EXHIBIT 99.1
GTSI Reports Strong Third Quarter Financial Results
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NET INCOME UP 10%, QUARTER-END TOTAL BACKLOG AT $228.3 MILLION
CLOSES ON A NEW AND EXPANDED $125 MILLION CREDIT FACILITY
CHANTILLY, VA. - October 28, 2003 - GTSI(R) Corp (Nasdaq: GTSI), a leading
government technology solutions provider, today announced financial results for
the three and nine-month periods ended September 30, 2003, and monthly sales
(see attached tables).
"GTSI proved once again that we are the preferred provider of information
technology solutions to the federal government. In September, a month that is
key to our whole year's success, GTSI performed at the highest levels with
bookings increasing over 13%, delivering a rock solid third quarter," said Dendy
Young, Chairman and Chief Executive Officer of GTSI. "The ability for GTSI to
continue at this pace appears to be strong, with the company booked backlog of
$228.3 million at the end of September."
Q3 EARNINGS AND PROFIT GROWTH
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For the third quarter GTSI reported diluted earnings per share of $0.39. Net
income rose to $3.5 million in the third quarter of 2003, representing a 10%
increase over the net income of $3.1 million for the third quarter last year.
Net income for the 2003 third quarter included interest income of $840,000
versus interest income of $1.3 million in the third quarter of 2002. Sales for
the third quarter of 2003 were $273.1 million as compared to $276.8 million for
the same period last year. The Company reported net income for the first nine
months of 2003 of $2.9 million, or $0.31 per diluted share. Sales for the first
nine months were $641.7 million.
Gross margin in the third quarter of 2003 increased to 10.1% of total sales from
8.1% of total sales. This increase is due primarily to the January 1, 2003
adoption of Emerging Issues Task Force ("EITF") Issue No. 02-16, "Accounting for
Consideration Received from a Vendor by a Customer (Including a Reseller of the
Vendor's Products)," which resulted in reclassifying in 2003 certain vendor
funds as a reduction in cost of sales. In addition, the Company's underlying
product margin showed a modest increase from the third quarter of 2002 to the
third quarter of 2003.
GTSI MAPS OUT CUSTOMER CENTRIC REALIGNMENT
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Mr. Young continued, "Our customer continues to undergo dramatic change. For the
past two years we have seen more repositioning of the government than any time
in our 20-year existence. To better serve the government, we are streamlining
and realigning our sales and support teams to meet its changing needs."
Going forward, GTSI expects to continue to enhance its revenue by adding new
vendors and solutions, as well as expanding its sales coverage. Additionally,
the Company will selectively examine and evaluate acquisition candidates to
augment its internal growth. Gaining higher margin business, pricing and
purchasing smarter, and realizing operating efficiencies are expected to result
in higher profit margins.
Recent examples of margin expansion have been seen in the growth of GTSI service
offerings. During the quarter ended September 30, 2003, services generated $27.5
million in revenue a 39.6% increase of $7.8 million over the same period one
year ago.
SEPTEMBER 2003 SALES
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Sales for September 2003 were $132.2 million, representing a 4.9% increase of
average daily sales from September 2002 of $120.0 million. Month-end total
backlog for September 2003 was $228.3 million or a 12.1% increase versus $203.6
million for the same period last year, while net bookings for September 2003
totaled $228.9 million as compared to $192.4 million for September 2002, a 13.3%
increase (see attached table).
FINANCIAL POSITION
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Tom Mutryn, GTSI's Senior Vice President and Chief Financial Officer, commented,
"GTSI is in an enviable position of being debt free and having a healthy balance
sheet. Our expenses for the quarter increased 3% to $22.6 million over expenses
in the third quarter 2002, adjusted to remove the impact of vendor
considerations for that period."
Last week GTSI closed on a new $125 million credit facility meeting GTSI's
revolving line of credit and distribution financing needs.
Mutryn added, "We believe that the lender's commitment to the size of the credit
facility confirms GTSI's solid financial condition and reflects the confidence
that they have shown in our business models and prospects. Just as important,
this credit facility gives GTSI the ability to meet its ongoing credit needs and
to further its strategic goals and corporate development program in the coming
years."
NEW ACCOUNTING PRONOUNCEMENT
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For comparative purposes, if the Company had applied EITF No. 02-16 to the
three-months ended September 30, 2002; gross margin would have increased from
$22.4 million to $25.9 million for the third quarter 2002. Gross margin
percentage would have increased from 8.1% to 9.3% for the quarter compared to
10.1% for the same period in 2003.
CONFERENCE CALL
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An investor conference call to discuss third quarter results is scheduled for
11:00 a.m. Eastern Time October 28, 2003. Interested parties are invited to
participate by calling 800-729-7758 or 706-643-1075. In addition, you may access
the web cast on GTSI's Investor Relations page (www.gtsi.com/ir). 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, October 31,
2003. To access the replay, please dial 800-642-1687 or 706-645-9291.
ABOUT GTSI CORP.
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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
Hewlett-Packard, Panasonic, Microsoft, Cisco, and Sun Microsystems. 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 Teams
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:
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Paul Liberty
Director of Investor Relations
703.502.2540
PAUL.LIBERTY@GTSI.COM
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GTSI Corp.
Unaudited Consolidated Statements of Operations
(in thousands, except per share data)
Three Months
September 30, Change from 2002
2003 2002 Actual Percentage
-------- -------- -------- ----------
Sales $273,066 $276,846 $ (3,780) (1.4)%
Cost of sales 245,569 254,485 (8,916) (3.5)%
-------- -------- -------- --------
Gross margin 27,497 22,361 5,136 23.0 %
Operating expenses 22,640 18,414 4,226 22.9 %
-------- -------- -------- --------
Income from operations 4,857 3,947 910 23.1 %
Interest income, net 840 1,288 (448) (34.8)%
-------- -------- -------- --------
Income before income taxes 5,697 5,235 462 8.8 %
Income tax provision 2,228 2,094 134 6.4 %
-------- -------- -------- --------
Net income $ 3,469 $ 3,141 $ 328 10.4 %
======== ======== ======== ========
Basic net income per share $ 0.42 $ 0.38 $ 0.04 10.5 %
======== ======== ======== ========
Diluted net income per share $ 0.39 $ 0.32 $ 0.07 21.9 %
======== ======== ======== ========
Weighted average shares outstanding:
Basic 8,238 8,316 (78) (0.9)%
======== ======== ======== ========
Diluted 8,986 9,723 (737) (7.6)%
======== ======== ======== ========
GTSI Corp.
Unaudited Consolidated Statements of Operations
(in thousands, except per share data)
Nine Months Ended
September 30, Change from 2002
2003 2002 Actual Percentage
-------- -------- -------- ----------
Sales $641,661 $654,581 $(12,920) (2.0)%
Cost of sales 575,333 602,600 (27,267) (4.5)%
-------- -------- -------- --------
Gross margin 66,328 51,981 14,347 27.6 %
Operating expenses 63,955 48,227 15,728 32.6 %
-------- -------- -------- --------
Income from operations 2,373 3,754 (1,381) (36.8)%
Interest income, net 2,317 3,669 (1,352) (36.8)%
-------- -------- -------- --------
Income before income taxes 4,690 7,423 (2,733) (36.8)%
Income tax provision 1,834 2,969 (1,135) (38.2)%
-------- -------- -------- --------
Net income $ 2,856 $ 4,454 $ (1,598) (35.9)%
======== ======== ======== ========
Basic net income per share $ 0.34 $ 0.54 $ (0.20) (37.0)%
======== ======== ======== ========
Diluted net income per share $ 0.31 $ 0.46 $ (0.15) (32.2)%
======== ======== ======== ========
Weighted average shares outstanding:
Basic 8,352 8,256 96 1.2 %
======== ======== ======== ========
Diluted 9,088 9,608 (520) (5.4)%
======== ======== ======== ========
GTSI Corp.
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
Change from % Change from
September 30, December 31, December 31, December 31,
2003 2002 2002 2002
------------- ------------ ------------ -------------
ASSETS
Current assets:
Cash $ 109 $ 32 $ 77 240.6 %
Accounts receivable 178,435 139,472 38,963 27.9 %
Merchandise inventory 94,826 56,039 38,787 69.2 %
Other current assets 24,145 15,080 9,065 60.1 %
-------- -------- -------- -------
Total current assets 297,515 210,623 86,892 41.3 %
Property and equipment, net 17,366 11,707 5,659 48.3 %
Other assets 3,375 2,588 787 30.4 %
-------- -------- -------- -------
TOTAL ASSETS $318,256 $224,918 93,338 41.5 %
======== ======== ======== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable to banks $ -- $ 7,539 $ (7,539) (100.0)%
Accounts payable 219,466 122,433 97,033 79.3 %
Accrued liabilities 17,790 13,412 4,378 32.6 %
Accrued warranties 3,463 4,403 (940) (21.3)%
-------- -------- -------- -------
Total current liabilities 240,719 147,787 92,932 62.9 %
Other liabilities 1,761 1,640 121 7.4 %
-------- -------- -------- -------
Total liabilities 242,480 149,427 93,053 62.3 %
Stockholders' equity 75,776 75,491 285 0.4 %
-------- -------- -------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $318,256 $224,918 $ 93,338 41.5 %
======== ======== ======== =======
GTSI Corp.
Monthly Results
Year-over-
Year
Year-over-Year Month-End Change
Change Total Year-over- Monthly Average
Business Sale ($ in Average Daily Backlog Year Bookings Daily
Days in Month Millions) Sales ($ in Millions) Change ($ in Millions) Bookings
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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 %