GTSI Gtsi Corp. (MM)

GTSI Corp. (NASDAQ: GTSI), a systems integration, solutions and services provider to federal, state and local governments, today announced its financial results for the three months and nine months ended September 30, 2011.

Reported Results

For the third quarter of 2011, GTSI reported revenue of $95.8 million compared to $237.4 million for the third quarter of 2010, a revenue decline of 59.6%. Gross margin for the third quarter of 2011 decreased to $17.3 million from $29.8 million, a reduction of 41.9%, from the same period in 2010. Gross Margin percent for the third quarter was 18.1% compared to 12.5% for the same quarter last year. Operating expenses declined $2.9 million or 14.1% to $17.7 million compared to $20.6 million for the third quarter of 2010. The resulting loss from Operations of $0.4 million is a $9.6 million decline from the $9.2 million income from operations reported for the third quarter of 2010. Equity earnings from our investment in Eyak Technology LLC (EyakTek) declined $1.5 million. The decline is primarily a result of recognizing a partial period due to the sale of our EyakTek equity interest to EyakTek on August 19th. As a result of the sale, GTSI recognized a gain on the EyakTek investment of $7.3 million in the third quarter. The net income for the third quarter of 2011 was $4.3 million, compared to net income of $5.9 million for the same period in 2010. Earnings per share declined $0.18 per share or 29% compared to the same quarter last year.

For the nine months ended September 30, 2011, GTSI reported revenue of $247.4 million compared to $474.2 million for the same period in 2010, a decline of 47.8%. Gross margin for the nine months ended September 30, 2011 decreased $16.3 million to $44.5 million, or 26.8% when compared to the first nine months of 2010. Gross Margin percent for this period is 18.0% compared to 12.8% for the same period last year. Operating expenses declined $10.8 million or 16.8% to $53.7 million compared to $64.5 million for the first three quarters of 2010. The loss from Operations increased for the nine months ended September 30, 2011 by $5.5 million compared to the first nine months of 2010. Equity earnings from our EyakTek investment declined $3.0 million or 49.6% to $3.0 million for the first nine months of 2011. After recognizing the $7.3 million gain from the sale of our EyakTek equity interest, our total net income for the nine months ended September 30, 2011 was $139 thousand, compared to net income of $110 thousand for the same period in 2010. Earnings per share for both the nine months ended 2011 and 2010 is $0.01.

GTSI ended the quarter with $56.4 million in cash on hand. The Company had no long-term debt and no borrowings under its credit facility. As of September 30, 2011, GTSI had stockholders’ equity of $96.5 million or $9.99 per outstanding share.

Conference Call

An investor conference call to discuss third quarter results is scheduled for 11:00 a.m. Eastern Time November 15, 2011. Interested parties are invited to participate by calling 800-593-9034 or 334-323-7224, pass code is GTSI. In addition, you may access the webcast on GTSI’s Investor Relations page (www.gtsi.com/ir). Webcast will be available for replay through January 14, 2012. To listen to the live call on the Internet, go to the web site at least 15 minutes early to register, download and install any necessary audio software. A replay will be available following the conclusion of the call until 6:00 p.m. eastern, January 14, 2012. To access the replay, please dial 877-919-4059 or 334-323-7226, pass code 61391114.

About GTSI Corp.

GTSI (NASDAQ: GTSI) is a leading provider of technology solutions and professional services to federal, state and local governments. Founded in 1983, the company has helped meet the unique IT needs of more than 1,700 governmental agencies nationwide. GTSI professionals draw on their deep knowledge, strategic partnerships, customer service and more than 740 industry certifications to guide agencies in selecting the most cost-effective technology available. GTSI has extensive capabilities and past performance in software development, data center, networking, collaboration, security and cloud computing solutions. In addition, GTSI's advanced engineering, integration, support and financial services - and broad portfolio of contracts - ease the planning, purchasing and deployment of solutions, and facilitates the management of mission-critical IT throughout the lifecycle. Headquartered in Herndon, Va., GTSI has approximately 500 employees. For more information visit the company's website at www.gtsi.com.

Forward Looking Statements

Except for historical information, all of the statements, expectations, beliefs and assumptions contained in the foregoing are "forward-looking statements" (within the meaning of the Private Securities Litigation Reform Act of 1995) that involve a number of risks and uncertainties. It is possible that the assumptions made by management, including, but not limited to, those relating to sales, margins, operating results and net income, and the effect of new contracts and lender agreements, as well as new vendor relationships may not materialize. Actual results may differ materially from those projected or implied in any forward-looking statements. In addition to the above factors, other important factors that could cause actual results to differ materially are discussed in the Company’s most recent annual report on Form 10–K and included from time to time in other documents filed by the Company with the Securities and Exchange Commission.

GTSI and GTSI.com are registered trademarks of GTSI Corp. in the U.S. and other countries. All trade names are the property of their respective owners.

All press releases are available in the News Room on GTSI.com

  GTSI Corp. Unaudited Condensed Consolidated Balance Sheets (In thousands)             September 30, December 31, 2011 2010 ASSETS Current assets: Cash and cash equivalents $ 56,350 $ 4,049 Accounts receivable, net 102,001 154,891 Inventory, net 10,309 13,708 Deferred costs 3,657 6,991 Other current assets   2,460   2,462 Total current assets 174,777 182,101 Depreciable assets, net 5,255 7,452 Long-term receivables and other assets 3,962 14,291 Other intangible assets, net 4,370 - Goodwill   7,718   - TOTAL ASSETS $ 196,082 $ 203,844   LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 58,472 $ 50,870 Accounts payable - floor plan 20,291 35,172 Accrued liabilities 14,693 14,887 Deferred revenue   3,168   3,661

Total current liablilites

96,624 104,590 Other liabilities   2,979   3,044 Total liabilities 99,603 107,634 Total stockholders’ equity   96,479   96,210 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 196,082 $ 203,844     GTSI Corp. Unaudited Condensed Consolidated Statements of Operations (In thousands, expect per share data)                         Three Months Ended Nine Months Ended September 30, September 30, 2011 2010 2011 2010   SALES Product $ 80,408 $ 208,797 $ 205,375 $ 418,456 Service 13,951 15,907 32,273 38,581 Financing   1,423     12,663     9,752     17,191   95,782 237,367 247,400 474,228   COST OF SALES Product 69,412 189,092 178,123 378,833 Service 8,742 10,968 21,398 25,571 Financing   309     7,519     3,415     9,068     78,463     207,579     202,936     413,472     GROSS MARGIN 17,319 29,788 44,464 60,756   SELLING, GENERAL & ADMINISTRATIVE EXPENSES   17,681     20,592     53,651     64,452   (LOSS) GAIN FROM OPERATIONS   (362 )   9,196     (9,187 )   (3,696 )   INTEREST AND OTHER INCOME, NET Interest and other income 29 57 93 131

Equity income from EyakTek

7,930 2,170 10,317 6,029 Interest expense   (147 )   (160 )   (443 )   (516 )

Interest and other income, net

  7,812     2,067     9,967     5,644     INCOME BEFORE INCOME TAXES 7,450 11,263 780 1,948   INCOME TAX EXPENSE   3,185     5,329     641     1,838     NET INCOME $ 4,265   $ 5,934   $ 139   $ 110     EARNINGS PER SHARE Basic $ 0.44   $ 0.62   $ 0.01   $ 0.01   Diluted $ 0.44   $ 0.62   $ 0.01   $ 0.01     WEIGHTED AVERAGE SHARES OUTSTANDING Basic   9,676     9,603     9,655     9,604   Diluted   9,690     9,629     9,677     9,653