COMSYS IT Partners, Inc. Reports Second Quarter Results.HOUSTON Houston, city (1990 pop. 1,630,553), seat of Harris co., SE Tex., a deepwater port on the Houston Ship Channel; inc. 1837. Economy The fourth largest city in the nation and the largest in the entire South and Southwest, Houston is a port of entry; -- COMSYS IT Partners, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :CITP (Certified Information Technology Professional) A specialty credential awarded by the AICPA to its CPA members who excel in the provision of technology-related business services. ), a leading provider of information technology staffing and consulting services Noun 1. consulting service - service provided by a professional advisor (e.g., a lawyer or doctor or CPA etc.) service - work done by one person or group that benefits another; "budget separately for goods and services" , today announced results for its second quarter and six months ended July July: see month. 2, 2006. Revenue for the second quarter of 2006 was $187.6 million, up 16% from $162.2 million for the second quarter of 2005 and above the Company's guidance range of $181 million to $185 million for the quarter, which included acquired revenue. Revenue in the second quarter of 2006, excluding revenue acquired in the fourth quarter of 2005 of $5.6 million, was $182.0 million, up 12% over the second quarter of 2005. Net income in the second quarter was $11.4 million, or $0.60 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, and included the receipt of a federal income tax refund Tax refund Money back from the government when too much tax has been paid or withheld from a salary. and the associated interest of $6.4 million, or $0.34 per diluted share. Excluding the tax refund and related interest income, net income for the quarter was $5.0 million, or $0.26 per diluted share, also above management's guidance range for net income of $3.6 million to $4.4 million, or $0.19 to $0.23 per diluted share. This compared with net income of $0.7 million, or $0.05 per diluted share for the second quarter last year, which included $1.4 million, or $0.09 per diluted share, of merger-related restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. and registration statement fees and expenses. Excluding the merger-related charges, net income for the second quarter of 2005 was $2.1 million, or $0.14 per diluted share. "Our second quarter results were strong as our revenue increased 5% sequentially over the first quarter of 2006 and most of our markets continued to benefit from improving demand for our services," said Larry Lar´ry n. 1. Same as Lorry, or Lorrie. L. Enterline, Chief Executive Officer. "Our sales and recruiting productivity initiatives are going well, and we were particularly pleased with the rate of new starts during the second quarter. This success enabled us to increase our average billable consultant headcount head count or head·count n. 1. The act of counting people in a particular group. 2. The number of people counted in this way. Noun 1. by 4% during the quarter and enter the third quarter at levels higher than where we expected to be earlier in the year. If our third quarter stays true to normal seasonal patterns, we believe we are now positioned well for a good second half. "We announced last Thursday Thursday: see week. that our shareholders had elected Bob Fotsch and Courtney Courtney (also Courteney or Courtenay) is a common given name, derived from an English surname. Surname origin This distinguished name is of Norman, Old French origin, introduced into England after the Norman Conquest of 1066. McCarthy Mc·Car·thy , Joseph Raymond 1908-1957. American politician. A U.S. senator from Wisconsin (1947-1957), he presided over the permanent subcommittee on investigations and held public hearings in which he accused army officials, members of the media, to our Board," Enterline continued. "The Board has appointed Bob Fotsch to fill the existing vacancy VACANCY. A place which is empty. The term is principally applied to cases where an office is not filled. 2. By the constitution of the United States, the president has the power to fill up vacancies that may happen during the recess of the senate. on our Audit Committee and, as a result, I am happy to report that we have returned to compliance with NASDAQ's Marketplace Rules." "We were pleased with the financial results in the second quarter," said Joseph C. Tusa, Jr., Senior Vice President and Chief Financial Officer. "We started the second quarter with approximately 5,000 billable consultants on assignment and completed the second quarter at approximately 5,200 billable consultants. Billable hours Billable Hours is a Canadian comedy series, which airs on Showcase. Set in the fictional Toronto law firm of Fagen & Harrison, the series focuses on three young lawyers struggling to balance their expectations in life with the difficult realities of building a career and bill rates also continued to improve during the second quarter of 2006 and gross margins were strong at 24.5%, up from 23.6% in the first quarter this year and 23.1% in the second quarter last year. SG&A expenses as a percentage of revenues declined to 18.3% from 19.2% in the first quarter, with a reduction in severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when costs offset by increased compensation expense related to stock-based compensation and accruals Accruals Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense. for incentive plans. We continue to move forward with programs to enhance our operational effectiveness and reduce costs, and we expect modest reductions in SG&A expense levels and as a percentage of revenue in the third and fourth quarters of 2006." Tusa continued, "We are focusing on strengthening our billing and collection processes and were able to reduce our days-sales- outstanding from 48 to 45 days during the quarter. Total debt increased from $142.3 million on January January: see month. 1, 2006, to $148.1 million at the end of the first quarter due to seasonal cash flow patterns, but decreased to $136.0 million by the end of the second quarter. Cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses , which includes the above mentioned income tax refund, was used to pay down our senior credit facility, resulting in a $12.1 million reduction in debt during the second quarter of 2006. We expect further reductions during the second half of 2006. In addition, we generated adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become of $12.5 million, or 6.7% of revenue in the second quarter of 2006. Our stated goal has been to achieve EBITDA margins of 7%-8%, and we are pleased with our stronger financial and operating metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. , which enabled us to make progress toward achieving our EBITDA goal." Selected operating data and reconciliations of non-GAAP financial measures to GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). results for the second quarter and six months of 2006 are included in a section before the financial tables. Third Quarter 2006 Financial Guidance For the third quarter of 2006, the Company expects to report revenue in a range of $185 million to $190 million on one less billing day compared with the second quarter. Additionally, the Company expects to report net income in the range of $5.1 million to $5.8 million, or approximately $0.26 to $0.30 per diluted share. These estimated net income amounts are based on an effective tax rate of 7%. Conference Call Information COMSYS will host a conference call today (August 3) at 10:00 a.m. Eastern time to discuss the quarterly financial results. The conference call-in call-in adj. Being in a format such that listeners or viewers are invited to have their telephone conversations with the host or guests on a show broadcast to other listeners: a call-in radio show. n. number is (913) 981-5572 and the confirmation number is 4829233. 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 Adj. 1. seven-day - lasting through a week; "her weeklong vacation" weeklong long - primarily temporal sense; being or indicating a relatively great or greater than average duration or passage of time or a duration as specified; "a long life"; "a long boring telephonic replay of this conference call will be available by dialing 719-457-0820. Callers should use the pass code 4829233 to gain access to the replay, which will be available through the end of the day on August 10, 2006. About COMSYS IT Partners COMSYS IT Partners, Inc. (NASDAQ: CITP) is a leading information technology services company with 42 offices across the U.S. and offices in Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of and the U.K. Leveraging more than 30 years of experience, COMSYS has enhanced its core competency A core competency is something that a firm can do well and that meets the following three conditions specified by Hamel and Prahalad (1990):
n the minimal expenditure of dollars, time, and other elements necessary to achieve the health care result deemed necessary and appropriate. information system solutions. COMSYS' service offerings include contingent staff augmentation AUGMENTATION, old English law. The name of a court erected by Henry VIII., which was invested with the power of determining suits and controversies relating to monasteries and abbey lands. of IT professionals, permanent recruiting and placement, vendor management and project solutions, including network design and management, offshore development, customized software See custom software. development and maintenance, software globalization/localization translation services and implementation and upgrade services for SAS (1) (SAS Institute Inc., Cary, NC, www.sas.com) A software company that specializes in data warehousing and decision support software based on the SAS System. Founded in 1976, SAS is one of the world's largest privately held software companies. See SAS System. , business intelligence and various ERP (Enterprise Resource Planning) An integrated information system that serves all departments within an enterprise. Evolving out of the manufacturing industry, ERP implies the use of packaged software rather than proprietary software written by or for one customer. packages. COMSYS primarily serves clients in the financial services/insurance, telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. , energy, pharmaceutical and healthcare industries and government agencies. Forward-looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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 relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc 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 United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , 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 our ability to maintain or improve our operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: , 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 in·cur tr.v. in·curred, in·cur·ring, in·curs 1. To acquire or come into (something usually undesirable); sustain: incurred substantial losses during the stock market crash. 2. liability for the activities of its billable consultants or for events impacting its billable consultants on clients' premises premises n. 1) in real estate, land and the improvements on it, a building, store, shop, apartment, or other designated structure. The exact premises may be important in determining if an outbuilding (shed, cabana, detached garage) is insured or whether a person ; --the risk in an uncertain economic environment of increased incidences of employment disputes, employment litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. and workers' compensation workers' compensation, payment by employers for some part of the cost of injuries, or in some cases of occupational diseases, received by employees in the course of their work. claims; --integration and restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). associated with the COMSYS and Venturi venturi a tube with a decrease in the inside diameter that is used to increase the flow velocity of the fluid and thereby cause a pressure drop; used to measure the flow velocity (a venturimeter) or to draw another fluid into the stream. merger or other business activities and the challenges of achieving anticipated synergies; --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 A loan covenant is a condition in a commercial loan or bond issue that requires the borrower to fulfill certain conditions or forbids the borrower from undertaking certain actions, or possibly restricts certain activities to circumstances when other conditions are met. ; --adverse changes in credit and capital markets conditions that may affect the Company's ability to obtain financing or refinancing Refinancing An extension and/or increase in amount of existing debt. on favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. 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 Proxy Statement A document containing the information that a company is required by the SEC to provide to shareholders so they can make informed decisions about matters that will be brought up at an annual stockholder meeting. , Forms 10-K, 10-K/A, 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 we cannot assure the reader that those statements will be realized or that the forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or 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 Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the services.
COMSYS IT PARTNERS, INC.
OPERATING DATA, SUPPLEMENTAL CASH FLOW INFORMATION
AND NON-GAAP MEASUREMENTS
(IN THOUSANDS, EXCEPT OPERATING DATA)
Three Months Ended
-------------------------------
July 2, April 2, July 3,
2006 2006 2005
------- ------- -------
Operating Data:
Ending consultant headcount 5,183 5,014 4,705
Billing days 64 64 64
Revenue per billing day
(in thousands) $2,931 $2,791 $2,534
Average bill rate $68.81 $68.19 $66.68
Gross margin percentage 24.5% 23.6% 23.1%
DSO 45 48 50
Three Months Ended
--------------------
July 2, July 3,
2006 2005
Supplemental Cash Flow Information: -------- --------
Net cash provided by operating activities $14,000 $ 7,475
Capital expenditures $ 969 $ 1,930
Depreciation and amortization $ 2,167 $ 2,515
Three Months Ended
--------------------
July 2, July 3,
2006 2005
-------- --------
Non-GAAP Financial Measures:
Adjusted revenues: N/A
GAAP revenue $187,609
Revenue from entity acquired in October 2005 5,606
--------
Adjusted revenue $182,003
========
Adjusted net income and earnings per diluted
share:
GAAP net income $ 11,362 $ 729
Tax refund (5,800) --
Interest on tax refund (550) --
Restructuring charges -- 424
Registration fees (included in SG&A) -- 950
-------- --------
Adjusted net income $ 5,012 $ 2,103
======== ========
Adjusted earnings per diluted share $ 0.26 $ 0.14
======== ========
Adjusted EBITDA:
GAAP net income $ 11,362 $ 729
Restructuring charges -- 424
Registration fees (included in SG&A) 950 --
Stock based compensation 950 439
Depreciation and amortization 2,167 2,515
Interest expense, net 3,573 4,348
Other (income) expense, net (170) 4
Income tax benefit (5,342) --
-------- --------
Adjusted EBITDA $ 12,540 $ 9,409
======== ========
Adjusted EBITDA as a % of GAAP revenue 6.7% 5.8%
----------------------------------------------------------------------
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. We believe
revenue and net income net of certain items and adjusted 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. 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 STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE)
(Unaudited)
Three Months Ended Six Months Ended
--------------------- ---------------------
July 2, July 3, July 2, July 3,
2006 2005 2006 2005
--------- --------- --------- ---------
Revenues from services $ 187,609 $ 162,185 $ 366,201 $ 327,138
Cost of services 141,736 124,647 278,256 252,013
--------- --------- --------- ---------
Gross profit 45,873 37,538 87,945 75,125
--------- --------- --------- ---------
Operating costs and expenses
Selling, general
and administrative
expenses 34,283 29,518 68,521 57,473
Restructuring and
integration costs -- 424 -- 3,852
Depreciation and
amortization 2,167 2,515 4,339 4,986
--------- --------- --------- ---------
Total operating
expenses 36,450 32,457 72,860 66,311
--------- --------- --------- ---------
Operating income 9,423 5,081 15,085 8,814
Interest expense, net 3,573 4,348 7,530 8,374
Other (income)
expense, net (170) 4 (294) (83)
--------- --------- --------- ---------
Income before income
taxes 6,020 729 7,849 523
Income tax benefit 5,342 -- 5,192 --
--------- --------- --------- ---------
Net income $ 11,362 $ 729 $ 13,041 $ 523
========= ========= ========= =========
Net income per common share:
Basic (attributable to
common shareholders) $ 0.60 $ 0.05 $ 0.69 $ 0.03
========= ========= ========= =========
Diluted $ 0.60 $ 0.05 $ 0.69 $ 0.03
========= ========= ========= =========
Weighted average shares
outstanding:
Basic 18,562 15,418 18,556 15,375
Diluted 18,920 16,154 18,862 15,956
COMSYS IT PARTNERS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE)
July 2, January 1,
2006 2006
--------- ---------
(Unaudited)
Assets
Current assets:
Cash $ 1,511 $ 3,099
Accounts receivable, net of allowance of
$4,317 and $4,427, respectively 194,060 170,321
Prepaid expenses and other 3,850 3,729
--------- ---------
Total current assets 199,421 177,149
--------- ---------
Fixed assets, net 13,760 14,976
Goodwill 153,737 154,322
Intangible assets, net 10,188 11,262
Deferred financing costs, net 4,109 4,655
Restricted cash 2,764 2,939
Other assets 2,266 1,618
--------- ---------
Total assets $ 386,245 $ 366,921
========= =========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 115,021 $ 108,432
Payroll and related taxes 28,218 22,600
Current maturities of long-term debt 1,370 5,000
Interest payable 991 933
Other 14,005 15,667
--------- ---------
Total current liabilities 159,605 152,632
--------- ---------
Long-term debt 134,599 137,273
Other non-current liabilities 5,578 5,920
--------- ---------
Total liabilities 299,782 295,825
--------- ---------
Commitments and contingencies
Stockholders' equity:
Common stock, par value $.01; 95,000 shares
authorized; 18,855 and 18,738 shares
outstanding at July 2, 2006 and
January 1, 2006, respectively 188 187
Common stock warrants 2,270 2,815
Deferred stock compensation -- (1,749)
Accumulated other comprehensive loss (7) (65)
Additional paid-in capital 203,056 201,993
Accumulated deficit (119,044) (132,085)
--------- ---------
Total stockholders' equity 86,463 71,096
--------- ---------
Total liabilities and stockholders' equity $ 386,245 $ 366,921
========= =========
|
|
||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion