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 |
|
480.777.6680 |
|
|
|
|
abobbitt@comsys.com |
COMSYS IT PARTNERS, INC. REPORTS 2008 SECOND QUARTER RESULTS
HOUSTON, TX (July 31, 2008) COMSYS IT Partners, Inc. (NASDAQ:CITP), a leading provider of
information technology staffing and consulting services, today announced results for its second
quarter ended June 29, 2008.
Revenue for the second quarter of 2008 was $184.1 million, down from $186.6 million for the second
quarter of 2007 but up sequentially from $183.4 million in the first quarter of this year.
Excluding the revenues from COMSYS December 2007 acquisitions, revenue declined by 3.6% versus the
prior-year period. Net income in the second quarter was $6.2 million, down from $9.6 million in
the second quarter of last year, and diluted earnings per share of $0.30 were down from $0.47 per
diluted share over the same period. The second quarter of 2008 included the previously announced
non-cash compensation charge associated with the Praeos acquisition and a higher effective tax rate
than in the prior-year period. These items reduced earnings per share in the second quarter of 2008
by $0.09 when compared to the second quarter of 2007. Net income and diluted earnings per share in
the second quarter were both up sequentially from $5.1 million and $0.25, respectively, in the
first quarter this year.
COMSYS second quarter was good overall, and were especially pleased that our revenue and diluted
earnings per share for the quarter exceeded our guidance in an increasingly challenging
environment, said Larry L. Enterline, COMSYS Chief Executive Officer. After further billable
headcount declines through the first six weeks of the second quarter, headcount stabilized and our
operating results in the latter half of the quarter were better than anticipated. Our expectations
for the balance of the year are conservative in light of the broader trends we see in the economic
data, but we continue to believe that we are positioned well to take advantage of whatever
opportunities our markets will offer.
During the quarter, we rolled out our new TAPFIN Process Solutions brand for our business process
outsourcing offerings and early results from that effort are encouraging, Enterline continued.
Also, in late June, we completed two small acquisitions. The first was a small, but rapidly
growing, globalization and localization practice that we have combined with our existing business
in that sector. The second was the acquisition of three vendor management systems contracts, which
we have added into TAPFINs VMS business. Neither of these acquisitions had any impact on our
second quarter operating results, but we do expect them both to contribute to our earnings over the
balance of this year.
As always, I would like to thank our operations leaders and their staffs for their continuing
strong efforts, Enterline continued. Were in a tough environment and their continued focus and
dedication will ensure that we continue to meet all of our customers needs.
-MORE-
CITP Reports 2008 Second Quarter Results
Page 2
July 31, 2008
Amy Bobbitt, Senior Vice President and Chief Accounting Officer, commented, We entered the second
quarter of 2008 with 4,758 consultants on assignment and ended the second quarter with 4,646
consultants. Our current headcount is approximately the same as headcount at the end of the
quarter. Excluding the increase in reimbursable expenses in the second quarter of 2008 and the
impact of higher payroll taxes in the first quarter of 2008, gross margin declined sequentially by
0.4% in the second quarter. Despite the slightly lower margins, we continue to generate strong cash
flow, and our average debt balance in the second quarter of 2008 was $82.6 million, or
approximately $8.4 million lower than in the first quarter.
The Company expects to continue to reduce its average daily debt balances in the third quarter of
2008 and for the remainder of this year, although at a slower rate than 2007 in line with our
expectations for slower revenue growth, Bobbitt continued. During the second quarter of 2008, the
Company generated EBITDA of $10.5 million compared with $9.9 million of EBITDA for the first
quarter of 2008.
Selected operating data and reconciliations of non-GAAP financial measures to GAAP results for the
second quarter ended June 29, 2008, are included below in a section before the financial tables.
Third Quarter 2008 Financial Guidance
For the third quarter of 2008, the Company expects to report revenue in a range of $178 million to
$184 million and net income in the range of $3.5 million to $4.5 million, or approximately $0.17 to
$0.22 per diluted share, on one less billing day than the second quarter of 2008. The net income
estimates for the third quarter include the $0.8 million (pre-tax) non-cash compensation charge for
the Praeos bonus plan that was previously announced. They are also based on an effective tax rate
of 42%, which is up significantly from 17.6% in the second quarter of 2008. The sequential increase
in the effective tax rate results in a $0.06 to $0.08 decrease in diluted earnings per share in the
third quarter of 2008 compared with the second quarter. COMSYS has previously discussed the
prospects of the upcoming change in its tax rate, and the third quarter tax rate assumes that the
Company reaches a conclusion in the third quarter that it is more likely than not that it will be
able to receive the benefit of its deferred tax assets and releases its valuation allowance during
the quarter. The third quarter guidance does not include any tax benefit that the Company would
record if it releases the valuation allowance. Management does not expect to pay any substantial
amount of cash taxes in 2008.
Conference Call Information
COMSYS will host a conference call today (July 31) at 10:00 a.m. Eastern time to discuss the
quarterly financial results. The conference call-in number is (913) 981-5539 and the confirmation
number is 4464227. 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 4464227 to gain
access to the replay, which will be available through the end of the day on August 7, 2008.
About COMSYS IT Partners
COMSYS IT Partners, Inc. (NASDAQ: CITP) is a leading IT services company with 53 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. TAPFIN Process Solutions delivers
critical management solutions across the resource spectrum from contingent workers to outsourced
services.
-MORE-
CITP Reports 2008 Second Quarter Results
Page 3
July 31, 2008
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:
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economic declines that affect the Companys business, including its profitability,
liquidity or the ability to comply with applicable loan covenants; |
| |
| |
|
|
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; |
| |
| |
|
|
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; |
| |
| |
|
|
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. |
-MORE-
CITP Reports 2008 Second Quarter Results
Page 4
July 31, 2008
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.
COMSYS IT PARTNERS, INC.
OPERATING DATA, SUPPLEMENTAL CASH FLOW INFORMATION AND NON-GAAP MEASUREMENTS
(IN THOUSANDS, EXCEPT OPERATING DATA)
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Three Months Ended |
| |
|
June 29, |
|
March 30, |
|
July 1, |
| Operating Data: |
|
2008 |
|
2008 |
|
2007 |
| |
|
|
Ending consultant headcount |
|
|
4,646 |
|
|
|
4,758 |
|
|
|
4,996 |
|
Billing days |
|
|
64 |
|
|
|
64 |
|
|
|
64 |
|
Revenue per billing day (in thousands) |
|
$ |
2,876 |
|
|
$ |
2,865 |
|
|
$ |
2,916 |
|
Average bill rate |
|
$ |
74.02 |
|
|
$ |
73.96 |
|
|
$ |
71.84 |
|
Gross margin |
|
|
24.4 |
% |
|
|
24.4 |
% |
|
|
25.1 |
% |
Effective tax rate |
|
|
17.6 |
% |
|
|
21.7 |
% |
|
|
4.6 |
% |
DSO |
|
|
45 |
|
|
|
45 |
|
|
|
50 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Three Months Ended |
| |
|
June 29, |
|
March 30, |
|
July 1, |
| Supplemental Cash Flow Information: |
|
2008 |
|
2008 |
|
2007 |
| |
|
|
Net cash provided by operating activities |
|
$ |
2,629 |
|
|
$ |
8,959 |
|
|
$ |
10,514 |
|
Capital expenditures |
|
$ |
2,143 |
|
|
$ |
1,064 |
|
|
$ |
261 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Three Months Ended |
| |
|
June 29, |
|
March 30, |
|
July 1, |
| Non-GAAP Financial Measures: |
|
2008 |
|
2008 |
|
2007 |
| |
|
|
EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income |
|
$ |
6,212 |
|
|
$ |
5,104 |
|
|
$ |
9,572 |
|
Depreciation and amortization |
|
|
1,898 |
|
|
|
1,820 |
|
|
|
1,589 |
|
Interest expense, net |
|
|
1,279 |
|
|
|
1,603 |
|
|
|
2,296 |
|
Other income, net |
|
|
(172 |
) |
|
|
(53 |
) |
|
|
(223 |
) |
Income tax expense |
|
|
1,324 |
|
|
|
1,418 |
|
|
|
460 |
|
| |
|
|
EBITDA |
|
$ |
10,541 |
|
|
$ |
9,892 |
|
|
$ |
13,694 |
|
| |
|
|
EBITDA as a % of GAAP revenue |
|
|
5.7 |
% |
|
|
5.4 |
% |
|
|
7.3 |
% |
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 Second Quarter Results
Page 5
July 31, 2008
COMSYS IT PARTNERS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Three Months Ended |
|
Six Months Ended |
| |
|
June 29, |
|
March 30, |
|
July 1, |
|
June 29, |
|
July 1, |
| |
|
2008 |
|
2008 |
|
2007 |
|
2008 |
|
2007 |
| |
|
|
|
|
Revenues from services |
|
$ |
184,064 |
|
|
$ |
183,383 |
|
|
$ |
186,602 |
|
|
$ |
367,447 |
|
|
$ |
372,810 |
|
Cost of services |
|
|
139,232 |
|
|
|
138,727 |
|
|
|
139,768 |
|
|
|
277,959 |
|
|
|
280,975 |
|
| |
|
|
|
|
Gross profit |
|
|
44,832 |
|
|
|
44,656 |
|
|
|
46,834 |
|
|
|
89,488 |
|
|
|
91,835 |
|
| |
|
|
|
|
Operating costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
34,291 |
|
|
|
34,764 |
|
|
|
33,140 |
|
|
|
69,055 |
|
|
|
68,561 |
|
Depreciation and amortization |
|
|
1,898 |
|
|
|
1,820 |
|
|
|
1,589 |
|
|
|
3,718 |
|
|
|
3,047 |
|
| |
|
|
|
|
|
|
|
36,189 |
|
|
|
36,584 |
|
|
|
34,729 |
|
|
|
72,773 |
|
|
|
71,608 |
|
| |
|
|
|
|
Operating income |
|
|
8,643 |
|
|
|
8,072 |
|
|
|
12,105 |
|
|
|
16,715 |
|
|
|
20,227 |
|
Interest expense, net |
|
|
1,279 |
|
|
|
1,603 |
|
|
|
2,296 |
|
|
|
2,882 |
|
|
|
4,716 |
|
Other income, net |
|
|
(172 |
) |
|
|
(53 |
) |
|
|
(223 |
) |
|
|
(225 |
) |
|
|
(451 |
) |
| |
|
|
|
|
Income before income taxes |
|
|
7,536 |
|
|
|
6,522 |
|
|
|
10,032 |
|
|
|
14,058 |
|
|
|
15,962 |
|
Income tax expense |
|
|
1,324 |
|
|
|
1,418 |
|
|
|
460 |
|
|
|
2,742 |
|
|
|
908 |
|
| |
|
|
|
|
Net income |
|
$ |
6,212 |
|
|
$ |
5,104 |
|
|
$ |
9,572 |
|
|
$ |
11,316 |
|
|
$ |
15,054 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.31 |
|
|
$ |
0.25 |
|
|
$ |
0.48 |
|
|
$ |
0.56 |
|
|
$ |
0.76 |
|
Diluted |
|
$ |
0.30 |
|
|
$ |
0.25 |
|
|
$ |
0.47 |
|
|
$ |
0.55 |
|
|
$ |
0.75 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
19,592 |
|
|
|
19,579 |
|
|
|
19,243 |
|
|
|
19,585 |
|
|
|
19,044 |
|
Diluted |
|
|
20,636 |
|
|
|
20,617 |
|
|
|
20,195 |
|
|
|
20,628 |
|
|
|
20,087 |
|
-MORE-
CITP Reports 2008 Second Quarter Results
Page 6
July 31, 2008
COMSYS IT PARTNERS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PAR VALUE AMOUNTS)
| |
|
|
|
|
|
|
|
|
| |
|
June 29, |
|
December 30, |
| |
|
2008 |
|
2007 |
| |
|
|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash |
|
$ |
1,683 |
|
|
$ |
1,594 |
|
Accounts receivable, net of allowance of $3,117 and $3,389, respectively |
|
|
218,576 |
|
|
|
189,317 |
|
Prepaid expenses and other |
|
|
4,668 |
|
|
|
3,153 |
|
Restricted cash |
|
|
3,411 |
|
|
|
3,365 |
|
| |
|
|
Total current assets |
|
|
228,338 |
|
|
|
197,429 |
|
| |
|
|
Fixed assets, net |
|
|
16,984 |
|
|
|
13,094 |
|
Goodwill |
|
|
175,460 |
|
|
|
174,160 |
|
Other intangible assets, net |
|
|
12,379 |
|
|
|
10,002 |
|
Deferred financing costs, net |
|
|
1,610 |
|
|
|
2,044 |
|
Restricted cash |
|
|
2,822 |
|
|
|
4,218 |
|
Other assets |
|
|
1,414 |
|
|
|
1,522 |
|
| |
|
|
Total assets |
|
$ |
439,007 |
|
|
$ |
402,469 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
Liabilities and stockholders equity |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
167,105 |
|
|
$ |
145,622 |
|
Payroll and related taxes |
|
|
29,837 |
|
|
|
29,574 |
|
Current maturities of long-term debt |
|
|
2,500 |
|
|
|
5,000 |
|
Interest payable |
|
|
246 |
|
|
|
365 |
|
Other current liabilities |
|
|
8,756 |
|
|
|
7,897 |
|
| |
|
|
Total current liabilities |
|
|
208,444 |
|
|
|
188,458 |
|
| |
|
|
Long-term debt |
|
|
67,478 |
|
|
|
66,903 |
|
Other noncurrent liabilities |
|
|
5,081 |
|
|
|
2,476 |
|
| |
|
|
Total liabilities |
|
|
281,003 |
|
|
|
257,837 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
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 20,386,879 shares outstanding;
95,000,000 shares authorized and 20,180,578 shares outstanding, respectively |
|
|
203 |
|
|
|
201 |
|
Common stock warrants |
|
|
1,734 |
|
|
|
1,734 |
|
Accumulated other comprehensive income |
|
|
73 |
|
|
|
57 |
|
Additional paid-in capital |
|
|
225,212 |
|
|
|
223,174 |
|
Accumulated deficit |
|
|
(69,218 |
) |
|
|
(80,534 |
) |
| |
|
|
Total stockholders equity |
|
|
158,004 |
|
|
|
144,632 |
|
| |
|
|
Total liabilities and stockholders equity |
|
$ |
439,007 |
|
|
$ |
402,469 |
|
| |
|
|
-END-