GTSI Reports Third Quarter Results

http://www.businesswire.com/news/home/20091105005510/en

Expense Containment and Profitability Lead the Way
HERNDON, Va.--(Business Wire)--
GTSI (R) Corp. (NASDAQ:GTSI), an enterprise IT infrastructure solutions and
services provider to the government, released financial and operational results
for the third quarter of 2009.

"The conditions in the government market were as hyper competitive as I have
seen in all my years," said Jim Leto, GTSI`s Chief Executive Officer. "With
influences from multiple sources, we found ourselves in the final weeks of the
quarter losing large transactions to companies willing to accept deals at very
low gross margins. While this quarter is not what we anticipated, we have
maintained a lower cost structure and delivered profitability, which has been
difficult in these economic times." As a result, the Company no longer projects
for 2009 an increase over 2008 in sales.

Third Quarter Highlights

* Awarded Perimeter Security and Communications contract for the Port of Oakland

* Won Army Authentication Identification Technology (AIT) IV contract with the
Department of the Army
* Sharp declines in quarter-ended inventory to lowest levels in years
* Strong growth in new financial services business
* Voluntary turnover 6%

Professional Services

During the quarter, GTSI adjusted its strategy for professional services. By
aligning all of the customer focused and service and sale revenue activities
under Scott Friedlander, GTSI`s President and Chief Operating Officer, the
Company expects to promote greater collaboration throughout the organization and
focus on a core set of featured solutions. In addition to the reporting change,
the professional services team has been challenged to improve utilization.

"We are seeking to accelerate growth in our services business by moving towards
enhanced engineering services around next generation computing platforms. This
phase of our services strategic plan is expected to enable us to maintain our
existing service offerings, at lower costs, and expand into higher margin
opportunities. To bolster this initiative and reshape our services model, we
have hired Sandy Gillespie, a top-flight executive, tenured government service
focused professional who brings tremendous skills to GTSI from Raytheon and
Lockheed Martin" said Leto.

Financial Update

For the third quarter of 2009, GTSI reported sales of $209.7 million and
earnings before taxes of $7.1 million as compared to sales of $257.1 million and
earnings before taxes of $8.2 million. In order to provide a valid comparison of
net income and earnings per share it is important to note that in 2009 GTSI
reverted to full taxpayer status. An income tax expense of $3.2 million was
recorded in the current quarter as compared to no income tax expense in 2008. As
a result, the GTSI recorded net income for the quarter of $3.8 million ($0.39
per diluted share) as compared net income of $8.2 million ($0.83 per diluted
share) reported in the third quarter of 2008. Selling, general and
administrative expenses for the quarter were $23.8 million, down sharply from
the $27.5 million for the same period in 2008.

Gross margin dollars in the third quarter of 2009 were $28.9 million with gross
margin percentage of 14% in the period, compared to $34.8 million with a gross
margin percentage of 14% in the third quarter of 2008.

"We continue to gain efficiencies in our business model allowing us to realize
greater savings in our operating expenses," said Peter Whitfield, Chief
Financial Officer for GTSI. "As a result of entering into a $135 million credit
and floor planning facility with Castle Pines Credit earlier this year, combined
with the fact that we have not been in the line for the past seven months, we
have seen a dramatic shift in cash and borrowings by nearly $38 million since
the end of 2008."

Conference Call

An investor conference call to discuss results for the quarter ended September
30, 2009 is scheduled for 8:30 a.m. Eastern Time November 5, 2009. Interested
parties are invited to participate by calling 800-593-9034 or 334-323-7224, pass
code is GTSI. In addition, you may access the webcast on GTSI`s Investor
Relations page (www.gtsi.com/ir). Webcast will be available for replay through
November 5, 2010. To listen to the live call on the Internet, go to the web site
at least 15 minutes early to register, download and install any necessary audio
software. A replay will be available following the conclusion of the call until
6:00 pm Eastern Time, November 14, 2009. To access the replay, please dial
877-919-4059 or 334-323-7226, pass code 30139618.

About GTSI Corp.

GTSI Corp. provides a Technology Lifecycle Management (TLM) approach to IT
infrastructure solutions delivered through industry-leading professional and
financial services. GTSI employs a proactive, strategic methodology that
streamlines technology lifecycle management, from initial assessment to
acquisition, implementation, refresh, and disposal. TLM allows customers to
implement solutions quickly and cost-effectively. GTSI`s certified engineers and
project managers leverage strategic partnerships with technology innovators.
These experts use proven, repeatable processes to design, deploy, manage, and
support simple to complex solutions, to meet client`s current and future
requirements and business objectives. GTSI is headquartered in Northern
Virginia, outside of Washington, D.C. and was named as one of "Best Places to
Work" in 2009. Further information about the Company is available at
www.GTSI.com/About.

Except for historical information, all of the statements, expectations, beliefs
and assumptions contained in the foregoing are "forward-looking statements"
(within the meaning of the Private Securities Litigation Reform Act of 1995)
that involve a number of risks and uncertainties. It is possible that the
assumptions made by management -- including, but not limited to, those relating
to revenue, margins, operating results and net income, and the effect of new
contracts and lender agreements, as well as new vendor relationships -- may not
materialize. Actual results may differ materially from those projected or
implied in any forward-looking statements. In addition to the above factors,
other important factors that could cause actual results to differ materially are
those listed in the Company`s most recent annual report on Form 10-K and
included from time to time in other documents filed by the Company with the
Securities and Exchange Commission.

GTSI and GTSI.com are registered trademarks of GTSI Corp. in the U.S. and other
countries. All trade names are the property of their respective owners.

GTSI Corp. Unaudited Consolidated Statements of Operations
(In thousands, except per share data)

Three Months Ended
September 30, 2009 vs 2008
2009 2008 Variance Percentage
SALES
Product $ 189,234 $ 233,545 $ (44,311) -19.0%
Service 13,985 15,331 (1,346) -8.8%
Financing 6,465 8,183 (1,718) -21.0%
209,684 257,059 (47,375) -18.4%

COST OF SALES
Product 169,550 209,896 40,346 19.2%
Service 8,745 8,890 145 1.6%
Financing 2,475 3,498 1,023 29.2%
180,770 222,284 41,514 18.7%

GROSS MARGIN 28,914 34,775 (5,861) -16.9%

SELLING, GENERAL & ADMINISTRATIVE EXPENSES 23,836 27,541 3,705 13.5%

INCOME FROM OPERATIONS 5,078 7,234 (2,156) -29.8%

INTEREST AND OTHER INCOME, NET 1,979 969 1,010 104.2%

INCOME BEFORE TAXES 7,057 8,203 (1,146) -14.0%

INCOME TAX (PROVISION) BENEFIT (3,236) 24 (3,260) -13583.3%

NET INCOME $ 3,821 $ 8,227 $ (4,406) -53.6%

EARNINGS PER SHARE
Basic $ 0.40 $ 0.84 $ (0.44) -52.4%
Diluted $ 0.39 $ 0.83 $ (0.44) -53.0%

WEIGHTED AVERAGE SHARES OUTSTANDING
Basic 9,651 9,791 (140) -1.4%
Diluted 9,787 9,885 (98) -1.0%

GTSI Corp. Unaudited Consolidated Statements of Operations
(In thousands, except per share data)

Nine Months Ended
September 30, 2009 vs 2008
2009 2008 Variance Percentage
SALES
Product $ 466,822 $ 504,196 $ (37,374) -7.4%
Service 40,835 40,599 236 0.6%
Financing 10,700 14,254 (3,554) -24.9%
518,357 559,049 (40,692) -7.3%

COST OF SALES
Product 421,566 454,080 32,514 7.2%
Service 25,669 23,422 (2,247) -9.6%
Financing 3,525 5,961 2,436 40.9%
450,760 483,463 32,703 6.8%

GROSS MARGIN 67,597 75,586 (7,989) -10.6%

SELLING, GENERAL & ADMINISTRATIVE EXPENSES 71,128 76,243 5,115 6.7%

LOSS FROM OPERATIONS (3,531) (657) (2,874) -437.4%

INTEREST AND OTHER INCOME, NET 3,251 848 2,403 283.4%

(LOSS) INCOME BEFORE TAXES (280) 191 (471) -246.6%

INCOME TAX (PROVISION) BENEFIT (89) 61 (150) -245.9%

NET (LOSS) INCOME $ (369) $ 252 $ (621) -246.4%

(LOSS) EARNINGS PER SHARE
Basic $ (0.04) $ 0.03 $ (0.07) -233.3%
Diluted $ (0.04) $ 0.03 $ (0.07) -233.3%

WEIGHTED AVERAGE SHARES OUTSTANDING
Basic 9,737 9,749 (12) -0.1%
Diluted 9,737 9,874 (137) -1.4%

GTSI Corp. Unaudited Consolidated Balance Sheet
(In thousands)

Change from December 31, 2008
September 30, December 31,
2009 2008 Variance Percentage
ASSETS
Current assets:
Cash and cash equivalents $ 15,359 $ - $ 15,359 100.0 %
Accounts receivable, net 216,023 190,740 25,283 13.3 %
Inventory 21,368 13,491 7,877 58.4 %
Deferred costs 2,787 7,849 (5,062 ) -64.5 %
Other current assets 9,182 7,807 1,375 17.6 %
Total current assets 264,719 219,887 44,832 20.4 %
Depreciable assets, net 11,669 13,664 (1,995 ) -14.6 %
Long-term receivables and other assets 41,369 14,078 27,291 193.9 %

TOTAL ASSETS $ 317,757 $ 247,629 $ 70,128 28.3 %

LIABILITIES AND STOCKHOLDERS` EQUITY
Current liabilities:
Borrowings under credit facility $ - $ 22,387 $ 22,387 100.0 %
Accounts payable 113,197 103,553 (9,644 ) -9.3 %
Accounts payable - Floor plan 60,250 - (60,250 ) -100.0 %
Financed lease debt, current portion 1,759 6,538 4,779 73.1 %
Accrued liabilities 21,563 17,857 (3,706 ) -20.8 %
Deferred revenue 2,436 2,079 (357 ) -17.2 %
Total current liabilities 199,205 152,414 (46,791 ) -30.7 %
Long-term financed lease debt 184 2,530 2,346 92.7 %
Other liabilities 29,894 2,571 (27,323 ) -1062.7 %
Total liabilities 229,283 157,515 (71,768 ) -45.6 %
Total stockholder's equity 88,474 90,114 1,640 1.8 %

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 317,757 $ 247,629 $ (70,128 ) -28.3 %

GTSI
Paul Liberty
Vice President, Corporate Affairs & Investor Relations
703-502-2540
paul.liberty@gtsi.com

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