EX-99.1 2 p15421exv99w1.htm EX-99.1 EX-99.1
Exhibit 99.1
(COMSYS LOGO)
         
Contacts:
  David L. Kerr   Amy Bobbitt
 
  Senior Vice President — Corporate Development   Senior Vice President & Chief
 
  713.386.1420   Accounting Officer
 
  dkerr@comsys.com   480.777.6680
 
      abobbitt@comsys.com
COMSYS IT PARTNERS, INC. REPORTS 2009 SECOND QUARTER RESULTS
HOUSTON, TX (July 29, 2009) — COMSYS IT Partners, Inc. (NASDAQ:CITP), a leading provider of information technology staffing and consulting services, today announced its financial results for the second quarter ended June 28, 2009.
Second Quarter 2009 Financial Results
    Revenue was $156.8 million, down 14.8% from $184.1 million during the second quarter of 2008. On an acquisition-adjusted basis (i.e. including the acquisitions made in the prior year on a pro forma basis), revenue declined by 16.7% from the prior-year period.
 
    Revenue declined sequentially from $162.7 million in the first quarter of 2009. The decline of 3.6% was an improvement over the sequential declines in the prior three quarters.
 
    Net income was $2.4 million, or $0.11 per common share, down from $6.2 million, or $0.30 per common share, in the second quarter of 2008.
 
    Results for the second quarter of 2009 also included previously announced restructuring charges of approximately $0.3 million. Excluding these charges, net income in the quarter would have been $2.7 million, or $0.13 per common share.
 
    EBITDA, excluding restructuring costs, in the second quarter of 2009 was $6.0 million compared with $10.5 million in the second quarter of 2008 and $4.9 million in the first quarter of 2009. EBITDA, excluding restructuring costs, is a non-GAAP measure defined below.
 
    Excess availability under COMSYS’ revolving credit facility at the end of the second quarter was $56.8 million.
Year-to-Date 2009 Financial Results
    Revenue was $319.5 million in the first six months of 2009, down 13.1% from $367.4 million during the first six months of 2008. On an acquisition-adjusted basis (i.e. including the acquisitions made in the prior year on a pro forma basis), revenue declined by 14.8% from the prior-year period.
 
    Net income was $0.5 million in the first six months of 2009, or $0.02 per common share, down from $11.3 million, or $0.55 per common share, in the first six months of 2008.
 
    Results for the first six months of 2009 also included previously announced restructuring charges of approximately $3.9 million. Excluding these charges, net income in the period would have been $4.5 million, or $0.21 per common share.
 
    EBITDA, excluding restructuring costs, in the first six months of 2009 was $10.9 million compared with $20.4 million in the first six months of 2008.
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CITP Reports 2009 Second Quarter Results
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July 29, 2009
“Our operations are performing well in this challenging environment and we are pleased with the progress we continue to make against a number of our longer-term priorities,” said Larry L. Enterline, COMSYS Chief Executive Officer. “With our strong balance sheet and liquidity and our improved performance against our peers, we have chosen to make a number of selected investments in TAPFIN, our healthcare and government verticals, and other parts of our business at a time when many others are focused primarily on defensive cost cutting. We are not expecting to see dramatic results from any of those efforts until the broader economy improves; but, we are confident that we are strengthening our competitive position during this difficult period and optimistic about the opportunities that we are creating for COMSYS in the next expansion.”
Enterline added, “As always, I would like to thank our operations leaders and their staffs for their ongoing strong efforts. Their continued focus and dedication will ensure that we continue to meet our clients’ needs in this difficult environment.”
Amy Bobbitt, COMSYS Senior Vice President and Chief Accounting Officer, commented, “Billable hours in the second quarter were down overall versus last year, but the rate of decline in our average weekly billable hours since the beginning of May has slowed. On a sequential basis, after eliminating the impact of higher payroll taxes in the first quarter this year, gross margin improved by 50 basis points over the first quarter of 2009. This increase resulted from improved management of pay rates and lower reimbursable expense revenue, partially offset by lower fee income from permanent placement and vendor management services.“
Bobbitt continued, “Our debt at the end of the quarter was $52.2 million, a decrease from $60.0 million at the end of the first quarter of 2009. We expect to further reduce our debt balance through the remainder of 2009.”
Selected operating data and reconciliations of non-GAAP financial measures to GAAP results for the second quarter ended June 28, 2009, are included below.
Conference Call Information
COMSYS will host a conference call tomorrow (July 30) at 10:00 a.m. Eastern time to discuss the quarterly financial results. The conference call-in number is (913) 981-5578 and the confirmation number is 1149877. The call will also be web cast live at www.comsys.com and www.earnings.com and replayed for 30 days at www.comsys.com. A seven-day telephonic replay of this conference call will be available by dialing (719) 457-0820. Callers should use the pass code 1149877 to gain access to the replay, which will be available through the end of the day on August 6, 2009.
About COMSYS IT Partners
COMSYS IT Partners, Inc. (NASDAQ: CITP) is a leading IT services company with 50 offices across the U.S. and offices in Puerto Rico, Canada and the U.K. COMSYS service offerings include contingent and direct hire placement of IT professionals and a wide range of technical services and solutions addressing requirements across the enterprise. TAPFIN Process Solutions delivers critical management solutions across the resource spectrum from contingent workers to outsourced services.
Forward-looking Statements
Certain information contained in this press release may be deemed forward-looking statements regarding events and financial trends that could affect our plans, objectives, future operating results, financial condition, performance and business. These statements may be identified by words such as “estimate,” “forecast,” “plan,” “intend,” “believe,” “should,” “expect,” “anticipate,” or variations or negatives thereof, or by similar or comparable words or phrases. These forward-looking statements are largely based on our expectations and beliefs concerning future events, which reflect estimates and assumptions made by our management. These estimates
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CITP Reports 2009 Second Quarter Results
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July 29, 2009
and assumptions reflect our best judgment based on currently known market conditions and other factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control, including:
    economic declines that affect our business, including our profitability, liquidity or the ability to comply with applicable loan covenants;
 
    the financial stability of our lenders and their ability to honor their commitments related to our credit agreements;
 
    whether governments will amend existing regulations or impose additional regulations or licensing requirements in such a manner as to increase our costs of doing business or restrict access to qualified technology workers;
 
    the risk of increased tax rates;
 
    adverse changes in credit and capital markets conditions that may affect our ability to obtain financing or refinancing on favorable terms or that may warrant changes to existing credit terms;
 
    the financial stability of our customers and other business partners and their ability to pay their outstanding obligations or provide committed services;
 
    changes in levels of unemployment and other economic conditions in the United States, or in particular regions or industries;
 
    the impact of competitive pressures on our ability to maintain or improve our operating margins, including pricing pressures as well as any change in the demand for our services;
 
    the risk in an uncertain economic environment of increased incidences of employment disputes, employment litigation and workers’ compensation claims;
 
    our success in attracting, training, retaining and motivating billable consultants and key officers and employees;
 
    our ability to shift a larger percentage of our business mix into IT solutions, project management and business process outsourcing and, if successful, our ability to manage those types of business profitably;
 
    weakness or reductions in corporate information technology spending levels;
 
    our ability to maintain existing client relationships and attract new clients in the context of changing economic or competitive conditions;
 
    the entry of new competitors into the U.S. staffing services market due to the limited barriers to entry or the expansion of existing competitors in that market;
 
    increases in employment-related costs such as healthcare and unemployment taxes;
 
    the possibility of our incurring liability for the activities of our billable consultants or for events impacting our billable consultants on our clients’ premises;
 
    the risk that we may be subject to claims for indemnification under our customer contracts;
 
    the risk that cost cutting or restructuring activities could cause an adverse impact on certain of our operations; and
 
    adverse changes to management’s periodic estimates of future cash flows that may affect our assessment of our ability to fully recover our goodwill.
Although we believe our estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond our control. In addition, management’s assumptions about future events may prove to be inaccurate. Management cautions all readers that the forward-looking statements contained in this report are not guarantees of future performance, and we cannot assure any reader that those statements will be realized or that the forward-looking events and circumstances will occur. Actual results may differ materially from those anticipated or implied in the forward-looking statements due to various factors, including the factors listed in this section and the “Risk Factors” section contained in our Annual Report on Form 10-K as filed with the Securities and Exchange Commission. All forward-looking statements speak only as of the date of this report. We do not intend to publicly update or revise any forward-looking statements as a result of new information, future events or otherwise, except as required by law. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.
CITP_F
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CITP Reports 2009 Second Quarter Results
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July 29, 2009
COMSYS IT PARTNERS, INC.
OPERATING DATA, SUPPLEMENTAL CASH FLOW INFORMATION AND NON-GAAP MEASURES
(IN THOUSANDS, EXCEPT OPERATING DATA)
                         
    Three Months Ended
    June 28,   March 29,   June 29,
    2009   2009   2008
     
Operating Data:
                       
 
                       
Billing days
    64       64       64  
Billable hours
    2,050,677       2,092,521       2,294,540  
Revenue per billing day, excluding reimbursable expense revenue (in thousands)
  $ 2,408     $ 2,490     $ 2,801  
Average bill rate
  $ 70.84     $ 71.63     $ 74.02  
Gross margin
    24.5 %     23.4 %     24.4 %
Effective tax rate
    6.1 %     (7.7 %)     4.6 %
DSO
    43       44       50  
Average daily net debt balance (in millions)
  $ 59.8     $ 57.9     $ 82.6  
                         
    Three Months Ended
    June 28,   March 29,   June 29,
    2009   2009   2008
     
Supplemental Cash Flow Information:
                       
 
                       
Net cash provided by (used in) operating activities
  $ 8,637     $ (6,748 )   $ 2,629  
Stock-based compensation
  $ 904     $ 867     $ 1,183  
Capital expenditures
  $ 251     $ 439     $ 2,143  
                                         
    Three Months Ended   Six Months Ended
    June 28,   March 29,   June 29,   June 28,   June 29,
    2009   2009   2008   2009   2008
         
Non-GAAP Financial Measures:
                                       
 
                                       
EBITDA, excluding restructuring costs:
                                       
GAAP net income (loss)
  $ 2,386     $ (1,871 )   $ 6,212     $ 515     $ 11,316  
Depreciation and amortization
    2,050       2,074       1,898       4,124       3,718  
Restructuring costs
    321       3,620             3,941        
Interest expense, net
    1,126       952       1,279       2,078       2,882  
Other income, net
    (67 )     (105 )     (172 )     (172 )     (225 )
Income tax expense
    216       243       1,324       459       2,742  
         
EBITDA, excluding restructuring costs
  $ 6,032     $ 4,913     $ 10,541     $ 10,945     $ 20,433  
         
EBITDA, excluding restructuring costs, as a % of GAAP revenue
    3.8 %     3.0 %     5.7 %     3.4 %     5.6 %
A non-GAAP financial measure is a numerical measure of a company’s performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles (“GAAP”). We believe EBITDA, excluding restructuring costs, to be relevant and useful information to our investors in assessing our financial operating results as these measures are used by our management in evaluating our financial performance, liquidity, our ability to service debt and fund capital expenditures. However, these measures should be considered in addition to, and not as a substitute for, or superior to, measures of financial performance prepared in accordance with generally accepted accounting principles, and may not be comparable to similarly titled measures reported by other companies. The non-GAAP measures included in this press release have been reconciled to the nearest GAAP measures as required under SEC rules regarding the use of non-GAAP financial measures.
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CITP Reports 2009 Second Quarter Results
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July 29, 2009
COMSYS IT PARTNERS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                         
    Three Months Ended   Six Months Ended
    June 28,   March 29,   June 29,   June 28,   June 29,
    2009   2009   2008   2009   2008
         
Revenues from services
  $ 156,765     $ 162,694     $ 184,064     $ 319,459     $ 367,447  
Cost of services
    118,386       124,598       139,232       242,984       277,959  
         
Gross profit
    38,379       38,096       44,832       76,475       89,488  
         
Operating costs and expenses:
                                       
Selling, general and administrative
    32,347       33,183       34,291       65,530       69,055  
Restructuring costs
    321       3,620             3,941        
Depreciation and amortization
    2,050       2,074       1,898       4,124       3,718  
         
 
    34,718       38,877       36,189       73,595       72,773  
         
Operating income (loss)
    3,661       (781 )     8,643       2,880       16,715  
Interest expense, net
    1,126       952       1,279       2,078       2,882  
Other income, net
    (67 )     (105 )     (172 )     (172 )     (225 )
         
Income (loss) before income taxes
    2,602       (1,628 )     7,536       974       14,058  
Income tax expense
    216       243       1,324       459       2,742  
         
Net income (loss)
  $ 2,386     $ (1,871 )   $ 6,212     $ 515     $ 11,316  
         
 
                                       
Net income (loss) per common share:
                                       
Basic
  $ 0.11     $ (0.09 )   $ 0.31     $ 0.02     $ 0.56  
Diluted
  $ 0.11     $ (0.09 )   $ 0.30     $ 0.02     $ 0.55  
 
                                       
Weighted average shares outstanding:
                                       
Basic
    19,796       19,774       19,592       19,785       19,585  
Diluted
    19,796       19,774       20,636       19,785       20,628  
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CITP Reports 2009 Second Quarter Results
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July 29, 2009
COMSYS IT PARTNERS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PAR VALUE AMOUNTS)
                 
    June 28,   December 28,
    2009   2008
     
Assets
               
Current assets:
               
Cash
  $ 1,771     $ 22,695  
Accounts receivable, net of allowance of $3,554 and $3,232, respectively
    182,333       202,297  
Prepaid expenses and other
    3,518       3,116  
Restricted cash
    2,486       2,489  
     
Total current assets
    190,108       230,597  
     
Fixed assets, net
    14,937       16,596  
Goodwill
    88,962       89,064  
Other intangible assets, net
    10,173       11,962  
Deferred financing costs, net
    3,002       1,175  
Restricted cash
    308       308  
Other assets
    1,144       1,478  
     
Total assets
  $ 308,634     $ 351,180  
     
 
               
Liabilities and stockholders’ equity
               
Current liabilities:
               
Accounts payable
  $ 128,072     $ 156,528  
Payroll and related taxes
    25,872       25,975  
Interest payable
    248       337  
Other current liabilities
    9,787       9,728  
     
Total current liabilities
    163,979       192,568  
     
Long-term debt
    52,174       69,692  
Other noncurrent liabilities
    6,827       5,435  
     
Total liabilities
    222,980       267,695  
     
 
               
Commitments and contingencies
               
 
               
Stockholders’ equity:
               
Preferred stock, no par value; 5,000,000 shares authorized; none issued
           
Common stock, par value $.01; 95,000,000 shares authorized and 20,816,746 shares outstanding; 95,000,000 shares authorized and 20,465,028 shares outstanding, respectively
    207       203  
Common stock warrants
    1,734       1,734  
Accumulated other comprehensive loss
    (182 )     (90 )
Additional paid-in capital
    229,102       227,360  
Accumulated deficit
    (145,207 )     (145,722 )
     
Total stockholders’ equity
    85,654       83,485  
     
Total liabilities and stockholders’ equity
  $ 308,634     $ 351,180  
     
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