MPS Group Announces First Quarter Results
First Quarter Revenue Exceeds Range of Management Guidance
JACKSONVILLE, FL (April 21, 2004) - MPS Group, Inc. (NYSE:MPS), a leading
provider of specialty staffing, consulting, and business solutions, today
announced financial results for the first quarter ended March 31, 2004. The
Company reported revenue of $310 million for the first quarter, which exceeded
the range of guidance previously provided by Company management. Diluted net
income per common share of $0.05 for the quarter was within the $0.04 to $0.06
range of guidance previously provided by Company management.
First Quarter Financial Summary
o Revenue of $310 million, up 9.4% sequentially versus the fourth
quarter of 2003 and up 17.5% versus the first quarter of 2003
o Diluted net income of $0.05 per common share, up 67% versus diluted
net income of $0.03 per common share in the first quarter of 2003
o EBITDA of $11.9 million, up 26.6% versus the prior-year first
quarter's EBITDA of $9.4 million
o Operating income of $8.0 million, up 60.3% versus the prior-year first
quarter's operating income of $5.0 million
o Cash balance of $113 million as of March 31, 2004; cash flow from
operations of $2.8 million
First Quarter Business Unit Performance
The Company's professional services division revenue grew 13.1% sequentially
versus the fourth quarter of 2003 and 31.1% versus the first quarter of 2003.
The finance and accounting unit, comprised of Badenoch and Clark in the United
Kingdom and Accounting Principals in North America, grew revenue 16.4%
sequentially versus the fourth quarter of 2003 and 38.1% versus the first
quarter of 2003. These revenue growth rates were aided by favorable changes in
currency exchange rates. The legal services unit, Special Counsel, experienced
sequential revenue growth of 12.5% versus the fourth quarter of 2003 and 51.4%
revenue growth versus the first quarter of 2003. Excluding the revenue
contributed from acquisitions completed during 2003, Special Counsels's
year-over-year revenue growth rate was 19.2%. The engineering unit, Entegee,
grew revenue 3.7% sequentially versus the fourth quarter of 2003 and 11.8%
versus the first quarter of 2003. The healthcare staffing unit, Soliant Health,
grew 70.5% sequentially versus the fourth quarter of 2003 and 66.4% versus the
first quarter of 2003. Soliant Health's growth rates were primarily due
acquisitions completed during the first quarter of 2004; however, Soliant also
grew organically on both a sequential and year-over-year basis. The Company's
Information Technology (IT) Services division, Modis, grew revenue 5.2%
sequentially versus the fourth quarter of 2003 and 8.5% versus the first quarter
of 2003. Modis historically has experienced a drop in billable headcount at
calendar year-end, and it normally takes much of the first quarter to build
headcount back to year-end levels. While the decline in billable headcount
occurred as usual in December of 2003, headcount was restored to year-end levels
by mid-February 2004. Combined with a gradual increase in average day's revenue
throughout the first quarter, this appears to be an indication of improving
client demand for IT services. The Company believes demand will continue to
strengthen in the second quarter of 2004.
Idea Integration, the Company's IT Solutions unit, experienced sequential
revenue growth of 11.4% versus the fourth quarter of 2003 and remained
profitable on an EBITDA basis for the seventh consecutive quarter. Due to
improving sales activity, the Company anticipates further increases in revenue
in the second quarter of 2004.
Management Comments
Timothy Payne, MPS Group Chief Executive Officer, stated, "We are clearly seeing
signs of improving client demand across all of our business units. The growth we
experienced in the first quarter shows that our people are executing well and
taking advantage of a stronger hiring environment. While organic growth remains
our primary focus, in the first quarter we also saw a positive impact from our
strategic acquisitions program. We will continue to use this program to attain
critical mass and gain new areas of expertise in certain key business units."
"In the first quarter, we were very pleased to see a stronger hiring environment
than we had anticipated as we entered the year, so we accelerated some of our
divisional hiring plans for 2004 into the first quarter to capitalize on this,"
stated Robert Crouch, MPS Group Chief Financial Officer. "While this resulted in
an increase in sales expenses, we were pleased with the return we received in
the form of increased revenue and earnings. Furthermore, we expect our revenue
and diluted net income per common share for the second quarter to be in the
range of $315 million to $330 million and $0.07 to $0.09, respectively. These
expectations represent an increase from the second quarter of 2003 revenue and
diluted net income per common share from continuing operations of $273 million
and $0.06, 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 (719) 457-2604.
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 April 28. To access the telephonic replay, please dial (719) 457-0820
and enter 142958 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. 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 and possible changes to laws or
regulations that address insurance, benefits; employment-related claims, costs,
and other litigation matters; adjustments during periodic tax audits; 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.
MPS Group, Inc.
Unaudited Operating Highlights
(in thousands, except per share amounts)
Three Months Ended
March 31,
-------------------------------
2004 2003
Operating Highlights: -------------------------------
Revenue:
Professional Services $ 156,568 $ 119,441
IT Services 137,414 126,620
IT Solutions 16,499 18,202
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Total revenue 310,481 264,263
Gross profit:
Professional Services 43,481 33,192
IT Services 28,864 27,593
IT Solutions 5,890 6,220
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Total gross profit 78,235 67,005
------------- -------------
General and administrative expenses 66,294 57,575
Depreciation and intangibles amortization 3,922 4,427
------------- -------------
Total operating expenses 70,216 62,002
------------- -------------
Operating income 8,019 5,003
Interest and other income (expense), net 635 (6)
------------- -------------
Income from continuing operations before provision for income taxes 8,654 4,997
Provision for income taxes 3,332 2,063
------------- -------------
Income from continuing operations 5,322 2,934
Income from discontinued operations, net of tax - 5
------------- -------------
Net income $ 5,322 $ 2,939
============= =============
Diluted net income per common share:
From continuing operations $ 0.05 $ 0.03
From discontinued operations, net of tax - 0.00
------------- -------------
Diluted net income per common share $ 0.05 $ 0.03
============= =============
Diluted common shares outstanding 107,996 102,677
============= =============
March 31, December 31,
2004 2003
------------- -------------
Cash and cash equivalents $ 112,693 $ 124,830
Working capital 219,301 216,879
Total assets 917,893 893,151
Stockholders' equity 803,488 793,462
As previously announced, the Company sold its outplacement unit, Manchester, in
December of 2003. Therefore, in accordance with GAAP, Manchester's results of
operations are reflected in the line item, "Income from discontinued operations,
net of tax," for the first quarter of 2003.
MPS Group, Inc.
Reconciliation of Non-GAAP Financial Measures to Most Comparable
GAAP Financial Measures
(in thousands)
Three Months Ended
March 31,
-------------------------------
2004 2003
MPS Group, Inc. -------------------------------
EBITDA $ 11,941 $ 9,430
Depreciation and intangibles amortization 3,922 4,427
------------- -------------
Operating income 8,019 5,003
Interest and other income (expense), net 635 (6)
------------- -------------
Income from continuing operations before provision for income taxes 8,654 4,997
Provision for income taxes 3,332 2,063
------------- -------------
Income from continuing operations 5,322 2,934
Income from discontinued operations, net of tax - 5
------------- -------------
Net income $ 5,322 $ 2,939
============= =============
Three Months Ended
------------------------------------------------------
March 31, Dec. 31, Sept. 30 June 30,
2004 2003 2003 2003
--------- --------- --------- ---------
Idea Integration
EBITDA $ 1,261 $ 40 $ 945 $ 3,356
Depreciation and intangibles amortization 514 723 738 799
--------- --------- --------- ---------
Operating income (loss) $ 747 $ (683) $ 207 $ 2,557
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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.
EBITDA is a non-GAAP financial measure that is defined as earnings before
interest, taxes, depreciation and amortization. Management believes EBITDA is a
meaningful measure of operating performance as it gives management a consistent
measurement tool for evaluating the operating activities of the business as a
whole as well as the various operating units before the effect of investing
activities, interest and taxes. In addition, management believes EBITDA provides
useful information to investors, analysts, lenders and other interested parties
because it excludes transactions that management considers unrelated to core
business operations thereby helping interested parties to more meaningfully
evaluate, trend and analyze the operating performance of the business.
Management also uses EBITDA for certain internal reporting purposes and certain
compensation targets may be based on EBITDA. Finally, certain covenants in the
Company's debt facility are based on EBITDA performance measures. EBITDA, as
with all non-GAAP financial measures, should be considered only in conjunction
with the comparable measures as calculated and presented in accordance with
GAAP, including net income.
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.
Reconciliation of Special Counsel's Revenue Growth Rate, Excluding Acquisitions
<s> <c>
GAAP revenue growth rate 1Q2003 to 1Q2004 51.40%
Revenue growth rate contributed from acquisitions 32.20%
---------
Revenue growth rate 1Q2003 to 1Q2004, excluding acquisitions 19.20%
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