Revenues for Fourth Quarter exceeded our Estimates
CALABASAS, Calif.--(BUSINESS WIRE)--On Assignment, Inc. (NYSE: ASGN), a leading global provider of
diversified professional staffing solutions, today reported results for
the quarter ended December 31, 2016.
Fourth Quarter Highlights
-
Revenues as reported were $620.9 million, up 7.5 percent
year-over-year.
-
On a same "Billable Day" basis (a non-GAAP measure), revenues were up
9.8 percent year-over-year. Same "Billable Day" for the quarter was
calculated by adjusting the current period revenues for the
year-over-year difference in Billable Days (Q4 of 2015 had 1.3 more
Billable Days than the current quarter).
-
Net income was $24.0 million ($0.45 per diluted share), up from $19.3
million ($0.36 per diluted share) in the fourth quarter of 2015.
-
Adjusted EBITDA (a non-GAAP measure) was $70.7 million (11.4 percent
of revenues), down from $77.8 million (12.4 percent of revenues) in Q3
of 2016.
-
Operating results included expenses of $9.3 million that were not
included in our financial estimates. These expenses were comprised of:
(i) out-of-period adjustments of $5.6 million for an under accrual of
costs of services, (ii) expense of $1.7 million related to the
retirement of the president of Oxford, (iii) $1.6 million in
integration expenses and (iv) a $0.4 million foreign exchange rate
charge on an intercompany loan. Excluding these expenses, Net Income
would have been $5.6 million higher ($0.10 per diluted share) and
Adjusted EBITDA would have been $6.7 million higher.
-
Cash flows from operating activities were $55.9 million, up from $30.2
million in the fourth quarter of 2015. For the full year 2016, cash
flows from operating activities were $196.3 million, up from $117.5
million for the full year 2015.
-
Repurchased 525,642 shares at an average per share price of $39.04
during the quarter. Through February 13, 2017, repurchased 1,362,384
shares at an average per share price of $39.07 under our $150 million
repurchase authorization.
-
Leverage ratio (a non-GAAP measure) was 2.32 to 1 at December 31,
2016, down from 2.38 to 1 at September 30, 2016.
Commenting on the results, Peter Dameris, Chief Executive Officer of On
Assignment, Inc., said, "The fourth quarter and full year 2016 were once
again record periods of financial performance for our company.
Throughout 2016, we continued to grow above published industry growth
rates and established many new and meaningful customer relationships."
Dameris continued, "Throughout the year, we continued to experience
greater rates of adoption of our development/deployment model (i.e.
staff augmentation). There are currently many secular and political
drivers that are causing our customers to want to execute their IT needs
with domestic, shared resources. We strongly believe that these drivers
for adoption of IT staff augmentation will permit us and our industry to
grow at attractive rates into the future."
Fourth Quarter 2016 Financial Results
Revenues for the quarter were $620.9 million, up 7.5 percent
year-over-year. Our largest segment, Apex, accounted for 76.7 percent of
total revenues and grew 9.6 percent year-over-year. Our Oxford Segment
accounted for 23.3 percent of total revenues and grew 1.3 percent
year-over-year.
Gross profit was $198.2 million, up $5.3 million or 2.7 percent
year-over-year. Gross margin for the quarter was 31.9 percent. Gross
profit included out-of-period adjustments of $5.6 million for under
accrued costs of services. Excluding these adjustments, gross profit
would have been $203.8 million and the gross margin would have been 32.8
percent.
Selling, general and administrative (“SG&A”) expenses were $142.6
million (23.0 percent of revenues), compared with $138.8 million (24.0
percent of revenues) in the fourth quarter of 2015. The increase in SG&A
was in line with the year-over-year growth of the business over the last
four quarters.
SG&A for the quarter included expenses of $3.7 million ($2.3 million
after tax, or $0.04 per diluted share) that were not included in our
financial estimates. These expenses were comprised of: (i) integration
expenses of $1.6 million primarily related to the integration of certain
operating units onto Oxford's front and back office systems, (ii)
expense of $1.7 million (includes $1.0 million in stock based
compensation) related to the retirement of the president of Oxford and
(iii) foreign exchange loss of $0.4 million on an intercompany loan.
Amortization of intangible assets was $9.7 million, compared with $11.3
million in the fourth quarter of 2015. The decrease is due to the
accelerated amortization method for certain acquired intangibles, which
have higher amortization rates at the beginning of their useful life.
Interest expense for the quarter was $7.0 million compared with $9.1
million in the fourth quarter of 2015. Interest expense for the quarter
was comprised of $6.0 million of interest on the credit facility and
$1.0 million of amortization of deferred loan costs.
Net income was $24.0 million ($0.45 per diluted share), compared with
$19.3 million ($0.36 per diluted share) in the fourth quarter of 2015.
Net Income for the quarter included the after tax effects of (i) the
out-of-period adjustments of $5.6 million and (ii) SG&A expense of $3.7
million related to items not included in our financial estimates. On a
pre-tax basis, these items totaled $9.3 million and on an after-tax
basis totaled $5.6 million ($0.10 per diluted share).
Adjusted EBITDA (a non-GAAP measure) was $70.7 million, or 11.4 percent
of revenues, down from $77.8 million (12.4 percent of revenues) in Q3 of
2016. Adjusted EBITDA was burdened with the out-of-period adjustments
and the cash portion the SG&A expense discussed above, excluding these
expenses Adjusted EBITDA would have been $6.7 million higher than the as
reported amount.
Cash flows from operating activities were $55.9 million and free cash
flow (a non-GAAP measure) was $49.3 million. During the quarter, we
repaid $19.0 million of long-term debt and at December 31, 2016, our
leverage ratio (a non-GAAP measure) was 2.32 to 1, down from 2.38 to 1
at September 30, 2016.
Financial Estimates for Q1 2017
On Assignment is providing financial estimates for the first quarter of
2017. 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
significant change in foreign exchange rates. Reconciliations of
estimated net income to the estimated non-GAAP measures are presented
herein.
-
Revenues of $614.0 million to $624.0 million
-
Gross margin of 31.4 percent to 31.6 percent
-
SG&A expense (excludes amortization of intangible assets) of $142.5
million to $145.0 million (includes $5.9 million in depreciation and
$6.0 million in equity-based compensation expense)
-
Amortization of intangible assets of $8.6 million
-
Effective tax rate of 39.0 percent
-
Net income of $21.5 million to $23.4 million
-
Earnings per diluted share of $0.41 to $0.44
-
Diluted shares outstanding of 53.0 million
-
Adjusted EBITDA (a non-GAAP measure) of $62.5 million to $65.5 million
-
Adjusted Net Income (a non-GAAP measure)1 of $29.7 million
to $31.6 million
-
Adjusted Net Income per diluted share1 (a non-GAAP measure)
of $0.56 to $0.60
_______________
1 Does not include the “Cash Tax Savings on Indefinite-lived
Intangible Assets.” These savings total $6.7 million each quarter, or
$0.12 per diluted share, and represent the economic value of the tax
deduction that we receive from the amortization of goodwill and
trademarks.
Consistent with past practice, our financial estimates above are based
on our estimate of “Billable Days” for the quarter, which are total
calendar days for the period, less weekends and holidays ("Business
Days") further adjusted for other factors, such as the day of the week a
holiday occurs, additional time taken off around holidays, year-end
client furloughs and inclement weather. For the first quarter, we
estimate billable days of 63.0, which is 0.3 fewer days than the first
quarter of 2016. Adjusting for the fewer billable days, our estimated
year-over-year growth rate for the first quarter ranges from 6.0 to 7.7
percent.
The above estimates also include the effects of the payroll tax reset,
which occurs at the beginning of each year. The reset results in an
estimated sequential increase in payroll taxes of approximately $11.6
million (or approximately 1.9 percent of revenues) of which
approximately $7.4 million relates to costs of services and the
remainder to SG&A expenses.
Conference Call
On Assignment will hold a conference call today at 5:00 p.m. EST to
review its financial results for the fourth quarter. The dial-in number
is 800-230-1766 (+1-612-332-0335 for callers outside the United States)
and the conference ID number is 415970. Participants should dial in ten
minutes before the call. The prepared remarks for this call will be
available via On Assignment's web site at www.onassignment.com.
This call is being webcast by CCBN and can be accessed at www.onassignment.com.
Individual investors can also listen at CCBN's site at www.fulldisclosure.com
or by visiting any of the investor sites in CCBN's Individual Investor
Network.
A replay of the conference call will be available beginning Tuesday,
February 14, 2017 at 7:00 p.m. EST until midnight on Tuesday, February
28, 2017. The access number for the replay is 800-475-6701
(+1-320-365-3844 outside the United States) and the conference ID number
is 415970.
About On Assignment
On Assignment, Inc. is a leading global provider of highly skilled,
hard-to-find professionals in the growing technology, life sciences, and
creative sectors, where quality people are the key to success. The
Company goes beyond matching résumés with job descriptions to match
people they know into positions they understand for temporary,
contract-to-hire, and direct hire assignments. Clients recognize On
Assignment for its quality candidates, quick response, and successful
assignments. Professionals think of On Assignment as career-building
partners with the depth and breadth of experience to help them reach
their goals. The Company has a network of branch offices throughout the
United States, Canada and Europe. To learn more, visit http://www.onassignment.com.
Reasons for Presentation of Non-GAAP Financial Measures
Statements in this release and the accompanying financial information
include non-GAAP financial measures. Such information is provided as
additional information, not as an alternative to our consolidated
financial statements presented in accordance with accounting principles
generally accepted in the United States ("GAAP"), and is intended to
enhance an overall understanding of our current financial performance.
These terms 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 a reconciliation of each non-GAAP financial measure to
the most directly comparable GAAP financial measure. Below is a
discussion of our non-GAAP measures.
Pro forma revenues and gross profit by segment are presented to provide
a more consistent basis for comparison between quarters. Pro forma was
prepared as if the acquisitions of Creative Circle and a small Life
Sciences business in Europe were consummated at the beginning of 2014.
Although the pro forma segment data are considered non-GAAP measures,
they were calculated in the same manner as the consolidated pro forma
data, which are GAAP measures.
EBITDA (earnings before interest, taxes, depreciation and amortization
of intangible assets) and Adjusted EBITDA (EBITDA plus equity-based
compensation expense and, as applicable, write-off of loan costs,
acquisition, integration and strategic planning expenses, and impairment
charges) are used to determine a portion of the compensation for some of
our executives and employees. Equity-based compensation expense is added
to arrive at Adjusted EBITDA because it is a non-cash expense. Write-off
of loan costs, acquisition, integration and strategic planning expenses,
and impairment charges are added, as applicable, to arrive at Adjusted
EBITDA as they are not indicative of the performance of our core
business on an ongoing basis.
Non-GAAP net income (net income, less income [loss] from discontinued
operations, net of tax, plus, as applicable, refinancing costs,
acquisition, integration and strategic planning expenses, accretion of
fair value discount on contingent consideration, impairment charges, and
the tax effect of these items) provides a method for assessing our
operating results in a manner that is focused on the performance of our
core business on an ongoing basis. Adjusted Net Income (Non-GAAP net
income plus amortization of intangible assets, less income taxes on
amortization for financial reporting purposes not deductible for income
tax purposes) provides a method for assessing our operating results in a
manner that is focused on the performance of our core business on an
ongoing basis, adjusted for some of the cash flows associated with
amortization of intangible assets to more fully present the performance
of our acquisitions.
Free cash flow is defined as net cash provided by (used in) operating
activities, less capital expenditures. Management believes this provides
useful information to investors about the amount of cash generated by
the business that can be used for strategic opportunities. Our leverage
ratio provides information about our compliance with loan covenants and
is calculated in accordance with our credit agreement, as filed with the
Securities and Exchange Commission ("SEC"), by dividing our total
indebtedness by trailing 12 months Adjusted EBITDA.
Reasons for Presentation of Operating Metrics
Operating metrics are intended to enhance the overall understanding of
our business and our current financial performance. These operating
metrics might not be calculated in the same manner as, and thus might
not be comparable to, similarly titled metrics reported by other
companies. The operating metrics presented on this release are
calculated as follows: average number of staffing consultants are full
time equivalent staffing consultant headcount in the quarter; average
number of contract professionals and average number of customers are the
number of contract professionals employed each week and the number of
customers served each week, averaged for the quarter, respectively
(average is weighted by total number of hours billed per week); top 10
customers as a percentage of revenue are the 10 largest clients defined
by the revenue generated in the quarter, divided by total revenues in
the quarter; gross profit per staffing consultant is gross profit for
the quarter divided by the average number of staffing consultants;
average bill rate is total assignment revenue client billings in the
quarter divided by total hours billed in the quarter.
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. 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, amortization,
effective tax rate, net income, diluted shares outstanding, Adjusted
EBITDA, Adjusted Net Income and related per share amounts (as
applicable) 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, our ability to manage our
litigation matters, the successful integration of our recently acquired
subsidiaries, the successful implementation of our five-year strategic
plan, and other risks detailed from time to time in our reports filed
with the SEC, including our Annual Report on Form 10-K for the year
ended December 31, 2015, as filed with the SEC on February 29, 2016 and
our Quarterly Reports on Form 10-Q for the quarters ended March 31,
2016, June 30, 2016 and September 30, 2016 as filed with the SEC on May
9, 2016, August 8, 2016 and November 8, 2016, respectively. 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
|
|
|
|
|
Year Ended
|
|
|
|
|
December 31,
|
|
|
September 30,
|
|
|
|
|
December 31,
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
$
|
620,884
|
|
|
|
$
|
577,517
|
|
|
|
$
|
629,401
|
|
|
|
|
|
$
|
2,440,413
|
|
|
|
$
|
2,065,008
|
|
Costs of services
|
|
|
|
|
422,689
|
|
|
|
384,585
|
|
|
|
422,281
|
|
|
|
|
|
1,645,230
|
|
|
|
1,386,263
|
|
Gross profit
|
|
|
|
|
198,195
|
|
|
|
192,932
|
|
|
|
207,120
|
|
|
|
|
|
795,183
|
|
|
|
678,745
|
|
Selling, general and administrative expenses
|
|
|
|
|
142,630
|
|
|
|
138,754
|
|
|
|
141,968
|
|
|
|
|
|
565,829
|
|
|
|
492,170
|
|
Amortization of intangible assets
|
|
|
|
|
9,710
|
|
|
|
11,316
|
|
|
|
9,742
|
|
|
|
|
|
39,628
|
|
|
|
34,467
|
|
Operating income
|
|
|
|
|
45,855
|
|
|
|
42,862
|
|
|
|
55,410
|
|
|
|
|
|
189,726
|
|
|
|
152,108
|
|
Interest expense, net
|
|
|
|
|
(7,049
|
)
|
|
|
(9,098
|
)
|
|
|
(8,294
|
)
|
|
|
|
|
(32,327
|
)
|
|
|
(26,444
|
)
|
Write-off of loan costs
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
(3,751
|
)
|
Income before income taxes
|
|
|
|
|
38,806
|
|
|
|
33,764
|
|
|
|
47,116
|
|
|
|
|
|
157,399
|
|
|
|
121,913
|
|
Provision for income taxes
|
|
|
|
|
14,746
|
|
|
|
14,591
|
|
|
|
17,341
|
|
|
|
|
|
60,203
|
|
|
|
50,491
|
|
Income from continuing operations
|
|
|
|
|
24,060
|
|
|
|
19,173
|
|
|
|
29,775
|
|
|
|
|
|
97,196
|
|
|
|
71,422
|
|
Gain on sale of discontinued operations, net of tax
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
25,703
|
|
Income (loss) from discontinued operations, net of tax
|
|
|
|
|
(32
|
)
|
|
|
165
|
|
|
|
(7
|
)
|
|
|
|
|
5
|
|
|
|
525
|
|
Net income
|
|
|
|
|
$
|
24,028
|
|
|
|
$
|
19,338
|
|
|
|
$
|
29,768
|
|
|
|
|
|
$
|
97,201
|
|
|
|
$
|
97,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
|
|
|
$
|
0.45
|
|
|
|
$
|
0.36
|
|
|
|
$
|
0.56
|
|
|
|
|
|
$
|
1.83
|
|
|
|
$
|
1.37
|
|
Income from discontinued operations
|
|
|
|
|
—
|
|
|
|
0.01
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
0.50
|
|
|
|
|
|
|
$
|
0.45
|
|
|
|
$
|
0.37
|
|
|
|
$
|
0.56
|
|
|
|
|
|
$
|
1.83
|
|
|
|
$
|
1.87
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
|
|
|
$
|
0.45
|
|
|
|
$
|
0.36
|
|
|
|
$
|
0.55
|
|
|
|
|
|
$
|
1.81
|
|
|
|
$
|
1.35
|
|
Income from discontinued operations
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
0.49
|
|
|
|
|
|
|
$
|
0.45
|
|
|
|
$
|
0.36
|
|
|
|
$
|
0.55
|
|
|
|
|
|
$
|
1.81
|
|
|
|
$
|
1.84
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of shares and share equivalents used to calculate earnings
per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
52,924
|
|
|
|
52,867
|
|
|
|
53,275
|
|
|
|
|
|
53,192
|
|
|
|
52,259
|
|
Diluted
|
|
|
|
|
53,521
|
|
|
|
53,590
|
|
|
|
53,768
|
|
|
|
|
|
53,747
|
|
|
|
53,005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT FINANCIAL INFORMATION (Unaudited) FOR THE
THREE MONTHS AND THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (Dollars
in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
Year Ended
|
|
|
|
|
2016
|
|
|
2015
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As Reported
|
|
|
Pro Forma
|
Revenues by segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Apex:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assignment
|
|
|
|
$
|
466.1
|
|
|
|
$
|
423.9
|
|
|
|
|
$
|
1,791.6
|
|
|
|
$
|
1,461.2
|
|
|
|
$
|
1,563.3
|
|
Permanent placement
|
|
|
|
10.0
|
|
|
|
10.7
|
|
|
|
|
44.9
|
|
|
|
32.4
|
|
|
|
41.7
|
|
|
|
|
|
476.1
|
|
|
|
434.6
|
|
|
|
|
1,836.5
|
|
|
|
1,493.6
|
|
|
|
1,605.0
|
|
Oxford:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assignment
|
|
|
|
125.9
|
|
|
|
121.0
|
|
|
|
|
520.7
|
|
|
|
485.8
|
|
|
|
488.4
|
|
Permanent placement
|
|
|
|
18.9
|
|
|
|
21.9
|
|
|
|
|
83.2
|
|
|
|
85.6
|
|
|
|
85.6
|
|
|
|
|
|
144.8
|
|
|
|
142.9
|
|
|
|
|
603.9
|
|
|
|
571.4
|
|
|
|
574.0
|
|
Consolidated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assignment
|
|
|
|
592.0
|
|
|
|
544.9
|
|
|
|
|
2,312.3
|
|
|
|
1,947.0
|
|
|
|
2,051.7
|
|
Permanent placement
|
|
|
|
28.9
|
|
|
|
32.6
|
|
|
|
|
128.1
|
|
|
|
118.0
|
|
|
|
127.3
|
|
|
|
|
|
$
|
620.9
|
|
|
|
$
|
577.5
|
|
|
|
|
$
|
2,440.4
|
|
|
|
$
|
2,065.0
|
|
|
|
$
|
2,179.0
|
|
Percentage of total revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Apex
|
|
|
|
76.7
|
%
|
|
|
75.2
|
%
|
|
|
|
75.3
|
%
|
|
|
72.3
|
%
|
|
|
73.7
|
%
|
Oxford
|
|
|
|
23.3
|
%
|
|
|
24.8
|
%
|
|
|
|
24.7
|
%
|
|
|
27.7
|
%
|
|
|
26.3
|
%
|
|
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assignment
|
|
|
|
95.3
|
%
|
|
|
94.3
|
%
|
|
|
|
94.7
|
%
|
|
|
94.3
|
%
|
|
|
94.2
|
%
|
Permanent placement
|
|
|
|
4.7
|
%
|
|
|
5.7
|
%
|
|
|
|
5.3
|
%
|
|
|
5.7
|
%
|
|
|
5.8
|
%
|
|
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
|
|
95.4
|
%
|
|
|
95.7
|
%
|
|
|
|
95.3
|
%
|
|
|
95.5
|
%
|
|
|
95.6
|
%
|
Foreign
|
|
|
|
4.6
|
%
|
|
|
4.3
|
%
|
|
|
|
4.7
|
%
|
|
|
4.5
|
%
|
|
|
4.4
|
%
|
|
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
Gross profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Apex
|
|
|
|
$
|
140.4
|
|
|
|
$
|
131.9
|
|
|
|
|
$
|
548.4
|
|
|
|
$
|
439.6
|
|
|
|
$
|
487.0
|
|
Oxford
|
|
|
|
57.8
|
|
|
|
61.0
|
|
|
|
|
246.8
|
|
|
|
239.1
|
|
|
|
240.0
|
|
Consolidated
|
|
|
|
$
|
198.2
|
|
|
|
$
|
192.9
|
|
|
|
|
$
|
795.2
|
|
|
|
$
|
678.7
|
|
|
|
$
|
727.0
|
|
Gross margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Apex
|
|
|
|
29.5
|
%
|
|
|
30.4
|
%
|
|
|
|
29.9
|
%
|
|
|
29.4
|
%
|
|
|
30.3
|
%
|
Oxford
|
|
|
|
39.9
|
%
|
|
|
42.7
|
%
|
|
|
|
40.9
|
%
|
|
|
41.9
|
%
|
|
|
41.8
|
%
|
Consolidated
|
|
|
|
31.9
|
%
|
|
|
33.4
|
%
|
|
|
|
32.6
|
%
|
|
|
32.9
|
%
|
|
|
33.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Pro forma data were prepared as if the acquisitions of
Creative Circle and a small Life Sciences business in Europe were
consummated at the beginning of 2014. Although the pro forma
segment data are considered non-GAAP measures, they were
calculated in the same manner as the consolidated pro forma data,
which are GAAP measures.
|
|
|
SELECTED CASH FLOW INFORMATION (Unaudited) FOR THE
THREE MONTHS AND THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
Year Ended
|
|
|
|
|
2016
|
|
|
2015
|
|
|
|
2016
|
|
|
2015
|
Cash provided by operating activities
|
|
|
|
$
|
55,902
|
|
|
|
$
|
30,196
|
|
|
|
|
$
|
196,250
|
|
|
|
$
|
117,493
|
|
Capital expenditures
|
|
|
|
(6,587
|
)
|
|
|
(6,512
|
)
|
|
|
|
(27,138
|
)
|
|
|
(24,689
|
)
|
Free cash flow (non-GAAP measure)
|
|
|
|
$
|
49,315
|
|
|
|
$
|
23,684
|
|
|
|
|
$
|
169,112
|
|
|
|
$
|
92,804
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash used in investing activities
|
|
|
|
$
|
(6,646
|
)
|
|
|
$
|
(6,015
|
)
|
|
|
|
$
|
(21,984
|
)
|
|
|
$
|
(461,530
|
)
|
Cash provided by (used in) financing activities
|
|
|
|
$
|
(38,860
|
)
|
|
|
$
|
(28,808
|
)
|
|
|
|
$
|
(170,984
|
)
|
|
|
$
|
337,659
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SELECTED CONSOLIDATED BALANCE SHEET DATA AS OF
DECEMBER 31, 2016 AND DECEMBER 31, 2015 (In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
(Unaudited)
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
$
|
27,044
|
|
|
|
$
|
23,869
|
Accounts receivable, net
|
|
|
|
|
386,858
|
|
|
|
354,808
|
Total current assets
|
|
|
|
|
437,524
|
|
|
|
414,208
|
Goodwill and intangible assets, net
|
|
|
|
|
1,251,243
|
|
|
|
1,292,831
|
Total assets
|
|
|
|
|
1,752,667
|
|
|
|
1,767,307
|
Total current liabilities
|
|
|
|
|
162,499
|
|
|
|
160,350
|
Working capital
|
|
|
|
|
275,025
|
|
|
|
253,858
|
Long-term debt
|
|
|
|
|
640,355
|
|
|
|
755,508
|
Other long-term liabilities
|
|
|
|
|
80,874
|
|
|
|
66,655
|
Stockholders’ equity
|
|
|
|
|
868,939
|
|
|
|
784,794
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF NET INCOME TO EBITDA (NON-GAAP MEASURE) AND ADJUSTED
EBITDA (NON-GAAP MEASURE) (Unaudited) FOR THE THREE
MONTHS AND THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
Year Ended
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
2016
|
|
|
2015
|
|
|
|
Net income
|
|
|
$
|
24,028
|
|
|
|
$
|
19,338
|
|
|
|
|
|
$
|
97,201
|
|
|
|
$
|
97,650
|
|
|
|
|
(Income) loss from discontinued operations, net of tax(1)
|
|
|
32
|
|
|
|
(165
|
)
|
|
|
|
|
(5
|
)
|
|
|
(26,228
|
)
|
|
|
|
Interest expense, net
|
|
|
7,049
|
|
|
|
9,098
|
|
|
|
|
|
32,327
|
|
|
|
26,444
|
|
|
|
|
Write-off of loan costs
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
3,751
|
|
|
|
|
Provision for income taxes
|
|
|
14,746
|
|
|
|
14,591
|
|
|
|
|
|
60,203
|
|
|
|
50,491
|
|
|
|
|
Depreciation
|
|
|
6,368
|
|
|
|
4,759
|
|
|
|
|
|
22,621
|
|
|
|
16,838
|
|
|
|
|
Amortization of intangible assets
|
|
|
9,710
|
|
|
|
11,316
|
|
|
|
|
|
39,628
|
|
|
|
34,467
|
|
|
|
|
EBITDA (non-GAAP measure)
|
|
|
61,933
|
|
|
|
58,937
|
|
|
|
|
|
251,975
|
|
|
|
203,413
|
|
|
|
|
Equity-based compensation
|
|
|
7,221
|
|
|
|
6,774
|
|
|
|
|
|
27,024
|
|
|
|
22,018
|
|
|
|
|
Acquisition, integration and strategic planning expenses
|
|
|
1,571
|
|
|
|
5,025
|
|
|
|
|
|
6,034
|
|
|
|
14,949
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA (non-GAAP measure)
|
|
|
$
|
70,725
|
|
|
|
$
|
70,736
|
|
|
|
|
|
$
|
285,033
|
|
|
|
$
|
240,380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common and common
equivalent shares outstanding (diluted)
|
|
|
53,521
|
|
|
|
53,590
|
|
|
|
|
|
53,747
|
|
|
|
53,005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
|
(Income) loss from discontinued operations, net of tax is excluded
from EBITDA and Adjusted EBITDA. Discontinued operations, net of
tax for the year ended December 31, 2015 included the gain on the
sale of our Physician Segment.
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME AND ADJUSTED
NET INCOME (NON-GAAP MEASURE) (Unaudited) FOR THE
THREE MONTHS AND THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In
thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
Year Ended
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
|
2016
|
|
|
2015
|
|
|
|
Net income
|
|
|
$
|
24,028
|
|
|
|
$
|
19,338
|
|
|
|
|
$
|
97,201
|
|
|
|
$
|
97,650
|
|
|
|
|
(Income) loss from discontinued operations, net of tax(1)
|
|
|
32
|
|
|
|
(165
|
)
|
|
|
|
(5
|
)
|
|
|
(26,228
|
)
|
|
|
|
Refinancing costs(2)
|
|
|
—
|
|
|
|
—
|
|
|
|
|
889
|
|
|
|
3,751
|
|
|
|
|
Acquisition, integration and strategic planning expenses
|
|
|
1,571
|
|
|
|
5,025
|
|
|
|
|
6,034
|
|
|
|
14,949
|
|
|
|
|
Accretion of discount on contingent consideration
|
|
|
—
|
|
|
|
650
|
|
|
|
|
863
|
|
|
|
1,361
|
|
|
|
|
Tax effect on adjustments
|
|
|
(614
|
)
|
|
|
(1,438
|
)
|
|
|
|
(3,022
|
)
|
|
|
(6,566
|
)
|
|
|
|
Non-GAAP net income
|
|
|
25,017
|
|
|
|
23,410
|
|
|
|
|
101,960
|
|
|
|
84,917
|
|
|
|
|
Amortization of intangible assets
|
|
|
9,710
|
|
|
|
11,316
|
|
|
|
|
39,628
|
|
|
|
34,467
|
|
|
|
|
Income taxes on amortization for financial reporting purposes not
deductible for income tax purposes
|
|
|
(431
|
)
|
|
|
(620
|
)
|
|
|
|
(2,018
|
)
|
|
|
(2,353
|
)
|
|
|
|
Adjusted Net Income (non-GAAP measure)(3)
|
|
|
$
|
34,296
|
|
|
|
$
|
34,106
|
|
|
|
|
$
|
139,570
|
|
|
|
$
|
117,031
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per diluted share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
0.45
|
|
|
|
$
|
0.36
|
|
|
|
|
$
|
1.81
|
|
|
|
$
|
1.84
|
|
|
|
|
Adjustments
|
|
|
0.19
|
|
|
|
0.28
|
|
|
|
|
0.79
|
|
|
|
0.37
|
|
|
|
|
Adjusted Net Income (non-GAAP measure)(3)
|
|
|
$
|
0.64
|
|
|
|
$
|
0.64
|
|
|
|
|
$
|
2.60
|
|
|
|
$
|
2.21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common and common equivalent shares outstanding
(diluted)
|
|
|
53,521
|
|
|
|
53,590
|
|
|
|
|
53,747
|
|
|
|
53,005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
(1)
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(Income) loss from discontinued operations, net of tax is excluded
from Non-GAAP net income and Adjusted Net Income. Discontinued
operations, net of tax for the year ended December 31, 2015
included the gain on the sale of our Physician Segment.
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(2)
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In August 2016 we amended our credit facility resulting in a 25
basis points reduction in the interest rate for the term B loan
facility, and we incurred $0.9 million third party costs related
to the debt amendment which are included in interest expense. In
June 2015, we entered into a new credit facility to fund the
Creative Circle acquisition. Our previous facility was considered
extinguished and we wrote off $3.8 million of deferred loan costs
associated with our previous facility.
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(3)
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Does not include the “Cash Tax Savings on Indefinite-lived
Intangible Assets.” These savings total $6.7 million each quarter,
or $0.12 per diluted share, and represent the economic value of
the tax deduction that we receive from the amortization of
goodwill and trademarks.
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|
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|
OPERATING METRICS (Unaudited)
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Apex
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|
Oxford
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|
Consolidated
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|
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|
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|
Average number of staffing consultants:
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|
|
|
|
|
|
|
|
|
Q4 2016
|
|
|
1,453
|
|
|
|
1,016
|
|
|
|
2,469
|
|
Q3 2016
|
|
|
1,402
|
|
|
|
1,001
|
|
|
|
2,403
|
|
Q4 2015
|
|
|
1,310
|
|
|
|
955
|
|
|
|
2,265
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|
|
|
|
|
|
|
|
|
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|
Average number of customers:
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|
|
|
|
|
|
|
|
Q4 2016
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|
|
3,611
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|
|
|
1,088
|
|
|
|
4,699
|
|
Q3 2016
|
|
|
3,530
|
|
|
|
1,057
|
|
|
|
4,587
|
|
Q4 2015
|
|
|
3,349
|
|
|
|
1,099
|
|
|
|
4,448
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|
|
|
|
|
|
|
|
|
|
|
Average number of contract professionals:
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|
|
|
|
|
|
|
|
|
Q4 2016
|
|
|
17,060
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|
|
|
2,903
|
|
|
|
19,963
|
|
Q3 2016
|
|
|
16,047
|
|
|
|
2,913
|
|
|
|
18,960
|
|
Q4 2015
|
|
|
14,691
|
|
|
|
2,874
|
|
|
|
17,565
|
|
|
|
|
|
|
|
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|
Top 10 customers as a percentage of revenue:
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|
|
|
|
|
|
|
|
|
Q4 2016
|
|
|
26.3
|
%
|
|
|
12.9
|
%
|
|
|
20.5
|
%
|
Q3 2016
|
|
|
25.3
|
%
|
|
|
15.6
|
%
|
|
|
19.2
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%
|
Q4 2015
|
|
|
22.8
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%
|
|
|
9.0
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%
|
|
|
17.2
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%
|
|
|
|
|
|
|
|
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Average bill rate:
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|
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|
|
|
|
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|
|
Q4 2016
|
|
|
$
|
56.57
|
|
|
|
$
|
99.12
|
|
|
|
$
|
62.12
|
|
Q3 2016
|
|
|
$
|
56.46
|
|
|
|
$
|
101.60
|
|
|
|
$
|
62.45
|
|
Q4 2015
|
|
|
$
|
54.83
|
|
|
|
$
|
102.10
|
|
|
|
$
|
60.68
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit per staffing consultant:
|
|
|
|
|
|
|
|
|
|
Q4 2016
|
|
|
$
|
97,000
|
|
|
|
$
|
57,000
|
|
|
|
$
|
80,000
|
|
Q3 2016
|
|
|
$
|
102,000
|
|
|
|
$
|
63,000
|
|
|
|
$
|
86,000
|
|
Q4 2015
|
|
|
$
|
101,000
|
|
|
|
$
|
64,000
|
|
|
|
$
|
85,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIAL ESTIMATES FOR Q1 2017 RECONCILIATION OF
ESTIMATED NET INCOME TO ESTIMATED NON-GAAP MEASURES (In
millions, except per share data)
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Low
|
|
|
High
|
|
|
|
Net income(1)
|
|
|
$
|
21.5
|
|
|
|
$
|
23.4
|
|
|
|
|
Interest expense, net
|
|
|
6.8
|
|
|
|
6.8
|
|
|
|
|
Provision for income taxes
|
|
|
13.7
|
|
|
|
14.8
|
|
|
|
|
Depreciation
|
|
|
5.9
|
|
|
|
5.9
|
|
|
|
|
Amortization of intangible assets
|
|
|
8.6
|
|
|
|
8.6
|
|
|
|
|
EBITDA (non-GAAP measure)
|
|
|
56.5
|
|
|
|
59.5
|
|
|
|
|
Equity-based compensation
|
|
|
6.0
|
|
|
|
6.0
|
|
|
|
|
Adjusted EBITDA (non-GAAP measure)
|
|
|
$
|
62.5
|
|
|
|
$
|
65.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Low
|
|
|
High
|
|
|
|
Net income(1)
|
|
|
$
|
21.5
|
|
|
|
$
|
23.4
|
|
|
|
|
Amortization of intangible assets
|
|
|
8.6
|
|
|
|
8.6
|
|
|
|
|
Income taxes on amortization for financial reporting purposes not
deductible for income tax purposes
|
|
|
(0.4
|
)
|
|
|
(0.4
|
)
|
|
|
|
Adjusted Net Income (non-GAAP measure)(2)
|
|
|
$
|
29.7
|
|
|
|
$
|
31.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per diluted share:
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
0.41
|
|
|
|
$
|
0.44
|
|
|
|
|
Adjustments
|
|
|
0.15
|
|
|
|
0.16
|
|
|
|
|
Adjusted Net Income (non-GAAP measure)(2)
|
|
|
$
|
0.56
|
|
|
|
$
|
0.60
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common and common equivalent shares outstanding
(diluted)
|
|
|
53.0
|
|
|
|
53.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
|
These estimates do not include acquisition, integration, or
strategic planning expenses.
|
|
|
|
|
(2)
|
|
|
Does not include the “Cash Tax Savings on Indefinite-lived
Intangible Assets.” These savings total $6.7 million each quarter,
or $0.12 per diluted share, and represent the economic value of
the tax deduction that we receive from the amortization of
goodwill and trademarks.
|
|
|
|
|
Contact:
On Assignment, Inc.
Ed Pierce, 818-878-7900
Chief Financial Officer