Corporate Resource Services announces Q3 results
Corporate Resource Services today announced results for the third quarter ended October 4, 2013.
The company had revenues of $209.0 million, an increase of 16% over the same quarter in 2012, while gross margins increased 40 basis points and SG&A expense as a percentage of revenue continued to drop – from 10.2% for the same quarter in 2012, to 9.4% this quarter.
Adjusted EBITDA for the quarter was $6.7 million and net income improved to a record $4.4 million. This is the fifth consecutive quarter of profitability for the company.
“Our results for the third quarter reflect our continued success at executing on strategic initiatives aimed at improving profitability,” said John Messina, CEO of Corporate Resource Services. “We continue to generate superior top-line growth and are very focused on controlling expenses. We believe that we will be able to continue this trend of improving margins and have set long-term goals to be among the best in our industry.”
“Through our management of expenses both above and below the gross margin line and our focus on offering higher margin services, we are making excellent progress in improving our profitability,” said Michael J. Golde, Chief Financial Officer of CRS. “We are committed to generating higher margins on the full suite of services we offer to our clients, and we expect that our profitability will continue to improve. For the first nine months of the year, we grew revenues by more than 25%, improved our adjusted EBITDA by $11.1 million and increased our net income by $10.1 million.”
Third Quarter 2013 results
Revenues for the third quarter 2013 were $209.0 million, an increase of $28.6 million, or 15.8% compared to revenues of $180.4 million for the three months ended September 28, 2012, restated to reflect the pooling of interest accounting relating to the Summit Software acquisition. Prior to the effect of this restatement, revenues increased by 16.3%. The company assert that part of the increase in revenues is attributable to acquisitions that it made late in 2012 and in 2013 that added $6.9 million in revenues. They believe that the 12.0% organic growth in revenues will be among the industry leaders.
Gross profit for the third quarter of 2013 increased by $4.3 million, or 20.1%, to $25.9 million as compared to $21.6 million for the three months ended September 28, 2012. As a percentage of revenues, gross profit increased from 12.0% in the 2012 period to 12.4% in the 2013.
Corporate Resource Services continue to implement initiatives intended to increase our gross profit, including the diversification of our service offerings, the continued review of pricing charged to all customers, and more effective management of state unemployment taxes.
For the third quarter, selling, general and administrative expenses increased by $1.3 million or 6.9% to $19.7 million, or 9.4% of revenues, as compared to $18.4 million, or 10.2% of revenues, for the three months ended September 28, 2012.
The increase was primarily due to increased professional fees, NASDAQ listing fees in September 2013, an increase in stock-based compensation and costs relating to supporting the company's revenue growth. The increase was offset by the company's ability to curb and reduce non-personnel costs including its ongoing consolidation of offices and functions in connection with its announced rebranding and consolidation.
The company state that revenue growth has allowed it to better leverage its fixed costs as indicated by the year-over-year decrease in selling, general and administrative costs as a percentage of revenues.
It continues to undertake initiatives to reduce selling, general and administrative costs through consolidation of select offices and administrative functions. It also expects that the integration of recently acquired operations will result in continued reduced selling, general and administrative costs as a percentage of revenues in the remainder of 2013 and beyond.
Depreciation and amortization expenses was $466,000 for the quarter, as compared to $453,000 in the three months ended September 28, 2012.
EBITDA excluding stock-based compensation and acquisition expenses was $6.7 million for the quarter, an increase of 106% over the $3.3 million posted in the same quarter of 2012. As a percentage of revenues, the adjusted EBITDA margin increased from 1.8% in 2012 to 3.2% for this quarter, and increased sequentially from 2.2% in the second quarter.
Interest expense decreased from $1.1 million for the three months ended September 28, 2012 to $927,000 for the three months ended October 4, 2013, due to renegotiated lower borrowing rates and a shift in borrowings to lower-cost credit facilities, partially offset by a higher volume of accounts receivable financing during the 2013 period as operations grew.
The company incurred acquisition expenses of $34,000 for the three months ended October 4, 2013, compared to $84,000 for the three months ended September 28, 2012. These expenses consisted primarily of legal and accounting fees.
For the three months ended October 4, 2013, the company recorded other expense of $24,000 compared to other income of $2,000 for the three months ended September 28, 2012.
Net income was $4.3 million for the third quarter 2013, compared to $1.4 million for the three months ended September 28, 2012. Net income available to common shareholders of the company was $4.4 million for the third quarter 2013, an increase of 216% from the $1.4 million for the three months ended September 28, 2012.
Yesterday the company announced its acquisition of FlexPlus and last month it acquired Cameo Employment Services.