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On Assignment Reports Results for Third Quarter of 2015

Third Quarter Highlights

Revenues were $572.1 million up 29.3 percent year-over-year (30.3 percent on a constant currency basis). Constant currency revenues and growth rates for the quarter were calculated using the foreign currency exchange rates from the same period in the prior year.

Revenues on a pro forma basis were up 13.4 percent year-over-year (14.2 percent on a constant currency basis). Pro forma results assume the acquisitions of Creative Circle, LLC ("Creative Circle") and a small Life Sciences business inEurope (the "Acquisitions") occurred at the beginning of 2014.

Revenues, excluding the contribution from the Acquisitions, were $496.4 million, up 12.2 percent year-over-year (up 13.1 percent, on a constant currency basis).

Adjusted EBITDA (a non-GAAP measure defined below) was $74.9 million, or 13.1 percent of revenues.

Adjusted income from continuing operations (a non-GAAP measure defined below) was $43.8 million ($0.82 per diluted share).

Leverage ratio (total indebtedness to trailing 12 months Adjusted EBITDA) was 3.21 to 1 at September 30, 2015, down from 3.51 to 1 at June 30, 2015.

Raising revenue estimates for the fourth quarter of 2015 to $563 million to $568 million (an increase of $15 million to $20 million).

Commenting on the results, Peter Dameris, President and Chief Executive Officer of On Assignment, Inc., said, "Our third quarter results were strong on all financial metrics. Revenue growth, Adjusted EBITDA, Adjusted EPS and free cash flow generation exceeded our initial expectations. We are particularly pleased with our higher revenue growth rates, which reflect, among other things, the contributions from our "hiring surge" of sales consultants and recruiters that began in the second half of 2014.

"We are raising our revenue estimates for the fourth quarter (implied from the high end of our previously announced estimates for the second half and the third quarter of 2015) to $563 million to $568 million, an increase of $15 million to $20 million. As a result of the strength we are seeing in business and the favorable demand outlook, we are making additional investments in the number of recruiters and sales consultants. We have added approximately 100 staffing consultants since the end of the second quarter. We believe that this additional headcount and the improving contribution from the headcount added during our hiring surge in the second half of 2014, will better position us to capture the current market opportunity and improve our growth in 2016."

Dameris concluded, "We believe the secular trend of customers wanting to share human capital has driven attractive growth for the entire professional staffing industry. Customers are continuing to embrace the realization that the best way to "fractionalize"/share human capital and avoid the legal risks of misclassifying employees is by working with a staffing firm. As the secular trend of sharing human capital gains speed, we believe the professional staffing industry will be the net beneficiary of customers refusing to use independent contractors and instead, using professional staffing firms."

Third Quarter 2015 Financial Results

Revenues for the quarter were $572.1 million ($576.6 million on a constant currency basis), up 29.3 percent year-over-year (30.3 percent on a constant currency basis). Constant currency revenues and growth rates were calculated using the foreign exchange rates from the third quarter of 2014. Revenues on a pro forma basis, which assumes the Acquisitions occurred at the beginning of 2014 were up 13.4 percent year-over-year (14.2 percent on a constant currency basis).

Revenues from the Acquisitions (which were acquired in the second quarter of 2015) totaled $75.7 million for the current quarter. The revenue contribution from Creative Circle was $73.0 million, and the contribution from the Life Sciences business was $2.7 million. Operating results of Creative Circle are included in the Apex Segment. The Life Sciences European business is included in the Oxford Segment.

Revenues, excluding the contribution from the Acquisitions, were $496.4 million ($500.3 million on a constant currency basis), up 12.2 percent year-over-year (13.1 percent, on a constant currency basis).

Direct hire and conversion revenues were $32.7 million, up 45.8 percent year-over-year, which included $5.4 million from Creative Circle. CyberCoders accounted for 63.0 percent of the total and was up 19.6 percent year-over-year. Direct hire and conversion revenues were 5.7 percent of total revenues for the quarter, up from 5.1 percent in the third quarter of 2014.

Our largest segment, Apex, accounted for 73.6 percent of total revenues. Apex grew 37.6 percent year-over-year, and 15.2 percent on a pro forma basis. Excluding the revenue contribution of $73.0 million from Creative Circle, the Apex Segment grew 13.7 percent year-over-year.

Our Oxford Segment accounted for 26.4 percent of total revenues. Oxford grew 10.7 percent year-over-year, and 8.6 percent on a pro forma basis (11.8 percent on constant currency basis). Excluding the revenue contribution of $2.7 million from an acquired business, the Oxford Segment grew 8.7 percent (11.6 percent on a constant currency basis).

Gross profit was $191.4 million, up $46.6 million or 32.2 percent year-over-year. Gross margin for the quarter was 33.5 percent.

Selling, general and administrative (“SG&A”) expenses were $128.6 million (22.5 percent of revenues), up from $100.6 million(22.7 percent of revenues) in the third quarter of 2014. SG&A expenses for the quarter included SG&A expense of $15.0 millionfrom Creative Circle, and acquisition, integration and strategic planning expenses of $1.7 million.

Amortization of intangible assets was $11.3 million, compared with $5.5 million in the third quarter of 2014. The increase in amortization is mainly related to the acquisition of Creative Circle.

Interest expense for the quarter was $9.5 million compared with $3.1 million in the third quarter of 2014. Interest expense for the quarter was comprised of (i) interest on the credit facility of $7.9 million, (ii) amortization of deferred loan costs of $0.9 million, and (iii) accretion of $0.7 million on the contingent consideration liability related to acquisitions.

Adjusted income from continuing operations (a non-GAAP measure as calculated in an accompanying table) was $43.8 million($0.82 per diluted share). Net income on a GAAP basis was $24.9 million ($0.47 per diluted share).

Adjusted EBITDA (a non-GAAP measure defined below) was $74.9 million, or 13.1 percent of revenues. The Adjusted EBITDA contribution from Creative Circle was $16.6 million.

Cash flows from operating activities were $35.3 million and free cash flow was $30.4 million. During the quarter, we repaid $46.0 million of long-term debt and at September 30, 2015, our leverage ratio (total indebtedness to trailing 12 months Adjusted EBITDA) was 3.21 to 1, down from 3.51 to 1 at June 30, 2015.

Financial Estimates for Q4 2015

On Assignment is providing financial estimates for the fourth quarter of 2015. These estimates do not include acquisition, integration, or strategic planning expenses and assume no deterioration in the staffing markets that On Assignment serves. These estimates also assume no deterioration in foreign exchange rates.

Revenues of $563.0 million to $568.0 million

Gross margin of 32.8 percent to 33.2 percent

SG&A expense (excludes amortization of intangible assets) of $128.3 to $129.3 million (includes $4.7 million in depreciation and $5.6 million in equity-based compensation expense)

Amortization of intangible assets of $11.3 million

Adjusted EBITDA of $66.7 million to $69.6 million

Effective tax rate of 40.8 percent

Adjusted income from continuing operations of $38.4 million to $40.1 million

Adjusted income from continuing operations per diluted share of $0.72 to $0.75

Income from continuing operations of $21.2 million to $22.9 million

Income from continuing operations per diluted share of $0.40 to $0.43

Diluted shares outstanding of 53.5 million

These estimates assume year-over-year revenue growth on a reported basis of approximately 35.0 percent for the Apex Segment (13.0 percent on a pro forma basis) and approximately 10.8 percent for the Oxford Segment. The above estimates assume billable days of 60.7 for the quarter, which are 3.1 fewer days than the preceding quarter. Based on the average revenue per billable day in the third quarter of 2015, the effect on revenues for the fourth quarter of fewer billable days than the preceding quarter is approximately $28 million.

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