2015 ANNUAL MEETING OF SHAREHOLDERS

Transcription

1 2015 ANNUAL MEETING OF SHAREHOLDERS NOVEMBER 10, 2015 NYSE MKT: VSR ENVIRONMENTAL AND CONSTRUCTION MANAGEMENT FROM THE HOME FRONT TO THE FRONT LINE

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3 Safe Harbor This presentation may include forward-looking statements, which are based on management's current expectations, estimates, forecasts and projections about the Company's business. These statements are forward-looking statements within the meaning of Section 27 A of the Securities Act of 1933, Section 21 E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995, and are subject to safe harbors created by such laws. Words such as "expects", "anticipates", "plans" and "believes" and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions, which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed in this presentation. We do not undertake to update publicly any forward-looking statements, except as required by law. For a description of factors that could cause actual results to differ materially from what may be disclosed in this presentation, you are referred to the Company's public filings. 3

4 Corporate Overview Global Project Management Firm Providing sustainable solutions to government and commercial clients Tailored & Secure Solutions for Harsh Environments, Industries & War Zones Capabilities in munitions demilitarization, classified projects, hazardous material disposal, and secure access control systems National Priority Markets Diversified mix of Department of Defense, EPA, State & Municipal and commercial Click customers edit Master subtitle style 4

5 Company Highlights Longstanding Client Relationships Robust Backlog Driven by Recent Contract Wins Diverse Capabilities Very strong federal government and Department of Defense (DOD) client base leading to new and repeat business opportunities Improved bidding strategies and enhancement of capabilities via acquisition resulted in $225M funded backlog as of October 1, 2015 Up 26% compared to $179M at the end of fiscal year 2014 Consistent year-over-year backlog growth over past five years Customer base expanding as marketplace recognizes effectiveness and range of our solutions Enhanced capabilities position Company to win higher margin projects Healthy Balance Sheet Strategic Acquisition Program Working capital of $22.6M at September 25, 2015 Current cash position and anticipated cash flow from operations will meet our ongoing needs New bank line to support acquisition and organic growth 5 acquisitions since 2012 Recently Acquired Johnson Controls Security Systems; Renamed Versar Security Systems (VSS) $34 million in trailing twelve month revenues; accretive immediately Adds complementary services bringing design, installation and support of complex physical security, network security, and facilities management 5

6 Three Business Segments Engineering & Construction Management (ECM) Construction Construction Management Design & Engineering International Programs Security Systems (New) FY15 Gross Revenue 57% Environmental Services (ESG) Compliance Cultural Resources Natural Resources Remediation UXO/MMRP 29% Professional Services (PSG) Staff Augmentation Construction Management Engineering Environmental Logistics 14% 6

7 Revenue Mix By Customer By Geography 5% 3% 11% DoD Other Federal 26% Domestic State & Local Commercial 74% International 81% 7

8 Consistent Flow of New Contract Wins Agency Awarded Amount Project Description U.S. Army Corps of Engineers (ECM) Nov-15 $17.1M Air Force Civil Engineer Center (ECM) Sep-15 $2.5M U.S. Army Corps of Engineers (ECM) Jun-15 TBD Commercial Client (ESG) May-15 $4.5M Air Force Civil Engineer Center (ECM) Apr-15 $9.0M Air Force Civil Engineer Center (PSG) Apr-15 $11.0M General Services Administration (PSG) Jan-15 Apr-15 $10.1M Provide Afghan engineering and technical staff Personal Services Contract Task Orders Provide construction services Mountain Home Air Force Base S/R&M Acquisition Task Order (SATOC) Facility Repair and Renewal (FRR) services ($290M IDIQ) Locations throughout the U.S., U.S. territories, Japan and Korea Air & energy program management Environmental compliance Design-build services for repairs of the Blue Brick Buildings SATOC Contract Kuwait Naval Base & Camp Arifjan, Kuwait Subcontractor Joint Base Lewis-McChord Onsite Environmental Quality Support Services Program management and support for civil engineering activities Assistance and support for civil engineering activities Air Force Civil Engineer Center (ECM) Jan-15 $6.1M Design/Build/Repair of electrical, water, and compressed air SATOC Contract Kaena Point Satellite Tracking Station Fence to Fence Environmental Services General Services Administration (ESG) Oct-14 $4.2M Barksdale Air Force Base and Columbus Air Force Base U.S. Corps of Engineers - Middle East Oct-14 $18.3M Onsite construction management support services in Afghanistan District (ECM) Oct-13 $30.5M Engineering and technical staff to oversee construction programs U.S. Environmental Protection Agency Multi-Phase remediation of multiple sites Oct-14 $3.1M (ESG) EPA Region 4-Remediation Action (RAC) Air Force Civil Engineer Center (ECM) Aug-14 $98.3M Runway replacement for main runway and associated structures Dover Air Force Base U.S. Army Corps of Engineers (ESG) Aug-14 $8.0M Fence to Fence provide comprehensive environmental services8 Cannon Holloman Air Force Base

9 Longstanding and Diversified Customer Base 9

10 Our Global Locations Headquarters 1. Springfield, VA Inside the US 2. Aiea, HI 3. Atlanta, GA 4. Boise, ID 5. Chandler, AZ 6. Charleston, SC 7. Columbia, MD 8. Denver, CO 9. Dulles, VA 10. El Paso, TX 11. Germantown, MD 12. Hampton, VA 13. Oceanside, CA 14. Richardson, TX 15. South Easton, MA 16. San Antonio, TX Outside the U.S. 17. Abu Dhabi, UAE 18. Baghdad, Iraq 19. Kabul, Afghanistan 20. Clark, PH 21. Milton Keynes, UK 22. Misawa Air Base, Japan 10

11 Engineering and Construction Management Segment: Case Study Runway Repair (Replacement) 01/19, Dover Air Force Base, Delaware (US Air Force) USAF C5M Super Galaxy over Dover AFB Runway Concrete Placement South End TWY B Connector E & F Dover AFB is one of two major Air Force Material Command strategic airlift bases Runway replacement for main runway and all associated structures: 9,600 feet long, 150 foot wide concrete runway replacement Soil cement, Sub base, base and pavement replacement Replace electrical system, Airfield Lighting System (ALS), Instrument Landing System (ILS), including a large number of inpavement lights - a critical coordination item Replace major drainage structures Replace airfield pavement markings Responsible for safety and quality assurance Largest single construction project awarded by the US Air Force in FY 2014 Award Date: 23 JULY 2014 Completion / Period of Performance: : 30 JUNE 2016 / 681 days (Pending Modification) Award: $98.3M Current Value: $99.9M Client: Air Force Civil Engineer Center (AFCEC), US Air Force Contract / Contract Type: SRM Task Order Contract / Indefinite Click to Delivery, edit Master Indefinite subtitle Quantity style Firm Fixed Priced Task Order Contract Capacity: $1.3B 11

12 Environmental Services Segment: Case Study Naval Submarine Base Kings Bay, Georgia Current sedimentation rates within Kings Bay is limiting training and operations for NSB Kings Bay Dredging operations to facilitate Navy activities currently cost millions per year It is uncertain if recent changes in land-use practices surrounding the installation may be the cause The purpose of the study is to develop a hydrodynamic flow & sedimentation model to help inform the Navy how to mitigate this issue or to develop a revised dredging plan to save costs and improve operations. Project: Hydrodynamic Flow Modeling & Sedimentation Study at Naval Submarine Base Kings Bay Award Date: 9 September 2015 Completion: 30 December 2016 Location: NSB Kings Bay, GA Client: NAVFAC Atlantic Contract Type: Firm Fixed Price Current Value: $2.1M Period of Performance: 16 months 12

13 Professional Services Segment: Case Study U.S. Army Reserve, 88 th Regional Support Command (RSC) Technical & Programmatic Support Through three task orders, we provide environmental, facilities management and operational support to the 88 th RSC s entire 19 state area of responsibility. Award Date: APRIL 2015 Completion: APRIL 2016 Location: Various locations throughout the 88 th RSC s 19 state area of responsibility Organizational Structure is based on a Versar Task Order Program Manager and Deputy Project Managers working closely with a government technical representative Technical areas include environmental compliance, hazardous waste management, natural and cultural resources, facility maintenance and repair, master planning, real property management, budget support, and general engineering Client: General Services Administration (GSA), Region 4 Contract Type: Firm Fixed Price Award: $12.7M Contract Capacity: $12.7M Period of Performance: Environmental and Operations task orders are through April AFOS task order is through April 2016, with option years that extends it to April

14 The New Versar: Changes Implemented Over Past Few Years Established clear vision for long-term growth strategy Principal capabilities align well with ongoing federal government spending Revitalized organic growth by strengthening Business Development efforts Strategically focused acquisitions have diversified and enhanced our portfolio of solutions Transformed management team New senior management established during last four years Enhanced financial team Improved HR organization and practices 14

15 The New Versar: Changes Implemented Over Past Few Years Revamped Financial and Project Controls Better project management training, oversight Focus on enhanced labor utilization Shortened/improved month end closing cycle Reduced/Controlled costs Ongoing focus on reduction of fixed costs Significant, ongoing investment in technology platforms to realize operational efficiencies 15

16 Recent Acquisitions Year Target Acquisition Structure Revenue Outcome Strategic Rationale October 2015 July 2014 Johnson Controls Security Systems, LLC J.M. Waller Associates, Inc. $20M Total $34M TTM $13M Total 54% C 46% SP Expected to be immediately accretive $29.2M Accretive, Year 1 Expands current service offerings to higher margin classified construction services Significant core market with steady growth Competitively positioned in the market Strong professional services business EPA Remediation Action Contract (RAC) Expands A/E design capabilities January 2014 Lime Energy Facility Repair and Renew (FRR) Asset Purchase - % on Revenue realized Not Disclosed Accretive, Year 1 FRR as an important long term program GMI had FRR proposal pending Increased VSR exposure w/huntsville September 2013 May 2012 Geo Marine, Inc. (GMI) Charron Construction Consulting, Inc. $4.35M Total - 71% C - 29% SP - EO not realized $3.4M Total - 59% C - 29% SP - 12% EO $13.3M Not Disclosed Loss, Year 1 Accretive, Year 2 Accretive, Year 1 Strategic contract vehicles w/navy Strong cultural & natural resource capabilities Strong USACE relationship in SW US Strong project and program management Strategic DC Courthouse contract Expand current service offering to commercial market February 2010 ADVENT Environmental, Inc. $4.7M Total 26% C 37% SP 37% EO Not Disclosed Accretive, Year 1 Full service environmental contractor Significant capabilities in Military Munitions Response Plans (MMRP) and Unexploded 16 Ordnance (UXO) clean up

17 FINANCIAL PERFORMANCE 17

18 Financial Results (in millions, except EPS) GROSS REVENUE $159.9 $110.3 $102.6 $115.0 Purchased Services Direct Costs of Services GROSS PROFIT 13.8 $8.5 $13.7 $16.5 GROSS PROFIT MARGIN 8.6% 7.7% 13.3% 14.3% SELLING,GENERAL & ADMIN SG&A % OF SALES 6.9% 9.2% 7.4% 7.0% OPERATING INCOME (LOSS) $2.8 ($1.4) $6.3 $8.2 OPERATING MARGIN 1.8% % 7.1% INCOME TAX EXPENSE (Benefit) 0.9 (1.0) NET INCOME (LOSS) FROM CONTINUING OPERATIONS $1.4 ($0.5) $4.1 $4.5 Income (Loss) from discontinued operations, net of tax (1.7) (0.3) NET INCOME (LOSS) $1.4 ($0.3) $2.4 $4.2 NET MARGIN 0.9% % 3.6% EARNINGS (LOSS) PER SHARE Continuing operations $0.14 ($0.05) $0.43 $0.48 Discontinued operations -- $0.02 ($0.18) ($0.03) NET INCOME (LOSS) PER SHARE $0.14 ($0.03) $0.25 $0.45 Delays in Federal Spending Impacted

19 Q Financial Results (in thousands) 1Q16 1Q15 GROSS REVENUE $44,905 $29,586 Purchased Services 29,767 12,228 Direct Costs of Services 12,826 14,752 GROSS PROFIT 2,312 $2,606 GROSS MARGIN 5.1% 8.8% SELLING, GENERAL & ADMIN. 2,854 2,691 % of gross revenue 6.4% 9.1% OPERATING LOSS $(542) $(85) OPERATING MARGIN (1.2)% (0.3)% INTEREST EXPENSE LOSS BEFORE INCOME TAX $(717) $(142) INCOME TAX BENEFIT (286) (53) NET LOSS (431) $(89) NET MARGIN (1.0)% (0.3)% NET LOSS PER SHARE (0.04) $(0.01) Expect Margin Improvement & Return to Profitability in FY

20 Backlog Growth $250 $200 $225 $ In Millions $150 $100 $50 $57 $78 $78 $93 $108 $114 $179 $ October 1, 2015 Backlog at Oct. 1, 2015 Up 26% Compared to End of Fiscal Year 2015; Shifting to higher margin backlog 20

21 First Quarter Balance Sheet Balance Sheet Summary ($ in thousands) As of 9/25/15 As of 6/26/15 As of 6/27/14 Cash $ 396 $ 2,109 $ 9,674 Total Debt $ 8,704 $ 8,148 $ 1,114 Total Assets $ 77,211 $ 89,206 $ 57,761 Working Capital $ 22,560 $ 23,136 $ 24,123 Shareholders Equity $ 38,928 $ 39,370 $ 37,785 Fair market value per share = $

22 LOOKING FORWARD 22

23 Strategic Direction Profitably execute the current backlog Maintain investment in business development to drive future proposal pipeline Continue to pursue strategic acquisitions in attractive M&A market Attract and retain the best people 23

24 Summary Established and growing specialization in project management in hazardous environments Consistent revenue stream across multiple government and commercial customers Strategic acquisitions have broadened Versar s capabilities and reach Solid balance sheet to support long-term growth 24

25 QUESTIONS AND ANSWERS 25

26 THANK YOU NYSE MKT: VSR ENVIRONMENTAL AND CONSTRUCTION MANAGEMENT FROM THE HOME FRONT TO THE FRONT LINE