Exhibit 99.1
VSE Reports Third Quarter 2004 Results
Company Earns $0.40 Per Share in Quarter
Alexandria, Virginia, October 28, 2004 - VSE Corporation (Nasdaq: VSEC)
reported the following consolidated financial results for the three- and nine-
month periods ended September 30, 2004 and 2003:
VSE Corporation and Subsidiaries
Consolidated Statements of Income (unaudited)
(in thousands, except share and per share amounts)
________________________________________________________________________________________
Three Months Nine Months
2004 2003 2004 2003
---- ---- ---- ----
Revenues, principally from contracts $ 62,223 $ 36,339 $ 158,869 $ 90,874
Costs and expenses of contracts 60,620 35,403 154,505 88,384
--------- --------- --------- ---------
Gross profit 1,603 936 4,364 2,490
Selling, general and administrative expenses 192 84 450 158
Interest income, net (31) (18) (76) (49)
--------- --------- --------- ---------
Income before income taxes 1,442 870 3,990 2,381
Provision for income taxes 557 340 1,542 912
--------- --------- --------- ---------
Income from continuing operations 885 530 2,448 1,469
Loss from discontinued operations,
net of tax benefit - (7) (1) (78)
--------- --------- --------- ---------
Net income $ 885 $ 523 $ 2,447 $ 1,391
========= ========= ========= =========
Weighted average shares outstanding:
Basic 2,225,307 2,188,635 2,221,043 2,188,108
Diluted 2,301,040 2,235,779 2,297,866 2,227,026
Earnings per share:
Basic - Income from continuing operations $ .40 $ .24 $ 1.10 $ .67
Basic - Loss from discontinued operations $ - $ - $ - $ (.03)
--------- --------- --------- ---------
Basic - Net income $ .40 $ .24 $ 1.10 $ .64
========= ========= ========= =========
Diluted - Income from continuing operations $ .38 $ .23 $ 1.06 $ .65
Diluted - Loss from discontinued operations $ - $ - $ - $ (.03)
--------- --------- --------- ---------
Diluted - Net income $ .38 $ .23 $ 1.06 $ .62
========= ========= ========= =========
________________________________________________________________________________________
Financial Results
VSE revenues increased about $25.9 million (up 71%) for the quarter and
about $68.0 million (up 75%) for the nine-month period compared to the same
periods of last year, primarily due to a higher volume of work in the company's
BAV ship transfer division and in its Communications and Engineering (CED) and
Fleet Maintenance Divisions.
VSE net income increased about $362 thousand (up 69%) for the quarter and
about $1.1 million (up 76%) for the nine-month period compared to the same
periods of last year, primarily due to profits earned on the increased revenues,
a larger base to absorb corporate costs, and a decrease in losses in VSE's
Communications and Engineering Division. The increase in net income during 2004
was partially offset by an increase in selling, general and administrative
expenses associated with vacant facilities.
VSE typically has three quarterly reporting periods during the year that
include a recognition of BAV award fee income and one quarterly reporting period
that does not. The three-month periods ended September 30, 2004 and 2003 do not
include BAV award fee income. Due to timing receipt differences and to
fluctuations in the level of revenues from period to period, VSE does not
estimate or recognize award fee income until a contract modification authorizing
the award fee is certain.
CEO Comments
Commenting on the financial results, VSE Chairman, President and CEO/COO
Don Ervine said, "Third quarter revenues of about $62 million are a record for
the company, and earnings of about $885 thousand for the quarter ($.40 per
share) are keeping pace with the increase in revenues."
"Based on projected revenue growth under existing contracts, we expect VSE
revenue and profit growth to continue into 2005. Our funded backlog at September
30, 2004, was about $161 million compared to about $83 million at December 31,
2003."
"As previously announced, in September 2004 VSE was awarded a contract by
the U.S. Navy to provide engineering and technical services to support the
maintenance, overhaul, repair, and alteration of systems aboard ships. The new
VSE contract has a total ceiling amount of $1.022 billion over a five-year
period if all option periods are exercised. This is a multiple award, indefinite
quantity contract, and VSE is one of seven awardees eligible to share in the
potential contract ceiling amount. While VSE revenues from this contract cannot
be predicted, the right to compete for task orders under this contract award is
expected to contribute to future growth."
"Our interim nine-month financial results are a significant improvement
compared to 2003, and we are working to continue these positive trends. I look
forward to reporting on our progress in the months ahead."
VSE provides diversified services to the engineering, energy and
environment, defense, and homeland security markets from more than 15 locations
across the United States and around the world. For more information on VSE
services and products, please see the Company's web site at www.vsecorp.com or
contact Len Goldstein, Director of Business and New Product Development at
(703) 317-5202.
News Contact: C. S. Weber, CAO, (703) 329-4770
This news release contains statements which, to the extent they are not
recitations of historical fact, constitute "forward looking statements" under
federal securities laws. All such statements are intended to be subject to the
safe harbor protection provided by applicable securities laws. For discussions
identifying some important factors that could cause actual VSE results to differ
materially from those anticipated in the forward looking statements in this news
release, see VSE's public filings with the Securities and Exchange Commission.
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