JIM:
GTSI: Nice up-gap today on earnings news. The insiders had been buying rather heavily for the past 2 months. They have also announced plans for the company to buy back some of the stock. The PE remains low.
Today's up-gap brings it ready to test the Sept.H at 6 3/8. The stock is quite volatile, in the first week of Jan, last year it went from 3.93 to a H of 10.93 and closed that week at 5.75 The float is only 4.10 million.
Will see what it can do this year with much better earnings <g>
Here is the news about the earnings:
CHANTILLY, Va., Feb. 5 /PRNewswire/ -- GTSI Corp. (Nasdaq: GTSI - news), formerly known as Government Technology Services, Inc., today announced financial results for its fourth quarter and year ended December 31, 2000. The Company said that for the third year in a row, it was profitable for the full year, reporting record net income of $10.6 million, or $1.18 per share on a basic and $1.15 per share on a diluted basis for the year. In 1999, the Company reported net income of $2.7 million, or $0.29 per share on a basic and on a diluted basis for the year.
Revenues during 2000 grew $17.2 million (2.6%) to $677.8 million from $660.6 million in 1999. Gross margin increased 20.0% to $60.1 million from $50.1 million in 1999. Gross margin as a percent of sales increased to 8.9% in 2000, as compared to a gross margin of 7.6% in 1999. The increase in gross margin percentage is due to better contract margins, more effective inventory management and better warranty experience.
A favorable geographical mix of contracts, which lowered freight costs, also helped gross margin. Operating expenses, at $53.3 million in 2000, were $4.8 million (9.9%) higher than 1999 expenses of $48.5 million.
The increase in operating expenses primarily results from increased personnel costs to support increased emphasis on customer relationship selling.
Interest income increased by $1.2 million (107%) in 2000 as compared with 1999, primarily due to a greater utilization of cash discounts earned on prompt payments of vendor invoices.
In addition, the Company's effective tax rate has been favorably impacted by the recognition of its previously reserved tax assets, which resulted in a $2.0 million income tax benefit in the fourth quarter and full year 2000. The Company anticipates that its ongoing effective tax rate will be approximately 39%.
During the fourth quarter of 2000, the Company adopted the provisions of the Securities and Exchange Commission's Staff Accounting Bulletin (SAB) No. 101, ``Revenue Recognition in Financial Statements'', retroactive to January 1, 2000.
The impact of adoption of SAB No. 101 is to generally defer the recognition of sales from two to seven days as compared to the Company's previous revenue recognition policy. The impact of adoption of SAB No. 101 on the year 2000 was to reduce revenues by $2.5 million and decrease gross margin by $358,000. The impact of adoption of SAB No. 101 on the fourth quarter of 2000 was to increase revenues by $15.1 million and increase gross margin by $1.3 million. The Company implemented the guidance set forth in SAB No. 101 by recording a charge of $467,000 for the cumulative effect of adoption on January 1, 2000.
Including the impact of adopting SAB No. 101, the Company also reported record fourth quarter 2000 net income of $8.4 million, or $1.02 per share on a basic and $1.01 per share on a diluted basis, compared with net income of $1.8 million, or $0.19 per share on a basic and on a diluted basis for 1999.
Excluding the impact of adopting SAB No. 101, revenues for the fourth quarter of 2000 increased by $20.6 million, or 10.4%, to $219.9 million from $199.2 million in the fourth quarter of 1999. Fourth quarter 2000 gross margin increased by 41.7% to $20.3 million from $14.3 million in the same period in 1999.
As a percent of sales, gross margins increased two percentage points over the fourth quarter of 1999. The increase in gross margin percentage is primarily due to better contract margins and more effective inventory management. A favorable geographical mix of contracts, which lowered freight costs, also helped gross margin.
GTSI's Board of Directors has authorized a common stock repurchase program with costs not to exceed $4,729,000. As it deems appropriate, the Company may periodically purchase its common stock in the open market or in privately negotiated block transactions.
On February 2, 2001 the closing price of the Company's common stock was $4.09 per share and there were 7,956,000 shares outstanding.
In recapping 2000, GTSI Chairman and CEO Dendy Young said, ``In addition to a record fourth quarter 2000, we have established a significant number of milestones and 'firsts.' We reported the highest earnings per share since 1993. We have reported a net income that is more than three times that of last year and significant bottom line and revenue growth.
``We attribute these results to three factors. The implementation of our FY 2000 strategy, a strong management team coupled with an outstanding staff and continued contract wins.
``Our FY 2000 strategy called for two bold moves: reorganizing our sales force to more closely match our customers' needs; and a concerted effort to substantially increase solutions sales. GTSI's strong management team, along with our excellent staff, executed this strategy. In addition, they also grew and nurtured our customer and vendor relationships.
``During 2000, GTSI won approximately $2 billion in contracts (assuming all options are exercised by the government), including the $857 million MMAD-1 contract the award of which is currently under review by the General Accounting Office (GAO). The contracts won were mostly Blanket Purchase Agreements (BPAs) awarded to GTSI and one to four other companies for products and services. GTSI holds seven Air Force IT2 BPAs which offer our Air Force customers everything from software, supplies, accessories, and printers to rugged portables, LAN/WAN network products, and workstations.
``Our vendor relationships continue to grow. We remain the #1 federal partner to several of our vendors such as Hewlett-Packard, Panasonic, Microsoft and Sun. Over the past 2-3 years, we have developed our relationship with Sun and Cisco so that today, we are Sun's #1 federal partner and a significant partner to Cisco. This is a dramatic turnaround from only 2-3 years ago, when GTSI was not even on either partner's 'radar scope.'''
In addition to established relationships, Mr. Young further pointed to new relationships with partners, which offer the Company's customers the latest technologies. Among those vendor partners are: Tachyon, a privately held company that offering bi-directional high-speed Internet access via satellite; Research in Motion (Nasdaq: RIMM - news), whose BlackBerry product offers real-time handheld Internet access; and ATG (Nasdaq: ARTG - news), a provider of Java-based software solutions that enable businesses to create, manage, and build customer relationships online.
``Even though our market constantly presents challenges, our responses continue to be dynamic and position GTSI well. We are responding to a changing government landscape, which includes an increased emphasis on the ability to provide electronic commerce, the importance of customer relationship management within the government, the growing emphasis on information assurance and the increasing demand for integrated solutions. We have expanded gtsi.com and created subweb sites to personalize the buying experience for both end-user customers and vendor partners. These subwebs proved to be so popular that we currently have built over 100 of them.
``All in all, we are a financially stable and growing company, operating in a market that is not subject to the vagaries of the commercial business cycle. It is noteworthy that even with the increase in earnings per share, our stock remains valued below the Company's book value per share of $7.35. Therefore, we will continue to keep our eye on those factors which impact our growth and profitability -- gross margin and controlling operating costs.
``We feel confident that the results for 2000 will position us well for continued growth in 2001,'' Mr. Young concluded. |
