SPRINGFIELD, Va.--(BUSINESS WIRE)--Versar, Inc. (NYSE Amex: VSR) today announced its financial results for the fiscal second quarter and six months ended December 30, 2011.
Revenue for the second quarter of fiscal year 2012 was $31.3 million, a decrease of 25% compared to revenue of $41.9 million reported in the same quarter of fiscal year 2011. The decrease in revenue is primarily attributable to non-recurring equipment purchase revenue of approximately $8.4 million, from our Tooele project in Utah, recorded in the second quarter of 2011, which was previously announced.
The Company achieved gross profit in the current quarter of $3.4 million, or 11% of sales, compared to gross profit of $3.5 million, or 8.4% of sales in the second quarter last year, resulting from increased margins primarily in our international operations. Operating income declined slightly to $1.3 million in the second quarter versus $1.5 million in the second quarter of last year. Versar recorded net income of $0.8 million or $0.09 per basic and diluted share for the second quarter of fiscal year 2012, compared to net income of $0.9 million, or $0.10 per basic and diluted share, in the second quarter of fiscal 2011.
For the first six months of fiscal 2012, Versar recorded gross revenue of $64.6 million. While this was a 9% decrease compared to revenue of $71.2 million in the first six months of last fiscal year, gross profit increased 13% to $7.2 million, or 11% of sales, compared to gross profit of $6.4 million or 9% of sales in the first half of fiscal year 2011. Operating income increased 8% in the first half of fiscal year 2012 to $2.6 million from $2.4 million in the same period last year. Versar achieved net income of $1.6 million or $0.18 per basic and diluted share in the first six months of fiscal 2012 as compared to $1.5 million or $0.16 per basic and diluted share in the first six months of fiscal 2011. The improved profit margins were due to strong performance in the Company’s Program Management segment.
Versar closed the second quarter of fiscal 2012 with funded backlog of $85 million, an increase of 15% compared to the second quarter of 2011.
Tony Otten, CEO of Versar said, “While revenues decreased, this quarter demonstrated many positive developments at Versar. First, it is important to understand that on a comparative basis, excluding last year’s one time equipment purchase, our revenues decreased only 7%. This decrease stems largely from softness in our environmental group where we saw both increased competition and fewer overall awards as compared to last year. That said, in an uncertain federal government environment, our overall backlog is up 15 percent from last year, a testament to our bolstered business development capabilities and our dedication as a company to continue to invest in the long-term growth of our business. During the quarter, our SG&A expense included a reserve charge of approximately $229 thousand related to a loan provided to an outside entity. When this charge is excluded, SG&A actually declined approximately $100 thousand, even after the continued investment in ongoing enhancements to our company-wide technology platform and expenses associated with strengthening our sales and marketing efforts. Overall, we were solidly profitable for the quarter and our balance sheet provides an excellent foundation for future growth.
”On a business segment basis, revenues in our Program Management business grew 3% during the quarter, as a result of improved performance from our U.S. based construction group, revenue growth generated by our Title II Construction Management projects in Afghanistan and our Electrical Inspection work in Iraq. Our Environmental Services business segment saw revenues decline by 39%, related to the award of fewer contracts during the second quarter. Revenues remained flat in our Professional Services segment and our National Security segment experienced a 53% decline in revenues related to the non-recurring equipment purchase revenue that was discussed above.”
Mr. Otten continued, “There continues to be uncertainty around the government budgeting process and as a result we are continuing to experience delays in the receipt of funding for certain projects in our Environmental Services business. However, we are positioned as a service provider to government mandated programs, particularly in areas where ongoing government expenditures are an operational necessity, such as sustainable military range management, environmental assessments, and remediation. Our balance sheet remains strong and we believe that our areas of expertise will remain in demand despite the anticipated reduction in government spending. It will be a challenge for us to match 2011 revenues in 2012, given the revenue bump in 2011 associated with the one-time equipment purchase, but we are encouraged by longer term organic growth opportunities, an improved acquisition landscape and ongoing enhancements made to the organization to maximize profitability.”
Conference Call:
The Company will host a conference call today, February 13, 2012 at 2:00 p.m. Eastern Time to discuss its operational performance and financial results. The conference call may be accessed in the U.S. and Canada by dialing toll-free 877-407-8033. International callers may access the call by dialing 201-689-8033.
Participants should call in a few minutes before 2:00 p.m. Eastern Time. For those unable to attend the conference call, replays will be available on Versar’s website, www.versar.com.
VERSAR, INC., headquartered in Springfield, VA, is a publicly traded global project management company providing sustainable value oriented solutions to government and commercial clients in the construction management, environmental services, munitions response, and telecommunication and technology integration market areas.
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 news 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 fiscal year ended July 1, 2011, 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 | ||||||||||||
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(unaudited - in thousands, except share amounts) |
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| December 30, | December 31, | December 30, | December 31, | |||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||
| GROSS REVENUE | $ | 31,280 | $ | 41,908 | $ | 64,564 | $ | 71,204 | ||||
| Purchased services and materials, at cost | 16,085 | 24,634 | 32,243 | 39,108 | ||||||||
| Direct costs of services and overhead | 11,748 | 13,788 | 25,141 | 25,725 | ||||||||
| GROSS PROFIT | 3,447 | 3,486 | 7,180 | 6,371 | ||||||||
| Selling, general and administrative expenses | 2,126 | 1,995 | 4,508 | 4,004 | ||||||||
| Other expense | 19 | --- | 53 | --- | ||||||||
| OPERATING INCOME | 1,302 | 1,491 | 2,619 | 2,367 | ||||||||
| OTHER (INCOME) EXPENSE | ||||||||||||
| Interest (income) | (39) | (38) | (68) | (120) | ||||||||
| Interest expense | 19 | 57 | 49 | 100 | ||||||||
| INCOME BEFORE INCOME TAXES | 1,322 | 1,472 | 2,638 | 2,387 | ||||||||
| Income tax expense | 505 | 548 | 997 | 924 | ||||||||
| NET INCOME | $ | 817 | $ | 924 | $ | 1,641 | $ | 1,463 | ||||
| NET INCOME PER SHARE – BASIC | $ | 0.09 | $ | 0.10 | $ | 0.18 | $ | 0.16 | ||||
|
NET INCOME PER SHARE – DILUTED |
$ | 0.09 | $ | 0.10 | $ | 0.18 | $ | 0.16 | ||||
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WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: |
||||||||||||
| – BASIC | 9,365 | 9,272 | 9,352 | 9,265 | ||||||||
| WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: | ||||||||||||
| – DILUTED | 9,391 | 9,317 | 9,372 | 9,291 | ||||||||
| VERSAR, INC. AND SUBSIDIARIES | ||||||
| Condensed Consolidated Balance Sheets | ||||||
|
(in thousands, except share amounts) |
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| As of | ||||||
| December 30, | July 1, | |||||
| 2011 | 2011 | |||||
| (unaudited) | ||||||
| ASSETS | ||||||
| Current assets | ||||||
| Cash and cash equivalents | $ | 990 | $ | 6,017 | ||
|
Accounts receivable, net |
33,477 | 29,500 | ||||
| Inventory | 1,375 | 1,386 | ||||
| Notes receivable, net | 474 | 1,040 | ||||
| Prepaid expenses and other current assets | 1,329 | 1,511 | ||||
| Deferred income taxes | 1,695 | 1,554 | ||||
| Income tax receivable, net | 102 | 424 | ||||
| Total current assets | 39,442 | 41,432 | ||||
| Property and equipment, net | 3,791 | 3,828 | ||||
| Goodwill | 5,758 | 5,758 | ||||
| Intangible assets, net | 1,343 | 1,539 | ||||
| Other assets | 808 | 819 | ||||
| Total assets | $ | 51,142 | $ | 53,376 | ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
| Current liabilities | ||||||
| Accounts payable | $ | 10,005 | $ | 10,022 | ||
| Accrued salaries and vacation | 3,052 | 3,039 | ||||
| Other current liabilities | 4,847 | 7,363 | ||||
| Notes payable | 219 | 1,417 | ||||
| Total current liabilities | 18,123 | 21,841 | ||||
| Deferred income taxes | 424 | 332 | ||||
| Other long-term liabilities | 1,014 | 977 | ||||
| Total liabilities | 19,561 | 23,150 | ||||
| Commitments and contingencies | ||||||
| Stockholders’ equity | ||||||
|
Common stock, $.01 par value; 30,000,000 shares authorized; 9,631,149 shares and 9,585,474 shares issued; 9,382,432 shares and 9,340,280 shares outstanding |
|
96 |
95 |
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| Capital in excess of par value | 29,003 | 28,806 | ||||
| Retained earnings | 4,409 | 2,768 | ||||
| Treasury stock, at cost (248,717 and 245,194 shares, respectively) | (1,152) | (1,142) | ||||
| Accumulated other comprehensive loss; foreign currency translation | (775) | (301) | ||||
| Total stockholders’ equity | 31,581 | 30,226 | ||||
| Total liabilities and stockholders’ equity | $ | 51,142 | $ | 53,376 | ||