Superior Consultant (NASDAQ:SUPC)
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Superior Consultant Reports Second Quarter Revenue and Profit
Growth
Superior on Track to Exceed 2004 Forecast
DEARBORN, Mich., July 29 /PRNewswire-FirstCall/ -- Superior Consultant
Holdings Corporation (NASDAQ:SUPC) today reported its second quarter 2004
operating results. For the quarter, the company reported net revenue of $26.9
million, compared with $22.9 million in the same quarter a year ago, and $24.6
million in the first quarter of 2004. The company reported EBITDA for the
quarter of $2.5 million and earnings per diluted share of $0.08, prior to
giving effect to a non-cash charge related to the sale of a building; with the
effect of the building sale, the company reported EBITDA of $1.9 million and
$0.03 per diluted share. The performance compares with EBITDA of $1.0 million
and a net loss of ($0.04) per share in the same quarter last year, and EBITDA
of $1.8 million and earnings per diluted share of $0.02 in the first quarter of
2004.
During the second quarter, Superior sold an office building, which added to the
company's cash position and simultaneously reduces operating expenses in
subsequent quarters. The transaction added $1.7 million net cash to the
company's balance sheet. The transaction resulted in a non-cash charge of
$562,000 to reflect the difference between the net sale price and the net book
value of the building. The company expects to realize approximately $125,000
each future calendar quarter in lower depreciation and operating costs
associated with the company's relocation to more efficient facilities.
Outsourcing net revenue increased 42.8% over the same quarter in the prior
year. During the quarter, the company gained $128 million in new outsourcing
sales. Included among the contract wins were new, full-service outsourcing
contracts with Southwest Washington Medical Center (Vancouver, Washington) and
Port Huron Hospital (Michigan). The company's outsourcing sales prospect
pipeline increased to $859 million from $790 million.
Consulting net revenue remained consistent with the same quarter in the prior
year and increased 4.5% over last quarter. During the quarter, the company
gained $29.6 million in new consulting bookings, an increase of 135% over the
same quarter of 2003. Included in the contract wins were the previously
announced $12.5 million multi-year enterprise-wide electronic medical records
implementation project and more than $4 million in initial implementation work
associated with a major electronic medical records project.
"Sustained focus on meeting the most important needs of our healthcare clients,
coupled with resolute pursuit of the outsourcing and consulting strategy we
announced nearly four years ago, has resulted in the best quarter of financial
performance under our current business model," said Chief Executive Officer
Richard D. Helppie. "We recorded $0.08 earnings per diluted share, absent the
effect of the sale of an under-utilized building. The second quarter of 2004
is our seventh consecutive quarter of in-line performance and our third
straight quarter of profitability, and we have an expectation of further growth
in revenue and profitability. As we marked our 20th anniversary of service to
the healthcare industry in May, we are pleased to report that strong
outsourcing and consulting bookings during the quarter have resulted in a
record backlog of $368 million in sold work."
"Superior increased its net 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 $12.5 million in cash. Uses of cash
during the quarter consisted primarily of capital purchases for software,
equipment, and associated implementation services related to our outsourcing
contracts and debt service associated with our financing arrangements. As
previously announced, we also finalized commitments for increased financing
capacity and further added to our available cash through the sale of under-
utilized real estate."
SG&A in the second quarter improved to 22.5% of net revenue from 24.1% last
quarter and 28.6% in the same quarter of 2003. Days Sales Outstanding (DSO)
were 55, compared with 49 last quarter and 50 one year ago.
Operating margin improved to 2.1% in the quarter, or 4.1% excluding the impact
of the building sale, compared with 1.8% in the prior quarter and (1.0%) in the
same quarter of 2003. Gross margin for the quarter was 26.6%, compared with
27.6% in the same quarter one year ago and 25.9% last quarter.
"During the quarter, our outsourcing and consulting units turned in solid
results," said George S. Huntzinger, President and Chief Operating Officer.
"Superior's partnership with our clients and our energized work force means
return on investment for our clients, growth for our colleagues, and returns
for our shareholders. As mentioned in our first quarter earnings release, we
have achieved a level of utilization at the Superior Processing Center, which
has transitioned from the investment stage to become a contributor to gross
margin."
"In consulting, we continued to gain new clinical transformation and revenue
cycle engagements during the quarter, and we saw an increase in strategic and
I.T. planning engagements as well as an increase in implementation work,"
Huntzinger continued. "We sold 19 consulting engagements valued in excess of
$200,000, seven of which are valued in excess of $500,000. We gained 30 new
clients during the quarter, eight of which awarded us contracts valued in
excess of $100,000. Accepted proposals for consulting work totaled $29.6
million for the second quarter. Thus far in 2004, we have added $41.1 million
in consulting sales," Huntzinger concluded.
OUTLOOK
"We are pleased with the results for the initial half of 2004," said Helppie.
"Everyone at Superior is pleased to see government and industry leaders'
growing awareness of the great potential of information technology's role in
improving quality and reducing the cost of healthcare. We believe that the
macro factors driving our market will help create demand in the second half of
2004 and into the years beyond."
For 2004, the company confirms its expectation to exceed the upper end of its
revenue, EBITDA, and earnings per basic share forecasts of $107 million, $8.5
million, and $0.13, respectively.
* The revenue forecast for 2004 is based on revenue of $51.5 million for the
initial half of 2004, a current booked backlog of $45 million for the remainder
of the year, and current client indications of an additional $1.7 million.
* The EBITDA forecast is based on results achieved in the initial half of
2004, expected margins from sold work, and estimated results of new contracts
for 2004.
* The earnings per basic share forecast is based on achievement of $0.11 for
the initial half of 2004, absent the effect of the building sale. For the
year, the company expects to reach at least $0.18 per basic share, absent the
effect of the building sale.
As previously announced, Superior 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.
Superior anticipates some 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.
Superior anticipates continued growth in 2005 and the years beyond. The
company has a rising revenue run rate, large backlog of sold work, and strong
sales pipelines. The revenue backlogs for 2005 and 2006 are now $64.2 million
and $52.6 million, respectively.
Helppie concluded, "Superior's deep experience with healthcare industry issues
forms the basis for our transformational consulting and outsourcing services.
We are making a positive difference for our clients and for the healthcare
industry. We have successfully integrated our consulting and outsourcing
services in a way that provides great value for our clients, great opportunity
for our employees, and excellent prospects for our shareholders."
Conference Call Broadcast:
Superior Consultant's senior executives will discuss the second quarter 2004
results during an investor teleconference scheduled for 11:00 a.m. eastern time
on Friday, July 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, July
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
170 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)
June 30, December 31,
ASSETS 2004 2003
Current assets
Cash and cash equivalents $12,498 $12,688
Accounts receivable, net 16,338 12,592
Other current assets 4,097 4,000
Total current assets 32,933 29,280
Property and equipment, net 24,932 24,235
Other long-term assets 249 338
Total Assets $58,114 $53,853
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable to bank $4,400 $1,900
Other current liabilities 18,181 16,300
Total current liabilities 22,581 18,200
Senior subordinated debentures, net 7,608 7,552
Long-term liabilities 4,005 5,185
Stockholders' equity 23,920 22,916
Total Liabilities and
Stockholders' Equity $58,114 $53,853
SUPERIOR CONSULTANT HOLDINGS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30, June 30,
2004 2004 2003 2004 2003
Revenue
Consulting
Revenue before
reimbursements (net
revenue) $13,767 $13,169 $13,718 $26,936 $27,709
Out-of-pocket
reimbursements (1) 1,911 1,459 1,877 3,370 3,650
Total consulting
revenue 15,678 14,628 15,595 30,306 31,359
Outsourcing
Revenue before
reimbursements (net
revenue) 13,090 11,453 9,168 24,543 17,068
Out-of-pocket
reimbursements (1) 101 108 147 209 225
Total outsourcing
revenue 13,191 11,561 9,315 24,752 17,293
Consolidated revenue 28,869 26,189 24,910 55,058 48,652
Cost of services
Consulting
Cost of services before
reimbursements (net cost
of services) 8,123 8,445 8,694 16,568 17,175
Out-of-pocket
reimbursements (1) 1,911 1,459 1,877 3,370 3,650
Total consulting cost
of services 10,034 9,904 10,571 19,938 20,825
Outsourcing
Cost of services before
reimbursements (net cost
of services) 11,577 9,812 7,872 21,389 15,275
Out-of-pocket
reimbursements (1) 101 108 147 209 225
Total outsourcing cost
of services 11,678 9,920 8,019 21,598 15,500
Consolidated cost of
services 21,712 19,824 18,590 41,536 36,325
Gross Profit
Consulting 5,644 4,724 5,024 10,368 10,534
Outsourcing 1,513 1,641 1,296 3,154 1,793
Consolidated gross
profit 7,157 6,365 6,320 13,522 12,327
Selling, general and
administrative expenses 6,044 5,923 6,555 11,967 13,370
Loss on sale of building 562 - - 562 -
Earnings (loss) from
operations 551 442 (235) 993 (1,043)
Other expense, net (205) (256) (150) (461) (229)
Earnings (loss)
before income tax
benefit 346 186 (385) 532 (1,272)
Income tax benefit - - - - -
Net earnings (loss) $346 $186 $(385) $532 $(1,272)
Net earnings (loss) per share
Basic $0.03 $0.02 $(0.04) $0.05 $(0.12)
Diluted $0.03 $0.02 $(0.04) $0.05 $(0.12)
Weighted average number of
common shares outstanding
Basic 10,415 10,358 10,765 10,387 10,765
Diluted 11,849 11,682 10,765 11,754 10,765
SUPERIOR CONSULTANT HOLDINGS CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
(In thousands)
(Unaudited)
Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30, June 30,
2004 2004 2003 2004 2003
GAAP to Non-GAAP Reconciliations:
Consolidated revenue $28,869 $26,189 $24,910 $55,058 $48,652
Less: Out-of-pocket
reimbursements (1) (2,012) (1,567) (2,024) (3,579) (3,875)
Net Revenue $26,857 $24,622 $22,886 $51,479 $44,777
Operating expenses
Consolidated cost of
services $21,712 $19,824 $18,590 $41,536 $36,325
Selling, general and
administrative expenses 6,044 5,923 6,555 11,967 13,370
Loss on sale of building 562 - - 562 -
Operating expenses - GAAP 28,318 25,747 25,145 54,065 49,695
Less: loss on sale of
building (562) - - (562) -
Less: Out-of-pocket
reimbursements (1) (2,012) (1,567) (2,024) (3,579) (3,875)
Operating expenses, as
adjusted $25,744 $24,180 $23,121 $49,924 $45,820
Net earnings (loss) - GAAP $346 $186 $(385) $532 $(1,272)
Loss on sale of building 562 - - 562 -
Net earnings (loss),
excluding loss on sale
of building $908 $186 $(385) $1,094 $(1,272)
Basic net earnings (loss)
per share, excluding
loss on sale of building $0.09 $0.02 $(0.04) $0.11 $(0.12)
Diluted net earnings
(loss) per share,
excluding loss on sale
of building $0.08 $0.02 $(0.04) $0.09 $(0.12)
Net earnings (loss) $346 $186 $(385) $532 $(1,272)
Depreciation and
amortization 1,354 1,356 1,258 2,710 2,339
Interest expense, net 205 256 150 461 229
Income tax benefit - - - - -
EBITDA $1,905 $1,798 $1,023 $3,703 $1,296
2004 EBITDA, as reported $1,905 $3,703
Adjustment for loss on
sale of building 562 562
2004 EBITDA, adjusted for
loss on sale of building,
amounts used in 2004
annual EBITDA guidance $2,467 $4,265
Capital expenditures, net of
financing $3,026 $2,606 $1,640 $5,632 $3,323
Gross profit % - Consulting(1) 41.0% 35.9% 36.6% 38.5% 38.0%
Gross profit % - Outsourcing(1) 11.6% 14.3% 14.1% 12.9% 10.5%
Gross profit % -
Consolidated(1) 26.6% 25.9% 27.6% 26.3% 27.5%
SGA % 22.5% 24.1% 28.6% 23.2% 29.9%
Headcount 669 592 569 669 569
(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 June 30, 2004, to the quarters ended March 31,
2004, and June 30, 2003, and the six months ended June 30, 2004 to the six
months ended June 30, 2003.
DATASOURCE: Superior Consultant Holdings Corporation
CONTACT: Richard D. Helppie - Chief Executive Officer, Richard R.
Sorensen - Chief Financial Officer, Susan M. Synor - Executive Vice President,
all of Superior Consultant Holdings Corporation, +1-248-386-8300
Web site: http://www.superiorconsultant.com/