(4,429

)

-320.7

%

Basic net loss per share

 

$

(0.65

)

$

(0.16

)

$

(0.49

)

-303.6

%

Diluted net loss per share

 

$

(0.65

)

$

(0.16

)

$

(0.49

)

-303.6

%

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

9,002

 

8,556

 

446

 

5.2

%

Diluted

 

9,002

 

8,556

 

446

 

5.2

%

 

 


 

GTSI Corp.

Unaudited Condensed Consolidated Balance Sheets

(in thousands)

 

 

 

 

March 31,
2005

 

December 31,
2004

 

Change from
December 31, 2004

 

% Change from
December 31, 2004

 

ASSETS

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

Cash

 

$

23,972

 

$

397

 

$

23,575

 

5938.3

%

Accounts receivable, net

 

131,447

 

210,606

 

(79,159

)

-37.6

%

Merchandise inventories

 

42,170

 

59,184

 

(17,014

)

-28.7

%

Other current assets

 

14,340

 

9,616

 

4,724

 

49.1

%

Total current assets

 

211,929

 

279,803

 

(67,874

)

-24.3

%

Property and equipment, net

 

15,511

 

15,183

 

328

 

2.2

%

Other assets

 

1,172

 

1,400

 

(228

)

-16.3

%

TOTAL ASSETS

 

$

228,612

 

$

296,386

 

$

(67,774

)

-22.9

%

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

Notes payable to banks

 

$

—

 

$

1,179

 

$

(1,179

)

-100.0

%

Accounts payable

 

117,019

 

173,218

 

(56,199

)

-32.4

%

Accrued liabilities

 

13,182

 

14,734

 

(1,552

)

-10.5

%

Deferred revenue

 

6,253

 

9,216

 

(2,963

)

-32.2

%

Accrued warranty liabilities

 

2,015

 

2,429

 

(414

)

-17.0

%

Total current liabilities

 

138,469

 

200,776

 

(62,307

)

-31.0

%

Other liabilities

 

3,373

 

3,473

 

(100

)

-2.9

%

Total liabilities

 

141,842

 

204,249

 

(62,407

)

-30.6

%

Stockholders’ equity

 

86,770

 

92,137

 

(5,367

)

-5.8

%

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

228,612

 

$

296,386

 

$

(67,774

)

-22.9

%

 

 


 

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 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

%

February 2005

 

19

 

43.0

 

-17.8

%

95.5

 

14.9

%

55.4

 

21.0

%

March 2005

 

23

 

59.2

 

-12.8

%

107.3

 

9.5

%

71.0

 

-14.3

%

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