Exhibit 99.1
GTSI Delivers Strong Sales for Second Quarter
---------------------------------------------
Bookings up 32%, with strong backlog
Over $1 billion in sales for most recent 12 months
Announces strategic growth plan
CHANTILLY, VA. - July 27, 2004 - GTSI(R)Corp. (NASDAQ: GTSI), a leading
government technology solutions provider, today announced financial results for
the quarter ended June 30, 2004, and monthly sales for June 2004 (see attached
tables).
For the second quarter 2004, GTSI reported sales of $238.9 million, a 26%
increase from $189.7 million during the same period a year ago. The company
reported a loss of $1.6 million of net income versus $1.1 million of net income
a year ago. In the second quarter of 2003, the company recorded a reversal of a
$1.4 million ($0.8 million tax-effected) inventory impairment charge. For
comparative purposes, adjusting for last year's second quarter reversal of the
tax-effected impairment charge, net income would have been $0.3 million for the
second quarter 2003.
"We are very proud of the 32.3% increase in our bookings compared to Q2 last
year and we are pleased to have surpassed $1 billion in sales for the most
recent twelve months," said Dendy Young, Chairman and Chief Executive Officer of
GTSI. "While our second quarter top-line growth was solid, we were disappointed
with the results on the bottom line, and believe that there is considerable room
for improvement. Management is keenly focused on margin. However, bookings are
the clearest indicator of the health of our company, and the growth and strength
of our backlog has positioned the company well for the coming quarter," added
Mr. Young.
Seasonality of the business
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As a company that generates most of its sales from the federal government, it is
important to note that, due to the end-of-fiscal-year buying engaged in by the
federal government around September 30th. GTSI generally achieves two-thirds of
its sales during the second half of the year.
Financial Position
- ------------------
Tom Mutryn, GTSI's Senior Vice President and Chief Financial Officer, commented,
"GTSI's operating expenses increased in the quarter to $24.6 million versus
$21.6 million in the same quarter a year ago. This increase is directly related
to our aggressive efforts to comply with the Sarbanes-Oxley (SOX) 404
requirement, our new Enterprise Resource Planning (ERP) system development, our
"I Rely on GTSI" marketing campaign and increased costs associated with new
hires, all of which compressed net income. The company continues to enjoy a
solid balance sheet with no long-term debt and $27.8 million in cash on hand at
the end of the second quarter." GTSI's efforts to comply with SOX 404 will have
a material negative effect on 2004 and 2005 results.
Reported earnings per share (EPS) were a negative $0.18 versus EPS of $0.13 a
year ago. Without the inventory impairment reversal of a year ago, EPS would
have been $0.03 in the second quarter of 2003.
Reported gross margin was $21.5 million in the second quarter 2004 versus $22.7
million a year ago. Without the inventory impairment reversal of a year ago,
gross margin would have been $21.3 million in the second quarter of 2003.
June 2004 Monthly Results
- -------------------------
Sales for June 2004 were $93.0 million, representing a 9.6% increase of average
daily sales from June 2003 of $81.0 million. Month-end total backlog for June
was $155.0 million or a 46.0% increase versus $106.2 million for the month-end
June 2003. Monthly bookings for June were $115.1 million or a 9.4% increase
versus $100.4 million for the same period last year (see attached table).
Strategic Growth Plan Announced
- -------------------------------
"We see a significant opportunity to invest in and grow GTSI. The fact that
Government demand for information technology is at an all time high and that our
industry is highly fragmented validates our decision to execute on a plan to
significantly increase the sales of GTSI," said Mr. Young. "It took GTSI about
six years to double revenue the last time, but we feel confident that we can
achieve this level of growth during the next three to four years," said Mr.
Young.
"The combined Federal and State and local annual spending on IT is well over
$100 billion, and our market share for our addressable portion of this spending
is in the low single digits. We believe that applying the right sales force
directed at the right opportunities will allow us to grow top-line revenue,"
continued Mr. Young. "Equally important, we believe we can deliver increases in
operating and net income margins through a series of initiatives which have been
identified and are underway."
Consistent with this longer-term plan, the company plans to increase its sales
and support staff by about 10-15% by the end of 2004. The core strategy will be
to strengthen relationships with federal government departments and agencies,
expand relationships with systems integrators, and grow its presence with key
state and local governments. GTSI will focus on margin expansion through better
pricing, smarter purchasing, sales alignment to the customer, improving contract
management, and a focus on higher value-add activities.
Conference Call
- ---------------
An investor conference call to discuss first quarter 2004 is scheduled for 11:00
a.m. EST July 27, 2004. Interested parties are invited to participate by calling
800-729-7758 or 706-643-1075, pass code 8817016. 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, July 30, 2004.
To access the replay, please dial 800-642-1687 or 706-645-9291, pass code
8817016.
About GTSI Corp.
- ----------------
GTSI Corp. is an information technology (IT) solutions leader, focusing
exclusively on Federal, State, and Local government customers worldwide. For
more than two decades, GTSI has served those customers by teaming with global IT
leaders like Panasonic, Sun Microsystems, Hewlett-Packard, 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 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:
- -------------
Paul Liberty
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
June 30, Change from 2003
------------------------ ------------------------
2004 2003 Actual Percentage
---------- ---------- ---------- ----------
Sales $ 238,990 $ 189,737 $ 49,253 26.0%
Cost of sales 217,453 166,981 50,472 30.2%
---------- ---------- ---------- ----------
Gross margin 21,537 22,756 (1,219) -5.4%
Operating expenses 24,622 21,613 3,009 13.9%
---------- ---------- ---------- ----------
(Loss) income from operations (3,085) 1,143 (4,228) -369.9%
Interest income, net 519 744 (225) -30.2%
---------- ---------- ---------- ----------
(Loss) income before income taxes (2,566) 1,887 (4,453) -236.0%
Income tax (benefit) provision (1,013) 738 (1,751) -237.3%
---------- ---------- ---------- ----------
Net (loss) income $ (1,553) $ 1,149 $ (2,702) -235.2%
========== ========== ========== ==========
Basic net (loss) income per share $ (0.18) $ 0.14 $ (0.32) -228.6%
========== ========== ========== ==========
Diluted net (loss) income per share $ (0.18) $ 0.13 $ (0.31) -238.5%
========== ========== ========== ==========
Weighted average shares outstanding:
Basic 8,573 8,258 315 3.8%
========== ========== ========== ==========
Diluted 8,573 8,907 (334) -3.7%
========== ========== ========== ==========
GTSI Corp.
Unaudited Consolidated Statements of Operations
(in thousands, except per share data)
Six Months Ended
June 30, Change from 2003
------------------------ ------------------------
2004 2003 Actual Percentage
---------- ---------- ---------- ----------
Sales $ 417,612 $ 368,595 $ 49,017 13.3%
Cost of sales 377,994 329,764 48,230 14.6%
---------- ---------- ---------- ----------
Gross margin 39,618 38,831 787 2.0%
Operating expenses 46,319 41,315 5,004 12.1%
---------- ---------- ---------- ----------
Loss from operations (6,701) (2,484) (4,217) -169.8%
Interest income, net 1,851 1,476 375 25.4%
---------- ---------- ---------- ----------
Loss before income taxes (4,850) (1,008) (3,842) -381.2%
Income tax benefit (1,915) (394) (1,521) -386.0%
---------- ---------- ---------- ----------
Net loss $ (2,935) $ (614) $ (2,321) -378.0%
========== ========== ========== ==========
Basic net loss per share $ (0.34) $ (0.07) $ (0.27) -385.7%
========== ========== ========== ==========
Diluted net loss per share $ (0.34) $ (0.07) $ (0.27) -385.7%
========== ========== ========== ==========
Weighted average shares outstanding:
Basic 8,564 8,410 154 1.8%
========== ========== ========== ==========
Diluted 8,564 8,410 154 1.8%
========== ========== ========== ==========
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
June 30, December 31, Change from % Change from
2004 2003 December 31, 2003 December 31, 2003
----------------- ----------------- ----------------- -----------------
ASSETS
Current assets:
Cash $ 27,847 $ 177 $ 27,670 15632.8%
Accounts receivable 140,117 181,988 (41,871) -23.0%
Merchandise inventory 86,891 55,987 30,904 55.2%
Other current assets 13,068 15,490 (2,422) -15.6%
----------------- ----------------- ----------------- -----------------
Total current assets 267,923 253,642 14,281 5.6%
Property and equipment, net 13,053 10,670 2,383 22.3%
Other assets 2,196 4,449 (2,253) -50.6%
----------------- ----------------- ----------------- -----------------
TOTAL ASSETS $ 283,172 $ 268,761 $ 14,411 5.4%
================= ================= ================= =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable to banks $ -- $ 12,813 $ (12,813) -100.0%
Accounts payable 186,619 152,435 34,184 22.4%
Accrued liabilities 10,933 11,168 (235) -2.1%
Deferred revenue 3,649 8,323 (4,674) -56.2%
Accrued warranties 4,186 4,555 (369) -8.1%
----------------- ----------------- ----------------- -----------------
Total current liabilities 205,387 189,294 16,093 8.5%
Other liabilities 1,250 1,522 (272) -17.9%
----------------- ----------------- ----------------- -----------------
Total liabilities 206,637 190,816 15,821 8.3%
Stockholders' equity 76,535 77,945 (1,410) -1.8%
----------------- ----------------- ----------------- -----------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 283,172 $ 268,761 $ 14,411 5.4%
================= ================= ================= =================
GTSI Corp.
Year-over-
Year-over- Monthly Year Change
Business Year Change Month-End Year-over- Bookings Average
Days in Sale ($ in Average Total Backlog Year ($ in Daily
Month Millions) Daily Sales ($ in Millions) Change Millions) Bookings
---------- ------------ ------------- ----------------- ----------- ----------- -------------
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%