COMSYS IT Partners, Inc. Reports First Quarter Results.

HOUSTON -- COMSYS IT Partners, Inc. (NASDAQ:CITP), a leading provider of information technology staffing and consulting services, today announced results for its first quarter ended April 1, 2007.

Revenue for the first quarter of 2007 was $186.2 million, up 4.3% from $178.6 million for the first quarter of 2006, and was within management's guidance range of $184 million to $188 million.

Net income in the first quarter of 2007 was $5.5 million, or $0.28 per diluted share, and included $1.7 million of stock-based compensation expense. Management's first quarter guidance was $4.7 million to $5.5 million of net income, or $0.24 to $0.28 of earnings per diluted share, and included estimated stock-based compensation expense of $1.5 million.

The Company reported net income of $1.7 million for the first quarter of last year, or $0.09 per diluted share. Net income in the first quarter of 2006 included $1.9 million, or $0.10 per diluted share, of severance-related charges related to the departure of two former officers of the Company.

"Our operations continued to perform well in the first quarter," said Larry L. Enterline, Chief Executive Officer. "Revenue and net income were in line with expectations and our bill rates and gross profit margins continued to show the strength we saw throughout 2006. Order activity remains high in most of our markets, and the pipeline in our managed solutions service line is solid. Of particular note in the first quarter, we acquired the remaining 80% of Econometrix that we did not already own and also expanded a customer relationship in our managed solutions group with a large biotech company for which we began to provide services last quarter. Outside of operations, the credit agreement amendments we announced in December produced the interest savings in the first quarter that we expected, which enhanced our earnings, and we completed a secondary offering of 2,500,000 shares of our common stock, which should have a positive impact on the liquidity in our stock.

"I would especially like to thank our operations leaders and their staffs for their efforts," Enterline continued. "We remain focused on our priorities for 2007, which are increasing internal growth rates and opening other new offices in high-potential markets, improving efficiency, particularly in sales and recruiting and in our front and back office operations, and making acquisitions that meet our criteria."

Joseph C. Tusa, Jr., Senior Vice President and Chief Financial Officer, commented, "We entered 2007 with approximately 5,000 consultants on assignment and, after the seasonal reduction in consultant headcount we experience each year in January, we strengthened in February and March and completed the first quarter near our year-end level. Our current headcount in April is approximately 4,900 consultants as we experienced slightly higher than anticipated quarter-end terminations in early April, primarily in two large accounts, but we expect modest headcount increases through the remainder of the second quarter of 2007. Gross margins during the first quarter of 2007 remained strong at 24.2% despite the seasonal impact of payroll-related taxes that we experience in the first quarter of each year. Gross margins in the first quarter of 2006 were 23.6%. SG&A expenses as a percentage of revenues for the first quarter of 2007 increased to 19% primarily due to higher stock-based compensation expenses related to awards to certain executive officers and higher seasonal payroll-related taxes. As previously communicated, we expect stock-based compensation expense will be $0.9 million to $1.0 million in each of the remaining quarters of 2007."

As previously disclosed, COMSYS reduced its overall debt by $43.7 million during 2006 and ended the year at $98.5 million. As expected, the Company's debt balance increased in the first quarter of 2007 to $108.6 million, which is consistent with seasonal trends. COMSYS expects to continue to reduce debt in the second quarter of 2007 and for the remainder of this year. During the first quarter of 2007, the Company generated adjusted EBITDA of $11.3 million compared with $10.5 million of adjusted EBITDA for the first quarter of 2006.

Selected operating data and reconciliations of non-GAAP financial measures to GAAP results for the first quarter ended April 1, 2007, are included below in a section before the financial tables.

Second Quarter 2007 Financial Guidance

For the second quarter of 2007, the Company expects to report revenue in a range of $187 million to $191 million and net income in the range of $7.1 million to $7.9 million, or approximately $0.36 to $0.40 per diluted share. These estimated net income amounts are based on an effective tax rate of 8%.

Conference Call Information

COMSYS will host a conference call today (May 3rd) at 10:00 a.m. Eastern time to discuss the quarterly financial results. The conference call-in number is [phone] and the confirmation number is 8470754. 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 [phone]. Callers should use the pass code 8470754 to gain access to the replay, which will be available through the end of the day on May 10, 2007.

About COMSYS IT Partners

COMSYS IT Partners, Inc. (NASDAQ: CITP) is a leading information technology services company with 44 offices across the U.S. and offices in Canada and the United Kingdom. Leveraging more than 30 years of experience, COMSYS has enhanced its core competency of IT staffing services by creating client-centric, cost-effective information system solutions. COMSYS' service offerings include contingent staff augmentation of IT professionals, permanent recruiting and placement, vendor management and project solutions, including network design and management, offshore development, customized software development and maintenance, software globalization/ localization translation services and implementation and upgrade services for SAS, business intelligence and various ERP packages. COMSYS primarily serves clients in the financial services/insurance, telecommunications, energy, pharmaceutical and healthcare industries and government agencies.

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 Company's 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 Company's expectations and beliefs concerning future events affecting the Company, which reflect estimates and assumptions made by management. These estimates and assumptions reflect the Company's best judgment based on currently known market conditions and other factors relating to the Company's operations and business environment, all of which are difficult to predict and many of which are beyond its control, including:

* the Company's success in attracting, training, retaining and motivating billable consultants and key officers and employees;

* the Company's ability to shift a larger percentage of its business mix into IT solutions and project management 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;

* weakness or reductions in corporate information technology spending levels;

* the Company's 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 Company's ability to maintain or improve its operating margins, including any change in the demand for the Company's 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 Company's incurring liability for the activities of its billable consultants or for events impacting its billable consultants on clients' premises;

* the risk in an uncertain economic environment of increased incidences of employment disputes, employment litigation and workers' compensation claims;

* the risk that further cost cutting or restructuring activities undertaken by the Company could cause an adverse impact on certain of the Company's operations;

* economic declines that affect the Company's business, including its profitability, liquidity or ability to comply with its loan covenants;

* adverse changes in credit and capital markets conditions that may affect the Company's ability to obtain financing or refinancing on favorable terms;

* adverse changes to management's periodic estimates of future cash flows that may affect the Company's 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 Company's costs of doing business; and

* other matters discussed in this press release and the Company's most recent definitive proxy statement, Forms 10-K, 10-Q and 8-K, as well as matters discussed in the Company's 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.

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