If you are looking for the answer to why shares of Versar Inc. (NYSEMKT: VSR) are soaring, look no further than a new five-year task order from the General Service Administration.
The company announced that it has been awarded an order with an estimated value of $37 million to perform certain tasks for the U.S. Army Reserve 88th Regional Support Command.
The contract was specifically awarded to Versar Inc. (NYSEMKT: VSR)’s division known as Professional Services Group (PSG). The task encompasses operations, plans and engineering technical support and it will be for 88th RSC’s area of responsibility spanning 19 states. Other aspects of the contract touch on environmental issues.
A great win for VSR
Versar Inc. (NYSEMKT: VSR)’s CEO Tony Otten termed the latest contract from the General Services Administration as a great win for Versar. He noted that VSR has worked with 88th RSC for the last 10 years and the team at Versar feels proud for their contribution to the success of the organization.
Otten added that Versar Inc. (NYSEMKT: VSR) looks forward to continue supporting 88th RSC for many years to come.
Reduced government contracts
Commenting on market conditions during F3Q2016 earnings call, CEO Otten noted that the amounts of government awards had reduced. He further noted that duration of government contracts has also declined from typical lengths. Otten attributed the impacts to shifting in federal spending priorities, anticipated acquisition reforms and the upcoming presidential election.
However, he assured shareholders that Versar Inc. (NYSEMKT: VSR) continues to take aggressive steps to support speedy return to profitability. Versar is also banking on its array of solutions and expertise to continue winning government and commercial orders.
How Versar Inc. (NYSEMKT: VSR) fared in F3Q
Versar Inc. (NYSEMKT: VSR) generated revenue of $36.5 million in F3Q2016, indicating a decrease of 8% from the same quarter last year. However, gross margin took a nosedive, falling to 4% from 8%. The company posted EPS loss of $1.34 for the quarter, compared with EPS profit of $0.03 in the year-ago quarter.
Versar finished F3Q with backlog of $158 million, down from $179 million in the same period last year.