COMSYS IT Partners, Inc. (NASDAQ:CITP), a leading provider of
information technology staffing and consulting services, today
announced its financial results for the third quarter ended
September 27, 2009.
Third Quarter 2009 Financial
Results Show Sequential Improvements
- Revenue was $157.3 million, down
14.4% from $183.7 million during the third quarter of 2008, but up
sequentially from $156.8 million in the second quarter of this year
on one less billing day.
- Revenue per billing day,
excluding reimbursable expense revenue, increased sequentially by
2.1% from the second quarter of 2009.
- Net income was $3.0 million, or
$0.14 per common share, down from $6.0 million, or $0.30 per common
share, in the third quarter of 2008, but up sequentially from $2.4
million, or $0.11 per common share, in the second quarter this
year. Excluding restructuring charges, net income in the quarter
would have been $3.2 million, or $0.15 per common share.
- Gross margin was 24.6%, up from
24.5% in the second quarter this year.
- EBITDA, excluding restructuring
costs, was $6.5 million in the third quarter, down from $10.6
million in the third quarter of 2008, but up sequentially from $6.0
million in the second quarter of 2009. EBITDA, excluding
restructuring costs, is a non-GAAP measure defined below.
- Excess availability under
COMSYS’ revolving credit facility at the end of the third quarter
was $50.0 million.
“Our quarterly results included sequential improvements in
revenue, EBITDA and billable hours, and we are very pleased with
the acceleration in billable headcount increases in September,”
said Larry L. Enterline, COMSYS Chief Executive Officer. “Activity
levels have continued to strengthen in October. COMSYS was
fortunate during this recession to have the financial flexibility
to focus on our business, and we are gratified that we have been
able to position ourselves with the right people and resources to
take advantage of increasing demand for our services. We believe
that the preservation of our infrastructure, together with a
resurgence of demand from our financial services customers, has
resulted in market share gains for COMSYS through the addition of a
number of new clients and increased activity at legacy clients. We
plan to continue with our investments in new services offerings and
production personnel in the coming quarters, and use them to build
momentum as our markets improve.”
Enterline cautioned, “Although our third quarter results have
given us some cause for optimism that the worst may be behind us,
and we have some renewed visibility about our short-term prospects,
our overall outlook will remain cautious. Our clients’ budgets for
2010 will be the best indicator to us of where we stand in this
cycle, and we plan to reserve judgment until then on expected
demand for next year.”
Enterline added, “I would especially like to thank our
operations leaders and their staffs for their efforts during the
third quarter. We are pleased with the progress we continue to
make, and believe that COMSYS is positioned well to continue taking
advantage of its market opportunities.”
Amy Bobbitt, COMSYS Senior Vice President and Chief Accounting
Officer, commented, “In the third quarter, revenue increased on a
sequential basis for the first time since the second quarter of
2008. Billable headcount growth accelerated in September after
modest increases in July and August, and that growth has continued
into October. Revenue per billing day in September increased by
4.8% over revenue per billing day in June. In addition, gross
margin improved by 10 basis points over the second quarter of 2009,
and we continued to keep selling and administrative costs
relatively flat even with our growth-initiative spending.”
Bobbitt added, “Our average daily net debt for the third quarter
was $55.8 million versus average daily net debt in the second
quarter of $59.8 million. We expect to reduce our debt balance over
the remainder of 2009.”
Selected operating data and reconciliations of non-GAAP
financial measures to GAAP results for the third quarter ended
September 27, 2009, are included below.
Fourth Quarter and Full Year
2009 Financial Guidance
For the fourth quarter ending January 3, 2010, the Company
expects to report revenue in a range of $161 million to $166
million and net income in the range of $2.5 million to $3.6
million, or approximately $0.13 to $0.18 per diluted share, on
three more billing days than in the third quarter. For the year
ended January 3, 2010, the Company expects to report revenue in the
range of $638 million to $643 million, and net income before
restructuring charges in the range of $6.0 million to $7.1 million,
or approximately $0.49 to $0.54 per diluted share. These estimates
are also based on an effective tax rate of approximately 10%.
The net income and earnings per share estimates above exclude an
expected reversal of a portion of restructuring expense previously
recognized related to the Company's Washington, DC-area lease, as
well as any potential effects of the Company's quarterly review of
the recoverability of deferred tax assets. Management does not
expect to make any substantial cash payments for taxes in 2009.
Conference Call
Information
COMSYS will host a conference call tomorrow (October 29) at
10:00 a.m. Eastern time to discuss the quarterly financial results.
The conference call-in number is (913) 312-0403 and the
confirmation number is 5846450. The call will also be web cast live
at www.comsys.com and www.earnings.com and replayed for 30 days at
www.comsys.com. A seven-day
telephonic replay of this conference call will be available by
dialing (719) 457-0820. Callers should use the pass code 5846450 to
gain access to the replay, which will be available through the end
of the day on November 5, 2009.
About COMSYS IT
Partners
COMSYS IT Partners, Inc. (NASDAQ: CITP) is a leading IT services
company with 52 offices across the U.S. and offices in Puerto Rico,
Canada and the U.K. COMSYS service offerings include contingent and
direct hire placement of IT professionals and a wide range of
technical services and solutions addressing requirements across the
enterprise. TAPFIN Process Solutions delivers critical management
solutions across the resource spectrum from contingent workers to
outsourced services.
Forward-looking
Statements
Certain information contained in this press release may be
deemed forward-looking statements regarding events and financial
trends that could affect our plans, objectives, future operating
results, financial condition, performance and business. These
statements may be identified by words such as “estimate,”
“forecast,” “plan,” “intend,” “believe,” “should,” “expect,”
“anticipate,” or variations or negatives thereof, or by similar or
comparable words or phrases. These forward-looking statements are
largely based on our expectations and beliefs concerning future
events, which reflect estimates and assumptions made by our
management. These estimates and assumptions reflect our best
judgment based on currently known market conditions and other
factors relating to our operations and business environment, all of
which are difficult to predict and many of which are beyond our
control, including:
- economic declines that affect
our business, including our profitability, liquidity or the ability
to comply with applicable loan covenants;
- the financial stability of our
lenders and their ability to honor their commitments related to our
credit agreements;
- regulatory changes that impose
additional regulations or licensing requirements in such a manner
as to increase our costs of doing business or restrict access to
qualified technology workers;
- the risk of increased tax
rates;
- adverse changes in credit and
capital markets conditions that may affect our ability to obtain
financing or refinancing on favorable terms or that may warrant
changes to existing credit terms;
- the financial stability of our
customers and other business partners and their ability to pay
their outstanding obligations or provide committed services;
- changes in levels of
unemployment and other economic conditions in the United States, or
in particular regions or industries;
- the impact of changes in demand
for our services or competitive pressures on our ability to
maintain or improve our operating margins, including pricing
pressures;
- the risk in an uncertain
economic environment of increased incidences of employment
disputes, employment litigation and workers’ compensation
claims;
- our success in attracting,
training, retaining and motivating billable consultants and key
officers and employees;
- our ability to shift a larger
percentage of our business mix into IT solutions, project
management and business process outsourcing and, if successful, our
ability to manage those types of business profitably;
- weakness or reductions in
corporate information technology spending levels;
- our ability to maintain existing
client relationships and attract new clients in the context of
changing economic or competitive conditions;
- the entry of new competitors
into the U.S. staffing services and consulting markets due to the
limited barriers to entry or the expansion of existing competitors
in that market;
- increases in employment-related
costs such as healthcare and unemployment taxes;
- the possibility of our incurring
liability for the activities of our billable consultants or for
events impacting our billable consultants on our clients’
premises;
- the risk that we may be subject
to claims for indemnification under our customer contracts;
- the risk that cost cutting or
restructuring activities could cause an adverse impact on certain
of our operations; and
- adverse changes to management’s
periodic estimates of future cash flows that may affect our
assessment of our ability to fully recover our goodwill.
Although we believe our estimates and assumptions to be
reasonable, they are inherently uncertain and involve a number of
risks and uncertainties that are beyond our control. In addition,
management’s assumptions about future events may prove to be
inaccurate. Management cautions all readers that the
forward-looking statements contained in this report are not
guarantees of future performance, and we cannot assure any reader
that those statements will be realized or that the forward-looking
events and circumstances will occur. Actual results may differ
materially from those anticipated or implied in the forward-looking
statements due to various factors, including the factors listed in
this section and the “Risk Factors” section contained in our Annual
Report on Form 10-K as filed with the Securities and Exchange
Commission. All forward-looking statements speak only as of the
date of this report. We do not intend to publicly update or revise
any forward-looking statements as a result of new information,
future events or otherwise, except as required by law. These
cautionary statements qualify all forward-looking statements
attributable to us or persons acting on our behalf.
CITP_F
COMSYS IT PARTNERS,
INC.
OPERATING DATA, SUPPLEMENTAL
CASH FLOW INFORMATION AND NON-GAAP MEASURES
(IN THOUSANDS, EXCEPT OPERATING
DATA)
Three Months Ended Operating
Data: September 27, June 28,
September 28, 2009 2009
2008 Billing days 63 64 63 Billable hours 2,071,234
2,050,677 2,244,450
Revenue per billing day, excluding
reimbursable expense revenue (in thousands)
$ 2,458 $ 2,408 $ 2,840 Average bill rate $ 70.08 $ 70.84 $ 73.72
Gross margin 24.6 % 24.5 % 24.6 % Effective tax rate 5.4 % 6.1 %
15.5 % DSO 47 43 49 Average daily net debt balance (in millions) $
55.8 $ 59.8 $ 76.0
Three Months Ended Supplemental
Cash Flow Information: September 27, June 28,
September 28, 2009 2009
2008 Net cash provided by (used for) operating activities $
(5,989 ) $ 8,637 $ 3,549 Reimbursable expense revenue $ 2,456 $
2,656 $ 4,761 Stock-based compensation $ 891 $ 904 $ 1,118 Capital
expenditures $ 199 $ 251 $ 1,937
Three Months Ended
Nine Months Ended Non-GAAP Financial Measures:
September 27, June 28, September 28,
September 27, September 28, 2009
2009 2008 2009 2008
EBITDA, excluding restructuring costs: GAAP net income $
3,018 $ 2,386 $ 6,047 $ 3,533 $ 17,363 Depreciation and
amortization 2,106 2,050 2,185 6,230 5,903 Restructuring costs 155
321 - 4,096 - Interest expense, net 1,057 1,126 1,224 3,135 4,106
Other expense (income), net 45 (67 ) 40 (127 ) (185 ) Income tax
expense 164 216
1,105 623 3,847 EBITDA,
excluding restructuring costs $ 6,545 $ 6,032
$ 10,601 $ 17,490 $ 31,034
EBITDA, excluding restructuring
costs, as a % of GAAP revenue
4.2 % 3.8 % 5.8 % 3.7 % 5.6 %
A non-GAAP financial measure is a numerical measure of a
company’s performance, financial position, or cash flows that
either excludes or includes amounts that are not normally excluded
or included in the most directly comparable measure calculated and
presented in accordance with generally accepted accounting
principles ("GAAP"). We believe EBITDA, excluding restructuring
costs, to be relevant and useful information to our investors in
assessing our financial operating results as these measures are
used by our management in evaluating our financial performance,
liquidity, our ability to service debt and fund capital
expenditures. However, these measures should be considered in
addition to, and not as a substitute for, or superior to, measures
of financial performance prepared in accordance with generally
accepted accounting principles, and may not be comparable to
similarly titled measures reported by other companies. The non-GAAP
measures included in this press release have been reconciled to the
nearest GAAP measures as required under SEC rules regarding the use
of non-GAAP financial measures.
COMSYS IT PARTNERS,
INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
Three Months Ended Nine Months Ended
September 27, June 28, September
28, September 27, September 28,
2009 2009 2008 2009
2008 Revenues from services $ 157,305 $ 156,765 $
183,663 $ 476,764 $ 551,110 Cost of services 118,677
118,386 138,483 361,661
416,442
Gross profit 38,628
38,379 45,180 115,103
134,668 Operating costs and expenses:
Selling, general and administrative 32,083 32,347 34,579 97,613
103,634 Restructuring costs 155 321 - 4,096 - Depreciation and
amortization 2,106 2,050
2,185 6,230 5,903 34,344
34,718 36,764 107,939
109,537
Operating income 4,284
3,661 8,416 7,164 25,131 Interest expense, net 1,057 1,126 1,224
3,135 4,106 Other expense (income), net 45 (67
) 40 (127 ) (185 ) Income before
income taxes 3,182 2,602 7,152 4,156 21,210 Income tax expense
164 216 1,105 623
3,847
Net income $ 3,018
$ 2,386 $ 6,047 $ 3,533 $ 17,363
Net income per common share: Basic $ 0.14 $ 0.11 $ 0.30 $
0.17 $ 0.85 Diluted $ 0.14 $ 0.11 $ 0.30 $ 0.17 $ 0.84
Weighted average shares outstanding: Basic 19,815 19,796 19,612
19,795 19,594 Diluted 19,815 19,796 20,455 19,795 20,611
COMSYS IT PARTNERS,
INC.
CONSOLIDATED BALANCE
SHEETS
(IN THOUSANDS, EXCEPT SHARE AND
PAR VALUE AMOUNTS)
September 27, December 28, 2009
2008 Assets Current assets: Cash $
1,213 $ 22,695 Accounts receivable, net of allowance of $3,480 and
$3,232, respectively 191,266 202,297 Prepaid expenses and other
2,764 3,116 Restricted cash 2,486 2,489
Total current assets 197,729
230,597 Fixed assets, net 13,810 16,596 Goodwill
89,155 89,064 Other intangible assets, net 9,570 11,962 Deferred
financing costs, net 2,733 1,175 Restricted cash 308 308 Other
assets 1,104 1,478
Total
assets $ 314,409 $ 351,180
Liabilities and stockholders’ equity Current
liabilities: Accounts payable $ 122,060 $ 156,528 Payroll and
related taxes 26,947 25,975 Interest payable 271 337 Other current
liabilities 9,783 9,728
Total
current liabilities 159,061 192,568
Long-term debt 59,170 69,692 Other noncurrent liabilities
6,660 5,435
Total
liabilities 224,891 267,695
Commitments and contingencies
Stockholders’
equity: Preferred stock, no par value; 5,000,000 shares
authorized; none issued - -
Common stock, par value $.01;
95,000,000 shares authorized and 21,120,544 shares outstanding;
95,000,000 shares authorized and 20,465,028 shares outstanding,
respectively
210 203 Common stock warrants 1,734 1,734 Accumulated other
comprehensive loss (211 ) (90 ) Additional paid-in capital 229,974
227,360 Accumulated deficit (142,189 )
(145,722 )
Total stockholders’ equity 89,518
83,485
Total liabilities and stockholders’
equity $ 314,409 $ 351,180
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