Press Release Archive
FORT LAUDERDALE, Fla., July 30, 2007 -- Spherion Corporation (NYSE: SFN) today announced financial results for the second quarter ended July 1, 2007.
Spherion President and Chief Executive Officer Roy Krause commented, "We are very pleased with our second quarter results, driven by disciplined execution of our business strategy. Revenues grew year over year and we continued to expand our gross profit. Operating margins and earnings also increased in the second quarter, evidence that our business strategy is working."
- Second quarter 2007 revenues were $478.5 million compared with $470.8 million in the second quarter of 2006. Revenue grew 1.6% year over year and grew organically 0.9% adjusting for the acquisition of Resulte Universal.
- Earnings from continuing operations were $7.4 million or $0.13 per share in the second quarter of 2007, which includes costs related to the purchase of the minority interest in our Canadian operation of approximately $0.01 per share. Adjusted earnings per share from continuing operations were $7.8 million or $0.14 per share in the second quarter of 2007. Earnings from continuing operations in the second quarter of 2006 were $4.8 million or $0.08 per share.
- Net earnings, including discontinued operations, for the second quarter of 2007 were $3.4 million or $0.06 per share, compared with $3.6 million or $0.06 per share in the second quarter of 2006.
- Revenues for the first six months of 2007 were $940.3 million compared with $932.1 for the same period in 2006. Earnings from continuing operations for the first six months of 2007 were $10.1 million or $0.18 per share compared with $6.9 million or $0.12 per share for the same period in 2006. Net earnings were $6.0 million or $0.11 per share for the first six months of 2007, compared with $6.5 million or $0.11 per share in 2006.
Krause continued, "We have been operating this year in an economy that has been growing at a modest pace, but have been able to achieve revenue growth, significant margin improvements and higher earnings. Operating cash flow was $15.5 million during the quarter and our balance sheet remains strong. We successfully completed the integration of Resulte, the acquisition announced early in the second quarter and believe this addition will help us accelerate growth in our professional business. We continue to stay focused on operational discipline, growing our targeted customer segments and professional business expansion."
Within Staffing Services, revenues were approximately flat with the prior year, reflecting growth of 8.2% from our targeted small and mid sized customers, offset by a decline in large staffing accounts. Gross profit margins increased to 21.0% in the second quarter of 2007 compared with 20.2% in the second quarter of 2006, primarily due to growth in the higher margin managed services, including recruitment process outsourcing services. Temporary staffing gross profit margins were 40 basis points higher than the prior year primarily due to improvements in payroll taxes and insurance costs. Selling, general and administrative costs decreased to $63.9 million or 18.5% of revenue in the second quarter of 2007, compared with $65.4 million or 18.9% of revenue last year. Segment operating profit was $8.7 million or 2.5% of revenue in the second quarter of 2007, compared with $4.8 million and 1.4% of revenue in the second quarter of 2006.
Professional Services revenue growth was 6.6% on a year over year basis in the second quarter of 2007; 3.6% adjusting for the acquisition of Resulte. Growth was led by finance and accounting at 9.6% year over year. Gross profit margins in the second quarter of 2007 were 34.9%, compared with 33.3% in the prior year, reflecting strong improvement in temporary staffing margins. Selling, general and administrative expenses were $38.6 million or 29.2% of revenue in the second quarter of 2007 compared with $34.6 million or 27.9% of revenue in the second quarter last year. Segment operating profit increased to $7.4 million or approximately 5.6% of revenue in the second quarter of 2007, compared with $6.7 million or approximately 5.4% of revenue in the same period last year.
During the quarter, the Company sold its outplacement consulting business. The sale resulted in a pre-tax loss of $5.4 million, of which $4.5 million was non-cash and predominantly comprised of a goodwill write off related to the business sold. The $3.3 million after tax loss on sale and operating results of prior periods are reported as part of discontinued operations.
Immediately after the end of the quarter, the Company purchased the remaining 15% interest in its Canadian operations. During the quarter, the Company recorded expense of $0.8 million pre-tax or approximately $0.01 per share to increase its purchase liability to equal the $5.8 million purchase price, which will be paid during the third and fourth quarters.
The Company purchased 562,200 shares of its common stock during the second quarter of 2007 at an average price of $9.43 per share.
Krause commented, "Based on recent trends, the Company anticipates revenue for the third quarter will be between $490 and $505 million, reflecting modest growth as demand across the industry remains somewhat challenging. Earnings from continuing operations are expected to be between $0.14 and $0.18 per share, assuming a 40% effective tax rate."
Spherion Corporation (NYSE: SFN) is a leading recruiting and staffing company that provides integrated solutions to meet the evolving needs of companies and job candidates. As an industry pioneer for more than 60 years, Spherion has screened and placed millions of individuals in temporary, temp-to-hire and full-time jobs. Positions range from administrative and light industrial to a host of professions that include accounting/finance, information technology, engineering, manufacturing, legal, human resources and sales/marketing.
With approximately 650 locations in the United States and Canada, Spherion delivers innovative workforce solutions that improve business performance. Spherion provides its services to more than 8,000 customers, from Fortune 500 companies to a wide range of small and mid-size organizations. Employing nearly 300,000 people annually through its network, Spherion is one of North America's largest employers. To learn more, visit http://www.spherion.com/.
This release contains statements that are forward looking in nature and, accordingly, are subject to risks and uncertainties. Factors that could cause future results to differ from current expectations include risks associated with: Competition - our business operates in highly competitive markets with low barriers to entry; Economic conditions - any significant economic downturn could result in lower revenues or a significant reduction in demand from our customers may result in a material impact on the results of our operations; Corporate strategy - we may not achieve the intended effects of our business strategy; Termination provisions - certain contracts contain termination provisions and pricing risks; Failure to perform - our failure or inability to perform under customer contracts could result in damage to our reputation and give rise to legal claims; Disposition of businesses - the disposition of businesses previously sold may create contractual liabilities associated with indemnifications provided; Business interruptions - natural disasters or failures with hardware, software or utilities could adversely affect our ability to complete normal business processes; Tax filings - regulatory challenges to our tax filing positions could result in additional taxes; Personnel - our business is dependent upon the availability of qualified personnel and we may lose key personnel which could cause our business to suffer; Litigation - we may be exposed to employment-related claims and costs and we are a defendant in a variety of litigation and other actions from time to time; Common stock - the price of our common stock may fluctuate significantly, which may result in losses for our investors; Government Regulation - government regulation may increase our costs; International operations - we are subject to business risks associated with our operations in Canada which could make those operations more costly; Integrating acquisitions - managing or integrating any future acquisitions may strain our resources; and Debt compliance - failure to meet certain covenant requirements under our credit facility could impact part or all of our availability to borrow. These and additional factors discussed in this release and in Spherion's filings with the Securities and Exchange Commission could cause the Company's actual results to differ materially from any projections contained in this release.
Spherion Corporation prepares its financial statements in accordance with generally accepted accounting principles (GAAP). Organic revenue growth is a non-GAAP financial measure, which includes pro-forma revenues impacted by acquired companies. Adjusted earnings from continuing operations is a non- GAAP financial measure, which excludes certain non-operating related charges and gains. Items excluded from the calculation of adjusted earnings from continuing operations include work opportunity tax credits and interest expense related to adjustment of the Canadian purchase liability. Organic growth and adjusted earnings from continuing operations is a key measure used by management to evaluate its operations. Management includes revenues prior to acquisition date for acquired companies in the organic revenue growth calculation in order to evaluate the Company's operating performance. Management does not consider the items excluded to be operating costs/gains and therefore, excludes them from the evaluation of the Company's operating performance. Organic growth and adjusted earnings from continuing operations should not be considered measures of financial performance in isolation or as an alternative to revenue growth or earnings from continuing operations or net earnings (loss) as determined in the Statement of Earnings in accordance with GAAP, and, as presented, may not be comparable to similarly titled measures of other companies, and therefore this measure has material limitations. Items excluded from adjusted earnings from continuing operations are significant components in understanding and assessing financial performance.
SOURCE: Spherion Corporation
CONTACT: Investors, Randy Atkinson, +1-954-308-7639,
firstname.lastname@example.org, or Media, Kip Havel, +1-800-422-3819,
email@example.com, both of Spherion Corporation
Web site: http://www.spherion.com/