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Share Name | Share Symbol | Market | Type |
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ASGN Inc | NYSE:ASGN | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.14 | 0.15% | 94.16 | 94.63 | 93.0001 | 93.575 | 198,178 | 00:07:22 |
On Assignment, Inc. (NYSE: ASGN), a diversified professional staffing firm providing flexible and permanent staffing solutions in specialty skills including Technology, Life Sciences, Healthcare and Physician, today reported results for the quarter ended September 30, 2012.
Third Quarter 2012 Highlights
Commenting on the results, Peter Dameris, President and Chief Executive Officer of On Assignment, Inc., said, “I’m very pleased, that despite the macro-economic challenges, we grew our revenues year-over-year approximately 14 percent on both a pro forma basis (including Apex) and for our legacy businesses (which excludes Apex). At the same time, our Adjusted EBITDA (both pro forma and legacy businesses) grew at twice the rate of our revenues. Our results reflected an expansion of our operating and Adjusted EBITDA margins, which did not include any synergy savings from the acquisition of Apex.
Dameris continued, “Since the acquisition of Apex Systems, we have paid down our bank indebtedness $50.9 million ($27.5 million in Q3 and $23.4 million in Q2). As a result of these repayments and the growth in our Adjusted EBITDA, our total leverage ratio at the end of the quarter was 2.96 times trailing twelve months Adjusted EBITDA down from the peak of 3.79 times following the acquisition of Apex Systems.”
Third Quarter 2012 Results
Revenues were $388.3 million, up 139.1 percent year-over-year and 37.4 percent on a sequential basis. This growth was the result of the inclusion of Apex Systems for a full quarter, which accounted for $202.7 million of total revenues in the quarter, and 14.3 percent combined year-over-year revenue growth of the other business segments.
Gross profit was $119.0 million, up 118.3 percent year-over-year and 33.8 percent sequentially. This improvement was related to the contribution of Apex Systems, which accounted for $56.9 million of total gross profit, and the year-over-year revenue growth of the other business segments. Gross margin was 30.7 percent compared with 33.6 percent for the third quarter of 2011. The year-over-year decline in gross margin was attributable to the inclusion of Apex Systems. Excluding Apex Systems, the combined gross margin for the other business segments was 33.5 percent, down slightly from the 33.6 percent in the third quarter of 2011 and the second quarter of 2012. The gross margin for Apex Systems was 28.1 percent for the quarter, up from 27.4 percent in the second quarter of 2012.
Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization of identifiable intangible assets plus equity-based compensation expense, impairment charges and acquisition-related costs), was $45.5 million, up from $18.2 million in the third quarter of 2011 and $32.3 million in the second quarter of 2012. The Adjusted EBITDA margin (Adjusted EBITDA as a percentage of revenues) was 11.7 percent compared with 11.2 percent for the third quarter of 2011 and 11.4 percent in the second quarter of 2012. The expansion in the Adjusted EBITDA margin was the result of higher operating efficiencies.
Net income was $17.4 million ($0.33 per diluted share) compared with $7.8 million (0.21 per diluted share) for the third quarter of 2011. Income before income taxes included approximately $0.8 million ($0.01 per diluted share) in non-recurring acquisition and offering costs. Offering costs are not deductible for federal income tax purposes and caused in a slight increase in the Company’s effective tax rate in the quarter. Income before income taxes in the quarter benefited from a $1.0 million ($0.01 per diluted share) reduction in the earn-out obligation for HealthCare Partners. Excluding these two items, net income on an adjusted basis was $17.5 million ($0.33 per diluted share).
Financial Estimates for the Fourth Quarter of 2012
Based on revenues for the first three weeks of the fourth quarter, On Assignment is providing financial estimates for the quarter ending December 31, 2012, which do not include any acquisition-related or offering costs. Those estimates follow:
The estimates assume approximately one less billable day in the fourth quarter than the third quarter and year-over-year revenue growth rate in the high 20’s for Oxford, a slight contraction for Life Sciences, mid-to-high teens for Healthcare (which includes estimated revenues from supporting a customer that is anticipating a likely labor disruption), and high single digits for Physician Staffing and approximately 10 percent for Apex. The estimates above assume no deterioration in the staffing markets On Assignment serves.
On Assignment will hold a conference call today at 1:30 p.m. PDT (4:30 EDT) to review its third quarter financial results. The dial-in number is 877-837-4158 (+1-281-913-8521 for callers outside the United States) and the conference ID number is 37436132. Participants should dial in ten minutes before the call. A replay of the conference call will be available beginning today at 4:30 p.m. PDT and ending on November 8, 2012. The access number for the replay is 855-859-2056 (1+404-537-3406 for callers outside the United States) and the conference ID number 37436132.
This call is being webcast by Thomson/CCBN and can be accessed via On Assignment’s web site at www.onassignment.com. Individual investors can also listen at Thomson/CCBN's site at www.fulldisclosure.com or by visiting any of the investor sites in Thomson/CCBN's Individual Investor Network.
About On Assignment
On Assignment, Inc. (NYSE: ASGN), is a leading global provider of highly skilled, hard-to-find professionals in the growing technology, healthcare and life sciences sectors, where quality people are the key to success. The Company goes beyond matching résumés with job descriptions to match people they know into positions they understand for temporary, contract-to-hire, and direct hire assignments. Clients recognize On Assignment for their quality candidates, quick response, and successful assignments. Professionals think of On Assignment as career-building partners with the depth and breadth of experience to help them reach their goals.
On Assignment was founded in 1985 and went public in 1992. The corporate headquarters are located in Calabasas, California, with a network of approximately 130 branch offices throughout the United States, Canada, United Kingdom, Netherlands, Ireland and Belgium. Additionally, physician placements are made in Australia and New Zealand. To learn more, visit http://www.onassignment.com.
Reasons for Presentation of Non-GAAP Financial Measures
Statements made in this release and the Supplemental Financial Information accompanying this release include non-GAAP financial measures. Such information is provided as additional information, not as an alternative to our consolidated financial statements presented in accordance with GAAP, and is intended to enhance an overall understanding of our current financial performance. The Supplemental Financial Information sets forth financial measures reviewed by our management to evaluate our operating performance. Such measures also are used to determine a portion of the compensation for some of our executives and employees. We believe the non-GAAP financial measures provide useful information to management, investors and prospective investors by excluding certain charges and other amounts that we believe are not indicative of our core operating results. These non-GAAP measures are included to provide management, our investors and prospective investors with an alternative method for assessing our operating results in a manner that is focused on the performance of our ongoing operations and to provide a more consistent basis for comparison between quarters. One of the non-GAAP financial measures presented is EBITDA (earnings before interest, taxes, depreciation, and amortization of identifiable intangible assets), other terms include Adjusted EBITDA (EBITDA plus equity-based compensation expense, impairment charges and acquisition related costs) and Net Income Before Acquisition Related Costs (Net Income plus acquisition related expenses, deferred financing fees written –off and non-recurring financing fees, net of tax). These terms might not be calculated in the same manner as, and thus might not be comparable to, similarly titled measures reported by other companies. The financial statement tables that accompany this press release include reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure.
Safe Harbor
Certain statements made in this news release are “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and involve a high degree of risk and uncertainty. Forward-looking statements include statements regarding the Company’s anticipated financial and operating performance in 2012. All statements in this release, other than those setting forth strictly historical information, are forward-looking statements. Forward-looking statements are not guarantees of future performance, and actual results might differ materially. In particular, the Company makes no assurances that the estimates of revenues, gross margin, SG&A, Adjusted EBITDA, net income, earnings per share or earnings per diluted share set forth above will be achieved. Factors that could cause or contribute to such differences include actual demand for our services, our ability to attract, train and retain qualified staffing consultants, our ability to remain competitive in obtaining and retaining temporary staffing clients, the availability of qualified temporary nurses and other qualified temporary professionals, management of our growth, continued performance of our enterprise-wide information systems, and other risks detailed from time to time in our reports filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2011, as filed with the SEC on March 14, 2012 and our Forms 10-Q for the quarterly periods ended March 31, 2012 and June 30, 2012, as filed with the SEC on May 9, 2012 and July 30, 2012, respectively. We specifically disclaim any intention or duty to update any forward-looking statements contained in this news release.
SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended September 30, June 30, September 30, 2012 2011 2012 2012 2011 Revenues $ 388,283 $ 162,370 $ 282,685 $ 838,046 $ 435,491 Cost of services 269,244 107,842 193,731 575,005 289,015 Gross profit 119,039 54,528 88,954 263,041 146,476 Selling, general andadministrative expenses
82,543 40,792 69,300 196,944 115,546 Operating income 36,496 13,736 19,654 66,097 30,930 Interest expense (6,317 ) (750 ) (4,906 ) (11,925 ) (2,264 ) Interest income 33 18 5 39 39 Income before incometaxes
30,212 13,004 14,753 54,211 28,705 Provision for income taxes 12,779 5,237 6,238 22,880 11,909 Net income $ 17,433 $ 7,767 $ 8,515 $ 31,331 $ 16,796 Earnings per share: Basic $ 0.33 $ 0.21 $ 0.19 $ 0.70 $ 0.46 Diluted $ 0.33 $ 0.21 $ 0.19 $ 0.68 $ 0.44 Number of shares andshare equivalents used to
calculate earnings per
share:
Basic 52,131 37,001 44,852 44,777 36,866 Diluted 53,162 37,769 45,879 45,807 37,756
SUPPLEMENTAL SEGMENT FINANCIAL INFORMATION (Unaudited)
(In thousands)
Three Months Ended Nine Months Ended September 30, June 30, September 30, 2012 2011 2012 2012 2011 Revenues: Technology – Apex $ 202,664$
―
$ 98,503 $ 301,167$
―
Oxford 88,104 70,074 88,107 254,970 195,512 290,768 70,074 186,610 556,137 195,512 Life Sciences 40,646 41,820 40,509 122,506 114,403 Healthcare 29,390 27,091 30,527 82,796 68,671 Physician 27,479 23,385 25,039 76,607 56,905 $ 388,283 $ 162,370 $ 282,685 $ 838,046 $ 435,491 Gross profit: Technology – Apex $ 56,934$
―
$ 26,983 $ 83,917$
―
Oxford 31,250 25,113 31,646 90,266 69,483 88,184 25,113 58,629 174,183 69,483 Life Sciences 14,002 14,163 13,808 41,649 39,025 Healthcare 8,483 7,458 8,799 23,622 19,242 Physician 8,370 7,794 7,718 23,587 18,726 $ 119,039 $ 54,528 $ 88,954 $ 263,041 $ 146,476
SELECTED CASH FLOW INFORMATION (Unaudited)
(In thousands)
Three Months Ended Nine Months Ended September 30, June 30, September 30, 2012 2011 2012 2012 2011 Cash (used in) providedby operations
$ 23,531 $ 2,109 $ (15,865 ) $ 14,639 $ 15,054 Capital expenditures 3,712 1,374 5,052 10,883 6,046
SELECTED CONSOLIDATED BALANCE SHEET DATA (Unaudited)
(In thousands)
September 30, June 30, 2012 2011 2012 Cash and cash equivalents $ 13,873 $ 13,245 $ 18,423 Accounts receivable, net 247,731 96,485 238,535 Goodwill and intangible assets, net 772,598 261,053 775,795 Total assets 1,098,935 406,729 1,094,748 Current portion of long-term debt 10,000 5,000 13,650 Total current liabilities 129,480 64,985 125,823 Working capital 155,414 58,999 153,319 Long-term debt 429,088 83,000 452,938 Other long-term liabilities 23,912 20,076 25,401 Stockholders’ equity 516,455 238,668 490,586
RECONCILIATION OF GAAP NET INCOME AND EARNINGS PER SHARE TO NON-GAAP ADJUSTED EBITDA AND ADJUSTED EBITDA PER DILUTED SHARE (Unaudited)
(In thousands, except per share amounts)
Three Months Ended September 30, June 30, 2012 2011 2012 Net income $ 17,433 $ 0.33 $ 7,767 $ 0.21 $ 8,515 $ 0.19 Interest expense, net 6,284 0.12 732 0.02 4,901 0.11 Provision for income taxes 12,779 0.24 5,237 0.14 6,238 0.14 Depreciation 1,817 0.03 1,677 0.04 1,580 0.03 Amortization of intangibles 3,320 0.06 663 0.02 2,205 0.05 EBITDA 41,633 0.78 16,076 0.43 23,439 0.51 Equity-based compensation 3,075 0.06 1,838 0.05 2,308 0.05 Acquisition-related costs 784 0.01 265 0.01 6,562 0.14 Adjusted EBITDA $ 45,492 $ 0.86 (1 ) $ 18,179 $ 0.48 (1 ) $ 32,309 $ 0.70 (1 ) Weighted average common and common equivalent shares outstanding (diluted) 53,162 37,769 45,879Nine Months Ended September 30, 2012 2011 Net income $ 31,331 $ 0.68 $ 16,796 $ 0.44 Interest expense, net 11,886 0.26 2,225 0.06 Provision for income taxes 22,880 0.50 11,909 0.32 Depreciation 4,826 0.11 4,911 0.13 Amortization of intangibles 6,159 0.13 1,633 0.04 EBITDA 77,082 1.68 37,474 0.99 Equity-based compensation 6,574 0.14 5,084 0.13 Acquisition-related costs 9,838 0.21 992 0.03 Adjusted EBITDA $ 93,494 $ 2.04 (1) $ 43,550 $ 1.15 Weighted average common
and common equivalent
shares outstanding (diluted)
45,807 37,756 _______(1) Does not foot due to rounding
RECONCILIATION OF GAAP NET INCOME AND EARNINGS PER SHARE TO NET INCOME BEFORE ACQUISITION-RELATED COSTS AND EARNINGS PER SHARE BEFORE ACQUISITION-RELATED COSTS (Unaudited)
(In thousands, except per share amounts)
Three Months Ended September 30, June 30, 2012 2011 2012 Net income $ 17,433 $ 0.33 $ 7,767 $ 0.21 $ 8,515 $ 0.19 Non-recurring charges related to refinancing, net of income taxes ― ― ― ― 701 0.02 Acquisition-related costs, net of income taxes 649 0.01 158 ― 3,788 0.08 Net income beforeacquisition-related costs
$ 18,082 $ 0.34 $ 7,925 $ 0.21 $ 13,004 $ 0.28(1)
Weighted average common
and common equivalent
shares outstanding (diluted)
53,16237,769 45,879
Nine Months Ended September 30, 2012 2011 Net income $ 31,331 $ 0.68 $ 16,796 $ 0.44 Non-recurring charges related to refinancing, net of income taxes 701 0.02 ― ― Acquisition-related costs, net of income taxes 5,888 0.13 576 0.02 Net income before acquisition-related costs $ 37,920 $ 0.83 $ 17,372 $ 0.46 Weighted average common
and common equivalent
shares outstanding (diluted)
45,80737,756 _______
(1) Does not foot due to rounding
RECONCILIATION OF ESTIMATED GAAP NET INCOME TO ESTIMATED NON-GAAP EBITDA AND ADJUSTED EBITDA (Unaudited)
(In thousands)
Estimated Range of Results Quarter Ending December 31, 2012 Net income $ 13,300 $ 15,400 Interest expense, net 6,000 6,000 Provision for income taxes 9,600 11,200 Depreciation and amortization 5,300 5,300 EBITDA 34,200 37,900 Equity-based compensation 2,900 2,900 Adjusted EBITDA $ 37,100 $ 40,800
SUPPLEMENTAL FINANCIAL INFORMATION – REVENUES AND GROSS MARGINS (Unaudited)
(Dollars in thousands)
Technology Healthcare Apex Oxford Total Life Sciences Allied Healthcare Nurse Travel Total Physician Consolidated Revenues: Q3 2012 $ 202,664 $ 88,104 $ 290,768 $ 40,646 $ 15,594 $ 13,796 $ 29,390 $ 27,479 $ 388,283 Q2 2012 $ 98,503 $ 88,107 $ 186,610 $ 40,509 $ 13,704 $ 16,823 $ 30,527 $ 25,039 $ 282,685 % Sequential change 105.7 % 0.0 % 55.8 % 0.3 % 13.8 % (18.0 %) (3.7 %) 9.7 % 37.4 % Q3 2011 ―$ 70,074 $ 70,074 $ 41,820 $ 11,735 $ 15,356 $ 27,091 $ 23,385 $ 162,370 % Year-over-year change ― 25.7 % N/M (2.8 %) 32.9 % (10.2 %) 8.5 % 17.5 % 139.1 % Gross margins: Q3 2012 28.1 % 35.5 % 30.3 % 34.4 % 32.5 % 24.8 % 28.9 % 30.5 % 30.7 % Q2 2012 27.4 % 35.9 % 31.4 % 34.1 % 32.0 % 26.3 % 28.8 % 30.8 % 31.5 % Q3 2011 ― 35.8 % 35.8 % 33.9 % 31.7 % 24.3 % 27.5 % 33.3 % 33.6 % Average number of staffing consultants: Q3 2012 650 512 1,162 166 83 42 125 103 1,556 Q2 2012 633 501 1,134 160 81 42 123 98 1,515 Q3 2011 ― 446 446 164 79 39 118 88 816 _______ N/M – not meaningful
SUPPLEMENTAL FINANCIAL INFORMATION – KEY METRICS (Unaudited)
Technology Healthcare Apex Oxford Total Life Sciences Allied Healthcare Nurse Travel Total Physician Consolidated Average number of customers: Q3 2012 607 650 1,257 928 529 142 671 194 3,050 Q2 2012 585 648 1,233 914 508 139 647 186 2,980 Q3 2011 ― 596 596 915 489 127 616 161 2,288 Top 10 customers as a percentage of revenue: Q3 2012 33.2 % 15.5 % 23.5 % 22.6 % 29.4 % 34.7 % 23.4 % 19.2 % 17.6 % Q2 2012 33.3 % (1 ) 16.4 % 23.5 % 23.3 % 24.6 % 23.3 % 17.3 % 19.8 % 17.5 % (1 ) Q3 2011 ― 13.0 % 13.0 % 21.0 % 22.4 % 26.6 % 17.9 % 20.3 % 7.5 % Average bill rate: Q3 2012 $ 59.1 $ 120.2 $ 69.4 $ 35.2 $ 37.2 $ 68.3 $ 46.7 $ 181.6 $ 63.5 Q2 2012 $ 59.1 $ 119.5 $ 74.6 $ 35.2 $ 37.4 $ 68.5 $ 47.7 $ 175.1 $ 65.0 Q3 2011 ― $ 114.9 $ 114.9 $ 35.0 $ 36.8 $ 70.6 $ 48.9 $ 178.7 $ 65.6 Gross profit per staffing consultants: Q3 2012 $ 88,000 $ 61,000 $ 76,000 $ 84,000 $ 61,000 $ 81,000 $ 68,000 $ 82,000 $ 76,000 Q2 2012 $ 43,000 (2 ) $ 63,000 $ 58,000 $ 86,000 $ 54,000 $ 105,000 $ 72,000 $ 79,000 $ 59,000 (2 ) Q3 2011 ― $ 56,000 $ 56,000 $ 86,000 $ 47,000 $ 97,000 $ 63,000 $ 89,000 $ 67,000 _______ (1) Top 10 customers as a percentage of revenue for Apex and Consolidated includes pro forma Apex Systems data for the quarter ended June 30, 2012. (2) Actual, reported Apex and Consolidated metrics reflect six weeks of Apex data. A full quarter would have been $85,000 for Apex and $77,000 for Consolidated.
SUPPLEMENTAL FINANCIAL INFORMATION – KEY METRICS (Unaudited)
Three Months Ended (3) September 30,2012
June 30,2012
Percentage of revenues: Top ten clients 17.6 % 17.5 % Direct hire/conversion 1.9 % 2.1 % Bill rate: (4) % Sequential change (2.2 %) (4.3 %) % Year-over-year change (3.2 %) 0.7 % Bill/Pay spread: % Sequential change (4.7 %) (10.5 %) % Year-over-year change (12.0 %) (6.9 %) Average headcount: Contract professionals (CP) 11,871 11,462 Staffing consultants (SC) 1,556 1,515 Productivity: Gross profit per SC $ 76,000 $ 59,000
(5)
_______ (3) Information for the three months ended June 30, 2012 includes six weeks of Apex activity, whereas information for the three months ended September 30, 2012 includes Apex activity for the full quarter. (4) Change principally due to the inclusion of Apex for a full quarter for the three months ended September 30, 2012. (5) A full quarter of contribution from Apex would have resulted in $77,000 of gross profit per SC.
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