Superior Consultant (NASDAQ:SUPC)
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Superior Consultant Reports Quarterly Profit, Anticipates
Exceeding Targets For 2004
Superior expects continued profitability and growth
SOUTHFIELD, Mich., April 29 /PRNewswire-FirstCall/ -- Superior Consultant
Holdings Corporation today reported its first quarter 2004 operating results
and that it expects to exceed its 2004 targets. For the first quarter of 2004,
the company reported net revenue of $24.6 million, compared with $21.9 million
in the same quarter a year ago. The company reported positive EBITDA for the
quarter of $1.8 million and earnings per diluted share of $0.02, compared with
EBITDA of $0.3 million and a net loss of ($0.08) per share in the same quarter
last year.
Outsourcing net revenue increased 45.0% over the same quarter in the prior
year. Following a competitive bid process, the company has been selected as
vendor of choice for a new, multi-year, multi-million dollar outsourcing
contract with a West Coast health system; contract negotiations are in the
final stages. Superior has reached agreement on all major items in another
previously announced multi-year, multi-million dollar outsourcing contract
negotiation with a Midwest health system. The combined value of these
contracts, if successfully concluded, is approximately $100 million. The
company's outsourcing sales prospect pipeline increased to $790 million.
"The past quarter marks a significant step forward in the plans we announced
three years ago to transition to a strong recurring revenue model," said Chief
Executive Officer Richard D. Helppie. "Building upon high client satisfaction
and industry recognition as the best value in healthcare information
technology, we have seen the results of our investments and corporate focus as
we mark our sixth consecutive quarter of in-line performance, a second straight
quarter of profitability, and an expectation of further growth in revenue and
profitability. Superior's revenue from long- term, recurring revenue contracts
is approaching 50%, and we currently have a backlog of $268 million in sold
work. Additionally, we have two multi-year outsourcing agreements in the final
stages of negotiations, which we expect will add approximately $100 million to
our backlog."
"Superior increased its revenue over the same quarter last year and achieved
additional operating efficiencies," said Richard R. Sorensen, Chief Financial
Officer. "We reported increases in our profit, operating margin and EBITDA,
and we ended the quarter with $12.2 million in cash. Uses of cash during the
quarter consisted primarily of the purchase of software and equipment related
to our outsourcing contracts, debt service associated with our financing
arrangements, and stock repurchases. Additionally, in the second quarter we
secured commitments for increased financing capacity and expect to further add
to our available cash through the sale of under-utilized real estate."
SG&A in the first quarter improved to 24.1% of net revenue from 26.0% last
quarter and 31.1% in the same quarter of 2003. Days Sales Outstanding (DSO)
were 49, compared with 46 last quarter and 59 one year ago.
Operating margin improved to 1.8% in the quarter, compared with 1.0% in the
prior quarter, excluding restructuring recovery, and (3.7%) in the same quarter
of 2003. Gross margin for the quarter was 25.9%, compared with 27.4% in the
same quarter one year ago.
"During the quarter, we focused on delivery of our outsourcing and consulting
commitments," said George S. Huntzinger, President and Chief Operating Officer.
"Superior's transformational outsourcing solution has generated high
satisfaction among our clients as it continues to propel them toward
achievement of their business goals. Supported by world-class infrastructure,
our single-source application delivery and process change approach provides
clients a faster and more significant return on their information technology
investment. Accordingly, during the quarter we continued to focus on
development and delivery of best practices solutions. From an economic
perspective, the Superior Processing Center has reached a utilization level
where it has transitioned from the investment stage to become a contributor to
gross margin."
"In consulting, we gained new clinical transformation and revenue cycle
engagements during the quarter, we saw a 77% revenue increase in interim
management engagements, and we noted revenue growth in some of our vendor
application delivery areas," Huntzinger continued. "We sold 12 consulting
engagements valued in excess of $200,000, and two of our new clients during the
quarter awarded us contracts valued in excess of $100,000. Accepted proposals
for consulting work totaled $11.5 million for the first quarter, and our
pipeline for consulting opportunities increased during the quarter. Thus far
in 2004, we have added $33.2 million in consulting sales, including a $12.5
million, multi-year, enterprise-wide electronic medical records and
implementation engagement, with physician order entry and decision support,
which closed in the second quarter," Huntzinger concluded.
OUTLOOK
"Dramatic results can be achieved in terms of healthcare quality, operational
improvement and cost reduction by applying specific digital technology and
process change to the healthcare delivery continuum," said Helppie. "In recent
years, backed by two decades of hands-on industry experience, Superior
constructed both a set of solutions to enable healthcare organizations to
achieve tangible results and a new business model with greater recurring
revenue. As a result, we are seeing more opportunities to make an even bigger
impact in the healthcare industry."
Based on the results for the first quarter, the current sales prospect
pipeline, and other factors, Superior anticipates that 2004 results will exceed
the previously published guidance. Net revenue is expected to be above the
previously announced range of approximately $102 million to $107 million,
earnings per basic share is expected to be above the previously announced $0.08
to $0.13, and EBITDA is expected to exceed the previously announced guidance
range of $8.0 to $8.5 million.
The revenue forecast is based on revenue recognized in the first quarter, a
current booked backlog of $56.7 million for the remainder of the year, and
client indications of an additional $10.6 million. As previously announced,
the company expects to continue to show quarterly improvement over comparable
2003 quarters throughout the year. The company's guidance is also predicated
on anticipated success in winning and servicing new outsourcing and consulting
contracts, achievement of the anticipated revenue mix between outsourcing and
consulting, and continued expense controls.
Early in the second quarter, the company received an unsolicited purchase offer
for an office building and subsequently reached an agreement for its sale. The
transaction is expected to add approximately $1.7 million in cash to the
company's balance sheet. Superior expects that the transaction will result in
a non-cash write-down of approximately $450,000 to reflect the difference
between the sale price and the net book value of the building, plus
approximately $100,000 in commission charges. The write-down is expected to be
substantially offset during the year by replacing the building with more
efficient facilities.
Superior anticipates continued capital expenditures in connection with the
launch and service of outsourcing relationships. The company expects to meet
the capital and cash requirements through the associated outsourcing revenue
streams, operating cash flow, and financing sources. In April, the company
negotiated a larger, more favorable line of credit with Fifth Third Bank. In
addition, the company negotiated other credit lines for equipment and software
financing.
Helppie concluded, "We remain on a steady course to gain efficiency in our
operations, to further develop a compelling transformational outsourcing
solution and complementary consulting services, and to build a solid recurring
revenue stream. Our success to date is evident in our position as the quality
and value leader of healthcare outsourcing and consulting solutions and our
strengthening financial performance and profitability. Superior's
extraordinary work force is the key to our past success and our future. Our
Superior colleagues look forward to continuing opportunities for growth in 2004
and beyond, as well as additional ways to serve our clients and create value
for all of our stakeholders."
Conference Call Broadcast:
Superior Consultant's senior executives will discuss the first quarter 2004
results during an investor teleconference scheduled for 11:00 a.m. eastern time
on Friday, April 30, 2004. To listen to the broadcast, participants may log
onto http://www.superiorconsultant.com/ and go to the "Investors" section of
the Web site. We suggest you log onto the Web site 10 minutes prior to the
conference call to download and install any necessary software.
Conference Call Replay:
An online replay will be available after 2:30 p.m. eastern time on Friday,
April 30, 2004, under the "Investors" section of
http://www.superiorconsultant.com/ .
Statements included in this press release which are not historical in nature,
are intended to be, and are hereby identified as "forward-looking statements"
for purposes of the safe harbor provided by Section 21E of the Securities
Exchange Act of 1934, as amended by Public Law 104-67. Forward- looking
statements may be identified by words including, but not limited to:
"anticipate," "believe," "intends," "estimates," "promises," "expect,"
"should," "conditioned upon" and similar expressions. This release contains
forward-looking statements relating to future financial results or business
expectations. Business plans may change as circumstances warrant. Actual
results may differ materially as a result of factors and events which the
company is unable to accurately predict or over which the company has no
control. Such factors include, but are not limited to: the award or loss of
significant client assignments, timing of contracts, recruiting and new
business solicitation efforts, the healthcare market's acceptance of and demand
for the company's offerings, demands upon and consumption of the company's cash
and cash equivalent resources or changes in the company's access to working
capital, regulatory changes and other factors affecting the financial
constraints on the company's clients, competitive pressures (both domestic and
foreign), the ability to successfully manage currency risk, obtain foreign work
permits and otherwise successfully execute and manage international contracts,
economic factors specific to healthcare, general economic conditions,
unforeseen disruptions in transportation, communications or other
infrastructure components, acquisitions under consideration and the ability to
integrate acquisitions on a timely basis. Additional information regarding
these risk factors and others, and additional information concerning the
company are included in the company's reports on file with the Securities and
Exchange Commission.
About Superior Consultant Holdings Corporation
Recipient of Frost & Sullivan's 2003 Best Bang for the Buck Award for providing
services and solutions with the highest ratio of value to cost, Superior
Consultant is a leading national provider of transformational outsourcing,
management and information technology consulting services and solutions to the
healthcare industry. Superior specializes in Digital Business
Transformation(TM) services that enable clients to thrive in the
information-driven economy, and its transformational outsourcing, management
and information technology consulting services and solutions help clients plan
and execute better business strategies and meet their fiscal challenges while
advancing clinical quality. Superior's best practices outsourcing model
includes a full range of flexible business process and information technology
solutions, including data center services, 24/7/365 network monitoring and help
desk services, facility management, interim management, and application
outsourcing services. For 20 years, Superior has been recognized as an
innovative leader within the healthcare industry and has been rewarded with
full and partial outsourcing contracts, thousands of engagements, approximately
150 interim management assignments, and nearly 3,000 clients.
For more information on Superior Consultant Holdings Corporation simply dial
1-800-PRO-INFO and enter the Company ticker: SUPC (a no-cost fax-on- demand
service) or visit the Company's Web site at http://www.superiorconsultant.com/
.
SUPERIOR CONSULTANT HOLDINGS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
March 31, December 31,
ASSETS 2004 2003
Current assets
Cash and cash equivalents $12,200 $12,688
Accounts receivable, net 13,341 12,592
Other current assets 3,736 4,000
Total current assets 29,277 29,280
Property and equipment, net 25,319 24,235
Other long-term assets 295 338
Total Assets $54,891 $53,853
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable to bank $2,400 $1,900
Other current liabilities 17,093 16,300
Total current liabilities 19,493 18,200
Senior subordinated debentures, net 7,578 7,552
Long-term liabilities 4,640 5,185
Stockholders' equity 23,180 22,916
Total Liabilities and
Stockholders' Equity $54,891 $53,853
SUPERIOR CONSULTANT HOLDINGS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
March 31, December 31, March 31,
2004 2003 2003
Revenue
Consulting
Revenue before reimbursements
(net revenue) $13,169 $13,326 $13,991
Out-of-pocket reimbursements (1) 1,459 1,688 1,773
Total consulting revenue 14,628 15,014 15,764
Outsourcing
Revenue before reimbursements
(net revenue) 11,453 11,249 7,900
Out-of-pocket reimbursements (1) 108 164 78
Total outsourcing revenue 11,561 11,413 7,978
Consolidated revenue 26,189 26,427 23,742
Cost of services
Consulting
Cost of services before
reimbursements (net cost of
services) 8,445 7,874 8,481
Out-of-pocket reimbursements (1) 1,459 1,688 1,773
Total consulting cost of
services 9,904 9,562 10,254
Outsourcing
Cost of services before
reimbursements (net cost of
services) 9,812 10,109 7,403
Out-of-pocket reimbursements (1) 108 164 78
Total outsourcing cost of
services 9,920 10,273 7,481
Consolidated cost of
services 19,824 19,835 17,735
Gross Profit
Consulting 4,724 5,452 5,510
Outsourcing 1,641 1,140 497
Consolidated gross profit 6,365 6,592 6,007
Selling, general and administrative
expenses 5,923 6,390 6,815
Restructuring recovery, net - (193) -
Earnings (loss) from
operations 442 395 (808)
Other expense, net (256) (288) (79)
Earnings (loss) before
income tax benefit 186 107 (887)
Income tax benefit - - -
Net earnings (loss) $186 $107 $(887)
Net earnings (loss) per share
Basic $0.02 $0.01 $(0.08)
Diluted $0.02 $0.01 $(0.08)
Weighted average number of common
shares outstanding
Basic 10,358 10,377 10,765
Diluted 11,686 11,361 10,765
SUPERIOR CONSULTANT HOLDINGS CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
(In thousands)
(Unaudited)
Three Months Ended
March 31, December 31, March 31,
2004 2003 2003
GAAP to Non-GAAP Reconciliations:
Consolidated revenue $26,189 $26,427 $23,742
Less: Out-of-pocket
reimbursements (1) (1,567) (1,852) (1,851)
Net Revenue $24,622 $24,575 $21,891
Operating expenses
Consolidated cost of services $19,824 $19,835 $17,735
Selling, general and administrative
expenses 5,923 6,390 6,815
Restructuring recovery, net - (193) -
Operating expenses - GAAP 25,747 26,032 24,550
Less: recovery, net - 193 -
Less: Out-of-pocket
reimbursements (1) (1,567) (1,852) (1,851)
Operating expenses, as adjusted $24,180 $24,373 $22,699
Net earnings (loss) $186 $107 $(887)
Depreciation and amortization 1,356 1,358 1,081
Interest expense, net 256 340 79
Income tax benefit - - -
EBITDA $1,798 $1,805 $273
Capital expenditures, net of financing $2,606 $2,462 $1,683
Gross profit % - Consulting (1) 35.9% 40.9% 39.4%
Gross profit % - Outsourcing (1) 14.3% 10.1% 6.3%
Gross profit % - Consolidated (1) 25.9% 26.8% 27.4%
SGA % 24.1% 26.0% 31.1%
Headcount 592 609 574
(1) In November 2001, the Financial Accounting Standards Board issued Staff
Announcement Topic No. D-103, "Income Statement Characterization of
Reimbursements Received for Out-of-Pocket Expenses Incurred," which states that
reimbursements received for out-of-pocket expenses should be characterized as
revenue in the income statement. The application of Staff Announcement Topic
No. D-103 does not have an impact on current or previously reported net
earnings (loss) or earnings (loss) per share. We will continue to use net
revenue (revenue before out-of-pocket reimbursements) and net cost of services
(cost of services before out-of-pocket reimbursements) to compute percentage
and margin calculations, as well as for purposes of comparing the results of
operations for the quarter ended March 31, 2004, to the quarters ended December
31, 2003, and March 31, 2003.
DATASOURCE: Superior Consultant Holdings Corporation
CONTACT: Richard D. Helppie - Chief Executive Officer, Richard R.
Sorensen - Chief Financial Officer, or Susan M. Synor - Executive Vice
President, of Superior Consultant Holdings Corporation, +1-248-386-8300
Web site: http://www.superiorconsultant.com/