On Assignment Reports Record Quarterly Revenue and Earnings
On Assignment Reports Record Quarterly Revenue and Earnings
Revenues up 40% Year-over-Year and 13% sequentially
On Assignment, Inc. a leading global provider of diversified professional staffing solutions, today reported results for the quarter ended September 30, 2011.
“We also continue to generate significant operating leverage, such that our Adjusted EBITDA growth is considerably higher than our revenue growth. On the incremental revenue generated during the first nine months of 2011 over the same period in 2010, we generated a 17% Adjusted EBITDA margin.”
Third Quarter 2011 Highlights
Revenues for the third quarter of 2011 were $162.4 million, up 40% year-over-year and 13% sequentially.
Gross Margin was 33.6%.
Adjusted EBITDA (a non-GAAP measurement defined below) for the quarter was $18.2 million, up 55% year-over-year.
Adjusted EBITDA margin (Adjusted EBITDA as a % of revenues) for the quarter was 11.2% compared with 10.1% in the third quarter of 2010.
Net Income was $7.8 million, or $0.21 per diluted share for the quarter compared with $3.2 million, or $0.09 per diluted share, in the third quarter of 2010.
During the third quarter and through October 26, 2011, the Company repurchased under its stock buyback program approximately 325,000 shares at an average price of $6.87 per share.
Peter Dameris, President and Chief Executive Officer of On Assignment, Inc., said, “We are very pleased that, for the first time since Q3 of 2007, all of our operating segments reported for the quarter both sequential and year-over-year revenue growth, with each segment contributing double-digit revenue increases as compared with the third quarter of 2010. While the economic environment remains difficult, our client diversification and focus on highly-skilled positions have served us well and permitted us to report record quarterly revenues.”
Commenting on the results for the third quarter, Dameris continued, “During the quarter, revenues at our IT & Engineering segment grew 48% year-over-year and Life Sciences segments grew 39%. Revenues in our Healthcare segment, which resumed growth in the first quarter after over two years of decline, grew 36% year-over-year and revenues in our Physician Staffing segment, which includes two months of contribution from the acquisition of HealthCare Partners, grew 24%.”
Dameris concluded, “We also continue to generate significant operating leverage, such that our Adjusted EBITDA growth is considerably higher than our revenue growth. On the incremental revenue generated during the first nine months of 2011 over the same period in 2010, we generated a 17% Adjusted EBITDA margin.”
Jim Brill, Senior Vice President and Chief Financial Officer of On Assignment, Inc., stated, “Our third quarter gross margin of 33.6% was down 38 basis points from the second quarter of 2011 due in part to a reduction in direct hire and conversion revenue as a percent of revenue and the relative increase in lower margin Nurse Travel revenue. In the third quarter of 2011, gross margin in our IT and Engineering division was 35.8%, in Life Sciences it was 33.9%, Healthcare gross margin was 27.5% and Physician staffing gross margin was 33.3%.”
Third Quarter 2011 Results
For the third quarter of 2011, consolidated revenues were $162.4 million, up 39.8% year-over-year and up 13.0% sequentially. The company had net income of $7.8 million, or $0.21 per diluted share, compared with net income of $3.2 million, or $0.09 per diluted share in the third quarter of 2010.
The IT and Engineering segment revenues were $70.1 million, up 47.7% year-over-year and 7.3% sequentially. Life Sciences segment revenues were $41.8 million, up 39.1% year-over-year and 5.5% from the second quarter of 2011. Healthcare segment revenues, which include the Nurse Travel and Allied Healthcare lines of business, were $27.1 million, up 36.4% year-over-year and 24.6% sequentially. Nurse Travel revenues (which included $3.9 million and $2.2 million in the third quarter of 2011 and 2010, respectively, and $0.9 million in the second quarter of 2011 in revenue generated from supporting customers that experienced labor disruptions) were $15.4 million, up 58.2% year-over-year and 41.9% sequentially. Allied Healthcare revenues were $11.7 million, up 15.5% year-over-year and 7.5% sequentially. Physician segment revenues which included two months of revenue related to the recent acquisition of HealthCare Partners were $23.4 million, up 24.5% year over year and 37.5% sequentially.
SG&A increased by $2.8 million over the second quarter of 2011 primarily due to the acquisition of HealthCare Partners, higher branch office expenses, mainly commissions on the higher revenue levels and headcount additions to support anticipated high growth in certain segments and a $1.3 million expense reduction in the second quarter from a favorable settlement of an acquisition earnout. Capital expenditures were $1.4 million, amortization of intangibles was $0.7 million and depreciation was $1.7 million.
Fourth Quarter 2011 Financial Estimates
Based on revenues in the first three weeks of the fourth quarter of 2011 and taking into account the Company’s normal seasonal operating patterns, the Company’s financial estimates for the quarter ending December 31, 2011 are as follows:
Revenues of $157 million to $159 million
Gross Margin of approximately 33.2%
SG&A of approximately $41.5 million which includes $0.2 million in acquisition-related expenses, depreciation of approximately $1.6 million, amortization of approximately $0.7 million and approximately $1.8 million in equity-based compensation expense
Adjusted EBITDA of $15.0 million to $15.8 million
Net income of $5.8 million to $6.3 million
Earnings per diluted share of $0.15 to $0.16
The estimates above assume no deterioration in the staffing markets On Assignment serves, normal seasonal patterns, no weather related plant closures and no longer than normal holiday patterns for our clients. Excluding labor disruption revenue from the third quarter 2011, fourth quarter revenue is estimated to increase, on an average billable day basis, over the third quarter. This estimate is based on there being 64 billable days in the third quarter and 61 billable days in the fourth quarter. The estimates assume year-over-year revenue growth in the low 30% range for IT and Engineering and for Life Sciences, the low 20% range for Healthcare and the high 30% range for Physician Staffing.