Monster Worldwide (MWW)

Q4 2011 Earnings Call

January 26, 2012 8:30 am ET


Sal Iannuzzi - Chairman, Chief Executive Officer, President and Member of Special Litigation Committee Addressing Civil Litigation Matters

Lori C. Chaitman - Former Vice President of Investor Relations

James M. Langrock - Chief Financial Officer, Chief Accounting Officer and Executive Vice President


Glenn Greene - Oppenheimer & Co. Inc., Research Division

John R. Blackledge - Crédit Suisse AG, Research Division

Tobey Sommer - SunTrust Robinson Humphrey, Inc., Research Division

John Janedis - UBS Investment Bank, Research Division

Timothy McHugh - William Blair & Company L.L.C., Research Division

Neil Doshi

James J. Janesky - Avondale Partners, LLC, Research Division



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Good morning. My name is April, and I will be your conference operator today. At this time, I would like to welcome everyone to the Monster Worldwide Q4 2011 Earnings Call. [Operator Instructions] Thank you. I would now like to turn the call over to Ms. Lori Chaitman, VP of Investor Relations. Ma'am, you may go ahead.

Lori C. Chaitman

Good morning, and thank you for joining us on Monster Worldwide's Fourth Quarter 2011 Conference Call. We will have formal remarks from Sal Iannuzzi, Chairman, President and Chief Executive Officer; and James Langrock, Executive Vice President and Chief Financial Officer. In addition to Sal and James, several members of our executive management team are available to answer your questions during the Q&A part of the call. They are Tim Yates, Andrea Bertone, Ted Gilvar, Patrick Manzo, Michael Miller, Lise Poulos and Mark Stoever.

Before we begin, I'd like to remind you that except for historical information, the statements made during this conference call constitute forward-looking statements under applicable securities laws. Such forward-looking statements involve certain risks and uncertainties, including statements regarding the company’s strategic direction, prospects and future results. Certain factors, including factors outside of our control, may cause actual results to differ materially from those contained in the forward-looking statements, including economic and other conditions in the markets in which we operate, risks associated with acquisitions or dispositions, competition and the other risks discussed in our Form 10-K and our other filings made with the Securities and Exchange Commission.

With that, I'd like to turn the call over to Sal for his comments. Sal?

Sal Iannuzzi

Thank you, Lori. Good morning, and welcome to Monster's Fourth Quarter Conference Call. 2011 was a year of mixed global economic performance. On the positive side, for the first 3 quarters of the year, global GDP grew moderately. And in that environment, bookings grew 25% on a comparable year-over-year basis. Earnings and cash flow significantly improved.

As anticipated, the fourth quarter, however, was a period of heightened economic uncertainty, largely fueled by fears of euro area destabilization. This anxiety caused slower global growth and concern that there would be another recession in 2012. In that environment, as anticipated, since our clients buy for the year ahead, fourth quarter bookings growth decelerated and was essentially flat on a year-over-year basis.

Summarizing our financial results for the full year 2011, bookings increased 16%. Revenue increased 18%. EPS was $0.37 compared to a loss last -- of the year before of $0.07. Operating margin was 7%, and approximately 55% of incremental revenue dropped to the bottom line. EBITDA for the full year was $192 million compared to $109 million in 2010.

During the fourth quarter, bookings were basically flat on a year-over-year basis. Sequentially, bookings increased by over $50 million. Revenue was up 2% on a year-over-year basis, but was somewhat lower than we had anticipated coming into the quarter as a result of increased number of multiyear deals. While the short-term consequence of a multiyear deal is to lengthen the period of time over which revenue is recognized, over the longer term, it will result in a larger multiyear backlog as our clients commit to our products for the longer term. This is a trend which we expect will increase in the years ahead. EPS was $0.11 versus last year's $0.06. Operating margin was 8%, an increased from last year's 5%. EBITDA was $47 million.

Summarizing 2011, we believe that in a mixed economic environment, our performance clearly validates a number of our key initiatives, as well as continuing concerns. Our innovative new products are being well received by our clients. While the flat year-over-year booking performance in the fourth quarter is disappointing compared to our performance over the prior 7 quarters, we believe that our new products certainly soften the deceleration and contributed to the full year 16% increase.

For the full year, about 55% of our incremental revenue dropped to the operating income line, demonstrating the operating leverage of our business model. We have proven that during a reasonable economic environment, the business, on a global basis, has significant growth potential. Full year bookings were over $1.1 billion, a $300 million increase or 38% from the depths of 2009.

During the year, we estimate that we did business well in excess of 200,000 clients on a global basis. However, the flat booking performance in the fourth quarter indicates that our business is not immune to the economic and employment cycle. While the core Monster business has always been highly influenced by the employment cycle, some of our new products, for example, SeeMore, have been designed to be less sensitive to the economic cycle, and we expect to benefit from these differentiated offerings over time.

Turning to 2012. The macro economic outlook remains uncertain. On the one hand, there is an expectation that U.S. economy is picking up, that Europe will find a solution to the current debt crisis and that China will have a soft landing. On the other hand, there was an equal view that Europe cannot escape an inevitable solvency crisis, that this crisis will cause a global slowdown which will negatively impact the U.S. and Asia. The important point is that right now, there is no consensus view on which way the economies will break. As a result, as we commented last quarter, clients continue to hedge their bets, particularly in the recruitment area, and this is having a negative impact on our near-term outlook.

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