Usually, when a company toots its own horn it's because the positives aren't noteworthy enough to speak for themselves. Not so in the case of Chantilly, Va.-based solution provider GTSI. The company has promoted its recent accomplishments hard, but with what seems like good reasons.
Most federal agencies know GTSI. The company made its name (and profits) for the majority of its 25 years in business by selling IT products. But changes in how the federal government buys IT, poor corporate management decisions and a botched ERP system implementation led GTSI to a $16 million loss in 2005, no line of credit and a 55 percent employee attrition rate.
Fast forward two years to the present. The company's services revenue has grown from $18 million to $150 million -- that's a 733 percent growth rate. Earlier this month GSA awarded GTSI a Mission Oriented Business Integrated Services (MOBIS) Schedule, which some might argue as confirmation that company efforts to transition from product peddler to services provider are working. In its third quarter of 2007, its gross margin reached nearly 15 percent and operating expenses declined more than 5 percent. Sales for that same period declined 25 percent, but management points to the corporate decision to not discount orders of less than $10,000 and net certain software and service offerings as the reason. Net income for the quarter was $5.5 million compared to a let loss of $3.4 million a year ago -- a positive change of 263 percent.
CEO Jim Leto said in a meeting with Government Executive Tuesday that GTSI has achieved all of the objectives he set when he took over the helm in February 2006. Whether or not that will continue remains to be seen. When asked what we might expect for the year-end financials, Leto only said that he hoped a spending bill would get passed sooner rather than later. Maybe that signifies an impending loss, as agencies have slowed IT spending awaiting for the long-delayed passage of a fiscal 2008 appropriations bill. A loss would fall in line with analyst predictions.
But here's the bigger question: If GTSI manages to pull itself consistently back in the black after years of hemorraging cash, will Leto stick around? Not likely. Last month, he relinquished 'president' from his title, promoting Scott Friedlander from executive vice president to president and chief operating officer. Chances are that was step one in a planned succession. Leto is undoubtedly a turnaround CEO, having done exactly that for a number of other companies that he later sold off. At the very least, GTSI's success might spur Leto's retirement (his third, he will tell you). If that does indeed happen in the near future -- and Leto would neither confirm nor deny when asked -- it could be the best sign for the company yet. As stated by Bill Weber, GTSI's senior vice president of programs and services: "The goal of the management team is to let him retire."
NEXT STORY: Web Headlines