EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

 

LOGO   Contact:
  Tyra Tutor
  Senior Vice President, Corporate Development
  (904) 360-2500
  tyra.tutor@mpsgroup.com
NEWS RELEASE   For Immediate Release

 

MPS Group Announces Fourth Quarter and Year-end 2005 Results

 

Fourth Quarter Net Income Up 77% Versus 2004

 

JACKSONVILLE, Fla. (February 8, 2006) — MPS Group, Inc. (NYSE:MPS), a leading provider of specialty staffing, consulting and business solutions, today announced financial results for the fourth quarter and year ended December 31, 2005. The Company reported revenue of $425 million and diluted net income per common share of $0.19 for the quarter ended December 31, 2005, compared with revenue of $421 million and diluted net income per common share of $0.11 for the year-earlier period. Revenue and diluted net income per common share were both within the range of guidance previously provided by management.

 

Fourth Quarter Summary

 

  Revenue was $425 million;

 

  Diluted net income per common share of $0.19, was up 73% versus the fourth quarter of 2004, and included $0.03 per diluted common share attributable to state income tax benefits;

 

  Net income was $20 million, up 77% versus the fourth quarter of 2004; and

 

  Cash flow from operations was $25 million during the fourth quarter.

 

2005 Summary

 

  Revenue was $1.7 billion, up 18% versus 2004;

 

  Excluding the impacts of acquisitions and changes in currency exchange rates, revenue increased 15% versus 2004;

 

  Diluted net income per common share was $0.56, up 70% from 2004;

 

  Net income was $60 million up 68% versus 2004;

 

  Cash flow from operations was $92 million during 2005; and

 

  The Company had cash balances of $143 million and no outstanding borrowings on its credit facility at the end of 2005.

 

Professional Services Division Performance

 

The Company’s Professional Services division reported revenue of $234 million for the fourth quarter of 2005, an increase of 10% versus the fourth quarter of 2004. Revenue for the fourth quarter was virtually the same as revenue reported for the third quarter of 2005, even though the fourth quarter had fewer billing days. Excluding the impacts of acquisitions and changes in currency exchange rates, revenue grew 12% versus the fourth quarter of 2004 and was flat sequentially versus the third quarter of 2005. The Company’s diversification initiatives continued to show progress, as revenue from the Professional Services division grew to 55% of the Company’s total revenues for the fourth quarter, up from 50% during the fourth quarter of 2004. Below is further discussion of the fourth quarter performance of the Professional Services division’s two reporting segments.

 

   

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www.mpsgroup.com


MPS Group Reports Year-end Results

Page 2

February 8, 2006

 

North American Professional Services Segment

 

The Company’s North American Professional Services segment provides specialized staffing and recruiting in the disciplines of accounting, law, engineering, and healthcare. During the fourth quarter, this segment posted 10% revenue growth versus the fourth quarter of 2004 and 1% sequential growth versus the third quarter of 2005. Excluding the impact of acquisitions, the North American Professional Services segment revenue rose 7% versus the fourth quarter of 2004 and was down 1% sequentially versus the third quarter of 2005. Operating income from the North American Professional Services segment increased 49% versus the prior-year period and 15% sequentially versus the third quarter of 2005.

 

Fourth quarter revenue for Entegee, the Company’s engineering staffing business, grew 6% versus the fourth quarter of 2004 and was flat sequentially versus the third quarter of 2005. Due to improved gross margins from contractor sales and slightly higher permanent placement fees, overall gross margin increased 40 basis points versus the fourth quarter of 2004.

 

Special Counsel, the Company’s legal staffing unit, benefited from an increase in large outsourced legal projects during the fourth quarter, with revenue growing 21% versus the fourth quarter of 2004. Along with this substantial organic growth, Special Counsel increased gross margins from contractor sales by 20 basis points versus the fourth quarter of 2004. Special Counsel is North America’s largest legal staffing business.

 

Accounting Principals, the Company’s finance and accounting staffing unit, reported fourth quarter 2005 revenue of $25 million. Due to continuing strong demand for finance and accounting professionals, gross margin on contractor sales continued to improve year-over-year as well as sequentially. The combination of higher permanent placement fees and higher gross margins from contractor sales resulted in overall gross margin improvement of 520 basis points in the fourth quarter of 2005 versus the fourth quarter of 2004.

 

Fourth quarter revenue for Soliant Health, the Company’s healthcare staffing unit, grew 28% versus the year-earlier period and 8% sequentially versus the third quarter of 2005. Excluding the impact of acquisitions, Soliant grew 15% versus the fourth quarter of 2004 and was down 2% sequentially versus last quarter primarily due to the slowdown in hours worked by traveling healthcare professionals during the holiday season. Soliant improved gross margins 90 basis points in the fourth quarter versus the fourth quarter of 2004.

 

European Professional Services Segment

 

The Company’s European Professional Services segment is composed of Badenoch & Clark, a United Kingdom-based provider of finance and accounting and professional staffing services.

 

For the fourth quarter of 2005, Badenoch & Clark revenue increased 11% versus the prior-year period. Excluding the impact of changes in currency exchange rates, revenue grew 18% versus the fourth quarter of 2004 and 1% sequentially versus the third quarter of 2005. Operating income for Badenoch & Clark was up 53% for the fourth quarter of 2005 versus the 2004 fourth quarter as the business unit continued to benefit from prior investments in staff and new service lines. Badenoch & Clark is one of the United Kingdom’s leading providers of professional staffing services.

 

Information Technology Division Performance

 

The Company’s Information Technology division reported revenue of $191 million for the fourth quarter of 2005. Below is further discussion of the fourth quarter performance of the IT division’s two reporting segments.

 

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MPS Group Reports Year-end Results

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February 8, 2006

 

North American Information Technology Services Segment

 

The Company’s North American Information Technology Services segment is composed of Modis, the IT staffing unit; Idea Integration, the IT solutions unit; and Beeline, the workforce solutions unit. This segment reported revenue of $131 million for the fourth quarter of 2005, which was down 1% versus the fourth quarter of 2004 and up 3% sequentially versus the third quarter of 2005. Operating income from the North American Information Technology Services segment increased 32% versus the prior-year period and 13% sequentially versus the third quarter of 2005.

 

Modis’ revenue was flat versus the fourth quarter of 2004 and up 2% sequentially versus the third quarter of 2005. Due to pricing discipline and a focus on higher-margin clients, gross margin on contractor sales continued to improve year-over-year as well as sequentially. Permanent placement sales were up 87% versus the fourth quarter of 2004. As a result of these improvements, overall gross margin increased by 170 basis points versus the fourth quarter of 2004 and 70 basis points sequentially versus the third quarter of 2005. Idea Integration revenue increased 9% versus the third quarter of 2005. Beeline continued to see strong demand for its workforce solutions offerings and consistent spending patterns from buyers of IT staffing services. The Company believes that overall market demand for IT staffing and solutions is relatively strong and sees the need for IT talent continuing to increase.

 

European Information Technology Services Segment

 

The Company’s European Information Technology Services segment is composed of Modis International, a leading provider of IT staffing services throughout the United Kingdom and continental Europe. As previously announced, in 2005 Modis International has been implementing initiatives designed to improve gross margin. These initiatives include the discontinuation of certain low-margin client accounts and altering service levels at certain other client accounts. As a result, revenue declined 8% versus the third quarter of 2005, but gross margin improved to 14.1% from 12.6% in the fourth quarter of 2004 and 13.3% in the third quarter of 2005. Excluding the impact of changes in currency exchange rates, Modis International revenue declined 6% versus the third quarter of 2005. The Company was pleased with the progress made during 2005 in its ongoing margin improvement initiatives.

 

Capital Update

 

During the fourth quarter, the Company generated operating cash flow of $25 million and used $8 million to repurchase its stock. During 2005, the Company spent $37 million to repurchase its stock. The Company has $53 million remaining on its stock buyback authorization.

 

At the close of 2005, the Company had a cash balance of $143 million and no borrowings outstanding under its credit facility.

 

Management Comments

 

Timothy Payne, MPS Chief Executive Officer, stated, “We are very pleased with our 2005 financial results, as we were able to grow revenues by 18% and net income by 68%. Across the board, all of our business units did a great job in driving new business and further developing the skills and professionalism of our staff. We appreciate the talents and hard work of all the people who contributed to our success in 2005.”

 

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MPS Group Reports Year-end Results

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February 8, 2006

 

“The continuing improvement in operating margin during the fourth quarter was due primarily to higher gross margins and management of the expense structure,” added Robert Crouch, MPS Chief Financial Officer. “We were pleased with our performance across all of our businesses, particularity with gross margin improvements both year-over-year and sequentially. Taking into account current trends in our business, we expect first quarter 2006 revenue of $420 million to $435 million. First quarter net income per diluted common share is expected to fall within the range of $0.13 to $0.16, which is expected to include $0.01 per share to reflect share-based related compensation expense and an effective tax rate of 37.5%.”

 

Conference Call Scheduled Today

 

The live broadcast of MPS Group’s conference call will begin at 10:00 a.m. Eastern Time today. The link to this event may be found at the Company’s website: www.mpsgroup.com. If you prefer, you may listen to the call by dialing (719) 457-2729.

 

If you are unable to participate at that time, online and telephonic replays will be available two hours after the call ends and will continue until 8:00 p.m. Eastern Time on February 15. To access the telephonic replay, please dial (719) 457-0820 and enter 4071073 when prompted for the passcode. The link for the online replay may also be found on the Company’s website.

 

About MPS Group

 

MPS Group is a leading provider of staffing, consulting and solutions in the disciplines of information technology, finance and accounting, law, engineering and healthcare. MPS Group delivers its services to government entities and businesses in virtually all industries throughout the United States, Canada, the United Kingdom and Europe. Headquartered in Jacksonville, Florida, MPS Group is a Fortune 1000 company and trades on the New York Stock Exchange under the ticker symbol “MPS.” For more information about MPS Group, visit www.mpsgroup.com. Except as expressly stated herein, none of the information on our website should be considered included in this release.

 

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MPS Group Reports Year-end Results

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February 8, 2006

 

Forward-Looking Statements

 

The statements contained in this press release should be considered forward-looking statements that are subject to risks, uncertainties or assumptions described above and may be affected by other factors, including, but not limited to: fluctuations in the economies and financial markets in the U.S. and foreign countries where we do business and in the Company’s industry segments in particular; industry trends toward consolidating vendor lists; the demand for the Company’s services, including the impact of changes in utilization rates; consolidation or bankruptcy of major customers; the effect of competition, including the Company’s ability to expand into new markets and to remain profitable or maintain profit margins in the face of pricing pressures; the Company’s ability to retain significant existing customers or obtain new customers; the Company’s ability to recruit, place and retain consultants and professional employees; the Company’s ability to identify and complete acquisition targets and to successfully integrate acquired operations into the Company; possible changes in governmental laws and regulations affecting the Company’s operations, including possible changes to laws and regulations relating to benefits for consultants and temporary personnel, and possible increased regulation of the employer-employee relationship; employment-related claims, costs, and other litigation matters; adjustments during periodic tax audits; litigation relating to prior and current transactions and activities; fluctuations in interest rates or foreign currency exchange rates; loss of key employees; fluctuations in the price of our common stock due to actual or anticipated changes in quarterly operating results, financial estimates, statements by securities analysts, and other events; and other factors discussed in the Company’s filings with the Securities and Exchange Commission. In some cases, you can identify forward-looking statements by terminology such as: “will,” “may,” “should,” “could,” “expects,” “plans,” “hopes,” “indicates,” “projects,” “anticipates,” “perhaps,” “believes,” “estimates,” “appears,” “predicts,” “potential,” “continues,” “would,” or “become,” or the negative of these terms or other comparable terminology. Readers are urged to review and consider the risk factors discussed in our Form 10-K for 2004 and in subsequent filings with the Securities and Exchange Commission.

 

Should one or more of these risks, uncertainties or other factors materialize, or should underlying assumptions prove incorrect, actual results, performance or achievements of the Company may vary materially from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements are based on beliefs and assumptions of the Company’s management and on information then currently available to management. Undue reliance should not be placed on such forward-looking statements. Forward-looking statements are not guarantees of performance. Such forward-looking statements were prepared by the Company based upon information available at the time of such statements. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update publicly any of them in light of new information or future events.

 

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MPS Reports Year-end 2005 Results

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February 8, 2006

 

MPS Group, Inc.

Unaudited Operating Highlights

(in thousands, except per share amounts)

 

     Three Months Ended    Year Ended
     December 31,

   December 31,

     2005

   2004

   2005

   2004

Operating Highlights:

                           

Revenue:

                           

North American Professional Services

   $ 140,692    $ 128,218    $ 537,257    $ 429,560

European Professional Services

     93,213      84,061      364,793      289,058

North American Information Technology Services

     131,172      132,283      510,499      459,470

European Information Technology Services

     60,116      76,222      272,150      248,754
    

  

  

  

Total revenue

     425,193      420,784      1,684,699      1,426,842
    

  

  

  

Gross profit:

                           

North American Professional Services

     43,279      38,125      160,400      123,783

European Professional Services

     26,334      22,731      104,320      80,402

North American Information Technology Services

     37,500      35,298      142,192      123,757

European Information Technology Services

     8,457      9,569      35,456      32,845
    

  

  

  

Total gross profit

     115,570      105,723      442,368      360,787
    

  

  

  

Operating income:

                           

North American Professional Services

     14,430      9,688      44,469      30,937

European Professional Services

     6,077      3,979      26,120      13,192

North American Information Technology Services

     10,777      8,193      37,324      28,022

European Information Technology Services

     920      1,003      4,485      2,401
    

  

  

  

Operating income before unallocated corporate expenses

     32,204      22,863      112,398      74,552

Unallocated corporate expenses

     5,579      7,167      25,412      22,419
    

  

  

  

Total operating income

     26,625      15,696      86,986      52,133

Interest and other income, net

     1,160      366      3,799      1,437
    

  

  

  

Income from operations before provision for income taxes

     27,785      16,062      90,785      53,570

Provision for income taxes

     7,769      4,754      31,188      18,150
    

  

  

  

Net income

   $ 20,016    $ 11,308    $ 59,597    $ 35,420
    

  

  

  

Diluted net income per common share

   $ 0.19    $ 0.11    $ 0.56    $ 0.33
    

  

  

  

Diluted common shares outstanding

     105,637      106,392      105,832      106,842
    

  

  

  

 

     As of

     December 31,    December 31,
     2005

   2004

Cash and cash equivalents

   $ 142,951    $ 106,497

Accounts receivable, net of allowance

     240,252      209,512

Other

     31,713      22,773
    

  

Current assets

     414,916      338,782

Long-term assets

     602,248      615,822
    

  

Total assets

   $ 1,017,164    $ 954,604
    

  

Current liabilities

   $ 130,177    $ 106,649

Other

     14,019      12,292

Stockholders’ equity

     872,968      835,663
    

  

Total liabilities and stockholders’ equity

   $ 1,017,164    $ 954,604
    

  

Working capital

   $ 284,739    $ 232,133
    

  

 

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MPS Group Reports Year-end 2005 Results

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February 8, 2006

 

MPS Group, Inc.

Unaudited Reconciliation of Non-GAAP Financial Measures to Most Comparable GAAP Financial Measures

 

Reconciliation of EBITDA to Net Income

(in thousands)

 

     Three Months Ended    Year Ended
     December 31,

   December 31,

     2005

   2004

   2005

   2004

EBITDA

   $ 30,259    $ 19,903    $ 102,303    $ 67,908

Depreciation and intangibles amortization

     3,634      4,207      15,317      15,775
    

  

  

  

Operating income

     26,625      15,696      86,986      52,133

Interest and other income, net

     1,160      366      3,799      1,437
    

  

  

  

Income from operations before provision for income taxes

     27,785      16,062      90,785      53,570

Provision for income taxes

     7,769      4,754      31,188      18,150
    

  

  

  

Net income

   $ 20,016    $ 11,308    $ 59,597    $ 35,420
    

  

  

  

 

Reconciliation of Year-Over-Year Quarterly Revenue Growth Rate, Excluding Acquisitions

 

     Professional     Soliant  
     NA Segment

    Health

 

GAAP revenue growth rate 4Q2004 to 4Q2005

   9.7 %   27.9 %

Revenue growth rate contributed from acquisitions

   2.5 %   13.0 %
    

 

Revenue growth rate 4Q2004 to 4Q2005, excluding acquisitions

   7.2 %   14.9 %
    

 

 

Reconciliation of Year-Over-Year Quarterly Revenue Growth Rate, Excluding

Acquisitions and the Effects of Changes in Currency Exchange Rates

 

     MPS     Professional     Badenoch &  
     Group

    Division

    Clark

 

GAAP revenue growth rate 4Q2004 to 4Q2005

   1.0 %   10.2 %   10.9 %

Revenue growth rate contributed from acquisitions

   1.4 %   1.6 %   —    

Revenue growth rate contributed from effects of changes in currency

   -2.5 %   -3.0 %   -7.5 %
    

 

 

Revenue growth rate 4Q2004 to 4Q2005, excluding acquisitions and the effects of changes in currency

   2.1 %   11.6 %   18.4 %
    

 

 

 

Reconciliation of Sequential Quarterly Revenue Growth Rate, Excluding Acqusitions

 

     Professional     Soliant  
     NA Segment

    Health

 

GAAP revenue growth rate 3Q2005 to 4Q2005

   0.9 %   7.7 %

Revenue growth rate contributed from acquisitions

   1.8 %   9.5 %
    

 

Revenue growth rate 3Q2005 to 4Q2005, excluding acquisitions

   -0.9 %   -1.8 %
    

 

 

Reconciliation of Sequential Quarterly Revenue Growth Rate, Excluding

Acquisitions and the Effects of Changes in Currency Exchange Rates

 

     Professional     Modis     Badenoch &  
     Division

    International

    Clark

 

GAAP revenue growth rate 3Q2005 to 4Q2005

   0.0 %   -8.2 %   -1.3 %

Revenue growth rate contributed from acquisitions

   1.2 %   —       —    

Revenue growth rate contributed from effects of changes in currency

   -0.9 %   -1.9 %   -2.0 %
    

 

 

Revenue growth rate 3Q2005 to 4Q2005, excluding acquisitions and the effects of changes in currency

   -0.3 %   -6.3 %   0.7 %
    

 

 

 

Reconciliation of Year-Over-Year 2005 Revenue Growth Rate, Excluding

Acquisitions and the Effects of Changes in Currency Exchange Rates

 

     MPS  
     Group

 

GAAP revenue growth rate 2004 to 2005

   18.1 %

Revenue growth rate contributed from acquisitions

   3.7 %

Revenue growth rate contributed from effects of changes in currency

   -0.3 %
    

Revenue growth rate 2004 to 2005, excluding acquisitions and the effects of changes in currency

   14.7 %
    

 

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