MPS Group - 2008 Results
MPS Group Announces Fourth Quarter and Full-Year 2008 Results
MPS Group, Inc. has announced its 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
The Companys fourth quarter results were affected by a non-cash goodwill impairment charge of $303 million, net of income taxes. Due primarily to worsening macro-economic conditions and a deterioration in the Companys 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 Companys cash position or the availability of borrowings under its credit facility.
2008 Full-Year Summary
Revenue was $2.2 billion, up 2% versus 2007
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.
Professional Services Division Performance
The Companys Professional Services division reported revenue of $279 million for the fourth quarter of 2008.
North American Professional Services SegmentThe Companys 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 Companys 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 & Clarks 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 years fourth quarter.
Information Technology Division Performance
The Companys Information Technology division reported revenue of $209 million for the fourth quarter of 2008. The Companys 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 segments fourth quarter revenue was down 12% versus the fourth quarter of 2007.
The North American IT Services segments 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 segments gross margin for the fourth quarter of 2008. These factors were offset by fewer permanent placement fees during the fourth quarter.
International Information Technology Services Segment The Companys 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.