SBA problems notwithstanding, GTSI posts solid third quarter

In the wake of GTSI’s recent problems with the Small Business Administration and the resignation of its president and CEO, Scott Friedlander, the federal contractor posted a solid third quarter of 2010 with revenues up in all sales categories.

“Revenue, on a year-over-year basis, was up in all sales categories, gross margin was up, operating expenses were down, income from operations was up, with net income up and earnings per share up sharply for the quarter,” said Sandra Gillespie, GTSI’s acting co-CEO in the company’s earnings statement, dated Nov. 15.

For the third quarter, GTSI reported sales of $237.4 million, up $27.7 million, or 13.2 percent, over third quarter 2009 sales of $209.7 million.

Gross margin was $29.8 million, a $0.9 million (3 percent) increase over gross margin of $28.9 million for the third quarter of 2009.

Operating expenses were $20.6 million, down $3.2 million (13.6 percent) from $23.8 million in the corresponding quarter of 2009, mainly due to lower personnel-related costs.

Income from operations was $9.2 million, a $4.1 million (81.1 percent) increase over income from operations of $5.1 million in the third quarter of 2009.

Income from GTSI’s investment in EyakTek was $2.2 million, a $0.2 million (7.4 percent) increase over $2.0 million in the third quarter of 2009.

Net income was $5.9 million, a $2.1 million (55.3 percent) improvement, or 62 cents earnings per diluted share, over net income of $3.8 million, or 39 cents earnings per diluted share, in the third quarter of 2009.

“When we started the third quarter, our results from the first half of the year were below expectations,” Gillespie said in the statement. “We made significant progress in closing the gap. Despite the recent SBA activities that prohibit small-business relationships, we have not lost focus on our customers’ needs for GTSI’s developed and delivered solutions and services.”

She said the third quarter started out strong and continued to build as the company focused on the end of the federal fiscal year on Sept. 30.

“With a concerted effort by our sales group and the entire GTSI team, we identified opportunities, developed strategies for overcoming obstacles and delivered solid financial results,” she said.

“We ended the quarter with $17.3 million in cash on the balance sheet, as well as strong accounts receivable,” said Peter Whitfield, chief financial officer and acting co-CEO, in the statement.

As required by the Administrative Agreement between GTSI and the SBA, the company has established an internal ethics officer who reports directly to the chairman of the board's Audit Committee.

Also “the company and the SBA have agreed on a seasoned government contracting examination firm to serve as the monitor required by the SBA agreement,” the statement said.

GTSI Corp., of Herndon, Va., ranks No. 59 on Washington Technology’s 2010 Top 100 list of the largest federal government contractors.