MPS Group Announces Second Quarter Results At Top End of Management Guidance
Tuesday July 22, 7:03 am ET
JACKSONVILLE, Fla., July 22 /PRNewswire-FirstCall/ -- MPS Group, Inc. (NYSE: MPS
- - News), a leading provider of specialty staffing and business solutions, today
announced financial results for the second quarter and six months ended June 30,
2003. The Company reported revenue of $279 million and diluted net income per
common share of $0.06 for the quarter ended June 30, 2003, compared with revenue
of $289 million and diluted net income per common share of $0.04 for the quarter
ended June 30, 2002. Results for the period were at the top end of the range of
guidance previously provided by Company management. Second Quarter Summary
-- Revenue of $279 million
-- EBITDA of $14.3 million and operating income of $9.9 million
-- Diluted net income per common share of $0.06, a 50% increase versus
the second quarter of 2002
-- Cash flow from operations of $31 million
-- Cash balance of $102 million and no debt outstanding under the
existing credit facility as of June 30, 2003
Business Unit Performance
During the second quarter, the Company delivered sequential increases in both
revenue and operating income versus the first quarter of 2003 in all three of
its reporting segments.
Modis, the Company's information technology (IT) services unit, improved revenue
by 1.3% and improved operating income sequentially versus the first quarter of
2003. The increase in profitability is attributable to a sequential 110 basis
point increase in gross margin combined with the unit's ability to increase
revenue without substantially increasing general and administrative costs.
Compared to the second quarter of 2002, Modis increased gross margin by 150
basis points. While the Company has still not seen a meaningful increase in
demand for IT services, Modis slightly increased billable headcount over the
course of the second quarter due to solid execution.
The Company's professional services division improved revenue by 2.8% and
operating income by over 33% sequentially versus the first quarter of 2003. The
three largest business units in the professional services division, accounting,
legal, and engineering, each recorded sequential increases in revenue. The legal
unit, Special Counsel, delivered particularly strong revenue growth with a
sequential increase of 12.6%. While demand for the Company's professional
services offerings remained relatively weak, some encouraging signs were visible
in the form of an increase in billable headcount over the course of the quarter
and a sequential increase in permanent placement fees.
Idea Integration, the Company's IT solutions business unit, improved revenue by
10.2% and operating income substantially versus the first quarter of 2003. The
second quarter performance was reflective of good execution by Idea Integration
and the effect of a positive contribution to revenue related to the completion
of a large project. Even without the positive contribution, Idea Integration
improved both revenue and profits on a sequential basis. Demand for Idea
Integration services improved slightly in practices devoted to optimizing
current systems, such as business intelligence, enterprise application
integration, and application maintenance. However, demand for new application
development solutions remained soft.
Financial Position and Cash Flow
The Company generated $31 million of cash flow from operations during the second
quarter and increased its cash position to $102 million as of June 30, 2003. The
Company continues to have no debt outstanding under the existing credit
facility. The Company achieved an eight-day reduction in days-sales- outstanding
in the second quarter versus the first quarter of 2003. During the quarter, the
Company repurchased 540,000 shares of MPS common stock for $3.7 million and
spent $2.1 million on capital expenditures.
Management Comments
Timothy Payne, MPS Chief Executive Officer, stated, "While the hiring and
economic environment remains challenging, we are encouraged by this successful
quarter. We improved revenue, gross profits, and earnings versus the first
quarter and continued to improve our overall financial position. This success is
attributable to hard work and good execution by our people -- I applaud their
efforts and resourcefulness. We are hopeful we will soon see improvements in the
business environment and believe we are well positioned for future growth."
"While we are starting to see a slight increase in our revenue which may
indicate some improvement in demand, the macro hiring environment is still not
very favorable," stated Robert Crouch, MPS Chief Financial Officer. "Therefore,
we expect our revenue and diluted net income per common share for the third
quarter to be in the range of $275 million to $285 million and $0.05 to $0.07,
respectively. This compares with revenue and diluted net income per common share
of $289 million and $0.05, respectively, for the quarter ended September 30,
2002."
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) 981-5522. 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. on July 29. To access the telephonic
replay, please dial (719) 457-0820 and enter 133454 when prompted for the
reservation code. 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. A Fortune 1000 company with headquarters in
Jacksonville, Florida, MPS Group trades on the New York Stock Exchange. For more
information about MPS Group, please visit www.mpsgroup.com. Except for materials
described above, none of the information on our website should be considered
included in this release.
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 general and
in the Company's industry segments in particular; industry trends towards
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; 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," "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 2002 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.
MPS Group, Inc.
Unaudited Operating Highlights
(in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
2003 2002 2003 2002
--------- --------- --------- ---------
Operating Highlights:
Revenue:
IT Services $ 128,256 $ 145,974 $ 254,876 $ 296,721
Professional Services 130,584 121,630 257,561 244,538
IT Solutions 20,063 21,049 38,265 43,847
--------- --------- --------- ---------
Total revenue 278,903 288,653 550,702 585,106
Gross profit:
IT Services 29,345 31,231 56,938 62,166
Professional Services 37,726 36,798 74,146 74,771
IT Solutions 8,400 6,492 14,620 13,842
--------- --------- --------- ---------
Total gross profit 75,471 74,521 145,704 150,779
--------- --------- --------- ---------
General and
administrative expenses 61,161 61,550 121,758 128,097
Depreciation and
intangibles amortization 4,439 4,925 9,059 9,923
--------- --------- --------- ---------
Total operating expenses 65,600 66,475 130,817 138,020
--------- --------- --------- ---------
Income from operations 9,871 8,046 14,887 12,759
Interest and other
expense, net (9) (981) (15) (2,555)
--------- --------- --------- ---------
Income before provision
for income taxes and
cumulative effect of
accounting change 9,862 7,065 14,872 10,204
Provision for
income taxes 4,043 2,889 6,109 4,082
--------- --------- --------- ---------
Income before
cumulative effect
of accounting change 5,819 4,176 8,763 6,122
Cumulative effect
of accounting change,
net of tax benefit -- -- -- (553,712)
--------- --------- --------- ---------
Net income (loss) $ 5,819 $ 4,176 $ 8,763 $(547,590)
========= ========= ========= =========
Diluted net income per
common share before
cumulative effect of
accounting change $ 0.06 $ 0.04 $ 0.09 $ 0.06
Cumulative effect of
accounting change,
net of tax benefit -- -- -- (5.43)
--------- --------- --------- ---------
Diluted net income
(loss) per common
share $ 0.06 $ 0.04 $ 0.09 $ (5.37)
========= ========= ========= =========
Diluted common
shares outstanding 103,002 102,996 102,840 101,897
========= ========= ========= =========
As of
----------------------
June 30, Dec. 31,
2003 2002
--------- ---------
Cash and cash equivalents $ 102,368 $ 66,934
Working capital 188,706 171,931
Total assets 894,645 897,983
Long-term debt -- --
Stockholders' equity 785,868 781,559
MPS Group, Inc.
Reconciliation of Non-GAAP Financial Measures to Most Comparable
GAAP Financial Measures
(in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
2003 2002 2003 2002
--------- --------- --------- ---------
MPS Group, Inc.
EBITDA $ 14,310 $ 12,971 $ 23,946 $ 22,682
Depreciation and
intangibles amortization 4,439 4,925 9,059 9,923
--------- --------- --------- ---------
Income from operations 9,871 8,046 14,887 12,759
Interest and other
expense, net (9) (981) (15) (2,555)
--------- --------- --------- ---------
Income before provision
for income taxes and
cumulative effect of
accounting change 9,862 7,065 14,872 10,204
Provision for
income taxes 4,043 2,889 6,109 4,082
--------- --------- --------- ---------
Income before
cumulative effect
of accounting change 5,819 4,176 8,763 6,122
Cumulative effect
of accounting change,
net of tax benefit -- -- -- (553,712)
--------- --------- --------- ---------
Net income (loss) $ 5,819 $ 4,176 $ 8,763 $(547,590)
========= ========= ========= =========
The term "cash flow from operations" is a GAAP financial measure titled "Net
cash provided by operating activities" on the Company's Consolidated Statement
of Cash Flows.
The term "operating income" is a GAAP financial measure titled "Income from
operations" on the Company's Consolidated Statement of Income.