ON Assignment, Inc. (MM) (NASDAQ:ASGN)
Historical Stock Chart
1 Year : From May 2012 to May 2013
On Assignment, Inc. (NASDAQ: ASGN), a diversified professional staffing
firm providing flexible and permanent staffing solutions in specialty
skills including Life Sciences, Healthcare, Physician and Information
Technology and Engineering, today reported results for the quarter ended
June 30, 2012.
Second Quarter 2012 Highlights
-
Revenues for the second quarter of 2012 were $283.2 million, including
$99.0 million from Apex Systems which was acquired on May 15th.
Revenues were up 97 percent year-over-year and up 70 percent from the
preceding quarter.
-
Revenue growth (excluding the acquisition of Apex Systems) was 28
percent over the second quarter of 2011.
-
Adjusted EBITDA (a non-GAAP measurement defined below) was $32.3
million, up 118 percent year-over-year.
-
Adjusted EBITDA margin (Adjusted EBITDA as a percent of revenues) for
the quarter was 11.4 percent compared with 10.3 percent in the second
quarter of 2011.
-
Net Income was $8.5 million, or $0.19 per diluted share and $13.0
million or $0.28 per diluted share excluding acquisition related costs
(net of income tax).
Commenting on the results for the second quarter, Peter Dameris,
President and Chief Executive Officer of On Assignment, Inc., said, “I’m
very pleased with our results for the second quarter of 2012. Our
revenue almost doubled year-over-year and net income before acquisition
related costs, as well as our Adjusted EBITDA more than doubled. Apex
accounted for $99 million of our second quarter revenues and our other
business grew 28 percent year-over-year. We are very pleased that our
efforts during the quarter continue to demonstrate our operating
discipline in that we were able to complete an acquisition that roughly
doubled the size of the Company while at the same time achieving above
market growth in our other businesses.”
“Our second quarter results reflect our expected income contribution
from the Apex acquisition.” Dameris continued, “In addition, these
results, which included expansion of our operating margins, were not
impacted by any synergy savings from the acquisition of Apex.”
Dameris concluded, “We will continue to maintain our operational
discipline, as we have demonstrated in the past, by growing our market
share without sacrificing our margins. The inclusion of Apex, together
with continued growth of our other businesses, will significantly
increase our free cash flow generation allowing us to focus on reducing
our outstanding debt. During the second quarter, we repaid $23.4 million
of our debt and reduced total leverage from 3.79 times trailing twelve
months Adjusted EBITDA to under 3.4 times.”
Jim Brill, Senior Vice President and Chief Financial Officer of On
Assignment, Inc., stated, “Consolidated gross margin was 31.4% in the
second quarter of 2012. Oxford’s gross margin was 35.9%, Apex System’s
gross margin was 27.3%, Life Sciences’ gross margin was 34.1%,
Healthcare’s gross margin was 28.8% and Physician Staffing’s gross
margin was 30.8%.”
Second Quarter 2012 Results
For the second quarter of 2012, consolidated revenues were $283.2
million, up 97.1 percent year-over-year and up 69.5 percent on a
sequential basis. Apex, which was acquired on May 15, 2012, accounted
for $99.0 in revenues for the quarter. Net income was $8.5 million, or
$0.19 per diluted share. Excluding acquisition related expenses of $6.6
million ($3.8 million net of income tax) and the write off of deferred
loan costs and non-recurring financing costs of $1.2 million together
totaling $4.5 million after income tax, net income was $13.0 million, or
$0.28 per diluted share, compared with $6.0 million, or $0.16 per
diluted share in the second quarter of 2011.
Oxford, the legacy IT and Engineering segment revenues were up 35
percent, year-over-year. The Life Sciences segment revenues were up 2%
year-over-year, the Healthcare segment which includes Nurse Travel and
Allied Healthcare lines of business, grew 40% from the second quarter of
2011. Nurse Travel revenues were $16.8 million and included $5.3 million
of revenue related to supporting customers that experienced labor
disruption as compared to $0.9 million in labor disruption revenue in
the same period in the prior year. Allied Healthcare revenues were up 26
percent year-over-year and Physician segment revenues, which were
positively affected by the acquisition of Healthcare Partners in 2011,
was up 47% from the second quarter of 2011.
SG&A was $69.3 million which included $6.6 million of acquisition
related expenses, $1.6 million of depreciation, $2.2 million of
amortization $2.3 million in equity based compensation and $0.5 million
of income related to the adjustment of an acquisition related earn-out.
Capital expenditures were $5.3 million, interest expense was $4.9
million which included the write-off of $1.2 million of deferred loan
costs and non-recurring financing fees.
Third Quarter 2012 Financial Estimates
Based on revenue in the first three weeks of the second quarter, On
Assignment is providing financial estimates for the quarter ending
September 30, 2012 which do not include any acquisition related costs.
Those estimates are as follows:
-
Revenues of $382 million to $388 million
-
Gross Margin of 30.3% to 30.6%
-
SG&A of $84 million which includes $1.9 million in depreciation,
amortization of $3.8 million and $2.8 million in equity-based
compensation expense
-
Adjusted EBITDA of $40.3 million to $43.2 million
-
Net income of $14.8 million to $16.5 million
-
Earnings per diluted share of $0.28 to $0.31
-
Diluted shares outstanding of 53 million
The estimates assume one less billable day in the third quarter than the
second quarter and year-over-year revenue growth ranges in the high 20
percent for Oxford, a slight contraction for Life Sciences, low single
digits for Healthcare (due to the labor disruption revenue in Nurse
Travel in the 3rd quarter of 2011) and the low teens for
Physician Staffing and Apex. The estimates above assume no deterioration
in the staffing markets On Assignment serves.
On Assignment will hold its quarterly conference call to discuss its
second quarter 2012 financial results this afternoon, Thursday, July 26,
2012 at 1:30 p.m. Pacific Time. Interested parties are invited to listen
to the conference call by dialing (877) 837-4158 or (281) 913-8521 ten
minutes before the call. The conference ID number is 99068611. A replay
of the conference call can be accessed from approximately 5:30 p.m.
Pacific Time Thursday, July 26, 2012 through Thursday, August 9, 2012 by
dialing (855) 859-2056 or (404) 537-3406 with the conference ID number
99068611.
This call is being webcast by Thomson/CCBN and can be accessed via On
Assignment’s web site at www.onassignment.com.
Individual investors can also listen at Thomson/CCBN's site at www.fulldisclosure.com
or by visiting any of the investor sites in Thomson/CCBN's Individual
Investor Network.
About On Assignment
On Assignment, Inc. (NASDAQ: ASGN), is a leading global provider of
highly skilled, hard-to-find professionals in the growing life sciences,
healthcare, and technology sectors, where quality people are the key to
success. The Company goes beyond matching résumés with job descriptions
to match people they know into positions they understand for temporary,
contract-to-hire, and direct hire assignments. Clients recognize On
Assignment for their quality candidates, quick response, and successful
assignments. Professionals think of On Assignment as career-building
partners with the depth and breadth of experience to help them reach
their goals.
On Assignment was founded in 1985 and went public in 1992. The corporate
headquarters are located in Calabasas, California, with a network of
approximately 129 branch offices throughout the United States, Canada,
United Kingdom, Netherlands, Ireland and Belgium. Additionally,
physician placements are made in Australia and New Zealand. To learn
more, visit http://www.onassignment.com.
Reasons for Presentation of Non-GAAP Financial Measures
Statements made in this release and the Supplemental Financial
Information accompanying this release include non-GAAP financial
measures. Such information is provided as additional information, not as
an alternative to our consolidated financial statements presented in
accordance with GAAP, and is intended to enhance an overall
understanding of our current financial performance. The Supplemental
Financial Information sets forth financial measures reviewed by our
management to evaluate our operating performance. Such measures also are
used to determine a portion of the compensation for some of our
executives and employees. We believe the non-GAAP financial measures
provide useful information to management, investors and prospective
investors by excluding certain charges and other amounts that we believe
are not indicative of our core operating results. These non-GAAP
measures are included to provide management, our investors and
prospective investors with an alternative method for assessing our
operating results in a manner that is focused on the performance of our
ongoing operations and to provide a more consistent basis for comparison
between quarters. One of the non-GAAP financial measures presented is
EBITDA (earnings before interest, taxes, depreciation, and amortization
of identifiable intangible assets), other terms include Adjusted EBITDA
(EBITDA plus equity-based compensation expense, impairment charges and
acquisition related costs) and Net Income Before Acquisition Related
Costs (Net Income plus acquisition related expenses, deferred financing
fees written –off and non-recurring financing fees, net of tax). These
terms might not be calculated in the same manner as, and thus might not
be comparable to, similarly titled measures reported by other companies.
The financial statement tables that accompany this press release include
reconciliation of each non-GAAP financial measure to the most directly
comparable GAAP financial measure.
Safe Harbor
Certain statements made in this news release are “forward-looking
statements” within the meaning of Section 21E of the Securities Exchange
Act of 1934, as amended, and involve a high degree of risk and
uncertainty. Forward-looking statements include statements regarding the
Company’s anticipated financial and operating performance in 2012. All
statements in this release, other than those setting forth strictly
historical information, are forward-looking statements. Forward-looking
statements are not guarantees of future performance, and actual results
might differ materially. In particular, the Company makes no assurances
that the estimates of revenues, gross margin, SG&A, Adjusted EBITDA, net
income, earnings per share or earnings per diluted share set forth above
will be achieved. Factors that could cause or contribute to such
differences include actual demand for our services, our ability to
attract, train and retain qualified staffing consultants, our ability to
remain competitive in obtaining and retaining temporary staffing
clients, the availability of qualified temporary nurses and other
qualified temporary professionals, management of our growth, continued
performance of our enterprise-wide information systems, and other risks
detailed from time to time in our reports filed with the Securities and
Exchange Commission, including our Annual Report on Form 10-K for the
year ended December 31, 2011, as filed with the SEC on March 14, 2012
and our Form 10Q for the period ended March 31, 2012, as filed with the
SEC on May 9, 2012. We specifically disclaim any intention or duty to
update any forward-looking statements contained in this news release.
SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
Six Months Ended
June 30,2012
June 30,2011
March 31,2012
June 30,2012
June 30,2011
Revenues
$
283,186
$
143,683
$
167,078
$
450,264
$
273,121
Cost of services
194,232
94,889
112,030
306,262
181,173
Gross profit
88,954
48,794
55,048
144,002
91,948
Selling, general and
administrative expenses
69,300
37,999
45,101
114,401
74,754
Operating income
19,654
10,795
9,947
29,601
17,194
Interest expense
(4,906
)
(784
)
(702
)
(5,608
)
(1,514
)
Interest income
5
4
1
6
21
Income before income taxes
14,753
10,015
9,246
23,999
15,701
Income tax provision
6,238
4,150
3,863
10,101
6,672
Net income
$
8,515
$
5,865
$
5,383
$
13,898
$
9,029
Earnings per share:
Basic
$
0.19
$
0.16
$
0.14
$
0.34
$
0.25
Diluted
$
0.19
$
0.16
$
0.14
$
0.33
$
0.24
Number of shares and share equivalents used to calculate earnings
per share:
Basic
44,852
36,971
37,269
41,060
36,798
Diluted
45,879
37,718
38,154
42,067
37,623
SUPPLEMENTAL SEGMENT FINANCIAL INFORMATION
(In thousands)
(Unaudited)
Three Months Ended
Six Months Ended
June 30,2012
June 30,2011
March 31,2012
June 30,2012
June 30,2011
Revenues:
Apex
$
99,004
$ ―
$ ―
$
99,004
$ ―
Oxford
88,107
65,319
78,759
166,866
125,438
Life Sciences
40,509
39,626
41,351
81,860
72,583
Healthcare
30,527
21,736
22,879
53,406
41,580
Physician
25,039
17,002
24,089
49,128
33,520
Consolidated revenues
$
283,186
$
143,683
$
167,078
$
450,264
$
273,121
Gross profit:
Apex
$
26,983
$ ―
$ ―
$
26,983
$ ―
Oxford
31,646
23,412
27,370
59,016
44,370
Life Sciences
13,808
13,592
13,839
27,647
24,862
Healthcare
8,799
6,157
6,340
15,139
11,784
Physician
7,718
5,633
7,499
15,217
10,932
Consolidated gross profit
$
88,954
$
48,794
$
55,048
$
144,002
$
91,948
SELECTED CASH FLOW INFORMATION
(In thousands)
(Unaudited)
Three Months Ended
Six Months Ended
June 30,2012
June 30,2011
March 31,2012
June 30,2012
June 30,2011
Cash (used in) provided by operations
$
(22,889
)
$
7,167
$
6,973
$
(15,916
)
$
12,945
Capital expenditures
5,255
2,022
2,119
7,374
4,672
SELECTED CONSOLIDATED BALANCE SHEET DATA
(In thousands)
(Unaudited)
As of
June 30, 2012
June 30, 2011
March 31, 2012
Cash and cash equivalents
$
18,423
$
19,183
$
17,685
Accounts receivable, net
238,535
80,831
102,026
Goodwill and intangible assets, net
774,942
246,766
260,626
Total assets
1,094,748
383,673
419,989
Current portion of long-term debt
13,650
5,000
5,000
Total current liabilities
125,823
60,246
62,541
Long-term debt
452,938
72,250
75,500
Other long-term liabilities
25,401
18,249
25,932
Stockholders’ equity
490,586
232,928
256,016
RECONCILIATION OF GAAP NET INCOME AND EARNINGS PER SHARE TO
NON-GAAP
ADJUSTED EBITDA AND ADJUSTED EBITDA PER DILUTED SHARE
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
June 30, 2012 (1)
June 30, 2011
March 31, 2012 (1)
Net income
$
8,515
$
0.19
$
5,865
$
0.16
$
5,383
$
0.14
Interest expense, net
4,901
0.11
780
0.02
701
0.02
Income tax provision
6,238
0.14
4,150
0.11
3,863
0.10
Depreciation
1,580
0.03
1,686
0.04
1,429
0.04
Amortization of intangibles
2,205
0.05
554
0.02
634
0.02
EBITDA
23,439
0.51
13,035
0.35
12,010
0.31
Equity-based compensation
2,308
0.05
1,621
0.04
1,191
0.03
Acquisition costs expensed
6,562
0.14
175
―
2,492
0.07
Adjusted EBITDA
$
32,309
$
0.70
$
14,831
$
0.39
$
15,693
$
0.41
Weighted Average Common and Common Equivalent Shares Outstanding
45,879
37,718
38,154
(1) Column does not foot due to rounding
Six Months Ended
June 30, 2012
June 30, 2011
Net income
$
13,898
$
0.33
$
9,029
$
0.24
Interest expense, net
5,602
0.13
1,493
0.04
Income tax provision
10,101
0.24
6,672
0.18
Depreciation
3,009
0.07
3,234
0.08
Amortization of intangibles
2,839
0.07
970
0.03
EBITDA
35,449
0.84
21,398
0.57
Equity-based compensation
3,499
0.08
3,246
0.08
Acquisition related costs
9,054
0.22
727
0.02
Adjusted EBITDA
$
48,002
$
1.14
$
25,371
$
0.67
Weighted Average Common and Common Equivalent Shares Outstanding
42,067
37,623
RECONCILIATION OF GAAP NET INCOME AND EARNINGS PER SHARE TO NET
INCOME
BEFORE ACQUISITION RELATED COSTS AND EARNINGS PER SHARE BEFORE
ACQUISITION RELATED COSTS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
June 30, 2012 (1)
June 30, 2011
March 31, 2012
Net income
$
8,515
$
0.19
$
5,865
$
0.16
$
5,383
$
0.14
Non-recurring charges related to refinancing, net of income taxes
701
0.02
―
―
―
―
Acquisition expenses, net of income taxes
3,788
0.08
102
―
1,451
0.04
Net income before acquisition related costs
$
13,004
$
0.28
$
5,967
$
0.16
$
6,834
$
0.18
Weighted Average Common and Common Equivalent Shares Outstanding
45,879
37,718
38,154
Six Months Ended
June 30, 2012
June 30, 2011
Net income
$
13,898
$
0.33
$
9,029
$
0.24
Non-recurring charges related to refinancing, net of income taxes
701
0.02
―
―
Acquisition expenses, net of income taxes
5,239
0.12
418
0.01
Net income before acquisition related costs
$
19,838
$
0.47
$
9,447
$
0.25
Weighted Average Common and Common Equivalent Shares Outstanding
42,067
37,623
(1) Column does not foot due to rounding
RECONCILIATION OF ESTIMATED GAAP NET INCOME TO ESTIMATED NON-GAAP
EBITDA AND ADJUSTED EBITDA
(In thousands)
(Unaudited)
Estimated Range of Results
Quarter Ending
September 30, 2012
Net income
$
14,800
$
16,500
Interest expense, net
6,300
6,300
Income tax provision
10,700
11,900
Depreciation and amortization
5,700
5,700
EBITDA
37,500
40,400
Equity-based compensation
2,800
2,800
Acquisition expenses
0
0
Adjusted EBITDA
$
40,300
$
43,200
SUPPLEMENTAL FINANCIAL INFORMATION – REVENUES AND GROSS MARGINS
(Dollars in thousands)
(Unaudited)
Healthcare
Apex
Oxford
Life Sciences
Allied Healthcare
Nurse Travel
Total Healthcare
Physician
Consolidated
Revenues:
Q2 2012
$
99,004
$
88,107
$
40,509
$
13,704
$
16,823
$
30,527
$
25,039
$
283,186
Q1 2012
―
$
78,759
$
41,351
$
12,561
$
10,318
$
22,879
$
24,089
$
167,078
% Sequential change
N/A
11.9
%
(2.0)%
9.1
%
63.0
%
33.4
%
3.9
%
69.5
%
Q2 2011
―
$
65,319
$
39,626
$
10,915
$
10,821
$
21,736
$
17,002
$
143,683
% Year-over-year change
N/A
34.9
%
2.2
%
25.6
%
55.5
%
40.4
%
47.3
%
97.1
%
Gross margins:
Q2 2012
27.3
%
35.9
%
34.1
%
32.0
%
26.3
%
28.8
%
30.8
%
31.4
%
Q1 2012
―
34.8
%
33.5
%
32.2
%
22.3
%
27.7
%
31.1
%
32.9
%
Q2 2011
―
35.8
%
34.3
%
32.5
%
24.2
%
28.3
%
33.1
%
34.0
%
Average number of staffing consultants:
Q2 2012
633
501
160
81
42
123
98
1,515
Q1 2012
―
488
169
78
41
119
95
871
Q2 2011
―
419
164
83
36
119
74
776
Healthcare
Apex
Oxford
Life Sciences
Allied Healthcare
Nurse Travel
Total Healthcare
Physician
Consolidated
Average number of customers:
Q2 2012
585
648
914
508
139
647
186
2,980
Q1 2012
―
625
918
478
120
598
175
2,316
Q2 2011
―
560
877
480
120
600
145
2,182
Top 10 customers as a percentage of revenue:
Q2 2012
33.3
%
(1)
16.4
%
23.3
%
24.6
%
23.3
%
17.3
%
19.8
%
17.5%
(1)
Q1 2012
―
15.6
%
22.6
%
25.6
%
36.0
%
21.2
%
22.0
%
9.2%
Q2 2011
―
13.5
%
21.2
%
21.3
%
34.6
%
20.8
%
22.9
%
7.8%
(1) Top 10 customers as a percentage of revenue for Apex and
Consolidated includes pro forma Apex Systems data for the quarter
ended June 30, 2012.
Average bill rate:
Q2 2012
$
59.1
$
119.5
$
35.2
$
37.4
$
68.5
$
47.7
$
175.1
$
65.0
Q1 2012
―
$
117.6
$
34.9
$
36.7
$
69.3
$
47.2
$
175.6
$
67.9
Q2 2011
―
$
113.6
$
35.6
$
37.0
$
67.8
$
47.6
$
182.9
$
64.5
Gross profit per staffing consultants:
Q2 2012
$
43,000
(2)
$
63,000
$
86,000
$
54,000
$
105,000
$
72,000
$
79,000
$
59,000
(2)
Q1 2012
―
$
56,000
$
82,000
$
52,000
$
56,000
$
53,000
$
79,000
$
63,000
Q2 2011
―
$
56,000
$
83,000
$
43,000
$
73,000
$
52,000
$
76,000
$
63,000
(2) Actual, reported Apex and Consolidated metrics reflect six
weeks of Apex data. A full quarter would have been $85,000 for
Apex and $77,000 for Consolidated.
SUPPLEMENTAL FINANCIAL INFORMATION – KEY METRICS
(Unaudited)
Three Months Ended (3)
June 30,
2012
March 31,
2012
Percentage of revenues:
Top ten clients
17.5
%
9.2
%
Direct hire/conversion
2.1
%
3.1
%
Bill rate:
% Sequential change
(4.3
)%
1.9
%
% Year-over-year change
0.7
%
4.9
%
Bill/Pay spread:
% Sequential change
(10.5
)%
2.3
%
% Year-over-year change
(6.9
)%
4.9
%
Average headcount:
Contract professionals (CP)
11,462
4,941
Staffing consultants (SC)
1,515
871
Productivity:
Gross profit per SC
$
59,000
(4)
$
63,000
(3) Information for the three months ended June 30, 2012 includes six
weeks of Apex activity, whereas information for the three months ended
March 31, 2012 does not include any Apex activity.
(4) A full quarter of contribution from Apex would have resulted in
$77,000 of gross profit per SC.
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