EX-99.1 2 earningsreleaseq22017.htm EXHIBIT 99.1 Exhibit

Exhibit 99.1


 
 
For Release
 
 
July 26, 2017
 
 
1:15 p.m. PDT


Contacts:
Ed Pierce        
Chief Financial Officer         
(818) 878-7900
 

On Assignment Reports Results for Second Quarter of 2017
Revenue Growth was within our Estimates
Income & Adjusted EBITDA (a non-GAAP measure) were above our Estimates

CALABASAS, Calif., July 26, 2017 -- On Assignment, Inc. (NYSE: ASGN), a leading global provider of diversified professional staffing solutions, today reported results for the quarter ended June 30, 2017.

Second Quarter Highlights
•
Revenues were $653.3 million, up 7.4 percent over the second quarter of 2016 (up 7.6 percent on a same "Billable Days" basis and "Constant Currency" basis).
•
Net income was $33.1 million ($0.62 per diluted share), up from $26.0 million ($0.48 per diluted share) in the second quarter of 2016.
•
Adjusted EBITDA (a non-GAAP measure) was $80.5 million (12.3 percent of revenues), up from $74.1 million (12.2 percent of revenues) in the second quarter of 2016.
•
Since our $150 million repurchase authorization began in June 2016, we have purchased approximately 1.4 million shares for $53.2 million, at an average per share price of $39.07. There were no repurchases during the quarter ended June 30, 2017.
•
Leverage ratio (a non-GAAP measure) was 2.04 to 1 at June 30, 2017, down from 2.21 to 1 at March 31, 2017.

Commenting on the results, Peter Dameris, Chief Executive Officer of On Assignment, said "Our financial results were above or in-line with our estimates for the quarter. Operational performance of each division was generally in-line with our expectations going into the quarter and the end markets that we serve remained healthy and productive. Finally, we are encouraged by the progress we are making on our initiatives taken to enhance our sales generation capabilities and improve the overall financial performance of our Oxford Segment."

Second Quarter 2017 Financial Results

Revenues for the quarter were $653.3 million, up 7.4 percent year-over-year. Our largest segment, Apex, accounted for 76.9 percent of total revenues and grew 10.7 percent year-over-year. Our Oxford Segment accounted for 23.1 percent of total revenues and was down 2.3 percent year-over-year, mainly due to revenues from two large projects that were substantially completed in 2016.

Gross profit was $213.0 million, up $10.9 million or 5.4 percent year-over-year. Gross margin for the quarter was 32.6 percent, down from 33.2 percent in the second quarter of 2016. The year-over-year change in gross margin was primarily the result of (i) a lower mix of permanent placement revenues (5.1 percent of revenues in the current quarter, down from 5.6 percent in the second quarter of 2016) and (ii) compression of approximately 30 basis points in our assignment gross margin, partially related to high growth at Apex, which has lower assignment gross margins than Oxford.
 

1

Selling, general and administrative (“SG&A”) expenses were $145.2 million (22.2 percent of revenues), compared with $141.4 million (23.2 percent of revenues) in the second quarter of 2016. SG&A expenses for the quarter included acquisition, integration and strategic planning expenses of $0.7 million, compared with $1.5 million in the second quarter of 2016. The one-percentage point reduction in SG&A expenses as a percent of revenues primarily related to lower growth in compensation expense for staffing consultants relative to revenue growth, lower acquisition, integration and strategic planning expenses and lower stock-based compensation expense.

Amortization of intangible assets was $8.3 million, compared with $10.0 million in the second quarter of 2016. The decrease is due to the accelerated amortization method for certain acquired intangibles, which have higher amortization rates at the beginning of their useful life.

Interest expense for the quarter was $6.1 million compared with $8.0 million in the second quarter of 2016. Interest expense for the quarter was comprised of $5.3 million of interest on the credit facility and $0.8 million of amortization of deferred loan costs. The decrease in interest expense reflected a lower debt balance and a lower interest rate as a result of the August 5, 2016 and February 21, 2017 amendments to our credit facility.

The effective tax rate for the quarter was 37.8 percent, which benefited from a change in accounting for excess tax benefits and deficiencies related to stock-based compensation (this change in accounting was effective at the beginning of the year and prior to the change these tax benefits and deficiencies were accounted for as an adjustment to stockholders' equity). This tax benefit, which reduced our provision for income taxes, was $0.5 million for the quarter.

Net income was $33.1 million ($0.62 per diluted share), up from $26.0 million ($0.48 per diluted share) in the second quarter of 2016. Adjusted EBITDA (a non-GAAP measure) was $80.5 million, or 12.3 percent of revenues, up from $74.1 million (12.2 percent of revenues) in the second quarter of 2016.

Cash flows from operating activities were $39.8 million and free cash flow (a non-GAAP measure) was $33.4 million. During the quarter, we repaid $38.0 million of long-term debt. At June 30, 2017, our leverage ratio (a non-GAAP measure) was 2.04 to 1, down from 2.21 to 1 at March 31, 2017.

Financial Estimates for Q3 2017

On Assignment is providing financial estimates for the third quarter of 2017. These estimates do not include acquisition, integration or strategic planning expenses and assume no deterioration in the staffing markets that On Assignment serves. These estimates also assume no significant change in foreign exchange rates. Reconciliations of estimated net income to the estimated non-GAAP measures are presented herein.

•
Revenues of $660.0 million to $670.0 million
•
Gross margin of 32.5 percent to 32.7 percent
•
SG&A expense (excludes amortization of intangible assets) of $148.8 to $150.4 (includes $6.5 million in depreciation and $6.8 million in stock-based compensation expense)
•
Amortization of intangible assets of $8.0 million
•
Effective tax rate of 39.0 percent(1) 
•
Net income of $31.4 million to $33.3 million
•
Earnings per diluted share of $0.59 to $0.62
•
Diluted shares outstanding of 53.4 million
•
Adjusted EBITDA (a non-GAAP measure) of $79.0 million to $82.0 million
•
Adjusted Net Income(2) (a non-GAAP measure) of $39.0 million to $40.8 million
•
Adjusted Net Income per diluted share(2) (a non-GAAP measure) of $0.73 to $0.76
_______________
(1)
Does not include excess tax benefits related to stock-based compensation. Effective January 1, 2017, these tax benefits (the tax effect of the difference between book and tax expense for equity-based compensation) are included in the determination of the provision for income taxes. Prior to the accounting rule change, these benefits were recorded as an adjustment to stockholders' equity.
(2)
Does not include the “Cash Tax Savings on Indefinite-lived Intangible Assets.” These savings total $6.7 million each quarter, or $0.12 per diluted share, and represent the economic value of the tax deduction that we receive from the amortization of goodwill and trademarks.

2


Our financial estimates above are based on our estimate of “Billable Days,” which are Business Days (calendar days for the period less weekends and holidays) adjusted for other factors, such as the day of the week a holiday occurs, additional time taken off around holidays, year-end client furloughs and inclement weather. For the third quarter, we estimate billable days of 62.6, which is 0.5 fewer than the third quarter of 2016.

Conference Call

On Assignment will hold a conference call today at 5:00 p.m. EDT to review its financial results for the second quarter. The dial-in number is 800-230-1059 (+1-612-234-9960 for callers outside the United States) and the conference ID number is 426728. Participants should dial in ten minutes before the call. The prepared remarks for this call will be available via On Assignment's web site at www.onassignment.com. This call is being webcast by CCBN and can be accessed at www.onassignment.com. Individual investors can also listen at CCBN's site at www.fulldisclosure.com or by visiting any of the investor sites in CCBN's Individual Investor Network.

A replay of the conference call will be available beginning Wednesday, July 26, 2017 at 7:00 p.m. EDT until midnight on Thursday, August 10, 2017. The access number for the replay is 800-475-6701 (+1-320-365-3844 outside the United States) and the conference ID number is 426728.

About On Assignment

On Assignment, Inc. is a leading global provider of highly skilled, hard-to-find professionals in the growing technology, life sciences, and creative 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 its 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. The Company has a network of branch offices throughout the United States, Canada and Europe. To learn more, visit http://www.onassignment.com.

Reasons for Presentation of Non-GAAP Financial Measures

Statements in this release and the accompanying financial information 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 accounting principles generally accepted in the United States ("GAAP"), and is intended to enhance an overall understanding of our current financial performance. 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 a reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure. Below is a discussion of our non-GAAP measures.

EBITDA (earnings before interest, taxes, depreciation and amortization of intangible assets) and Adjusted EBITDA (EBITDA plus equity-based compensation expense and, as applicable, write-off of loan costs, acquisition, integration and strategic planning expenses, and impairment charges) are used to determine a portion of the compensation for some of our executives and employees. Equity-based compensation expense is added to arrive at Adjusted EBITDA because it is a non-cash expense. Write-off of loan costs, acquisition, integration and strategic planning expenses, and impairment charges are added, as applicable, to arrive at Adjusted EBITDA as they are not indicative of the performance of our core business on an ongoing basis.

Non-GAAP net income (net income, less income (loss) from discontinued operations, net of tax, plus, as applicable, refinancing costs, acquisition, integration and strategic planning expenses, accretion of fair value discount on contingent consideration, impairment charges, and the tax effect of these items) provides a method for assessing our operating results in a manner that is focused on the performance of our core business on an ongoing basis. Adjusted Net Income (Non-GAAP net income plus amortization of intangible assets, less income taxes on amortization for financial reporting purposes not deductible for income tax purposes) provides a method

3

for assessing our operating results in a manner that is focused on the performance of our core business on an ongoing basis, adjusted for some of the cash flows associated with amortization of intangible assets to more fully present the performance of our acquisitions.

Free cash flow is defined as net cash provided by (used in) operating activities, less capital expenditures. Management believes this provides useful information to investors about the amount of cash generated by the business that can be used for strategic opportunities. Our leverage ratio provides information about our compliance with loan covenants and is calculated in accordance with our credit agreement, as filed with the Securities and Exchange Commission ("SEC"), by dividing our total indebtedness by trailing 12 months Adjusted EBITDA.

Reasons for Presentation of Operating Metrics

Operating metrics are intended to enhance the overall understanding of our business and our current financial performance. These operating metrics might not be calculated in the same manner as, and thus might not be comparable to, similarly titled metrics reported by other companies. The operating metrics presented on this release are calculated as follows: average number of staffing consultants are full time equivalent staffing consultant headcount in the quarter; average number of contract professionals and average number of customers are the number of contract professionals employed each week and the number of customers served each week, averaged for the quarter, respectively (average is weighted by total number of hours billed per week); top 10 customers as a percentage of revenue are the 10 largest clients defined by the revenue generated in the quarter, divided by total revenues in the quarter; gross profit per staffing consultant is gross profit for the quarter divided by the average number of staffing consultants; average bill rate is total assignment revenue client billings in the quarter divided by total hours billed in the quarter.

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. 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, amortization, effective tax rate, net income, diluted shares outstanding, Adjusted EBITDA, Adjusted Net Income and related per share amounts (as applicable) 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 clients, the availability of qualified contract professionals, management of our growth, continued performance and improvement of our enterprise-wide information systems, our ability to manage our litigation matters, the successful integration of our acquired subsidiaries, the successful implementation of our five-year strategic plan, and other risks detailed from time to time in our reports filed with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2016, as filed with the SEC on March 1, 2017 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, as filed with the SEC on May 10, 2017. We specifically disclaim any intention or duty to update any forward-looking statements contained in this news release.

4


SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share amounts)
 
Three Months Ended
 
Six Months Ended
June 30,
 
March 31,
 
June 30,
 
2017
 
2016
 
2017
 
2017
 
2016
 
 
 
 
 
 
 
 
 
 
Revenues
$
653,313

 
$
608,088

 
$
626,528

 
$
1,279,841

 
$
1,190,128

Costs of services
440,376

 
406,002

 
428,384

 
868,760

 
800,260

Gross profit
212,937

 
202,086

 
198,144

 
411,081

 
389,868

Selling, general and administrative expenses
145,177

 
141,350

 
146,072

 
291,249

 
281,231

Amortization of intangible assets
8,299

 
10,032

 
8,464

 
16,763

 
20,176

Operating income
59,461

 
50,704

 
43,608

 
103,069

 
88,461

Interest expense
(6,067
)
 
(7,959
)
 
(8,501
)
 
(14,568
)
 
(16,984
)
Income before income taxes
53,394

 
42,745

 
35,107

 
88,501

 
71,477

Provision for income taxes
20,158

 
16,732

 
12,725

 
32,883

 
28,116

Income from continuing operations
33,236

 
26,013

 
22,382

 
55,618

 
43,361

Income (loss) from discontinued operations,
 net of tax
(139
)
 
(9
)
 
9

 
(130
)
 
44

Net income
$
33,097

 
$
26,004

 
$
22,391

 
$
55,488

 
$
43,405

 
 
 
 
 
 
 
 
 
 
Basic earnings per common share:
 
 
 
 
 
 
 
 
 
Income from continuing operations
$
0.63

 
$
0.49

 
$
0.43

 
$
1.05

 
$
0.81

Income from discontinued operations
—

 
—

 
—

 
—

 
—

 
$
0.63

 
$
0.49

 
$
0.43

 
$
1.05

 
$
0.81

 
 
 
 
 
 
 
 
 
 
Diluted earnings per common share:
 
 
 
 
 
 
 
 
 
Income from continuing operations
$
0.62

 
$
0.48

 
$
0.42

 
$
1.04

 
$
0.81

Income from discontinued operations
—

 
—

 
—

 
—

 
—

 
$
0.62

 
$
0.48

 
$
0.42

 
$
1.04

 
$
0.81

 
 
 
 
 
 
 
 
 
 
Number of shares and share equivalents
 used to calculate earnings per share:
 
 
 
 
 
 
 
 
 
Basic
52,823

 
53,422

 
52,658

 
52,741

 
53,284

Diluted
53,473

 
53,911

 
53,249

 
53,375

 
53,783

 
 
 
 
 
 
 
 
 
 

5

SEGMENT FINANCIAL INFORMATION (Unaudited)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2017 AND 2016
(Dollars in millions)
 
 
Three Months Ended
 
 
Six Months Ended
 
 
 
2017
 
2016
 
Year-Over-Year
Growth Rates
 
2017
 
2016
 
Year-Over-Year
Growth Rates
Revenues by segment:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Apex:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assignment
 
$
491.3

 
$
441.4

 
11.3
 %
 
 
$
962.6

 
$
863.5

 
11.5
 %
 
Permanent placement
 
11.2

 
12.3

 
(10.0
)%
 
 
22.4

 
23.3

 
(4.4
)%
 
 
 
502.5

 
453.7

 
10.7
 %
 
 
985.0

 
886.8

 
11.1
 %
 
Oxford:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assignment
 
128.7

 
133.0

 
(3.2
)%
 
 
251.9

 
260.4

 
(3.2
)%
 
Permanent placement
 
22.1

 
21.4

 
3.6
 %
 
 
42.9

 
42.9

 
0.2
 %
 
 
 
150.8

 
154.4

 
(2.3
)%
 
 
294.8

 
303.3

 
(2.8
)%
 
Consolidated:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assignment
 
620.0

 
574.4

 
8.0
 %
 
 
1,214.5

 
1,123.9

 
8.1
 %
 
Permanent placement
 
33.3

 
33.7

 
(1.4
)%
 
 
65.3

 
66.2

 
(1.4
)%
 
 
 
$
653.3

 
$
608.1

 
7.4
 %
 
 
$
1,279.8

 
$
1,190.1

 
7.5
 %
 
Percentage of total revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Apex
 
76.9
%
 
74.6
%
 
 
 
 
77.0
%
 
74.5
%
 
 
 
Oxford
 
23.1
%
 
25.4
%
 
 
 
 
23.0
%
 
25.5
%
 
 
 
 
 
100.0
%
 
100.0
%
 
 
 
 
100.0
%
 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assignment
 
94.9
%
 
94.4
%
 
 
 
 
94.9
%
 
94.4
%
 
 
 
Permanent placement
 
5.1
%
 
5.6
%
 
 
 
 
5.1
%
 
5.6
%
 
 
 
 
 
100.0
%
 
100.0
%
 
 
 
 
100.0
%
 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Domestic
 
95.0
%
 
95.1
%
 
 
 
 
95.1
%
 
95.2
%
 
 
 
Foreign
 
5.0
%
 
4.9
%
 
 
 
 
4.9
%
 
4.8
%
 
 
 
 
 
100.0
%
 
100.0
%
 
 
 
 
100.0
%
 
100.0
%
 
 
 
Gross profit:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Apex
 
$
150.3

 
$
138.1

 
8.7
 %
 
 
$
290.2

 
$
264.3

 
9.8
 %
 
Oxford
 
62.7

 
64.0

 
(1.9
)%
 
 
120.9

 
125.6

 
(3.7
)%
 
Consolidated
 
$
213.0

 
$
202.1

 
5.4
 %
 
 
$
411.1

 
$
389.9

 
5.4
 %
 
Gross margin:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Apex
 
29.9
%
 
30.5
%
 

 
 
29.5
%
 
29.8
%
 
 
 
Oxford
 
41.6
%
 
41.4
%
 

 
 
41.0
%
 
41.4
%
 
 
 
Consolidated
 
32.6
%
 
33.2
%
 

 
 
32.1
%
 
32.8
%
 
 
 





6


SELECTED CASH FLOW INFORMATION (Unaudited)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2017 AND 2016
(In thousands)

 
Three Months Ended
 
Six Months Ended
 
2017
 
2016
 
2017
 
2016
Cash provided by operating activities(1)
$
39,793

 
$
61,896

 
$
83,593

 
$
100,124

Capital expenditures
(6,416
)
 
(6,627
)
 
(13,208
)
 
(13,909
)
Free cash flow (non-GAAP measure)
$
33,377

 
$
55,269

 
$
70,385

 
$
86,215

 
 
 
 
 
 
 
 
Cash used in investing activities(2)
$
(6,581
)
 
$
(7,153
)
 
$
(13,356
)
 
$
(8,259
)
Cash used in financing activities(1)
$
(39,077
)
 
$
(48,379
)
 
$
(79,292
)
 
$
(80,946
)
 
 
 
 
 
 
 
 

(1)
On January 1, 2017, we adopted Accounting Standards Update 2016-09 Compensation - Stock Compensation (Topic 718). Under this new guidance excess tax benefits and deficiencies are recognized as income tax benefit or expense in the consolidated statements of operations and comprehensive income, instead of paid in capital, on a prospective basis from the date of adoption. On the statement of cash flows, excess tax benefits and deficiencies are presented as cash flows from operating activities, instead of financing activities. For the statement of cash flows we elected to retrospectively adopt this new presentation and for the three and six months ended June 30, 2016, cash flows from excess tax benefits of $1.6 million, and $2.5 million respectively were reclassified from financing activities to operating activities.

(2)
The six months ended June 30, 2016, included $6.0 million in cash provided by investing activities related to the release of cash held in escrow from the sale of the Physician Segment.



SELECTED CONSOLIDATED BALANCE SHEET DATA
AS OF JUNE 30, 2017 AND DECEMBER 31, 2016
(In thousands)

 
2017
 
2016
 
(Unaudited)
 
 
Cash and cash equivalents
$
18,963

 
$
27,044

Accounts receivable, net
417,267

 
386,858

Total current assets
462,680

 
437,524

Goodwill and intangible assets, net
1,236,971

 
1,251,243

Total assets
1,766,644

 
1,752,667

Total current liabilities
178,377

 
162,499

Working capital
284,303

 
275,025

Long-term debt
579,782

 
640,355

Other long-term liabilities
81,123

 
80,874

Stockholders’ equity
927,362

 
868,939

 
 
 
 



7


RECONCILIATION OF NET INCOME TO EBITDA (NON-GAAP MEASURE) AND
ADJUSTED EBITDA (NON-GAAP MEASURE) (Unaudited)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2017 AND 2016
(In thousands)
 
Three Months Ended
 
Six Months Ended
 
 
2017
 
2016
 
2017
 
2016
 
Net income
$
33,097

 
$
26,004

 
$
55,488

 
$
43,405

 
(Income) loss from discontinued operations,
 net of tax
139

 
9

 
130

 
(44
)
 
Interest expense
6,067

 
7,959

 
14,568

 
16,984

 
Provision for income taxes
20,158

 
16,732

 
32,883

 
28,116

 
Depreciation
6,068

 
5,372

 
12,079

 
10,655

 
Amortization of intangible assets
8,299

 
10,032

 
16,763

 
20,176

 
EBITDA (non-GAAP measure)
73,828

 
66,108

 
131,911

 
119,292

 
Equity-based compensation
5,991

 
6,534

 
11,561

 
13,458

 
Acquisition, integration and strategic planning expenses
725

 
1,467

 
1,635

 
3,793

 
Adjusted EBITDA (non-GAAP measure)
$
80,544

 
$
74,109

 
$
145,107

 
$
136,543

 
 
 
 
 
 
 
 
 
 







8

RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME AND
ADJUSTED NET INCOME (NON-GAAP MEASURE) (Unaudited)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2017 AND 2016
(In thousands, except per share amounts)

 
Three Months Ended
 
Six Months Ended
 
 
2017
 
2016
 
2017
 
2016
 
Net income
$
33,097

 
$
26,004

 
$
55,488

 
$
43,405

 
(Income) loss from discontinued operations, net of tax
139

 
9

 
130

 
(44
)
 
Refinancing costs(1)
(104
)
 
—

 
1,924

 
—

 
Acquisition, integration and strategic planning expenses
725

 
1,467

 
1,635

 
3,793

 
Accretion of discount on contingent consideration
—

 
—

 
—

 
863

 
Tax effect on adjustments
(242
)
 
(572
)
 
(1,388
)
 
(1,800
)
 
Non-GAAP net income
33,615

 
26,908

 
57,789

 
46,217

 
Amortization of intangible assets
8,299

 
10,032

 
16,763

 
20,176

 
Income taxes on amortization for financial reporting purposes not deductible for income tax purposes
(406
)
 
(547
)
 
(812
)
 
(1,148
)
 
Adjusted Net Income (non-GAAP measure)(2)
$
41,508

 
$
36,393

 
$
73,740

 
$
65,245

 
 
 
 
 
 
 
 
 
 
Per diluted share:
 
 
 
 
 
 
 
 
Net income
$
0.62

 
$
0.48

 
$
1.04

 
$
0.81

 
Adjustments
0.16

 
0.20

 
0.34

 
0.40

 
Adjusted Net Income (non-GAAP measure)(2)
$
0.78

 
$
0.68

 
$
1.38

 
$
1.21

 
 
 
 
 
 
 
 
 
 
Weighted average common and common equivalent shares outstanding (diluted)
53,473

 
53,911

 
53,375

 
53,783

 
 
 
 
 
 
 
 
 
 

(1)
In February 2017, we amended our credit facility and incurred $2.5 million in fees, of which $1.9 million were included in interest expense and the remaining $0.6 million were capitalized and will be amortized over the term of the credit facility.

(2)
Does not include the “Cash Tax Savings on Indefinite-lived Intangible Assets.” These savings total $6.7 million per quarter (approximately $0.12 per diluted share) and represent the economic value of the tax deduction that we receive from the amortization of goodwill and trademarks.




9


OPERATING METRICS (Unaudited)
 
Apex
 
Oxford
 
Consolidated
 
 
 
 
 
 
 
 
 
 
Average number of staffing consultants:
 
 
 
 
 
 
 
Q2 2017
1,441

 
925

 
2,366

 
 
Q1 2017
1,423

 
977

 
2,400

 
 
Q2 2016
1,314

 
974

 
2,288

 
 
 
 
 
 
 
 
 
 
Average number of customers:
 
 
 
 
 
 
 
Q2 2017
3,502

 
1,063

 
4,565

 
 
Q1 2017
3,569

 
1,085

 
4,654

 
 
Q2 2016
3,446

 
1,082

 
4,528

 
 
 
 
 
 
 
 
 
 
Average number of contract professionals(1):
 
 
 
 
 
 
 
Q2 2017
17,525

 
2,818

 
20,343

 
 
Q1 2017
16,596

 
2,634

 
19,230

 
 
Q2 2016
14,907

 
2,875

 
17,782

 
 
 
 
 
 
 
 
 
 
Top 10 customers as a percentage of revenues:
 
 
 
 
 
 
 
Q2 2017
26.9
%
 
10.1
%
 
21.1
%
 
 
Q1 2017
26.5
%
 
9.3
%
 
20.4
%
 
 
Q2 2016
23.8
%
 
11.6
%
 
18.3
%
 
 
 
 
 
 
 
 
 
 
Average bill rate:
 
 
 
 
 
 
 
Q2 2017
$
57.81

 
$
100.14

 
$
63.23

 
 
Q1 2017
$
57.51

 
$
97.79

 
$
62.67

 
 
Q2 2016
$
55.97

 
$
103.58

 
$
62.45

 
 
 
 
 
 
 
 
 
 
Gross profit per staffing consultant:
 
 
 
 
 
 
 
Q2 2017
$
104,000

 
$
68,000

 
$
90,000

 
 
Q1 2017
$
98,000

 
$
60,000

 
$
83,000

 
 
Q2 2016
$
105,000

 
$
66,000

 
$
88,000

 
 


(1)
Average number of contract professionals placed on assignment each week that are considered our employees; this number does not include employees of our subcontractors.


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FINANCIAL ESTIMATES FOR Q3 2017
RECONCILIATION OF ESTIMATED NET INCOME TO ESTIMATED NON-GAAP MEASURES
(In millions, except per share data)

 
 
Low
 
High
 
Net income(1)(2)
 
$
31.4

 
$
33.3

 
Interest expense
 
6.1

 
6.1

 
Provision for income taxes(2)
 
20.2

 
21.3

 
Depreciation
 
6.5

 
6.5

 
Amortization of intangible assets
 
8.0

 
8.0

 
EBITDA (non-GAAP measure)
 
72.2

 
75.2

 
Equity-based compensation
 
6.8

 
6.8

 
Adjusted EBITDA (non-GAAP measure)
 
$
79.0

 
$
82.0




 
 
Low
 
High
 
Net income(1)(2)
 
$
31.4

 
$
33.3

 
Amortization of intangible assets
 
8.0

 
8.0

 
Income taxes on amortization for financial reporting purposes not deductible for income tax purposes
 
(0.4
)
 
(0.4
)
 
Other
 
—

 
(0.1
)
 
Adjusted Net Income (non-GAAP measure)(3)
 
$
39.0

 
$
40.8

 
 
 
 
 
 
 
Per diluted share:
 
 
 
 
 
Net income
 
$
0.59

 
$
0.62

 
Adjustments
 
0.14

 
0.14

 
Adjusted Net Income (non-GAAP measure)(3)
 
$
0.73

 
$
0.76

 
 
 
 
 
 
 
Weighted average common and common equivalent shares outstanding (diluted)
 
53.4

 
53.4

 

(1)
These estimates do not include acquisition, integration, or strategic planning expenses.

(2)
These estimates do not include excess tax benefits related to stock-based compensation.

(3)
Does not include the “Cash Tax Savings on Indefinite-lived Intangible Assets.” These savings total $6.7 million per quarter ($0.12 per diluted share) and represent the economic value of the tax deduction that we receive from the amortization of goodwill and trademarks.
 







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