GTSI reports net loss, sales decline

GTSI reported today a 33 percent decline in second-quarter sales and a net loss of $8.1 million, citing the company’s enterprise resource planning (ERP) deployment as a contributing factor.

For the quarter ended June 30, GTSI posted sales of $160.7 million, compared with $239 million in the same quarter last year. The company had a net loss of $8.1 million, compared with a net loss of $1.6 million last year. Last month, GTSI advised investors that second-quarter financial results would be adversely affected by lower bookings and shipments.

The company’s selling, general and administrative expenses increased 19.4 percent for the quarter. Some of the expenses were associated with the sales workers the company hired to help fuel its growth initiative. ERP-related expenses also contributed.

Dendy Young, chairman and chief executive officer of GTSI, said the company “struggled mightily” with the ERP deployment, adding that the most significant issues are behind the company.

The ERP solution is an important part of the company’s plan to boost productivity, company officials have said. During GTSI's earnings teleconference, Young said the company had no alternative but to pursue the ERP project.

“We have to have a first-class information system to run our business,” he said, adding that the ERP system “was a necessary investment by the company.”

Young said the company is sensitive to the operating expense line, which grew to $29.4 million in the second quarter from $24.6 million last year. But he said the company does not plan to pursue layoffs to cut costs.

Young said he won’t make decisions on specific cost-cutting measures until the company completely stabilizes from its ERP implementation. “You can’t fine-tune an organization when everything around you is changing,” he said.

By midday, the company’s stock had declined about 5 percent to $7.24 per share.

Moore is a freelance writer based in Syracuse, N.Y.

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