Versar, Inc. (VSR) Announces FY 2011 Financial Results

Versar, Inc. (NYSE Amex: VSR) today announced financial results for the fiscal year ended July 1, 2011. Gross revenue for fiscal year 2011 was $137.6 million, an increase of 37% from gross revenue of $100.8 million reported in fiscal year 2010. The $137.6 million gross revenue is the highest ever reported in the 42 year history of Versar.

The revenue growth can be primarily attributed to a full year of benefit from the Company’s two previously reported acquisitions that were completed during the third quarter of FY 2010 and the Tooele Chemical Demilitarization project that fully ramped up during the second quarter of fiscal year 2011. From a business segment standpoint, the ADVENT acquisition and improved overall performance resulted in 91% revenue growth in Versar’s Compliance and Environmental business segment. The National Security business segment reported year over year revenue growth of 158% driven by the Tooele project and the PPS acquisition. The Company’s Professional Services business segment revenue grew 10% organically and the Program Management business segment revenue was down less than 2% as a result of declining Title II engineering work in Iraq, largely offset by new awards in Iraq and Afghanistan.

Versar recorded net income of $3.4 million or $0.37 per share on a fully diluted weighted average shares outstanding basis for fiscal year 2011, as compared to a net loss of $2.3 million, or ($0.25) per share, for fiscal year 2010. Fiscal year 2011 gross profit of $14.3 million was up 138% compared to last year’s gross profit of $6.0 million. Utilization rates improved throughout the entire Company and every business segment reported positive gross profit.

Fiscal year 2011 Selling, General and Administrative costs (SG&A) were down 7% as compared to last year as cost reduction efforts and efficiency improvements were realized even as revenue grew by 37%.

Versar booked new orders in excess of $141 million and completed fiscal year 2011 with a funded backlog of $78 million, flat compared to the end of fiscal year 2010. New orders, including the Tinker Air Force Base award, were strong in the first two months of FY 2012 and Versar finished August with a funded backlog of $92 million.

For the fourth quarter ending July 1, 2011 the Company reported revenue of $34.9 million, 28% higher than the $27.3 million reported during the same quarter last year. Versar recorded net income for the fourth quarter of fiscal year 2011 of $1.4 million or $0.14 per fully diluted share compared to a loss of $0.7 million or ($0.08) per share during the same quarter in 2010.

Tony Otten, CEO of Versar said, “Our results for fiscal year 2011 clearly confirm that our strategy is on target and that, as a team, we are effectively implementing our growth strategy. Our record revenue was a combination of 15% organic growth complimented by a successful acquisition strategy. Going forward we will follow a focused approach, targeting well-funded Federal contracting opportunities and acquiring like-minded firms. We will continue to invest in business development initiatives and our technology. I am confident that in FY 2012 we will build upon the positive results achieved in FY 2011 to establish Versar as a growing, profitable and vibrant company.”

Conference Call:

The Company will host a conference call today, September 20, 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 (807) 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 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
Consolidated Statements of Operations
(In thousands, except per share amounts)
		Years Ended
			July 1,			June 25,			June 26,
			2011			2010			2009
GROSS REVENUE		$	137,599		$	100,763		$	112,196
Purchased services and materials, at cost			71,417			55,378			60,583
Direct costs of services and overhead			51,849			39,374			37,133
GROSS PROFIT			14,333			6,011			14,480
Selling, general and administrative expenses			8,025			8,651			8,876
Other expense			423			1,012			—
OPERATING INCOME (LOSS)			5,885			(3,652)			5,604
OTHER EXPENSE/(INCOME)
Loss on marketable securities			—			—			328
Interest income			(182)			(143)			—
Interest expense			175			104			36
INCOME (LOSS) BEFORE INCOME TAXES			5,892			(3,613)			5,240
Income tax expense (benefit)			2,445			(1,319)			2,071
NET INCOME (LOSS)		$	3,447		$	(2,294)		$	3,169
NET INCOME (LOSS) PER SHARE – BASIC		$	0.37		$	(0.25)		$	0.35
NET INCOME (LOSS) PER SHARE – DILUTED		$	0.37		$	(0.25)		$	0.35
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING – BASIC			9,261			9,141			9,123
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING – DILUTED			9,283			9,141			9,150