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SFN Group Announces First Quarter 2010 Financial Results

SFN Group Announces First Quarter 2010 Financial Results

SFN Group Inc. has announced financial results for the first quarter ended March 28, 2010.

SFN Group president and CEO Roy Krause commented, "The SFN Group team performed well during the quarter as the economy continued to improve. We achieved significant year over year improvement in adjusted EBITDA resulting from 8.7% higher revenues, including the recently acquired Tatum LLC, and continued effective cost management. We are also pleased to report that we have completed integration activities related to the acquisition of Tatum."

FINANCIAL HIGHLIGHTS
First quarter 2010 revenues were $463 million compared with $426 million last year.
Loss from continuing operations in the first quarter was $3.2 million, or $0.06 per share, compared with a loss of $6.5 million, or $0.12 per share, in the prior year.
Adjusted loss from continuing operations (defined below) in the first quarter was $1.8 million, or $0.03 per share, compared with an adjusted loss in the same prior year period of $4.1 million, or $0.08 per share.
Adjusted EBITDA (defined below) in the first quarter was $4.6 million, or 1.0% of revenues, compared with $0.6 million, or 0.1% of revenues, in the prior year.
Net debt was $32.9 million at the end of the first quarter. Availability under the credit facility was $95.3 million as of the end of the quarter.

Krause continued, "Our focus on the expansion of Professional Services has increased that portion of the Company to 47% of total revenues and 59% of total gross profit. Within that segment, both SourceRight Solutions and Tatum are uniquely positioned to allow us to take market leadership positions in outsourcing services and services to the Office of the CFO. This strategy should help us increase EBITDA margin as the market continues to improve."

FIRST QUARTER OPERATING PERFORMANCE
Within Professional Services, first quarter revenues were up 13.4% compared with the same prior year period due to the Tatum acquisition and SourceRight Solutions growth. Gross profit was up 2.6% compared with last year while SG&A expenses were flat, allowing segment operating profit to increase to $3.8 million, or 1.7% of revenues, compared with $2.5 million, or 1.3% of revenues, last year.

Year over year revenues in Staffing Services for the quarter were up 4.8% compared with the same period last year. Gross profit was flat compared with last year while SG&A expenses decreased 7.6%. Segment operating profit was a loss of $1.1 million, or (0.4%) of revenues, compared with a loss of $3.9 million, or (1.7%) of revenues, last year.

As previously announced, the Company realigned its operating segments during the first quarter of 2010. Our managed service provider (MSP) and professional contingent workforce services businesses are now operated under the SourceRight Solutions brand in Professional Services rather than within Staffing Services. Additionally, several large clerical accounts were moved out of Professional Services and are now reported within Staffing Services. Internal organizational and business strategy changes precipitated these movements. Historical operating segment results reflecting these changes for the quarters of 2009 have been restated and posted on the Company's website. This information can be accessed in the Investor Relations section of the SFN Group website at www.sfngroup.com.

OTHER ITEMS
The Company recorded restructuring and other charges during the quarter of $2.3 million ($1.4 million after tax or $0.03 per share) related primarily to the acquisition of Tatum LLC.

OUTLOOK
Revenues per day in the first three weeks of April, including Tatum, were about 22% higher than during the same prior year period. Professional Services and Staffing Services revenues per day, including Tatum, were up about 33% and 13%, respectively, compared with the same prior year period.

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