First Consulting Group -- FCG -- Reports First Quarter 2001 Results.Business Editors LONG BEACH, Calif.--(BUSINESS WIRE)--April 26, 2001 First Consulting Group Inc. (Nasdaq:FCGI FCGI Fast Common Gateway Interface FCGI Fellow of the City and Guilds Institute (UK) ): -- Returns to Profitability with $0.04 EPS -- Reports Record Revenue of $70.3 Million -- Signs New Projects Valued in Excess of $166 Million -- Expects Second Quarter Pause Before Second Half Growth First Consulting Group Inc. (Nasdaq:FCGI), a leading provider of information-based consulting, integration and management services to the health-related industries, today reported financial results for the first quarter ended March 31, 2001. First Quarter 2001 Performance Net revenue for the first quarter of 2001 was a record $70.3 million, an increase of 10.7 percent over net revenue of $63.5 million in the first quarter of 2000. The increase in revenue was primarily due to growth in the health plan, life sciences, and outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. markets, partially offset by a decline in the health delivery market. FCG FCG First Consulting Group FCG Foreign Clearance Guide FCG Fatigue Crack Growth FCG Flux Compression Generator FCG Guinean Civic Forum (Guinea-Bissau) FCG Fisheries Consultative Group (ASEAN-SEAFDEC) reported net income of $891,000, or $0.04 per share, in the first quarter of 2001, exceeding its previous guidance, and reflecting its first quarter of profitability in five quarters. The net income in the first quarter compares to a net loss reported in the same period last year of $1.7 million, or $0.07 per share. This also represents a turnaround Turnaround A situation where a company that has had poor performance for an extended period of time experiences a positive reversal. Notes: A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company. from the fourth quarter 2000 loss of $2.1 million, or $0.09 per share. Luther Nussbaum Nussbaum is a German surname. It is usually translated as nut-tree, or sometimes as walnut-tree. It may refer to:
"We have made excellent progress in returning to profitability during a time when many IT services firms have been slowing and the general economy has deteriorated. We are encouraged that the decisive moves we made last year are continuing to make a positive impact, and that we are well positioned to capture significant opportunities in the future." The company reported gross margins of 37.6 percent of revenue in the first quarter of 2001, up from 34.4 percent in the fourth quarter of 2000. This more than three point improvement in gross margin was due to improved utilization and higher realized rates. Selling, general and administrative expenses declined from 39.9 percent in the fourth quarter of 2000 to 36.0 percent in the first quarter of 2001, primarily due to the leveraging effect of the significant revenue increase. Selling expenses for the first quarter of 2001 were 11.2 percent of revenue, compared with 10.9 percent in the fourth quarter of 2000. General and administrative expenses during the first quarter of 2001 were 24.8 percent of revenue, compared with 29.0 percent in the fourth quarter of 2000. 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. increased to 2,027 as of March 31, 2001, from 1,878 at the end of 2000. Much of this increase came in FCG's Outsourcing unit as 28 associates from New York Blood Center New York Blood Center bills itself as the "nation's largest, community-based, non-profit, independent blood center." Founded in 1964, it relies upon a staff of 2,000 volunteers and a much smaller permanent staff in order to supply over 200 hospitals in New York and New Jersey with , and 123 associates from University of Pennsylvania (body, education) University of Pennsylvania - The home of ENIAC and Machiavelli. http://upenn.edu/. Address: Philadelphia, PA, USA. were brought on board. FCG finished the first quarter of 2001 with 1,118 billable associates in consulting and integration services, as well as 527 associates in outsourcing. Total cash and cash equivalents increased to $33.5 million at the end of the first quarter from approximately $29.8 million at the end of the fourth quarter of 2000. FCG's collection improvement initiative resulted in a record low for days sales outstanding In accountancy, Days Sales Outstanding is a company's average collection period. A low figure indicates that the company collects its outstanding receivables quickly. Typically it is looked at either quarterly or yearly (90 or 365 days). of 67 in the first quarter of 2001, versus 73 in the fourth quarter of 2000. Business Segment Highlights In order to continue to improve the effectiveness of the company's organization, FCG has consolidated its business into five operating units operating unit A type of operating company that engages in transactions with outsiders and that is owned by another business. For example, in 1995 the stockholders of Capital Cities/ABC approved a $19 billion merger with the Walt Disney Company, whereupon . This move is designed to further streamline operations, promote cross-selling Cross-selling is the term used to describe the sale of additional products or services to a customer. Less frequently it is used to describe the sale of services to additional business units at an account or to different geographic units of a customer. opportunities, leverage efficiencies from common sales and marketing practices, share resources and better position the company to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. marketplace opportunities. The Healthcare Group. This unit brings together under common leadership the Health Delivery and Health Plan business units. Health Delivery and Health Plan contributed 19 percent and 26 percent, respectively, of revenue for the first quarter of 2001. Steve v. t. 1. To pack or stow, as cargo in a ship's hold. See Steeve. Heck heck interj. Used as a mild oath. n. Slang Used as an intensive: had a heck of a lot of money; was crowded as heck. [Alteration of hell. , President of FCG, commented, "During the last 18 months, we have not wavered in our commitment to our health delivery consulting and integration practice and we have recently started to feel the positive impacts of increased demand. We have responded with a very focused set of services targeted at helping clients improve IT effectiveness, cash flow, patient safety, and overall cost management. We have enhanced our reputation as the premier consulting firm Noun 1. consulting firm - a firm of experts providing professional advice to an organization for a fee consulting company business firm, firm, house - the members of a business organization that owns or operates one or more establishments; "he worked for a in this sector with very high client satisfaction ratings. All of these factors contributed to 24 percent growth during the quarter compared to last quarter." In health plans, FCG said that its business doubled from the same period last year. Health plans continue to invest in IT based transformation initiatives creating demand for FCG's consulting, 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 , software implementation and infrastructure services. The company further stated that it expects a pause in its growth in the second quarter as it consolidates its gains. As the economy slows and 2001 IT budgets are re-evaluated, several potential initiatives have been delayed at various client sites. Going forward, FCG expects to see opportunities for transformation type projects in large accounts resulting from the move towards consumerism consumerism Movement or policies aimed at regulating the products, services, methods, and standards of manufacturers, sellers, and advertisers in the interests of the buyer. , adoption of Internet technology and need for HIPAA (Health Insurance Portability & Accountability Act of 1996, Public Law 104-191) Also known as the "Kennedy-Kassebaum Act," this U.S. law protects employees' health insurance coverage when they change or lose their jobs (Title I) and provides standards for patient health, compliance. Life Sciences. This unit is dedicated to selling and delivering content management, validation See validate. validation - The stage in the software life-cycle at the end of the development process where software is evaluated to ensure that it complies with the requirements. , data warehousing See data warehouse. data warehousing - data warehouse , and general systems development services to the pharmaceutical, biotech bi·o·tech n. Informal Biotechnology. biotech Noun short for biotechnology Noun 1. , and Contract Research Organizations markets. Life Sciences contributed 30 percent of revenue in the first quarter of 2001. FCG continues to experience excellent demand for its IT strategy and content management services in the U.S. and Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). as evolving
regulations continue to drive demand for new FCG services and solutions.
While FCG is seeing strong demand for its services with an active
pipeline, the current economic slowdown For articles with similar titles, see Slow Down (disambiguation).A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. is impacting the initiation of new projects. Clients have delayed but not cancelled several initiatives pending more clarity about the economic outlook. FCG appointed Rick Riegel to the post of Vice President and Managing Director in charge of Life Sciences. Riegel, formerly in charge of Life Sciences' primary sales and delivery units, has more than seven years experience with FCG including his successful launch and oversight
Oversight may refer to:
tr. & intr.v. sharp·ened, sharp·en·ing, sharp·ens To make or become sharp or sharper. sharp its service offerings, and improve overall utilization and gross margins. Doghouse Technology Services. As previously announced, FCG merged three of its web and infrastructure units (FCG Doghouse, Advanced Technology Services, and Systems and Networking) into a single business unit, called Doghouse Technology Services, to gain economies of scale and business concentration. Doghouse Technology Services provides services to FCG's Health Plan, Health Delivery, Life Sciences and Government units, as well as selling directly to other industries such as telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. , financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. and consumer products. Doghouse Technology Services had revenues in the first quarter of 2001 of $18.6 million, which represents 26.5 percent of total revenues. Given that a large proportion of revenue from this unit is derived from health plan clients, FCG expects performance in this unit to mirror Health Plans with softness in the second quarter of 2001 followed by a rebound rebound (rē´bownd), n/v 1. a recovery from illness. n 2. an outbreak of fresh reflex activity after withdrawal of a stimulus rebound adjective in the second half. However, Doghouse Technologies continues to see strength in certain areas, such as digital imaging, enterprise storage solutions, portal development, applications integration, and HIPAA remediation. FCG Management Services. This unit provides IT outsourcing services to the healthcare industries. FCGMS FCGMS Fuel Center of Gravity Management System (aircraft) contributed 18 percent of revenue in the first quarter of 2001. FCGMS won two new contracts during the quarter, New York Blood Center and the University of Pennsylvania Health System The University of Pennsylvania Health System is a diverse research and clinical care organization in Philadelphia, Pennsylvania that operates under the direction and auspices of the University of Pennsylvania, its umbrella organization Penn Medicine and the University of . The outsourcing business enters the second quarter with committed contracts representing $65 million in annual revenue, up 60 percent from $40 million at the end of 2000. FCG is pursuing about a dozen opportunities in the prospect phase and three in assessment with the potential total contract value of these opportunities exceeding $1 billion. FCG also has signed an outsourcing partnership agreement with VHA VHA Veterans Health Administration VHA Variable Housing Allowance VHA Villages Homeowners Association VHA Voluntary Hospitals Association VHA Virtual Home Agent VHA Very High Altitude VHA Vapor Hazard Area VHA Vermont Holstein-Friesian Association , Inc. Steven Ste´ven n. 1. Voice; speech; language. Ye have as merry a steven As any angel hath that is in heaven. - Chaucer. 2. An outcry; a loud call; a clamor. To set steven to make an appointment. Heck, FCG's president said, "VHA brings significant long-standing long-stand·ing adj. Of long duration or existence: a long-standing friendship. long-standing Adjective existing for a long time senior level relationships with more than 2,200 members. The VHA alliance comprises 27 percent of the nation's community hospitals, including many of the nations largest and most respected institutions. FCG continues to be VHA's exclusive IT consulting partner in healthcare and this agreement is a logical extension to that." Government. FCG's Government unit focuses on delivering FCG's healthcare domain and deep technology skills to governmental organizations such as the U.S. Department of Defense, Centers for Disease Control, Health Care Financing Administration Health Care Financing Administration, n.pr department in the U.S. agency of Health and Human Services responsible for the oversight of the Medicaid and Medicare benefit programs, including guidelines, payment, and coverage policies. , and the Veterans Health Administration. Government contributed 3 percent of revenue in the first quarter of 2001. For segment reporting segment reporting A type of financial reporting in which the firm discloses information by identifiable industry segments. For example, Union Pacific Corporation reports revenues, income, assets, depreciation, and capital expenditures for each of four purposes, this unit is included in the Healthcare Group. Outlook FCG provided the following statements while noting that readers should reference the section at the end of the release regarding the company's 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. in this section and elsewhere in this release. Nussbaum stated, "We have accomplished an incredible amount over the last several quarters, resulting in record revenues, returning to profitability, and positioning ourselves for continued success. However, we expect that our recovery will pause during the second quarter followed by a return to growth in the second half." In the second quarter of 2001, FCG expects to experience a fallback fall·back n. 1. a. Something to which one can resort or retreat. b. A retreat. 2. Computer Science in revenue in its Health Plan and Life Sciences units. In Health Plans, FCG's sales capacity was impacted by the assignment of key sales resources to large project startups. Those engagements have absorbed new staff at slower rates than planned. In its Life Sciences unit, FCG said that it expects its recent leadership change and operational initiatives to improve its ability to capitalize on strong market opportunities. Given the fundamental demand for life sciences and health plan IT initiatives, FCG believes that it will return to growth in these sectors in the second half of 2001. Nussbaum commented, "Even with these challenges in a slowing economy, we are committed to maintaining our profitability during this pause and are poised to continue our growth. We believe that while we have this pause, we must continue to exercise cost discipline and maximize our resources so that we can achieve improved financial results in the second half. In so doing, we will strengthen the bottom line impact of our continuing recovery." FCG provided the following guidance for investors regarding its expected financial performance: -- Full year 2001 revenues of approximately $293 to 298 million -- Second quarter earnings to be in the range of breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations to $0.03 per share -- 2001 earnings to be in the range of $0.22 to $0.30 per share, while ending the year at an annual run rate of $0.44 to $0.60 per share -- Continued profitability throughout the remainder of 2001 FCG also said its long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. financial goals include the following targets: -- Annual revenue growth of approximately 25-30 percent -- Operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: of approximately 10-12 percent Company Web Cast FCG will broadcast its first quarter 2001 investor conference call live over the Internet today at 8:30 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT (5:30 a.m. PDT PDT abbr. Pacific Daylight Time PDT Pacific Daylight Time PDT n abbr (US) (= Pacific Daylight Time) → hora de verano del Pacífico PDT ). This call will contain additional details about the company's first quarter 2001 results. The broadcast will be hosted on the company's Investor Relations Investor relations The process by which the corporation communicates with its investors. Web site located at www.fcg.com. Participants should allow approximately five minutes prior to the call's start time to visit the site and download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. any streaming media See streaming audio, streaming video and digital media hub. software needed to listen to the Internet broadcast. An online archive of the broadcast will be available approximately four hours following the live call. About First Consulting Group First Consulting Group is a leading provider of information-based consulting, integration and management services for healthcare, pharmaceutical and other life sciences organizations in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and Europe. The firm's services are designed to increase its clients' operations effectiveness, resulting in reduced costs, improved customer service, enhanced quality of patient care and the more rapid introduction of new pharmaceutical compounds. More information about FCG is available through the FCG World Wide Web site at www.fcg.com or by calling the toll free number 800/345-0957. Forward-Looking Statements This release contains forward-looking statements including (i) the prospective growth and profitability of FCG's business units in life sciences, health delivery, outsourcing, e-services An umbrella term for services on the Internet. E-services include e-commerce transaction services for handling online orders, application hosting by application service providers (ASPs) and any processing capability that is obtainable on the Web. See e-speak. , advanced technology services and health plans, (ii) potential values of and negotiations on future outsourcing and other services agreements, (iii) the effectiveness of 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). its business units, and (iv) FCG's anticipated revenues and earnings per share for the second quarter of 2001 and calendar year 2001. These forward-looking statements involve known and unknown risks which may cause its actual results and performance to be materially different from the future results and performance stated or implied by the forward-looking statements. Some of the risks you should consider include the following: (a) the unpredictable nature of negotiations with clients on new outsourcing and other engagements, resulting in uncertainty as to whether and when FCG will enter into new agreements and whether those agreements will be on terms favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. to FCG; (b) the unpredictable nature of the business of FCG's clients and the markets that they serve, particularly in the current economic climate, which could result in clients canceling, modifying or delaying prospective engagements with FCG; (c) the importance of FCG's personnel to its operations, including whether FCG can attract and retain qualified personnel and keep those personnel utilized on client engagements in order to achieve projected growth, revenue and earnings; (d) the ability of FCG to operate effectively with its restructured business units, and (e) other risk factors referenced in our most recent Forms 10-K, 10-Q and other periodic reports filed with the Securities and Exchange Commission.
First Consulting Group
Consolidated Statements of Operations
(in thousands except per share data)
3 Months Ended March 31,
2001 2000
Net Revenue $ 70,300 $ 63,507
Cost of Services 43,853 42,016
---------------------
Gross Profit 26,447 21,491
Selling Expenses 7,859 7,428
General and Administrative Expenses 17,402 17,570
---------------------
Operating Income 1,186 (3,507)
Interest Income 411 718
Other Expense (61) (56)
---------------------
Pre-tax Income 1,536 (2,845)
Income Tax 645 (1,138)
---------------------
Net Income $ 891 $(1,707)
=====================
Basic EPS $ 0.04 $ (0.07)
Diluted EPS $ 0.04 $ (0.07)
Basic Weighted Avg. Shares 23,573 24,084
Diluted Weighted Avg. Shares 24,402 24,084
First Consulting Group, Inc. and Subsidiaries
Consolidated Balance Sheet Data
(in thousands, except per share data)
Mar. 31, Dec. 31,
2001 2000
Cash, cash equivalents, short and
long-term investments $ 33,498 $ 29,795
Accounts receivable, net 33,443 38,637
Unbilled receivables 23,996 17,465
Current assets 94,447 90,702
Total assets 144,228 141,996
Current liabilities 28,950 27,912
Long-term debt 78 91
Total stockholders' equity 106,330 105,262
Selected Business Metrics:
Q1 2001 Q4 2000 Q3 2000
Net revenue ($ millions) 70.3 61.7 60.0
Gross margin % 37.6 34.4 32.4
Selling Expense % 11.2 10.9 12.8
General and Admin Expense % 24.8 29.0 28.6
Operating % (excl merger etc) 1.7 (5.5) (9.0)
Utilization % 71.1 68.0 67.6
Total associates 2,027 1,878 1,942
Total billable associates 1,118 1,122 1,187
Total outsourcing associates 527 372 372
Days sales outstanding - total 67 73 79
Q2 2000 Q1 2000
Net revenue ($ millions) 63.7 63.5
Gross margin % 36.0 33.8
Selling Expense % 12.3 11.7
General and Admin Expense % 28.4 27.7
Operating % (excl merger etc) (4.7) (5.5)
Utilization % 69.5 67.1
Total associates 2,020 1,987
Total billable associates 1,231 1,222
Total outsourcing associates 382 383
Days sales outstanding - total 85 82
Sales Mix as a % of Revenues
Q1 2001 Q4 2000 Q3 2000
Health Plan 26 29 23
Health Delivery 19 17 23
FCG Management Services 18 18 20
(outsourcing clients)
Life Sciences 30 28 27
Government 3 4 4
Other 4 3 5
Q2 2000 Q1 2000
Health Plan 18 15
Health Delivery 26 32
FCG Management Services 19 18
(outsourcing clients)
Life Sciences 31 27
Government 2 4
Other 3 4
Delivery Units Selected Financial Metrics
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Healthcare Q1 2001 Q4 2000 Q3 2000
Net Revenue ($ millions) 20.0 18.9 19.1
Gross Margin % 50.0 43.0 40.7
Utilization % 71.2 66.7 66.4
Billable Associates 277 306 338
Total Associates 292 323 351
Healthcare Q2 2000 Q1 2000
Net Revenue ($ millions) 19.3 22.9
Gross Margin % 39.4 42.2
Utilization % 64.1 64.8
Billable Associates 377 392
Total Associates 400 405
----------------------------------------------------------------------
Life Sciences Q1 2001 Q4 2000 Q3 2000
Net Revenue ($ millions) 19.8 16.9 15.3
Gross Margin % 32.9 31.8 28.1
Utilization % 73.2 69.7 69.5
Billable Associates 448 438 448
Total Associates 546 533 540
Life Sciences Q2 2000 Q1 2000
Net Revenue ($ millions) 19.7 16.1
Gross Margin % 42.2 36.3
Utilization % 78.9 73.1
Billable Associates 425 471
Total Associates 520 567
----------------------------------------------------------------------
DHTS Q1 2001 Q4 2000 Q3 2000
Net Revenue ($ millions) 18.6 15.9 15.6
Gross Margin % 38.9 31.3 32.1
Utilization % 69.3 71.4 70.8
Billable Associates 379 364 371
Total Associates 427 418 423
DHTS Q2 2000 Q1 2000
Net Revenue ($ millions) 13.8 14.5
Gross Margin % 31.3 27.8
Utilization % 68.6 66.9
Billable Associates 390 331
Total Associates 446 371
----------------------------------------------------------------------
Outsourcing Q1 2001 Q4 2000 Q3 2000
Net Revenue ($ millions) 11.8 10.0 10.0
Gross Margin % 22.6 27.6 23.8
Total Associates 527 372 372
Outsourcing Q2 2000 Q1 2000
Net Revenue ($ millions) 10.8 10.0
Gross Margin % 24.8 19.6
Total Associates 382 383
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