ATLANTA, July 28, 2015 (GLOBE NEWSWIRE) -- PRGX Global, Inc. (Nasdaq:PRGX), the world's leading provider of accounts payable recovery audit services and the pioneer in Profit Discovery™, today announced its unaudited financial results for the second quarter and six months ended June 30, 2015.

"I'm pleased to report that PRGX continues to deliver strong growth in Adjusted EBITDA, which increased by 48% in the second quarter and 87% in the first half of the year compared to the same periods in 2014," said Ron Stewart, president and chief executive officer. "This improvement was primarily attributable to our core business, where we continue to demonstrate steady progress in audit operations, coupled with improved financial discipline."

"Our transformation program remains on track. We continue to strengthen our client relationships, invest in our growth platforms, and build out our industry-leading technology infrastructure. Combined, these initiatives further strengthen our core business while adding new service offerings that increase the value we provide our clients," concluded Mr. Stewart.

Consolidated Results for the Three Months Ended June 30, 2015

Second quarter 2015 Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA) was $5.6 million, or 14.9% of revenue, compared to Adjusted EBITDA of $3.8 million, or 9.0% of revenue, in the second quarter 2014. This represents a 65.6% year-over-year improvement in quarterly Adjusted EBITDA as a percentage of revenue. Schedule 3 attached to this press release provides a reconciliation of net income (loss) to each of EBIT (Earnings Before Interest and Taxes), EBITDA and Adjusted EBITDA.

Consolidated revenue for the second quarter of 2015 was $37.3 million, compared to $42.0 million for the same period last year, a decrease of 11.2%. Adjusted for changes in foreign exchange rates, consolidated second quarter 2015 revenue decreased 5.3% compared to the same period in 2014. Excluding the Chicago-based consulting business divested in October 2014 and the Healthcare Claims Recovery Audit ("HCRA") business, which the Company is in the process of exiting, and adjusted for changes in foreign exchange rates, consolidated second quarter 2015 revenue decreased 2.8% compared to the same period in 2014.

Total operating expenses for the second quarter of 2015 were $36.4 million, compared to $43.5 million, in the same period last year, a decrease of $7.1 million, which represents a 16.3% improvement. This decrease in total operating expenses was primarily driven by improving operational processes while right-sizing the Company's cost structure.

Total cost of revenue for the second quarter of 2015 was $24.9 million, or 66.8% of revenue, compared to $29.9 million, or 71.3% of revenue, in the same period last year, for a 6.3% improvement.  

SG&A expenses for the second quarter of 2015 were $9.4 million, compared to $11.0 million in same period last year, an improvement of 14.9%.

Consolidated net income for the second quarter of 2015 was $1.1 million, or $0.04 per basic and diluted share, compared to a net loss of $(1.5) million, or $(0.05) per basic and diluted share, for the same period in 2014. Included in the second quarter 2015 net income is $0.4 million of foreign currency transaction gains on intercompany balances, compared to $0.2 million for the same period in 2014.

Net cash provided by operating activities for the second quarter of 2015 was $2.1 million, compared to $2.9 million in the second quarter of the prior year.

Consolidated Results for the Six Months Ended June 30, 2015

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA) for the six months ended June 30, 2015 was $8.0 million, or 11.4% of revenue, compared to Adjusted EBITDA of $4.3 million, or 5.4% of revenue, in the same period in the prior year. This represents a 111.1% year-over-year improvement in six month Adjusted EBITDA as a percentage of revenue. Schedule 3 attached to this press release provides a reconciliation of net income (loss) to each of EBIT (Earnings Before Interest and Taxes), EBITDA and Adjusted EBITDA.

Consolidated revenue for the six months ended June 30, 2015 was $70.4 million, compared to $79.9 million for the same period last year, a decrease of 11.8%. Adjusted for changes in foreign exchange rates, consolidated revenue for the six months ended June 30, 2015 decreased 6.5% compared to the same period in 2014. Excluding the Chicago-based consulting business divested in October 2014 and HCRA, and adjusted for changes in foreign exchange rates, consolidated revenue for the six months ended June 30, 2015 decreased 2.5% compared to the same period in 2014.

Total operating expenses for the six months ended June 30, 2015 were $70.4 million, compared to $84.9 million in the same period last year, a decrease of $14.5 million, which represents a 17.1% improvement.

Total cost of revenue for the six months ended June 30, 2015 was $48.7 million, or 69.2% of revenue, compared to $58.8 million, or 73.6% of revenue, in the same period last year, for a 6.0% improvement as a percentage of revenue.  

SG&A expenses for the six months ended June 30, 2015 were $17.6 million, compared to $21.0 million in same period last year, an improvement of 16.2%.

Consolidated net loss for the six months ended June 30, 2015 was $(1.9) million, or $(0.07) per basic share and diluted share, compared to a net loss of $(5.1) million, or $(0.17) per basic and diluted share, for the same period in 2014. Included in the net loss for the six months ended June 30, 2015 is $1.3 million of foreign currency transaction losses on intercompany balances, compared to $0.1 million of foreign currency transaction gains on intercompany balances for the same period in 2014.

Net cash provided by operating activities for the six months ended June 30, 2015 was $7.5 million, compared to $5.8 million in the same period in the prior year.

Liquidity

At June 30, 2015, the Company had unrestricted cash and cash equivalents of $19.7 million, no borrowings against its revolving credit facility, and no bank debt outstanding.

Stock Repurchase Program

During the second quarter of 2015 the Company repurchased 1.0 million shares of its outstanding common stock for an aggregate cost of $4.8 million. From the February 2014 announcement of the Company's current stock repurchase program through July 25, 2015, the Company has repurchased 5.8 million shares, or 19.2% of its common stock outstanding on the date of the announcement, for an aggregate cost of $33.0 million. As of July 25, 2015, the Company had 24.6 million shares of common stock outstanding.

Second Quarter Earnings Call

As previously announced, management will hold a conference call later this morning at 8:30 AM (Eastern time) to discuss the Company's second quarter 2015 financial results. To access the conference call, listeners in the U.S. and Canada should dial (877) 755-7423 at least 5 minutes prior to the start of the conference. Listeners outside the U.S. and Canada should dial (678) 894-3069. To be admitted to the call, listeners should use passcode 79207859.

This teleconference will also be audiocast on the Internet at www.prgx.com (click on "Events & Presentations" under "Investors"). A replay of the audiocast will be available at the same location on www.prgx.com beginning approximately two hours after the conclusion of the live audiocast, extending through September 30, 2015. Please note that the Internet audiocast is "listen-only." Microsoft Windows Media Player is required to access the live audiocast and the replay and can be downloaded from www.microsoft.com/windows/mediaplayer.

About PRGX Global, Inc.

Headquartered in Atlanta, Georgia, PRGX Global, Inc. is the world's leading provider of accounts payable recovery audit services. With over 1,400 employees, the Company operates and serves clients in more than 30 countries and provides its services to over 75% of the top 20 global retailers. PRGX is also pioneering Profit Discovery, a unique combination of audit, analytics and advisory services that improves client financial performance. For additional information, please visit PRGX at www.prgx.com.

Forward-Looking Statements

In addition to historical information, this press release includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include both implied and express statements regarding the Company's overall condition and growth prospects, the strength of the Company's core recovery audit business, and the long term business objectives for the Company. Such forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to differ materially from the historical results or from any results expressed or implied by such forward-looking statements. Risks that could affect the Company's future performance include revenue that does not meet expectations or justify costs incurred, the Company's ability to develop material sources of new revenue in addition to revenue from its core recovery audit services, changes in the market for the Company's services, the Company's ability to retain and attract qualified personnel, changes to Medicare and Medicaid recovery audit contractor programs and the effects of the Company's decision to withdraw from the Medicare RAC rebid process, the Company's ability to integrate recent and future acquisitions, uncertainty in the credit markets, the Company's ability to maintain compliance with its financial covenants, client bankruptcies, loss of major clients, and other risks generally applicable to the Company's business. For a discussion of other risk factors that may impact the Company's business, please see the Company's filings with the Securities and Exchange Commission, including its Form 10-K filed on March 13, 2015. The Company disclaims any obligation or duty to update or modify these forward-looking statements.

Non-GAAP Financial Measures

EBIT, EBITDA and Adjusted EBITDA are all "non-GAAP financial measures" presented as supplemental measures of the Company's performance. They are not presented in accordance with accounting principles generally accepted in the United States, or GAAP. The Company believes these measures provide additional meaningful information in evaluating its performance over time, and that the rating agencies and a number of lenders use EBITDA and similar measures for similar purposes. In addition, a measure similar to Adjusted EBITDA is used in the restrictive covenants contained in the Company's secured credit facility. However, EBIT, EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation, or as substitutes for analysis of the Company's results as reported under GAAP. In addition, in evaluating EBIT, EBITDA and Adjusted EBITDA, you should be aware that, as described above, the adjustments may vary from period to period and in the future the Company will incur expenses such as those used in calculating these measures. The Company's presentation of these measures should not be construed as an inference that future results will be unaffected by unusual or nonrecurring items. Schedule 3 to this press release provides a reconciliation of net income (loss) to each of EBIT, EBITDA and Adjusted EBITDA.

This news release was distributed by GlobeNewswire,  www.globenewswire.com

 
SCHEDULE 1
PRGX Global, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Amounts in thousands, except per share data)
(Unaudited)
                       
                 
  Three Months   Six Months  
  Ended June 30,   Ended June 30,  
    2015       2014       2015       2014    
                 
Revenue   $   37,289     $   41,981     $   70,421     $   79,882    
Operating expenses:                
  Cost of revenue     24,920         29,944         48,698         58,776    
  Selling, general and administrative expenses     9,387         11,037         17,556         21,013    
  Depreciation of property and equipment     1,304         1,586         2,596         3,268    
  Amortization of intangible assets     754         902         1,500         1,805    
  Total operating expenses     36,365         43,469         70,350         84,862    
                       
  Operating income (loss)     924         (1,488 )       71         (4,980 )  
                       
Foreign currency transaction (gains) losses                
  on short-term intercompany balances     (416 )       (163 )       1,276         (148 )  
Interest expense (income), net     (53 )       (43 )       (95 )       11    
  Income (loss) before income taxes     1,393         (1,282 )       (1,110 )       (4,843 )  
                       
Income tax expense     296         186         751         299    
                       
  Net income (loss) $   1,097     $   (1,468 )   $   (1,861 )   $   (5,142 )  
                       
Basic earnings (loss) per common share $   0.04     $   (0.05 )   $   (0.07 )   $   (0.17 )  
Diluted earnings (loss) per common share $   0.04     $   (0.05 )   $   (0.07 )   $   (0.17 )  
                       
Weighted average common shares outstanding:                
  Basic       26,497         29,733         26,446         29,945    
  Diluted     26,553         29,733         26,446         29,945    
                       

 
   
SCHEDULE 2  
PRGX Global, Inc. and Subsidiaries  
Condensed Consolidated Balance Sheets  
(Amounts in thousands)  
(Unaudited)  
                     
                     
              June 30,   December 31,  
                2015       2014    
                     
  ASSETS  
Current assets:              
  Cash and cash equivalents     $   19,682     $   25,735    
  Restricted cash           162         53    
  Receivables:              
    Contract receivables, net       28,535         35,182    
    Employee advances and miscellaneous receivables, net       1,630         1,993    
      Total receivables         30,165         37,175    
                     
  Prepaid expenses and other current assets       4,252         3,421    
      Total current assets         54,261         66,384    
                     
Property and equipment, net         11,765         12,220    
Goodwill             13,043         13,036    
Intangible assets, net         7,932         9,439    
Deferred income taxes         132         36    
Other assets           1,254         1,667    
       Total assets      $   88,387     $   102,782    
                     
  LIABILITIES AND SHAREHOLDERS' EQUITY  
Current liabilities:              
  Accounts payable and accrued expenses   $   7,130     $   7,397    
  Accrued payroll and related expenses       11,508         15,415    
  Refund liabilities and deferred revenue       6,901         7,566    
  Other current liabilities         282         -     
      Total current liabilities       25,821         30,378    
                     
Other long-term liabilities         1,257         1,418    
      Total liabilities         27,078         31,796    
                     
Shareholders' equity:            
  Common stock           246         268    
  Additional paid-in capital         582,121         590,067    
  Accumulated deficit         (522,773 )       (520,912 )  
  Accumulated other comprehensive income       1,715         1,563    
      Total shareholders' equity       61,309         70,986    
                     
       Total liabilities and shareholders' equity    $   88,387     $   102,782    
                     

 
 
SCHEDULE 3
PRGX Global, Inc. and Subsidiaries
Reconciliation of Net Income (Loss) to EBIT, EBITDA and Adjusted EBITDA
(Amounts in thousands)
(Unaudited)
                     
                     
        Three Months   Six Months
        Ended June 30,   Ended June 30,
          2015       2014       2015       2014  
Reconciliation of Net Income (Loss) to                 
  EBIT, EBITDA and Adjusted EBITDA:                
                     
Net income (loss)   $   1,097     $   (1,468 )   $   (1,861 )   $   (5,142 )
                     
  Income tax expense       296         186         751         299  
  Interest expense (income), net       (53 )       (43 )       (95 )       11  
                     
EBIT         1,340         (1,325 )       (1,205 )       (4,832 )
                     
  Depreciation of property and equipment       1,304         1,586         2,596         3,268  
  Amortization of intangible assets       754         902         1,500         1,805  
                     
EBITDA       3,398         1,163         2,891         241  
                     
  Foreign currency transaction (gains) losses                
   on short-term intercompany balances       (416 )       (163 )       1,276         (148 )
  Acquisition-related charges       -          230         -          249  
  Transformation severance and related                
   expenses       562         1,554         708         1,939  
  Stock-based compensation       2,017         983         3,149         2,004  
                     
Adjusted EBITDA   $   5,561     $   3,767     $   8,024     $   4,285  
                     
                     
EBIT, EBITDA and Adjusted EBITDA are all "non-GAAP financial measures" presented as supplemental measures of our performance. They are not presented in accordance with accounting principles generally accepted in the United States, or GAAP. The Company believes these measures provide additional meaningful information in evaluating the Company's performance over time, and that the rating agencies and a number of lenders use EBIT, EBITDA and similar measures for similar purposes. In addition, a measure similar to Adjusted EBITDA is used in the restrictive covenants contained in the Company's secured credit facility. However, EBIT, EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation, or as substitutes for analysis of our results as reported under GAAP. In addition, in evaluating EBIT, EBITDA and Adjusted EBITDA, you should be aware that in the future we will incur expenses such as those used in calculating these measures. Our presentation of these measures should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items. 

 
SCHEDULE 4
PRGX Global, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Amounts in thousands)
(Unaudited)
                     
                     
        Three Months   Six Months
        Ended June 30,   Ended June 30,
          2015       2014       2015       2014  
Cash flows from operating activities:              
  Net Income (Loss) $   1,097     $   (1,468 )   $   (1,861 )   $   (5,142 )
  Adjustments to reconcile net loss to net cash              
     provided by operating activities:              
      Depreciation and amortization     2,058         2,488         4,096         5,073  
      Amortization of deferred debt costs     -          23         -          39  
      Stock-based compensation expense     2,017         983         3,149         2,004  
      Foreign currency transaction (gains) losses on              
        short-term intercompany balances     (416 )       (163 )       1,276         (148 )
      Decrease in receivables     309         500         6,393         7,732  
      Increase (decrease) in accounts payable, accrued              
        payroll and other accrued expenses     (1,729 )       1,331         (5,162 )       (3,652 )
      Other, primarily changes in assets and liabilities     (1,278 )       (754 )       (409 )       (54 )
      Net cash provided by operating activities     2,058         2,940         7,482         5,852  
                     
Cash flows from investing activities:              
  Purchases of property and equipment, net of disposals     (1,081 )       (1,489 )       (2,197 )       (2,333 )
      Net cash used in investing activities     (1,081 )       (1,489 )       (2,197 )       (2,333 )
                     
Cash flows from financing activities:              
  Repurchase of common stock     (4,852 )       (10,958 )       (10,340 )       (10,998 )
  Other, net     (229 )       (352 )       (235 )       (232 )
      Net cash used in financing activities     (5,081 )       (11,310 )       (10,575 )       (11,230 )
                     
Effect of exchange rates on cash and cash equivalents     398         529         (763 )       378  
                     
      Net decrease in cash and cash equivalents     (3,706 )       (9,330 )       (6,053 )       (7,333 )
                     
Cash and cash equivalents at beginning of period     23,388         45,697         25,735         43,700  
                     
Cash and cash equivalents at end of period $   19,682     $   36,367     $   19,682     $   36,367  
                     

 
 
SCHEDULE 5
PRGX Global, Inc. and Subsidiaries
Results by Operating Segment *
(Amounts in thousands)
(Unaudited)
                           
                           
      Three Months Ended   Six Months Ended
      June 30,   June 30,
                           
        2015       2014     Change     2015       2014     Change
Revenue                        
  Recovery Audit Services - Americas   $   25,350     $   27,029     $   (1,679 )   $   47,767     $   51,827     $   (4,060 )
  Recovery Audit Services - Europe/Asia-Pacific        9,950         12,382         (2,432 )       19,255         22,084         (2,829 )
  Adjacent Services       1,695         2,281         (586 )       2,958         4,564         (1,606 )
  Healthcare Claims Recovery Audit Services       294         289         5         441         1,407         (966 )
  Total   $   37,289     $   41,981     $   (4,692 )   $   70,421     $   79,882     $   (9,461 )
                           
Cost of revenue                        
  Recovery Audit Services - Americas   $   15,162     $   17,074     $   1,912     $   30,133     $   33,074     $   2,941  
  Recovery Audit Services - Europe/Asia-Pacific        6,607         8,673         2,066         13,044         16,090         3,046  
  Adjacent Services       2,342         2,849         507         4,101         5,884         1,783  
  Healthcare Claims Recovery Audit Services       809         1,348         539         1,420         3,728         2,308  
  Total   $   24,920     $   29,944     $   5,024     $   48,698     $   58,776     $   10,078  
                           
Selling, general and administrative expenses                        
  Recovery Audit Services - Americas   $   2,442     $   2,970     $   528     $   3,963     $   5,818     $   1,855  
  Recovery Audit Services - Europe/Asia-Pacific        1,360         1,936         576         2,926         3,740         814  
  Adjacent Services       198         946         748         398         1,512         1,114  
  Healthcare Claims Recovery Audit Services       202         553         351         427         1,177         750  
  Corporate       5,185         4,632         (553 )       9,842         8,766         (1,076 )
  Total   $   9,387     $   11,037     $   1,650     $   17,556     $   21,013     $   3,457  
                           
Depreciation of property and equipment                        
  Recovery Audit Services - Americas   $   979     $   1,245     $   266     $   1,948     $   2,501     $   553  
  Recovery Audit Services - Europe/Asia-Pacific        153         149         (4 )       306         295         (11 )
  Adjacent Services       162         158         (4 )       319         318         (1 )
  Healthcare Claims Recovery Audit Services       10         34         24         23         154         131  
  Total   $   1,304     $   1,586     $   282     $   2,596     $   3,268     $   672  
                           
Amortization of intangible assets                        
  Recovery Audit Services - Americas   $   441     $   501     $   60     $   882     $   1,001     $   119  
  Recovery Audit Services - Europe/Asia-Pacific        280         305         25         553         612         59  
  Adjacent Services       33         96         63         65         192         127  
  Total   $   754     $   902     $   148     $   1,500     $   1,805     $   305  
                           
Operating income (loss)                        
  Recovery Audit Services - Americas   $   6,326     $   5,239     $   1,087     $   10,841     $   9,433     $   1,408  
  Recovery Audit Services - Europe/Asia-Pacific        1,550         1,319         231         2,426         1,347         1,079  
  Adjacent Services       (1,040 )       (1,768 )       728         (1,925 )       (3,342 )       1,417  
  Healthcare Claims Recovery Audit Services       (727 )       (1,646 )       919         (1,429 )       (3,652 )       2,223  
  Corporate       (5,185 )       (4,632 )       (553 )       (9,842 )       (8,766 )       (1,076 )
  Total   $   924     $   (1,488 )   $   2,412     $   71     $   (4,980 )   $   5,051  
                           
Adjusted EBITDA                        
  Recovery Audit Services - Americas   $   7,854     $   7,443     $   411     $   13,835     $   13,401     $   434  
  Recovery Audit Services - Europe/Asia-Pacific        2,186         2,256         (70 )       3,553         2,816         737  
  Adjacent Services       (831 )       (1,049 )       218         (1,511 )       (2,205 )       694  
  Healthcare Claims Recovery Audit Services       (506 )       (1,362 )       856         (1,195 )       (3,093 )       1,898  
  Corporate       (3,142 )       (3,521 )       379         (6,658 )       (6,634 )       (24 )
  Total   $   5,561     $   3,767     $   1,794     $   8,024     $   4,285     $   3,739  
                           
* The Recovery Audit Services - Americas segment represents recovery audit services, excluding Healthcare Claims Recovery Audit Services, provided in the United States, Canada and Latin America. The Recovery Audit Services - Europe/Asia-Pacific segment represents recovery audit services, excluding Healthcare Claims Recovery Audit Services, provided in Europe, Asia and the Pacific region. The Adjacent Services segment represents financial advisory services and business analytics services. The Healthcare Claims Recovery Audit Services segment represents recovery audit services for healthcare claims, which consist primarily of services provided under subcontracts related to the Medicare Recovery Audit Contractor program.
 
CONTACT: PRGX Global, Inc. investor-relations@prgx.comPhone: 770-779-3011

Primary Logo