UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
February 25, 2020
Date of Report (Date of earliest event reported)
PRGX Global, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Georgia
(State or Other Jurisdiction of Incorporation)
0-28000 | 58-2213805 | |
(Commission File Number) | (IRS Employer Identification No.) | |
600 Galleria Parkway, Suite 100, Atlanta, Georgia |
30339-5949 | |
(Address of Principal Executive Offices) | (Zip Code) |
770-779-3900
(Registrants Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading |
Name of each exchange | ||
Common Stock, no par value | PRGX | The Nasdaq Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
The following information is being furnished pursuant to Item 2.02 of Form 8-K. This information shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
On February 25, 2020, PRGX Global, Inc. issued a press release announcing its unaudited results for the fourth quarter and fiscal year ended December 31, 2019, a copy of which is furnished herewith as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
The following exhibit is furnished herewith:
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
PRGX Global, Inc. | ||
By: | /s/ Victor A. Allums | |
Victor A. Allums | ||
Senior Vice President, General Counsel and Secretary |
Dated: February 25, 2020
Exhibit 99.1
Press Release
PRGX Global, Inc. Announces Fourth Quarter and Full Year 2019 Financial Results
ATLANTA, February 25, 2020 PRGX Global, Inc. (Nasdaq: PRGX), a global leader in Recovery Audit and Spend Analytics services, today announced its unaudited financial results for the fourth quarter and year ended December 31, 2019.
Quarterly Highlights
| Adjusted EBITDA from continuing operations of $11.9 million, net loss from continuing operations of $4.4 million |
| Adjusted EBITDA is the highest in over a decade |
| Delivered on commitment to reach Adjacent Services profitability by the end of 2019 |
| Reiterating 2020 annual guidance for Adjusted EBITDA of between $28 million to $30 million |
For the Three Months Ended December 31, |
For the Twelve Months Ended December 31, |
|||||||||||||||||||||||
Selected Financial Data (dollars in thousands) | 2019 | 2018 | % Change | 2019 | 2018 | % Change | ||||||||||||||||||
Revenue |
||||||||||||||||||||||||
Recovery Audit Services - Americas |
$ | 30,413 | $ | 32,244 | -5.7 | % | $ | 116,708 | $ | 115,920 | 0.7 | % | ||||||||||||
Recovery Audit Services - Europe/Asia-Pacific |
14,885 | 15,863 | -6.2 | % | 47,283 | 49,526 | -4.5 | % | ||||||||||||||||
Adjacent Services |
1,392 | 1,526 | -8.8 | % | 5,767 | 6,330 | -8.9 | % | ||||||||||||||||
Total |
$ | 46,690 | $ | 49,633 | -5.9 | % | $ | 169,758 | $ | 171,776 | -1.2 | % | ||||||||||||
Net (loss) income from continuing operations |
(4,369 | ) | 5,933 | -173.6 | % | (14,328 | ) | 3,351 | -527.6 | % | ||||||||||||||
Non-GAAP Financial Measures |
||||||||||||||||||||||||
Adjusted EBITDA from continuing operations |
$ | 11,889 | $ | 10,869 | 9.4 | % | $ | 22,070 | $ | 24,673 | -10.5 | % |
Consistent with the guidance provided last quarter, we delivered significantly improved Adjusted EBITDA performance as we rationalized costs in our business and brought Adjacent Services to profitability. This quarter marks the highest quarterly Adjusted EBITDA the company has delivered in more than 10 years. While our streamlined cost structure is the nearest term evidence of PRGXs transformation, we remain on track to begin rolling out our next generation technology platform and audit tools in the second quarter that we expect will drive future revenue growth and improved profitability, said Ron Stewart, President and Chief Executive Officer.
In 2020, we continue to expect Adjusted EBITDA to grow as we fully realize the benefit of the cost takeout initiatives in 2019 and continue to improve client profitability. We reiterate our expectation of delivering 2020 Adjusted EBITDA within a range of $28 to $30 million, reflecting 25-to-30 percent growth on an assumed flat revenue base, and significant improvement in free cash flow. Looking ahead to 2021 and beyond, we expect to deliver meaningful top-line growth, as the market for Source-to-Pay solutions continues to grow and PRGX further enhances its position in that market, concluded Stewart.
Unaudited Consolidated Results from Continuing Operations for the Three Months Ended December 31, 2019
Consolidated revenue from continuing operations for the fourth quarter of 2019 was $46.7 million, compared to $49.6 million for the same period in 2018, a decrease of 5.9%. Fourth quarter 2019 revenue from the Recovery Audit Services segments was $45.3 million compared to $48.1 million in the prior year, and from the Adjacent Services segment was $1.4 million compared to $1.5 million in 2018. On a constant dollar basis adjusted for changes in foreign exchange rates, revenue decreased by 6.3% in the fourth quarter of 2019 compared to the same period in the prior year.
Total cost of revenue from continuing operations for the fourth quarter of 2019 was $23.1 million, or 49.5% of revenue, compared to $26.5 million, or 53.4% of revenue, for the same period in the prior year.
Selling, general and administrative expenses from continuing operations for the fourth quarter of 2019 were $14.4 million compared to $13.9 million in the prior year period.
Consolidated net loss from continuing operations for the fourth quarter of 2019 was $4.4 million, or $(0.19) per basic and diluted share, compared to net income of $5.9 million, or $0.26 per basic and diluted share, for the same period in 2018.
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA) from continuing operations for the fourth quarter of 2019 was $11.9 million, or 25.5% of revenue, compared to Adjusted EBITDA of $10.9 million, or 21.9% of revenue, for the fourth quarter of 2018, an increase of $1.0 million or 9.4%.
Schedule 3 attached to this press release provides a reconciliation of net loss to each of Earnings Before Interest and Taxes (EBIT), Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA.
Unaudited Consolidated Results from Continuing Operations for the Year Ended December 31, 2019
Consolidated revenue from continuing operations for the year ended December 31, 2019 was $169.8 million, compared to $171.8 million for the same period in 2018, a decrease of 1.2%. For the year ended December 31, 2019, revenue from the Recovery Audit Services segments was $164.0 million compared to $165.4 million in the prior year, and from the Adjacent Services segment was $5.8 million compared to $6.3 million in 2018. On a constant dollar basis adjusted for changes in foreign exchange rates, revenue increased by 0.1% for the year ended December 31, 2019 compared to the prior year.
Total cost of revenue from continuing operations for the year ended December 31, 2019 was $100.2 million, or 59.0% of revenue, compared to $104.8 million, or 61.0% of revenue, for the prior year, representing a 2.0% improvement as a percentage of revenue.
Selling, general and administrative expenses from continuing operations for the year ended December 31, 2019 were $57.6 million compared to $50.5 million in the prior year.
Consolidated net loss from continuing operations for the year ended December 31, 2019 was $14.3 million, or $(0.63) per basic and diluted share, compared to net income of $3.4 million, or $0.14 per basic and diluted share, for 2018.
Adjusted EBITDA from continuing operations for the year ended December 31, 2019 was $22.1 million, or 13.0% of revenue, compared to Adjusted EBITDA of $24.7 million, or 14.4% of revenue, for 2018, a decrease of $2.6 million or 10.5%.
Schedule 3 attached to this press release provides a reconciliation of net loss to each of EBIT, EBITDA and Adjusted EBITDA.
Cash Flow and Liquidity
Net cash provided by operating activities for the fourth quarter of 2019 was $7.3 million, compared to $5.9 million in the fourth quarter of the prior year, and net cash provided by operating activities was $10.5 million for the year ended December 31, 2019, compared to $2.4 million in the prior year.
At December 31, 2019, the Company had unrestricted cash and cash equivalents of $15.0 million, and borrowings of $37.0 million against its $60.0 million revolving credit facility.
Impairment Charges
Under generally accepted accounting principles, the company is required to perform a periodic impairment test of its goodwill. This analysis is performed in the fourth quarter each year. Additionally, we evaluate goodwill, property, equipment and software, and intangible assets when there is an indicator of impairment. As a result of these analyses, in the fourth quarter the Company recorded a non-cash impairment charge of $10.1 million, with $7.5 million relating to internally developed software that is no longer in use, and $2.6 million relating to the impairment of goodwill associated with our Adjacent Services segment.
Guidance
For 2020, Adjusted EBITDA is expected to be in the range of $28 million to $30 million.
Stock Repurchase Program
Since the February 2014 announcement of the Companys stock repurchase program, as of December 31, 2019, the Company has repurchased 9.8 million shares. The Company repurchased approximately 0.7 million shares of its outstanding common stock for an aggregate price of $4.7 million in the year ended December 31, 2019.
Fourth Quarter Earnings Call
As previously announced, management will hold a conference call later today at 5:00 PM (Eastern time) to discuss the Companys fourth quarter and full year 2019 financial results. To access the conference call, listeners in the U.S. and Canada should dial (877) 755-7423 at least 5 minutes prior to the start of the conference. Listeners outside the U.S. and Canada should dial (678) 894-3069. To be admitted to the call, listeners should use passcode 2181927.
This teleconference will also be audiocast on the Internet at www.prgx.com (click on Events & Presentations under Investors). A replay of the audiocast will be available at the same location on www.prgx.com beginning approximately two hours after the conclusion of the live audiocast, extending through June 30, 2020. Please note that the Internet audiocast is listen-only. Microsoft Windows Media Player is required to access the live audiocast and the replay and can be downloaded from www.microsoft.com/en-us/downloads.
About PRGX
PRGX helps companies spot value in their source-to-pay processes that other sophisticated solutions didnt get to before. Having identified more than 300 common points of leakage, we help companies reach wider, dig deeper, and act faster to get more value out of their source-to-pay data. We pioneered this industry nearly 50 years ago, and today we help clients in more than 30 countries take back $1.2 billion in annual cash flow. Its why 75% of top global retailers and a third of the largest companies in the Fortune 500 rely on us. For additional information on PRGX, please visit www.prgx.com.
Forward-Looking Statements
In addition to historical information, this press release includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include both implied and express statements regarding the Companys overall condition and growth prospects, and the Companys expectations regarding its 2020 financial performance. Such forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to differ materially from the historical results or from any results expressed or implied by such forward-looking statements. Risks that could affect the Companys future performance include revenue that does not meet expectations or justify costs incurred, the Companys ability to develop material sources of new revenue in addition to revenue from its core recovery audit services, changes in the market for the Companys services, the Companys ability to retain and attract qualified personnel, the Companys ability to execute on its profitability improvement efforts, the Companys ability to integrate recent and future acquisitions, uncertainty in the credit markets, the Companys ability to maintain compliance with its financial covenants, client bankruptcies, loss of major clients, and other risks generally applicable to the Companys business. For a discussion of other risk factors that may impact the Companys business, please see the Companys filings with the Securities and Exchange Commission. The Company disclaims any obligation or duty to update or modify these forward-looking statements.
Non-GAAP Financial Measures
EBIT, EBITDA and Adjusted EBITDA are all non-GAAP financial measures presented as supplemental measures of the Companys performance. They are not presented in accordance with accounting principles generally accepted in the United States, or GAAP. The Company believes these measures provide additional meaningful information in evaluating its performance over time, and that the rating agencies and a number of lenders use EBITDA and similar measures for similar purposes. In addition, a measure similar to Adjusted EBITDA is used in the restrictive covenants contained in the Companys secured credit facility. However, EBIT, EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation, or as substitutes for analysis of the Companys results as reported under GAAP. In addition, in evaluating EBIT, EBITDA and Adjusted EBITDA, you should be aware that, as described above, the adjustments may vary from period to period and in the future the Company will incur expenses such as those used in calculating these measures. The Companys presentation of these measures should not be construed as an inference that future results will be unaffected by unusual or nonrecurring items. Schedule 3 to this press release provides a reconciliation of net income (loss) to each of EBIT, EBITDA and Adjusted EBITDA.
CONTACT: PRGX Global, Inc.
investor-relations@prgx.com
Phone: 770-779-3011
SCHEDULE 1
PRGX Global, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Amounts in thousands, except per share data)
(Unaudited)
Three Months Ended December 31, |
Twelve Months Ended December 31, |
|||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Revenue, net |
$ | 46,690 | $ | 49,633 | $ | 169,758 | $ | 171,776 | ||||||||
Operating expenses: |
||||||||||||||||
Cost of revenue |
23,090 | 26,493 | 100,176 | 104,825 | ||||||||||||
Selling, general and administrative expenses |
14,390 | 13,862 | 57,599 | 50,456 | ||||||||||||
Depreciation of property, equipment and software assets |
2,749 | 2,074 | 9,981 | 7,370 | ||||||||||||
Amortization of intangible assets |
867 | 871 | 3,465 | 3,395 | ||||||||||||
Acquisition-related adjustment loss (income) |
| 12 | (250 | ) | (1,628 | ) | ||||||||||
Impairment charges |
10,073 | | 10,073 | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses |
51,169 | 43,312 | 181,044 | 164,418 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating (loss) income from continuing operations |
(4,479 | ) | 6,321 | (11,286 | ) | 7,358 | ||||||||||
Foreign currency transaction (gains) losses on short-term intercompany balances |
(736 | ) | 272 | 298 | 1,002 | |||||||||||
Interest expense, net |
376 | 363 | 1,817 | 1,663 | ||||||||||||
Other loss (income) |
1 | 5 | (3 | ) | 21 | |||||||||||
|
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|
|
|
|
|
|
|||||||||
(Loss) income from continuing operations before income tax |
(4,120 | ) | 5,681 | (13,398 | ) | 4,672 | ||||||||||
Income tax expense (benefit) |
249 | (252 | ) | 930 | 1,321 | |||||||||||
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|
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|
|
|||||||||
Net (loss) income from continuing operations |
$ | (4,369 | ) | $ | 5,933 | $ | (14,328 | ) | $ | 3,351 | ||||||
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|
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|
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Discontinued operations: |
||||||||||||||||
(Loss) income from discontinued operations |
(34 | ) | 1,926 | 608 | 1,242 | |||||||||||
Income tax expense |
| | | | ||||||||||||
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|
|
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|
|||||||||
Net (loss) income from discontinued operations |
(34 | ) | 1,926 | 608 | 1,242 | |||||||||||
Net (loss) income |
$ | (4,403 | ) | $ | 7,859 | $ | (13,720 | ) | $ | 4,593 | ||||||
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Basic (loss) income per common share: |
||||||||||||||||
Basic (loss) income from continuing operations |
$ | (0.19 | ) | $ | 0.26 | $ | (0.63 | ) | $ | 0.14 | ||||||
Basic income from discontinued operations |
| 0.08 | 0.03 | 0.06 | ||||||||||||
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|||||||||
Total basic (loss) income per common share |
$ | (0.19 | ) | $ | 0.34 | $ | (0.60 | ) | $ | 0.20 | ||||||
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Diluted (loss) income per common share: |
||||||||||||||||
Diluted (loss) income from continuing operations |
$ | (0.19 | ) | $ | 0.26 | $ | (0.63 | ) | $ | 0.14 | ||||||
Diluted income from discontinued operations |
| 0.08 | 0.03 | 0.06 | ||||||||||||
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Total diluted (loss) income per common share |
$ | (0.19 | ) | $ | 0.34 | $ | (0.60 | ) | $ | 0.20 | ||||||
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Weighted average common shares outstanding: |
||||||||||||||||
Basic |
22,463 | 23,036 | 22,651 | 22,811 | ||||||||||||
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Diluted |
22,463 | 23,619 | 22,651 | 23,434 | ||||||||||||
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SCHEDULE 2
PRGX Global, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Amounts in thousands)
(Unaudited)
December 31, 2019 |
December 31, 2018 |
|||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 14,982 | $ | 13,973 | ||||
Restricted cash |
46 | 46 | ||||||
Receivables: |
||||||||
Contract receivables, net |
43,112 | 46,865 | ||||||
Employee advances and miscellaneous receivables, net |
704 | 567 | ||||||
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Total receivables |
43,816 | 47,432 | ||||||
Prepaid expenses and other current assets |
5,582 | 3,144 | ||||||
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Total current assets |
64,426 | 64,595 | ||||||
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Property, equipment and software, net |
17,746 | $ | 22,028 | |||||
Operating lease right-of-use assets |
10,969 | | ||||||
Goodwill |
15,070 | 17,531 | ||||||
Intangible assets, net |
11,506 | 14,945 | ||||||
Deferred income taxes |
3,921 | 3,561 | ||||||
Other assets |
1,828 | 2,169 | ||||||
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Total assets |
$ | 125,466 | $ | 124,829 | ||||
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LIABILITIES AND SHAREHOLDERS EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable and accrued expenses |
$ | 4,326 | $ | 7,515 | ||||
Accrued payroll and related expenses |
12,951 | 15,073 | ||||||
Current portion of operating lease liabilities |
3,717 | | ||||||
Refund liabilities |
4,513 | 6,497 | ||||||
Deferred revenue |
2,217 | 2,428 | ||||||
Current portion of long-term debt |
17 | 48 | ||||||
Current portion of business acquisition obligations |
| 4,162 | ||||||
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|||||
Total current liabilities |
27,741 | 35,723 | ||||||
Long-term debt |
36,603 | 21,553 | ||||||
Long-term operating lease liabilities |
7,435 | | ||||||
Refund liabilities |
9 | 100 | ||||||
Deferred income taxes |
628 | 666 | ||||||
Other long-term liabilities |
| 458 | ||||||
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Total liabilities |
72,416 | 58,500 | ||||||
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|||||
Shareholders equity: |
||||||||
Common stock |
234 | 232 | ||||||
Additional paid-in capital |
582,404 | 582,574 | ||||||
Accumulated deficit |
(529,176 | ) | (515,456 | ) | ||||
Accumulated other comprehensive income |
(412 | ) | (1,021 | ) | ||||
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Total shareholders equity |
53,050 | 66,329 | ||||||
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Total liabilities and shareholders equity |
$ | 125,466 | $ | 124,829 | ||||
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SCHEDULE 3
PRGX Global, Inc. and Subsidiaries
Reconciliation of Net (Loss) Income to EBIT, EBITDA and Adjusted EBITDA
(Amounts in thousands)
(Unaudited)
Three Months Ended December 31, |
Twelve Months Ended December 31, |
|||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Reconciliation of net (loss) income to EBIT, EBITDA and Adjusted EBITDA: |
||||||||||||||||
Net (loss) income |
$ | (4,403 | ) | $ | 7,859 | $ | (13,720 | ) | $ | 4,593 | ||||||
Income tax expense (benefit) |
249 | (252 | ) | 930 | 1,321 | |||||||||||
Interest expense, net |
376 | 363 | 1,817 | 1,663 | ||||||||||||
|
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|
|||||||||
EBIT |
(3,778 | ) | 7,970 | (10,973 | ) | 7,577 | ||||||||||
Depreciation of property, equipment and software assets |
2,749 | 2,074 | 9,981 | 7,371 | ||||||||||||
Amortization of intangible assets |
867 | 871 | 3,465 | 3,395 | ||||||||||||
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|||||||||
EBITDA |
(162 | ) | 10,915 | 2,473 | 18,343 | |||||||||||
Impairment charges |
10,058 | | 10,058 | | ||||||||||||
Foreign currency transaction (gains) losses on short-term intercompany balances |
(736 | ) | 272 | 298 | 1,002 | |||||||||||
Acquisition-related adjustment loss (income) |
| 12 | (250 | ) | (1,628 | ) | ||||||||||
Transformation, severance, and other expenses |
1,322 | 694 | 5,157 | 3,122 | ||||||||||||
Other loss (income) |
1 | 5 | (3 | ) | 21 | |||||||||||
Stock-based compensation |
1,357 | 897 | 4,930 | 5,056 | ||||||||||||
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|||||||||
Adjusted EBITDA |
$ | 11,840 | $ | 12,795 | $ | 22,663 | $ | 25,916 | ||||||||
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Adjusted EBITDA from continuing operations |
$ | 11,889 | $ | 10,869 | $ | 22,070 | $ | 24,673 | ||||||||
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Adjusted EBITDA from discontinued operations |
$ | (49 | ) | $ | 1,926 | $ | 593 | $ | 1,243 | |||||||
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EBIT, EBITDA and Adjusted EBITDA are all non-GAAP financial measures presented as supplemental measures of our performance. They are not presented in accordance with accounting principles generally accepted in the United States, or GAAP. The Company believes these measures provide additional meaningful information in evaluating the Companys performance over time, and that the rating agencies and a number of lenders use EBIT, EBITDA and similar measures for similar purposes. In addition, a measure similar to Adjusted EBITDA is used in the restrictive covenants contained in the Companys secured credit facility. However, EBIT, EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation, or as substitutes for analysis of our results as reported under GAAP. In addition, in evaluating EBIT, EBITDA and Adjusted EBITDA, you should be aware that in the future we will incur expenses such as those used in calculating these measures. Our presentation of these measures should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items.
SCHEDULE 4
PRGX Global, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Amounts in thousands)
(Unaudited)
Three Months Ended December 31, |
Twelve Months Ended December 31, |
|||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Cash flows from operating activities: |
||||||||||||||||
Net (loss) income |
$ | (4,403 | ) | $ | 7,859 | $ | (13,720 | ) | $ | 4,593 | ||||||
Adjustments to reconcile net (loss) income to net cash from operating activities: |
||||||||||||||||
Impairment charges |
10,058 | | 10,058 | | ||||||||||||
Depreciation and amortization |
3,616 | 2,946 | 13,446 | 10,766 | ||||||||||||
Amortization of deferred loan costs |
5 | | 126 | 53 | ||||||||||||
Deferred income taxes |
(429 | ) | (1,490 | ) | (425 | ) | (1,321 | ) | ||||||||
Stock-based compensation expense |
1,495 | 897 | 5,068 | 5,056 | ||||||||||||
Changes in fair value of contingent consideration |
| 12 | (250 | ) | (1,628 | ) | ||||||||||
Foreign currency transaction (gains) losses on short-term intercompany balances |
(736 | ) | 272 | 298 | 1,002 | |||||||||||
Long-term incentive compensation payout |
| | | (6,378 | ) | |||||||||||
(Increase) decrease in receivables |
(5,240 | ) | (10,181 | ) | 4,107 | (9,631 | ) | |||||||||
Increase (decrease) in accounts payable, accrued payroll and other accrued expenses |
4,245 | 5,367 | (3,386 | ) | (855 | ) | ||||||||||
Other, primarily changes in assets and liabilities |
(1,319 | ) | 173 | (4,822 | ) | 769 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net cash provided by operating activities |
7,292 | 5,855 | 10,500 | 2,426 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Cash flows from investing activities: |
||||||||||||||||
Purchases of property, equipment and software, net of disposals |
(3,348 | ) | (2,499 | ) | (15,027 | ) | (10,398 | ) | ||||||||
Business acquisition, net of cash acquired |
| | | 19 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net cash used in investing activities |
(3,348 | ) | (2,499 | ) | (15,027 | ) | (10,379 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Cash flows from financing activities: |
||||||||||||||||
Net borrowings under line of credit |
1,000 | 4,000 | 15,400 | 8,000 | ||||||||||||
Payment of earnout liability related to business acquisitions |
| | (4,229 | ) | (4,000 | ) | ||||||||||
Payment of deferred loan costs |
(78 | ) | | (472 | ) | (38 | ) | |||||||||
Repurchases of common stock |
(442 | ) | (4,069 | ) | (4,654 | ) | (4,069 | ) | ||||||||
Other, net |
(43 | ) | 262 | (582 | ) | 3,141 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net cash provided by financing activities |
437 | 193 | 5,463 | 3,034 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Effect of exchange rates on cash and cash equivalents |
(590 | ) | (123 | ) | 73 | 64 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net change in cash, cash equivalents and restricted cash |
3,791 | 3,426 | 1,009 | (4,855 | ) | |||||||||||
Cash, cash equivalents and restricted cash at beginning of period |
11,237 | 10,593 | 14,019 | 18,874 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Cash, cash equivalents and restricted cash at end of period |
$ | 15,028 | $ | 14,019 | $ | 15,028 | $ | 14,019 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Noncash investing activities: |
||||||||||||||||
Capital expenditures for property, equipment, and software not paid by period end |
$ | 17 | $ | 1,954 | $ | 17 | $ | 1,954 | ||||||||
|
|
|
|
|
|
|
|
SCHEDULE 5
PRGX Global, Inc. and Subsidiaries
Results by Operating Segment *
(Amounts in thousands)
(Unaudited)
Three Months Ended December 31, |
Twelve Months Ended December 31, |
|||||||||||||||||||||||
2019 | 2018 | Change | 2019 | 2018 | Change | |||||||||||||||||||
Revenue, net |
||||||||||||||||||||||||
Recovery Audit ServicesAmericas |
$ | 30,413 | $ | 32,244 | $ | (1,831 | ) | $ | 116,708 | $ | 115,920 | $ | 788 | |||||||||||
Recovery Audit ServicesEurope/Asia-Pacific |
14,885 | 15,863 | (978 | ) | 47,283 | 49,526 | (2,243 | ) | ||||||||||||||||
Adjacent Services |
1,392 | 1,526 | (134 | ) | 5,767 | 6,330 | (563 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total |
$ | 46,690 | $ | 49,633 | $ | (2,943 | ) | $ | 169,758 | $ | 171,776 | $ | (2,018 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Cost of revenue |
||||||||||||||||||||||||
Recovery Audit ServicesAmericas |
$ | 15,724 | $ | 17,031 | $ | (1,307 | ) | $ | 64,864 | $ | 69,897 | $ | (5,033 | ) | ||||||||||
Recovery Audit ServicesEurope/Asia-Pacific |
7,042 | 7,216 | (174 | ) | 27,618 | 27,767 | (149 | ) | ||||||||||||||||
Adjacent Services |
324 | 2,246 | (1,922 | ) | 7,694 | 7,161 | 533 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total |
$ | 23,090 | $ | 26,493 | $ | (3,403 | ) | $ | 100,176 | $ | 104,825 | $ | (4,649 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Selling, general and administrative expenses |
||||||||||||||||||||||||
Recovery Audit ServicesAmericas |
$ | 3,261 | $ | 3,103 | $ | 158 | $ | 13,751 | $ | 11,849 | $ | 1,902 | ||||||||||||
Recovery Audit ServicesEurope/Asia-Pacific |
1,047 | 1,796 | (749 | ) | 7,600 | 7,439 | 161 | |||||||||||||||||
Adjacent Services |
66 | 262 | (196 | ) | 1,147 | 1,685 | (538 | ) | ||||||||||||||||
Corporate |
10,016 | 8,701 | 1,315 | 35,101 | 29,483 | 5,618 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total |
$ | 14,390 | $ | 13,862 | $ | 528 | $ | 57,599 | $ | 50,456 | $ | 7,143 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Impairment charges and acquisition-related adjustments |
||||||||||||||||||||||||
Recovery Audit ServicesAmericas |
$ | 1,497 | $ | | $ | 1,497 | $ | 1,247 | $ | | $ | 1,247 | ||||||||||||
Recovery Audit ServicesEurope/Asia-Pacific |
24 | | 24 | 24 | | 24 | ||||||||||||||||||
Adjacent Services |
3,425 | | 3,425 | 3,425 | | 3,425 | ||||||||||||||||||
Corporate |
5,127 | 12 | 5,115 | 5,127 | (1,628 | ) | 6,755 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total |
$ | 10,073 | $ | 12 | $ | 10,061 | $ | 9,823 | $ | (1,628 | ) | $ | 11,451 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Depreciation of property, equipment and software assets |
||||||||||||||||||||||||
Recovery Audit ServicesAmericas |
$ | 2,312 | $ | 1,669 | $ | 643 | $ | 8,184 | $ | 5,545 | $ | 2,639 | ||||||||||||
Recovery Audit ServicesEurope/Asia-Pacific |
186 | 171 | 15 | 706 | 683 | 23 | ||||||||||||||||||
Adjacent Services |
251 | 234 | 17 | 1,091 | 1,142 | (51 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total |
$ | 2,749 | $ | 2,074 | $ | 675 | $ | 9,981 | $ | 7,370 | $ | 2,611 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Amortization of intangible assets |
||||||||||||||||||||||||
Recovery Audit ServicesAmericas |
$ | 437 | $ | 446 | $ | (9 | ) | $ | 1,750 | $ | 1,664 | $ | 86 | |||||||||||
Recovery Audit ServicesEurope/Asia-Pacific |
43 | 36 | 7 | 169 | 172 | (3 | ) | |||||||||||||||||
Adjacent Services |
387 | 389 | (2 | ) | 1,546 | 1,559 | (13 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total |
$ | 867 | $ | 871 | $ | (4 | ) | $ | 3,465 | $ | 3,395 | $ | 70 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Operating income (loss) |
||||||||||||||||||||||||
Recovery Audit ServicesAmericas |
$ | 7,182 | $ | 9,995 | $ | (2,813 | ) | $ | 26,912 | $ | 26,965 | $ | (53 | ) | ||||||||||
Recovery Audit ServicesEurope/Asia-Pacific |
6,543 | 6,644 | (101 | ) | 11,166 | 13,465 | (2,299 | ) | ||||||||||||||||
Adjacent Services |
(3,061 | ) | (1,605 | ) | (1,456 | ) | (9,136 | ) | (5,217 | ) | (3,919 | ) | ||||||||||||
Corporate |
(15,143 | ) | (8,713 | ) | (6,430 | ) | (40,228 | ) | (27,855 | ) | (12,373 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total |
$ | (4,479 | ) | $ | 6,321 | $ | (10,800 | ) | $ | (11,286 | ) | $ | 7,358 | $ | (18,644 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Adjusted EBITDA from continuing operations |
||||||||||||||||||||||||
Recovery Audit ServicesAmericas |
$ | 12,520 | $ | 12,326 | $ | 194 | $ | 40,217 | $ | 35,118 | $ | 5,099 | ||||||||||||
Recovery Audit ServicesEurope/Asia-Pacific |
7,078 | 7,046 | 32 | 12,732 | 15,514 | (2,782 | ) | |||||||||||||||||
Adjacent Services |
909 | (982 | ) | 1,891 | (2,213 | ) | (2,450 | ) | 237 | |||||||||||||||
Corporate |
(8,618 | ) | (7,521 | ) | (1,097 | ) | (28,666 | ) | (23,509 | ) | (5,157 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total |
$ | 11,889 | $ | 10,869 | $ | 1,020 | $ | 22,070 | $ | 24,673 | $ | (2,603 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
* | The Recovery Audit Services - Americas segment represents recovery audit services provided in the United States, Canada and Latin America. The Recovery Audit Services - Europe/Asia-Pacific segment represents recovery audit services provided in Europe, Asia and the Pacific region. The Adjacent Services segment represents advisory services, spend analytics and supplier information management services. |
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