MPS Group Announces Fourth Quarter and Year-end 2003 Results
Fourth Quarter Results at Top End of Management Guidance
JACKSONVILLE, FL (February 4, 2004) - 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,
2003. Results for the fourth quarter were at the top end of the range of
guidance previously provided by Company management.
As previously announced in December 2003, the Company sold its outplacement
unit, Manchester. Therefore, the Company is required to report the results of
operations for Manchester and the related loss on its disposition as
discontinued operations. In accordance with GAAP, the financial results of
discontinued operations are reflected in the line item, "Income (loss) from
discontinued operations, net of tax," for all periods presented.
Fourth Quarter Financial Summary
o Revenue of $284 million, up 3.4% sequentially versus the third quarter
of 2003 and 4.2% versus the fourth quarter of 2002
o Diluted net income from continuing operations of $0.05 per common
share
o EBITDA of $12.5 million and operating income of $8.3 million
o Cash balance of $124.8 million as of December 31, 2003
o Days sales outstanding (DSO) dropped to 52 days, down 8 days versus
the fourth quarter of 2002
o Closed on a $150 million, three-year credit facility with no current
borrowings that the Company may use in the future to pursue its growth
strategy
Fourth Quarter Business Unit Performance
The Company's professional services division revenue grew 4.7% sequentially
versus the third quarter of 2003. The legal services unit, Special Counsel,
experienced its seventh consecutive quarter of sequential revenue growth. The
finance and accounting staffing unit, comprised of Accounting Principals in the
United States and Badenoch & Clark in the United Kingdom, grew revenues 4.4%
sequentially versus the third quarter of 2003, which was aided by favorable
changes in foreign currency exchange rates. The engineering unit, Entegee, grew
revenues 4.7% sequentially versus the third quarter of 2003, perhaps indicating
an improvement in demand in the manufacturing sector. In the fourth quarter, all
of the Company's professional services division business units experienced
year-over-year increases in revenue.
Modis, the Company's information technology (IT) services division, experienced
a sequential increase in revenue of 4.3% versus the third quarter of 2003. Most
of this growth was driven by the Company's United Kingdom-based IT unit and
resulted from improved client demand, good execution, and favorable changes in
foreign currency exchange rates. The Company's North American IT services unit
also showed improved performance with increases in average daily revenue and
billable headcount during the course of the quarter.
Idea Integration, the Company's IT solutions division, experienced reduced
revenue sequentially versus the third quarter of 2003 due to seasonality and the
final wind-down of a large project. Idea remained profitable on an EBITDA basis
for the sixth consecutive quarter. Based upon current sales activity, improved
client demand for IT solutions is anticipated in 2004.
2003 Summary
Consolidated revenue in 2003 was $1.096 billion compared with 2002 revenue of
$1.119 billion, with revenue increasing sequentially during each quarter of
2003. EBITDA for 2003 was $52.8 million and operating income was $35.8 million.
Cash flow from operations in 2003 was $65.3 million. The Company's cash position
improved by $57.9 million during 2003 with the cash balance increasing to $124.8
million at December 31, 2003. Throughout the course of 2003, the Company
continued to invest in initiatives that will allow it to execute its growth
strategy.
Management Comments
Timothy Payne, MPS Group Chief Executive Officer, stated, "While hiring activity
still appears to be lagging the economic recovery, we are encouraged by the
indications of improved client demand that we are seeing. Demand is clearly
improving faster in our professional businesses, and we anticipate that demand
in our IT businesses will continue to improve. Our people are the best in the
industry, and with an improving business environment, we are looking forward to
a year of growth in 2004."
"We are encouraged by the increase in average daily revenue that we have
experienced throughout January and we anticipate further growth in average daily
revenue for the remainder of the first quarter of 2004," stated Robert Crouch,
MPS Group Chief Financial Officer. "Therefore, we expect our revenue and diluted
net income per common share for the first quarter to be in the range of $285
million to $295 million and $0.04 to $0.06, respectively. These expectations
represent an increase from the first quarter of 2003 revenue and diluted net
income per common share from continuing operations of $264 million and $0.03,
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) 981-5509.
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. on February 11. To access the telephonic replay, please dial (719) 457-0820
and enter 792853 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," "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 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 Year Ended
December 31, December 31,
------------------------- -------------------------
2003 2002 2003 2002
---------- ---------- ---------- ----------
Operating Highlights:
Revenue:
Professional Services $ 138,450 $ 116,833 $ 514,100 $ 459,343
IT Services 130,666 134,941 511,739 575,312
IT Solutions 14,815 20,631 70,191 84,501
--------- --------- --------- ---------
Total revenue 283,931 272,405 1,096,030 1,119,156
Gross profit:
Professional Services 39,457 34,649 147,365 134,113
IT Services 28,915 29,336 114,704 122,294
IT Solutions 4,485 7,319 25,071 28,431
--------- --------- --------- ---------
Total gross profit 72,857 71,304 287,140 284,838
--------- --------- --------- ---------
General and administrative expenses 60,606 57,362 234,614 235,673
Lease restructuring (recapture) charge (284) 8,967 (284) 8,967
Impairment of investment - 16,165 - 16,165
Depreciation and intangibles amortization 4,203 5,449 17,009 20,256
--------- --------- --------- ---------
Total operating expenses 64,525 87,943 251,339 281,061
--------- --------- --------- ---------
Operating income (loss) 8,332 (16,639) 35,801 3,777
Interest and other expense, net 382 (186) 553 (3,947)
--------- --------- --------- ---------
Income (loss) from continuing operations
before provision for income taxes and
cumulative effect of accounting change 8,714 (16,825) 36,354 (170)
Tax provision 3,441 6,954 14,519 13,832
--------- --------- --------- ---------
Income (loss) from continuing operations
before cumulative effect of
accounting change 5,273 (23,779) 21,835 (14,002)
Income (loss) from discontinued
operations, net of tax (579) (225) (2,395) 1,410
Loss on disposition of discontinued
operations, net of tax (20,675) - (20,675) -
Cumulative effect of accounting change,
net of tax - - - (553,712)
--------- --------- --------- ---------
Net loss $ (15,981) $ (24,004) $ (1,235) $ (566,304)
========= ========= ========= =========
Diluted net (loss) income per common share:
From continuing operations before
cumulative effect of accounting change $ 0.05 $ (0.23) $ 0.21 $ (0.14)
From discontinued operations, net of tax (0.01) (0.00) (0.02) 0.01
From disposition of discontinued
operations, net of tax (0.19) - (0.20) -
From cumulative effect of accounting
change, net of tax - - - (5.49)
--------- --------- --------- ---------
Diluted net loss per common share $ (0.15) $ (0.23) $ (0.01) $ (5.62)
========= ========= ========= =========
Diluted common shares outstanding 107,528 102,320 104,518 100,833
========= ========= ========= =========
As of
----------------------
Dec. 31, Dec. 31,
2003 2002
--------- ---------
Cash and cash equivalents $ 124,807 $ 66,934
Working capital 217,748 171,154
Total assets 893,702 892,974
Stockholders' equity 792,790 781,559
MPS Group, Inc.
Reconciliation of Non-GAAP Financial Measures to Most Comparable
GAAP Financial Measures
(in thousands)
Three Months Ended Year Ended
December 31, December 31,
------------------------- -------------------------
2003 2002 2003 2002
---------- ---------- ---------- ----------
EBITDA $ 12,535 $ (11,190) $ 52,810 $ 24,033
Depreciation and intangibles amortization 4,203 5,449 17,009 20,256
--------- --------- --------- ---------
Operating income (loss) 8,332 (16,639) 35,801 3,777
Interest and other expense, net 382 (186) 553 (3,947)
--------- --------- --------- ---------
Income (loss) from continuing operations
before provision for income taxes and
cumulative effect of accounting change 8,714 (16,825) 36,354 (170)
Tax provision 3,441 6,954 14,519 13,832
--------- --------- --------- ---------
Income (loss) from continuing operations
before cumulative effect of
accounting change 5,273 (23,779) 21,835 (14,002)
Income (loss) from discontinued
operations, net of tax (579) (225) (2,395) 1,410
Loss on disposition of discontinued
operations, net of tax (20,675) - (20,675) -
Cumulative effect of accounting change,
net of tax - - - (553,712)
--------- --------- --------- ---------
Net loss $ (15,981) $ (24,004) $ (1,235) $ (566,304)
========= ========= ========= =========
Three Months Ended
----------------------------------------
December September June
31, 30, 30,
---------- ---------- ----------
2003 2003 2003
---------- ---------- ----------
Idea Integration
EBITDA $ 40 $ 945 $ 3,356
Depreciation and intangibles amortization 723 738 799
--------- --------- ---------
Operating income (loss) $ (683) $ 207 $ 2,557
========= ========= =========
A reconciliation of Idea Integration's EBITDA to net income is not possible
because the Company does not allocate taxes and interest at the divisional
level. See the first quarter 2003 earnings release posted on our Website for
this reconciliation for the three months ended September 30, 2002, December 31,
2002, and March 31, 2003.
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 (loss)" is a GAAP financial measure titled "Income
(loss) from operations" on the Company's Consolidated Statement of Income.
Supplemental Disclosure of Continuing Operations
(in thousands, except per share amounts)
1Q2003 2Q2003 3Q2003 4Q2003 2003
---------- ---------- ---------- ---------- ----------
Revenue $ 264,263 $ 273,167 $ 274,669 $ 283,931 $1,096,030
Gross profit percentage 25.4% 26.9% 26.8% 25.7% 26.2%
Operating expenses 62,002 62,720 62,092 64,525 251,339
Depreciation and intangibles amortization 4,427 4,245 4,134 4,203 17,009
Operating income 5,003 10,861 11,605 8,332 35,801
Income (loss) from continuing operations
before provision for income taxes 4,997 10,852 11,791 8,714 36,354
Income from continuing operations 2,934 6,463 7,165 5,273 21,835
Diluted net income per common share from
continuing operations $ 0.03 $ 0.06 $ 0.07 $ 0.05 $ 0.21