Versar, Inc. (NYSE AMEX:VSR)

SPRINGFIELD, Va., Sept. 9, 2015 /PRNewswire/ -- Versar, Inc. (NYSE MKT: VSR) announced today that it has signed a definitive agreement to acquire Johnson Controls' specialized federal security integration business, known as Johnson Controls Security Systems (JCSS).  Headquartered in Gaithersburg, Maryland, JCSS is a CAS-compliant security systems integrator serving Federal clients by designing, installing and supporting complex physical security, network security, and facilities management systems.  The acquisition price of $20M will be satisfied with cash and contingent consideration.  The deal is expected to be accretive in the first year.

The agreement between the parties provides that the transaction is expected to close on or before September 30, 2015, assuming all conditions to close are satisfied.

Tony Otten, CEO of Versar, said, "The acquisition of JCSS, which is well known for its substantial security expertise, will be a great strategic fit for Versar, extending our client base, and enabling us to offer additional products and services to our existing clients.  An important element of our growth strategy is to leverage our service capabilities to generate more work with our existing clients and to more effectively compete for new customers and projects in the new economic environment."

VSR PPS Division

The Ebola virus is spreading across the world at an unprecedented rate this year, leading to what medical experts have described as the worst epidemic of the disease yet. As the fatality and casualty cases continue to rise in the existing infected areas we want to ensure that everyone is in a position to PREPARE, PROTECT, PREVENT.

SPRINGFIELD, Va., Oct. 7, 2014 /PRNewswire/ -- Versar, Inc. (NYSE MKT: VSR) announced today that it has been awarded two new task orders under its existing Personal Services Contract in Afghanistan. The year-long task orders were awarded by the U.S. Army Corps of Engineers (USACE), Middle East District (MED).  The Personal Services Contract primarily provides Afghan engineering and technical staff to work with USACE personnel in overseeing construction projects throughout Afghanistan.

The combined value of the new task orders is $18.3 million, representing continued significant growth in Versar's four-year long contract with USACE, which expires in September 2016. To date, Versar has received $80.2 million of a maximum contract capacity of $170 million.

Tony Otten, CEO of Versar, said, "Versar has been proud to participate in the United States Department of Defense's reconstruction and capacity development efforts in Afghanistan since 2006. The continuation and growth of this contract is one of the key mechanisms USACE is using to provide long term and cost effective engineering oversight for active construction projects." 

SPRINGFIELD, Va., July 1, 2014 /PRNewswire/ -- Versar, Inc. (NYSE MKT: VSR) announced today that it has acquired J.M. Waller Associates, Inc., a Service Disabled Veteran Owned Small Business (SDVOSB) with more than $30 million in annual revenues. The acquisition price of $13 million will be satisfied with cash and a seller note. J.M. Waller is expected to be accretive to earnings in year one and adds contracted backlog of over $25 million.

J.M. Waller is headquartered in Fairfax, Virginia, and provides environmental, facilities, professional staffing and logistics consulting services in support of a wide range of government, industry, and commercial clients.  Key long-term clients include the U.S. Army Corps of Engineers, U.S. Air Force, U.S. Navy, Environmental Protection Agency, and the General Services Administration.

Tony Otten, CEO of Versar said, "The acquisition of J.M. Waller is a great strategic fit for Versar, and will immediately strengthen not only our environmental services and professional services businesses, but also our engineering and construction management services. Our cultures are similar and J.M. Waller's technical capabilities strongly complement those of Versar. In particular, the addition of J.M. Waller's facilities expertise and customer base will allow us to expand our reach in terms of clients, technical capabilities and geography."

Third Quarter 2014 Results

• Gross revenue for the third quarter of fiscal year 2014 decreased 9% to $28.2 million, compared to revenues of $31.0 million during the third quarter of the last fiscal year.
• Versar recorded a net loss of $131,000 or a loss of $0.01 per share in the third quarter of 2014 (which included a loss of $0.02 from continuing operations and income of $0,01 from discontinued operations) as compared to net income of $1 million or $0.11 on a fully diluted basis (which included a loss of $0.16 from discontinued operations) in the same period of 2013.
• As of March 28, 2014, Versar recorded funded backlog of approximately $119 million, an increase of 10% compared to $108 million of funded backlog at the end of fiscal year 2013.

Consolidated revenue performance was impacted by delayed funding for government contracts related to sequestration. Sequentially, revenues were essentially flat as compared to the second quarter of 2014.

Tony Otten, CEO of Versar said, "In the third quarter, we continued to see delayed funding for government contracts related to last fall's government shut down and sequestration. Despite the 2014 appropriations deal, we have not seen the expected increase in funding, although we do expect more money to be obligated by the end of September. As with many in our sector, the slow down has weighed on both our revenues and our margins. That said, our backlog remains strong and we enhanced it with the acquisition of Lime Energy's Facility Repair and Renewal business, which represents five task orders with total revenue of between $6 million and $10 million. Additionally, we received an extension to our personal services contract in Iraq. Following the close of the quarter, we announced that the Army Corps of Engineers had awarded an environmental services IDIQ contract to our joint venture with Cardno TEC, which has a maximum capacity of $27.5 million. Additionally, we were awarded a $2.39 million design/build contract for the replacement of a gas line at Hanscom Air Force Base. We are optimistic about our pipeline for future projects as we enter into the May through September time period, typically the busiest season for government contract awards."

Mr. Otten continued, "Our integration of GMI continues to progress, but not as quickly as anticipated. Strategically, GMI is a valuable asset to Versar and we are seeing its positive impact in terms of technical capabilities, geography and hence projects we are bidding on. However, the slow down has particularly impacted GMI given their specialty, and we now anticipate that GMI will be accretive in fiscal 2015 as opposed to the first quarter of fiscal 2015 as previously stated."

Second Quarter 2014 Results

• Gross revenue for the second quarter of fiscal year 2014 was $28.0 million, an increase of 16% compared to $24.1 million during the second quarter of the last fiscal year.
• The Company reported net income of $100,000, or $0.01 per share on a fully diluted basis (which includes $0.02 from discontinued operations) compared to net income of $925,000 or $0.09 per share on a fully diluted basis (which included a loss of $0.03 from discontinued operations) for the second quarter last year.

Tony Otten, CEO of Versar said, "We achieved solid revenue growth in the second quarter and are particularly pleased with this result, given the government shutdown during the quarter that delayed some contract awards and caused a temporary slowdown in activity for some of our existing projects. While revenue increased, profitability for the quarter was below historical levels due to higher purchased services and materials related to our PSC and PBR programs. In addition, we had some one-time costs associated with final tax payments related to our fiscal year 2012 acquisition of Charron Construction Consulting, Inc. and severance costs associated with our recent acquisition of GMI.

"Our backlog grew 12% from our June 28, 2013 fiscal year end. During the quarter, we were awarded $1.1 million in new awards and $440,000 in subcontract extensions from HDR for continued construction management and quality assurance operations in support of the Air Force in Afghanistan. This is in addition to the $8.8 million in awards we received during the last quarter of fiscal 2013 and the first quarter of this fiscal year. These extensions bring our HDR subcontract total to just under $40 million over the life of the subcontract. This is one of our many contracts in the region and demonstrates the level of confidence our government has in the services we provide. Additionally, following the close of the quarter we were awarded a $2.25 million contract with Frederick County, Maryland to provide municipal stormwater permit support and a $1.5 million extension of our personal services and support contract with the U.S. Army Corps of Engineers in Iraq."

Mr. Otten continued, "We continue to make progress with the GMI integration and are encouraged by the strategic benefits of their technical capabilities and diverse customer base. Our balance sheet remains solid, positioning us well for continued organic growth and providing flexibility for our pursuit of complementary acquisitions."

SPRINGFIELD, Va., Feb. 6, 2014 /PRNewswire/ -- Versar, Inc. (NYSE MKT: VSR) announced that the United States Army Corps of Engineers, Middle East District (USACE-TAM) has extended the Company's ongoing Personal Services and Support contract in Iraq by six months.  The extension has a ceiling value of $1.5 million and the period of performance runs through August 6, 2014. Versar has been supporting the United States Department of Defense reconstruction efforts in Iraq since 2004. 

Jeff Wagonhurst, President of Versar, said, "This contract extension demonstrates the continued quality support and capacity development we provide to the U.S. Army Corps of Engineers (USACE) in Iraq."

SPRINGFIELD, Va., Jan. 22, 2014 /PRNewswire/ -- Versar, Inc. (NYSE MKT: VSR) announced today that it has been awarded a contract with Frederick County, Maryland, to support the County's National Pollutant Discharge Elimination System (NPDES) and Municipal Separate Storm Sewer System (MS4) permit compliance.  With a capacity of $2.25 million over three years, this award will allow Versar to continue to provide a wide range of stormwater and watershed services to Frederick County.  Versar has conducted $4.5 million in compliance support under six prior contracts with the county since 1999, including water quality and biological monitoring, illicit discharge investigations, industrial stormwater inspections, pollution prevention, and watershed restoration planning. 

Jeff Wagonhurst, President of Versar, said, "We look forward to continuing our work with Frederick County, especially as their program evolves to meet new MS4 requirements and Chesapeake Bay pollutant reduction targets.  Our expertise and operational capability in meeting these new regulatory challenges is well-recognized in the mid-Atlantic region, where we continue to grow our local government business, with experience to date in support of 11 counties." 

In addition to Frederick, Versar has provided MS4 and other stormwater services to Anne Arundel, Baltimore, Cecil, Carroll, Harford, Howard, and Montgomery Counties in Maryland, and Arlington, Fairfax, and Loudoun Counties in Virginia

First Quarter Fiscal 2014 Results

• Gross revenue for the first quarter of fiscal year 2014 was $29.1 million, an increase of 30% compared to $22.4 million during the first quarter of the last fiscal year.
• The company reported EPS of $0.07 per share on a fully diluted basis, compared to $0.09 per share on a fully diluted basis for the first quarter last year.

Tony Otten, CEO of Versar said, "We are pleased to report strong revenue growth with improved sequential gross margin performance, continued profitability and increased backlog during the first quarter. We've added several new contracts subsequent to the close of the quarter, including two new task orders for our USACE contract in Afghanistan valued cumulatively at $30.5 million, as well as a program management support contract from the General Services Administration valued at up to $5.4 million and a task order contract from Fairfax County, Virginia for engineering consulting services with an annual maximum capacity of $1.5 million."

Mr. Otten continued, "Our integration of GMI is progressing well and we are confident that their technical capabilities and established customer base will enable us to expand our reach in terms of clients, technical capabilities and geography. With our solid balance sheet, we believe we are well positioned to drive organic growth and to pursue our acquisition strategy."

SPRINGFIELD, Va., Oct. 8, 2013 /PRNewswire/ -- Versar, Inc. (NYSE MKT: VSR) announced today that the team of J.M. Waller Associates, Inc. (Prime Contractor) and Versar, Inc. (Subcontractor) was awarded a new contract from the General Services Administration (GSA) to provide environmental program management support to the U.S. Army Reserves 88th Regional Support Command (RSC), comprised of more than 300 facilities in 19 states across the Midwest, Mountain West and Northwest United States.  The firm fixed price contract is a single award with a maximum two-year and seven-month period of performance consisting of a base seven-month period and two option years.  The maximum contract capacity is $11.9 million.  Versar's share for supporting this contract during the stated period of performance is $5.4M.

Tony Otten, CEO of Versar said, "This award is a validation of the team we have formed with J.M. Waller Associates, Inc.  We welcome this additional opportunity to work with the U.S. Army Reserves 88th Regional Support Command and GSA and are confident that our team's capabilities are well matched to the requirements of the contract and to the demands of the geographic locations in which we will be working."   

SPRINGFIELD, Va., Sept. 3, 2013 /PRNewswire/ -- Versar, Inc. (NYSE MKT: VSR) announced today it has acquired Geo-Marine, Inc., a business with more than $20 million in annual revenues. The purchase price was paid with a combination of cash and seller notes. Geo-Marine, headquartered in Plano, Texas, provides engineering design, construction management, environmental planning and programming, and other services in support of a wide range of government, industry, and commercial clients.  Key long-term clients include the U.S. Navy, the U.S. Air Force and the U.S. Army Corps of Engineers.

Geo-Marine is expected to be accretive to earnings in year one and adds contracted backlog of over $15 million.

Tony Otten, CEO of Versar said, "Geo-Marine is a great strategic fit for Versar. Our cultures are similar and Geo-Marine's technical capabilities complement our own very well. In particular, Geo-Marine's environmental expertise and customer base will allow us to expand our reach in terms of clients, technical capabilities and geography."

"Of particular note," Mr. Otten continued, "is Geo-Marine's long-term relationship with the U.S. Navy. Just this past July, they were selected, along with two other firms, for a new, $75 million five-year ID/IQ with NAVFAC.  We have identified the U.S. Navy as a key market that Versar wanted to penetrate, and with the acquisition of Geo-Marine, we believe we have accomplished that. We look forward to providing the U.S. Navy the same high-quality service that we have provided other branches of DOD."

Fourth Quarter 2013 Results

• Gross revenue from continuing operations for the fourth quarter of fiscal year 2013 was $25.1 million, a decrease of 10% compared to gross revenue from continuing operations of $27.9 million reported in the same quarter of fiscal year 2012.
• The Company reported a net income from continuing operations for the quarter of $450,000, or $0.05 per share on a fully diluted basis, compared to $1.1 million, or $0.12 per share on a fully diluted basis for the fourth quarter last year.
• As of June 28, 2013, Versar recorded funded backlog of approximately $108 million, an increase of 16% compared to $93 million of funded backlog at June 29, 2012.

Tony Otten, CEO of Versar said, "Fiscal 2013 was a solid year for Versar given the challenging business environment. For the year, we achieved profitability, grew our backlog, and maintained our very strong balance sheet. Revenues for the year were down, as expected, given the completion of our Tooele Chemical Demilitarization project and decreased domestic construction. In the fourth quarter, as we saw in the third quarter, profitability was lower resulting from a shift in revenue mix with the completion of two high margin programs in the fourth quarter of fiscal 2012, but in addition, we also had a significant write-off of an uncollected receivables account. Our backlog is robust including multiple Performance Based Remediation contracts as well as a large Personal Services contract with the U.S. Army Corps of Engineers. While we converted a bit less of our backlog to revenue in the fourth quarter than expected, we anticipate realizing these revenues in fiscal 2014."

SPRINGFIELD, Va., May 16, 2013 /PRNewswire/ -- Versar, Inc. (NYSE MKT: VSR) announced today that its  joint venture with Parsons was awarded a new prime contract from the U.S. Army Corps of Engineers (USACE), Middle East District (MED) to provide Construction Phase Support Services (CPSS) throughout 18 countries within the Central Command Area of Responsibility.  The Indefinite Delivery Indefinite Quantity (IDIQ) contract is a single award with a maximum five-year period of performance consisting of a base year and four option years.  The maximum contract capacity is $90 million.  According to the terms of the contract, the joint venture will provide construction support services in the CENTCOM Area of Responsibility to include locations such as Afghanistan, Kazakhstan, Pakistan, Saudi Arabia, Iraq, Qatar, and 12 additional countries.

Tony Otten, CEO of Versar said, "This award is a validation of the team we have formed with our joint venture partner Parsons.  We welcome this additional opportunity to work with USACE and are confident that our team's capabilities are well matched to the requirements of the contract and to the demands of the geographic locations in which we will be working."   

Versar joint venture awarded construction services contract worth up to $90M

Versar announced that its joint venture with Parsons was awarded a new prime contract from the U.S. Army Corps of Engineers, Middle East District to provide Construction Phase Support Services throughout 18 countries within the Central Command Area of Responsibility. The Indefinite Delivery Indefinite Quantity contract is a single award with a maximum five-year period of performance consisting of a base year and four option years. The maximum contract capacity is $90M. According to the terms of the contract, the joint venture will provide construction support services in the CENTCOM Area of Responsibility to include locations such as Afghanistan, Kazakhstan, Pakistan, Saudi Arabia, Iraq, Qatar, and 12 additional countries.

Third Quarter 2013 Results

• Gross revenue for the third quarter of fiscal year 2013 was $31.6 million, a 22.7% increase compared to revenue of $25.7 million reported in the third quarter of fiscal year 2012.
• Net income for the third quarter of fiscal year 2013 was $1.0 million or $0.11 per basic and diluted share, an increase of 8.2% compared to net income in the third quarter of fiscal 2012 or $0.10.

Tony Otten, CEO of Versar said, "We are pleased to report strong revenue growth, continued profitability and increased backlog during the third quarter. Our revenue growth was driven by our performance based remediation contracts with the U.S. Air Force and by revenues related to construction management projects acquired with our purchase of Charron. Additionally, our work in Afghanistan has been reinvigorated by our previously announced $170 million Personal Services contract for the U.S. Army Corps of Engineers, largely offsetting the wind down of our Title II work with the U.S. Air Force in that country. However, gross profit margin declined as a result of a shift in revenue mix with the completion of two particularly high margin programs, as well as a modest margin impact resulting from one-time costs associated with moving operations in Afghanistan to a more centralized, secure location. We continue to see opportunities internationally that are a good match to our capabilities.

"Our focus remains on securing significant contracts related to non-discretionary funding, such as sustainable range management, unexploded ordnance and performance based remediation. As a solutions based company, we are continuously pursuing new partnership opportunities and the expansion of our existing relationships, domestically and internationally."

On September 29, 2012, Versar Inc. (the “Company”) was awarded the Afghanistan Personal Services Contract for the U.S. Army Corps of Engineers (the “AED Contract”). The AED Contract is a single-award, indefinite-delivery/indefinite-quantity contract with a base period of one year, three option years and one six-month extension, for a total possible period of performance of four and-one half years. The AED Contract has a maximum total capacity of $170,000,000 and a maximum annual capacity of $42,500,000. The Company has been awarded two initial task orders under the AED Contract, with a total funded value of approximately $16,000,000.

Fourth Quarter 2012 Results

• Gross revenue for the fourth quarter of fiscal year 2012 was $28.7 million, a decrease of 18% compared to revenue of $34.9 million reported in the same quarter of fiscal year 2011.
  
• For the fourth quarter of fiscal year 2012, Versar earned net income of $1.6 million, or $0.17 per basic and diluted share compared to net income of $1.4 million, or $0.14 per share in the fourth quarter of fiscal year 2011, an increase of 14% on net income and 21% on earnings per share, respectively.
  
• Net Income for fiscal year 2012 was $4.2 million or $0.45 per basic and diluted share, compared to $3.4 million or $0.37 per basic and diluted share in fiscal year 2011.  GeoTeam calculated non-gaap EPS for fiscal 2012 was $0.52 vs $0.37 in prior year, after adding back $0.07 from the write-off of uncollectable financing receivable from the third quarter 2012. 
  

Item 1.01 Entry into a Material Definitive Agreement.

On September 13, 2012, Versar Inc. (the “Company”) and certain of its wholly-owned subsidiaries (the “Co-Borrowers”) entered into an Amended and Restated Loan and Security Agreement (“Agreement”) with United Bank (the “Bank”) amending and restating certain provisions of the Loan and Security Agreement dated September 26, 2003 (as amended from time to time, the “Original Loan Agreement”).

The Agreement: (a) extended the term of the Company’s line of credit under the Agreement for two years; (b) increased the annual commitment fee from 0.17% of the unused portion of the Commitment (as defined in the Agreement) to 0.25% of the unused portion of the Commitment; and (c) made minor modifications to certain other terms and conditions of the Original Loan Agreement.

A copy of the Agreement is filed with this Report as Exhibit 10.33 and incorporated by reference herein. The foregoing description of the Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Agreement.

On September 13, 2012, the Company and the Co-Borrowers executed an Amended and Restated Revolving Commercial Note in the aggregate principal amount of up to $15,000,000 for the benefit of the Bank in connection with and under the terms of the Agreement (the “Note”).

A copy of the Note is filed with this Report as Exhibit 10.34 and incorporated by reference herein. The foregoing description of the Note does not purport to be complete and is qualified in its entirety by reference to the full text of the Note.

SPRINGFIELD, Va.--(BUSINESS WIRE)--Versar, Inc. (NYSE MKT: VSR) today announced that it has been awarded a new contract by Tetra Tech, Inc. for Professional Services support at Joint Base Lewis-McChord, Washington (“JBLM”).

The contract has a five-month base ordering period beginning July 1, 2012, with a not to exceed value of $2.1 million, and four option periods totaling an additional $7.6 million. The total period of performance runs through June of 2014 and Versar’s total contract capacity is $9.7 million. Versar in partnership with Tetra Tech has been supporting the United States Department of Defense environmental efforts on-site at Joint Base Lewis McChord, since 2007. JBLM is comprised of Lewis Main, Lewis North, McChord Field, and the Yakima Training Center. Versar will be supporting the Directorate of Public Works, Environmental Division, which is responsible for managing and performing environmental, natural resources, and cultural resources programs for JBLM.

Jeff Wagonhurst, President of Versar, said, "We are privileged to continue our Professional Services environmental support to this world-class Joint Base. Having commanded there myself as an Active Duty Army Officer, I’m proud to lead Versar in contributing to the JBLM Environmental Division mission to sustain and protect the environment as a fully-integrated community partner in the lower Puget Sound, with a highly-trained and motivated workforce."

Third Quarter 2012 Results

• Revenue for the third quarter of fiscal year 2012 was $25.7 million, a decrease of 18% compared to revenue of $31.5 million reported in the same quarter of fiscal year 2011. The decrease in revenue was primarily attributable to reduced activity from our projects in Iraq and lower revenue from our Environmental Services business segment.
• Versar recorded net income of $1.0 million, or $0.10 per basic and diluted share for the third quarter of fiscal year 2012, compared to net income of $0.6 million, or $0.07 per basic and diluted share, in the third quarter of fiscal 2011.

Versar closed the third quarter of fiscal year 2012 with funded backlog of $97 million, an increase of 37% compared to approximately $71 million at April 1, 2011. This increase reflected the award of several large long term contracts and was indicative of the high quality proposals that were developed as a result of proposal preparation staff training and business development investments earlier this fiscal year.

Tony Otten, CEO of Versar said, “I’m very pleased with the results of our third quarter and our focus on profitable growth. The consistent improvement in our gross profit, operating income and earnings per share clearly shows we can perform in a challenging budget environment and the growth in funded backlog, in light of our investment during the year, bodes well for our future. Furthermore, the acquisition agreement announced last week to acquire Charron, a strategically attractive construction management company, will allow us to leverage our tremendous capability in International Title II Engineering stateside and will fold nicely into our business. Finally, our balance sheet remains a tremendous asset and provides a strong platform for future organic and M&A growth.”

SPRINGFIELD, Va.--(BUSINESS WIRE)--Versar, Inc. (NYSE Amex: VSR) announced today that it has reached an agreement to acquire Charron Construction Consulting, Inc. (“Charron”). Charron, headquartered in Dulles, Virginia, is a national construction project management firm that has provided construction management services since 1992 for a broad spectrum of projects including office, retail, industrial, civic, and various government facilities.

The Charron transaction is expected to close within the next 30 days and contains customary conditions to closing. The acquisition price will range between $3.0 - $3.5 million and will be satisfied with cash, a seller note, and payments under an earn-out. The acquisition is expected to be accretive in the first year. Charron is expected to provide the Company with over $4.5 million in annualized gross revenue and contracted backlog of over $8.8 million.

Tony Otten, CEO of Versar, said, “The acquisition of Charron Construction Consulting is a great strategic fit for Versar and will strengthen our U.S. based construction management practice. We are extremely excited about the opportunities this combination offers and expect the combination to solidify our global engineering and construction division.”

Charron’s management will stay intact and report to Lee Staab, Versar’s Engineering and Construction Group’s Sr. Vice President. Chris Charron, Charron Construction Consulting, Inc. CEO, said, “This combination will provide new opportunities for us to expand our federal government construction management work and leverage Versar’s existing client base.”

SPRINGFIELD, Va.--(BUSINESS WIRE)--Versar, Inc. (NYSE Amex: VSR) announced today that it has been awarded a $23.4 million subcontract from HDR, Inc., a global architecture, engineering, consulting and construction firm, for continued construction management and quality assurance operations in Afghanistan. This subcontract will allow Versar to continue to provide engineering support, construction management and quality assurance operations in Afghanistan through February 2013. Versar has been providing construction management and quality assurance work in Afghanistan since 2006.

Tony Otten, CEO of Versar, Inc., said, “This important subcontract with HDR allows Versar to continue to support the Department of Defense by providing our construction management and quality assurance support for reconstruction efforts in Afghanistan. We are also excited about our new relationship with HDR and believe that the HDR/Versar team will continue to provide high quality services and capacity development in this important contract.”

Second Quarter 2012 Results

• Revenue for the second quarter of fiscal year 2012 was $31.3 million, a decrease of 25% compared to revenue of $41.9 million reported in the same quarter of fiscal year 2011
• Net income of $0.8 million or $0.09 per basic and diluted share for the second quarter of fiscal year 2012, compared to net income of $0.9 million, or $0.10 per basic and diluted share, in the second quarter of fiscal 2011.

Versar closed the second quarter of fiscal 2012 with funded backlog of $85 million, an increase of 15% compared to the second quarter of 2011.

Tony Otten, CEO of Versar said, “While revenues decreased, this quarter demonstrated many positive developments at Versar. First, it is important to understand that on a comparative basis, excluding last year’s one time equipment purchase, our revenues decreased only 7%. This decrease stems largely from softness in our environmental group where we saw both increased competition and fewer overall awards as compared to last year. That said, in an uncertain federal government environment, our overall backlog is up 15 percent from last year, a testament to our bolstered business development capabilities and our dedication as a company to continue to invest in the long-term growth of our business. During the quarter, our SG&A expense included a reserve charge of approximately $229 thousand related to a loan provided to an outside entity. When this charge is excluded, SG&A actually declined approximately $100 thousand, even after the continued investment in ongoing enhancements to our company-wide technology platform and expenses associated with strengthening our sales and marketing efforts. Overall, we were solidly profitable for the quarter and our balance sheet provides an excellent foundation for future growth.

”On a business segment basis, revenues in our Program Management business grew 3% during the quarter, as a result of improved performance from our U.S. based construction group, revenue growth generated by our Title II Construction Management projects in Afghanistan and our Electrical Inspection work in Iraq. Our Environmental Services business segment saw revenues decline by 39%, related to the award of fewer contracts during the second quarter. Revenues remained flat in our Professional Services segment and our National Security segment experienced a 53% decline in revenues related to the non-recurring equipment purchase revenue that was discussed above.”

Mr. Otten continued, “There continues to be uncertainty around the government budgeting process and as a result we are continuing to experience delays in the receipt of funding for certain projects in our Environmental Services business. However, we are positioned as a service provider to government mandated programs, particularly in areas where ongoing government expenditures are an operational necessity, such as sustainable military range management, environmental assessments, and remediation. Our balance sheet remains strong and we believe that our areas of expertise will remain in demand despite the anticipated reduction in government spending. It will be a challenge for us to match 2011 revenues in 2012, given the revenue bump in 2011 associated with the one-time equipment purchase, but we are encouraged by longer term organic growth opportunities, an improved acquisition landscape and ongoing enhancements made to the organization to maximize profitability.”

Financial Trends

Fiscal year 2012 and beyond will continue to offer significant challenges. For the near-term, it appears that the economy will continue to be challenged by reduced government funding, high unemployment, a weak financial market, and debt reduction pressures that affect government spending patterns at all levels. We believe that each of our business segments have the expertise to address the challenges raised by these national economic issues and is positioned in the coming year to address these concerns. This is because of value-driven economic metrics that are dictating more efficient services for our clients, coupled with mandated government program areas that utilize our services. Our broad range of project management skills will allow us to effectively target areas where ongoing government expenditures (both domestically and internationally) will be necessary, areas such as sustainable military range management, chemical de-militarization, emergency response, and environmental assessments and remediation.

Specifically, we see the following three elements driving our strategy going forward:
  •   Pursuit of larger contract opportunities. Our move to a large business, coincident with development of a strong internal infrastructure and associated technologies, is allowing us to focus on pursuing larger prime contract opportunities.

  •   Leveraging of our services. This will allow us to work efficiently in the new economic environment whether that is selling of sustainable risk management utilizing our energy and environmental skill-sets, or via effective use of our construction management skills in relation to complex project oversight.

  •   Expanding our international footprint. While strong internationally in the construction management business, incorporation of our non-construction services into our overseas client-base will allow for replication of our proven domestic skills into the international market and will help us meet growing overseas client needs.

Due to the financial successes experienced in fiscal year 2011 and prior fiscal years, our balance sheet is strong. We are well positioned with our cash balance on hand to handle challenges resulting from the business downturn while we continue to pursue merger and acquisition activity. As of the quarter ended September 30, 2011 we had $2.6 million of cash on hand and a working capital balance of $20.3 million. We also continue to have access to a line of credit that on October 25, 2011 was increased to $15 million.

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.” 
 

Versar Increases Credit line...

SPRINGFIELD, Va.--(BUSINESS WIRE)--Versar, Inc. (NYSE AMEX: VSR) announced that it has executed an amendment to its line of credit that increases the amount 50% from $10 million to $15 million and extends the maturity date to Sept 25, 2012.

Tony Otten, CEO of Versar said “Versar is very proud to continue its lending relationship with United Bank which began in September of 2003. The increase in the credit line is a strong indication of the strength of our balance sheet and will help support our anticipated growth requirements.”

Third Quarter 2011 Results

• Total revenues increased 5% to $1.1 billion vs $1 billion 
•  Adjusted income from continuing operations for the third quarter 2011 of $14.3 million, or $0.44 per diluted share, versus adjusted income from continuing operations in the third quarter 2010 of $12.7 million, or $0.39 per diluted share, a 13% increase per diluted share.

"Asbury is pleased to announce another quarter of double-digit growth in adjusted EPS from continuing operations," said Craig T. Monaghan, Asbury's President and CEO. "We produced these excellent results during a quarter that was significantly impacted by a limited supply of Japanese-branded new vehicle inventory. We set another Company record used-to-new sales ratio, generated strong gross profits from our new vehicle sales, and continued growing our finance and insurance profit per vehicle retailed. The third quarter provides another example of our associates' ability to increase profitability by reacting quickly to changing market dynamics and nimbly shifting business strategies. On top of our stores' excellent operating performance, we continued to aggressively strengthen our balance sheet by paying down debt in order to improve our flexibility and better prepare the Company for future growth."

Asbury's Executive Vice President and Chief Operating Officer Michael S. Kearney added, "Our Japanese-branded dealerships experienced the full impact of the inventory shortages during the third quarter, with a number of these dealerships operating on only two weeks supply of new vehicle inventory. We are now beginning to experience levels of Japanese-branded new vehicle inventory supply that are more appropriately aligned with consumer demand and we anticipate rebuilding these inventory levels through the first quarter of 2012."

SPRINGFIELD, Va.--(BUSINESS WIRE)--Versar, Inc. (NYSE AMEX: VSR) announced that it has been named “Company of the Month” by the Bowser Report in its October 2011 edition. The Bowser Report, founded by Max Bowser and now in its 35^th year, is a monthly subscription-based newsletter which highlights small-cap stocks trading on the NYSE, NASDAQ and AMEX at $3.00 per share or less. The Bowser Report newsletter uses fundamental analysis to select and recommend stocks to its readers. Companies featured in the newsletter do not pay for the research or coverage and additionally do not edit the newsletter's recommendations.

Tony Otten, Chief Executive Officer of Versar stated, “We are honored to be selected by the Bowser Report as its Company of the Month and thankful to Max Bowser for bringing our story and accomplishments to the attention of his readers."

Previous Release 5/17/2011

SPRINGFIELD, Va.--(BUSINESS WIRE)--Versar, Inc. (NYSE Amex: VSR) announced today that it has been selected as prime contractor for up to a $45.4 million task order with the Air Force Center for Engineering and the Environment (AFCEE) under their WERC09 contract, for conducting performance-based remediation at Tinker Air Force Base, Oklahoma. The initial funded award amount is $18.7 million, with options totaling another $26.7 million over the next nine years.

Versar, and major teaming members CH2MHill and Battelle Memorial Institute, have combined their unique skills, resources, and Tinker AFB experience, to forge a team who can implement effective cleanup remedies. Using various remediation technologies, the Versar team will be performing environmental cleanup at 34 sites across the base, with the overall goal of achieving closure at 13 of these sites, making them eligible for unrestricted future land use.

Tony Otten, CEO of Versar said “With this important project, Versar continues its long-standing tradition of providing quality environmental services to the Air Force. Since 1994, Versar has held eight AFCEE ID/IQ contracts and completed more than 230 individual task orders, spanning installations in Europe, the Middle East, Pacific, and the continental U.S. We look forward to continuing our partnership with the environmental professionals at AFCEE and Tinker Air Force Base to achieve efficient and permanent solutions.”

In the 2011 fiscal year we delivered solid financial results that reflected improvement in net income and gross revenue compared to the 2010 fiscal year. Our improved performance was driven by both an aggressive growth strategy and cost reduction efforts targeted at our fixed and controllable expenses. For instance, in fiscal 2011 we continued to shift our emphasis to Afghanistan in an attempt to maintain and expand our business there in order to replace revenues from the reconstruction efforts in Iraq that were significantly reduced during fiscal year 2010. We also continued to invest heavily in business development activities and our internal technology infrastructure, and we recognized increased revenue from our acquisitions completed during the third quarter of fiscal year 2010. We remained focused on identifying additional complementary businesses to integrate into our existing business segments to compliment organic growth and strengthen the Company’s overall depth and backlog.

We foresee continued pressure and weakness in the United States and world economies with slow and gradual economic recovery. During periods of economic uncertainty and volatility, our Federal government business has historically been the most stable and predictable. However, the growing Federal deficit and uncertainty in our Federal government and DoD future budgets may impact our future revenue and in that regard we have experienced some delays in project funding and contract awards.

Our business continues to be operated through the following four business segments: Program Management, Compliance and Environmental Programs, Professional Services, and National Security. Program Management remains our largest business.

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.”

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.

Versar, Inc. (NYSE Amex: VSR) today announced solid financial results for the third quarter of fiscal year 2011, ending April 1, 2011.

• Gross revenue for the third quarter of $31.5 million was 29% higher than the $24.4 million reported during the same period last year.
• Net income for the third quarter of fiscal year 2011 was $629 thousand or $0.07 per share compared to a loss of $1.5 million or ($0.16) per share for the same period last year.
• Third quarter fiscal year 2011 Gross profit of $4.2 million was 223% higher than the $1.3 million reported during the third quarter of fiscal year 2010 and
• Operating Income of $1.4 million was approximately $3.6 million higher than the $2.3 million loss reported during the same period last year.

Tony Otten, CEO of Versar said, "Through nine months of fiscal year 2011 we have now exceeded the entire revenue total of fiscal year 2010. Our four business segments were once again all in the black and gross profit margins continue to improve. Net income for the third quarter of fiscal year 2011 was 145% higher than the same period last year and would have been higher if not for non-recurring expenses associated with severance for our former CFO and a change in the fair market value of a previous acquisition. I continue to be optimistic for the Company’s year-end results and for the coming fiscal year."

Financial results for its second quarter fiscal year 2011, that ended December 31, 2010.

• Gross revenue for the second quarter achieved a company record $41,908,000, a 72% increase from the $24,387,000 reported in the second quarter of fiscal year 2010.
• Revenue was positively affected by an $8.4 million one-time equipment purchase related to the company’s Chemical Munitions Destruction Project near Tooele, Utah.
• Net income for the second quarter of fiscal year 2011 was $924,000, or $0.10 per share compared to a loss of $300,000 or ($0.03) per share for the same period last year.
• Second quarter FY 2011 operating income of $1,491,000 was approximately $2 million higher than the $510,000 loss reported during the same period last year.
• Gross Profit for second quarter of FY 2011 of $3,486,000 was 102% higher than the $1,728,000 reported during the same period last year.

Tony Otten, CEO of Versar said, "Our second quarter performance is directly attributable to a significant turnaround in our domestic operations, with improved results from our Compliance and Environmental and National Security business segments and continued strong performance of our Professional Services Group. We are expecting strong financial performance for the remainder of FY 2011 and are focusing our resources on a ramp up of our business development processes as we look to strengthen our backlog for FY 2012."

We have begun to track Versar at $2.95.

The company has not grown its business over the past three years. In fact, VSR ended 2010 with a loss, on a 10.2% revenue decline to $110.8 million. For the two years prior to fiscal 2010, revenues were stagnant while EPS was constant at around $0.35.

Versar recorded a net loss of $2,294,000, or ($0.25) per share, on a fully diluted share basis, for fiscal year 2010, compared to after tax net income of $3,169,000 or $0.35per share for the previous fiscal year. The yearly loss was the firm’s first since 2003 and was heavily driven by a $1 million restructuring charge taken in the previous quarter as Versar reduced headcount, closed two domestic offices, and accounted for transaction costs associated with the Company’s two acquisitions completed during the year. Further losses were attributed to project losses in our U.S. construction business, Chemical Lab renovations in our National Security Segment, and higher than anticipated legal costs associated with an ongoing construction claim.

However, there may be reasons to track the VSR story:

Tony Otten, CEO of Versar said, “We are clearly disappointed in our financial performance during fiscal year 2010. During our third quarter we took aggressive measures to reduce fixed costs and overhead, however these actions did not occur soon enough to improve fiscal year 2010 results. Heading into fiscal year 2011, our forward indicators are trending positive and we are again in a cash positive position even after buying two firms last fiscal year.”

• Versar completed fiscal year 2010 with a funded backlog of $78 million which is 37% higher than the $57 million reported at the end of fiscal year 2009.
• New Orders have continued to be very strong in the first two months of FY 2011.
  
• Versar finished August with a funded backlog estimated at $94 million, 74% higher than the $54 million at the end of August 2009 and up 20% from the end of Fiscal Year 2010.

Mr. Otten continued, “Our current funded backlog is much stronger than the same period last year and our Business Development team continues to submit quality proposals. This year we will fully benefit from our two acquisitions and are focused on achieving significant revenue growth with improved profit margins.”

VSR is also repositioning its business to make up for loss of business from the Iraq "wind down".

"To offset in part the loss of revenues from Iraq, the Company has continued to follow funding shifts to Afghanistan, attempting to maintain and expand its business there and has pursued acquisitions and other business opportunities to expand its core business base. While these efforts have led to the Company securing a contract to provide electricians in Iraq for the U.S. Army under which it anticipates approximately $17 million of revenue in fiscal year 2011 and additional work in Afghanistan which it believes will result in increased revenue of approximately $15 million in fiscal year 2011, the Company must continue to expand these efforts to fully replace the loss of revenues from Iraq.

The Company’s Compliance and Environmental business segment has been most significantly impacted by the declining U.S. economy over the last two years. Management expects to continue to face challenges in fiscal year 2011 in the Compliance and Environmental business segment as municipalities continue to face funding shortfalls due to current economic conditions. Therefore, the Company continues to take steps to further diversify its business to replace reduced or eliminated opportunities in Iraq, as discussed above, and reduced municipality work in its Compliance and Environmental business segment.

Versar is also focused on new initiatives in the rural broadband market in the U.S., and on green energy development projects and programs providing engineering, design and construction support, and on further expanding the Professional Services and National Security business segments to address cost constraints while effectively providing business solutions to meet our clients changing needs."

We also listened to a replay of the 2010 year end conference call and noticed management is realigning itself by targeting areas of the government that it feels will experience constant expenditures:

• Emergency management
• Sustainability military range management
• Greenhouse gas and environmental assessment
• Chemical weapons destruction.

We took a look at the revenue to backlog relationship since 2004. While the relationship between end of year funded backlog and following year revenue has not always been linear, in all but one year since 2004 revenues followed the direction of end of year funded backlog. The revenue multiplier (revenue divided by previous year funded backlog has ranged between 1.50 to 2.14).

We have used this relationship, along with fiscal 2009 net-margins, to derive three financial projection scenarios:

One thing seems certain; the revenue and margin picture should improve in 2011. The stock is likely under the radar of many investors and will not show up on many screens due to fiscal 2010 negative net-income and because it has reported three consecutive quarterly losses.

We have followed this story in the recent past, when growth did not materialize to our expectations. We will attempt to interview management to determine if circumstances have changed. Among other things, we need clarification on the current statements:

Press release:

Mr. Otten continued, “Our current funded backlog is much stronger than the same period last year and our Business Development team continues to submit quality proposals. This year we will fully benefit from our two acquisitions and are focused on achieving significant revenue growth with improved profit margins.”

Conference call:

"business throughout 2011 should remain positive and continue to improve."

Although management commented that margins would improve, it did not necessarily indicate that profitability was around the corner.

Also, certain factors will likely impact P/E expansion:

• Lumpiness of quarterly results is a concern due the nature of its project management contracts.
• The potential for the cancellation of projects, which has happened in recent years.
• Current ratio is less than 2 to 1.
• Accounts receivable represent over 70% current assets.

Summary of reasons to consider:

• The stock is selling near its book value per share of $2.84, but has one of the highest funded backlog in its history.
• Strong initial order flow for fiscal 2011
• Company has rectified problems that plagued it during fiscal 2010.
• It seems that the company will quickly return to profitability.
• Investors are likely unaware of this story.
• Stock has sold at much higher levels in the past, when the story line was not as strong as it is now.

Dr. Ted Prociv, President and CEO of Versar said, “Our third quarter performance has considerably improved. In fact, it is the strongest quarterly revenue in Versar’s history. It bodes well for a strong fourth quarter and final year results. We continue to be profitable, debt free, and maintain a large backlog of work.”

Funded backlog as of March 27, 2009: $76 million

Fourth Quarter 2008 Summary Ended June

Year End 2008 Financial Summary Ended June