VSE Corporation reported the following unaudited consolidated financial results for its first quarter ended March 31, 2011.
“The federal government continues to experience funding delays and budget constraints, presenting certain challenges for firms operating in our industry,” said Maurice “Mo” Gauthier, VSE CEO. “This challenging budget environment, along with emerging global insecurity, affirms our continuing strategy to focus on markets that are closely aligned with federal budget priorities. Our long term strategic diversification into selected federal markets and service offerings through acquisitions, combined with our planned efforts to grow organically in our sustainable markets, continues to show intended results. We remain committed to this strategy.”
For the first quarter of 2011, revenues were $151.2 million compared to $228.2 million in the first quarter of 2010. Operating income for the first quarter of 2011 was $6.9 million compared to $8.7 million in the first quarter of 2010.
The decrease in revenue for the first quarter 2011 as compared to the first quarter 2010 was primarily due to the expiration of delivery orders on our U.S. Army CECOM Rapid Response “R2” contract in January 2011, including the delivery orders supporting our Assured Mobility Systems and Route Clearance Vehicle “RCV” Modernization Programs.
Operating margin for the first quarter of 2011 was 4.6%, an increase of 80 bp compared to 3.8% in the first quarter of 2010. The year-over-year increase in operating margin was primarily due to the inclusion of Akimeka, LLC, which we acquired in August 2010, improved profitability on services provided by our Systems Engineering Division, an increase in energy and management consulting work by our Energetics subsidiary, and a reduction in low margin revenue.
Net income for the first quarter of 2011 was $4.2 million, or $.80 per diluted share, compared to $5.4 million, or $1.04 per diluted share in the first quarter of 2010.
Bookings were $107 million in the first quarter of 2011 compared to $210 million in the first quarter of 2010. Funded contract backlog at March 31, 2011 was $357 million, compared to $407 million at December 31, 2010. Federal budget constraints have affected the timeliness of awards in our market and the decrease in government funding activity has impacted our bookings and funded backlog in the first quarter of 2011.
The Federal Group was awarded a $410M, 5-year LOGWORLD task order at the end of January 2011 to continue providing equipment engineering, maintenance, and logistics readiness support services to the U.S. Army Reserve Command (USARC) and the 63rd and 88th Regional Support Commands (RSC). The award represents a recompete of existing work for Federal Group’s Engineering and Logistics Directorate supporting the U.S. Army Reserve.
VSE (vsecorp.com) is a diversified federal services company of choice with over 52 years of 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 and consulting. For additional information on VSE services and products, please see the Company's website 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 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 Securities and Exchange Commission, including VSE’s annual report on Form 10-K for the year ended December 31, 2010 and subsequent reports filed with the Securities and Exchange Commission.