|
| | |
| | | For Release |
| | | February 17, 2016 |
| | | 1:15 p.m. PST |
Contacts:
Ed Pierce
Chief Financial Officer
(818) 878-7900
On Assignment Reports Results for Fourth Quarter and Full Year 2015
Revenues, Adjusted EPS & Adjusted EBITDA above Previously Announced Estimates
Pro Forma Revenue Growth of 14.4 Percent for Q4 and 11.1 Percent for the Full Year
Third Consecutive Quarter Year-over-Year Revenue Growth Rate Up over Preceding Quarter
CALABASAS, Calif., February 17, 2016 -- On Assignment, Inc. (NYSE: ASGN), a leading global provider of diversified professional staffing solutions, today reported results for the quarter ended December 31, 2015.
Fourth Quarter Highlights
| |
| • | Reported record revenues of $577.5 million; up 30.9 percent year-over-year (31.7 percent on a constant currency basis). Constant currency revenues and growth rates for the quarter were calculated using the foreign currency exchange rates from the same period in the prior year. |
| |
| • | Revenues on a pro forma basis were up 14.4 percent year-over-year (15.0 percent on a constant currency basis). Pro forma results assume the acquisitions of Creative Circle, LLC ("Creative Circle") and a small Life Sciences business in Europe (the "Acquisitions") occurred at the beginning of 2014. |
| |
| • | Revenues, excluding the contribution from the Acquisitions, were $500.1 million, up 13.4 percent year-over-year (up 14.0 percent, on a constant currency basis). |
| |
| • | Adjusted EBITDA (a non-GAAP measure defined below) was $70.7 million, or 12.2 percent of revenues. |
| |
| • | Adjusted income from continuing operations (a non-GAAP measure defined below) was $40.6 million ($0.76 per diluted share). |
| |
| • | Leverage ratio (total indebtedness to trailing 12 months Adjusted EBITDA) was 3.02 to 1 at December 31, 2015, down from 3.21 to 1 at September 30, 2015. |
Commenting on the results, Peter Dameris, President and Chief Executive Officer of On Assignment, Inc., said, "We are very pleased with our financial results for Q4 in which we exceeded our financial targets for revenues, Adjusted EBITDA and Adjusted EPS. Our pro forma revenue growth rate for the quarter was 14.4 percent and represented the third straight quarter our pro forma revenue growth rate increased over the preceding quarter. This improvement reflects higher demand from our customers and higher productivity from our field operations staff. We believe we are entering 2016 with strong momentum which positions us well to continue to report above-market growth rates."
Fourth Quarter 2015 Financial Results
Revenues for the quarter were $577.5 million ($580.7 million on a constant currency basis), up 30.9 percent year-over-year (31.7 percent on a constant currency basis). Constant currency revenues and growth rates were calculated using the foreign exchange rates from the fourth quarter of 2014. Revenues on a pro forma basis, which assumes the Acquisitions occurred at the beginning of 2014, were up 14.4 percent year-over-year (15.0 percent on a constant currency basis).
Revenues from the Acquisitions (which were acquired in the second quarter of 2015) totaled $77.4 million for the current quarter. The revenue contribution from Creative Circle was $74.6 million, and the contribution from the Life Sciences business was $2.8 million. Operating results of Creative Circle are included in the Apex Segment. The Life Sciences European business is included in the Oxford Segment.
Revenues, excluding the contribution from the Acquisitions, were $500.1 million ($502.9 million on a constant currency basis), up 13.4 percent year-over-year (14.0 percent, on a constant currency basis).
Direct hire and conversion revenues were $32.6 million, up 61.9 percent year-over-year, which included $5.0 million from Creative Circle. CyberCoders accounted for 63.2 percent of the total and was up 37.3 percent year-over-year. Direct hire and conversion revenues were 5.7 percent of total revenues for the quarter, up from 4.6 percent in the fourth quarter of 2014.
Our largest segment, Apex, accounted for 75.0 percent of total revenues. Apex grew 40.7 percent year-over-year, and 17.4 percent on a pro forma basis. Excluding the revenue contribution of $74.6 million from Creative Circle, the Apex Segment grew 16.5 percent year-over-year.
Our Oxford Segment accounted for 25.0 percent of total revenues. Oxford grew 8.4 percent year-over-year (10.8 percent on constant currency basis). Excluding the revenue contribution of $2.8 million from an acquired business, the Oxford Segment grew 6.3 percent (8.5 percent on a constant currency basis).
Gross profit was $192.9 million, up $50.4 million or 35.4 percent year-over-year. Gross margin for the quarter was 33.4 percent.
Selling, general and administrative (“SG&A”) expenses were $138.8 million (24.0 percent of revenues), up from $101.2 million (22.9 percent of revenues) in the fourth quarter of 2014. SG&A expenses for the quarter included $15.6 million from Creative Circle and the acquired Life Sciences business in Europe, and acquisition, integration and strategic planning expenses of $5.0 million.
Amortization of intangible assets was $11.3 million, compared with $5.5 million in the fourth quarter of 2014. The increase in amortization is mainly related to the acquisition of Creative Circle.
Interest expense for the quarter was $9.1 million compared with $3.2 million in the fourth quarter of 2014. Interest expense for the quarter was comprised of (i) interest on the credit facility of $7.5 million, (ii) amortization of deferred loan costs of $0.9 million, and (iii) accretion of discount of $0.7 million on the contingent consideration liability related to the Acquisitions.
Adjusted income from continuing operations (a non-GAAP measure as calculated in an accompanying table) was $40.6 million ($0.76 per diluted share). Net income on a GAAP basis was $19.3 million ($0.36 per diluted share).
Adjusted EBITDA (a non-GAAP measure defined below) was $70.7 million, or 12.2 percent of revenues. The Adjusted EBITDA contribution from Creative Circle was $16.8 million.
During the quarter, we repaid $30.0 million of long-term debt and at December 31, 2015, our leverage ratio (total indebtedness to trailing 12 months Adjusted EBITDA) was 3.02 to 1, down from 3.21 to 1 at September 30, 2015.
Financial Estimates for Q1 2016
On Assignment is providing financial estimates for the first quarter of 2016. These estimates do not include acquisition, integration, or strategic planning expenses and assume no deterioration in the staffing markets that On Assignment serves. These estimates also assume no deterioration in foreign exchange rates.
| |
| • | Revenues of $550.0 million to $555.0 million |
| |
| • | Gross margin of 32.5 percent to 32.9 percent |
| |
| • | SG&A expense (excludes amortization of intangible assets) of $134.8 to $135.8 million (includes $5.1 million in depreciation and $7.2 million in equity-based compensation expense) |
| |
| • | Amortization of intangible assets of $10.1 million |
| |
| • | Adjusted EBITDA of $56.5 million to $59.0 million |
| |
| • | Effective tax rate of 39.5 percent |
| |
| • | Adjusted income from continuing operations of $31.6 million to $33.1 million |
| |
| • | Adjusted income from continuing operations per diluted share of $0.58 to $0.61 |
| |
| • | Income from continuing operations of $15.3 million to $16.8 million |
| |
| • | Income from continuing operations per diluted share of $0.28 to $0.31 |
| |
| • | Diluted shares outstanding of 54.1 million |
The above estimates assume billable days of 62.8 for the quarter. The above estimates also include the effects of the payroll tax reset, which occurs at the beginning of each year. The reset results in an estimated sequential increase in payroll taxes of approximately $8.5 million (or 1.5 percent of revenues) of which approximately $5.0 million relates to cost of services and the remainder to SG&A expenses.
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 800-230-1093 (+1-612-234-9959 for callers outside the United States) and the conference ID number is 384040. Participants should dial in ten minutes before the call.
A replay of the conference call will be available beginning Wednesday, February 17, 2016 at 6:30 p.m. EST and ending at 11:59 p.m. EST on Wednesday, March 2, 2016. The access number for the replay is 800-475-6701 (+1-320-365-3844 outside the United States) and the conference ID number is 384040.
This call is being webcast by CCBN and can be accessed via On Assignment's web site at www.onassignment.com. Individual investors can also listen at CCBN's site at www.fulldisclosure.com or by visiting any of the investor sites in CCBN's Individual Investor Network.
About On Assignment
On Assignment, Inc. is a leading global provider of in-demand, skilled professionals in the growing technology, life sciences, and creative 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 its 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, which is based in Calabasas, California, was founded in 1985 and went public in 1992. The Company has a network of branch offices throughout the United States, Canada and Europe. 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 Generally Accepted Accounting Principles in the United States ("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 a 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 2016. 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 ("SEC"), including our Annual Report on Form 10-K for the year ended December 31, 2014, as filed with the SEC on March 2, 2015, our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2015, June 30, 2015 and September 30, 2015 as filed with the SEC on May 8, 2015, August 7, 2015 and November 6, 2015, respectively, and our Current Report on Form 8-K filed with the SEC on June 5, 2015. 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, |
| | 2015 | | 2014 (1) |
| | 2015 | | 2015 | | 2014 (1) |
|
| | | | | | | | | | |
| Revenues | $ | 577,517 |
| | $ | 441,023 |
| | $ | 572,123 |
| | $ | 2,065,008 |
| | $ | 1,724,741 |
|
| Cost of services | 384,585 |
| | 298,486 |
| | 380,719 |
| | 1,386,263 |
| | 1,167,306 |
|
| Gross profit | 192,932 |
| | 142,537 |
| | 191,404 |
| | 678,745 |
| | 557,435 |
|
| Selling, general and administrative expenses | 138,754 |
| | 101,192 |
| | 128,614 |
| | 492,170 |
| | 397,523 |
|
| Amortization of intangible assets | 11,316 |
| | 5,538 |
| | 11,325 |
| | 34,467 |
| | 22,130 |
|
| Operating income | 42,862 |
| | 35,807 |
| | 51,465 |
| | 152,108 |
| | 137,782 |
|
| Interest expense, net | (9,098 | ) | | (3,198 | ) | | (9,543 | ) | | (26,444 | ) | | (12,730 | ) |
| Write-off of loan costs | — |
| | — |
| | — |
| | (3,751 | ) | | — |
|
| Income before income taxes | 33,764 |
| | 32,609 |
| | 41,922 |
| | 121,913 |
| | 125,052 |
|
| Provision for income taxes | 14,591 |
| | 13,083 |
| | 17,031 |
| | 50,491 |
| | 51,557 |
|
| Income from continuing operations | 19,173 |
| | 19,526 |
| | 24,891 |
| | 71,422 |
| | 73,495 |
|
| Gain on sale of discontinued operations, net of tax | — |
| | — |
| | — |
| | 25,703 |
| | — |
|
| Income from discontinued operations, net of tax | 165 |
| | 947 |
| | 34 |
| | 525 |
| | 3,689 |
|
| Net income | $ | 19,338 |
| | $ | 20,473 |
| | $ | 24,925 |
| | $ | 97,650 |
| | $ | 77,184 |
|
| | | | | | | | | | |
| Basic earnings per common share: | | | | | | | | | |
| Income from continuing operations | $ | 0.36 |
| | $ | 0.38 |
| | $ | 0.47 |
| | $ | 1.37 |
| | $ | 1.38 |
|
| Income from discontinued operations | 0.01 |
| | 0.01 |
| | — |
| | 0.50 |
| | 0.06 |
|
| | $ | 0.37 |
| | $ | 0.39 |
| | $ | 0.47 |
| | $ | 1.87 |
| | $ | 1.44 |
|
| | | | | | | | | | |
| Diluted earnings per common share: | | | | | | | | | |
| Income from continuing operations | $ | 0.36 |
| | $ | 0.37 |
| | $ | 0.47 |
| | $ | 1.35 |
| | $ | 1.35 |
|
| Income from discontinued operations | — |
| | 0.02 |
| | — |
| | 0.49 |
| | 0.07 |
|
| | $ | 0.36 |
| | $ | 0.39 |
| | $ | 0.47 |
| | $ | 1.84 |
| | $ | 1.42 |
|
| | | | | | | | | | |
| Number of shares and share equivalents used to calculate earnings per share: | | | | | | | | | |
| Basic | 52,867 |
| | 51,900 |
| | 52,654 |
| | 52,259 |
| | 53,437 |
|
| Diluted | 53,590 |
| | 52,679 |
| | 53,304 |
| | 53,005 |
| | 54,294 |
|
| | | | | | | | | | |
______
| |
| (1) | Amounts have been restated to give retroactive effect to the sale of our Physician Segment on February 1, 2015 which is 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 ("SEC"). |
SUPPLEMENTAL SEGMENT FINANCIAL INFORMATION (Unaudited)
(In thousands)
|
| | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Year Ended |
| December 31, | | September 30, | | December 31, |
| | 2015 | | 2014 (1) | | 2015 | | 2015 | | 2014 (1) |
| Revenues: | | | | | | | | | |
| Apex | $ | 432,978 |
| | $ | 307,724 |
| | $ | 421,067 |
| | $ | 1,487,042 |
| | $ | 1,190,052 |
|
| Oxford | 144,539 |
| | 133,299 |
| | 151,056 |
| | 577,966 |
| | 534,689 |
|
| | $ | 577,517 |
| | $ | 441,023 |
| | $ | 572,123 |
| | $ | 2,065,008 |
| | $ | 1,724,741 |
|
| | | | | | | | | | |
| Gross profit: | | | | | | | | | |
| Apex | $ | 131,481 |
| | $ | 87,816 |
| | $ | 128,731 |
| | $ | 437,507 |
| | $ | 335,322 |
|
| Oxford | 61,451 |
| | 54,721 |
| | 62,673 |
| | 241,238 |
| | 222,113 |
|
| | $ | 192,932 |
| | $ | 142,537 |
| | $ | 191,404 |
| | $ | 678,745 |
| | $ | 557,435 |
|
| |
______
| |
| (1) | Amounts have been restated to give retroactive effect to the sale of our Physician Segment on February 1, 2015 which is 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 ("SEC"). |
SELECTED CASH FLOW INFORMATION (Unaudited)
(In thousands)
|
| | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Year Ended |
| December 31, | | September 30, | | December 31, |
| | 2015 | | 2014 | | 2015 | | 2015 (1) | | 2014 |
| Cash provided by operations | $ | 30,196 |
| | $ | 28,064 |
| | $ | 35,277 |
| | $ | 117,493 |
| | $ | 96,022 |
|
| Capital expenditures | $ | 6,512 |
| | $ | 5,469 |
| | $ | 4,846 |
| | $ | 24,689 |
| | $ | 19,729 |
|
SELECTED CONSOLIDATED BALANCE SHEET DATA (Unaudited)
(In thousands)
|
| | | | | | | |
| | December 31, | | September 30, |
| | 2015 | | 2015 |
| Cash and cash equivalents | $ | 23,869 |
| | $ | 28,916 |
|
| Accounts receivable, net | 354,808 |
| | 358,649 |
|
| Total current assets | 414,208 |
| | 417,350 |
|
Goodwill and intangible assets, net (2) | 1,292,831 |
| | 1,305,249 |
|
Total assets (2) | 1,767,307 |
| | 1,781,960 |
|
Total current liabilities (2) | 160,350 |
| | 182,323 |
|
Working capital (2) | 253,858 |
| | 235,027 |
|
Long-term debt (3) | 755,508 |
| | 784,797 |
|
| Other long-term liabilities | 66,655 |
| | 55,898 |
|
| Stockholders’ equity | 784,794 |
| | 758,942 |
|
____
| |
| (1) | Amounts include cash flows from our Physician Segment. This segment generated a negative $1.8 million of cash flows from operations and its capital expenditures were negligible during the three months ended March 31, 2015. There were no cash flows from the Physician Segment in the three months ended September 30, 2015 and December 31, 2015. |
| |
| (2) | September 30, 2015 balance reflects purchase accounting adjustments which are presented retrospectively to the acquisition date and the change in presentation of deferred tax assets and deferred tax liabilities as noncurrent. |
| |
| (3) | Long-term debt is net of $18.5 million and $19.2 million unamortized deferred loan costs at December 31, 2015 and September 30, 2015, respectively. |
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, | | | |
| | 2015 | | 2014 (1) | | September 30, 2015 | |
| Net income | $ | 19,338 |
| | $ | 0.36 |
| | $ | 20,473 |
| | $ | 0.39 |
| | $ | 24,925 |
| | $ | 0.47 |
| |
| Income from discontinued operations, net of tax | 165 |
| | — |
| | 947 |
| | 0.02 |
| | 34 |
| | — |
| |
| Income from continuing operations | 19,173 |
| | 0.36 |
| | 19,526 |
| | 0.37 |
| | 24,891 |
| | 0.47 |
| |
| Interest expense, net | 9,098 |
| | 0.17 |
| | 3,198 |
| | 0.06 |
| | 9,543 |
| | 0.18 |
| |
| Provision for income taxes | 14,591 |
| | 0.27 |
| | 13,083 |
| | 0.25 |
| | 17,031 |
| | 0.32 |
| |
| Depreciation | 4,759 |
| | 0.09 |
| | 3,379 |
| | 0.06 |
| | 4,356 |
| | 0.08 |
| |
| Amortization of intangible assets | 11,316 |
| | 0.21 |
| | 5,538 |
| | 0.11 |
| | 11,325 |
| | 0.21 |
| |
| EBITDA | 58,937 |
| | 1.10 |
| | 44,724 |
| | 0.85 |
| | 67,146 |
| | 1.26 |
| |
| Equity-based compensation | 6,774 |
| | 0.13 |
| | 4,157 |
| | 0.08 |
| | 6,054 |
| | 0.12 |
| |
| Acquisition, integration and strategic planning expenses | 5,025 |
| | 0.09 |
| | 1,762 |
| | 0.03 |
| | 1,714 |
| | 0.03 |
| |
| Adjusted EBITDA | $ | 70,736 |
| | $ | 1.32 |
| | $ | 50,643 |
| | $ | 0.96 |
| | $ | 74,914 |
| | $ | 1.41 |
| |
| | | | | | | | | | | | | |
| Weighted average common and common equivalent shares outstanding (diluted) | 53,590 |
| | | | 52,679 |
| | | | 53,304 |
| | | |
|
| | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, | |
| | | 2015 | | 2014 (1) | |
| Net income | | $ | 97,650 |
| | $ | 1.84 |
| | $ | 77,184 |
| | $ | 1.42 |
| |
| Income from discontinued operations, net of tax | | 26,228 |
| | 0.49 |
| | 3,689 |
| | 0.07 |
| |
| Income from continuing operations | | 71,422 |
| | 1.35 |
| | 73,495 |
| | 1.35 |
| |
| Interest expense, net | | 26,444 |
| | 0.50 |
| | 12,730 |
| | 0.23 |
| |
| Write-off of loan costs | | 3,751 |
| | 0.07 |
| | — |
| | — |
| |
| Provision for income taxes | | 50,491 |
| | 0.95 |
| | 51,557 |
| | 0.95 |
| |
| Depreciation | | 16,838 |
| | 0.32 |
| | 12,265 |
| | 0.23 |
| |
| Amortization of intangible assets | | 34,467 |
| | 0.65 |
| | 22,130 |
| | 0.41 |
| |
| EBITDA | | 203,413 |
| | 3.84 |
| | 172,177 |
| | 3.17 |
| |
| Equity-based compensation | | 22,018 |
| | 0.42 |
| | 15,623 |
| | 0.29 |
| |
| Acquisition, integration and strategic planning expenses | | 14,949 |
| | 0.28 |
| | 5,264 |
| | 0.10 |
| |
| Adjusted EBITDA | | $ | 240,380 |
| | $ | 4.54 |
| | $ | 193,064 |
| | $ | 3.56 |
| |
| | | | | | | | | | |
Weighted average common and common equivalent shares outstanding (diluted) | | 53,005 |
| | | | 54,294 |
| | | |
______
| |
| (1) | Amounts have been restated to give retroactive effect to the sale of our Physician Segment on February 1, 2015 which is 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 ("SEC"). |
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, |
| | 2015 | | 2014 (1) | | 2015 |
| Net income | $ | 19,338 |
| | $ | 0.36 |
| | $ | 20,473 |
| | $ | 0.39 |
| | $ | 24,925 |
| | $ | 0.47 |
|
| Income from discontinued operations, net of tax | 165 |
| | — |
| | 947 |
| | 0.02 |
| | 34 |
| | — |
|
| Income from continuing operations | 19,173 |
| | 0.36 |
| | 19,526 |
| | 0.37 |
| | 24,891 |
| | 0.47 |
|
| Acquisition, integration and strategic planning expenses, net of tax | 3,771 |
| | 0.07 |
| | 1,105 |
| | 0.02 |
| | 1,132 |
| | 0.02 |
|
Accretion of fair value discount on contingent consideration (2) | 466 |
| | 0.01 |
| | — |
| | — |
| | 480 |
| | 0.01 |
|
| Non-GAAP income from continuing operations | $ | 23,410 |
| | $ | 0.44 |
| | $ | 20,631 |
| | $ | 0.39 |
| | $ | 26,503 |
| | $ | 0.50 |
|
| | | | | | | | | | | | |
| Weighted average common and common equivalent shares outstanding (diluted) | 53,590 |
| |
|
| | 52,679 |
| | | | 53,304 |
| |
|
|
| |
|
| | | | | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2015 | | 2014 (1) |
| Net income | $ | 97,650 |
| | $ | 1.84 |
| | $ | 77,184 |
| | $ | 1.42 |
|
| Income from discontinued operations, net of tax | 26,228 |
| | 0.49 |
| | 3,689 |
| | 0.07 |
|
| Income from continuing operations | 71,422 |
| | 1.35 |
| | 73,495 |
| | 1.35 |
|
| Write-off of loan costs, net of tax | 2,288 |
| | 0.04 |
| | — |
| | — |
|
| Acquisition, integration and strategic planning expenses, net of tax | 10,261 |
| | 0.19 |
| | 3,479 |
| | 0.07 |
|
Accretion of fair value discount on contingent consideration (2) | 946 |
| | 0.02 |
| | — |
| | — |
|
| Non-GAAP income from continuing operations | $ | 84,917 |
| | $ | 1.60 |
| | $ | 76,974 |
| | $ | 1.42 |
|
| | | | | | | | |
Weighted average common and common equivalent shares outstanding (diluted) | 53,005 |
| |
|
| | 54,294 |
| | |
| | | | | | | | |
_____
| |
| (1) | Amounts have been restated to give retroactive effect to the sale of our Physician Segment on February 1, 2015 which is 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 ("SEC"). |
| |
| (2) | We have contingent consideration obligations related to our acquisitions. The fair value of the contingent consideration was determined using an expected present value technique. The change in present value due to the passage of time (accretion of fair value discount) is recorded in interest expense. |
CALCULATION OF ADJUSTED EARNINGS PER DILUTED SHARE (Unaudited)
(In thousands, except per share amounts)
|
| | | | | | | | | | | | | | | |
| | Three Months Ended | | Year Ended |
| | December 31, | | December 31, |
| | 2015 | | 2014 (5) | | 2015 | | 2014 (5) |
Non-GAAP income from continuing operations (1) | $ | 23,410 |
| | $ | 20,631 |
| | $ | 84,917 |
| | $ | 76,974 |
|
| Adjustments: | | | | | | | |
Amortization of intangible assets (2) | 11,316 |
| | 5,538 |
| | 34,467 |
| | 22,130 |
|
Cash tax savings on indefinite-lived intangible assets (3) | 6,529 |
| | 3,808 |
| | 21,795 |
| | 15,230 |
|
Income taxes on amortization for financial reporting purposes not deductible for income tax purposes (4) | (620 | ) | | (532 | ) | | (2,353 | ) | | (2,125 | ) |
| Adjusted income from continuing operations | $ | 40,635 |
| | $ | 29,445 |
| | $ | 138,826 |
| | $ | 112,209 |
|
| | | | | | | | |
Adjusted income from continuing operations per diluted share
| $ | 0.76 |
| | $ | 0.56 |
| | $ | 2.62 |
| | $ | 2.07 |
|
| | | | | | | | |
| Weighted average common and common equivalent shares outstanding (diluted) | 53,590 |
| | 52,679 |
| | 53,005 |
| | 54,294 |
|
| | | | | | | | |
______
| |
| (1) | Non-GAAP income from continuing operations as calculated on preceding page. Non-GAAP income from continuing operations excludes the write-off of loan costs, and 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) | Income taxes (assuming a 39 percent marginal rate) on the portion of amortization of intangible assets, which is not deductible for income tax purposes (mainly amortization associated with the acquisition of CyberCoders, Inc. and a Life Science business in Europe that the Company was not able to step-up the tax basis in those acquired assets for tax purposes). |
| |
| (5) | Amounts have been restated to exclude results of the Physician Segment from continuing operations. The Physician Segment was sold on February 1, 2015 and its results are now included in discontinued operations. |
PROJECTED ADJUSTMENTS TO GAAP NET INCOME TO CALCULATED ADJUSTED NET INCOME (Unaudited)
(In thousands)
|
| | | | | | | | | | | | | | | | | | | |
| | Year Ending December 31, |
| | 2016 | | 2017 | | 2018 | | 2019 | | 2020 |
| Add-backs: | | | | | | | | | |
Amortization of intangible assets (1) | $ | 39,534 |
| | $ | 32,943 |
| | $ | 28,893 |
| | $ | 22,031 |
| | $ | 14,532 |
|
Cash tax savings on indefinite-lived intangible assets for income tax purposes (Goodwill & Trademarks) (2) | 26,528 |
| | 26,712 |
| | 26,712 |
| | 26,712 |
| | 26,712 |
|
Income taxes on amortization for financial reporting purposes not deductible for income tax purposes (3)
| (2,018 | ) | | (1,622 | ) | | (1,606 | ) | | (1,439 | ) | | (252 | ) |
Net adjustment to GAAP net income to calculate adjusted net income
| $ | 64,044 |
| | $ | 58,033 |
| | $ | 53,999 |
| | $ | 47,304 |
| | $ | 40,992 |
|
______
The table above shows adjustments to GAAP net income to calculate Adjusted net income
| |
| (1) | Amortization of identifiable intangible assets of 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 is not deductible for income tax purposes (mainly amortization associated with the acquisition of CyberCoders, Inc. and a Life Science business in Europe 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)
|
| | | | | | | | | | | | | |
| | Apex | | Oxford | | Consolidated 1 | | |
| Revenues (in thousands): | | | | | | | |
| Q4 2015 | $ | 432,978 |
| | $ | 144,539 |
| | $ | 577,517 |
| | |
| Q3 2015 | $ | 421,067 |
| | $ | 151,056 |
| | $ | 572,123 |
| | |
| % Sequential change | 2.8 | % | | (4.3 | )% | | 0.9 | % | | |
| Q4 2014 | $ | 307,724 |
| | $ | 133,299 |
| | $ | 441,023 |
| | |
| % Year-over-year change | 40.7 | % | | 8.4 | % | | 30.9 | % | | |
| | | | | | | | |
| Direct hire and conversion revenues (in thousands): | | | | | | | |
| Q4 2015 | $ | 10,480 |
| | $ | 22,152 |
| | $ | 32,632 |
| | |
| Q3 2015 | $ | 10,574 |
| | $ | 22,166 |
| | $ | 32,740 |
| | |
| Q4 2014 | $ | 4,146 |
| | $ | 16,008 |
| | $ | 20,154 |
| | |
| | | | | | | | |
| Gross margins: | | | | | | | |
| Q4 2015 | 30.4 | % | | 42.5 | % | | 33.4 | % | | |
| Q3 2015 | 30.6 | % | | 41.5 | % | | 33.5 | % | | |
| Q4 2014 | 28.5 | % | | 41.1 | % | | 32.3 | % | | |
| | | | | | | | |
Average number of staffing consultants: 2 | | | | | | | |
| Q4 2015 | 1,293 |
| | 972 |
| | 2,265 |
| | |
| Q3 2015 | 1,266 |
| | 966 |
| | 2,232 |
| | |
| Q4 2014 | 942 |
| | 869 |
| | 1,811 |
| | |
| | | | | | | | |
Average number of customers: 3 | | | | | | | |
| Q4 2015 | 3,331 |
| | 1,117 |
| | 4,448 |
| | |
| Q3 2015 | 3,207 |
| | 1,114 |
| | 4,321 |
| | |
| Q4 2014 | 1,276 |
| | 1,050 |
| | 2,326 |
| | |
| | | | | | | | |
| Top 10 customers as a percentage of revenue: | | | | | | | |
| Q4 2015 | 22.9 | % | | 8.9 | % | | 17.2 | % | | |
| Q3 2015 | 22.7 | % | | 8.7 | % | | 16.7 | % | | |
| Q4 2014 | 29.1 | % | | 12.6 | % | | 20.3 | % | | |
| | | | | | | | |
| Average bill rate: | | | | | | | |
| Q4 2015 | $ | 54.80 |
| | $ | 98.19 |
| | $ | 60.68 |
| | |
| Q3 2015 | $ | 55.51 |
| | $ | 99.33 |
| | $ | 61.84 |
| | |
| Q4 2014 | $ | 54.59 |
| | $ | 103.92 |
| | $ | 62.75 |
| | |
| | | | | | | | |
| Gross profit per staffing consultant: | | | | | | | |
| Q4 2015 | $ | 102,000 |
| | $ | 63,000 |
| | $ | 85,000 |
| | |
| Q3 2015 | $ | 102,000 |
| | $ | 65,000 |
| | $ | 86,000 |
| | |
| Q4 2014 | $ | 93,000 |
| | $ | 63,000 |
| | $ | 79,000 |
| | |
_______
| |
| (1) | Prior year amounts have been restated to exclude discontinued operations. |
| |
| (2) | Excluding Creative Circle, the average number of staffing consultants for the Apex Segment is 1,086 for the fourth quarter of 2015 and 1,073 for the third quarter of 2015. |
| |
| (3) | Excluding Creative Circle, the average number of customers for the Apex Segment is 1,379 for the fourth quarter of 2015 and 1,375 for the third quarter of 2015. |
SUPPLEMENTAL FINANCIAL INFORMATION – KEY METRICS (Unaudited)
|
| | | | | | | |
| | Three Months Ended | |
| December 31, 2015 | | September 30, 2015 |
| Percentage of revenues: | | | | | |
| Top ten clients | 17.2 | % | | | 16.7 | % | |
| Direct hire/conversion | 5.7 | % | | | 5.7 | % | |
| | | | | | |
| Bill rate: | | | | | |
| % Sequential change | (1.9 | %) | | | (1.1 | %) | |
| % Year-over-year change | (3.3 | %) | | | (1.1 | %) | |
| | | | | | |
| Bill/Pay spread: | | | | | |
| % Sequential change | (1.6 | %) | | | 1.0 | % | |
| % Year-over-year change | (1.7 | %) | | | (0.6 | %) | |
| | | | | | |
| Average headcount: | | | | | |
| Contract professionals (CP) | 17,612 |
| | | 16,633 |
| |
| Staffing consultants (SC) | 2,265 |
| | | 2,232 |
| |
| | | | | | |
Note: The above table is shown on a consolidated basis. The changes in bill rate data are primarily caused by changes in mix of business within the divisions (such as mix of large versus small accounts) or a change in the overall mix of business related to different growth rates of the operating divisions.
