Exhibit 99.1
 | Contact: Tyra Tutor Senior Vice President, Corporate Development (904) 360-2500 tyra.tutor@mpsgroup.com |
| NEWS RELEASE | For Immediate Release |
MPS Group Announces Fourth Quarter and Year-end Results
Revenue Up 30% in 2004 Versus 2003
JACKSONVILLE, Fla. (February 10, 2005) —MPS Group, Inc. (NYSE:MPS), a leading provider of specialty staffing, consulting and business solutions, today announced financial results for the fourth quarter and year ended December 31, 2004. The Company reported revenue of $421 million and diluted net income per common share of $0.11 for the quarter ended December 31, 2004, compared with revenue of $284 million and diluted net income per common share from continuing operations of $0.05 for the year-earlier period.
For the year, revenue grew from $1.096 billion in 2003 to $1.427 billion in 2004, an increase of 30%. Diluted net income per common share from continuing operations grew from $0.21 in 2003 to $0.33 in 2004, an increase of 57%. EBITDA grew from $53 million in 2003 to $68 million in 2004, an increase of 28%.
Fourth Quarter Summary
| • | Revenue was $421 million, up 48% versus the fourth quarter of 2003 and up 16% sequentially versus the third quarter of 2004; |
| • | Excluding the impacts of acquisitions and currency exchange rates, revenue increased 37% versus the fourth quarter of 2003 and 11% versus the third quarter of 2004; |
| • | Diluted net income per common share was $0.11, up 120% from the fourth quarter of 2003; |
| • | Net income was impacted by higher-than-anticipated administrative expenses, primarily related to Sarbanes-Oxley Section 404, incurred in the fourth quarter; however, these higher costs were offset by income tax benefits; |
| • | EBITDA was $20 million, an increase of 59% versus the fourth quarter of 2003; |
| • | Operating income was $16 million, an increase of 88% versus the fourth quarter of 2003; |
| • | Cash flow from operations was $33 million during the fourth quarter. |
Segment Information
In the past, the Company has presented the financial results of three reporting segments: IT Services, IT Solutions, and Professional Services. In an effort to better align the reporting of its financial results with the manner in which the Company currently manages its business, the Company will revise its presentation of financial results from three to four reporting segments. Beginning with the fourth quarter, financial results will be reported as follows:
Information Technology (IT) Division | Professional Services Division | |
• North American Segment | • North American Segment | |
• European Segment | • European Segment |
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1 Independence DriveŸ Jacksonville, Florida 32202Ÿ 904-360-2000Ÿ 904-360-2814 fax
www.mpsgroup.com
MPS Reports Year-end Results
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February 10, 2005
The former IT Solutions segment is included in the North American information technology segment, as all of its business is conducted in the United States.
Professional Services Division Performance
The Company’s Professional Services division reported revenue for the fourth quarter of 2004 of $212 million, an increase of 53% versus the fourth quarter of 2003 and 17% sequentially versus the third quarter of 2004. Excluding the impacts of acquisitions and changes in currency, revenue grew 33% versus the fourth quarter of 2003 and 8% sequentially versus the third quarter of 2004. For the year, Professional Services division revenue increased from $514 million in 2003 to $719 million in 2004, an increase of 40%. Professional Services division revenue has grown substantially over the past three years as a percentage of the Company’s overall revenue, representing 51% of the Company’s revenue as of the fourth quarter. Below is further discussion of the fourth quarter performance of the Professional Services division’s two reporting segments.
North American Professional Services Segment
The Company’s North American Professional Services segment provides specialized staffing and recruiting in the disciplines of accounting, law, engineering and healthcare and its business units go to market under the brands Accounting Principals, Special Counsel, Entegee, and Soliant Health, respectively. In the fourth quarter, this segment posted a 53% increase in revenue versus the fourth quarter of 2003 and a 21% sequential increase versus the third quarter of 2004. Excluding the impact of acquisitions, the North American Professional Services segment revenue grew 22% versus the fourth quarter of 2003 and 9% sequentially versus the third quarter of 2004. Gross margin expanded slightly, both sequentially and on a year-over-year basis.
Accounting Principals reported a 249% increase in revenue over the fourth quarter of 2003 and a 101% sequential increase versus the third quarter of 2004. During the quarter, Accounting Principals acquired Accounting Solutions, one of the nation’s largest privately held accounting staffing companies. Excluding the impact of acquisitions, revenue from Accounting Principals increased 49% versus the fourth quarter of 2003 and 5% sequentially versus the third quarter of 2004. The Company estimates that less than 5% of Accounting Principals’ revenue is directly attributable to Sarbanes-Oxley Act compliance work.
In the fourth quarter, Special Counsel grew revenue on a sequential basis for the eleventh consecutive quarter, posting a 27% increase in revenue versus the fourth quarter of 2003. Demand for temporary staffing remained steady, while demand for permanent recruitment services showed strong improvement. Special Counsel’s fourth quarter permanent recruitment fees increased 60% versus the fourth quarter of 2003. Demand for outsourced legal project work appears to be improving as well.
Revenue for Entegee rose 26% versus the fourth quarter of 2003 and 11% sequentially versus the third quarter of 2004. This strong organic growth is due to good execution and strong demand from the defense and aerospace industries.
Fourth quarter revenue for Soliant Health grew 10% sequentially versus the third quarter of 2004, indicating improvement in demand for nursing and allied health professionals. Soliant Health continues to expand its service offerings and delivery network.
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European Professional Services Segment
The Company’s European Professional Services Segment is composed of Badenoch & Clark, a leading provider of finance and accounting and professional staffing services in the United Kingdom. In the fourth quarter, Badenoch & Clark grew revenue 54% versus the fourth quarter of 2003 and 12% sequentially versus the third quarter of 2004. Excluding the impact of currency exchange rates, revenue grew 50% versus the fourth quarter of 2003 and 10% sequentially versus the third quarter of 2004. In 2004, Badenoch & Clark made substantial investments in staff and new lines of business to meet market demand.
Information Technology Division Performance
The Company’s Information Technology division reported revenue for the fourth quarter of 2004 of $209 million, an increase of 43% versus the fourth quarter of 2003 and 15% sequentially versus the third quarter of 2004. For the year, IT revenue increased from $582 million in 2003 to $708 million in 2004, an increase of 22%. Billable headcount in the Information Technology Division grew steadily throughout 2004. Below is further discussion of the fourth quarter performance of the IT division’s two reporting segments.
North American Information Technology Services Segment
The Company’s North American Information Technology Services segment is composed of Modis, the IT staffing unit; Idea Integration, the IT solutions unit; and Beeline, the workforce solutions unit. This segment reported revenue for the fourth quarter of 2004 of $132 million, an increase of 35% versus the fourth quarter of 2003 and 13% sequentially versus the third quarter of 2004.
Modis continued to see improvements in demand for IT staffing services, with revenue increasing both sequentially and on a year-over-year basis. Fourth quarter gross margin showed a slight improvement sequentially versus the third quarter of 2004. Profits for the fourth quarter were strong, as revenue increases were accompanied by only slight increases in operating expenses.
Idea Integration grew revenue versus the fourth quarter of 2003. Demand for project-based solutions showed some improvement, particularly in middle-market clients implementing Microsoft solutions.
Beeline continues to see encouraging improvements in sales and delivery activity. Beeline has recently introduced a number of new workforce optimization modules that are expected to add new sources of revenue in 2005. It is anticipated that Beeline will be profitable in 2005.
European Information Technology Services Segment
The Company’s European Information Technology Services Segment is composed of Modis International, a leading provider of IT staffing services throughout the United Kingdom and continental Europe. Modis International grew fourth quarter revenue to $76 million, an increase of 60% versus the fourth quarter of 2003 and 19% sequentially versus the third quarter of 2004. Excluding the impact of currency exchange rates, European IT staffing revenue grew 55% versus the fourth quarter of 2003 and 16% sequentially versus the third quarter of 2004. Modis International continues to experience some downward pressure on gross margin, which it intends to counter in 2005 by scaling back certain business with lower-margin clients.
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Capital Update
During the fourth quarter, the Company generated operating cash flow of $33 million. At the close of the fourth quarter, the Company had a cash balance of $106 million and no borrowings outstanding under its credit facility.
In 2004, the Company spent $50 million in cash on strategic acquisitions and $31 million to buy back the Company’s stock. The Company intends to continue to complete strategic acquisitions designed to enhance its service delivery network and establish new specialty lines of business. The Company has $25 million remaining on its stock buyback authorization and may continue to buy back Company shares as it deems appropriate.
Management Comments
Timothy Payne, MPS Chief Executive Officer, stated, “In 2004, our goal was to get our business growing again after several years of soft demand. For the most part, we were successful, as our top line grew over 30% in 2004 versus 2003. In order to do this, we had to make some investments in new people and new service offerings. We believe that these investments will pay off for us in 2005 as people mature in their jobs and new services come on-line. We are also looking forward to a stronger year in 2005 for permanent recruitment sales, which should help our profitability.”
“We were pleased with the strong revenue growth and substantial operating cash flow generated during the fourth quarter,” stated Robert Crouch, MPS Chief Financial Officer. “We expect first quarter 2005 results to be relatively consistent with the fourth quarter 2004 results as we adjust to the traditional seasonal patterns we experience in the first quarter. Specifically, we anticipate first quarter 2005 revenue to be in the range of $410 million to $430 million and earnings per share in the range of $0.09 to $0.11.”
Conference Call Scheduled Today
The live broadcast of MPS Group’s conference call will begin at 10:00 a.m. Eastern Time today. The link to this event may be found at the Company’s website:www.mpsgroup.com. If you do not have Internet access, you may listen to the call by dialing (913) 981-5509.
If you are unable to participate at that time, online and telephonic replays will be available two hours after the call ends and will continue until 8:00 p.m. Eastern Time on February 17. To access the telephonic replay, please dial (719) 457-0820 and enter 208545 when prompted for the passcode. The link for the online replay may also be found on the Company’s website.
About MPS Group
MPS Group is a leading provider of staffing, consulting and solutions in the disciplines of information technology, finance and accounting, law, engineering and healthcare. MPS Group delivers its services to government entities and businesses in virtually all industries throughout the United States, Canada, the United Kingdom and Europe. Headquartered in Jacksonville, Florida, MPS Group trades on the New York Stock Exchange under the ticker symbol “MPS.” For more information about MPS Group, visitwww.mpsgroup.com. Except for materials described above, none of the information on our website should be considered included in this release.
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Forward-Looking Statements
The statements contained in this press release should be considered forward-looking statements that are subject to risks, uncertainties or assumptions described above and may be affected by other factors, including but not limited to: fluctuations in the economy and financial markets in the U.S. and foreign countries where we do business and in the Company’s industry segments in particular; industry trends toward consolidating vendor lists; the demand for the Company’s services, including the impact of changes in utilization rates; consolidation or bankruptcy of major customers; the effect of competition, including the Company’s ability to expand into new markets and to maintain profit margins in the face of pricing pressures; the Company’s ability to retain significant existing customers or obtain new customers; the Company’s ability to recruit, place and retain consultants and professional employees; the Company’s ability to identify and complete acquisition targets and to successfully integrate acquired operations into the Company; possible changes in governmental regulations affecting the Company’s operations, including possible changes to regulations relating to benefits for consultants and temporary personnel and possible changes to laws or regulations that address insurance, benefits; employment-related claims, costs, and other litigation matters; adjustments during periodic tax audits; litigation relating to prior and current transactions and activities; unexpected fluctuations in interest rates or foreign currency exchange rates; loss of key employees; and other factors discussed in the Company’s filings with the Securities and Exchange Commission. In some cases, you can identify forward-looking statements by terminology such as “will,” “may,” “should,” “could,” “expects,” “plans,” “hopes,” “indicates,” “projects,” “anticipates,” “perhaps,” “believes,” “estimates,” “appears,” “predicts,” “potential,” “continues,” “would,” or “become,” or the negative of these terms or other comparable terminology. Readers are urged to review and consider the factors discussed in our Form 10-K for 2003 and in subsequent filings with the Securities and Exchange Commission.
Should one or more of these risks, uncertainties or other factors materialize, or should underlying assumptions prove incorrect, actual results, performance or achievements of the Company may vary materially from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements are based on beliefs and assumptions of the Company’s management and on information then currently available to management. Undue reliance should not be placed on such forward-looking statements. Forward-looking statements are not guarantees of performance. Such forward-looking statements were prepared by the Company based upon information available at the time of such statements. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update publicly any of them in light of new information or future events.
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MPS Group, Inc.
Unaudited Operating Highlights
(in thousands, except per share amounts)
| Three Months Ended Dec. 31, | Year Ended Dec. 31, | |||||||||||||||
| Operating Highlights: | 2004 | 2003 | 2004 | 2003 | ||||||||||||
Revenue: | ||||||||||||||||
North American Professional Services | $ | 128,218 | $ | 83,925 | $ | 429,560 | $ | 315,754 | ||||||||
European Professional Services | 84,061 | 54,518 | 289,058 | 198,346 | ||||||||||||
North American Information Technology Services | 132,283 | 97,805 | 459,470 | 401,193 | ||||||||||||
European Information Technology Services | 76,222 | 47,683 | 248,754 | 180,737 | ||||||||||||
Total revenue | 420,784 | 283,931 | 1,426,842 | 1,096,030 | ||||||||||||
Gross profit: | ||||||||||||||||
North American Professional Services | 38,125 | 24,356 | 123,783 | 89,127 | ||||||||||||
European Professional Services | 22,731 | 15,100 | 80,402 | 58,238 | ||||||||||||
North American Information Technology Services | 35,298 | 26,479 | 123,757 | 112,780 | ||||||||||||
European Information Technology Services | 9,569 | 6,922 | 32,845 | 26,995 | ||||||||||||
Total gross profit | 105,723 | 72,857 | 360,787 | 287,140 | ||||||||||||
General and administrative expenses | 86,492 | 60,606 | 293,776 | 234,614 | ||||||||||||
Exit recapture | (672 | ) | (284 | ) | (897 | ) | (284 | ) | ||||||||
Depreciation and intangibles amortization | 4,207 | 4,203 | 15,775 | 17,009 | ||||||||||||
Total operating expenses | 90,027 | 64,525 | 308,654 | 251,339 | ||||||||||||
Operating income | 15,696 | 8,332 | 52,133 | 35,801 | ||||||||||||
Interest and other income, net | 366 | 382 | 1,437 | 553 | ||||||||||||
Income from continuing operations before provision for income taxes | 16,062 | 8,714 | 53,570 | 36,354 | ||||||||||||
Provision for income taxes | 4,754 | 3,441 | 18,150 | 14,519 | ||||||||||||
Income from continuing operations, net of tax | 11,308 | 5,273 | 35,420 | 21,835 | ||||||||||||
Loss from discontinued operations, net of tax | — | (21,254 | ) | — | (23,070 | ) | ||||||||||
Net income (loss) | $ | 11,308 | $ | (15,981 | ) | $ | 35,420 | $ | (1,235 | ) | ||||||
Diluted net income (loss) per common share: | ||||||||||||||||
From continuing operations | $ | 0.11 | $ | 0.05 | $ | 0.33 | $ | 0.21 | ||||||||
From discontinued operations, net of tax | — | (0.20 | ) | — | (0.22 | ) | ||||||||||
Diluted net income (loss) per common share | $ | 0.11 | $ | (0.15 | ) | $ | 0.33 | $ | (0.01 | ) | ||||||
Diluted common shares outstanding | 106,392 | 107,528 | 106,842 | 104,518 | ||||||||||||
| As of | ||||||||||||||||
| December 31, 2004 | December 31, 2003 | |||||||||||||||
Cash and cash equivalents | $ | 106,497 | $ | 124,830 | ||||||||||||
Accounts receivable, net of allowance | 209,512 | 159,359 | ||||||||||||||
Other | 22,773 | 19,279 | ||||||||||||||
Current assets | 338,782 | 303,468 | ||||||||||||||
Long-term assets | 615,070 | 589,683 | ||||||||||||||
Total assets | $ | 953,852 | $ | 893,151 | ||||||||||||
Current liabilities | $ | 105,897 | $ | 86,589 | ||||||||||||
Other | 12,292 | 13,100 | ||||||||||||||
Stockholders' equity | 835,663 | 793,462 | ||||||||||||||
Total liabilities and stockholders' equity | $ | 953,852 | $ | 893,151 | ||||||||||||
Working capital | $ | 232,885 | $ | 216,879 | ||||||||||||
As previously reported, the Company sold its outplacement unit, Manchester, in December 2003. Therefore, in accordance with GAAP, Manchester's results of operations are reflected in the line item, "Loss from discontinued operations, net of tax," for the fourth quarter and year ended December 31, 2003.
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MPS Group, Inc.
Unaudited Operating Highlights
(in thousands)
| Three Months Ended | ||||||||||||||||
| March 31, 2004 | June 30, 2004 | Sept. 30 2004 | Dec. 31, 2004 | |||||||||||||
Operating Highlights: | ||||||||||||||||
Revenue: | ||||||||||||||||
North American Professional Services | $ | 92,803 | $ | 102,509 | $ | 106,030 | $ | 128,218 | ||||||||
European Professional Services | 63,765 | 66,168 | 75,064 | 84,061 | ||||||||||||
North American Information Technology Services | 101,789 | 108,437 | 116,961 | 132,283 | ||||||||||||
European Information Technology Services | 52,124 | 56,131 | 64,277 | 76,222 | ||||||||||||
Total revenue | $ | 310,481 | $ | 333,245 | $ | 362,332 | $ | 420,784 | ||||||||
Gross profit: | ||||||||||||||||
North American Professional Services | $ | 25,817 | $ | 29,317 | $ | 30,524 | $ | 38,125 | ||||||||
European Professional Services | 17,664 | 18,882 | 21,125 | 22,731 | ||||||||||||
North American Information Technology Services | 27,752 | 29,208 | 31,499 | 35,298 | ||||||||||||
European Information Technology Services | 7,002 | 7,749 | 8,525 | 9,569 | ||||||||||||
Total gross profit | $ | 78,235 | $ | 85,156 | $ | 91,673 | $ | 105,723 | ||||||||
Income from operations: | ||||||||||||||||
North American Professional Services | $ | 4,395 | $ | 8,459 | $ | 8,395 | $ | 9,685 | ||||||||
European Professional Services | 2,907 | 2,972 | 3,333 | 3,980 | ||||||||||||
North American Information Technology Services | 5,827 | 6,232 | 7,770 | 8,193 | ||||||||||||
European Information Technology Services | 204 | 521 | 673 | 1,003 | ||||||||||||
Total income from operations from segments | 13,333 | 18,184 | 20,171 | 22,861 | ||||||||||||
Exit recapture | — | — | 225 | 672 | ||||||||||||
Corporate expenses* | (5,314 | ) | (4,911 | ) | (5,251 | ) | (7,837 | ) | ||||||||
Operating income | $ | 8,019 | $ | 13,273 | $ | 15,145 | $ | 15,696 | ||||||||
Unaudited Supplemental Data on the Previous Three Segments for the Three Months Ended December 31, 2004 The Segment Reporting was Changed from this Manner effective October 1, 2004 |
| |||||||||||||||
| Professional Services | IT Services | IT Solutions | Total | |||||||||||||
Revenue | $ | 212,279 | $ | 189,948 | $ | 18,557 | $ | 420,784 | ||||||||
Gross profit | $ | 60,856 | $ | 39,421 | $ | 5,446 | $ | 105,723 | ||||||||
| * | Corporate expenses include unallocated expenses not directly related to the segments' operations. |
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MPS Group, Inc.
Unaudited Reconciliation of Non-GAAP Financial Measures to Most Comparable GAAP Financial Measures
(in thousands)
Reconciliation of EBITDA to Net Income
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||
| 2004 | 2003 | 2004 | 2003 | |||||||||||
EBITDA | $ | 19,903 | $ | 12,535 | $ | 67,908 | $ | 52,810 | ||||||
Depreciation and intangibles amortization | 4,207 | 4,203 | 15,775 | 17,009 | ||||||||||
Operating income | 15,696 | 8,332 | 52,133 | 35,801 | ||||||||||
Interest and other income, net | 366 | 382 | 1,437 | 553 | ||||||||||
Income from continuing operations before provision for income taxes | 16,062 | 8,714 | 53,570 | 36,354 | ||||||||||
Provision for income taxes | 4,754 | 3,441 | 18,150 | 14,519 | ||||||||||
Income from continuing operations, net of tax | 11,308 | 5,273 | 35,420 | 21,835 | ||||||||||
Loss from discontinued operations, net of tax | — | (21,254 | ) | — | (23,070 | ) | ||||||||
Net income (loss) | $ | 11,308 | $ | (15,981 | ) | $ | 35,420 | $ | (1,235 | ) | ||||
Reconciliation of Sequential Quarterly Revenue Growth Rate,
Excluding Acquisitions and the Effects of Changes in Currency
| MPS Group | Professional | EU IT | |||||||
GAAP revenue growth rate 3Q2004 to 4Q2004 | 16.1 | % | 17.2 | % | 18.6 | % | |||
Revenue growth rate contributed from acquisitions | 3.9 | % | 7.9 | % | 0.0 | % | |||
Revenue growth rate from changes in currency | 0.9 | % | 0.9 | % | 2.5 | % | |||
Revenue growth rate 3Q2004 to 4Q2004, excluding acquisitions and effects of changes in currency | 11.3 | % | 8.4 | % | 16.1 | % | |||
Reconciliation of Sequential Quarterly Revenue Growth Rate, Excluding Acquisitions and the Effects of Changes in Currency |
| ||||||||
| EU Professional | NA Professional | Accounting | |||||||
GAAP revenue growth rate 3Q2004 to 4Q2004 | 12.0 | % | 20.9 | % | 101.2 | % | |||
Revenue growth rate contributed from acquisitions | 0.0 | % | 11.8 | % | 96.7 | % | |||
Revenue growth rate from changes in currency | 2.3 | % | 0.0 | % | 0.0 | % | |||
Revenue growth rate 3Q2004 to 4Q2004, excluding acquisitions and effects of changes in currency | 9.7 | % | 9.1 | % | 4.5 | % | |||
Reconciliation of Year-Over-Year Quarterly Revenue Growth Rate, Excluding Acquisitions and the Effects of Changes in Currency |
| ||||||||
| MPS Group | Professional | EU IT | |||||||
GAAP revenue growth rate 4Q2003 to 4Q2004 | 48.2 | % | 53.3 | % | 59.9 | % | |||
Revenue growth rate contributed from acquisitions | 9.2 | % | 18.8 | % | 0.0 | % | |||
Revenue growth rate from changes in currency | 1.8 | % | 1.8 | % | 4.9 | % | |||
Revenue growth rate 4Q2003 to 4Q2004, excluding acquisitions and effects of changes in currency | 37.2 | % | 32.7 | % | 55.0 | % | |||
Reconciliation of Year-Over-Year Quarterly Revenue Growth Rate, Excluding Acquisitions and the Effects of Changes in Currency |
| ||||||||
| EU Professional | NA Professional | Accounting | |||||||
GAAP revenue growth rate 4Q2003 to 4Q2004 | 54.2 | % | 52.8 | % | 248.5 | % | |||
Revenue growth rate contributed from acquisitions | 0.0 | % | 30.5 | % | 199.7 | % | |||
Revenue growth rate from changes in currency | 4.7 | % | 0.0 | % | 0.0 | % | |||
Revenue growth rate 4Q2003 to 4Q2004, excluding acquisitions and effects of changes in currency | 49.5 | % | 22.3 | % | 48.8 | % | |||
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