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 July 24, 2013, reporting its financial results for the second quarter of 2013. |
On Assignment, Inc. | |
Date: July 24, 2013 | /s/ Edward L. Pierce |
Edward L. Pierce | |
Executive Vice President and Chief Financial Officer |
For Release | ||
July 24, 2013 | ||
1:00 p.m. PDT |
• | Revenues were $417.9 million, up 15.4 percent year-over-year on a pro forma basis and 7.4 percent sequentially. Pro forma results, as used herein, assume that our acquisition of Apex Systems occurred on January 1, 2012. Pro forma operating results are summarized in a table below. |
• | Income from continuing operations, excluding the write-off of loan costs, acquisition-related costs and strategic planning expenses, which were not included in the previously announced estimates (a non-GAAP measure set forth in the table below) was $17.4 million ($0.32 per diluted share), up from $11.0 million ($0.20 per diluted share) in the first quarter of 2013. Adjusted income from continuing operations (a non-GAAP measure set forth in the table below) was $25.5 million ($0.47 per diluted share). |
• | Adjusted EBITDA (a non-GAAP measure defined below) was $44.2 million, up from $38.4 million in second quarter of 2012 on a pro forma basis. |
• | Percentage of gross profit converted into Adjusted EBITDA was 35.5 percent, up from 34.4 percent in second quarter of 2012 on a pro forma basis. |
• | Leverage ratio (total indebtedness to trailing twelve months Adjusted EBITDA) was 2.3 to 1, down from 2.88 to 1 at December 31, 2012. |
• | On May 16, we closed on a new $500 million credit facility that expanded our borrowing capacity and flexibility and reduced our interest rates. |
• | Revenues of $429 million to $433 million |
• | Gross Margin of 29.8 percent to 30.1 percent |
• | SG&A (excludes amortization of intangible assets) of $87.5 to $89.0 million (includes $2.3 million in depreciation and $4.2 million in equity-based compensation expense) |
• | Amortization of intangible assets of $5.2 million |
• | Adjusted EBITDA of $46 million to $48 million |
• | Effective tax rate of 42.5 percent |
• | Adjusted Income from Continuing Operations of $25.8 million to $27.0 million |
• | Adjusted Income from Continuing Operations per diluted share of $0.47 to $0.49 |
• | Income from Continuing Operations of $17.8 million to $18.9 million |
• | Income from Continuing Operations per diluted share of $0.33 to $0.35 |
• | Diluted shares outstanding of 54.4 million |
Three Months Ended | Six Months Ended | ||||||||||||||||||
June 30, | March 31, | June 30, | |||||||||||||||||
2013 | 2012 (1) | 2013 | 2013 | 2012(1) | |||||||||||||||
Revenues | $ | 417,923 | $ | 265,863 | $ | 389,193 | $ | 807,116 | $ | 422,623 | |||||||||
Cost of services | 293,356 | 181,326 | 275,919 | 569,275 | 285,337 | ||||||||||||||
Gross profit | 124,567 | 84,537 | 113,274 | 237,841 | 137,286 | ||||||||||||||
Selling, general and administrative expenses | 86,454 | 65,173 | 84,161 | 170,615 | 107,918 | ||||||||||||||
Amortization of intangible assets | 5,275 | 3,884 | 5,379 | 10,654 | 4,518 | ||||||||||||||
Operating income | 32,838 | 15,480 | 23,734 | 56,572 | 24,850 | ||||||||||||||
Interest expense, net | (4,198 | ) | (3,957 | ) | (5,331 | ) | (9,529 | ) | (4,658 | ) | |||||||||
Write-off of loan costs | (14,958 | ) | (813 | ) | — | (14,958 | ) | (813 | ) | ||||||||||
Income before income taxes | 13,682 | 10,710 | 18,403 | 32,085 | 19,379 | ||||||||||||||
Provision for income taxes | 5,860 | 4,633 | 7,793 | 13,653 | 8,255 | ||||||||||||||
Income from continuing operations | 7,822 | 6,077 | 10,610 | 18,432 | 11,124 | ||||||||||||||
Gain on sale of discontinued operations, net of tax | — | — | 14,412 | 14,412 | — | ||||||||||||||
Income (loss) from discontinued operations, net of tax | (483 | ) | 1,485 | (409 | ) | (892 | ) | 1,821 | |||||||||||
Net income | $ | 7,339 | $ | 7,562 | $ | 24,613 | $ | 31,952 | $ | 12,945 | |||||||||
Basic earnings per common share: | |||||||||||||||||||
Income from continuing operations | $ | 0.15 | $ | 0.14 | $ | 0.20 | $ | 0.35 | $ | 0.27 | |||||||||
Income from discontinued operations | (0.01 | ) | 0.03 | 0.26 | 0.25 | 0.05 | |||||||||||||
$ | 0.14 | $ | 0.17 | $ | 0.46 | $ | 0.60 | $ | 0.32 | ||||||||||
Diluted earnings per common share: | |||||||||||||||||||
Income from continuing operations | $ | 0.14 | $ | 0.13 | $ | 0.20 | $ | 0.34 | $ | 0.26 | |||||||||
Income from discontinued operations | — | 0.03 | 0.26 | 0.25 | 0.05 | ||||||||||||||
$ | 0.14 | $ | 0.16 | $ | 0.46 | $ | 0.59 | $ | 0.31 | ||||||||||
Number of shares and share equivalents used to calculate earnings per share: | |||||||||||||||||||
Basic | 53,378 | 44,852 | 53,046 | 53,213 | 41,060 | ||||||||||||||
Diluted | 54,327 | 45,879 | 54,036 | 54,222 | 42,067 | ||||||||||||||
(1) Amounts differ from the previously reported numbers on our Form 10-Q for the period ended June 30, 2012, due to the retrospective adjustment of amortization of the identifiable intangible assets of Apex purchase price allocation, and the retrospective presentation of discontinued operations related to the sale of Nurse Travel during 2013. |
Three Months Ended | Six Months Ended | ||||||||||||||||||
June 30, | March 31, | June 30, | |||||||||||||||||
2013 | 2012 | 2013 | 2013 | 2012 | |||||||||||||||
Revenues: | |||||||||||||||||||
Technology – | |||||||||||||||||||
Apex | $ | 233,446 | $ | 98,503 | $ | 212,728 | $ | 446,174 | $ | 98,503 | |||||||||
Oxford | 101,474 | 88,107 | 95,262 | 196,736 | 166,866 | ||||||||||||||
334,920 | 186,610 | 307,990 | 642,910 | 265,369 | |||||||||||||||
Life Sciences | 41,877 | 40,509 | 40,473 | 82,350 | 81,860 | ||||||||||||||
Physician | 26,466 | 25,039 | 26,302 | 52,768 | 49,128 | ||||||||||||||
Healthcare | 14,660 | 13,705 | 14,428 | 29,088 | 26,266 | ||||||||||||||
$ | 417,923 | $ | 265,863 | $ | 389,193 | $ | 807,116 | $ | 422,623 | ||||||||||
Gross profit: | |||||||||||||||||||
Technology – | |||||||||||||||||||
Apex | $ | 63,896 | $ | 26,983 | $ | 55,619 | $ | 119,515 | $ | 26,983 | |||||||||
Oxford | 34,506 | 31,646 | 32,150 | 66,656 | 59,016 | ||||||||||||||
98,402 | 58,629 | 87,769 | 186,171 | 85,999 | |||||||||||||||
Life Sciences | 13,838 | 13,808 | 13,384 | 27,222 | 27,647 | ||||||||||||||
Physician | 7,640 | 7,718 | 7,483 | 15,123 | 15,217 | ||||||||||||||
Healthcare | 4,687 | 4,382 | 4,638 | 9,325 | 8,423 | ||||||||||||||
$ | 124,567 | $ | 84,537 | $ | 113,274 | $ | 237,841 | $ | 137,286 | ||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||
June 30, | March 31, | June 30, | |||||||||||||||||
2013 | 2012 | 2013 | 2013 | 2012 | |||||||||||||||
Cash (used in) provided by operations | $ | 26,752 | $ | (15,865 | ) | $ | 3,575 | $ | 30,327 | $ | (8,892 | ) | |||||||
Capital expenditures | $ | 4,543 | $ | 5,052 | $ | 2,785 | $ | 7,328 | $ | 7,171 |
June 30, | March 31, | ||||||
2013 | 2013 | ||||||
Cash and cash equivalents | $ | 14,111 | $ | 11,774 | |||
Accounts receivable, net | 266,567 | 257,196 | |||||
Goodwill and intangible assets, net | 748,744 | 755,904 | |||||
Total assets | 1,089,033 | 1,093,436 | |||||
Current portion of long-term debt | 10,250 | 10,000 | |||||
Total current liabilities | 127,077 | 128,899 | |||||
Working capital | 174,844 | 166,461 | |||||
Long-term debt | 359,063 | 373,588 | |||||
Other long-term liabilities | 28,694 | 29,166 | |||||
Stockholders’ equity | 574,199 | 561,783 |
Three Months Ended | ||||||||||||||||||||||||
June 30, | ||||||||||||||||||||||||
2013 | 2012 (1) | March 31, 2013 | ||||||||||||||||||||||
Income from continuing operations | $ | 7,822 | $ | 0.14 | $ | 6,077 | $ | 0.13 | $ | 10,610 | $ | 0.20 | ||||||||||||
Interest expense, net | 4,198 | 0.08 | 3,957 | 0.10 | 5,331 | 0.10 | ||||||||||||||||||
Write-off of loan costs | 14,958 | 0.27 | 813 | 0.02 | — | — | ||||||||||||||||||
Provision for income taxes | 5,860 | 0.11 | 4,633 | 0.10 | 7,793 | 0.14 | ||||||||||||||||||
Depreciation | 1,914 | 0.04 | 1,560 | 0.03 | 1,855 | 0.03 | ||||||||||||||||||
Amortization of intangibles | 5,275 | 0.10 | 3,884 | 0.08 | 5,379 | 0.10 | ||||||||||||||||||
EBITDA | 40,027 | 0.74 | 20,924 | 0.46 | 30,968 | 0.57 | ||||||||||||||||||
Equity-based compensation | 3,486 | 0.06 | 2,287 | 0.05 | 2,550 | 0.05 | ||||||||||||||||||
Acquisition-related costs | 251 | 0.00 | 6,562 | 0.14 | 161 | 0.00 | ||||||||||||||||||
Strategic planning costs | 405 | 0.01 | — | — | 457 | 0.01 | ||||||||||||||||||
Adjusted EBITDA | $ | 44,169 | $ | 0.81 | $ | 29,773 | $ | 0.65 | $ | 34,136 | $ | 0.63 | ||||||||||||
Weighted average common and common equivalent shares outstanding (diluted) | 54,327 | 45,879 | 54,036 |
Six Months Ended June 30, | |||||||||||||||||
2013 | 2012 (1) | ||||||||||||||||
Income from continuing operations | $ | 18,432 | $ | 0.34 | $ | 11,124 | $ | 0.26 | |||||||||
Interest expense, net | 9,529 | 0.17 | 4,658 | 0.11 | |||||||||||||
Write-off of loan costs | 14,958 | 0.28 | 813 | 0.02 | |||||||||||||
Provision for income taxes | 13,653 | 0.25 | 8,255 | 0.20 | |||||||||||||
Depreciation | 3,769 | 0.07 | 2,970 | 0.07 | |||||||||||||
Amortization of intangibles | 10,654 | 0.20 | 4,518 | 0.11 | |||||||||||||
EBITDA | 70,995 | 1.31 | 32,338 | 0.77 | |||||||||||||
Equity-based compensation | 6,036 | 0.10 | 3,459 | 0.08 | |||||||||||||
Acquisition-related costs | 412 | 0.01 | 9,054 | 0.22 | |||||||||||||
Strategic planning costs | 862 | 0.02 | — | — | |||||||||||||
Adjusted EBITDA | $ | 78,305 | $ | 1.44 | $ | 44,851 | $ | 1.07 | |||||||||
Weighted average common and common equivalent shares outstanding (diluted) | 54,222 | 42,067 | |||||||||||||||
Three Months Ended | |||||||||||||||||||||||
June 30, | March 31, | ||||||||||||||||||||||
2013 | 2012 (1) | 2013 | |||||||||||||||||||||
Income from continuing operations | $ | 7,822 | $ | 0.14 | $ | 6,077 | $ | 0.13 | $ | 10,610 | $ | 0.20 | |||||||||||
Write-off of loan costs related to refinancing, net of income taxes | 9,181 | 0.17 | 701 | 0.02 | — | — | |||||||||||||||||
Acquisition-related costs, net of income taxes | 143 | — | 3,788 | 0.08 | 93 | — | |||||||||||||||||
Strategic planning expenses, net of income taxes | 249 | 0.01 | — | — | 281 | — | |||||||||||||||||
Non-GAAP income from continuing operations | $ | 17,395 | $ | 0.32 | $ | 10,566 | $ | 0.23 | $ | 10,984 | $ | 0.20 | |||||||||||
Weighted average common and common equivalent shares outstanding (diluted) | 54,327 | 45,879 | 54,036 |
Six Months Ended June 30, | |||||||||||||||
2013 | 2012 (1) | ||||||||||||||
Income from continuing operations | $ | 18,432 | $ | 0.34 | $ | 11,124 | $ | 0.26 | |||||||
Write-off of loan costs related to refinancing, net of income taxes | 9,181 | 0.17 | 701 | 0.02 | |||||||||||
Acquisition-related costs, net of income taxes | 236 | 0.00 | 5,239 | 0.13 | |||||||||||
Strategic planning expenses, net of income taxes | 530 | 0.01 | — | 0.00 | |||||||||||
Non-GAAP income from continuing operations | $ | 28,379 | $ | 0.52 | $ | 17,064 | $ | 0.41 | |||||||
Weighted average common and common equivalent shares outstanding (diluted) | 54,222 | 42,067 | |||||||||||||
Three Months Ended | Six Months Ended | ||||||
June 30, 2013 | |||||||
Non-GAAP income from continuing operations (2) | $ | 17,395 | $ | 28,379 | |||
Adjustments: | |||||||
Amortization of intangible assets (3) | 5,275 | 10,654 | |||||
Cash tax savings on indefinite-lived intangible assets (4) | 3,850 | 7,700 | |||||
Excess of capital expenditures over depreciation, net of tax (5) | (1,050 | ) | (2,100 | ) | |||
Income from Continuing Operations - As Adjusted | $ | 25,470 | $ | 44,633 | |||
Earnings per Diluted Share from Continuing Operations--, As Adjusted | $ | 0.47 | $ | 0.82 | |||
Weighted average common and common equivalent shares outstanding (diluted) | 54,327 | 54,222 | |||||
(2) | Non-GAAP income from continuing operations as calculated on preceding page. GAAP income from continuing operations excludes the write-off of loan costs related to refinancing of the credit facility, acquisition-related cost and strategic planning expenses. |
(3) | Amortization of identifiable intangible assets of acquired businesses. |
(4) | Cash tax savings on indefinite-lived intangible assets (goodwill and trademarks related to acquisition of Apex Systems, Oxford and HealthCare Partners) that are amortized and deductible in the determination of income taxes, but not amortized for financial reporting purposes. These assets total $593.1 million and are amortized (and deducted) for income tax purposes on a straight-line basis over 15 years. The annual income tax deduction is $39.5 million and the annual after-tax cash savings are approximately $15.4 million, assuming an estimated marginal combined federal and state income tax rate of 39 percent. |
(5) | Excess capital expenditures over depreciation is equal to one-quarter of the estimated full year difference between capital expenditures (full year estimate of $15.9 million) less depreciation (full year estimate of $9.0 million), tax affected using an estimated marginal combined federal and state tax rate of 39 percent. |
Q1 | Q2 | Q3 | Q4 | Full Year | |||||||||||||||
Revenues | $ | 342,721 | $ | 362,179 | $ | 374,512 | $ | 380,381 | $ | 1,459,793 | |||||||||
Cost of services | 240,652 | 250,583 | 258,882 | 264,762 | 1,014,879 | ||||||||||||||
Gross profit | 102,069 | 111,596 | 115,630 | 115,619 | 444,914 | ||||||||||||||
SG&A expenses | 77,397 | 77,172 | 77,009 | 78,912 | 310,490 | ||||||||||||||
Amortization of intangible assets | 6,381 | 6,349 | 6,309 | 6,299 | 25,338 | ||||||||||||||
Operating income | $ | 18,291 | $ | 28,075 | $ | 32,312 | $ | 30,408 | $ | 109,086 | |||||||||
Adjusted EBITDA | $ | 28,425 | $ | 38,855 | $ | 43,532 | $ | 41,659 | $ | 152,471 | |||||||||
Adjusted EBITDA, excluding write-downs of earnout obligations | $ | 28,425 | $ | 38,364 | $ | 42,532 | $ | 41,659 | $ | 150,980 | |||||||||
___ |
Technology | |||||||||||||||||||||||||||
Apex | Oxford | Total | Life Sciences | Physician | Healthcare | Consolidated | |||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||
Q2 2013 | $ | 233,446 | $ | 101,474 | $ | 334,920 | $ | 41,877 | $ | 26,466 | $ | 14,660 | $ | 417,923 | |||||||||||||
Q1 2013 | $ | 212,728 | $ | 95,262 | $ | 307,990 | $ | 40,473 | $ | 26,302 | $ | 14,428 | $ | 389,193 | |||||||||||||
% Sequential change | 9.7 | % | 6.5 | % | 8.7 | % | 3.5 | % | 0.6 | % | 1.6 | % | 7.4 | % | |||||||||||||
Q2 2012 | $ | 98,503 | $ | 88,107 | $ | 186,610 | $ | 40,509 | $ | 25,039 | $ | 13,705 | $ | 265,863 | |||||||||||||
% Year-over-year change | 137.0 | % | 15.2 | % | 79.5 | % | 3.4 | % | 5.7 | % | 7.0 | % | 57.2 | % | |||||||||||||
Gross margins: | |||||||||||||||||||||||||||
Q2 2013 | 27.4 | % | 34.0 | % | 29.4 | % | 33.0 | % | 28.9 | % | 32.0 | % | 29.8 | % | |||||||||||||
Q1 2013 | 26.1 | % | 33.7 | % | 28.5 | % | 33.1 | % | 28.5 | % | 32.1 | % | 29.1 | % | |||||||||||||
Q2 2012 | 27.4 | % | 35.9 | % | 31.4 | % | 34.1 | % | 30.8 | % | 32.0 | % | 31.8 | % | |||||||||||||
Average number of staffing consultants: | |||||||||||||||||||||||||||
Q2 2013 | 679 | 540 | 1,219 | 182 | 100 | 97 | 1,598 | ||||||||||||||||||||
Q1 2013 | 671 | 540 | 1,211 | 176 | 107 | 89 | 1,583 | ||||||||||||||||||||
Q2 2012 | 633 | 501 | 1,134 | 160 | 98 | 81 | 1,473 | ||||||||||||||||||||
Technology | ||||||||||||||||||||||||||||
Apex | Oxford | Total | Life Sciences | Physician | Healthcare | Consolidated | ||||||||||||||||||||||
Average number of customers: | ||||||||||||||||||||||||||||
Q2 2013 | 588 | 679 | 1,267 | 916 | 177 | 491 | 2,851 | |||||||||||||||||||||
Q1 2013 | 600 | 659 | 1,259 | 884 | 173 | 479 | 2,795 | |||||||||||||||||||||
Q2 2012 | 585 | 648 | 1,233 | 914 | 186 | 508 | 2,841 | |||||||||||||||||||||
Top 10 customers as a percentage of revenue: | ||||||||||||||||||||||||||||
Q2 2013 | 34.1 | % | 20.4 | % | 24.1 | % | 25.1 | % | 22.3 | % | 28.8 | % | 19.3 | % | ||||||||||||||
Q1 2013 | 33.5 | % | 16.7 | % | 23.5 | % | 24.8 | % | 21.6 | % | 29.6 | % | 18.6 | % | ||||||||||||||
Q2 2012 | 33.3 | % | (6) | 16.4 | % | 23.5 | % | 23.3 | % | 19.8 | % | 24.6 | % | 18.4 | % | (6) | ||||||||||||
(6) Top 10 customers as a percentage of revenue for Apex and Consolidated includes pro forma Apex data for the quarter ended June 30, 2012. | ||||||||||||||||||||||||||||
Average bill rate: | ||||||||||||||||||||||||||||
Q2 2013 | $ | 60.78 | $ | 123.43 | $ | 71.23 | $ | 34.28 | $ | 183.95 | $ | 37.14 | $ | 64.80 | ||||||||||||||
Q1 2013 | $ | 59.62 | $ | 122.47 | $ | 69.88 | $ | 34.94 | $ | 185.92 | $ | 38.01 | $ | 64.21 | ||||||||||||||
Q2 2012 | $ | 59.07 | $ | 119.51 | $ | 69.83 | $ | 35.25 | $ | 175.11 | $ | 37.44 | $ | 64.82 | ||||||||||||||
Gross profit per staffing consultant: | ||||||||||||||||||||||||||||
Q2 2013 | $ | 94,000 | $ | 64,000 | $ | 81,000 | $ | 76,000 | $ | 77,000 | $ | 48,000 | $ | 78,000 | ||||||||||||||
Q1 2013 | $ | 83,000 | $ | 60,000 | $ | 72,000 | $ | 76,000 | $ | 70,000 | $ | 52,000 | $ | 72,000 | ||||||||||||||
Q2 2012 | $ | 43,000 | (7) | $ | 63,000 | $ | 52,000 | $ | 86,000 | $ | 79,000 | $ | 54,000 | $ | 57,000 | (7) | ||||||||||||
(7) Actual, reported Apex and Consolidated metric reflect six weeks of Apex data. A full quarter would have been $85,000 for Apex and $76,000 for Consolidated. | ||||||||||||||||||||||||||||
Three Months Ended | |||||||
June 30, 2013 | March 31, 2013 | ||||||
Percentage of revenues: | |||||||
Top ten clients | 19.3 | % | 18.6 | % | |||
Direct hire/conversion | 1.5 | % | 1.9 | % | |||
Bill rate: | |||||||
% Sequential change | 0.9 | % | 1.2 | % | |||
% Year-over-year change | — | % | (5.3 | %) | |||
Bill/Pay spread: | |||||||
% Sequential change | 1.0 | % | 0.7 | % | |||
% Year-over-year change | (3.3 | %) | (13.7 | %) | |||
Average headcount: | |||||||
Contract professionals (CP) | 11,961 | 11,583 | |||||
Staffing consultants (SC) | 1,598 | 1,583 | |||||
Productivity: | |||||||
Gross profit per SC | $ | 78,000 | $ | 72,000 |