On Assignment Reports Record Second Quarter 2012 Results
On Assignment Reports Record Second Quarter 2012 Results
Quarterly Revenues were $283 million up 97% year-over-year
EPS (excluding acquisition related costs of $0.10) was $0.28 versus $0.16 in Q2 2011
Adjusted EBITDA of $32.3 million (11.4% of Revenues) versus $14.8 million (10.3% of Revenues) in Q2 2011
CALABASAS, Calif.--(BUSINESS WIRE)--Jul. 26, 2012-- On Assignment, Inc. (NASDAQ: ASGN), a diversified professional staffing firm providing flexible and permanent staffing solutions in specialty skills including Life Sciences, Healthcare, Physician and Information Technology and Engineering, today reported results for the quarter ended June 30, 2012.
Second Quarter 2012 Highlights
Revenues for the second quarter of 2012 were $283.2 million, including $99.0 million from Apex Systems which was acquired on May 15th. Revenues were up 97 percent year-over-year and up 70 percent from the preceding quarter.
Revenue growth (excluding the acquisition of Apex Systems) was 28 percent over the second quarter of 2011.
Adjusted EBITDA (a non-GAAP measurement defined below) was $32.3 million, up 118 percent year-over-year.
Adjusted EBITDA margin (Adjusted EBITDA as a percent of revenues) for the quarter was 11.4 percent compared with 10.3 percent in the second quarter of 2011.
Net Income was $8.5 million, or $0.19 per diluted share and $13.0 million or $0.28 per diluted share excluding acquisition related costs (net of income tax).
Commenting on the results for the second quarter, Peter Dameris, President and Chief Executive Officer of On Assignment, Inc., said, “I’m very pleased with our results for the second quarter of 2012. Our revenue almost doubled year-over-year and net income before acquisition related costs, as well as our Adjusted EBITDA more than doubled. Apex accounted for $99 million of our second quarter revenues and our other business grew 28 percent year-over-year. We are very pleased that our efforts during the quarter continue to demonstrate our operating discipline in that we were able to complete an acquisition that roughly doubled the size of the Company while at the same time achieving above market growth in our other businesses.”
“Our second quarter results reflect our expected income contribution from the Apex acquisition.” Dameris continued, “In addition, these results, which included expansion of our operating margins, were not impacted by any synergy savings from the acquisition of Apex.”
Dameris concluded, “We will continue to maintain our operational discipline, as we have demonstrated in the past, by growing our market share without sacrificing our margins. The inclusion of Apex, together with continued growth of our other businesses, will significantly increase our free cash flow generation allowing us to focus on reducing our outstanding debt. During the second quarter, we repaid $23.4 million of our debt and reduced total leverage from 3.79 times trailing twelve months Adjusted EBITDA to under 3.4 times.”
Jim Brill, Senior Vice President and Chief Financial Officer of On Assignment, Inc., stated, “Consolidated gross margin was 31.4% in the second quarter of 2012. Oxford’s gross margin was 35.9%, Apex System’s gross margin was 27.3%, Life Sciences’ gross margin was 34.1%, Healthcare’s gross margin was 28.8% and Physician Staffing’s gross margin was 30.8%.”
Second Quarter 2012 Results
For the second quarter of 2012, consolidated revenues were $283.2 million, up 97.1 percent year-over-year and up 69.5 percent on a sequential basis. Apex, which was acquired on May 15, 2012, accounted for $99.0 in revenues for the quarter. Net income was $8.5 million, or $0.19 per diluted share. Excluding acquisition related expenses of $6.6 million ($3.8 million net of income tax) and the write off of deferred loan costs and non-recurring financing costs of $1.2 million together totaling $4.5 million after income tax, net income was $13.0 million, or $0.28 per diluted share, compared with $6.0 million, or $0.16 per diluted share in the second quarter of 2011.
Oxford, the legacy IT and Engineering segment revenues were up 35 percent, year-over-year. The Life Sciences segment revenues were up 2% year-over-year, the Healthcare segment which includes Nurse Travel and Allied Healthcare lines of business, grew 40% from the second quarter of 2011. Nurse Travel revenues were $16.8 million and included $5.3 million of revenue related to supporting customers that experienced labor disruption as compared to $0.9 million in labor disruption revenue in the same period in the prior year. Allied Healthcare revenues were up 26 percent year-over-year and Physician segment revenues, which were positively affected by the acquisition of Healthcare Partners in 2011, was up 47% from the second quarter of 2011.
SG&A was $69.3 million which included $6.6 million of acquisition related expenses, $1.6 million of depreciation, $2.2 million of amortization $2.3 million in equity based compensation and $0.5 million of income related to the adjustment of an acquisition related earn-out. Capital expenditures were $5.3 million, interest expense was $4.9 million which included the write-off of $1.2 million of deferred loan costs and non-recurring financing fees.
Third Quarter 2012 Financial Estimates
Based on revenue in the first three weeks of the second quarter, On Assignment is providing financial estimates for the quarter ending September 30, 2012 which do not include any acquisition related costs. Those estimates are as follows:
Revenues of $382 million to $388 million
Gross Margin of 30.3% to 30.6%
SG&A of $84 million which includes $1.9 million in depreciation, amortization of $3.8 million and $2.8 million in equity-based compensation expense
Adjusted EBITDA of $40.3 million to $43.2 million
Net income of $14.8 million to $16.5 million
Earnings per diluted share of $0.28 to $0.31
Diluted shares outstanding of 53 million
The estimates assume one less billable day in the third quarter than the second quarter and year-over-year revenue growth ranges in the high 20 percent for Oxford, a slight contraction for Life Sciences, low single digits for Healthcare (due to the labor disruption revenue in Nurse Travel in the 3rd quarter of 2011) and the low teens for Physician Staffing and Apex. The estimates above assume no deterioration in the staffing markets On Assignment serves.