On Assignment, Inc. Reports 2006 First Quarter Results
CALABASAS, Calif., May 3 /PRNewswire-FirstCall/ -- On Assignment, Inc. , a diversified professional staffing firm providing flexible and permanent staffing solutions in specialty skills, including Laboratory/Scientific, Healthcare, Medical Financial and Health Information Services, reported revenues for the quarter ended March 31, 2006 of $66,723,000. Net income for the quarter was $302,000, or $0.01 per share, including $0.02 per share of FAS 123R expense. Earnings before interest, taxes, depreciation and amortization (EBITDA) were $1,886,000, which includes $459,000 of FAS 123R expense.
FIRST QUARTER HIGHLIGHTS * Revenues for the quarter were $66,723,000, up 34.0% year over year and above the Company's previously announced estimates on continued strong organic growth. * Selling, General and Administrative (SG&A) expenses were $16,786,000, or 25.2% of total revenues, compared with $15,974,000, or 32.1% in the first quarter of 2005. Excluding FAS 123R expense of $459,000 and accelerated depreciation of $324,000, SG&A was $16,003,000, or 24.0% of total revenues. * Operating income was $198,000, an increase of $3,203,000 from the first quarter of 2005. * Cash, cash equivalents and restricted cash totaled $27,448,000 at March 31, 2006, up $2,083,000 from the preceding quarter.
For the quarter ended March 31, 2006, consolidated revenues were $66,723,000, an increase of 34.0% compared to $49,796,000 in the same period of 2005. Lab Support revenues were $26,458,000, up 21.2% compared to $21,833,000 in the same period of 2005. Healthcare Staffing revenues, which include our Nurse Travel and MF&A lines of business, were up 44.0% to $40,265,000 compared to $27,963,000 in the same period of 2005. Nurse Travel revenues were $28,682,000, up 46.0% compared to $19,650,000 in the same period of 2005. Excluding revenues of $211,000 derived from staffing hospitals experiencing labor disruptions in the quarter, Nurse Travel revenues were up 44.9%. MF&A revenues increased 39.3% to $11,583,000 compared with $8,313,000 in the same period of 2005.
Operating income for the quarter ended March 31, 2006 was $198,000, which includes $459,000 of FAS 123R expense and $324,000 of accelerated depreciation, compared to an operating loss of $3,005,000 in the first quarter of 2005. The operating loss in the prior year's period did not include expenses related to FAS 123R or accelerated depreciation. EBITDA for the quarter was $1,886,000, including FAS 123R expense, an improvement of $3,368,000 over the year-ago quarter. Net income for the quarter ended March 31, 2006 was $302,000, or $0.01 per share, including $0.02 per share of FAS 123R expense, compared to a net loss of $2,871,000, or ($0.11) per share, for the quarter ended March 31, 2005.
Peter Dameris, President and Chief Executive Officer of On Assignment, Inc. said, "We are pleased to report another solid quarter of growth in revenues, gross profits, EBITDA and EPS. Our growth was achieved without acquisitions, new branch offices or new service offerings in what is typically our seasonally most impacted quarter due to year-end holidays and sequentially fewer billing days for Nurse Travel. Our SG&A expenses for the quarter, excluding FAS 123R expense and accelerated depreciation, were essentially flat with the year ago quarter despite a 34% increase in revenues."
Dameris concluded, "Our focus in the remainder of 2006 will be to translate our expanding revenue base into improved EBITDA and operating margins. In order to achieve this, we will continue to work to increase bill rates and raise gross margins above the seasonally impacted first quarter levels, increase staffing consultant productivity, invest in our highest growth markets and lines of business and control, rationalize and leverage our SG&A expenses. During the first quarter of 2006, our gross margins expanded throughout the quarter.
Mike Holtzman, Senior Vice President and Chief Financial Officer of On Assignment, Inc. stated, "Our first quarter gross margins in the Lab Support, Nurse Travel and MF&A lines of business were 30.5%, 20.2% and 27.0%, respectively. Gross margins were up year over year for Nurse Travel and MF&A. Although our bill/pay spreads increased on a consolidated basis, consolidated gross margin decreased 50 bps year over year to 25.5% primarily due to an increase in state unemployment insurance, a greater percentage of our revenue mix from Nurse Travel (with lower gross margins, but higher bill rates), lower conversion fees and higher holiday pay. The increase in state unemployment insurance was primarily related to the state of California where we experienced an increase in reported payroll, which resulted in higher state reserve requirements. Lab Support was also impacted by an unfavorable workers' compensation adjustment due to an increase in a claim reserve from a prior period."
We ended the quarter with $27.4 million in cash, cash equivalents and restricted cash. Our working capital was $50.1 million, up from $47.6 million in the preceding quarter. Cash provided by operations was $2.5 million, cash from stock option exercises and employee stock purchases was $1.2 million and capital expenditures increased to $1.6 million from $0.7 million in the preceding quarter, primarily related to information technology initiatives.
Holtzman continued, "Based on the strength of revenues in the first three weeks of the second quarter, we currently project revenues of $68.0 to $69.0 million for the quarter ending June 30, 2006. We are projecting gross margins of approximately 26.5% and SG&A of $16.0 to $16.2 million, including depreciation and amortization of $1.4 million and excluding approximately $550,000 of FAS 123R expense. We project earnings per share of $0.03 to $0.05, which includes FAS 123R expense of approximately $0.02 per share and an effective tax rate of 30.0%.
Holtzman concluded, "For the year, assuming fairly stable labor markets and no loss of major clients at Nurse Travel, we are revising our guidance for revenues to $270 to $275 million (from $268 to $275 million), which represents growth of 13.5% to 15.6% over 2005. We continue to project average gross margins for the year of 26.5% to 27.0%, SG&A of $64.5 to $66.0 million, excluding approximately $2.5 to $2.8 million of FAS 123R expense, and revising our earnings per share guidance to $0.15 to $0.18 (from $0.14 to $0.18), which includes approximately $0.08 per share in FAS 123R expense."
On Assignment will hold its quarterly conference call to discuss its 2006 first quarter financial results tomorrow, Thursday May 4, 2006 at 10:30 a.m. EDT. Interested parties are invited to listen to the conference call by dialing (800) 309-8283 or (706) 634-1958 ten minutes before the call. A replay of the conference call can be accessed from approximately 11:30 a.m. EDT on Thursday May 4, 2006 through Friday May 12, 2006 by dialing (800) 642-1687 or (706) 645-9291 with the access code 8006117.
This call is being webcast by Thomson/CCBN and can be accessed at On Assignment's web site at www.onassignment.com. Individual investors can also listen at Thomson/CCBN's site at www.fulldisclosure.com or by visiting any of the investor sites in Thomson/CCBN's Individual Investor Network.
Institutional investors can access the call via Thomson/CCBN's password- protected event management site, StreetEvents at www.streetevents.com.
About On Assignment
On Assignment, Inc. is a diversified professional staffing firm providing flexible and permanent staffing solutions in specialty skills including Laboratory/Scientific, Healthcare and Medical Financial & Health Information Services. The corporate headquarters are located in Calabasas, California. On Assignment, Inc. was founded in 1985 as On Assignment/Lab Support and went public in 1992. The company's branch network encompasses approximately 60 branch offices across the United States, the United Kingdom, the Netherlands and Belgium.
Reasons for Presentation of Non-GAAP Financial Measures
Statements made in this release and the Supplemental Financial Information accompanying this release includes non-GAAP financial measures. Such information is provided as additional information, not as an alternative to our consolidated financial statements presented in accordance with GAAP, and is intended to enhance an overall understanding of our current financial performance. The Supplemental Financial Information sets forth financial measures reviewed by our management to evaluate our operating performance. Such measures also are used to determine a portion of the compensation for some of our executives and employees. We believe the non-GAAP financial measures provide useful information to management, investors and prospective investors by excluding certain charges and other amounts that we believe are not indicative of our core operating results. These non-GAAP measures are included to provide management, our investors and prospective investors with an alternative method for assessing our operating results in a manner that is focused on the performance of our ongoing operations and to provide a more consistent basis for comparison between quarters. One of the non-GAAP financial measures presented is EBITDA (earnings before interest, taxes, depreciation, amortization and impairment of goodwill and identifiable intangible assets), which term might not be calculated in the same manner as, and thus might not be comparable to, similarly titled measures reported by other companies. The financial statement tables that accompany this press release include reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure.
Certain statements made in this news release are "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and involve a high degree of risk and uncertainty. Forward-looking statements include statements regarding the Company's anticipated financial and operating performance in 2006. All statements in this release, other than those setting forth strictly historical information, are forward-looking statements. Forward-looking statements are not guarantees of future performance, and actual results might differ materially. Factors that could cause or contribute to such differences include actual demand for our services, our ability to attract, train and retain qualified staffing consultants, our ability to remain competitive in obtaining and retaining temporary staffing clients, the availability of qualified temporary nurses and other qualified temporary professionals, management of our growth, continued performance of our enterprise-wide information systems, and other risks detailed from time to time in our reports filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2005, as filed with the SEC on March 16, 2006. We specifically disclaim any intention or duty to update any forward-looking statements contained in this news release.
(Unaudited) (In thousands, except per share amounts) CONSOLIDATED STATEMENTS OF OPERATIONS Quarter Ended March 31, December 31, March 31, 2006 2005 2005 Revenues $66,723 $64,701 $49,796 Cost of Services 49,739 47,717 36,827 Gross Profit 16,984 16,984 12,969 Selling, General and Administrative Expenses 16,786 16,240 15,974 Operating Income (loss) 198 744 (3,005) Interest Income 234 227 214 Pre-tax Income (Loss) 432 971 (2,791) Income Tax Provision 130 150 80 Net Income (Loss) $302 $821 $(2,871) Diluted Earnings (Loss) Per Share $0.01 $0.03 $(0.11) Weighted average number of shares and dilutive shares outstanding 26,827 27,025 25,297 (Unaudited) (In thousands) SUPPLEMENTAL FINANCIAL INFORMATION Quarter Ended March 31, December 31, March 31, 2006 2005 2005 Revenues: Lab Support Segment $26,458 $26,348 $21,833 Nurse Travel 28,682 27,132 19,650 Medical Financial and Allied 11,583 11,221 8,313 Healthcare Segment 40,265 38,353 27,963 Total $66,723 $64,701 $49,796 Gross Profit: Lab Support Segment $8,075 $8,572 $7,019 Nurse Travel 5,785 5,333 3,756 Medical Financial and Allied 3,124 3,079 2,194 Healthcare Segment 8,909 8,412 5,950 Total $16,984 $16,984 $12,969 (Unaudited) (In thousands) SELECTED CASH FLOW INFORMATION Quarter Ended March 31, December 31, March 31, 2006 2005 2005 Cash provided by (used for) Operations $2,470 $(106) $1,500 Capital Expenditures 1,596 732 1,263 (Unaudited) (In thousands) SELECTED CONSOLIDATED BALANCE SHEET DATA As of March 31, December 31, March 31, 2006 2005 2005 Cash, Cash Equivalents, Restricted Cash and Marketable Securities $27,448 $25,365 $22,811 Accounts Receivable, net 37,225 35,325 25,495 Working Capital 50,116 47,629 39,093 Total Assets 97,239 93,705 90,366 Current Liabilities 18,126 16,998 18,590 Long-term Liabilities 418 70 216 Stockholders Equity 78,695 76,637 71,560 (Unaudited) (In thousands, except per share amounts) RECONCILIATION OF GAAP NET INCOME (LOSS) AND EARNINGS (LOSS) PER SHARE TO NON-GAAP EBITDA AND EBITDA PER SHARE Quarter Ended March 31, 2006 December 31, 2005 March 31, 2005 Net Income (Loss) $302 $0.01 $821 $0.03 $(2,871) (0.11) Interest Income (234) (0.01) (227) (0.01) (214) (0.01) Income Tax Provision 130 0.01 150 0.01 80 0.00 Depreciation 1,453 0.05 1,389 0.05 1,242 0.05 Amortization of Intangibles 235 0.01 281 0.01 281 0.01 EBITDA $1,886 $0.07 $2,414 $0.09 $(1,482) $(0.06) Weighted Average Common and Common Equivalent Shares Outstanding 26,827 27,025 25,297 (Logo: http://www.newscom.com/cgi-bin/prnh/20041022/LAF035LOGO )Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20041022/LAF035LOGOAP Archive: http://photoarchive.ap.orgPRN Photo Desk, firstname.lastname@example.orgOn Assignment, Inc.
CONTACT: Mike Holtzman, SVP, Finance and Chief Financial Officer,+1-818-878-7900, or Deirdre Skolfield, CFA, Director, Investor Relations,email@example.com, both of On Assignment, Inc.
Web site: http://www.onassignment.com/