Versar, Inc. Announces Improved Second Quarter FY 2011 Results

SPRINGFIELD, Va.--(BUSINESS WIRE)--Versar, Inc. (NYSE Amex: VSR) today announced its financial results for its second quarter fiscal year 2011, that ended December 31, 2010. Gross revenue for the second quarter achieved a company record $41,908,000, a 72% increase from the $24,387,000 reported in the second quarter of fiscal year 2010. Revenue was positively affected by an $8.4 million one-time equipment purchase related to the company’s Chemical Munitions Destruction Project near Tooele, Utah. Net income for the second quarter of fiscal year 2011 was $924,000, or $0.10 per share compared to a loss of $300,000 or ($0.03) per share for the same period last year. Second quarter FY 2011 operating income of $1,491,000 was approximately $2 million higher than the $510,000 loss reported during the same period last year.

Gross revenue for the first six months of fiscal year 2011 was $71,204,000, an increase of $22,103,000 (45%) compared to $49,101,000 in the first six months of last fiscal year. The Company reported net income of $1,463,000, or $.16 per share, for the first six months of fiscal year 2011 compared to loss of $63,000, or ($0.01) per share, during the same period in fiscal year 2010.

In addition to the Tooele project, year on year revenue growth was driven by the two acquisitions completed last year, which have added over $11 million of revenue during the first half of FY 2011 and improved performance from the Company’s Compliance and Environmental and National Security segments.

Gross Profit for second quarter of FY 2011 of $3,486,000 was 102% higher than the $1,728,000 reported during the same period last year. All of the Company’s business segments contributed positive operating income and gross profit. The improved profit margin also benefited from the Company’s ongoing cost reduction efforts as selling, general and administrative (SG&A) expenses decreased by 11% during the second quarter of FY 2011 compared to same period last year despite revenue growing by 72%.

Tony Otten, CEO of Versar said, "Our second quarter performance is directly attributable to a significant turnaround in our domestic operations, with improved results from our Compliance and Environmental and National Security business segments and continued strong performance of our Professional Services Group. We are expecting strong financial performance for the remainder of FY 2011 and are focusing our resources on a ramp up of our business development processes as we look to strengthen our backlog for FY 2012."

VERSAR, INC., headquartered in Springfield, VA, is a publicly held global project management company providing sustainable solutions to government and commercial clients in construction management, environmental services, munitions response, telecommunications and energy. VERSAR operates a number of web sites, including the corporate Web sites, www.versar.com, www.homelanddefense.com, www.geomet.com; www.viap.com; www.dtaps.com; www.adventenv.com, and www.ppsgb.com.

This press release contains forward-looking information. The forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be significantly impacted by certain risks and uncertainties described herein and in Versar’s Annual Report on Form 10-K filed with the Securities and Exchange Commission for the year ended June 25, 2010, as updated from time to time in the Company’s periodic filings. The forward-looking statements are made as of the date hereof and Versar does not undertake to update its forward-looking statements.

VERSAR, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited – in thousands, except per share amounts)
	For the Three-Month Periods Ended						For the Six-Month Periods Ended
	December 31, 2010			December 25, 2009			December 31, 2010			December 25, 2009
GROSS REVENUE	$	41,908		$	24,387		$	71,204		$	49,101
Purchased services and materials, at cost		24,634			13,350			39,108			26,120
Direct costs of services and overhead		13,788			9,309			25,725			18,900
GROSS PROFIT		3,486			1,728			6,371			4,081
Selling, general and administrative expenses		1,995			2,238			4,004			4,213
OPERATING INCOME (LOSS)		1,491			(510	)		2,367			(132	)
OTHER EXPENSE
Interest income		(38	)		(33	)		(120	)		(65	)
Interest expense		57			9			100			22
INCOME (LOSS) BEFORE INCOME TAXES		1,472			(486	)		2,387			(89	)
Income tax expense (benefit)		548			(186	)		924			(26	)
NET INCOME (LOSS)	$	924		$	(300	)	$	1,463		$	(63	)
NET INCOME (LOSS) PER SHARE – BASIC	$	0.10		$	(0.03	)	$	0.16		$	(0.01	)
NET INCOME (LOSS) PER SHARE – DILUTED	$	0.10		$	(0.03	)	$	0.16		$	(0.01	)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING – BASIC		9,272			9,121			9,265			9,065
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING – DILUTED		9,317			9,121			9,291			9,065