ON Assignment, Inc. (MM) (NASDAQ:ASGN)
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2 Years : From May 2011 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
March 31, 2012.
First Quarter 2012 Highlights
-
Revenues for the first quarter of 2012 were $167.1 million, up 29%
year-over-year and up 3% from the preceding quarter.
-
Gross Margin was 32.9% compared with 33.3% in the first quarter of
2011.
-
Adjusted EBITDA (a non-GAAP measurement defined below) was $15.7
million, up 49% year-over-year.
-
Adjusted EBITDA margin (Adjusted EBITDA as a % of revenues) for the
quarter was 9.4% compared with 8.1% in the first quarter of 2011.
-
Net Income was $5.4 million, or $0.14 per diluted share. Excluding
acquisition related expenses (net of tax) net income was $6.8 million
or $0.18 per diluted share.
-
Announced the proposed acquisition of Apex Systems.
-
March monthly consolidated revenues highest in history of the firm.
Commenting on the results for the first quarter, Peter Dameris,
President and Chief Executive Officer of On Assignment, Inc., said, “We
had an excellent first quarter of 2012. Each of our four operating
segments generated double-digit revenue growth year-over-year. We also
maintained strong gross margins and expense controls, such that our 29%
revenue growth translated into 49% growth in Adjusted EBITDA and 100%
growth in earnings per share when excluding acquisition expenses.”
Dameris concluded, “During the first quarter, we also announced a
milestone transaction in the proposed acquisition of Apex Systems, one
of the largest and fastest-growing IT staffing firms in the United
States. This acquisition will create one of the largest professional
staffing firms and the country’s second-largest IT staffing firm, with
pro forma 2011 revenues of $1.3 billion. We are excited about the
opportunities this combination brings to us and look forward to
continued strong growth as we complete the transaction, expected during
the second quarter of 2012.”
Jim Brill, Senior Vice President and Chief Financial Officer of On
Assignment, Inc., stated, “We achieved record first Quarter Adjusted
EBITDA and Adjusted EBITDA margin. Consolidated gross margin was 32.9%
in the first quarter of 2012, while IT and Engineering gross margin was
34.8%, Life Sciences gross margin was 33.5%, Healthcare gross margin was
27.7% and Physician staffing gross margin was 31.1%.”
First Quarter 2012 Results
For the first quarter of 2012, consolidated revenues were $167.1
million, up 29.1% year-over-year and up 3.3% on a sequential basis. The
Company had net income of $5.4 million, or $0.14 per diluted share.
Excluding acquisition related expenses (net of tax) net income was $6.8
million, or $0.18 per diluted share, compared with $3.5 million, or
$0.09 per diluted share in the first quarter of 2011.
The IT and Engineering segment revenues were $78.8 million, up 31.0%
from the first quarter of 2011 and 10.6% from the fourth quarter of
2011. Life Sciences segment revenues were $41.4 million, up 25.5% from
the first quarter of 2011 and 1.1% from the fourth quarter of 2011.
Healthcare segment revenues, which include Nurse Travel and Allied
Healthcare lines of business, were $22.9 million, up 15.3% from the
first quarter of 2011 and down 11.8% from the fourth quarter of 2011.
Nurse Travel revenues were $10.3 million, compared with $9.7 million in
the first quarter of 2011 and $13.8 million in the fourth quarter of
2011, which included $2.3 million of revenue generated from supporting a
customer that experienced labor disruption during that quarter. Allied
Healthcare revenues were $12.6 million, up 23.9% from the first quarter
of 2011 and up 3.2 % from the fourth quarter of 2011. Physician segment
revenues were $24.1 million, up 45.8% from the first quarter of 2011 and
up 1.6% from the fourth quarter of 2011.
SG&A increased by $4.9 million over the fourth quarter, primarily due to
acquisition related expenses of $2.5 million and higher branch office
expenses, mainly commissions on the higher revenue levels and headcount
additions to support anticipated high growth in certain segments. This
increase was partially offset by a $0.7 million decrease in equity based
compensation. Capital expenditures were $2.1 million, amortization of
intangibles was $0.6 million and depreciation was $1.4 million.
Second Quarter 2012 Financial Estimates
On Assignment is providing financial estimates for the quarter ending
June 30, 2012 on a standalone basis excluding any contribution from Apex
Systems. Based on revenues in the first four weeks of the second quarter
of 2012 and taking into account the Company’s normal seasonal operating
patterns, the Company’s financial estimates for the quarter are as
follows:
-
Revenues of $177 million to $180 million
-
Gross Margin of approximately 33%
-
SG&A of approximately $44.3-$44.7 million which excludes any
acquisition related expenses but includes depreciation of
approximately $1.6 million, amortization of approximately $0.6 million
and approximately $2.1 million in equity-based compensation expense
-
Adjusted EBITDA of $18.0 million to $19.1 million
-
Net income of $7.6 million to $8.2 million
-
Earnings per diluted share of $0.20 to $0.22
The estimates assume year over-year-revenue growth in the low 30% range
for IT and Engineering, the mid 20% range for Life Sciences, the
mid-teens for Healthcare and the mid 40% range for Physician Staffing.
The estimates above assume no deterioration in the staffing markets On
Assignment serves and do not include the impact of the acquisition of
Apex Systems which is expected to close during the second quarter.
Upon consummation of the acquisition of Apex Systems, On Assignment will
provide updated financial estimates for the quarter ending June 30,
2012. The Company is also reiterating its financial estimates for the
second half of 2012, including contributions from Apex Systems. Taking
the acquisition into account as well as the Company’s normal seasonal
operating patterns, the Company’s financial estimates for the second
half of 2012 are as follows:
-
Revenues of $775 million to $805 million
-
Gross margin of approximately 30% to 31%
-
SG&A of approximately $167 million to $178 million1
-
Adjusted EBITDA as a percentage of revenue 10% to 11%1 2 4
-
Tax Rate of 41% to 41.5%
-
Adjusted net income per diluted share of $0.50 to $0.601 4
-
Cash earnings per diluted share of $0.77 to $0.881 2 3 4
-
Fully diluted shares outstanding of 54,385,000
1 Excludes transaction related costs2 Excludes
stock-based compensation expense3 Excludes amortization
of intangibles and includes all tax benefits from section 338(h)10
election4 Excludes write-offs of deferred financing fees
On Assignment will hold its quarterly conference call to discuss its
first quarter 2012 financial results this afternoon, Thursday, April 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 73460659. A replay
of the conference call can be accessed from approximately 5:30 p.m.
Pacific Time Thursday, April 26, 2012 through Friday, May 4, 2012 by
dialing (855) 859-2056 or (404) 537-3406 with the conference ID number
73460659.
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 76 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, amortization of
identifiable intangible assets), other terms include Adjusted EBITDA
(EBITDA plus equity-based compensation expense, impairment charges and
acquisition related costs), Cash earnings per diluted share (net income
plus the after tax impact of transaction related costs, write off of
deferred financing expenses, stock based compensation expense,
amortization expense and the tax benefits related section 338(h)10
elections),and Adjusted net income (Net Income plus acquisition related
expenses 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.
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)
Quarter Ended
March 31,
December 31,
2012
2011
2011
Revenues
$
167,078
$
129,438
$
161,790
Cost of services
112,030
86,284
108,161
Gross profit
55,048
43,154
53,629
Selling, general and
administrative expenses
45,101
36,755
40,160
Operating income
9,947
6,399
13,469
Interest expense
(702
)
(730
)
(711
)
Interest income
1
17
―
Income before income taxes
9,246
5,686
12,758
Income tax provision
3,863
2,522
5,257
Net income
$
5,383
$
3,164
$
7,501
Earnings per share
Basic
$
0.14
$
0.09
$
0.20
Diluted
$
0.14
$
0.08
$
0.20
Number of shares and share equivalents used to calculate earnings
per share:
Basic
37,269
36,623
36,903
Diluted
38,154
37,429
37,773
SUPPLEMENTAL SEGMENT FINANCIAL INFORMATION
(In thousands)
(Unaudited)
Quarter Ended
March 31,
December 31,
2012
2011
2011
Revenues:
Life Sciences
$
41,351
$
32,957
$
40,921
Healthcare Staffing
22,879
19,844
25,927
Physician Staffing
24,089
16,518
23,712
IT and Engineering
78,759
60,119
71,230
Consolidated revenues
$
167,078
$
129,438
$
161,790
Gross profit:
Life Sciences
$
13,839
$
11,270
$
13,618
Healthcare Staffing
6,340
5,627
7,395
Physician Staffing
7,499
5,299
7,132
IT and Engineering
27,370
20,958
25,484
Consolidated gross profit
$
55,048
$
43,154
$
53,629
SELECTED CASH FLOW INFORMATION
(In thousands)
(Unaudited)
Quarter Ended
March 31,
December 31,
2012
2011
2011
Cash provided by
operations
$
6,901
$
5,778
$
8,365
Capital expenditures
2,119
2,650
2,365
SELECTED CONSOLIDATED BALANCE SHEET DATA
(In thousands)
(Unaudited)
As of
March 31,
December 31,
2012
2011
20111
Cash and cash equivalents
$
17,685
$
15,821
$ 17,739
Accounts receivable, net
102,026
74,924
93,925
Goodwill and intangible assets, net
260,626
246,985
260,431
Total assets
419,989
376,179
411,538
Current portion of long-term debt
5,000
5,000
5,000
Total current liabilities
62,541
54,899
56,409
Long-term debt
75,500
73,500
81,750
Other long-term liabilities
25,932
23,159
26,636
Stockholders’ equity
256,016
224,621
246,743
1Goodwill and intangible assets, net, Total assets and Other
long-term liabilities reflect retrospective measurement period
adjustments related to the Valesta acquisition.
RECONCILIATION OF GAAP NET INCOME AND EARNINGS PER SHARE TO
NON-GAAP EBITDA AND EBITDA PER SHARE
(In thousands, except per share amounts)
(Unaudited)
Quarter Ended
March 31,2012 (1)
March 31,2011 (1)
December 31,2011
Net income
$
5,383
$
0.14
$
3,164
$
0.08
$
7,501
$
0.20
Interest expense, net
701
0.02
713
0.02
711
0.02
Income tax provision
3,863
0.10
2,522
0.07
5,257
0.14
Depreciation
1,430
0.04
1,548
0.04
1,594
0.04
Amortization of intangibles
634
0.02
416
0.01
713
0.02
EBITDA
12,011
0.31
8,363
0.22
15,776
0.42
Equity-based compensation
1,191
0.03
1,625
0.04
1,843
0.05
Acquisition costs expensed
2,492
0.07
552
0.01
64
0.00
Adjusted EBITDA
$
15,694
$
0.41
$
10,540
$
0.28
$
17,683
$
0.47
Weighted Average Commonand Common EquivalentShares
Outstanding
38,154
37,429
37,773
(1) Column does not foot due to rounding
RECONCILIATION OF GAAP NET INCOME AND EARNINGS PER SHARE TO
NON-GAAP ADJUSTED NET INCOME AND EARNINGS PER SHARE
(In thousands, except per share amounts)
(Unaudited)
Quarter Ended
March 31,2012
March 31,2011
December 31,2011
Net income
$
5,383
$
0.14
$
3,164
$
0.08
$
7,501
$
0.20
Acquisition relatedexpenses, net of tax
1,451
0.04
307
0.01
38
0.00
Adjusted net income
$
6,834
$
0.18
$
3,471
$
0.09
$
7,539
$
0.20
Weighted Average Commonand Common EquivalentShares
Outstanding
38,154
37,429
37,773
RECONCILIATION OF ESTIMATED GAAP NET INCOME TO ESTIMATED
NON-GAAP EBITDA AND ADJUSTED EBITDA
(In thousands)
(Unaudited)
Estimated Range of Results
Quarter Ending
June 30, 2012
Net income
$
7,600
$
8,200
Interest expense
700
700
Income tax provision
5,400
5,900
Depreciation and amortization
2,200
2,200
EBITDA
15,900
17,000
Equity-based compensation
2,100
2,100
Adjusted EBITDA
$
18,000
$
19,100
SUPPLEMENTAL FINANCIAL INFORMATION – REVENUES AND GROSS MARGINS
(Dollars in thousands)
(Unaudited)
Healthcare
Life Sciences
Allied Healthcare
Nurse Travel
Total Healthcare
Physician Staffing
IT and Engineering
Consolidated
Revenues:
Q1 2012
$
41,351
$
12,561
$
10,318
$ 22,879
$
24,089
$
78,759
$
167,078
Q4 2011
$
40,921
$
12,166
$
13,761
$ 25,927
$
23,712
$
71,230
$
161,790
% Sequential change
1.1
%
3.2
%
(25.0
%)
(11.8
%)
1.6
%
10.6
%
3.3
%
Q1 2011
$
32,957
$
10,140
$
9,704
$ 19,844
$
16,518
$
60,119
$
129,438
% Year-over-Year Change
25.5
%
23.9
%
6.3
%
15.3
%
45.8
%
31.0
%
29.1
%
Gross Margins:
Q1 2012
33.5
%
32.2
%
22.3
%
27.7
%
31.1
%
34.8
%
32.9
%
Q4 2011
33.3
%
32.2
%
25.3
%
28.5
%
30.1
%
35.8
%
33.1
%
Q1 2011
34.2
%
31.3
%
25.2
%
28.4
%
32.1
%
34.9
%
33.3
%
SUPPLEMENTAL FINANCIAL INFORMATION – KEY METRICS
(Unaudited)
Quarter Ended
March 31,
2012
December 31,
2011
Percentage of revenues:
Top ten clients
9.2
%
8.3
%
Direct hire/conversion
3.1
%
2.8
%
Bill rate:
% Sequential change
1.9
%
1.6
%
% Year-over-year change
4.9
%
5.2
%
Bill/Pay spread:
% Sequential change
2.3
%
0.9
%
% Year-over-year change
4.9
%
5.3
%
Average headcount:
Contract professionals (CP)
4,941
5,001
Staffing consultants (SC)
871
855
Productivity:
Gross profit per SC
$
63,000
$
63,000
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