EX-99.1 2 dex991.htm PRESS RELEASE DATED FEBRUARY 5, 2009 Press release dated February 5, 2009

Exhibit 99.1

 

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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 Full-Year 2008 Results

JACKSONVILLE, Fla. (February 5, 2009) — 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, 2008. Revenue was below the range of guidance previously provided by management, primarily due to the greater-than-expected negative impact of changes in foreign currency exchange rates. Fourth quarter diluted net income per common share (before the non-cash charge discussed below) was at the high end of guidance previously provided by management.

The Company’s fourth quarter results were affected by a non-cash goodwill impairment charge of $303 million, net of income taxes, or $3.48 per common share, that was recognized in accordance with SFAS 142. As previously disclosed, the Company is required to review goodwill annually during the fourth quarter. Due primarily to worsening macro-economic conditions and a deterioration in the Company’s stock price, a goodwill impairment charge was required to be recognized in the fourth quarter pursuant to SFAS 142. The impairment charge does not affect the Company’s cash position or the availability of borrowings under its credit facility.

2008 Full-Year Summary

 

 

Revenue was $2.2 billion, up 2% versus 2007;

 

 

Excluding the impact of acquisitions and changes in foreign currency exchange rates, revenue increased 1% versus 2007;

 

 

Full-year diluted net loss per common share was $2.64, including the aforementioned SFAS 142 non-cash goodwill impairment charge;

 

 

Full-year diluted net income per common share before the SFAS 142 charge was $0.75;

 

 

The Company generated $134 million in cash flow from operations in 2008; and

 

 

The Company ended the year with $91 million in cash on hand and borrowings of $7 million from its credit facility.

Fourth Quarter Summary

 

 

Revenue was $488 million, down 14% versus the fourth quarter of 2007;

 

 

Excluding the impact of acquisitions and changes in foreign currency exchange rates, revenue declined 7% versus the prior year’s fourth quarter;

 

 

Fourth quarter diluted net loss per common share was $3.36, including a non-cash charge of $3.48 per share in accordance with SFAS 142;

 

 

Fourth quarter diluted net income per common share before the SFAS 142 charge was $0.12; and

 

 

The Company generated $49 million in cash flow from operations during the fourth quarter.

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1 Independent Drive • Jacksonville, Florida 32202 • 904-360-2000 • 904-360-2814 fax

www.mpsgroup.com


MPS Group Announces Year-end Results

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February 5, 2009

 

Professional Services Division Performance

The Company’s Professional Services division reported revenue of $279 million for the fourth quarter of 2008. Below is further discussion of the fourth quarter performance of the Professional Services division’s two reporting segments.

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, and its business units operate respectively under the primary brands Accounting Principals, Special Counsel, Entegee, and Soliant Health.

For the fourth quarter of 2008, this segment’s revenue declined 5% versus the fourth quarter of 2007. Excluding the impact of acquisitions, the North American Professional Services segment revenue was down 9% versus the fourth quarter of 2007.

Overall gross margin in this segment was 30.7%, which was slightly higher sequentially versus the third quarter due to higher temporary staffing gross margins generated by all four business units. Permanent placement fees were down 27% versus the fourth quarter of 2007 and 27% sequentially versus the third quarter of 2008.

International Professional Services Segment

The Company’s International Professional Services segment is composed of Badenoch & Clark, a United Kingdom-based provider of finance and accounting and professional staffing services. Badenoch & Clark delivers its services in the United Kingdom, continental Europe, Australia, and Asia.

During the fourth quarter of 2008, Badenoch & Clark revenue declined 26% versus the fourth quarter of 2007. Excluding the impact of changes in foreign currency exchange rates, revenue declined 2% versus the fourth quarter of 2007.

Badenoch & Clark’s overall gross margin was 27.4%, which is lower than the gross margin generated last year, reflecting the shift in the mix of temporary placements to the lower-margin public sector and declining demand for permanent placements. Permanent placement fees were down 43% (27% on a constant currency basis) versus the prior year’s fourth quarter.

Information Technology Division Performance

The Company’s Information Technology division reported revenue of $209 million for the fourth quarter of 2008. Below is further discussion of the fourth quarter performance of the IT division’s two reporting segments.

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. The North American IT Services segment’s fourth quarter revenue was down 12% versus the fourth quarter of 2007.

The North American IT Services segment’s gross margin improved to 31.7%, up 150 basis points versus the fourth quarter of 2007. Higher temporary staffing margins from Modis and a greater mix of higher-margin revenue from Beeline had a positive impact on this segment’s gross margin for the fourth quarter of 2008. These factors were offset by fewer permanent placement fees during the fourth quarter.

 

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MPS Group Announces Year-end Results

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February 5, 2009

 

International Information Technology Services Segment

The Company’s International Information Technology Services segment is composed of Modis International, a leading provider of IT staffing services throughout the United Kingdom and Continental Europe. During the fourth quarter, Modis International revenue was down 19% versus the fourth quarter of 2007. Excluding the impact of acquisitions and changes in foreign currency exchange rates, revenue rose 1.0% versus the fourth quarter of 2007.

Even with fewer permanent placement fees, overall gross margin improved to 18.6%, and temporary staffing margins improved versus both the year-earlier quarter and the third quarter of 2008.

Capital Update

During 2008, the Company generated operating cash flow of $134 million. As of December 31, 2008, the Company had a cash balance of $91 million and borrowings of $7 million from its $250 million credit facility. During the fourth quarter, the Company used $11 million to buy back its common stock. As of today, $24 million remains on the Company’s stock buyback authorization.

Management Comments

Timothy Payne, MPS Chief Executive Officer, stated, “Our focus on high-demand professional specialties has fueled our growth in recent years. However, it has become clear that even this market segment is not going to be immune to the effects of poor economic conditions. The Company has seen a continuing decrease in demand for both permanent and temporary professionals in the fourth quarter. We have been and are continuing to take appropriate steps to adjust our cost structure to market conditions. We are fortunate to have a seasoned management team that has successfully navigated employment downturns in the past. Our near-term goals are to deliver the best financial results possible, given current conditions, while continuing to strengthen our company for the better days that surely lie ahead.”

“The Company had $224 million of working capital at year-end, including over $90 million in cash on hand, and minimal debt,” added Robert Crouch, MPS Chief Financial Officer. “Given current market conditions and the declining value of the British pound versus the dollar, we estimate our first quarter revenue and diluted net income per common share to be in the range of $410 million to $450 million and $0.02 to $0.07, respectively. We would like to caution investors that our ability to provide guidance on future results is impaired by the uncertain economic conditions.”

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 (913) 312-1273, confirmation 1074562.

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 6:00 p.m. on February 12. To access the telephonic replay, please dial (719) 457-0820 and enter 1074562 when prompted for the passcode. The link for the online replay may also be found on the Company’s website.

 

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MPS Group Announces Year-end Results

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February 5, 2009

 

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, marketing and creative, property, and healthcare. MPS Group delivers its services to businesses and government entities in the United States, Europe, Canada, Australia, and Asia. A Fortune 1000 company with headquarters in Jacksonville, Florida, MPS Group trades on the New York Stock Exchange. For more information about MPS Group, please visit www.mpsgroup.com.

Forward-Looking Statements

This press release contains forward-looking statements that are subject to certain 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; claims and liabilities asserted for the acts or omissions of our temporary employees; fluctuations in interest rates or foreign currency exchange rates; loss of key employees; fluctuations in the price of the Company’s 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,” “intends,” “plans,” “hopes,” “indicates,” “projects,” “can,” “anticipates,” “perhaps,” “probably,” “believes,” “estimates,” “appears,” “predicts,” “potential,” “continues,” “would,” or “become,” or other comparable terminology or the negative of these terms or other comparable terminology. Readers are urged to review and consider the matters discussed in “Item 1A. Risk Factors” of the Company’s Form 10-K for the year ended December 31, 2007 and discussion of risks or uncertainties 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 Group Announces Year-end Results

Page  5   

February 5, 2009

 

MPS Group, Inc.

Unaudited Operating Highlights

(in thousands, except per share amounts)

 

     Three Months Ended
December 31,
   Twelve Months Ended
December 31,
     2008     2007    2008     2007

Operating Highlights:

         

Revenue:

         

North American Professional Services

   $ 169,082     $ 177,271    $ 726,535     $ 690,073

International Professional Services

     109,845       149,237      553,228       547,460

North American Information Technology Services

     141,843       161,095      613,697       628,641

International Information Technology Services

     66,775       82,362      328,840       305,661
                             

Total revenue

     487,545       569,965      2,222,300       2,171,835
                             

Gross profit:

         

North American Professional Services

     51,989       57,706      223,285       219,775

International Professional Services

     30,074       46,987      165,120       164,111

North American Information Technology Services

     44,923       48,709      190,448       184,809

International Information Technology Services

     12,410       14,903      58,041       53,593
                             

Total gross profit

     139,396       168,305      636,894       622,288
                             

Operating income before goodwill impairment charge:

         

North American Professional Services

     13,805       19,639      65,450       70,854

International Professional Services

     2,010       10,314      25,849       37,279

North American Information Technology Services

     8,865       9,499      42,191       42,801

International Information Technology Services

     2,913       5,143      12,792       13,116
                             

Total operating income before goodwill impairment charge

     27,593       44,595      146,282       164,050
                             

Goodwill impairment charge:

         

North American Professional Services

     49,928       —        49,928       —  

International Professional Services

     94,336       —        94,336       —  

North American Information Technology Services

     205,114       —        205,114       —  

International Information Technology Services

     29,891       —        29,891       —  
                             

Total goodwill impairment charge

     379,269       —        379,269       —  
                             

Operating income (loss):

         

North American Professional Services

     (36,123 )     19,639      15,522       70,854

International Professional Services

     (92,326 )     10,314      (68,487 )     37,279

North American Information Technology Services

     (196,249 )     9,499      (162,923 )     42,801

International Information Technology Services

     (26,978 )     5,143      (17,099 )     13,116
                             

Operating income (loss) before unallocated corporate expenses

     (351,676 )     44,595      (232,987 )     164,050

Unallocated corporate expenses

     8,191       8,192      30,912       30,414
                             

Operating income (loss)

     (359,867 )     36,403      (263,899 )     133,636

Other income (expense), net

     (1,390 )     992      (5,649 )     6,911
                             

Income (loss) before provision for (benefit from) income taxes

     (361,257 )     37,395      (269,548 )     140,547

Provision for (benefit from) income taxes

     (68,288 )     13,844      (33,586 )     53,459
                             

Net income (loss)

   $ (292,969 )   $ 23,551    $ (235,962 )   $ 87,088
                             

Diluted net income (loss) per common share

   $ (3.36 )   $ 0.24    $ (2.64 )   $ 0.86
                             

Diluted common shares outstanding

     87,098       97,609      89,391       101,086
                             

 

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MPS Group Announces Year-end Results

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February 5, 2009

 

MPS Group, Inc.

Unaudited Operating Highlights

(in thousands, except per share amounts)

 

     As of
     December 31,
2008
   December 31,
2007

Cash and cash equivalents

   $ 90,566    $ 105,285

Short-term investments

     —        2,500

Accounts receivable, net of allowance

     282,093      323,804

Other

     24,198      32,115
             

Current assets

     396,857      463,704

Long-term assets

     399,035      745,947
             

Total assets

   $ 795,892    $ 1,209,651
             

Current liabilities

   $ 173,147    $ 198,554

Credit facility

     7,313      —  

Other

     23,962      34,752

Stockholders' equity

     591,470      976,345
             

Total liabilities and stockholders' equity

   $ 795,892    $ 1,209,651
             

Working capital

   $ 223,710    $ 265,150
             

 

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MPS Group Announces Year-end Results

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February 5, 2009

 

MPS Group, Inc.

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

Reconciliation of EBITDA Before Goodwill Impairment Charge to Net Income (Loss)

(in thousands)

 

     Three Months Ended
December 31,
   Twelve Months Ended
December 31,
     2008     2007    2008     2007

Earnings before interest, taxes, depreciation and amortization (EBITDA) and before goodwill impairment charge

   $ 24,408     $ 41,910    $ 137,148     $ 153,753

Goodwill impairment charge

     379,269       —        379,269       —  

Depreciation and intangibles amortization

     5,006       5,507      21,778       20,117
                             

Operating income (loss)

     (359,867 )     36,403      (263,899 )     133,636

Other income (expense), net

     (1,390 )     992      (5,649 )     6,911
                             

Income (loss) before provision for (benefit from) income taxes

     (361,257 )     37,395      (269,548 )     140,547

Provision for (benefit from) income taxes

     (68,288 )     13,844      (33,586 )     53,459
                             

Net income (loss)

   $ (292,969 )   $ 23,551    $ (235,962 )   $ 87,088
                             

Reconciliation of Diluted Net Income per Common Share Before SFAS 142 Charge to Diluted Net Income per Common Share

 

     Three Months Ended
December 31,
   Twelve Months Ended
December 31,
     2008     2007    2008     2007

Diluted net income per common share before goodwill impairment charge

   $ 0.12     $ 0.24    $ 0.75     $ 0.86
                             

Goodwill impairment charge, net:

         

Goodwill impairment, pre-tax

     4.35       —        4.24       —  

Tax benefit from goodwill impairment charge

     (0.87 )     —        (0.85 )     —  
                             

Goodwill impairment charge, net

     3.48       —        3.39       —  
                             

Diluted net income (loss) per common share

   $ (3.36 )   $ 0.24    $ (2.64 )   $ 0.86
                             

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

Acquisitions and the Effects of Changes in Foreign Currency Exchange Rates

 

     MPS Group     IT
N. American
    IT
International
    Professional
N. American
 

Revenue growth rate 4Q2007 to 4Q2008, excluding acquisitions and the effects of changes in foreign currency

   -6.6 %   -12.1 %   1.0 %   -8.9 %

Revenue growth rate contributed from acquisitions

   2.7 %   1.6 %   6.0 %   4.3 %

Revenue growth rate contributed from effects of changes in currency

   -10.6 %   -1.5 %   -25.9 %   —    
                        

GAAP revenue growth rate 4Q2007 to 4Q2008

   -14.5 %   -12.0 %   -18.9 %   -4.6 %
                        

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

the Effects of Changes in Foreign Currency Exchange Rates

 

     Professional
International
    Prof. Int'l.
Perm. Fees
 

Revenue growth rate 4Q2007 to 4Q2008, excluding the effects of changes in foreign currency

   -2.0 %   -26.6 %

Revenue growth rate contributed from effects of changes in currency

   -24.4 %   -16.4 %
            

GAAP revenue growth rate 4Q2007 to 4Q2008

   -26.4 %   -43.0 %
            

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

Acquisitions and the Effects of Changes in Foreign Currency Exchange Rates

 

     MPS Group  

Revenue growth rate 2007 to 2008, excluding acquisitions and the effects of changes in foreign currency

   1.4 %

Revenue growth rate contributed from acquisitions

   4.0 %

Revenue growth rate contributed from effects of changes in currency

   -3.1 %
      

GAAP revenue growth rate 2007 to 2008

   2.3 %
      

 

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