MPS Group Announces Second Quarter Results
Second Quarter Revenue Exceeds Range of Management Guidance
JACKSONVILLE, FL (July 29, 2004) - MPS Group, Inc. (NYSE:MPS), a leading
provider of specialty staffing, consulting, and business solutions, today
announced financial results for the second quarter and six months ended June 30,
2004. The Company reported revenue of $333 million and diluted net income per
common share of $0.09 for the quarter ended June 30, 2004, compared with revenue
of $273 million and diluted net income per common share of $0.06 for the
year-earlier period. Results for the period met or exceeded the range of
guidance previously provided by Company management.
Second Quarter Summary
o Revenue of $333 million, up 7% sequentially versus the first quarter
of 2004 and up 22% versus the second quarter of 2003
o Diluted net income per common share of $0.09, an increase of 50%
versus the second quarter of 2003, aided by a tax benefit of $0.01
related to the resolution of a state audit
o EBITDA of $16 million and operating income of $12 million
o Cash flow from operations of $10 million
o Cash balance of $127 million as of June 30, 2004
Capital Update
At the close of the second quarter, the Company had a cash balance of $127
million and no long-term debt. Year to date, the Company has spent $15.9 million
in cash on strategic acquisitions and has spent $3.8 million to buy back the
Company's stock. The Company has $52 million remaining on its stock buyback
authorization and intends to continue to buy back Company shares, as well as
complete strategic acquisitions. The Company also has a $150 million line of
credit in place with no outstanding balance.
Professional Services Business Unit Performances
The Company's professional services division revenue rose 8% sequentially versus
the first quarter of 2004 and 35% versus the second quarter of 2003. Permanent
placement fees, or fees charged to clients for the recruitment of full-time
staff, were up 49% in the professional services division versus the second
quarter of 2003 and up 33% sequentially versus the first quarter of 2004. These
increases suggest that the Company's previously announced strategy to place
greater emphasis on generating permanent placement fees is producing positive
results.
Revenue of the finance and accounting unit, made up of Badenoch and Clark in the
United Kingdom and Accounting Principals in North America, increased 6%
sequentially versus the first quarter of 2004 and 38.2% versus the second
quarter of 2003. A significant portion of the professional services division's
increase in permanent placement fees was derived from the Company's finance and
accounting unit. The legal services unit, Special Counsel, posted a 37% increase
in revenue over the second quarter of 2003; sequential revenue growth was up
only 2% versus the first quarter of the year, largely due to the completion of a
large project toward the end of the first quarter of 2004. Revenue for Entegee,
the Company's engineering unit, grew 7% sequentially versus the first quarter of
2004 and 17% versus the second quarter of 2003. In the Company's healthcare
staffing unit, Soliant Health, revenue was aided by the execution of the
Company's acquisition strategy and rose 56% sequentially versus the first
quarter of 2004 and 194% versus the second quarter of 2003. Excluding the
revenue contributed from acquisitions completed in the first quarter of 2004,
Soliant Health's growth rates were 10% sequentially and 33% compared with the
year-earlier period, indicating continuing improvement in demand in the
healthcare staffing market.
Information Technology Business Unit Performances
Revenue for the Company's information technology (IT) staffing division,
composed of Modis in North America and Modis International in the United
Kingdom, increased 7% sequentially versus the first quarter of 2004 and 15%
versus the year-earlier period. Excluding the effects of currency exchange
rates, IT staffing growth rates were 8% sequentially and 10% compared with the
year-earlier period. Idea Integration, the Company's IT solutions division,
posted sequential revenue growth of 4% versus the first quarter of 2004 and
remained profitable on an EBITDA basis for its eighth consecutive quarter.
Demand for both IT staffing and IT solutions has shown continuing moderate
improvement over the course of the year and further improvements in demand are
anticipated.
Management Comments
Timothy Payne, MPS Chief Executive Officer, stated, "For the first half of 2004,
we saw increased activity and improved results across our business units
compared with the same period last year. We are seeing positive progress from
our strategic initiatives as we continue to build our capabilities in the
accounting, legal and healthcare markets, and this is helping to drive growth
and create greater diversification in our company. We were pleased with the
strong execution we saw in our professional services unit, and at this point
professional services demand appears to be more robust than what we are seeing
in our IT units. As demand strengthens in our IT units, we expect further
improvements in our results."
"We were pleased with the operating leverage we were able to produce on a
sequential basis, which resulted in diluted net income per common share of
$0.09, which included a tax benefit of $0.01 realized in the second quarter,"
stated Robert Crouch, MPS Chief Financial Officer. "Moving forward, we believe
we will continue to see improvement in both revenue and earnings. We expect our
third quarter 2004 revenue to be in the range of $335 million to $355 million
and earnings to be in the range of $0.08 to $0.10 per diluted share, which
represents a 22% to 30% increase in revenue and a 14% to 43% increase in diluted
net income per common share from continuing operations versus the prior year
third quarter."
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 (303) 205-0066.
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 August 5. To access the telephonic replay, please dial (303) 590-3000
and enter 11003074# 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. 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 June 30, Six Months Ended June 30,
------------------------- -------------------------
2004 2003 2004 2003
---------- ---------- ---------- ----------
Operating Highlights:
Revenue:
Professional Services $ 168,677 $ 124,848 $ 325,245 $ 244,289
IT Services 147,442 128,256 284,856 254,876
IT Solutions 17,126 20,063 33,625 38,265
--------- --------- --------- ---------
Total revenue 333,245 273,167 643,726 537,430
Gross profit:
Professional Services 48,199 35,836 91,680 69,028
IT Services 31,460 29,345 60,343 56,938
IT Solutions 5,497 8,400 11,368 14,620
--------- --------- --------- ---------
Total gross profit 85,156 73,581 163,391 140,586
--------- --------- --------- ---------
General and administrative expenses 69,301 58,475 135,595 116,050
Depreciation and intangibles amortization 3,794 4,245 7,716 8,672
--------- --------- --------- ---------
Total operating expenses 73,095 62,720 143,311 124,722
--------- --------- --------- ---------
Operating income 12,061 10,861 20,080 15,864
Interest and other income (expense), net 1,308 (9) 1,943 (15)
--------- --------- --------- ---------
Income from continuing operations before
provision for income taxes 13,369 10,852 22,023 15,849
Provision for income taxes 4,025 4,389 7,246 6,453
--------- --------- --------- ---------
Income from continuing operations 9,344 6,463 14,777 9,396
Loss from discontinued operations, net of tax - (644) - (638)
--------- --------- --------- ---------
Net income $ 9,344 $ 5,819 $ 14,777 $ 8,758
========= ========= ========= =========
Diluted net (loss) income per common share:
From continuing operations $ 0.09 $ 0.06 $ 0.14 $ 0.09
From discontinued operations, net of tax - (0.01) - (0.01)
--------- --------- --------- ---------
Diluted net income per common share $ 0.09 $ 0.06 $ 0.14 $ 0.09
========= ========= ========= =========
Diluted common shares outstanding 107,527 103,002 106,955 102,840
========= ========= ========= =========
As of
------------------------
June 30, December 31,
2004 2003
--------- ---------
Cash and cash equivalents $ 127,486 $ 124,830
Accounts receivable, net 180,775 159,359
Other 23,642 19,279
--------- ---------
Current assets 331,903 303,468
Long-term assets 593,853 589,683
--------- ---------
Total assets $ 925,756 $ 893,151
========= =========
Current liabilities $ 90,702 $ 86,589
Other 13,587 13,100
Stockholders' equity 821,467 793,462
--------- ---------
Total liabilities and stockholders' equity $ 925,756 $ 893,151
========= =========
Working capital $ 241,201 $ 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 second quarter and six months ended June 30, 2003.
MPS Group, Inc.
Reconciliation of Non-GAAP Financial Measures to Most Comparable
GAAP Financial Measures
(in thousands)
Three Months Ended June 30, Six Months Ended June 30,
------------------------- -------------------------
2004 2003 2004 2003
---------- ---------- ---------- ----------
MPS Group, Inc.
EBITDA $ 15,855 $ 15,106 $ 27,796 $ 24,536
Depreciation and intangibles amortization 3,794 4,245 7,716 8,672
--------- --------- --------- ---------
Operating income 12,061 10,861 20,080 15,864
Interest and other income (expense), net 1,308 (9) 1,943 (15)
--------- --------- --------- ---------
Income from continuing operations before
provision for income taxes 13,369 10,852 22,023 15,849
Provision for income taxes 4,025 4,389 7,246 6,453
--------- --------- --------- ---------
Income from continuing operations 9,344 6,463 14,777 9,396
Loss from discontinued operations, net of tax - (644) - (638)
--------- --------- --------- ---------
Net income $ 9,344 $ 5,819 $ 14,777 $ 8,758
========= ========= ========= =========
Three Months Ended
-------------------------------------------------------
June 30, March 31, Dec. 31, Sept. 30
2004 2004 2003 2003
---------- ---------- ---------- ----------
Idea Integration
EBITDA $ 426 $ 1,261 $ 40 $ 945
Depreciation and intangibles amortization 604 514 723 738
--------- --------- --------- ---------
Operating income (loss) $ (178) $ 747 $ (683) $ 207
========= ========= ========= =========
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 and fourth quarter 2003 earnings release posted on our
Website for this reconciliation for the three months ended September 30, 2002,
December 31, 2002, March 31, 2003, and June 30, 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.
Reconciliation of Sequential Revenue Growth Rate,
Excluding Acquisitions and the Effects of Changes in Currency
IT Staffing Accounting Legal Healthcare
---------- ---------- ---------- ----------
GAAP revenue growth rate 1Q2004 to 2Q2004 7.3% $ 5.9% $ 1.9% $ 55.6%
Revenue growth rate contributed from acquisitions 0.0% 0.7% 0.0% 46.0%
Revenue growth rate from changes in currency -0.7% -1.6% 0.0% 0.0%
--------- --------- --------- ---------
Revenue growth rate 1Q2004 to 2Q2004, excluding
acquisitions and effects of changes in currency 8.0% $ 6.8% $ 1.9% $ 9.6%
========= ========= ========= =========
Reconciliation of Year-Over-Year Revenue Growth Rate,
Excluding Acquisitions and the Effects of Changes in Currency
IT Staffing Accounting Legal Healthcare
---------- ---------- ---------- ----------
GAAP revenue growth rate 2Q2003 to 2Q2004 15.0% $ 38.2% $ 37.1% $ 193.9%
Revenue growth rate contributed from acquisitions 0.0% 1.9% 23.1% 161.4%
Revenue growth rate from changes in currency 4.6% 12.5% 0.0% 0.0%
--------- --------- --------- ---------
Revenue growth rate 2Q2003 to 2Q2004, excluding
acquisitions and effects of changes in currency 10.4% $ 23.8% $ 14.0% $ 32.5%
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