VSE Reports Financial Results for Third Quarter 2012
VSE Continues Diversification Strategy in a Challenging Market
ALEXANDRIA, Va. -- October 30, 2012
VSE Corporation (Nasdaq:VSEC) reported the following unaudited consolidated
financial results for its third quarter ended September 30, 2012.
Financial Results (Unaudited)
(in thousands, except per-share data and percentages)
Three Months Ended September 30 Nine Months Ended September 30
2012 2011 % 2012 2011 %
Revenues $ 148,246 $ 159,923 (7.3 )% $ 431,751 $ 469,713 (8.1 )%
Operating $ 11,850 $ 11,387 4.1 % $ 36,225 $ 25,569 41.7 %
Operating 8.0 % 7.1 % Up 90 8.4 % 5.4 % Up 300
margin bp bp
Net $ 5,964 $ 6,120 (2.5 )% $ 18,927 $ 14,503 30.5 %
Basic EPS $ 1.13 $ 1.17 (3.4 )% $ 3.58 $ 2.77 29.2 %
Diluted $ 1.12 $ 1.16 (3.4 )% $ 3.57 $ 2.76 29.3 %
“While our traditional market conditions continue to be challenging, our
diversification efforts are paying off,” said Maurice “Mo” Gauthier, VSE CEO.
“The Federal budget impasse continues to create uncertainty for our industry,
but the demand for VSE’s core competency of extending the service life of
aging, mission critical fleets is ramping up as procurements are delayed. With
the addition of supply chain management to our services, we anticipate more
uplift in this market. Of equal importance is our successful expansion of this
competency beyond the Department of Defense, starting with the USPS vehicle
Mr. Gauthier added, “Our plan for diversification over the last several years
has decreased our dependence on the Department of Defense market. The
operating improvements we are experiencing directly result from our strong
commitment to efficient program execution and sustained cost reduction
throughout the Company.”
Revenues were $148million for the third quarter of 2012 compared to $160
million in the third quarter of 2011. For the first nine months, revenues were
$432 million in 2012 compared to $470 million in 2011.
Revenues decreased approximately $12 million, or 7%, for the quarter ended
September 30, 2012, and approximately $38 million, or 8%, for the first nine
months of 2012, as compared to the same periods of 2011. The revenue decreases
were primarily due to delays in the authorization of ship transfers to foreign
navies performed under our FMS Program, as well as the expiration of work on
our R2 Program upon completion in 2011. The decline for the nine month period
was partially offset by the inclusion of revenues from our Supply Chain
Management Group, established in June 2011, in our operating results for 2012.
Operating income was $11.9million for the third quarter of 2012 compared to
$11.4million in the third quarter of 2011. For the first nine months,
operating income was $36.2 million in 2012 compared to $25.6 million in 2011.
We recognized an award fee associated with our FMS Program for the third
quarter of 2012 and three award fees for the nine months ended 2012 compared
to no award fee for the third quarter and two award fees for the nine months
of the prior year.
During the third quarter of 2012 we had several accounting adjustments and
resolution of previously pending issues, each of which individually caused
either an increase or decrease to our operating income for the quarter, but in
the aggregate resulted in an immaterial increase. These items included charges
for impairment of acquisition related goodwill and intangible assets,
adjustments to earn-out liabilities associated with acquisitions, a reserve
for bad debts and settlement of outstanding claims for costs and fees owed to
us. These items will be more fully discussed in our Form 10-Q for the quarter
ended September 30, 2012, which will be filed with the Securities and Exchange
Commission on or about October 30, 2012.
Management will continue evaluating the operations, financial performance and
future viability of our Infrastructure Group, which incurred losses during the
third quarter of 2012, including an above-referenced charge for impairment of
acquisition related goodwill and intangible assets of approximately $2.9
million and a reserve for bad debts of approximately $1.3 million for our
subsidiary Integrated Concepts and Research Corporation.
Net income was $6 million for the third quarter of 2012, or $1.12 per diluted
share, compared to $6.1 million, or $1.16 per diluted share for the third
quarter of 2011. Net income was $19million for the first nine months of 2012,
or $3.57 per diluted share, compared to $14.5million, or $2.76 per diluted
share for the first nine months of 2011.
Bookings were $460million for the first nine months of 2012 compared to
$396million for the first nine months of 2011. Funded contract backlog at
September 30, 2012 was $297million, compared to $289million at December 31,
*VS2, LLC, a joint venture between VSE Corporation and Shaw Environmental &
Infrastructure Inc., a division of The Shaw Group, Inc., was selected by
the U.S. Army Sustainment Command to participate on the U.S. Army's
Enhanced Army Global Logistics Enterprise (EAGLE) contract. The award is a
Basic Ordering Agreement (BOA), allowing all selected primes to compete
for future task order opportunities under the EAGLE program. Services can
commence under the BOA as of November 2012. The EAGLE program has a
potential value of approximately $23 billion over a five-year period for
*International Group received a delivery order totaling $37.6 million to
provide engineering and training services in support of the Iraqi Navy in
Umm Qasr over a three-year period. Services will include repair and
maintenance training for various classes of ships and patrol boats
supporting Iraqi naval security.
*Federal Group was awarded a firm-fixed price level-of-effort (FFP/LOE)
prime contract through the Army Contracting Command – Warren (ACC-WRN) for
work performed at the Mine Resistance Ambush Protected (MRAP) Logistics
Compound Maintenance Sustainment Facility (MSF) in Kuwait. The contract
has a three-month period of performance (20 Sept 2012 – 31 Dec 2012) and a
value of $13.2M.
*International Group was awarded a Firm Fixed Price (FFP) task order to
continue supporting the Pacific Air Force (PACAF) Command pre-positioned
equipment program located in Guam. The task order was awarded through
VSE’s GSA Logistics Worldwide schedule and has a value in excess of $13.1
million over a five-year period of performance.
*Our subsidiary G&B Solutions has been awarded a Time and Materials (T&M)
follow-on task order by Koniag Services, Inc. (KSI) to continue supporting
the System Operations Support Services (SOSS) contract with Social
Security Administration (SSA). The new task order has a one year period of
performance, and is valued at over $8 million.
Established in 1959, VSE is a diversified federal services company with
experience in solving issues of global significance with integrity, agility,
and value. VSE is dedicated to making our clients successful by delivering
talented people and innovative solutions for logistics, engineering, IT
services, construction management, consulting and supply chain management. For
additional information regarding VSE services and products, please see the
Company’s web site at www.vsecorp.com or contact Randy Hollstein, VSE
Corporate Vice President of Sales and Marketing, at (703) 329-3206.
VSE encourages investors and others to review the detailed reporting and
disclosures contained in VSE’s public filings with the U.S. Securities and
Exchange Commission (the “SEC”) for further information and analysis of VSE’s
financial condition and results of operations. The public filings include
additional discussion about the status of specific customer programs and
contract awards, risks, revenue sources and funding, dependence on material
customers, and management’s discussion of short and long term business
challenges and opportunities.
This news release contains statements that to the extent they are not
recitations of historical fact, constitute “forward looking statements” under
federal securities laws. All such statements are intended to be subject to the
safe harbor protection provided by applicable securities laws. For discussions
identifying some important factors that could cause actual VSE results to
differ materially from those anticipated in the forward looking statements in
this news release, see VSE’s public filings with the SEC, including VSE’s
annual report on Form 10-K for the year ended December 31, 2011 and subsequent
reports filed with the SEC.
VSE Financial News Contact:
Christine Kaineg, 703-329-3263
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