On Assignment 2010 Financial and Operational Highlights
On Assignment, Inc. the diversified professional staffing firm providing flexible and permanent staffing solutions in specialty skills including Laboratory/Scientific, Healthcare/Nursing, Physicians, Medical Financial, Information Technology and Engineering, has reported results for the quarter and the year ended December 31, 2010.
2010 Financial and Operational Highlights
Revenues for the fourth quarter of 2010 were $121.2 million, up 21% from $99.9 million in the fourth quarter of 2009 and up 4% from $116.1 million in the third quarter of 2010.
Gross Margin was 34.9% for the quarter and a record 34.1% for the full year.
Adjusted EBITDA (a non-GAAP measurement defined below) was $11.6 million or 9.6% of revenues compared to $7.8 million or 7.8% of revenues in the fourth quarter of 2009.
Net Income (before goodwill impairment charges and the write-off of deferred loan costs) was $2.8 million or $0.08 per diluted share.
Bank Debt was voluntarily paid down by $10 million during the quarter.
291,212 shares of common stock were repurchased during the quarter at an average price of $6.84 per share under the Company's Share Repurchase Plan.
The Company announced on December 22, 2010 the signing of a letter of intent to acquire an independent clinical research staffing firm in Western Europe.
Peter Dameris, President and Chief Executive Officer of On Assignment, Inc., said, "We are very pleased that our quarterly revenue growth rate for the fourth quarter of 2010 was the fastest of the year. Our discipline in protecting our margins and our efforts in expense control are beginning to pay off as revenue growth returns. In 2010 we were successful in creating value for our shareholders and employees by substantially reducing our long term debt, expanding our consolidated gross margin, expanding our service offerings and maintaining a high EBITDA margin." Dameris concluded, "Our third and fourth quarter results demonstrate the operating leverage we believe lies ahead for our company. Moreover, we continue to see good acquisition opportunities that can complement our organic growth. Last month, we executed a letter of intent to acquire one of the largest privately owned clinical staffing firms in Western Europe. This company generated approximately $20 million in revenue in 2010 and we expect its addition to be accretive to our earnings in 2011."
Jim Brill, Senior Vice President and Chief Financial Officer of On Assignment, Inc., stated, "Our fourth quarter gross margin remained strong and expanded over the fourth quarter of 2009. In the fourth quarter of 2010 gross margin in IT and Engineering was 36.1%, in Life Sciences it was 36.2%, Healthcare gross margin was 29.6%, while Physician staffing gross margin was 34.1%, all of which contributed to a record gross margin for the full year of 34.1%."
Fourth Quarter 2010 Results
For the fourth quarter of 2010, consolidated revenues were $121.2 million, up 4.3% and 21.2% on a sequential and year over year basis, respectively. The Company had net income before the impairment of goodwill ($15.4 million) and the write-off of deferred loan costs ($1.1 million net of tax) of $2.8 million or $0.08 per share compared with net income of $3.2 million in the third quarter of 2010 and net income of $1.0 million or $0.03 per share in the fourth quarter of 2009.
The IT and Engineering segment revenues were $54.2 million, up 14.3% from the third quarter of 2010 and 52.5% from the fourth quarter of 2009. Life Sciences segment revenues were $30.9 million, up 2.7% from the third quarter of 2010 and 34.5% from the fourth quarter of 2009. Healthcare segment revenues, which include Nurse Travel and Allied Healthcare lines of business, were $18.5 million, down 6.6% from the third quarter of 2010 and down 13.1% from the fourth quarter of 2009. Nurse Travel revenues were $8.5 million, which included $0.8 million of revenue generated from supporting a customer that experienced labor disruption during the quarter, compared with $9.7 million in the third quarter of 2010 which included $2.2 million of revenue generated from supporting a customer labor disruption during the quarter, and $9.6 million in the fourth quarter of 2009. Allied Healthcare revenues were $10.1 million, down slightly from $10.2 million in the third quarter of 2010 and down 14.8% from the fourth quarter of 2009 which included a significant amount of revenue related to the flu pandemic. Physician segment revenues were $17.5 million, down 6.8% from the third quarter of 2010 and down 12.7% from the fourth quarter of 2009.
SG&A increased by $1.7 million over the third quarter in part due to increases in field employee related expenses resulting from increased revenues, a $0.3 million increase in equity based compensation to $2.4 million and $0.3 million in acquisition related expenses. During the quarter the Company refinanced its debt and paid the outstanding amount down to $66.75 million. The new facility increases the Company's borrowing capacity and reduces its interest rate by about 350 basis points. The refinancing resulted in $2.2 million of deferred financing costs being written off in the quarter. Capital expenditures were $2.1 million, amortization of intangibles was $0.5 million and depreciation was $1.5 million. In addition, the Company took a $15.4 million goodwill impairment charge relating to its Nurse Travel business.
First Quarter 2011 Financial Estimates
Based on revenues in the first six weeks of the first quarter of 2011 and taking into account the Company's normal seasonal operating patterns, the Company's financial estimates for the quarter ending March 31, 2011 are as follows:
Revenues of $120 to $123 million
Gross Margin of approximately 33.3%
SG&A of approximately $35.1 million which excludes any acquisition related expenses but includes depreciation of approximately $1.6 million, amortization of approximately $0.3 million and approximately $1.4 million in equity-based compensation expense
Adjusted EBITDA of $8.1 to $9.4 million
Net income of $2.1 to $2.9 million
Earnings per diluted share of $0.05 to $0.07