Exhibit 99.1
| |
|
|
|
|
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 2008 FIRST QUARTER RESULTS IN LINE WITH MANAGEMENT GUIDANCE
HOUSTON, TX (May 1, 2008) COMSYS IT Partners, Inc. (NASDAQ:CITP), a leading provider of
information technology staffing and consulting services, today announced results for its first
quarter ended March 30, 2008.
Revenue for the first quarter of 2008 was $183.4 million, down from $186.2 million for the first
quarter of 2007. Excluding the revenues from the 2007 acquisitions, revenue declined by 5.5%
versus the prior-year period. Despite a significant increase in the effective tax rate between
periods, net income in the first quarter was $5.6 million, up from $5.5 million in the first
quarter of last year and diluted earnings per share of $0.27 were down from $0.28 per diluted share
last year.
Our results for the first quarter were in line with our guidance and reflected todays economic
uncertainty, said Larry L. Enterline, COMSYS Chief Executive Officer. Although our revenue
decline was indicative of the impact of this uncertainty on our customers spending, our operators
focused on maximizing profitability throughout the quarter, and, as a result, gross profit and net
income were still good despite the reduced revenue. We have worked hard to prepare COMSYS for this
type of situation, and believe that we have properly positioned the Company not only to withstand
the uncertainty, but also to take advantage of it. We plan to focus our organization on
maintaining strong relationships with existing customers, aggressively pursuing new customers,
continuing our process and efficiency initiatives and pursuing strategic acquisitions. Our
expectation is that we will be stronger and better positioned, both from a market standpoint as
well as financially, as we look to the future.
As always, I would like to thank our operations leaders and their staffs for their continuing
strong efforts, Enterline continued. Their focus on our customers needs, even in a difficult
economic environment, will drive our success, and we are very grateful for their commitment.
Amy Bobbitt, Senior Vice President and Chief Accounting Officer, commented, We entered 2008 with
4,986 consultants on assignment, and, after a year-end fall-off that was greater than our normal
seasonal reduction, we ended the first quarter of 2008 with 4,758 consultants. Our current
headcount at the end of April is approximately 4,714 consultants. Gross profit was 24.4% in the
first quarter of 2008, which was slightly higher than the first quarter of 2007. Results for the
first quarter included the seasonal impact of payroll-related taxes that we experience in the first
quarter of each year. Average bill rates also improved during this period, increasing to $73.96 in
the first quarter of 2008 from $72.02 in the first quarter of 2007. For the first quarter of 2008,
EBITDA as a percentage of revenues increased to 5.9% from 5.1% in the same period last year.
The Companys debt balance decreased to $65.4 million at the end of the first quarter of 2008 from
$71.9 million at the end of 2007, mainly due to the timing of a large vendor management payment.
Our average daily debt balance during the first quarter was $91.0 million, which was in line with
seasonal trends. The Company expects to continue to reduce these average daily debt balances in
the second quarter of 2008 and for the remainder of this year, although at a slower rate than 2007
in line with our
-MORE-
CITP Reports 2008 First Quarter Results
Page 2
May 1, 2008
expectations for slower revenue growth. During the first quarter of 2008, the Company generated
EBITDA of $10.7 million compared with $9.6 million of EBITDA for the first quarter of 2007.
Selected operating data and reconciliations of non-GAAP financial measures to GAAP results for the
first quarter ended March 30, 2008, are included below in a section before the financial tables.
Second Quarter 2008 Financial Guidance
For the second quarter of 2008, the Company expects to report revenue in a range of $177 million to
$183 million and net income in the range of $5.4 million to $6.4 million, or approximately $0.26 to
$0.31 per diluted share, on the same number of billing days as the first quarter of 2008. These
estimated net income amounts are based on an effective tax rate of 24%. Management does not expect
to pay any substantial amount of cash taxes in 2008. Assuming the Company continues to be
profitable, management expects to release the valuation allowance during 2008 and begin to provide
for taxes at the full statutory rate.
Conference Call Information
COMSYS will host a conference call today (May 1) at 10:00 a.m. Eastern time to discuss the
quarterly financial results. The conference call-in number is (913) 312-0835 and the confirmation
number is 1000040. The call will also be web cast live at
www.comsys.comand 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 1000040 to gain
access to the replay, which will be available through the end of the day on May 8, 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. These forward-looking statements are largely based on the Companys expectations and
beliefs concerning future events, 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 its operations and business environment, all of which are
difficult to predict and many of which are beyond its control, including:
| |
|
|
the Companys success in attracting, training, retaining and motivating billable
consultants and key officers and employees; |
| |
| |
|
|
the Companys ability to shift a larger percentage of its business mix into IT
solutions, project management and business process outsourcing and, if successful, the
Companys 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; |
| |
| |
|
|
weakness or reductions in corporate information technology spending levels; |
-MORE-
CITP Reports 2008 First Quarter Results
Page 3
May 1, 2008
| |
|
|
the Companys ability to maintain existing client relationships and attract new
clients in the context of changing economic or competitive conditions; |
| |
| |
|
|
the financial stability of the Companys customers and other business partners and
their ability to pay their outstanding obligations; |
| |
| |
|
|
the impact of competitive pressures on the Companys ability to maintain or improve
its operating margins, including pricing pressures as well as 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 or that may
warrant changes to existing credit 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; and |
| |
| |
|
|
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. |
Although the Company believes its estimates and assumptions to be reasonable, they are inherently
uncertain and involve a number of risks and uncertainties that are beyond its control. In
addition, managements 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 the Company 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
the factors listed in this section as well as the Risk Factors section included in the Companys
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. The Company does 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 the Companys behalf.
-MORE-
CITP Reports 2008 First Quarter Results
Page 4
May 1, 2008
COMSYS IT PARTNERS, INC.
OPERATING DATA, SUPPLEMENTAL CASH FLOW INFORMATION AND NON-GAAP MEASUREMENTS
(IN THOUSANDS, EXCEPT OPERATING DATA)
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Three Months Ended |
| |
|
March 30, 2008 |
|
December 30, 2007 |
|
April 1, 2007 |
Operating Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending consultant headcount |
|
|
4,758 |
|
|
|
4,986 |
|
|
|
4,983 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Billing days |
|
|
64 |
|
|
|
62 |
|
|
|
64 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue per billing day (in thousands) |
|
$ |
2,865 |
|
|
$ |
2,956 |
|
|
$ |
2,910 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average bill rate |
|
$ |
73.96 |
|
|
$ |
73.25 |
|
|
$ |
72.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit percentage |
|
|
24.4 |
% |
|
|
25.2 |
% |
|
|
24.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate |
|
|
24.0 |
% |
|
|
4.7 |
% |
|
|
7.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
DSO |
|
|
45 |
|
|
|
43 |
|
|
|
49 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Three Months Ended |
| |
|
March 30, 2008 |
|
December 30, 2007 |
|
April 1, 2007 |
Supplemental Cash Flow Information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used for) operating activities |
|
$ |
8,959 |
|
|
$ |
31,246 |
|
|
$ |
(9,902 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
$ |
1,064 |
|
|
$ |
2,056 |
|
|
$ |
357 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Three Months Ended |
|
| |
|
March 30, 2008 |
|
|
December 30, 2007 |
|
|
April 1, 2007 |
|
Non-GAAP Financial Measures: |
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income |
|
$ |
5,596 |
|
|
$ |
8,678 |
|
|
$ |
5,482 |
|
Depreciation and amortization |
|
|
1,820 |
|
|
|
1,726 |
|
|
|
1,458 |
|
Interest expense, net |
|
|
1,603 |
|
|
|
1,541 |
|
|
|
2,420 |
|
Other income, net |
|
|
(53 |
) |
|
|
(67 |
) |
|
|
(228 |
) |
Income tax expense |
|
|
1,767 |
|
|
|
430 |
|
|
|
448 |
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
$ |
10,733 |
|
|
$ |
12,308 |
|
|
$ |
9,580 |
|
|
|
|
|
|
|
|
|
|
|
EBITDA as a % of GAAP revenue |
|
|
5.9 |
% |
|
|
6.7 |
% |
|
|
5.1 |
% |
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.
-MORE-
CITP Reports 2008 First Quarter Results
Page 5
May 1, 2008
COMSYS IT PARTNERS, INC.
STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Three Months Ended |
|
| |
|
March 30, 2008 |
|
|
December 30, 2007 |
|
|
April 1, 2007 |
|
Revenues from services |
|
$ |
183,383 |
|
|
$ |
183,260 |
|
|
$ |
186,208 |
|
Cost of services |
|
|
138,727 |
|
|
|
137,154 |
|
|
|
141,207 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
44,656 |
|
|
|
46,106 |
|
|
|
45,001 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
33,923 |
|
|
|
33,798 |
|
|
|
35,421 |
|
Depreciation and amortization |
|
|
1,820 |
|
|
|
1,726 |
|
|
|
1,458 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,743 |
|
|
|
35,524 |
|
|
|
36,879 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations |
|
|
8,913 |
|
|
|
10,582 |
|
|
|
8,122 |
|
Interest expense, net |
|
|
1,603 |
|
|
|
1,541 |
|
|
|
2,420 |
|
Other income, net |
|
|
(53 |
) |
|
|
(67 |
) |
|
|
(228 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
7,363 |
|
|
|
9,108 |
|
|
|
5,930 |
|
Income tax expense |
|
|
1,767 |
|
|
|
430 |
|
|
|
448 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
5,596 |
|
|
$ |
8,678 |
|
|
$ |
5,482 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.27 |
|
|
$ |
0.43 |
|
|
$ |
0.28 |
|
Diluted |
|
$ |
0.27 |
|
|
$ |
0.43 |
|
|
$ |
0.28 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
19,579 |
|
|
|
19,474 |
|
|
|
18,845 |
|
Diluted |
|
|
20,617 |
|
|
|
20,392 |
|
|
|
19,754 |
|
-MORE-
CITP Reports 2008 First Quarter Results
Page 6
May 1, 2008
COMSYS IT PARTNERS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
| |
|
|
|
|
|
|
|
|
| |
|
March 30, |
|
|
December 30, |
|
| |
|
2008 |
|
|
2007 |
|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash |
|
$ |
1,585 |
|
|
$ |
1,594 |
|
Accounts receivable, net of allowance of $3,296 and $3,389, respectively |
|
|
186,510 |
|
|
|
189,317 |
|
Prepaid expenses and other |
|
|
4,398 |
|
|
|
3,153 |
|
Restricted cash |
|
|
3,392 |
|
|
|
3,365 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
195,885 |
|
|
|
197,429 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed assets, net |
|
|
13,109 |
|
|
|
13,094 |
|
Goodwill |
|
|
171,708 |
|
|
|
174,160 |
|
Intangible assets, net |
|
|
12,205 |
|
|
|
10,002 |
|
Deferred financing costs, net |
|
|
1,827 |
|
|
|
2,044 |
|
Restricted cash |
|
|
4,223 |
|
|
|
4,218 |
|
Other assets |
|
|
1,463 |
|
|
|
1,522 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
400,420 |
|
|
$ |
402,469 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and stockholders equity |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
148,219 |
|
|
$ |
145,622 |
|
Payroll and related taxes |
|
|
25,919 |
|
|
|
29,574 |
|
Current maturities of long-term debt |
|
|
3,750 |
|
|
|
5,000 |
|
Interest payable |
|
|
266 |
|
|
|
365 |
|
Other |
|
|
7,166 |
|
|
|
7,897 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
185,320 |
|
|
|
188,458 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt |
|
|
61,626 |
|
|
|
66,903 |
|
Other noncurrent liabilities |
|
|
2,369 |
|
|
|
2,476 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
249,315 |
|
|
|
257,837 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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; 20,378 and
20,181 shares outstanding at March 30, 2008, and December 30, 2007,
respectively |
|
|
203 |
|
|
|
201 |
|
Common stock warrants |
|
|
1,734 |
|
|
|
1,734 |
|
Accumulated other comprehensive income |
|
|
78 |
|
|
|
57 |
|
Additional paid-in capital |
|
|
224,028 |
|
|
|
223,174 |
|
Accumulated deficit |
|
|
(74,938 |
) |
|
|
(80,534 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity |
|
|
151,105 |
|
|
|
144,632 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity |
|
$ |
400,420 |
|
|
$ |
402,469 |
|
|
|
|
|
|
|
|
-END-