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On Assignment Reports Results For Second Quarter 2013

Safe Harbor

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 2013. 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. In particular, the Company makes no assurances that the estimates of revenues, gross margin, SG&A, Adjusted EBITDA, income from continuing operations, adjusted income from continuing operations, earnings per share or earnings per diluted share set forth above will be achieved. 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 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, 2012, as filed with the SEC on March 18, 2013, our report on Form 8-K filed with the SEC on June 13, 2013, and our Form 10-Q for the quarterly period ended March 31, 2013 as filed with the SEC on May 9, 2013. We specifically disclaim any intention or duty to update any forward-looking statements contained in this news release.

     
 

SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(In thousands, except per share amounts)

 
Three Months Ended Six Months Ended
June 30,   March 31, June 30,
2013  

2012 (1)

2013 2013  

2012 (1)

 
Revenues $ 417,923 $ 265,863 $ 389,193 $ 807,116 $ 422,623
Cost of services 293,356   181,326   275,919   569,275   285,337  
Gross profit 124,567 84,537 113,274 237,841 137,286
Selling, general and administrative expenses 86,454 65,173 84,161 170,615 107,918
Amortization of intangible assets 5,275   3,884   5,379   10,654   4,518  
Operating income 32,838 15,480 23,734 56,572 24,850
Interest expense, net (4,198 ) (3,957 ) (5,331 ) (9,529 ) (4,658 )
Write-off of loan costs (14,958 ) (813 )     (14,958 ) (813 )  
Income before income taxes 13,682 10,710 18,403 32,085 19,379
Provision for income taxes 5,860   4,633   7,793   13,653   8,255  
Income from continuing operations 7,822 6,077 10,610 18,432 11,124
Gain on sale of discontinued operations, net of tax 14,412 14,412
Income (loss) from discontinued operations, net of tax (483 ) 1,485   (409 ) (892 ) 1,821  
Net income $ 7,339   $ 7,562   $ 24,613   $ 31,952   $ 12,945  
 
Basic earnings per common share:
Income from continuing operations $ 0.15 $ 0.14 $ 0.20 $ 0.35 $ 0.27
Income from discontinued operations (0.01 ) 0.03   0.26   0.25   0.05  
$ 0.14   $ 0.17   $ 0.46   $ 0.60   $ 0.32  
 
Diluted earnings per common share:
Income from continuing operations $ 0.14 $ 0.13 $ 0.20 $ 0.34 $ 0.26
Income from discontinued operations   0.03   0.26   0.25   0.05  
$ 0.14   $ 0.16   $ 0.46   $ 0.59   $ 0.31  
 
Number of shares and share equivalents used to calculate earnings per share:
Basic 53,378   44,852   53,046   53,213   41,060  
Diluted 54,327   45,879   54,036   54,222   42,067  
 
(1) Amounts differ from the previously reported numbers on our Form 10-Q for the period ended June 30, 2012, due to the retrospective adjustment of amortization of the identifiable intangible assets of Apex purchase price allocation, and the retrospective presentation of discontinued operations related to the sale of Nurse Travel during 2013.
 
 
     
 

SUPPLEMENTAL SEGMENT FINANCIAL INFORMATION (Unaudited)

(In thousands)

 
  Three Months Ended Six Months Ended
  June 30,   March 31, June 30,
2013   2012 2013 2013   2012
Revenues:
Technology –
Apex $ 233,446 $ 98,503 $ 212,728 $ 446,174 $ 98,503
Oxford   101,474   88,107   95,262   196,736   166,866
334,920 186,610 307,990 642,910 265,369
 
Life Sciences 41,877 40,509 40,473 82,350 81,860
Physician 26,466 25,039 26,302 52,768 49,128
Healthcare   14,660   13,705   14,428   29,088   26,266
$ 417,923 $ 265,863 $ 389,193 $ 807,116 $ 422,623
 
Gross profit:
Technology –
Apex $ 63,896 $ 26,983 $ 55,619 $ 119,515 $ 26,983
Oxford   34,506   31,646   32,150   66,656   59,016
98,402 58,629 87,769 186,171 85,999
 
Life Sciences 13,838 13,808 13,384 27,222 27,647
Physician 7,640 7,718 7,483 15,123 15,217
Healthcare   4,687   4,382   4,638   9,325   8,423
$ 124,567 $ 84,537 $ 113,274 $ 237,841 $ 137,286
 
 
     
 

SELECTED CASH FLOW INFORMATION (Unaudited)

(In thousands)

 
Three Months Ended Six Months Ended
June 30,   March 31, June 30,
2013   2012 2013 2013   2012
Cash (used in) provided by operations $ 26,752 $ (15,865 ) $ 3,575 $ 30,327 $ (8,892 )
Capital expenditures $ 4,543 $ 5,052 $ 2,785 $ 7,328 $ 7,171
 
 
       

SELECTED CONSOLIDATED BALANCE SHEET DATA (Unaudited)

(In thousands)

 
June 30, March 31,
2013 2013
Cash and cash equivalents $ 14,111 $ 11,774
Accounts receivable, net 266,567 257,196
Goodwill and intangible assets, net 748,744 755,904
Total assets 1,089,033 1,093,436
Current portion of long-term debt 10,250 10,000
Total current liabilities 127,077 128,899
Working capital 174,844 166,461
Long-term debt 359,063 373,588
Other long-term liabilities 28,694 29,166
Stockholders’ equity 574,199 561,783
 
 
   
 

RECONCILIATION OF GAAP INCOME FROM CONTINUING OPERATIONS AND EARNINGS PER SHARE TO NON-GAAP ADJUSTED EBITDA AND ADJUSTED EBITDA PER DILUTED SHARE

(Unaudited)

(In thousands, except per share amounts)

 
Three Months Ended
June 30,  
2013  

2012 (1)

March 31, 2013
Income from continuing operations $ 7,822   $ 0.14 $ 6,077   $ 0.13 $ 10,610   $ 0.20
Interest expense, net 4,198 0.08 3,957 0.10 5,331 0.10
Write-off of loan costs 14,958 0.27 813 0.02
Provision for income taxes 5,860 0.11 4,633 0.10 7,793 0.14
Depreciation 1,914 0.04 1,560 0.03 1,855 0.03
Amortization of intangibles 5,275 0.10   3,884 0.08   5,379 0.10
EBITDA 40,027 0.74 20,924 0.46 30,968 0.57
Equity-based compensation 3,486 0.06 2,287 0.05 2,550 0.05
Acquisition-related costs 251 0.00 6,562 0.14 161 0.00
Strategic planning costs 405 0.01     457 0.01
Adjusted EBITDA $ 44,169 $ 0.81   $ 29,773 $ 0.65   $ 34,136 $ 0.63
 
Weighted average common and common equivalent shares outstanding (diluted) 54,327 45,879 54,036
          Six Months Ended June 30,
2013      

2012 (1)

Income from continuing operations $ 18,432     $ 0.34 $ 11,124     $ 0.26
Interest expense, net 9,529 0.17 4,658 0.11
Write-off of loan costs 14,958 0.28 813 0.02
Provision for income taxes 13,653 0.25 8,255 0.20
Depreciation 3,769 0.07 2,970 0.07
Amortization of intangibles 10,654     0.20   4,518     0.11  
EBITDA 70,995 1.31 32,338 0.77
Equity-based compensation 6,036 0.10 3,459 0.08
Acquisition-related costs 412 0.01 9,054 0.22
Strategic planning costs 862     0.02        
Adjusted EBITDA $ 78,305     $ 1.44   $ 44,851     $ 1.07  
 
Weighted average common

and common equivalent

shares outstanding (diluted)

54,222 42,067
 
 
   
 

RECONCILIATION OF GAAP INCOME AND EPS TO NON-GAAP INCOME AND EPS (Unaudited)

(In thousands, except per share amounts)

 
Three Months Ended
June 30,   March 31,
2013  

2012 (1)

2013
Income from continuing operations $ 7,822   $ 0.14 $ 6,077   $ 0.13 $ 10,610   $ 0.20
Write-off of loan costs related to refinancing, net of income taxes 9,181 0.17 701 0.02
Acquisition-related costs, net of income taxes 143 3,788 0.08 93
Strategic planning expenses, net of income taxes 249 0.01     281
Non-GAAP income from continuing operations $ 17,395 $ 0.32   $ 10,566 $ 0.23   $ 10,984 $ 0.20
 
Weighted average common and common equivalent shares outstanding (diluted) 54,327

 

45,879 54,036

 

 
         
Six Months Ended June 30,
2013

2012 (1)

Income from continuing operations $ 18,432     $ 0.34 $ 11,124     $ 0.26
Write-off of loan costs related to refinancing, net of income taxes 9,181 0.17 701 0.02
Acquisition-related costs, net of income taxes 236 0.00 5,239 0.13
Strategic planning expenses, net of income taxes 530 0.01   0.00  
Non-GAAP income from continuing operations $ 28,379 $ 0.52   $ 17,064 $ 0.41  
 

Weighted average common and common equivalent shares outstanding (diluted)

54,222

 

42,067
 
 
   
 

CALCULATION OF ADJUSTED EARNINGS PER SHARE (Unaudited)

 

(In thousands, except per share amounts)

 
Three Months     Six Months
Ended Ended
June 30, 2013
Non-GAAP income from continuing operations (2) $ 17,395 $ 28,379
Adjustments:
Amortization of intangible assets (3) 5,275 10,654
Cash tax savings on indefinite-lived intangible assets (4) 3,850 7,700
Excess of capital expenditures over depreciation, net of tax (5) (1,050 ) (2,100 )
Income from Continuing Operations - As Adjusted $ 25,470   $ 44,633  
 
Earnings per Diluted Share from Continuing Operations--, As Adjusted $ 0.47   $ 0.82  
 
Weighted average common and common equivalent shares outstanding (diluted) 54,327   54,222  
 
(2)   Non-GAAP income from continuing operations as calculated on preceding page. GAAP income from continuing operations excludes the write-off of loan costs related to refinancing of the credit facility, acquisition-related cost and strategic planning expenses.
 

(3)

Amortization of identifiable intangible assets of acquired businesses.

 

(4)

Cash tax savings on indefinite-lived intangible assets (goodwill and trademarks related to acquisition of Apex Systems, Oxford and HealthCare Partners) that are amortized and deductible in the determination of income taxes, but not amortized for financial reporting purposes. These assets total $593.1 million and are amortized (and deducted) for income tax purposes on a straight-line basis over 15 years. The annual income tax deduction is $39.5 million and the annual after-tax cash savings are approximately $15.4 million, assuming an estimated marginal combined federal and state income tax rate of 39 percent.

 

(5)

Excess capital expenditures over depreciation is equal to one-quarter of the estimated full year difference between capital expenditures (full year estimate of $15.9 million) less depreciation (full year estimate of $9.0 million), tax affected using an estimated marginal combined federal and state tax rate of 39 percent.

 
 
           
 

PRO FORMA OPERATING RESULTS FROM CONTINUING OPERATIONS (Unaudited)

Year Ended December 31, 2012

(In thousands)

 
 
Q1 Q2 Q3 Q4 Full Year
Revenues $ 342,721 $ 362,179 $ 374,512 $ 380,381 $ 1,459,793
Cost of services 240,652   250,583   258,882   264,762   1,014,879
Gross profit 102,069 111,596 115,630 115,619 444,914
SG&A expenses 77,397 77,172 77,009 78,912 310,490
Amortization of intangible assets 6,381   6,349   6,309   6,299   25,338
Operating income $ 18,291   $ 28,075   $ 32,312   $ 30,408   $ 109,086
 
Adjusted EBITDA $ 28,425 $ 38,855 $ 43,532 $ 41,659 $ 152,471
Adjusted EBITDA, excluding write-downs of earnout obligations $ 28,425 $ 38,364 $ 42,532 $ 41,659 $ 150,980
___
 

The above unaudited pro forma results were prepared on the basis that the acquisition of Apex Systems occurred on January 1, 2012. These results differ from the pro forma disclosures included in the Company's recast 2012 financials as reported on Form 8-K filed with the SEC on June 13, 2013, as those pro forma results were prepared on the basis that the acquisition of Apex Systems occurred on January 1, 2011. SG&A expenses, operating income and Adjusted EBITDA included a $0.5 million and $1.0 million benefit in Q2 and Q3, respectively, related to the reduction in the earnout obligation for HealthCare Partners.

           

SUPPLEMENTAL FINANCIAL INFORMATION – REVENUES AND GROSS MARGINS (Unaudited)

(Dollars in thousands)

 
Technology
Apex   Oxford   Total Life Sciences Physician Healthcare Consolidated
Revenues:
Q2 2013 $ 233,446 $ 101,474 $ 334,920 $ 41,877 $ 26,466 $ 14,660 $ 417,923
Q1 2013 $ 212,728 $ 95,262 $ 307,990 $ 40,473 $ 26,302 $ 14,428 $ 389,193
% Sequential change 9.7 % 6.5 % 8.7 % 3.5 % 0.6 % 1.6 % 7.4 %
Q2 2012 $ 98,503 $ 88,107 $ 186,610 $ 40,509 $ 25,039 $ 13,705 $ 265,863
% Year-over-year change 137.0 % 15.2 % 79.5 % 3.4 % 5.7 % 7.0 % 57.2 %
 
Gross margins:
Q2 2013 27.4 % 34.0 % 29.4 % 33.0 % 28.9 % 32.0 % 29.8 %
Q1 2013 26.1 % 33.7 % 28.5 % 33.1 % 28.5 % 32.1 % 29.1 %
Q2 2012 27.4 % 35.9 % 31.4 % 34.1 % 30.8 % 32.0 % 31.8 %
 
Average number of staffing consultants:
Q2 2013 679 540 1,219 182 100 97 1,598
Q1 2013 671 540 1,211 176 107 89 1,583
Q2 2012 633 501 1,134 160 98 81 1,473
 
 
           
Technology
Apex   Oxford   Total Life Sciences Physician Healthcare Consolidated
Average number of customers:
Q2 2013 588 679 1,267 916 177 491 2,851
Q1 2013 600 659 1,259 884 173 479 2,795
Q2 2012 585 648 1,233 914 186 508 2,841
 
Top 10 customers as a percentage of revenue:
Q2 2013 34.1% 20.4% 24.1% 25.1% 22.3% 28.8% 19.3%
Q1 2013 33.5% 16.7% 23.5% 24.8% 21.6% 29.6% 18.6%
Q2 2012 33.3%

(6)

16.4% 23.5% 23.3% 19.8% 24.6% 18.4%

(6)

(6) Top 10 customers as a percentage of revenue for Apex and Consolidated includes pro forma Apex data for the quarter ended June 30, 2012.
 
Average bill rate:
Q2 2013 $ 60.78 $ 123.43 $ 71.23 $ 34.28 $ 183.95 $ 37.14 $ 64.80
Q1 2013 $ 59.62 $ 122.47 $ 69.88 $ 34.94 $ 185.92 $ 38.01 $ 64.21
Q2 2012 $ 59.07 $ 119.51 $ 69.83 $ 35.25 $ 175.11 $ 37.44 $ 64.82
 
Gross profit per staffing consultant:
Q2 2013 $ 94,000 $ 64,000 $ 81,000 $ 76,000 $ 77,000 $ 48,000 $ 78,000
Q1 2013 $ 83,000 $ 60,000 $ 72,000 $ 76,000 $ 70,000 $ 52,000 $ 72,000
Q2 2012 $ 43,000

(7)

$ 63,000 $ 52,000 $ 86,000 $ 79,000 $ 54,000 $ 57,000

(7)

(7) Actual, reported Apex and Consolidated metric reflect six weeks of Apex data. A full quarter would have been $85,000 for Apex and $76,000 for Consolidated.
 
 
     
 

SUPPLEMENTAL FINANCIAL INFORMATION – KEY METRICS (Unaudited)

 
 
Three Months Ended

June 30,2013

   

March 31,2013

Percentage of revenues:
Top ten clients 19.3 % 18.6 %
Direct hire/conversion 1.5 % 1.9 %
 
Bill rate:
% Sequential change 0.9 % 1.2 %
% Year-over-year change % (5.3 %)
 
Bill/Pay spread:
% Sequential change 1.0 % 0.7 %
% Year-over-year change (3.3 %) (13.7 %)
 
Average headcount:
Contract professionals (CP) 11,961 11,583
Staffing consultants (SC) 1,598 1,583
 
Productivity:
Gross profit per SC $ 78,000 $ 72,000
 




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