VSE Reports Consolidated Financial Results for 2001; Company Earns $0.40 Per Share in 2001; CEO Optimistic About 2002
ALEXANDRIA, Va., Feb. 27 /PRNewswire-FirstCall/ -- VSE Corporation (Nasdaq: VSEC - news) reported the following consolidated financial results for the three- and twelve-month periods ended December 31, 2001 and 2000:
VSE Corporation and Subsidiaries
Consolidated Statements of Income
(dollars in thousands, except share data)
Three Months Twelve Months
2001 2000 2001 2000
Revenues, principally
from contracts $27,511 $29,259 $111,572 $122,269
Costs and expenses of
contracts 27,420 29,289 109,990 119,937
Gross profit (loss) 91 (30) 1,582 2,332
Selling, general and
administrative expenses 95 30 237 239
Interest (income) expense, net 18 (66) 49 (98)
Income (loss) from continuing
operations before
income taxes (22) 6 1,296 2,191
Provision for (benefit from)
income taxes (76) (51) 441 806
Income from continuing
operations 54 57 855 1,385
Loss from discontinued
operations, net of tax -- (417) -- (417)
Net income (loss) $54 $(360) $855 $968
Weighted average shares
outstanding 2,147,032 2,123,183 2,136,992 2,122,564
Basic and diluted earnings per share:
Income from continuing
operations $.02 $.02 $.40 $.65
Loss from discontinued
operations -- (.19) -- (.19)
Net income (loss) $.02 $(.17) $.40 $.46
Financial Results
Commenting on the financial results, VSE Chairman and CEO Don Ervine said, ``We anticipated that our revenues in 2001 would be about the same as in 2000, but we came in below our estimates primarily as a result of a slowdown in orders to our ship transfer division (BAV), partly as a result of the tragic events of September 11, 2001. Indications are that some of the deferred BAV work will be placed for delivery in 2002.''
``Our profit in 2001 also came in below our estimate. Profits were reduced by costs incurred during 2001 to build-up the work of our new Telecommunications Technologies Group, to strengthen our VSE marketing team, and to improve our information technology infrastructure. The decrease in 2001 revenues also reduced our overall profitability for the year.''
Outlook for 2002
Looking forward, Mr. Ervine said he expected an increase in consolidated revenues in 2002 and an increase in operating profits as the year progresses. ``We have reduced overhead costs since year end, but profitability will probably be lower during the first two quarters of 2002 as we work through the slowdown in volume we began to experience late in 2001. Based on current expectations, we expect a stronger second half of the year, with profits for the full year 2002 exceeding 2001.''
Mr. Ervine was optimistic about VSE's business and potential for improving results based on positive recent developments:
The International Group under the leadership of Jim Knowlton is expected to be VSE's revenue leader in 2002 as it has been every year since 1996 (2001 revenues of about $68 million). The ship transfer and follow-on technical support work performed by the BAV Division for foreign navies has been in high demand, and in January 2002 VSE announced that it had been awarded a new five-year, $25 million contract to support the U.S. Coast Guard. The prospects for significant revenue growth late in 2002 and into 2003 are expected to contribute to VSE's profitability.
The Federal Group under the leadership of Bart Bartholomew has a number of opportunities to provide diversified services in 2002 (2001 revenues of about $22 million). VSE was awarded a new contract to support the Naval Surface Warfare Center Indian Head Division in 2001. We expect to continue our efforts to identify, bid, and win new work in our Federal sector as the year progresses.
The Energy and Environmental Group under the leadership of Bob Kelly continues to support clients at the Department of Energy and other agencies concerned with renewable energy sources, new technologies, and energy conservation programs (2001 revenues of about $12 million). Our work in the energy and environment sector is growing, and we anticipate continued growth and profitability from this business in 2002.
The Telecommunications Technologies Group under the leadership of Tom Stallone and Bob Waizenegger has grown into a significant VSE business practice area (2001 revenues of about $9 million). During 2001 our work in facilities security became a high demand, high growth area, including directed support for state port authorities as a part of our homeland defense capability. Coupled with our total ``low voltage'' expertise and rapid response in designing, building, and installing collaborative environments for command and control centers and intelligent conference rooms, we see continued VSE growth from this business.
VSE exited the ship scrapping business in late 2001 due to inadequate funding and low profit margins. We expect to replace much of the lost business (about $4 million in 2001) with a new Management Sciences Division established in December 2001 under the leadership of Tom Dacus (MSD 2002 revenues estimated at about $3 million). The new MSD division provides Six Sigma training and consulting services for quality systems management and process optimization. Margins in this division have the potential to exceed those in the ship scrapping business, and we expect a boost in our profitability as this new venture becomes an established part of our business.
``Looking at each of our business areas, we are optimistic about our prospects for revenue growth in 2002 and 2003, and we will work to translate real growth into improved profitability. While there is no assurance that we can achieve the revenue and profit goals we have set, in view of the current economic environment and other uncertainties, we intend to focus on growing the company and increasing shareholder value. We look forward to reporting our progress as the year proceeds.'' |
