COMSYS IT Partners, Inc. (NASDAQ:CITP), a leading provider of
information technology staffing and consulting services, today
announced its financial results for the second quarter ended June
28, 2009.
Second Quarter 2009 Financial
Results
- Revenue was $156.8 million, down
14.8% from $184.1 million during the second quarter of 2008. On an
acquisition-adjusted basis (i.e. including the acquisitions made in
the prior year on a pro forma basis), revenue declined by 16.7%
from the prior-year period.
- Revenue declined sequentially
from $162.7 million in the first quarter of 2009. The decline of
3.6% was an improvement over the sequential declines in the prior
three quarters.
- Net income was $2.4 million, or
$0.11 per common share, down from $6.2 million, or $0.30 per common
share, in the second quarter of 2008.
- Results for the second quarter
of 2009 also included previously announced restructuring charges of
approximately $0.3 million. Excluding these charges, net income in
the quarter would have been $2.7 million, or $0.13 per common
share.
- EBITDA, excluding restructuring
costs, in the second quarter of 2009 was $6.0 million compared with
$10.5 million in the second quarter of 2008 and $4.9 million in the
first quarter of 2009. EBITDA, excluding restructuring costs, is a
non-GAAP measure defined below.
- Excess availability under
COMSYS’ revolving credit facility at the end of the second quarter
was $56.8 million.
Year-to-Date 2009 Financial
Results
- Revenue was $319.5 million in
the first six months of 2009, down 13.1% from $367.4 million during
the first six months of 2008. On an acquisition-adjusted basis
(i.e. including the acquisitions made in the prior year on a pro
forma basis), revenue declined by 14.8% from the prior-year
period.
- Net income was $0.5 million in
the first six months of 2009, or $0.02 per common share, down from
$11.3 million, or $0.55 per common share, in the first six months
of 2008.
- Results for the first six months
of 2009 also included previously announced restructuring charges of
approximately $3.9 million. Excluding these charges, net income in
the period would have been $4.5 million, or $0.21 per common
share.
- EBITDA, excluding restructuring
costs, in the first six months of 2009 was $10.9 million compared
with $20.4 million in the first six months of 2008.
“Our operations are performing well in this challenging
environment and we are pleased with the progress we continue to
make against a number of our longer-term priorities,” said Larry L.
Enterline, COMSYS Chief Executive Officer. “With our strong balance
sheet and liquidity and our improved performance against our peers,
we have chosen to make a number of selected investments in TAPFIN,
our healthcare and government verticals, and other parts of our
business at a time when many others are focused primarily on
defensive cost cutting. We are not expecting to see dramatic
results from any of those efforts until the broader economy
improves; but, we are confident that we are strengthening our
competitive position during this difficult period and optimistic
about the opportunities that we are creating for COMSYS in the next
expansion.”
Enterline added, “As always, I would like to thank our
operations leaders and their staffs for their ongoing strong
efforts. Their continued focus and dedication will ensure that we
continue to meet our clients’ needs in this difficult
environment.”
Amy Bobbitt, COMSYS Senior Vice President and Chief Accounting
Officer, commented, “Billable hours in the second quarter were down
overall versus last year, but the rate of decline in our average
weekly billable hours since the beginning of May has slowed. On a
sequential basis, after eliminating the impact of higher payroll
taxes in the first quarter this year, gross margin improved by 50
basis points over the first quarter of 2009. This increase resulted
from improved management of pay rates and lower reimbursable
expense revenue, partially offset by lower fee income from
permanent placement and vendor management services.”
Bobbitt continued, “Our debt at the end of the quarter was $52.2
million, a decrease from $60.0 million at the end of the first
quarter of 2009. We expect to further reduce our debt balance
through the remainder of 2009.”
Selected operating data and reconciliations of non-GAAP
financial measures to GAAP results for the second quarter ended
June 28, 2009, are included below.
Conference Call
Information
COMSYS will host a conference call tomorrow (July 30) at 10:00
a.m. Eastern time to discuss the quarterly financial results. The
conference call-in number is (913) 981-5578 and the confirmation
number is 1149877. The call will also be web cast live at
www.comsys.com and www.earnings.com and replayed for 30 days at
www.comsys.com. A seven-day
telephonic replay of this conference call will be available by
dialing (719) 457-0820. Callers should use the pass code 1149877 to
gain access to the replay, which will be available through the end
of the day on August 6, 2009.
About COMSYS IT
Partners
COMSYS IT Partners, Inc. (NASDAQ:CITP) is a leading IT services
company with 50 offices across the U.S. and offices in Puerto Rico,
Canada and the U.K. COMSYS service offerings include contingent and
direct hire placement of IT professionals and a wide range of
technical services and solutions addressing requirements across the
enterprise. TAPFIN Process Solutions delivers critical management
solutions across the resource spectrum from contingent workers to
outsourced services.
Forward-looking
Statements
Certain information contained in this press release may be
deemed forward-looking statements regarding events and financial
trends that could affect our plans, objectives, future operating
results, financial condition, performance and business. These
statements may be identified by words such as “estimate,”
“forecast,” “plan,” “intend,” “believe,” “should,” “expect,”
“anticipate,” or variations or negatives thereof, or by similar or
comparable words or phrases. These forward-looking statements are
largely based on our expectations and beliefs concerning future
events, which reflect estimates and assumptions made by our
management. These estimates and assumptions reflect our best
judgment based on currently known market conditions and other
factors relating to our operations and business environment, all of
which are difficult to predict and many of which are beyond our
control, including:
- economic declines that affect
our business, including our profitability, liquidity or the ability
to comply with applicable loan covenants;
- the financial stability of our
lenders and their ability to honor their commitments related to our
credit agreements;
- whether governments will amend
existing regulations or impose additional regulations or licensing
requirements in such a manner as to increase our costs of doing
business or restrict access to qualified technology workers;
- the risk of increased tax
rates;
- adverse changes in credit and
capital markets conditions that may affect our ability to obtain
financing or refinancing on favorable terms or that may warrant
changes to existing credit terms;
- the financial stability of our
customers and other business partners and their ability to pay
their outstanding obligations or provide committed services;
- changes in levels of
unemployment and other economic conditions in the United States, or
in particular regions or industries;
- the impact of competitive
pressures on our ability to maintain or improve our operating
margins, including pricing pressures as well as any change in the
demand for our services;
- the risk in an uncertain
economic environment of increased incidences of employment
disputes, employment litigation and workers’ compensation
claims;
- our success in attracting,
training, retaining and motivating billable consultants and key
officers and employees;
- our ability to shift a larger
percentage of our business mix into IT solutions, project
management and business process outsourcing and, if successful, our
ability to manage those types of business profitably;
- weakness or reductions in
corporate information technology spending levels;
- our ability to maintain existing
client relationships and attract new clients in the context of
changing economic or competitive conditions;
- the entry of new competitors
into the U.S. staffing services market due to the limited barriers
to entry or the expansion of existing competitors in that
market;
- increases in employment-related
costs such as healthcare and unemployment taxes;
- the possibility of our incurring
liability for the activities of our billable consultants or for
events impacting our billable consultants on our clients’
premises;
- the risk that we may be subject
to claims for indemnification under our customer contracts;
- the risk that cost cutting or
restructuring activities could cause an adverse impact on certain
of our operations; and
- adverse changes to management’s
periodic estimates of future cash flows that may affect our
assessment of our ability to fully recover our goodwill.
Although we believe our estimates and assumptions to be
reasonable, they are inherently uncertain and involve a number of
risks and uncertainties that are beyond our control. In addition,
management’s assumptions about future events may prove to be
inaccurate. Management cautions all readers that the
forward-looking statements contained in this report are not
guarantees of future performance, and we cannot assure any reader
that those statements will be realized or that the forward-looking
events and circumstances will occur. Actual results may differ
materially from those anticipated or implied in the forward-looking
statements due to various factors, including the factors listed in
this section and the “Risk Factors” section contained in our Annual
Report on Form 10-K as filed with the Securities and Exchange
Commission. All forward-looking statements speak only as of the
date of this report. We do not intend to publicly update or revise
any forward-looking statements as a result of new information,
future events or otherwise, except as required by law. These
cautionary statements qualify all forward-looking statements
attributable to us or persons acting on our behalf.
COMSYS IT PARTNERS,
INC.
OPERATING DATA, SUPPLEMENTAL
CASH FLOW INFORMATION AND NON-GAAP MEASURES
(IN THOUSANDS, EXCEPT OPERATING
DATA)
Three Months Ended Operating
Data: June 28, March 29, June
29, 2009 2009 2008 Billing
days 64 64 64 Billable hours 2,050,677 2,092,521 2,294,540
Revenue per billing day, excluding
reimbursable expense revenue (in thousands)
$ 2,408 $ 2,490 $ 2,801 Average bill rate $ 70.84 $ 71.63 $ 74.02
Gross margin 24.5 % 23.4 % 24.4 % Effective tax rate 6.1 % (7.7 %)
4.6 % DSO 43 44 50 Average daily net debt balance (in millions) $
59.8 $ 57.9 $ 82.6
Three Months Ended
Supplemental Cash Flow Information: June 28, March
29, June 29, 2009 2009
2008 Net cash provided by (used in) operating activities $
8,637 $ (6,748 ) $ 2,629 Stock-based compensation $ 904 $ 867 $
1,183 Capital expenditures $ 251 $ 439 $ 2,143
Three Months Ended Six Months Ended Non-GAAP
Financial Measures: June 28, March 29, June
29, June 28, June 29, 2009
2009 2008 2009 2008
EBITDA, excluding restructuring costs: GAAP net income
(loss) $ 2,386 $ (1,871 ) $ 6,212 $ 515 $ 11,316 Depreciation and
amortization 2,050 2,074 1,898 4,124 3,718 Restructuring costs 321
3,620 - 3,941 - Interest expense, net 1,126 952 1,279 2,078 2,882
Other income, net (67 ) (105 ) (172 ) (172 ) (225 ) Income tax
expense 216 243
1,324 459 2,742 EBITDA,
excluding restructuring costs $ 6,032 $ 4,913
$ 10,541 $ 10,945 $ 20,433
EBITDA, excluding restructuring costs, as a % of GAAP revenue 3.8 %
3.0 % 5.7 % 3.4 % 5.6 %
A non-GAAP financial measure is a
numerical measure of a company’s performance, financial position,
or cash flows that either excludes or includes amounts that are not
normally excluded or included in the most directly comparable
measure calculated and presented in accordance with generally
accepted accounting principles ("GAAP"). We believe EBITDA,
excluding restructuring costs, to be relevant and useful
information to our investors in assessing our financial operating
results as these measures are used by our management in evaluating
our financial performance, liquidity, our ability to service debt
and fund capital expenditures. However, these measures should be
considered in addition to, and not as a substitute for, or superior
to, measures of financial performance prepared in accordance with
generally accepted accounting principles, and may not be comparable
to similarly titled measures reported by other companies. The
non-GAAP measures included in this press release have been
reconciled to the nearest GAAP measures as required under SEC rules
regarding the use of non-GAAP financial measures.
COMSYS IT PARTNERS,
INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
Three Months Ended Six Months
Ended June 28, March 29, June
29, June 28, June 29, 2009
2009 2008 2009 2008
Revenues from services $ 156,765 $ 162,694 $ 184,064 $ 319,459 $
367,447 Cost of services 118,386
124,598 139,232 242,984
277,959
Gross profit 38,379
38,096 44,832
76,475 89,488 Operating costs
and expenses: Selling, general and administrative 32,347 33,183
34,291 65,530 69,055 Restructuring costs 321 3,620 - 3,941 -
Depreciation and amortization 2,050
2,074 1,898 4,124
3,718 34,718 38,877
36,189 73,595
72,773
Operating income (loss) 3,661 (781 )
8,643 2,880 16,715 Interest expense, net 1,126 952 1,279 2,078
2,882 Other income, net (67 ) (105 )
(172 ) (172 ) (225 ) Income (loss)
before income taxes 2,602 (1,628 ) 7,536 974 14,058 Income tax
expense 216 243
1,324 459 2,742
Net
income (loss) $ 2,386 $ (1,871 ) $ 6,212
$ 515 $ 11,316 Net income (loss)
per common share: Basic $ 0.11 $ (0.09 ) $ 0.31 $ 0.02 $ 0.56
Diluted $ 0.11 $ (0.09 ) $ 0.30 $ 0.02 $ 0.55 Weighted
average shares outstanding: Basic 19,796 19,774 19,592 19,785
19,585 Diluted 19,796 19,774 20,636 19,785 20,628
COMSYS IT PARTNERS,
INC.
CONSOLIDATED BALANCE
SHEETS
(IN THOUSANDS, EXCEPT SHARE AND
PAR VALUE AMOUNTS)
June 28, December 28,
2009 2008 Assets Current assets:
Cash $ 1,771 $ 22,695 Accounts receivable, net of allowance of
$3,554 and $3,232, respectively 182,333 202,297 Prepaid expenses
and other 3,518 3,116 Restricted cash 2,486
2,489
Total current assets 190,108
230,597 Fixed assets, net 14,937 16,596
Goodwill 88,962 89,064 Other intangible assets, net 10,173 11,962
Deferred financing costs, net 3,002 1,175 Restricted cash 308 308
Other assets 1,144 1,478
Total assets $ 308,634 $ 351,180
Liabilities and stockholders’ equity Current
liabilities: Accounts payable $ 128,072 $ 156,528 Payroll and
related taxes 25,872 25,975 Interest payable 248 337 Other current
liabilities 9,787 9,728
Total
current liabilities 163,979 192,568
Long-term debt 52,174 69,692 Other noncurrent liabilities
6,827 5,435
Total
liabilities 222,980 267,695
Commitments and contingencies
Stockholders’
equity: Preferred stock, no par value; 5,000,000 shares
authorized; none issued - -
Common stock, par value $.01;
95,000,000 shares authorized and 20,816,746 shares outstanding;
95,000,000 shares authorized and 20,465,028 shares outstanding,
respectively
207 203 Common stock warrants 1,734 1,734 Accumulated other
comprehensive loss (182 ) (90 ) Additional paid-in capital 229,102
227,360 Accumulated deficit (145,207 )
(145,722 )
Total stockholders’ equity 85,654
83,485
Total liabilities and stockholders’
equity $ 308,634 $ 351,180
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