Revenues, Adjusted EBITDA & Adjusted EPS
above Previously-announced Estimates
Completes $100 million Stock Repurchase
Program & Board Approves new $100 million Program
Closes Sale of Physician Segment
On Assignment, Inc. (NYSE: ASGN), a leading global provider of
diversified professional staffing solutions, today reported results
for the three months and year ended December 31, 2014.
Fourth Quarter Highlights
- Revenues were $475.8 million, up 12.5
percent year-over-year and 8.3 percent on a pro forma basis (pro
forma assumes the acquisitions of Whitaker Medical, LLC and
CyberCoders Holdings, Inc. in December 2013 had occurred at the
beginning of 2013).
- Adjusted income from continuing
operations (a non-GAAP measure defined below) was $31.4 million
($0.60 per diluted share).
- Income from continuing operations was
$21.8 million ($0.41 per diluted share). Income from continuing
operations included $1.8 million ($1.1 million net of tax, or $0.02
per diluted share) in acquisition, integration and strategic
planning expenses, which were not included in our previously
announced estimates.
- Adjusted EBITDA (a non-GAAP measure
defined below) was $54.7 million.
- Repurchased 1.0 million shares of
common stock at an average price of $30.50 per share during the
quarter and for the full year repurchased 3.4 million shares at an
average price of $29.78.
- On February 1, 2015, completed the sale
of the Physician Segment for $123.0 million (net proceeds of
approximately $102.0 to $105.0 million after income taxes and
transaction expenses).
- Leverage ratio (total indebtedness to
trailing 12 months Adjusted EBITDA) was 2.06 to 1 at December 31,
2014, unchanged from September 30, 2014 despite the stock
repurchases during the quarter.
- Closed European retained search unit in
December 2014. Consolidated results for all periods presented have
been restated to exclude operations of this unit from continuing
operations and report them in discontinued operations. Revenues and
EBITDA from this unit in 2014 were approximately $2.0 million and
negative $1.3 million, respectively.
Commenting on the results, Peter Dameris, President and Chief
Executive Officer of On Assignment, Inc., said, “We are pleased
with our solid operating performance for the quarter in which we
exceeded our financial estimates for revenues, Adjusted EBITDA and
Adjusted EPS. Operating performance of our operating units was in
line with or above expectations. Furthermore, we believe the
actions that we took in 2014 of divesting our remaining healthcare
assets, the repurchase of $100 million of our common stock,
completing the realignment of our operating units and our
accelerated hiring of additional sales consultants and recruiters
have positioned us to perform well, both operationally and
financially, in 2015 and beyond.”
Fourth Quarter 2014 Financial Results
Revenues for the quarter were $475.8 million, up 12.5 percent
year-over-year (8.3 percent on a pro forma basis (pro forma assumes
the acquisitions of CyberCoders and Whitaker Medical had occurred
at the beginning of 2013).
Our largest segment Apex, which accounts for approximately 64.7
percent of total revenues, grew 9.5 percent year-over-year. Our
Oxford Segment, which accounts for approximately 26.0 percent of
total revenues, grew 18.6 percent year-over-year and 6.7 percent on
a pro forma basis. Our Physician Segment, which accounted for 7.3
percent of total revenues, grew 29.6 percent and 9.6 percent on a
pro forma basis.
Gross profit was $153.5 million, up 18.9 percent year-over-year
(9.7 percent on a pro forma basis). This improvement was primarily
due to growth in revenues (which included the results of the
businesses acquired in December 2013) and expansion in gross
margin. Gross margin for the quarter was 32.3 percent, up from 30.5
percent in the fourth quarter of 2013. The year-over-year expansion
in gross margin was mainly attributable to a higher mix of
permanent placement revenues (4.4 percent of revenues for the
quarter compared with 1.9 percent in the fourth quarter of 2013)
and higher contract margins. The higher mix of permanent placement
revenues in the quarter was attributable to the inclusion of
CyberCoders, which accounted for $15.0 million of the $21.1 million
in permanent placement revenues.
Selling, general and administrative (“SG&A”) expenses were
$108.6 million (22.8 percent of revenues), up from $89.4 million
(21.1 percent of revenues) in the fourth quarter of 2013 ($97.2
million, or 22.1 percent of revenues on a pro forma basis).
SG&A expenses for the quarter included acquisition, integration
and strategic planning expenses of $1.8 million. The increase in
our reported SG&A as a percent of revenues was due to the
inclusion of CyberCoders (which has higher gross margin and higher
SG&A as a percent of revenues than our other business units),
and higher branch expenses related to the acceleration in hiring of
additional sales consultants and recruiters.
Amortization of intangible assets was $6.1 million, compared
with $5.9 million in the fourth quarter of 2013. The increase
related to amortization from the businesses acquired in December
2013.
Interest expense for the quarter was $3.2 million compared with
$3.4 million in the fourth quarter of 2013. Interest expense for
the quarter was comprised of interest on the credit facility of
$2.9 million and amortization of capitalized loan costs of $0.3
million. The leverage ratio (total indebtedness to trailing 12
months Adjusted EBITDA) at December 31, 2014 was 2.06 to 1,
unchanged from September 30, 2014.
The effective income tax rate for the quarter was 39.0 percent.
The effective tax rate for the full year was 40.8 percent, down
from 41.5 percent for the full year 2013. The improvement in the
effective tax rate relates to higher growth of pre-tax income
relative to growth of permanent differences between financial and
tax income.
Adjusted EBITDA (earnings before interest, taxes, depreciation,
and amortization of intangible assets plus equity-based
compensation expense, impairment charges, acquisition, integration
and strategic planning expenses), was $54.7 million, up from $48.5
million for the fourth quarter of 2013.
Adjusted income from continuing operations was $31.4 million
($0.60 per diluted share). Income from continuing operations (which
includes acquisition, integration and strategic planning expenses
of $1.8 million, or $1.1 million net of tax) was $21.8 million
($0.41 per diluted share) compared with $17.5 million ($0.32 per
diluted share) for the fourth quarter of 2013.
Net income was $20.5 million ($0.39 per diluted share) compared
with $32.4 million ($0.59 per diluted share) in the fourth quarter
of 2013. Net income for the fourth quarter of 2013 included a gain
of $16.4 million ($0.30 per diluted share) related to the sale of
the Allied Healthcare unit.
Sale of Physician Segment
Effective February 1, 2015, the Company completed the sale of
its Physician Segment for $123 million in cash. Net proceeds from
the sale (after income taxes and transaction expenses) are
estimated to be approximately $102.0 to $105.0 million. Revenues
from the Physician Segment were approximately $135.2 million and
EBITDA was approximately $12.9 million for 2014.
In this release and the Company’s Annual Report on Form 10-K for
the year ending December 31, 2014, which is expected to be filed
with the Securities and Exchange Commission (“SEC”) on or before
March 2, 2015, this sale is treated as a subsequent event and
operating results of the segment are included in the Company’s
consolidated results of operations from continuing operations. In
subsequent Company releases and filings with the SEC, operating
results of this segment will be reported as discontinued operations
on a retrospective basis for all periods presented. Included in
this release is quarterly historical financial information for 2013
and 2014 that has been restated to report operating results of the
Physician Segment as discontinued operations.
Share Repurchase Programs
During the quarter, the Company repurchased 1.0 million share of
its common stock at an average price per share of $30.50, thus
completing the $100 million repurchase program approved by its
Board of Directors in July 2014. During 2014, the Company
repurchased 3.4 million shares of its common stock at an average
price of $29.78.
On January 16, 2015, the Company’s Board of Directors authorized
a new $100 million share repurchase program effective for two
years. Under this new program, the Company may begin share
repurchases on February 23, 2015.
Financial Estimates for Q1 2015
On Assignment is providing financial estimates for continuing
operations for the first quarter of 2015. These estimates do not
include acquisition, integration, or strategic planning expenses
and assume no deterioration in the staffing markets that On
Assignment serves.
- Revenues of $432.0 million to $439.0
million
- Gross margin of 31.5 percent to 31.9
percent
- SG&A expenses (excludes
amortization of intangible assets) of $105.5 to $107.0 million
(includes $3.5 million in depreciation and $3.9 million in
equity-based compensation expense)
- Amortization of intangible assets of
$4.9 million
- Adjusted EBITDA of $38.0 million to
$40.5 million
- Effective tax rate of 40.0 percent
- Adjusted income from continuing
operations of $21.5 million to $23.0 million
- Adjusted income from continuing
operations per diluted share of $0.41 to $0.44
- Income from continuing operations of
$13.8 million to $15.3 million
- Income from continuing operations per
diluted share of $0.26 to $0.29
- Diluted shares outstanding of 52.2
million
The revenues estimates include approximately $2.5 to $3.5
million for the adverse effect of the inclement weather in the
first quarter. The above estimates also include the effects of the
payroll tax reset, which occurs at the beginning of every year.
This reset results in an estimated sequential increase in cost of
sales of $4.0 to $4.5 million and a sequential increase in SG&A
expenses of approximately $3.0 million.
Conference Call
On Assignment will hold a conference call today at 4:30 p.m. EST
to review its fourth quarter financial results. The dial-in number
is 800-230-1059 (+1-612-234-9959 for callers outside the United
States) and the conference ID number is 351312. Participants should
dial in ten minutes before the call. A replay of the conference
call will be available beginning today at 6:30 p.m. EST and ending
at midnight EST on March 4, 2015. The access number for the replay
is 800-475-6701 (+1-320-365-3844 for callers outside the United
States) and the conference ID number 351312.
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. (NYSE: ASGN), is a leading global provider
of in-demand, skilled professionals in the growing technology and
life sciences 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 our quality
candidates, quick response, and successful assignments.
Professionals think of On Assignment as a career-building partner
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
Company, which is headquartered in Calabasas, California, operates
through a network of branch offices throughout the United States,
Canada, United Kingdom, Netherlands, Ireland and Belgium. To learn
more, visit http://www.onassignment.com.
Reasons for Presentation of Non-GAAP Financial
Measures
Statements in this release and the accompanying Supplemental
Financial Information 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 intangible assets), other terms include
Adjusted EBITDA (EBITDA plus equity-based compensation expense,
impairment charges, write-off of loan costs, and acquisition,
integration and strategic planning expenses) and Non-GAAP Income
from continuing operations (Income from continuing operations, plus
write-off of loan costs, and acquisition, integration and strategic
planning expenses, net of tax) and Adjusted income from continuing
operations and related per share amounts. 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 2014. 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,
income from continuing operations, adjusted income from continuing
operations, 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 professionals, management of
our growth, continued performance of our enterprise-wide
information systems, our ability to manage our potential or actual
litigation matters, the successful integration of our recently
acquired subsidiaries, the successful implementation of our
five-year strategic plan, 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, 2013, as filed with the SEC on March 3, 2014 and
our Quarterly Reports on Form 10-Q for the periods ended March 31,
2014, June 30, 2014 and September 30, 2014 as filed with the SEC on
May 9, 2014, August 11, 2014 and November 7, 2014, respectively. We
specifically disclaim any intention or duty to update any
forward-looking statements contained in this news release.
SUMMARY CONSOLIDATED STATEMENTS OF
OPERATIONS (unaudited)
(In thousands, except per share
amounts)
Three Months Ended Year
Ended December 31, September 30,
December 31,
2014 2013 (1) 2014 (1) 2014
2013 (1) Revenues $ 475,808 $
422,906 $ 477,391 $ 1,859,922 $ 1,628,927 Cost of services 322,274
293,812 322,209 1,262,010 1,143,438
Gross profit 153,534 129,094 155,182 597,912 485,489
Selling, general and administrative expenses 108,567 89,433 108,030
427,241 339,423 Amortization of intangible assets 6,055
5,919 6,018 24,401 21,686 Operating
income 38,912 33,742 41,134 146,270 124,380 Interest expense, net
(3,198 ) (3,429 ) (3,101 ) (12,730 ) (15,863 ) Write-off of loan
costs — — — — (14,958 ) Income before
income taxes 35,714 30,313 38,033 133,540 93,559 Provision for
income taxes 13,924 12,826 15,795 54,527
38,848 Income from continuing operations 21,790
17,487 22,238 79,013 54,711 Gain on sale of discontinued
operations, net of tax — 16,428 — — 30,840 Income (loss) from
discontinued operations, net of tax (1,317 ) (1,505 ) (233 ) (1,829
) (1,039 ) Net income $ 20,473 $ 32,410 $ 22,005
$ 77,184 $ 84,512 Basic earnings per
common share: Income from continuing operations $ 0.42 $ 0.32 $
0.42 $ 1.48 $ 1.02 Income from discontinued operations (0.03 ) 0.28
(0.01 ) (0.04 ) 0.56 $ 0.39 $ 0.60 $
0.41 $ 1.44 $ 1.58 Diluted earnings per
common share: Income from continuing operations $ 0.41 $ 0.32 $
0.41 $ 1.46 $ 1.00 Income from discontinued operations (0.02 ) 0.27
— (0.04 ) 0.55 $ 0.39 $ 0.59 $
0.41 $ 1.42 $ 1.55 Number of shares and
share equivalents used to calculate earnings per share: Basic
51,900 53,868 53,374 53,437 53,481
Diluted 52,679 54,880 54,129 54,294
54,555
______
(1) Amounts have been restated to give retroactive effect to the
closure of the European retained search unit in December 31, 2014.
The results of that unit are included in discontinued operations
for all periods presented. Accordingly, the results shown above
differ from the results in our previous filings with the Securities
and Exchange Commission.
SUPPLEMENTAL SEGMENT FINANCIAL
INFORMATION (unaudited)
(In thousands)
Three Months Ended
Year Ended December 31,
September 30, December 31, 2014 2013 (1) 2014
(1) 2014 2013 (1) Revenues:
Apex $ 307,724 $ 281,032 $ 306,027 $ 1,190,052 $ 1,059,993
Oxford 123,872 104,416 125,944 493,320 423,670 Physician 34,785
26,836 34,948 135,181 105,827 Life Sciences Europe 9,427
10,622 10,472 41,369 39,437 $ 475,808 $
422,906 $ 477,391 $ 1,859,922 $ 1,628,927
Gross profit: Apex $ 87,816 $ 78,864 $ 87,323 $ 335,322 $
294,611 Oxford 51,703 38,586 54,267 208,607 147,348 Physician
10,997 8,109 10,344 40,477 30,614 Life Sciences Europe 3,018
3,535 3,248 13,506 12,916 $ 153,534 $
129,094 $ 155,182 $ 597,912 $ 485,489 ____
(1) Amounts have been restated to give retroactive effect to the
closure of the European retained search unit in December 31, 2014.
The results of that unit are included in discontinued operations
for all periods presented. Accordingly, the results shown above
differ from the results in our previous filings with the Securities
and Exchange Commission.
SELECTED CASH FLOW INFORMATION
(Unaudited)
(In thousands)
Three Months Ended
Year Ended December 31, September 30, December 31,
2014 2013 2014 2014
2013 Cash provided by operations $ 28,064 $
36,576 $ 42,949 $ 96,022 $ 110,524 Capital expenditures $
5,469 $ 4,238 $ 4,622 $ 19,729 $ 16,531
SELECTED CONSOLIDATED BALANCE SHEET
DATA (Unaudited)
(In thousands)
December 31, September
30, 2014 2014 Cash and cash equivalents $ 31,714 $ 29,881
Accounts receivable, net 298,761 296,506 Goodwill and intangible
assets, net 833,266 840,799 Total assets 1,274,174 1,263,673
Current portion of long-term debt 18,250 18,250 Total current
liabilities 165,566 170,659 Working capital 220,338 200,611
Long-term debt 396,875 385,438 Other long-term liabilities 77,325
64,561 Stockholders’ equity 634,408 643,015
RECONCILIATION OF GAAP INCOME FROM
CONTINUING OPERATIONS AND EARNINGS PER
DILUTED SHARE TO NON-GAAP ADJUSTED
EBITDA AND ADJUSTED EBITDA
PER DILUTED SHARE (Unaudited)
(In thousands, except per share
amounts)
Three Months Ended
December 31,
2014
2013 (1)
September 30, 2014 (1)
Net income $ 20,473 $ 0.39 $ 32,410
$ 0.59 $ 22,005 $
0.41 Income (loss) from discontinued operations, net of tax (1,317
) (0.02 ) 14,923 0.27 (233
)
— Income from continuing operations 21,790 0.41 17,487 0.32 22,238
0.41 Interest expense, net 3,198 0.06 3,429 0.06 3,101 0.06
Provision for income taxes 13,924 0.26 12,826 0.23 15,795 0.29
Depreciation 3,643 0.07 2,285 0.04 3,594 0.07 Amortization of
intangibles 6,055 0.12 5,919 0.11 6,018
0.11 EBITDA 48,610 0.92 41,946 0.76 50,746 0.94
Equity-based compensation 4,308 0.09 3,923 0.07 4,607 0.08
Acquisition, integration and strategic planning expenses 1,811
0.03 2,623 0.05 1,002
0.02 Adjusted EBITDA $ 54,729 $ 1.04 $ 48,492
$ 0.88 $ 56,355 $ 1.04 Weighted average
common and common equivalent shares outstanding (diluted) 52,679
54,880 54,129
Year Ended 2014 2013 (1) Net
income $ 77,184 $ 1.42 $ 84,512 $ 1.55 Income from discontinued
operations, net of tax (1,829 ) (0.04
)
29,801 0.55 Income from continuing operations 79,013
1.46 54,711 1.00 Interest expense, net 12,730 0.23 15,863 0.29
Write-off of loan costs — — 14,958 0.27 Provision for income taxes
54,527 1.00 38,848 0.71 Depreciation 13,344 0.25 7,961 0.15
Amortization of intangibles 24,401 0.45 21,686
0.40 EBITDA 184,015 3.39 154,027 2.82 Equity-based
compensation 16,200 0.29 14,078 0.26 Acquisition, integration and
strategic planning expenses 5,733 0.11 4,409
0.08 Adjusted EBITDA $ 205,948 $ 3.79
$ 172,514 $ 3.16 Weighted average
common and common equivalent shares outstanding (diluted) 54,294
54,555
______
(1) Amounts have been restated to give
retroactive effect to the closure of the European retained search
unit in December 31, 2014. The results of that unit are included in
discontinued operations for all periods presented. Accordingly, the
results shown above differ from the results in our previous filings
with the Securities and Exchange Commission.
RECONCILIATION OF GAAP INCOME AND
DILUTED EPS TO NON-GAAP INCOME
AND DILUTED EPS (Unaudited)
(In thousands, except per share
amounts)
Three Months Ended December 31,
September 30, 2014 2013 (1) 2014 (1) Net income $
20,473 $ 0.39 $ 32,410 $ 0.59 $
22,005 $ 0.41 Income (loss) from discontinued
operations, net of tax (1,317 ) (0.02 ) 14,923 0.27
(233
)
— Income from continuing operations 21,790 0.41 17,487 0.32 22,238
0.41 Acquisition, integration and strategic planning expenses, net
of tax 1,105 0.02 1,542 0.03 611
0.01 Non-GAAP income from continuing operations $ 22,895
$ 0.43 $ 19,029 $ 0.35 $ 22,849
$ 0.42 Weighted average common and common equivalent
shares outstanding (diluted) 52,679
54,880 54,129
Year Ended 2014 2013 (1) Net income $ 77,184 $
1.42 $ 84,512 $ 1.55 Income from discontinued operations, net of
tax (1,829 ) (0.04 ) 29,801 0.55 Income from continuing
operations 79,013 1.46 54,711 1.00 Write-off of loan costs related
to refinancing, net of income taxes — — 9,181
0.17
Acquisition, integration and strategic planning expenses, net of
tax 3,479 0.06 2,619 0.05 Non-GAAP income from
continuing operations $ 82,492 $ 1.52 $ 66,511
$ 1.22 Weighted average common and common equivalent shares
outstanding (diluted) 54,294
54,555
______
(1) Amounts have been restated to give retroactive effect to the
closure of the European retained search unit in December 31, 2014.
The results of that unit are included in discontinued operations
for all periods presented. Accordingly, the results shown above
differ from the results in our previous filings with the Securities
and Exchange Commission.
CALCULATION OF ADJUSTED EARNINGS PER
DILUTED SHARE (Unaudited)
(In thousands, except per share
amounts)
Three Months Ended Year
Ended December 31, 2014 2013 2014
2013
Non-GAAP Income from continuing operations
(1)
$ 22,895 $ 19,029 $ 82,492 $ 66,511 Adjustments:
Amortization of intangible assets (2)
6,055 5,919 24,401 21,686
Cash tax savings on indefinite-lived
intangible assets (3)
4,023 4,015 16,098 15,565
Excess of capital expenditures over
depreciation, net of tax (4)
(1,025 ) (1,050 ) (4,100 ) (4,200 )
Income taxes on amortization for financial
reporting purposes not deductible for income tax purposes (5)
(532 ) (347 ) (2,125 ) (347 ) Adjusted income from continuing
operations $ 31,416 $ 27,566 $ 116,766 $
99,215 Adjusted earnings per diluted share from
continuing operations $ 0.60 $ 0.50 $ 2.15 $
1.82 Weighted average common and common equivalent
shares outstanding (diluted) 52,679 54,880 54,294
54,555
______
(1) Non-GAAP income from continuing operations as calculated on
preceding page. Non-GAAP income from continuing operations excludes
acquisition, integration and strategic planning expenses.
(2) Amortization of intangible assets of acquired
businesses.
(3) Income tax benefit (using 39 percent marginal tax rate) from
amortization for income tax purposes of certain indefinite-lived
intangible assets (goodwill and trademarks), on acquisitions in
which the Company received a step-up tax basis. For income tax
purposes, these assets are amortized on a straight-line basis over
15 years. For financial reporting purposes, these assets are not
amortized and a deferred tax provision is recorded that fully
offsets the cash tax benefit in the determination of net
income.
(4) Excess capital expenditures over depreciation is equal to
one-quarter of the estimated full year difference between capital
expenditures less depreciation, tax affected using an estimated
marginal combined federal and state tax rate of 39 percent.
(5) Income taxes (assuming a 39 percent marginal rate) on the
portion of amortization of intangible assets, which are not
deductible for income tax purposes (mainly amortization associated
with the CyberCoders acquisition that the Company was not able to
step-up the tax basis in those acquired assets for tax
purposes).
SUPPLEMENTAL FINANCIAL AND OPERATING
DATA (Unaudited)
(Dollars in thousands)
Apex Oxford Physician
Life SciencesEurope
Consolidated Revenues: Q4 2014 $ 307,724 $ 123,872 $
34,785 $ 9,427 $ 475,808 Q3 2014 $ 306,027 $ 125,944 $ 34,948 $
10,472 $ 477,391 % Sequential change 0.6 % (1.6 )% (0.5 )% (10.0 )%
(0.3 )% Q4 2013 $ 281,032 $ 104,416 $ 26,836 $ 10,622 $ 422,906 %
Year-over-year change 9.5 % 18.6 % 29.6 % (11.3 )% 12.5 %
Direct hire and conversion revenues: Q4 2014 4,146 15,782 959 226
21,113 Q3 2014 3,930 18,245 793 278 23,246 Q4 2013 3,221 3,892 746
193 8,052 Gross margins: Q4 2014 28.5 % 41.7 % 31.6 % 32.0 %
32.3 % Q3 2014 28.5 % 43.1 % 29.6 % 31.0 % 32.5 % Q4 2013 28.1 %
37.0 % 30.2 % 33.3 % 30.5 % Average number of staffing
consultants: Q4 2014 942 836 140 33 1,951 Q3 2014 875 813 142 32
1,862 Q4 2013 805 660 106 34 1,605 Average number of
customers: Q4 2014 1,276 897 269 153 2,595 Q3 2014 1,475 863 261
150 2,749 Q4 2013 1,381 892 215 156 2,644 Top 10 customers
as a percentage of revenue: Q4 2014 29.1 % 12.9 % 20.0 % 55.4 %
18.8 % Q3 2014 29.8 % 13.6 % 19.0 % 53.0 % 19.1 % Q4 2013 31.1 %
14.6 % 20.9 % 57.9 % 20.7 % Average bill rate: Q4 2014 $
54.59 $ 114.35 $ 176.75 $ 51.01 $ 65.67 Q3 2014 $ 54.65 $ 112.33 $
176.80 $ 54.06 $ 65.57 Q4 2013 $ 53.41 $ 113.75 $ 186.44 $ 51.91 $
64.11 Gross profit per staffing consultant: Q4 2014 $ 93,000
$ 62,000 $ 79,000 $ 91,000 $ 79,000 Q3 2014 $ 100,000 $ 67,000 $
73,000 $ 102,000 $ 83,000 Q4 2013 $ 98,000 $ 58,000 $ 77,000 $
104,000 $ 80,000
SUPPLEMENTAL FINANCIAL INFORMATION –
KEY METRICS (Unaudited)
Three Months Ended
December 31,2014
September 30,2014
Percentage of revenues: Top ten clients 18.8% 19.1% Direct
hire/conversion 4.4% 4.9% Bill rate: % Sequential change
0.2% 0.0% % Year-over-year change 2.4% 0.4% Bill/Pay spread:
% Sequential change (0.7%) (2.0%) % Year-over-year change 0.8% 0.2%
Average headcount: Contract professionals (CP) 12,859 12,961
Staffing consultants (SC) 1,951 1,862 Productivity: Gross
profit per SC $79,000 $83,000
Sale of Physician Segment
Effective February 1, 2015, the Company completed the sale of
its Physician segment. The following tables reflect the statements
of operations, with the results of the Physician segment included
in discontinued operations.
ON ASSIGNMENT, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE INCOME (Unaudited)
FOR EACH OF THE THREE-MONTH PERIODS IN
THE YEAR ENDED DECEMBER 31, 2014
AND THE YEAR ENDED DECEMBER 31,
2014
(In thousands, except per share
amounts)
Three Months Ended
Year Ended Mar. 31 Jun. 30
Sept. 30 Dec. 31
Dec. 31 Revenues
$
406,851
$
434,424
$
442,443
$
441,023
$
1,724,741
Cost of services 278,696 292,519
297,605 298,486 1,167,306 Gross
profit 128,155 141,905 144,838 142,537 557,435 Selling, general and
administrative expenses 96,109 99,614 100,608 101,192 397,523
Amortization of intangible assets 5,538 5,522
5,532 5,538 22,130
Operating income 26,508 36,769 38,698 35,807 137,782 Interest
expense (3,328 ) (3,103 ) (3,101 )
(3,198 ) (12,730 ) Income from continuing operations before
income taxes 23,180 33,666 35,597 32,609 125,052 Provision for
income taxes 9,575 14,025 14,874
13,083 51,557 Net income from
continuing operations 13,605 19,641 20,723 19,526 73,495 Income
from discontinued operations, net of tax 312
1,148 1,282 947 3,689
Net income
$
13,917
$
20,789
$
22,005
$
20,473
$
77,184
Basic earnings per common share: Income from
continuing operations $ 0.25 $ 0.36 $ 0.39 $ 0.38 $ 1.38 Income
from discontinued operations 0.01 0.02
0.02 0.01 0.06
Net income
$ 0.26 $ 0.38 $ 0.41 $ 0.39 $ 1.44
Diluted earnings per common share: Income from
continuing operations $ 0.25 $ 0.36 $ 0.38 $ 0.37 $ 1.35 Income
from discontinued operations — 0.02
0.03 0.02 0.07
Net income
$ 0.25 $ 0.38 $ 0.41 $ 0.39 $ 1.42
Number of shares and share equivalents used to
calculate earnings per share: Basic 54,104
54,372 53,374 51,900
53,437 Diluted 54,975 55,173
54,129 52,679 54,294
ON ASSIGNMENT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE INCOME (Unaudited)
FOR EACH OF THE THREE-MONTH PERIODS IN THE YEAR ENDED DECEMBER
31, 2013 AND THE YEAR ENDED DECEMBER 31, 2013 (In
thousands, except per share amounts)
Three Months Ended Year Ended Mar.
31 Jun. 30 Sept. 30 Dec.
31 Dec. 31 Revenues $ 351,852 $ 380,779 $
394,400 $ 396,070 $ 1,523,101 Cost of services 250,083
267,674 275,384 275,085
1,068,226 Gross profit 101,769 113,105 119,016
120,985 454,875 Selling, general and administrative expenses 76,141
78,034 79,652 83,518 317,345 Amortization of intangible assets
5,170 5,066 5,068
5,639 20,943 Operating income 20,458 30,005
34,296 31,828 116,587 Interest expense (3,808 ) (3,437 ) (3,257 )
(3,429 ) (13,931 ) Write-off of deferred loan costs —
(14,958 ) — — (14,958 )
Income from continuing operations before income taxes 16,650 11,610
31,039 28,399 87,698 Provision for income taxes 7,136
4,961 12,383 12,078
36,558 Net income from continuing operations 9,514
6,649 18,656 16,321 51,140 Gain on sale of discontinued operations,
net of tax 14,412 — — 16,428 30,840 Income from discontinued
operations, net of tax 687 690
1,494 (339 ) 2,532
Net income
$
24,613
$
7,339
$
20,150
$
32,410
$
84,512
Basic earnings per common share: Income from
continuing operations $ 0.18 $ 0.12 $ 0.35 $ 0.30 $ 0.96 Income
from discontinued operations 0.28 0.02
0.03 0.30 0.62
Net income
$ 0.46 $ 0.14 $ 0.38 $ 0.60 $ 1.58
Diluted earnings per common share: Income from
continuing operations $ 0.18 $ 0.12 $ 0.34 $ 0.30 $ 0.94 Income
from discontinued operations 0.28 0.02
0.03 0.29 0.61
Net income
$ 0.46 $ 0.14 $ 0.37 $ 0.59 $ 1.55
Number of shares and share equivalents used to
calculate earnings per share: Basic 53,046
53,378 53,620 53,868
53,481 Diluted 54,036 54,327
54,624 54,880 54,555
ON ASSIGNMENT, INC. AND
SUBSIDIARIES
PROJECTED ADJUSTMENTS TO GAAP NET
INCOME TO CALCULATED ADJUSTED NET INCOME (Unaudited)
(REVISED TO EXCLUDE PHYSICIAN
SEGMENT (4))
(In thousands)
Year Ending December 31, 2015 2016
2017 2018 2019 Add-backs:
Amortization of intangible assets (1)
$ 19,504 $ 16,470 $ 12,155 $ 9,731 $ 8,023
Cash tax savings on indefinite-lived
intangible assets for income tax purposes (Goodwill&
Trademarks) (2)
15,530 15,530 15,530 15,530 15,530 Deductions: Estimated excess of
capital expenditures over depreciation, net of tax (1,880 ) (1,474
) (945 ) (269 ) —
Income taxes on amortization for financial
reporting purposes not deductible for income tax purposes (3)
(2,022 ) (1,595 ) (1,229 ) (1,229 ) (1,144 ) Net Adjustment to GAAP
Net Income to Calculate Adjusted Net Income $ 31,132 $
28,931 $ 25,511 $ 23,763 $ 22,409
______
The table above shows adjustments to GAAP net income to
calculate Adjusted Net Income
(1) Amortization of identifiable intangible assets (e.g.,
customer/contractor relationships, non-compete agreements, etc.)
related to the acquired businesses. The year-over-year reductions
in this add-back will result in a corresponding increase in
operating income for GAAP purposes.
(2) Income tax benefit (using 39 percent marginal tax rate) from
amortization for income tax purposes of certain indefinite-lived
intangible assets (goodwill and trademarks), on acquisitions in
which the Company received a step-up tax basis. For income tax
purposes, these assets are amortized on a straight-line basis over
15 years. For financial reporting purposes, these assets are not
amortized and a deferred tax provision is recorded that fully
offsets the cash tax benefit in the determination of net
income.
(3) Income taxes (assuming a 39 percent marginal rate) on the
portion of amortization of intangible assets, which are not
deductible for income tax purposes (mainly amortization associated
with the CyberCoders acquisition that the Company was not able to
step-up the tax basis in those acquired assets for tax
purposes).
(4) Projections have been updated to remove amounts related to
the Physician Segment that was sold effective February 1, 2015.
ON ASSIGNMENT, INC. AND
SUBSIDIARIES
BILLABLE DAYS
2014 2015 Restated
(1) Projected Billable days per quarter: First Quarter 62.0 62.0
Second Quarter 63.8 63.5 Third Quarter 63.6 63.5 Fourth Quarter
61.4 60.0 Total Year 250.8 249.0 _____
(1) Restated to exclude Physician
Segment
On Assignment, Inc.Ed Pierce, 818-878-7900Chief Financial
Officer
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