Versar, Inc. (NYSE Amex: VSR) today announced its financial results for the fiscal first quarter ended September 30, 2011.

Revenue for the first quarter of fiscal year 2012 was $33.3 million, an increase of 14% compared to revenue of $29.3 million reported in same quarter of fiscal year 2011. The Company achieved gross profit of $3.7 million, a 28% increase compared to gross profit of $2.9 million in the first quarter of last year, with gross margins of 11% in the first quarter as compared to 10% in the same quarter last year. Operating income improved 44% to $1.3 million in the first quarter versus $0.9 million in the first quarter of last year. Versar recorded net income of $0.8 million or $0.09 per basic and diluted share for the first quarter of fiscal year 2012, compared to net income of $0.5 million, or $0.06 per basic and diluted share, in the first quarter of fiscal 2011.

Increased revenue and profitability in the first quarter of 2012 can be primarily attributed to additional revenue from the Company’s Title II Construction Management projects and from the Tooele Chemical Demilitarization project in its National Security business segment and improved performance from its US based construction projects. Additionally, the Company experienced organic growth during the fiscal 2012 quarter in its Professional Services business segment.

Versar booked new orders in excess of $40 million and completed the first quarter of 2012 with a funded backlog of $84 million, a decrease of 8% compared to the first quarter of 2011, but an increase of 8% when compared to the end of FY 2011.

As of September 30, 2011 the Company had working capital of $20.3 million. Subsequent to the close of the quarter, Versar increased its existing credit line from $10 million to $15 million and extended the maturity date of the facility to September 25, 2012.

Tony Otten, CEO of Versar said, “We are pleased to have achieved increased revenues and improved earnings during the first quarter of 2012, reflecting organic growth across our business segments. We have positioned our Company as a service provider to government mandated programs, and in a weak economy the government has historically been among our most reliable customers. However, we have seen some delays in the receipt of government funding for certain projects in our Environmental Services business segment, related to the current uncertainty in the budgeting process. Consistent with our stated strategy, we remain focused on providing our services to areas where ongoing government expenditures are an operational necessity, such as sustainable military range management, chemical demilitarization, and environmental assessments and remediation.”

Mr. Otten continued, “Following the close of the quarter, we announced that we were awarded a General Services Administration (GSA) Professional Engineering Services (PES) Contract Schedule 871. This is an important and widely accepted contract vehicle that will allow our government clients an efficient method for contracting for engineering services. We will continue to implement our growth strategy by pursuing larger prime contract opportunities, leveraging our services to be applicable to all types of projects and expanding our international footprint.”

“Our balance sheet remains strong and we are well positioned in our areas of expertise to meet potential challenges presented by the anticipated reduction in government spending while continuing to evaluate acquisition opportunities.”

Conference Call:

The Company will host a conference call today, November 10, 2011 at 2:00 p.m. Eastern Time to discuss its operational performance and financial results. The conference call may be accessed in the U.S. and Canada by dialing toll-free (877) 407-8033. International callers may access the call by dialing (201) 689-8033.

Participants should call in a few minutes before 2:00 p.m. Eastern Time. For those unable to attend the conference call, replays will be available on Versar’s website, www.versar.com.

VERSAR, INC., headquartered in Springfield, VA, is a publicly traded global project management company providing sustainable value oriented solutions to government and commercial clients in the construction management, environmental services, munitions response, and telecommunication and technology integration market areas.

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 news 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 fiscal year ended July 1, 2011, 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 share amounts)
 
For the Three-Months Ended
September 30,   September 24,
2011 2010
 
GROSS REVENUE $ 33,284 $ 29,296
Purchased services and materials, at cost 16,158 14,474
Direct costs of services and overhead   13,393   11,937
GROSS PROFIT 3,733 2,885
 
Selling, general and administrative expenses 2,352 2,009
Other expense   34   ---
OPERATING INCOME 1,347 876
 
OTHER (INCOME) EXPENSE
Interest (income) (29) (82)
Interest expense   60   43
INCOME BEFORE INCOME TAXES 1,316 915
 
Income tax expense   492   376
 
NET INCOME $ 824 $ 539
 
 
NET INCOME PER SHARE – BASIC $ 0.09 $ 0.06

NET INCOME PER SHARE – DILUTED
$ 0.09 $

0.06

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
– BASIC   9,341   9,258
 
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
– DILUTED   9,356   9,276
 
VERSAR, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands, except share amounts)
  As of
September 30,   July 1,
2011 2011
(unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 2,596 $ 6,017
Accounts receivable, net 33,191 29,500
Inventory 1,366 1,386
Notes receivable, current 867 1,040
Prepaid expenses and other current assets 1,612 1,511
Deferred income taxes 1,594 1,554
Income tax receivable, net   ---   424
Total current assets 41,226 41,432
 
Property and equipment, net 3,826 3,828
Goodwill 5,758 5,758
Intangible assets, net 1,459 1,539
Other assets   764   819
Total assets $ 53,033 $ 53,376
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable $ 11,376 $ 10,022
Accrued salaries and vacation 2,253 3,039
Income tax payable 25 ---
Other current liabilities 5,999 7,363
Notes payable, current   1,244   1,417
Total current liabilities 20,897 21,841
 
Deferred income taxes 365 332
Other long-term liabilities   996   977
Total liabilities   22,258   23,150
 
Commitments and contingencies
 
Stockholders’ equity

Common stock, $.01 par value; 30,000,000 shares authorized; 9,598,649 shares and 9,585,474 shares issued; 9,351,720 shares and 9,340,280 shares outstanding

96

95
Capital in excess of par value 28,956 28,806
Retained earnings 3,592 2,768
Treasury stock, at cost (246,929 and 245,194 shares, respectively) (1,147) (1,142)
Accumulated other comprehensive loss; foreign currency translation   (722)   (301)
Total stockholders’ equity   30,775   30,226
Total liabilities and stockholders’ equity $ 53,033 $ 53,376
 

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