Financial results above previously announced
estimates
On Assignment, Inc. (NYSE: ASGN), a leading global provider of
diversified professional staffing solutions, today reported results
for the quarter and full year ended December 31, 2017.
Fourth Quarter Highlights
- Revenues were $679.1 million, up 9.4
percent over the fourth quarter of 2016 (up 8.6 percent
year-over-year excluding the revenue contribution from Stratacuity,
which was acquired in August 2017).
- Net income of $67.3 million ($1.28 per
diluted share), was up from $24.0 million ($0.45 per diluted share)
in the fourth quarter of 2016.
- Net income included a one-time,
non-cash benefit of $31.4 million ($0.59 per diluted share) from
the reduction in deferred tax liabilities related to the recently
enacted Tax Cuts and Jobs Act.
- Cash flows from operating activities
were $58.3 million for the quarter and $196.4 million for the full
year 2017.
- Adjusted EBITDA (a non-GAAP measure)
was $82.9 million (12.2 percent of revenues), up from $70.7 million
(11.4 percent of revenues) in the fourth quarter of 2016.
- The Company paid down $35.5 million of
debt during the quarter and the leverage ratio (a non-GAAP measure)
at December 31, 2017 was 1.89 to 1, down from 2.08 to 1 at
September 30, 2017.
- Through December 31, 2017, On
Assignment had repurchased approximately 2.4 million shares for
$101.2 million, at an average per share price of $42.81 under its
$150 million stock repurchase program.
- On January 31, 2018, the Company
entered into an agreement to acquire ECS Federal, LLC ("ECS") for
approximately $775.0 million in cash. The acquisition is expected
to close on April 2, 2018.
Management Commentary
Peter Dameris, Chief Executive Officer of On Assignment, Inc.,
said, "We are pleased with our operating and financial performance
for the fourth quarter and full year 2017. We continued to grow
well above the stated growth rate for our industry reflecting the
continued deepening of customer relationships, the increasing rate
of adoption of our delivery model and the successful expansion of
our statement of work business. Over the past year we generated
$172.2 million in free cash flow, which we used, among other
things, to repurchase our common stock, pay down debt and fund the
acquisition of Stratacuity."
Dameris continued, "We are well positioned going into 2018. Our
previously announced acquisition of ECS will strengthen our
position as one of the largest and fasting growing IT services
firms in North America and increase our addressable end market to
$279 billion by virtue of our entering the $129 billion Government
Services space."
Fourth Quarter 2017 Financial Results
Revenues were $679.1 million, up 9.4 percent year-over-year (8.6
percent excluding the $4.5 million revenue contribution from
Stratacuity, which was acquired in August 2017). The combined net
effects of "Same Billable Days" and "Constant Currency" basis, were
not material. Our largest segment, Apex, accounted for 78.7 percent
of total revenues and grew 12.3 percent year-over-year. Our Oxford
Segment accounted for 21.3 percent of total revenues and was down
0.3 percent year-over-year.
Gross profit was $220.7 million, up $22.5 million or 11.3
percent year-over-year. Gross margin was 32.5 percent, up from 31.9
percent in the fourth quarter of 2016.
Selling, general and administrative (“SG&A”) expenses were
$151.4 million (22.3 percent of revenues), compared with $142.6
million (23.0 percent of revenues) in the fourth quarter of 2016.
SG&A expenses for the quarter included acquisition, integration
and strategic planning expenses of $0.9 million, compared with $1.6
million in the fourth quarter of 2016.
Amortization of intangible assets was $8.4 million, compared
with $9.7 million in the fourth quarter of 2016. The decrease is
due to the accelerated amortization method for certain acquired
intangibles, which have higher amortization rates at the beginning
of their useful life.
Interest expense was $6.0 million compared with $7.0 million in
the fourth quarter of 2016. Interest expense for the fourth quarter
of 2017 was comprised of $5.1 million of interest on the credit
facility and $0.9 million of amortization of deferred loan costs.
The decrease in interest expense reflected a lower debt balance and
a lower interest rate as a result of the amendments to our credit
facility.
As a result of a one-time, non-cash income tax benefit of $31.4
million mainly relating to the reduction of net deferred income tax
liabilities and accrual of the transitional tax on the deemed
dividend of foreign earnings both as a result of the recently
enacted Tax Cuts and Jobs Act ("TCJA"), we reported an income tax
benefit of $12.6 million for the quarter. Excluding the one-time
benefit of $31.4 million, our income tax provision was
approximately $18.8 million for the quarter, an effective tax rate
of 34.3 percent. This rate included $2.5 million in excess tax
benefits from stock-based compensation.
Net income was $67.3 million ($1.28 per diluted share), compared
with $24.0 million ($0.45 per diluted share) in the fourth quarter
of 2016. Adjusted EBITDA (a non-GAAP measure) was $82.9 million, or
12.2 percent of revenues, up from $70.7 million (11.4 percent of
revenues) in the fourth quarter of 2016.
Cash flows from operating activities were $58.3 million and free
cash flow (a non-GAAP measure) was $52.0 million. At December 31,
2017, our leverage ratio (a non-GAAP measure) was 1.89 to 1, down
from 2.08 to 1 at September 30, 2017.
Financial Estimates for Q1 2018 for On Assignment
On Assignment is providing financial estimates for the first
quarter of 2018. These estimates do not include acquisition,
integration or strategic planning expenses (other than $10.0
million in estimated acquisition costs and expenses related to the
pending acquisition of ECS) and assume no deterioration in the
markets that On Assignment serves. These estimates also assume no
significant change in foreign exchange rates. Reconciliations of
estimated net income to the estimated non-GAAP measures are
presented herein. These estimates do not include any operating
results of ECS.
- Revenues of $672.0 million to $682.0
million
- Gross margin of 31.5 percent to 31.8
percent
- SG&A expense (excludes amortization
of intangible assets) of $164.7 million to $166.9 million (includes
$6.5 million in depreciation, $5.6 million in stock-based
compensation expense and $10.0 million in acquisition expenses
related to the pending acquisition of ECS)
- Amortization of intangible assets of
$7.6 million
- Interest expense of $6.2 million
(including amortization of deferred loan costs of $0.9
million)
- Effective tax rate of 26.5 percent
- Net income of $24.4 million to $26.6
million
- Earnings per diluted share of $0.46 to
$0.50
- Diluted shares outstanding of 52.8
million
- Adjusted EBITDA (a non-GAAP measure) of
$69.0 million to $72.0 million
- Adjusted Net Income (a non-GAAP
measure)1 of $39.0 million to $41.2 million
- Adjusted Net Income per diluted share1
(a non-GAAP measure) of $0.74 to $0.78
_______________
(1)
Does not include the “Cash Tax Savings on
Indefinite-lived Intangible Assets.” These savings total $4.6
million each quarter, or $0.09 per diluted share, and represent the
economic value of the tax deduction that we receive from the
amortization of goodwill and trademarks.
Consistent with past practice, our financial estimates above are
based on our estimate of “Billable Days” which are Business Days
(calendar days for the period less weekends and holidays) adjusted
for other factors, such as the day of the week a holiday occurs,
additional time taken off around holidays, year-end client
furloughs and inclement weather. For the first quarter, we estimate
billable days of 62.8, which is 0.25 fewer days than the first
quarter of 2017. Each "Billable Day" is approximately $10.8 million
in revenues. On a same "Billable Days" basis, our implied
year-over-year revenue growth rate for the first quarter ranges
from 7.6 to 9.2 percent.
The above estimates also include the effects of the payroll tax
reset, which occurs at the beginning of each year. These annual
resets cause, among other things, lower gross and Adjusted EBITDA
margin in the first quarter of the year.
On Assignment to Acquire ECS Federal, LLC
As announced on January 31, 2018, the Company entered into a
definitive agreement to acquire ECS for $775 million in
cash. ECS is one of the largest privately-held government services
contractors and delivers cyber security, cloud, DevOps, IT
modernization and advanced science and engineering solutions to
government enterprises. The transaction is subject to various
regulatory approvals and customary closing conditions and is
expected to close on April 2, 2018.
On Assignment is providing preliminary financial estimates for
ECS, on a stand alone basis, for the full year 2018, as
follows:
- Revenues of $620.0 million to $640.0
million
- Operating costs and expenses (includes
costs of services and excludes amortization of intangible assets)
of $567.3 million to $583.9 million (includes $14.1 million in
depreciation and $3.3 million in stock-based compensation
expense)
- Amortization of intangible assets of
$42.0 million to $45.0 million (based on a preliminary estimate of
the fair value of identifiable intangible assets and their related
service lives, which are subject to change during the open one-year
measurement period)
- Interest expense of $33.6 million on
new term B loan to fund the purchase of ECS (including amortization
of deferred loan costs of $2.4 million)
- Effective tax rate of 26.5 percent
- Net loss of $19.0 million to $14.3
million
- Adjusted EBITDA (a non-GAAP measure) of
$70.0 million to $73.5 million
- Adjusted Net Income (a non-GAAP
measure)1 of $26.0 million to $27.7 million
_______________
(1)
Does not include the “Cash Tax Savings on
Indefinite-lived Intangible Assets.” These savings are estimated to
be approximately $9.0 million annually over 15 years and represent
the economic value of the tax deduction that we receive from the
amortization of goodwill and trademarks.
The above estimates assume no deterioration in current operating
and market trends. Reconciliations of estimated net income to the
estimated non-GAAP measures are presented herein. Operating results
of ECS will be included in the 2018 consolidated operating results
of On Assignment from the date of acquisition (currently expected
to occur on April 2, 2018) through December 31, 2018.
The preliminary financial estimates for ECS include, among other
things, amortization of intangible assets, interest expense on the
debt to fund the acquisition and the estimated provision (benefit)
for income taxes as if the acquisition of ECS occurred at the
beginning of 2018. These estimates do not include any transaction
costs related to the pending acquisition. The estimated
amortization of intangible assets is based on a preliminary
estimate of the fair value of assets acquired and their related
service lives, both of which are subject to change within the
one-year measurement period.
Conference Call
On Assignment will hold a conference call today at 5:00 p.m. EST
to review its financial results for the fourth quarter. The dial-in
number is 800-230-1059 (+1-612-234-9959 for callers outside the
United States) and the conference ID number is 442530. Participants
should dial in ten minutes before the call. This call is being
broadcasted by CCBN and can be accessed via On Assignment's
web site at www.onassignment.com. The
prepared remarks and supplemental materials for this call will be
available at On Assignment's web site.
A replay of the conference call will be available beginning
Wednesday, February 14, 2018 at 7:00 p.m. EST until midnight on
Wednesday, February 28, 2018. The access number for the replay is
800-475-6701 (+1-320-365-3844 outside the United States) and the
conference ID number is 442530.
About On Assignment
On Assignment, Inc. (NYSE: ASGN) is one of the foremost
providers of IT and professional services in the technology,
creative/digital, engineering and life sciences sectors. Through an
integrated suite of professional staffing and IT solutions, On
Assignment improves productivity and utilization among leading
corporate enterprises.
Due to our companies’ achievements, we are viewed as best in
class across multiple industries and have built an outstanding
reputation of excellence over the past 33 years.
Based in Calabasas, California, On
Assignment operates a network of over 150 branch offices
across the United States, Canada and Europe.
For more information, visit us at www.onassignment.com.
Reasons for Presentation of Non-GAAP Financial
Measures
Statements in this release and the accompanying 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
accounting principles generally accepted in the United States
("GAAP"), and is intended to enhance an overall understanding of
our current financial performance. 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 a reconciliation of each non-GAAP financial measure to the
most directly comparable GAAP financial measure. Below is a
discussion of our non-GAAP financial measures.
EBITDA (earnings before interest, taxes, depreciation and
amortization of intangible assets) and Adjusted EBITDA (EBITDA plus
stock-based compensation expense and, as applicable, write-off of
loan costs, acquisition, integration and strategic planning
expenses, and impairment charges) are used to determine a portion
of the compensation for some of our executives and employees.
Stock-based compensation expense is added to arrive at Adjusted
EBITDA because it is a non-cash expense. Write-off of loan costs,
acquisition, integration and strategic planning expenses, and
impairment charges are added, as applicable, to arrive at Adjusted
EBITDA as they are not indicative of the performance of our core
business on an ongoing basis.
Non-GAAP net income (net income, less income (loss) from
discontinued operations, net of tax, plus, as applicable,
refinancing costs, acquisition, integration and strategic planning
expenses, accretion of fair value discount on contingent
consideration, impairment charges, and the tax effect of these
items) provides a method for assessing our operating results in a
manner that is focused on the performance of our core business on
an ongoing basis. Adjusted Net Income (Non-GAAP net income plus
amortization of intangible assets, less income taxes on
amortization for financial reporting purposes not deductible for
income tax purposes) provides a method for assessing our operating
results in a manner that is focused on the performance of our core
business on an ongoing basis, adjusted for some of the cash flows
associated with amortization of intangible assets to more fully
present the performance of our acquisitions.
Constant currency information removes the effect of
year-over-year changes in foreign currency exchange rates. Constant
currency information is calculated using the foreign currency
exchange rates from the same period in the prior year.
Billable Days are Business Days (calendar days for the period
less weekends and holidays) adjusted for other factors, such as the
day of the week a holiday occurs, additional time taken off around
holidays, year-end client furloughs and inclement weather. In order
to remove the fluctuations caused by comparable periods having
different billable days, revenues on a Same Billable Days basis are
calculated by taking the current period average revenue per
billable day, multiplied by the number of billable days from the
same period in the prior year.
The term Same Billable Days and Constant Currency basis means
that the impact of year-over-year changes in foreign currency
exchange rates has been removed from Same Billable Days basis
calculation.
Free cash flow is defined as net cash provided by (used in)
operating activities, less capital expenditures. Management
believes this provides useful information to investors about the
amount of cash generated by the business that can be used for
strategic opportunities. Our leverage ratio provides information
about our compliance with loan covenants and is calculated in
accordance with our credit agreement, as filed with the Securities
and Exchange Commission ("SEC"), by dividing our total indebtedness
by trailing 12 months Adjusted EBITDA.
Reasons for Presentation of Operating Metrics
Operating metrics are intended to enhance the overall
understanding of our business and our current financial
performance. These operating metrics might not be calculated in the
same manner as, and thus might not be comparable to, similarly
titled metrics reported by other companies. The operating metrics
presented on this release are calculated as follows: average number
of staffing consultants are full time equivalent staffing
consultant headcount in the quarter; average number of contract
professionals and average number of customers are the number of
contract professionals employed each week and the number of
customers served each week, averaged for the quarter, respectively
(average is weighted by total number of hours billed per week); top
10 customers as a percentage of revenue are the 10 largest clients
defined by the revenue generated in the quarter, divided by total
revenues in the quarter; gross profit per staffing consultant is
gross profit for the quarter divided by the average number of
staffing consultants; average bill rate is total assignment revenue
client billings in the quarter divided by total hours billed in the
quarter.
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.
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. The
Company makes no assurances that the estimates of revenues, gross
margin, SG&A, amortization, effective tax rate, net income,
diluted shares outstanding, Adjusted EBITDA, Adjusted Net Income
and related per share amounts (as applicable) set forth above will
be achieved. Further, the Company makes no assurances or
guarantees: i) that the announced transaction with ECS Federal, LLC
will receive regulatory approval or occur; ii) that the assumptions
made in determining the value of the transaction will be realized;
iii) that the Company will be able to finance the potential
transaction; or iv) that 2018 preliminary financial estimates for
ECS will be realized. 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 clients, the availability of qualified contract
professionals, management of our growth, continued performance and
improvement of our enterprise-wide information systems, our ability
to manage our litigation matters, the successful integration of our
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 SEC, including our Annual Report
on Form 10-K for the year ended December 31, 2016, as filed with
the SEC on March 1, 2017. 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, 2017 2016
2017 2017
2016 Revenues $ 679,035 $ 620,884 $ 667,048 $
2,625,924 $ 2,440,413 Costs of services 458,358
422,689 448,733 1,775,851
1,645,230 Gross profit 220,677 198,195 218,315
850,073 795,183 Selling, general and administrative expenses
151,447 142,630 149,197 591,893 565,829 Amortization of intangible
assets 8,433 9,710 8,248
33,444 39,628 Operating income 60,797
45,855 60,870 224,736 189,726 Interest expense (5,976 )
(7,049 ) (7,099 ) (27,643 ) (32,327 )
Income before income taxes 54,821 38,806 53,771 197,093 157,399
Provision for income taxes (12,556 ) 14,746
18,892 39,219 60,203
Income from continuing operations 67,377 24,060 34,879 157,874
97,196 Income (loss) from discontinued operations, net of tax
(46 ) (32 ) (23 ) (199 ) 5
Net income $ 67,331 $ 24,028 $ 34,856 $
157,675 $ 97,201 Per share income from
continuing operations and net income: Basic $ 1.29 $ 0.45
$ 0.66 $ 3.01 $ 1.83 Diluted $ 1.28
$ 0.45 $ 0.66 $ 2.97 $ 1.81
Number of shares and share equivalents used to calculate
earnings per share: Basic 52,038 52,924
52,500 52,503 53,192
Diluted 52,822 53,521 53,173
53,205 53,747
SEGMENT FINANCIAL INFORMATION
(Unaudited)
(Dollars in millions)
Three Months Ended Year Ended December 31, December 31,
2017 2016
Year-Over-YearGrowth Rates
2017 2016
Year-Over-YearGrowth Rates
Revenues by segment: Apex: Assignment $ 524.3 $ 466.1 12.5 % $
1,993.3 $ 1,791.6 11.3 % Permanent placement 10.4
10.0 3.9 % 43.9 44.9 (2.3
)% 534.7 476.1 12.3 % 2,037.2 1,836.5 10.9 % Oxford: Assignment
123.2 125.9 (2.2 )% 503.1 520.7 (3.4 )% Permanent placement
21.2 18.9 12.0 % 85.7
83.2 3.0 % 144.4 144.8 (0.3 )% 588.8 603.9 (2.5 )%
Consolidated: Assignment 647.5 592.0 9.4 % 2,496.4 2,312.3 8.0 %
Permanent placement 31.6 28.9 9.2 %
129.6 128.1 1.1 % $ 679.1 $
620.9 9.4 % $ 2,626.0 $ 2,440.4 7.6 %
Percentage of total revenues: Apex 78.7 % 76.7 % 77.6 % 75.3 %
Oxford 21.3 % 23.3 % 22.4 % 24.7 %
100.0 % 100.0 % 100.0 % 100.0 % Assignment 95.3 % 95.3 %
95.1 % 94.7 % Permanent placement 4.7 % 4.7 %
4.9 % 5.3 % 100.0 % 100.0 % 100.0 % 100.0 % Domestic
95.0 % 95.4 % 95.0 % 95.3 % Foreign 5.0 % 4.6 %
5.0 % 4.7 % 100.0 % 100.0 % 100.0 % 100.0 % Gross
profit: Apex $ 160.4 $ 140.4 14.2 % $ 606.3 $ 548.4 10.6 % Oxford
60.3 57.8 4.4 % 243.8
246.8 (1.2 )% Consolidated $ 220.7 $ 198.2
11.3 % $ 850.1 $ 795.2 6.9 % Gross margin:
Apex 30.0 % 29.5 % 29.8 % 29.9 % Oxford 41.8 % 39.9 % 41.4 % 40.9 %
Consolidated 32.5 % 31.9 % 32.4 % 32.6 %
SELECTED CASH FLOW INFORMATION
(Unaudited)
(In thousands)
Three Months Ended Year Ended December 31, December 31,
2017 2016 2017
2016 Cash provided by operating activities(1)
$ 58,259 $ 56,424 $ 196,446 $ 199,331 Capital expenditures
(6,227 ) (6,587 ) (24,265 ) (27,138 ) Free
cash flow (non-GAAP measure) $ 52,032 $ 49,837 $
172,181 $ 172,193 Cash used in investing
activities(2) $ (6,251 ) $ (6,646 ) $ (50,117 ) $ (21,984 ) Cash
used in financing activities(1) $ (43,652 ) $ (39,382 ) $ (138,469
) $ (174,065 ) (1) On January 1, 2017, we adopted
Accounting Standards Update 2016-09 Compensation - Stock
Compensation (Topic 718). Under this new standard excess tax
benefits and deficiencies are recognized as income tax benefit or
expense in the consolidated statements of operations and
comprehensive income, instead of paid in capital, on a prospective
basis from the date of adoption. On the statement of cash flows,
excess tax benefits and deficiencies are presented as cash flows
from operating activities, instead of financing activities. For the
statement of cash flows we elected to retrospectively adopt this
new presentation and for the three months and year ended December
31, 2016, cash flows from excess tax benefits of $0.5 million, and
$3.1 million, respectively, were reclassified from financing
activities to operating activities. (2) The twelve months
ended December 31, 2017, included $25.9 million cash used for the
Stratacuity acquisition. The twelve months ended December 31, 2016,
included $6.0 million in cash provided by investing activities
related to the release of cash held in escrow from the sale of the
Physician Segment.
SELECTED
CONSOLIDATED BALANCE SHEET DATA AS OF DECEMBER 31, 2017 AND
DECEMBER 31, 2016
(In thousands)
2017 2016 (Unaudited) Cash and cash
equivalents $ 36,667 $ 27,044 Accounts receivable, net 428,536
386,858 Total current assets 499,523 437,524 Goodwill and
intangible assets, net 1,246,861 1,251,243 Total assets 1,810,129
1,752,667 Total current liabilities 166,717 162,499 Working capital
332,806 275,025 Long-term debt 575,213 640,355 Other long-term
liabilities 76,808 80,874 Stockholders’ equity 991,391 868,939
RECONCILIATION OF NET INCOME
TO EBITDA (NON-GAAP MEASURE)
AND ADJUSTED EBITDA (NON-GAAP
MEASURE) (Unaudited)
(In thousands)
Three Months Ended Year Ended December 31, December 31,
2017 2016 2017
2016 Net income $ 67,331 $ 24,028 $ 157,675 $ 97,201
(Income) loss from discontinued operations,
net of tax
46 32 199 (5 ) Interest expense 5,976 7,049 27,643 32,327 Provision
for income taxes (12,556 ) 14,746 39,219 60,203 Depreciation 6,678
6,368 25,160 22,621 Amortization of intangible assets 8,433
9,710 33,444 39,628 EBITDA
(non-GAAP measure) 75,908 61,933 283,340 251,975 Stock-based
compensation 6,101 7,221 24,044 27,024 Acquisition, integration and
strategic planning
expenses
937 1,571 4,052 6,034 Adjusted EBITDA
(non-GAAP measure) $ 82,946 $ 70,725 $ 311,436 $ 285,033
RECONCILIATION OF NET
INCOME TO NON-GAAP NET INCOME AND
ADJUSTED NET INCOME (NON-GAAP
MEASURE) (Unaudited)
(In thousands, except per share
amounts)
Three Months Ended Year Ended December 31, December 31,
2017 2016 2017 2016 Net
income $ 67,331 $ 24,028 $ 157,675 $ 97,201 (Income) loss from
discontinued operations, net of tax 46 32 199 (5) Refinancing
costs(1) — — 2,728 889 Acquisition, integration and strategic
planning expenses 937 1,571 4,052 6,034 Accretion of discount on
contingent consideration — — — 863 Tax effect on adjustments
(365) (614) (2,644) (3,022) Non-GAAP net
income 67,949 25,017 162,010 101,960 Amortization of intangible
assets 8,433 9,710 33,444 39,628 Income taxes on amortization for
financial reporting purposes not deductible for income tax purposes
(405) (431) (1,622) (2,018) Adjusted
Net Income (non-GAAP measure)(2) $ 75,977 $ 34,296 $ 193,832 $
139,570 Per diluted share: Net income $ 1.28 $ 0.45 $ 2.97 $
1.81 Adjustments 0.16 0.19 0.67 0.79
Adjusted Net Income (non-GAAP measure)(2) $ 1.44 $ 0.64 $ 3.64 $
2.60 Weighted average common and common equivalent shares
outstanding (diluted) 52,822 53,521 53,205
53,747 (1) In February, August and September
2017, we amended our credit facility and incurred $3.3 million in
fees, of which $2.7 million were included in interest expense and
the remaining $0.6 million were capitalized and will be amortized
over the term of the credit facility. In August 2016 we amended our
credit facility and incurred $0.9 million in fees which are
included in interest expense for the twelve months ended December
31, 2016. (2) Does not include Cash Tax Savings on
Indefinite-lived Intangible Assets. These savings total $6.8
million per quarter (approximately $0.13 per diluted share) and
represent the economic value of the tax deduction that we receive
from the amortization of goodwill and trademarks.
OPERATING METRICS (Unaudited)
Apex Oxford Consolidated Average number of staffing
consultants: Q4 2017 1,578 927 2,505 Q3 2017 1,567 925 2,492 Q4
2016 1,453 1,016 2,469 Average number of customers: Q4 2017
3,613 1,036 4,649 Q3 2017 3,530 1,048 4,578 Q4 2016 3,611 1,088
4,699 Average number of contract professionals(1): Q4 2017
19,216 2,841 22,057 Q3 2017 18,236 2,896 21,132 Q4 2016 17,060
2,903 19,963 Top 10 customers as a percentage of revenues:
Q4 2017 25.8 % 12.4 % 20.5 % Q3 2017 26.7 % 11.3 % 20.9 % Q4 2016
26.3 % 12.9 % 20.5 % Average bill rate: Q4 2017 $ 57.46 $
101.16 $ 62.88 Q3 2017 $ 58.16 $ 100.78 $ 63.49 Q4 2016 $ 56.57 $
99.12 $ 62.12 Gross profit per staffing consultant: Q4 2017
$ 102,000 $ 65,000 $ 88,000 Q3 2017 $ 99,000 $ 68,000 $ 88,000 Q4
2016 $ 97,000 $ 57,000 $ 80,000 (1) Average number of
contract professionals placed on assignment each week that are
considered our employees; this number does not include employees of
our subcontractors.
ON
ASSIGNMENT, INC FINANCIAL ESTIMATES FOR Q1 2018
RECONCILIATION OF ESTIMATED NET INCOME TO ESTIMATED NON-GAAP
MEASURES
(In millions, except per share data)
Low High Net income(1)(2) $ 24.4 $ 26.6
Interest expense 6.2 6.2 Provision for income taxes(2) 8.7 9.5
Depreciation 6.5 6.5 Amortization of intangible assets 7.6
7.6 EBITDA (non-GAAP measure) 53.4 56.4
Stock-based compensation 5.6 5.6 Estimated acquisition expenses
related to the pending acquisition of ECS 10.0
10.0 Adjusted EBITDA (non-GAAP measure) $ 69.0
$ 72.0 Low High Net
income(1)(2) $ 24.4 $ 26.6 Estimated acquisition expenses related
to the pending acquisition of ECS 10.0 10.0 Tax effect on estimated
acquisition expenses (2.7 ) (2.7 ) Amortization of intangible
assets 7.6 7.6 Income taxes on amortization for financial reporting
purposes not deductible for income tax purposes (0.3 )
(0.3 ) Adjusted Net Income (non-GAAP measure)(3) $ 39.0
$ 41.2 Per diluted share: Net income $ 0.46 $
0.50 Adjustments 0.28 0.28 Adjusted Net
Income (non-GAAP measure)(3) $ 0.74 $ 0.78
Weighted average common and common equivalent shares outstanding
(diluted) 52.8 52.8 (1)
These estimates do not include acquisition, integration, or
strategic planning expenses, other than the $10.0 million in
estimated acquisition expenses related to the pending acquisition
of ECS. (2) These estimates do not include excess tax
benefits related to stock-based compensation. (3) Does not
include the “Cash Tax Savings on Indefinite-lived Intangible
Assets.” These savings total $4.6 million per quarter ($0.09 per
diluted share) and represent the economic value of the tax
deduction that we receive from the amortization of goodwill and
trademarks.
ECS FEDERAL,
LLC PRELIMINARY FINANCIAL ESTIMATES FOR THE YEAR
ENDING DECEMBER 31, 2018 RECONCILIATION OF ESTIMATED NET
INCOME TO ESTIMATED NON-GAAP MEASURES
(In millions)
Low High Net loss(1) $ (19.0 ) $ (14.3
) Interest expense 33.6 33.6 Provision for income taxes (7.0 ) (5.2
) Depreciation 14.1 14.1 Amortization of intangible assets
45.0 42.0 EBITDA (non-GAAP measure) 66.7 70.2
Stock-based compensation 3.3 3.3
Adjusted EBITDA (non-GAAP measure) $ 70.0 $ 73.5
Low High Net loss(1) $
(19.0 ) $ (14.3 ) Amortization of intangible assets 45.0
42.0 Adjusted Net Income (non-GAAP measure)(2)
$ 26.0 $ 27.7 (1) These estimates do
not include acquisition or integration expenses. (2) Does
not include the “Cash Tax Savings on Indefinite-lived Intangible
Assets.” These savings are estimated to be approximately $9.0
million annually over 15 years and represent the economic value of
the tax deduction that we receive from the amortization of goodwill
and trademarks.
These estimates assume no deterioration in current operating and
market trends. Operating results of ECS will be included in the
2018 consolidated operating results of On Assignment from the date
of acquisition (currently expected to occur on April 2, 2018)
through December 31, 2018.
The preliminary financial estimates for ECS include, among other
things, amortization of intangible assets, interest expense on the
debt to fund the acquisition and the estimated provision (benefit)
for income taxes as if the acquisition of ECS occurred at the
beginning of 2018. These estimates do not include any transaction
costs related to the pending acquisition. The estimated
amortization of intangible assets is based on a preliminary
estimate of the fair value of assets acquired and their related
service lives, both of which are subject to change within the
one-year measurement period.
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version on businesswire.com: http://www.businesswire.com/news/home/20180214006378/en/
On Assignment, Inc.Ed PierceChief Financial Officer(818)
878-7900
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