MPS Group Announces Third Quarter Results In Line With Management Guidance
JACKSONVILLE, FL (October 28, 2003) - MPS Group, Inc. (NYSE:MPS), a leading
provider of specialty staffing, consulting, and business solutions, today
announced financial results for the third quarter and nine months ended
September 30, 2003. The Company reported revenue of $279 million and diluted net
income per common share of $0.06 for the quarter. Results for the period were
within the range of guidance previously provided by Company management.
Third Quarter Summary
o Revenue of $279 million
o EBITDA of $14.1 million and operating income of $9.8 million
o Diluted net income per common share of $0.06, an increase from $0.05
in the third quarter of 2002
o Cash flow from operations of $13.7 million
o Cash balance of $109 million as of September 30, 2003
o Strategic acquisition of LawCorps to further enhance the Company's
leadership position in the legal services market
Business Unit Performance
During the third quarter, in aggregate, the Company experienced sequential
increases versus the second quarter of 2003 in revenue, gross margin and
billable headcount in its staffing business units: information technology (IT),
finance and accounting, engineering, legal, and healthcare. These increases
appear to reflect the early stages of a hiring recovery, as employers have
historically tended to test the market coming out of recessions by hiring
contingent labor resources first and permanent staff later.
The Company's professional services division revenue rose 4.5% and operating
income was up 26.7% sequentially versus the second quarter of 2003. The two
strongest performers were the legal staffing and accounting staffing units.
Special Counsel, the Company's legal staffing unit, delivered a 12.0% sequential
increase in revenue versus the second quarter of 2003, aided by its August
acquisition of LawCorps. The Company's accounting staffing unit, comprised of
Badenoch & Clark in the United Kingdom and Accounting Principals in the United
States, delivered a 7.4% sequential increase in revenue versus the second
quarter of 2003. Softness in demand in the Company's counter-cyclical
outplacement unit had a negative impact on performance for the quarter in the
Company's professional services division.
Modis, the Company's information technology (IT) staffing division, experienced
a moderate improvement in demand for IT services in its North America operations
as measured by an increase in billable headcount over the course of the quarter
and continued strong RFP (Request For Proposal) activity. However, performance
for the quarter in Modis' North American operations was negatively affected by a
loss of billable hours attributable to the effects of Hurricane Isabel and the
blackout in the northeastern United States. While billable headcount in Modis'
United Kingdom operations increased moderately over the course of the third
quarter, a shift in mix toward lower-end skills resulted in slightly reduced
revenue sequentially versus the second quarter.
Idea Integration, the Company's IT solutions division, experienced reduced
revenue sequentially versus the second quarter of 2003. While Idea remained
profitable on an operating income basis for the fifth consecutive quarter, the
wind-down of a large, multi-year project at a leading healthcare company had a
negative impact on revenue and earnings.
Financial Position and Cash Flow
The Company generated $13.7 million of cash flow from operations during the
third quarter and increased its cash position to $109 million. The Company's
existing credit facility expired as of October 27, 2003 with no outstanding
borrowings under the facility. The Company expects to close on a new credit
facility in the fourth quarter.
Management Comments
Timothy Payne, MPS Chief Executive Officer, stated, "We are encouraged by the
growth in revenue and billable headcount we have seen in our staffing units,
particularly in the legal and accounting markets. At this point, the technology
services market is not as robust as the professional services markets, but we
are hopeful we will see better conditions soon based on the activity we have
seen. We believe we are well positioned for growth in an improving economy."
"Although we are encouraged by the positive trends in our staffing units, we
anticipate that our expectations of moderate growth in revenue per day will be
offset by the loss of billing days caused by the seasonal impact of the fourth
quarter," stated Robert Crouch, MPS Chief Financial Officer. "Therefore, we
expect our revenue and diluted net income per common share for the fourth
quarter to be in the range of $265 million to $280 million and $0.03 to $0.05,
respectively."
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) 981-5510.
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 November 4. To access the telephonic replay, please dial (719) 457-0820
and enter 562165 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 Nine Months Ended
September 30, September 30,
---------------------- ----------------------
2003 2002 2003 2002
--------- --------- --------- ---------
Operating Highlights:
Revenue:
IT Services $ 125,266 $ 143,650 $ 380,142 $ 440,371
Professional Services 136,459 125,755 394,020 370,293
IT Solutions 17,111 20,023 55,376 63,870
--------- --------- --------- ---------
Total revenue 278,836 289,428 829,538 874,534
Gross profit:
IT Services 28,851 30,792 85,789 92,958
Professional Services 39,642 37,873 113,788 112,644
IT Solutions 5,965 7,270 20,585 21,112
--------- --------- --------- ---------
Total gross profit 74,458 75,935 220,162 226,714
--------- --------- --------- ---------
General and
administrative expenses 60,363 60,307 182,121 188,404
Depreciation and
intangibles amortization 4,301 5,456 13,360 15,379
--------- --------- --------- ---------
Total operating expenses 64,664 65,763 195,481 203,783
--------- --------- --------- ---------
Income from operations 9,794 10,172 24,681 22,931
Interest and other
expense, net 186 (1,206) 170 (3,761)
--------- --------- --------- ---------
Income before provision
for income taxes and
cumulative effect of
accounting change 9,980 8,966 24,851 19,170
Provision for
income taxes 3,992 3,676 10,101 7,758
--------- --------- --------- ---------
Income before
cumulative effect
of accounting change 5,988 5,290 14,750 11,412
Cumulative effect
of accounting change,
net of tax benefit -- -- -- (553,712)
--------- --------- --------- ---------
Net income (loss) $ 5,988 $ 5,290 $ 14,750 $(542,300)
========= ========= ========= =========
Diluted net income per
common share before
cumulative effect of
accounting change $ 0.06 $ 0.05 $ 0.14 $ 0.11
Cumulative effect of
accounting change,
net of tax benefit -- -- -- (5.41)
--------- --------- --------- ---------
Diluted net income
(loss) per common
share $ 0.06 $ 0.05 $ 0.14 $ (5.30)
========= ========= ========= =========
Diluted common
shares outstanding 104,866 103,115 103,515 102,303
========= ========= ========= =========
As of
----------------------
Sept. 30, Dec. 31,
2003 2002
--------- ---------
Cash and cash equivalents $ 108,910 $ 66,934
Working capital 200,096 171,931
Total assets 914,433 897,983
Long-term debt 500 -
Stockholders' equity 803,889 781,559
MPS Group, Inc.
Reconciliation of Non-GAAP Financial Measures to Most Comparable
GAAP Financial Measures
(in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
2003 2002 2003 2002
--------- --------- --------- ---------
MPS Group, Inc.
EBITDA $ 14,095 $ 15,628 $ 38,041 $ 38,310
Depreciation and
intangibles amortization 4,301 5,456 13,360 15,379
--------- --------- --------- ---------
Income from operations 9,794 10,172 24,681 22,931
Interest and other
expense, net 186 (1,206) 170 (3,761)
--------- --------- --------- ---------
Income before provision
for income taxes and
cumulative effect of
accounting change 9,980 8,966 24,851 19,170
Provision for
income taxes 3,992 3,676 10,101 7,758
--------- --------- --------- ---------
Income before
cumulative effect
of accounting change 5,988 5,290 14,750 11,412
Cumulative effect
of accounting change,
net of tax benefit -- -- -- (553,712)
--------- --------- --------- ---------
Net income (loss) $ 5,988 $ 5,290 $ 14,750 $(542,300)
========= ========= ========= =========
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.