EXHIBIT 99.1
| |
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Contacts: |
|
David L. Kerr |
|
Amy Bobbitt |
|
|
Senior Vice President -- Corporate Development |
|
Senior Vice President & Chief |
|
|
713.386.1420 |
|
Accounting Officer |
|
|
dkerr@comsys.com |
|
602.414.3867 |
|
|
|
|
abobbitt@comsys.com |
COMSYS IT PARTNERS, INC. REPORTS 2007 FOURTH QUARTER AND FULL YEAR RESULTS
HOUSTON, TX (February 14, 2008) COMSYS IT Partners, Inc. (NASDAQ:CITP), a leading provider of
information technology staffing and consulting services, today announced results for its fourth
quarter and year ended December 30, 2007.
Revenue for the fourth quarter of 2007 was $183.3 million, down 1% from $184.7 million for the
fourth quarter of 2006. Excluding the impact of the 2007 acquisitions, revenue declined by 2.1%
versus the prior year period.
Net income in the fourth quarter of 2007 was $8.7 million, or $0.43 per diluted share, within
managements fourth quarter net income guidance of $8.4 million to $9.3 million, or $0.42 to $0.46
of earnings per diluted share. Results for the fourth quarter of 2007 included a pre-tax charge of
$1.0 million, or $0.05 per diluted share, related to the potential uncollectible accounts
receivable exposure resulting from the bankruptcy of VMS provider, Chimes. Managements guidance
for the fourth quarter did not include any impact of the Chimes bankruptcy.
For the fourth quarter of 2006, the Company reported net income of $5.2 million, or $0.26 per
diluted share, which included a pre-tax charge of $0.7 million, or $0.04 per diluted share, related
to a loss on early extinguishment of debt. Excluding this amount in 2006 and the Chimes-related
charge in 2007, net income for the fourth quarter of 2007 increased 65% over the fourth quarter of
2006.
Revenue for the full-year 2007 was $743.3 million, up 1% over $736.6 million for 2006. Net income
for 2007 was $33.3 million, or $1.66 per diluted share, an increase from 2006 net income of $21.0
million, or $1.10 per diluted share.
Except for the impact of the Chimes bankruptcy, we were pleased with our financial results in the
fourth quarter, said Larry L. Enterline, COMSYS Chief Executive Officer. Net income rose over
last year primarily due to the benefits of efficiency initiatives implemented throughout the past
year. In addition, we had a decrease in interest expense due to our lower debt levels, and our
gross margins continued to show the strength we experienced throughout 2006 and during the first
half of 2007. Although our revenue softened during the fourth quarter, our process initiatives and
our ability to generate cash and repay debt throughout the year have positioned us well for the
uncertain economic times that many are now forecasting.
I would especially like to thank our operations leaders and their staffs, Enterline continued.
Their continued focus on our customers, even in the face of the Chimes situation and the
integration of the Praeos and TWC acquisitions this quarter, will drive our success, and we are
very grateful for their ongoing efforts.
Amy Bobbitt, Senior Vice President and Chief Accounting Officer, commented, We entered 2007 with
4,996 consultants on assignment, and after the seasonal reduction in consultant headcount we
experience each year in January and the typical falloff we experience at the end of each quarter,
we ended 2007 with
-MORE-
CITP Reports 2007 Fourth Quarter and Year-End Results
Page 2
February 14, 2008
4,986 consultants, which includes approximately 170 consultants from businesses acquired in 2007.
In 2008, our headcount has declined at a greater-than-normal pace and, as a result, our current
headcount in February is approximately 4,750 consultants. Gross profit improved to 25.2% in the
fourth quarter of 2007 from 24.6% in the same period last year, with gross profit up approximately
$0.7 million between periods. Average bill rates also improved during this period, increasing to
$73.25 in the fourth quarter of 2007 from $70.68 in the fourth quarter of 2006. For the fourth
quarter of 2007, EBITDA as a percentage of revenues increased to 6.7% (7.3% excluding the Chimes
charge) from 6.1% in the same period last year.
The Companys debt balance declined to $71.9 million at the end of 2007 from $98.5 million at the
end of 2006. During 2007, the Company generated $58.8 million of cash flow from operations and
used $30.9 million for acquisitions. The Company expects to make further debt reductions in 2008.
During the fourth quarter of 2007, the Company generated EBITDA of $12.3 million compared with
$11.3 million of EBITDA for the fourth quarter of 2006.
Selected operating data and reconciliations of non-GAAP financial measures to GAAP results for the
fourth quarter ended December 30, 2007, are included below in a section before the financial
tables.
First Quarter 2008 Financial Guidance
For the first quarter of 2008, the Company expects to report revenue in a range of $181 million to
$186 million and net income in the range of $5.1 million to $5.9 million, or approximately $0.25 to
$0.29 per diluted share, on two more billing days than the fourth quarter of 2007. These estimated
net income amounts include the seasonal impact of payroll-related taxes that the Company
experiences in the first quarter of each year and are based on an effective tax rate of 24% (up
from 7.6% in the first quarter of 2007).
Conference Call Information
COMSYS will host a conference call today (February 14) at 10:00 a.m. Eastern time to discuss the
quarterly financial results. The conference call-in number is (913) 312-0832 and the confirmation
number is 2504079. 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 2504079 to gain
access to the replay, which will be available through the end of the day on February 21, 2008.
About COMSYS IT Partners
COMSYS IT Partners, Inc. (NASDAQ: CITP) is a leading IT services company with 52 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 as well as a wide range of technical services and
solutions addressing requirements across the enterprise. The COMSYS Process Solutions Group
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 the Companys 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. Forward-looking statements are based on the Companys expectations and beliefs concerning
future events affecting the Company, which reflect estimates and assumptions made by management.
These estimates and assumptions reflect the Companys best judgment based on currently known market
conditions and other factors relating to the Companys operations and business environment, all of
which are difficult to predict and many of which are beyond its control, including:
-MORE-
CITP Reports 2007 Fourth Quarter and Year-End Results
Page 3
February 14, 2008
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the Companys success in attracting, training, retaining and motivating billable
consultants and key officers and employees; |
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|
the Companys ability to shift a larger percentage of its business mix into IT
solutions, project management and business process outsourcing and, if successful, its
ability to manage those types of business profitably; |
| |
|
changes in levels of unemployment and other economic conditions in the United States,
or in particular regions or industries; |
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weakness or reductions in corporate information technology spending levels; |
| |
|
the Companys ability to maintain existing client relationships and attract new clients
in the context of changing economic or competitive conditions; |
| |
|
the impact of competitive pressures on the Companys ability to maintain or improve its
operating margins, including any change in the demand for its services; |
| |
|
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 the Companys incurring liability for the activities of its billable
consultants or for events impacting its billable consultants on clients premises; |
| |
|
the risk that the Company may be subject to claims for indemnification under its
customer contracts; |
| |
|
the risk in an uncertain economic environment of increased incidences of employment
disputes, employment litigation and workers compensation claims; |
| |
|
the risk that cost cutting or restructuring activities could cause an adverse impact on
certain of the Companys operations; |
| |
|
economic declines that affect the Companys business, including its profitability,
liquidity or the ability to comply with applicable loan covenants; |
| |
|
adverse changes in credit and capital markets conditions that may affect the Companys
ability to obtain financing or refinancing on favorable terms; |
| |
|
adverse changes to managements periodic estimates of future cash flows that may affect
the Companys assessment of its ability to fully recover its goodwill; |
| |
|
whether governments will amend existing regulations or impose additional regulations or
licensing requirements in such a manner as to increase the Companys costs of doing
business; and |
| |
|
other matters discussed in this press release and the Companys most recent definitive
proxy statement, Forms 10-K, 10-Q and 8-K, as well as matters discussed in its future SEC
filings. |
Although the Company believes that the expectations reflected in its forward-looking statements are
reasonable, it can give no assurance that such expectations will prove to be correct. They can be
affected by inaccurate assumptions the Company might make or by known or unknown risks and
uncertainties. The forward-looking statements included in this release are not guarantees of
future performance, and the Company cannot assure the reader that those statements will be realized
or that the forward-looking events or circumstances will occur. Actual future results may vary
materially. Because of these factors, the Company cautions that investors should not place undue
reliance on any of its forward-looking statements. Further, any forward-looking statement speaks
only as of the date on which it is made and, except as required by law, the Company undertakes no
obligation to update any forward-looking statement to reflect events or circumstances after the
date on which it is made or to reflect the occurrence of anticipated or
unanticipated events or circumstances, and is not responsible for any changes made to this release
by wire or Internet services.
-MORE-
CITP Reports 2007 Fourth Quarter and Year-End Results
Page 4
February 14, 2008
COMSYS IT PARTNERS, INC.
OPERATING DATA, SUPPLEMENTAL CASH FLOW INFORMATION AND NON-GAAP MEASUREMENTS
(IN THOUSANDS, EXCEPT OPERATING DATA)
| |
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|
|
|
|
|
|
|
|
|
|
|
| |
|
Three Months Ended |
|
| |
|
December 30, 2007 |
|
|
September 30, 2007 |
|
|
December 31, 2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending consultant headcount |
|
|
4,986 |
|
|
|
4,982 |
|
|
|
4,996 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Billing days |
|
|
62 |
|
|
|
63 |
|
|
|
62 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue per billing day (in thousands) |
|
$ |
2,956 |
|
|
$ |
2,971 |
|
|
$ |
2,979 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average bill rate |
|
$ |
73.25 |
|
|
$ |
72.92 |
|
|
$ |
70.68 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit percentage |
|
|
25.2 |
% |
|
|
25.2 |
% |
|
|
24.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
DSO |
|
|
43 |
|
|
|
48 |
|
|
|
43 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Three Months Ended |
|
| |
|
December 30, 2007 |
|
|
September 30, 2007 |
|
|
December 31, 2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Cash Flow Information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
$ |
31,246 |
|
|
$ |
26,951 |
|
|
$ |
25,898 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
$ |
2,056 |
|
|
$ |
414 |
|
|
$ |
301 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Three Months Ended |
|
| |
|
December 30, 2007 |
|
|
September 30, 2007 |
|
|
December 31, 2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Financial Measures: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income |
|
$ |
8,678 |
|
|
$ |
9,617 |
|
|
$ |
5,150 |
|
Depreciation and amortization |
|
|
1,726 |
|
|
|
1,653 |
|
|
|
2,180 |
|
Interest expense, net |
|
|
1,541 |
|
|
|
1,993 |
|
|
|
3,137 |
|
Loss on early extinguishment of debt |
|
|
|
|
|
|
|
|
|
|
723 |
|
Other income, net |
|
|
(67 |
) |
|
|
(18 |
) |
|
|
(38 |
) |
Income tax expense |
|
|
430 |
|
|
|
941 |
|
|
|
151 |
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
$ |
12,308 |
|
|
$ |
14,186 |
|
|
$ |
11,303 |
|
|
|
|
|
|
|
|
|
|
|
EBITDA as a % of GAAP revenue |
|
|
6.7 |
% |
|
|
7.6 |
% |
|
|
6.1 |
% |
A non-GAAP financial measure is a numerical measure of a companys 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 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. Additionally, our Debt to EBITDA ratio affects the interest
rates we pay on our credit agreements. 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.
CITP Reports 2007 Fourth Quarter and Year-End Results
Page 5
February 14, 2008
COMSYS IT PARTNERS, INC.
STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Three Months Ended |
|
|
Year Ended |
|
| |
|
December 30, |
|
|
September 30, |
|
|
December 31, |
|
|
December 30, |
|
|
December 31, |
|
| |
|
2007 |
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues from services |
|
$ |
183,260 |
|
|
$ |
187,195 |
|
|
$ |
184,710 |
|
|
$ |
743,265 |
|
|
$ |
736,645 |
|
Cost of services |
|
|
137,154 |
|
|
|
139,945 |
|
|
|
139,351 |
|
|
|
558,074 |
|
|
|
557,598 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
46,106 |
|
|
|
47,250 |
|
|
|
45,359 |
|
|
|
185,191 |
|
|
|
179,047 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
33,798 |
|
|
|
33,064 |
|
|
|
34,056 |
|
|
|
135,423 |
|
|
|
135,651 |
|
Depreciation and amortization |
|
|
1,726 |
|
|
|
1,653 |
|
|
|
2,180 |
|
|
|
6,426 |
|
|
|
8,717 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,524 |
|
|
|
34,717 |
|
|
|
36,236 |
|
|
|
141,849 |
|
|
|
144,368 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations |
|
|
10,582 |
|
|
|
12,533 |
|
|
|
9,123 |
|
|
|
43,342 |
|
|
|
34,679 |
|
Interest expense, net |
|
|
1,541 |
|
|
|
1,993 |
|
|
|
3,137 |
|
|
|
8,250 |
|
|
|
15,518 |
|
Loss on early extinguishment of debt |
|
|
|
|
|
|
|
|
|
|
723 |
|
|
|
|
|
|
|
3,191 |
|
Other income, net |
|
|
(67 |
) |
|
|
(18 |
) |
|
|
(38 |
) |
|
|
(536 |
) |
|
|
(310 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
9,108 |
|
|
|
10,558 |
|
|
|
5,301 |
|
|
|
35,628 |
|
|
|
16,280 |
|
Income tax expense (benefit) |
|
|
430 |
|
|
|
941 |
|
|
|
151 |
|
|
|
2,279 |
|
|
|
(4,767 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
8,678 |
|
|
$ |
9,617 |
|
|
$ |
5,150 |
|
|
$ |
33,349 |
|
|
$ |
21,047 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.43 |
|
|
$ |
0.48 |
|
|
$ |
0.27 |
|
|
$ |
1.67 |
|
|
$ |
1.10 |
|
Diluted |
|
$ |
0.43 |
|
|
$ |
0.48 |
|
|
$ |
0.26 |
|
|
$ |
1.66 |
|
|
$ |
1.10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
19,474 |
|
|
|
19,459 |
|
|
|
18,628 |
|
|
|
19,255 |
|
|
|
18,449 |
|
Diluted |
|
|
20,392 |
|
|
|
20,118 |
|
|
|
19,531 |
|
|
|
20,100 |
|
|
|
19,137 |
|
-MORE-
CITP Reports 2007 Fourth Quarter and Year-End Results
Page 6
February 14, 2008
COMSYS IT PARTNERS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
| |
|
|
|
|
|
|
|
|
| |
|
December 30, |
|
|
December 31, |
|
| |
|
2007 |
|
|
2006 |
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash |
|
$ |
1,594 |
|
|
$ |
1,605 |
|
Accounts receivable, net of allowance of $3,389 and $3,474, respectively |
|
|
189,317 |
|
|
|
189,610 |
|
Prepaid expenses and other |
|
|
3,153 |
|
|
|
3,741 |
|
Restricted cash |
|
|
3,365 |
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
197,429 |
|
|
|
194,956 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed assets, net |
|
|
13,094 |
|
|
|
9,214 |
|
Goodwill |
|
|
174,160 |
|
|
|
154,984 |
|
Intangible assets, net |
|
|
10,002 |
|
|
|
9,142 |
|
Deferred financing costs, net |
|
|
2,044 |
|
|
|
2,926 |
|
Restricted cash |
|
|
4,218 |
|
|
|
2,794 |
|
Other assets |
|
|
1,522 |
|
|
|
1,018 |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
402,469 |
|
|
$ |
375,034 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and stockholders equity |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
145,622 |
|
|
$ |
131,535 |
|
Payroll and related taxes |
|
|
29,574 |
|
|
|
32,204 |
|
Current maturities of long-term debt |
|
|
5,000 |
|
|
|
5,000 |
|
Interest payable |
|
|
365 |
|
|
|
654 |
|
Other |
|
|
7,897 |
|
|
|
13,506 |
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
188,458 |
|
|
|
182,899 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt |
|
|
66,903 |
|
|
|
93,542 |
|
Other noncurrent liabilities |
|
|
2,476 |
|
|
|
3,823 |
|
|
|
|
|
|
|
|
Total liabilities |
|
|
257,837 |
|
|
|
280,264 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders equity: |
|
|
|
|
|
|
|
|
Preferred stock, no par value; 5,000 shares authorized, none issued |
|
|
|
|
|
|
|
|
Common stock, par value $0.01; 95,000 shares authorized; 20,181 and
19,279 shares outstanding at December 30, 2007 and December 31, 2006,
respectively |
|
|
201 |
|
|
|
191 |
|
Common stock warrants |
|
|
1,734 |
|
|
|
1,734 |
|
Accumulated other comprehensive income (loss) |
|
|
57 |
|
|
|
(12 |
) |
Additional paid-in capital |
|
|
223,174 |
|
|
|
206,740 |
|
Accumulated deficit |
|
|
(80,534 |
) |
|
|
(113,883 |
) |
|
|
|
|
|
|
|
Total stockholders equity |
|
|
144,632 |
|
|
|
94,770 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity |
|
$ |
402,469 |
|
|
$ |
375,034 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-END-