Exhibit 99.1
GTSI Delivers Record Sales for Third Quarter
Growth seen in both civilian and defense agencies
CHANTILLY, VA. – October 29, 2004 – GTSIÒ Corp. (NASDAQ: GTSI), a leading government technology solutions provider, today announced financial results for the quarter ended September 30, 2004, and monthly sales for September 2004 (see attached tables).
For the third quarter 2004, GTSI reported sales of $330.6 million, a 21.1% increase from $273.1 million during the same period a year ago. The company reported $10.5 million of net income versus $3.5 million of net income a year ago. Reported earnings per share (EPS) for the third quarter were $1.13, an increase over EPS of $0.39 from the same period a year ago. Reported EPS for the nine months ended September 30 was $0.80 versus $0.31 for the same period a year ago.
During the quarter, GTSI reversed certain aged accrued liabilities of $10.1 million, decreasing cost of sales and increasing gross margin. For comparative purposes, adjusting for this quarter’s accrued liability reversal, net of tax, net income for the third quarter 2004 would have been $4.3 million and EPS would have been $0.47 for the quarter and $0.15 for the nine months ended September 30, 2004.
“The third quarter results marked the largest quarterly sales in the history of the company. The GTSI team performed well, going deeper and wider with customers and offering the most sought after technology solutions,” said Dendy Young, Chairman and Chief Executive Officer of GTSI. “The strategic growth initiative roadmap we implemented during the quarter, combined with the renewed emphasis on increasing margin, were instrumental in the overall strength of the third quarter results.”
Federal IT Budget Trends
On September 29th, with only two out of the 13 appropriations bills enacted, the United States Congress passed a continuing resolution (CR) carrying current FY04 spending for federal agencies through November 20th. The stopgap funding measure, the eighth since 1996, acknowledged that Congress would not finish its spending bill before the October 1st start of the new fiscal year. A “lame duck” session is expected in November to either complete the appropriations process or to enact a new CR.
“CR’s have become a way of life for our customers,” said Mr. Young, “but continued pent-up demand for IT solutions gives us great promise for continued growth in IT spending. Recently an industry and government study found that IT spending is expected to grow to $72.6 billion by the end of the decade from $59 billion in President Bush’s 2005 IT budget request. This fact, coupled with the ever increasing concern about securing networks and physical infrastructure and storing the vast amounts of critical data, leads us to believe that the growth estimates may be conservative.”
Financial Position
Tom Mutryn, GTSI’s Senior Vice President and Chief Financial Officer, commented, “GTSI’s operating expenses increased in the quarter to $30.4 million versus $22.6 million in the same quarter a year ago. This increase is chiefly related to our continuing aggressive efforts to comply with the Sarbanes-Oxley (SOX) 404 requirement, the final build-out of our new Enterprise Resource Planning (ERP) system, and increased costs associated with new hires supporting our strategic growth plan. The company continues to enjoy a solid balance sheet with no long-term debt.”
GTSI’s effort to comply with SOX 404 is expected to have a material negative effect on 2004 and 2005 results.
Reported gross margin was $46.7 million in the third quarter 2004 versus $27.5 million a year ago. This represents an increase in gross margin percentage from 10.1% in the third quarter of 2003 to 14.1% in the third quarter of 2004. Without the accrued liability reversal, gross margin for the third quarter 2004 would have been $36.6 million, a gross margin percentage of 11.1%.
September 2004 Monthly Results
Sales for September 2004 were $156.2 million, representing a 18.2% increase of average daily sales from September 2003 of $132.2 million. Month-end total backlog for September was $257.0 million or a 12.6% increase versus $228.3 million for the month-end September 2003. Monthly bookings for September were $220.4 million or a 3.7% decrease versus $228.9 million for the same period last year (see attached table).
Selected Quarterly Highlights
• GTSI is designing and implementing an end-to-end security surveillance system for Super Bowl XXXIX to be held February 6, 2005 through a contract awarded by the City of Jacksonville.
• Strategic new hires, including
• Barry Culman, as Chief Business Architect
• Ken Everist, as Vice President of Pricing
• David Samuels, as Vice President of Finance and Corporate Controller
• Announced Radio Frequency Identification (RFID) services to ensure that GTSI and its vendor partners are fully compliant with the January 1, 2005 Department of Defense requirements to have RFID on shipped products.
• Teamed with two of eight award winners, General Dynamics and Centech, on NetCents, a five year Air Force contract (indefinite-delivery, indefinite quantity) with a ceiling of $9 billion.
• Continued to build an organization which will allow the company to reach its goal of doubling annual sales by 2007. At the end of the third quarter, GTSI had over 800 employees and is on track to reach 850 by year-end.
• Created GTSI Financial Services Inc., a fully integrated financing subsidiary facilitating financing transactions across the company’s sales operations.
Conference Call
An investor conference call to discuss third quarter 2004 is scheduled for 11:00 a.m. EST October 29, 2004. 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 October 29, 2005. 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 November 3, 2004. To access the replay, please dial 877-519-4471 or 973-341-3080, PIN number 5315999.
About GTSI Corp.
GTSI Corp. is the leading information technology product and solutions aggregator focusing exclusively on Federal, State, and Local government customers worldwide. GTSI also focuses on systems integrators on behalf of government programs. For more than two decades, GTSI has served its customers by teaming with global IT leaders like Panasonic, Sun Microsystems, HP, Cisco, 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 unique Technology Practices to deliver exceptional solutions that help government customers support its critical transformation efforts. GTSI is headquartered in Northern Virginia, outside of Washington, D.C. Further information about the Company is available at www.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
703.502.2540
paul.liberty@gtsi.com
### ### ###
GTSI Corp.
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except per share data)
|
| Three Months Ended |
| Change from 2003 |
| |||||||
|
| 2004 |
| 2003 |
| Actual |
| Percentage |
| |||
|
|
|
|
|
|
|
|
|
| |||
Sales |
| $ | 330,645 |
| $ | 273,066 |
| $ | 57,579 |
| 21.1 | % |
Cost of sales |
| 283,922 |
| 245,569 |
| 38,353 |
| 15.6 | % | |||
Gross margin |
| 46,723 |
| 27,497 |
| 19,226 |
| 69.9 | % | |||
|
|
|
|
|
|
|
|
|
| |||
Operating expenses |
| 30,404 |
| 22,640 |
| 7,764 |
| 34.3 | % | |||
Income from operations |
| 16,319 |
| 4,857 |
| 11,462 |
| 236.0 | % | |||
|
|
|
|
|
|
|
|
|
| |||
Interest and other income, net |
| 958 |
| 840 |
| 118 |
| 14.0 | % | |||
Income before income taxes |
| 17,277 |
| 5,697 |
| 11,580 |
| 203.3 | % | |||
|
|
|
|
|
|
|
|
|
| |||
Income tax provision |
| 6,823 |
| 2,227 |
| 4,596 |
| 206.4 | % | |||
Net income |
| $ | 10,454 |
| $ | 3,470 |
| $ | 6,984 |
| 201.3 | % |
|
|
|
|
|
|
|
|
|
| |||
Basic earnings per share |
| $ | 1.21 |
| $ | 0.42 |
| $ | 0.79 |
| 187.1 | % |
Diluted earnings per share |
| $ | 1.13 |
| $ | 0.39 |
| $ | 0.74 |
| 192.5 | % |
|
|
|
|
|
|
|
|
|
| |||
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
| |||
Basic |
| 8,646 |
| 8,238 |
| 408 |
| 5.0 | % | |||
Diluted |
| 9,255 |
| 8,986 |
| 269 |
| 3.0 | % | |||
|
| Nine Months Ended |
| Change from 2003 |
| |||||||
|
| 2004 |
| 2003 |
| Actual |
| Percentage |
| |||
|
|
|
|
|
|
|
|
|
| |||
Sales |
| $ | 748,257 |
| $ | 641,661 |
| $ | 106,596 |
| 16.6 | % |
Cost of sales |
| 661,915 |
| 575,333 |
| 86,582 |
| 15.0 | % | |||
Gross margin |
| 86,342 |
| 66,328 |
| 20,014 |
| 30.2 | % | |||
|
|
|
|
|
|
|
|
|
| |||
Operating expenses |
| 76,723 |
| 63,955 |
| 12,768 |
| 20.0 | % | |||
Income from operations |
| 9,619 |
| 2,373 |
| 7,246 |
| 305.4 | % | |||
|
|
|
|
|
|
|
|
|
| |||
Interest and other income, net |
| 2,809 |
| 2,317 |
| 492 |
| 21.2 | % | |||
Income before income taxes |
| 12,428 |
| 4,690 |
| 7,738 |
| 165.0 | % | |||
|
|
|
|
|
|
|
|
|
| |||
Income tax benefit |
| 4,909 |
| 1,834 |
| 3,075 |
| 167.7 | % | |||
Net income |
| $ | 7,519 |
| $ | 2,856 |
| $ | 4,663 |
| 163.3 | % |
|
|
|
|
|
|
|
|
|
| |||
Basic earnings per share |
| $ | 0.88 |
| $ | 0.34 |
| $ | 0.53 |
| 155.9 | % |
Diluted earnings per share |
| $ | 0.80 |
| $ | 0.31 |
| $ | 0.49 |
| 155.8 | % |
|
|
|
|
|
|
|
|
|
| |||
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
| |||
Basic |
| 8,592 |
| 8,352 |
| 240 |
| 2.9 | % | |||
Diluted |
| 9,355 |
| 9,088 |
| 267 |
| 2.9 | % | |||
GTSI Corp.
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
|
| September 30, |
| December 31, |
| Change from |
| % Change from |
| |||
ASSETS |
|
|
|
|
|
|
|
|
| |||
Current assets: |
|
|
|
|
|
|
|
|
| |||
Cash |
| $ | 136 |
| $ | 177 |
| $ | (41 | ) | -23.2 | % |
Accounts receivable, net |
| 226,733 |
| 181,988 |
| 44,745 |
| 24.6 | % | |||
Merchandise inventories |
| 84,393 |
| 55,987 |
| 28,406 |
| 50.7 | % | |||
Other current assets |
| 13,342 |
| 15,490 |
| (2,148 | ) | -13.9 | % | |||
Total current assets |
| 324,604 |
| 253,642 |
| 70,962 |
| 28.0 | % | |||
Property and equipment, net |
| 14,165 |
| 10,670 |
| 3,495 |
| 32.8 | % | |||
Other assets |
| 2,420 |
| 4,449 |
| (2,029 | ) | -45.6 | % | |||
|
|
|
|
|
|
|
|
|
| |||
TOTAL ASSETS |
| $ | 341,189 |
| $ | 268,761 |
| $ | 72,428 |
| 26.9 | % |
|
|
|
|
|
|
|
|
|
| |||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
| |||
Current liabilities |
|
|
|
|
|
|
|
|
| |||
Notes payable to banks |
| $ | — |
| $ | 12,813 |
| $ | (12,813 | ) | -100.0 | % |
Accounts payable |
| 225,221 |
| 152,435 |
| 72,786 |
| 47.7 | % | |||
Accrued liabilities |
| 16,682 |
| 11,168 |
| 5,514 |
| 49.4 | % | |||
Deferred revenue |
| 5,978 |
| 8,323 |
| (2,345 | ) | -28.2 | % | |||
Accrued warranties |
| 4,197 |
| 4,555 |
| (358 | ) | -7.9 | % | |||
Total current liabilities |
| 252,078 |
| 189,294 |
| 62,784 |
| 33.2 | % | |||
Other liabilities |
| 1,148 |
| 1,522 |
| (374 | ) | -24.6 | % | |||
Total liabilities |
| 253,226 |
| 190,816 |
| 62,410 |
| 32.7 | % | |||
Stockholders’ equity |
| 87,963 |
| 77,945 |
| 10,018 |
| 12.9 | % | |||
|
|
|
|
|
|
|
|
|
| |||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
| $ | 341,189 |
| $ | 268,761 |
| $ | 72,428 |
| 26.9 | % |
GTSI Corp.
|
| Business Days |
| Sales ($ in |
| Year-over-Year |
| Month-End |
| Year-over-Year |
| Monthly |
| Year-over-Year |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
| — |
| |||
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 | % | |||
