Versar, Inc. (NYSE Amex: VSR) today announced solid financial results for the third quarter of fiscal year 2011, ending April 1, 2011. Gross revenue for the third quarter of $31.5 million was 29% higher than the $24.4 million reported during the same period last year. Net income for the third quarter of fiscal year 2011 was $629 thousand or $0.07 per share compared to a loss of $1.5 million or ($0.16) per share for the same period last year. Third quarter fiscal year 2011 Gross profit of $4.2 million was 223% higher than the $1.3 million reported during the third quarter of fiscal year 2010 and Operating Income of $1.4 million was approximately $3.6 million higher than the $2.3 million loss reported during the same period last year.

Third quarter year on year revenue growth benefitted from Versar’s two acquisitions completed in fiscal year 2010 and strong performance in the Company’s Compliance and Environmental and National Security Business Segments. Further, Versar’s cost reduction efforts, combined with ongoing efficiency improvements, kept selling, general and administrative (SG&A) expenses flat compared to last year, even as revenue grew 40% during the first nine months of fiscal year 2011.

For the first nine months of fiscal year 2011, gross revenue was $102.7 million, 40% higher compared to $73.5 million reported in the first nine months of last fiscal year. The Company reported net income of $2.1 million, or $.23 per share, for the first nine months of fiscal year 2011 compared to a loss of $1.6 million, or ($0.17) per share, during the same period in fiscal year 2010, a $.40 per share turn around. Gross Profit for the first nine months of fiscal year 2011 of $10.7 million was 100% higher than the same period last year and Operating Income for the first nine months of fiscal year 2011 of $3.7 million was $6.1 million higher than $2.4 million loss reported during the same period last year.

Funded backlog at the end of the third quarter was approximately $71.0 million, a decrease of 6% compared to approximately $75.5 million as of March 26, 2010; however funded backlog grew to $85.6 million by the end of April, a 16% increase over the same period last year as contract funding began to flow following the recent resolution of the Federal FY 2011 Budget concerns.

Tony Otten, CEO of Versar said, “Through nine months of fiscal year 2011 we have now exceeded the entire revenue total of fiscal year 2010. Our four business segments were once again all in the black and gross profit margins continue to improve. Net income for the third quarter of fiscal year 2011 was 145% higher than the same period last year and would have been higher if not for non-recurring expenses associated with severance for our former CFO and a change in the fair market value of a previous acquisition. I continue to be optimistic for the Company’s year-end results and for the coming fiscal year.”

VERSAR, INC., headquartered in Springfield, VA, is a publicly held global project management company providing sustainable solutions to government and commercial clients in construction management, environmental services, munitions response, telecommunications and energy. VERSAR operates a number of web sites, including the corporate Web sites, www.versar.com, www.homelanddefense.com, www.geomet.com; www.viap.com; www.dtaps.com; www.adventenv.com, and www.ppsgb.com.

This press release contains forward-looking information. The forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be significantly impacted by certain risks and uncertainties described herein and in Versar’s Annual Report on Form 10-K filed with the Securities and Exchange Commission for the year ended June 25, 2010, as updated from time to time in the Company’s periodic filings. The forward-looking statements are made as of the date hereof and Versar does not undertake to update its forward-looking statements.
 
VERSAR, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited – in thousands, except per share amounts)
   

For the Three-MonthPeriods Ended

For the Nine-MonthPeriods Ended

April 1,2011
 

March 26,2010

April 1,2011
 

March 26,2010
 
GROSS REVENUE $ 31,487 $ 24,355 $ 102,691 $ 73,456
Purchased services and materials, at cost 14,457 13,750 53,565 39,870
Direct costs of services and overhead   12,818     9,346     38,443     28,246  
GROSS PROFIT 4,212 1,259 10,683 5,340
 
Selling, general and administrative expenses (2,380 ) (2,256 ) (6,384 ) (6,469 )
Other expense   (464 )   (1,269 )   (564 )   (1,269 )
 
OPERATING INCOME (LOSS) 1,368 (2,266 ) 3,735 (2,398 )
 
OTHER EXPENSE (INCOME)
Interest income (35 ) (41 ) (155 ) (106 )
Interest expense   44     25     144     47  
INCOME (LOSS) BEFORE INCOME TAXES 1,359 (2,250 ) 3,746 (2,339 )
 
Income tax expense (benefit)   730     (733 )   1,654     (759 )
 
NET INCOME (LOSS) $ 629   $ (1,517 ) $ 2,092   $ (1,580 )
 
NET INCOME (LOSS) PER SHARE – BASIC

$

0.07
 

$

(0.16

)

$

0.23
 

$

(0.17

)

 

NET INCOME (LOSS) PER SHARE – DILUTED

$

0.07
 

$

(0.16

)

$

0.23
 

$

(0.17

)
 

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING – BASIC
  9,270     9,224     9,247     9,107  
 

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING – DILUTED
  9,302     9,224     9,270     9,107  
 

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