Delaware | 000-20540 | 95-4023433 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
26745 Malibu Hills Road, Calabasas, California | 91301 |
(Address of principal executive offices) | (Zip Code) |
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
(d) | The following exhibit is furnished pursuant to Item 2.02: |
99.1 | Press release of On Assignment, Inc. dated October 25, 2012, reporting its financial results for the third quarter of 2012. |
On Assignment, Inc. | |
Date: October 25, 2012 | /s/ Edward L. Pierce |
Edward L. Pierce | |
Executive Vice President and Chief Financial Officer |
• | Revenues were $388.3 million and above the high-end of the previously-announced estimates. |
• | Revenues were up 139.1 percent year-over-year and included Apex Systems (which was acquired on May 15, 2012) for a full quarter. Apex Systems accounted for $202.7 million of total revenues. Revenue growth, excluding Apex Systems, was 14.3 percent year-over-year. |
• | Adjusted EBITDA (a non-GAAP measurement defined below) was $45.5 million, up 150.2 percent year-over-year. |
• | Adjusted EBITDA margin (Adjusted EBITDA as a percent of revenues) was 11.7 percent, up from 11.2 percent in the third quarter of 2011 and 11.4 percent in the second quarter of 2012. |
• | Net Income was $17.4 million ($0.33 per diluted share) compared with $7.8 million ($0.21 per diluted share) in the third quarter of 2011 and $8.5 million ($0.19 per diluted share) in the second quarter of 2012. |
• | Leverage ratio (total indebtedness to trailing twelve months Adjusted EBITDA) was 2.96 to 1 compared with 3.79 to 1 as of May 15, 2012, the effective date of the acquisition of Apex Systems. |
• | Revenues of $385 million to $389 million |
• | Gross Margin of 30.1 percent to 30.4 percent |
• | SG&A of $86 to $87 million, which includes $1.8 million in depreciation, $3.5 million amortization and $2.9 million in equity-based compensation expense |
• | Adjusted EBITDA of $37.1 million to $40.8 million |
• | Effective tax rate of 42 percent |
• | Net income of $13.3 million to $15.4 million |
• | Earnings per diluted share of $0.25 to $0.29 |
• | Diluted shares outstanding of 53.3 million |
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 and administrative 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 income taxes | 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 and share 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 | ||||||||||||||
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 | ||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||
September 30, | June 30, | September 30, | |||||||||||||||||
2012 | 2011 | 2012 | 2012 | 2011 | |||||||||||||||
Cash (used in) provided by operations | $ | 23,531 | $ | 2,109 | $ | (15,865 | ) | $ | 14,639 | $ | 15,054 | ||||||||
Capital expenditures | 3,712 | 1,374 | 5,052 | 10,883 | 6,046 |
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 |
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 | 45,879 |
Nine 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 |
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 before acquisition-related costs | $ | 18,082 | $ | 0.34 | $ | 7,925 | $ | 0.21 | $ | 13,004 | $ | 0.28 | (1) | |||||||||||
Weighted average common and common equivalent shares outstanding (diluted) | 53,162 | 37,769 | 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) | 45,807 | 37,756 | |||||||||||||
_______ |
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 |
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 | % | — | % | 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 |
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. |
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. |