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FORT LAUDERDALE, Fla., July 29 /PRNewswire-FirstCall/ -- Spherion Corporation (NYSE: SFN) today announced financial results for the second quarter ended June 28, 2009.
Spherion president and CEO Roy Krause commented, "We are encouraged with our quarterly results as we exceeded our recession adjusted 2.0% EBITDA target, reported positive earnings and brought net debt close to zero."
FINANCIAL HIGHLIGHTS
- Second quarter 2009 revenues were $409 million, compared with $563 million last year.
- Earnings from continuing operations in the second quarter were $0.4 million, or $0.01 per share, compared with earnings of $5.3 million, or $0.10 per share, in the prior year.
- Adjusted earnings from continuing operations (defined below) in the second quarter were $0.6 million, or $0.01 per share, compared with adjusted earnings in the same prior year period of $4.9 million, or $0.09 per share.
- Adjusted EBITDA (defined below) in the second quarter was $9.4 million, or 2.3% of revenues, compared with $16.6 million, or 2.9% of revenues, in the prior year.
- Revenues for the first six months of 2009 were $835 million compared with $1,139 million for the same period in 2008. Adjusted earnings from continuing operations for the first six months of 2009 were a loss of $3.5 million, or ($0.07) per share, compared with $7.7 million, or $0.14 per share, for the same period in 2008. Adjusted EBITDA for the first six months was $10.0 million compared with $30.2 million for the same period last year.
- Net debt was $0.7 million at the end of the second quarter, compared with $24.0 million at the end of the first quarter 2009.
Krause continued, "There were signs in the quarter that the demand for our services was beginning to stabilize, not the least of which were our monthly revenue per day trends. Total Company revenues per day during June were only 1% less than during March and Staffing Services revenues per day were actually higher during June than during March. Commercial staffing services, which we provide through our Staffing Services segment, are typically the first to grow during the early stages of an economic recovery. We continue to be focused on our strategy to increase the percentage of professional revenues, enhance account diversification and expand margins."
SECOND QUARTER OPERATING PERFORMANCE
Within Professional Services, second quarter revenues were down 30.3% compared with the same prior year period and 5.8% compared with the prior quarter. Gross profit margins in second quarter 2009 increased to 27.6% compared with 26.6% in the prior quarter reflecting lower state unemployment taxes (SUTA). Segment cost controls were excellent with SG&A declining by 14.0% sequentially from the prior quarter and representing 23.0% of revenues this quarter compared with 25.1% of revenues last quarter. Segment operating profit was $8.0 million, or 4.6% of revenues, compared with $13.8 million, or 5.6% of revenues, last year and $2.7 million last quarter, or 1.5% of revenues.
Within Staffing Services, year over year revenues in the quarter were down 25.1% compared with the same period last year and 2.5% compared with the prior quarter. Gross profit margins were 15.1% in second quarter 2009 compared with 14.2% in the prior quarter, primarily reflecting lower SUTA costs. SG&A expenses as a percentage of revenues were 15.4% in second quarter 2009 compared with 15.9% in the prior quarter reflecting a 5.8% sequential quarter reduction in SG&A. Segment operating profit was a loss of $0.7 million, or (0.3%) of revenues, compared with $1.6 million, or 0.5% of revenues, last year and a loss of $4.1 million last quarter, or (1.7%) of revenues.
OTHER ITEMS
As previously announced, the Company amended and extended its $250 million asset-based credit facility through July 2013 after the end of the quarter. At closing, excess availability was approximately $110 million (borrowings outstanding under the facility were less than $5 million). The revised credit facility should provide the Company with sufficient liquidity and flexibility to take advantage of growth opportunities as the economy recovers.
Restructuring actions taken over the past nine months have essentially been completed and have positioned the Company's 2009 SG&A to be approximately $330 million, or 27% below total 2008 total SG&A of about $450 million. Cash requirements associated with previously recorded restructuring charges are expected to be $3 million during the second half of 2009.
The Company purchased 400,740 shares of its common stock during the second quarter of 2009 at an average price of $4.15 per share. The Company will continue to purchase shares under the Board of Directors' authorization to offset the dilution of employee benefit plans.
OUTLOOK
Revenue per day trends in the first three weeks of July are flat compared with the second quarter average revenue per day. However, uncertain economic conditions make it difficult to predict the amount of demand that will be seen throughout the remainder of the third quarter and the rest of the year.
ABOUT SPHERION
Spherion Corporation (NYSE: SFN) is a leading recruiting and staffing company that provides integrated solutions and breakout specialties to meet the evolving needs of companies and job candidates. As an industry pioneer for more than 60 years, Spherion has sourced, screened and placed millions of individuals in temporary, temp-to-hire and full-time jobs.
With approximately 600 locations in the United States and Canada, Spherion delivers innovative workforce solutions that improve business performance. Spherion provides its services to approximately 10,000 customers, from Fortune 500 companies to a wide range of small and mid-size organizations. Employing more than 215,000 people annually through its network, Spherion is one of North America's largest employers. Spherion operates under the following brands: Spherion Staffing Services Group for administrative, clerical and light industrial workers; Technisource for technology professionals and solutions; The Mergis Group for accounting and finance and other professional positions; Todays Office Professionals for specialty administrative personnel; and Spherion Recruitment Process Outsourcing. To learn more, visit 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; Customers - a loss of customers may result in a material impact on our results of operations; Debt and debt compliance - market conditions and failure to meet certain requirements could impact our availability to borrow under our revolving lines of credit and the cost of our borrowings; 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; Acquisitions - managing or integrating past and future acquisitions may strain our resources; 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; Government Regulation - government regulation may significantly increase our costs; International operations - we are subject to business risks associated with our operations in Canada, which could make those operations significantly more costly; and Common stock - the price of our common stock may fluctuate significantly, which may result in losses for our investors, and further decreases in the Company's common stock price and market capitalization may impact our ability to comply with the NYSE continued listing standards. 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). Adjusted earnings from continuing operations is a non-GAAP financial measure, which excludes certain non-operating related charges. Items excluded from the calculation of adjusted earnings from continuing operations include restructuring and other charges related to cost reduction initiatives, and adjustments to tax valuation allowances. Adjusted EBITDA from continuing operations is a non-GAAP financial measure which excludes interest, restructuring and other charges, taxes, depreciation and amortization from earnings from continuing operations. Adjusted earnings and adjusted EBITDA from continuing operations are key measures used by management to evaluate its operations. Adjusted earnings and adjusted EBITDA from continuing operations should not be considered measures of financial performance in isolation or as an alternative to net earnings (loss) from continuing operations or net earnings (loss) as determined in the Statement of Operations in accordance with GAAP, and, as presented, may not be comparable to similarly titled measures of other companies. This measure has material limitations. Items excluded from adjusted earnings from continuing operations are significant components in understanding and assessing financial performance.
SPHERION CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share amounts)
Three Months Ended
------------------
June 28, June 29,
2009 2008
---- ----
Revenues(1) $409,127 $562,977
Cost of services 325,977 432,790
------- -------
Gross profit(2) 83,150 130,187
------ -------
Selling, general and administrative expenses 78,832 118,875
Amortization of intangibles 1,625 2,043
Interest expense 727 1,575
Interest income (37) (72)
Restructuring and other charges 374 944
------ -------
81,521 123,365
------ -------
Earnings from continuing operations before
income taxes 1,629 6,822
Income tax expense (1,226) (1,473)
------ ------
Earnings from continuing operations 403 5,349
Loss from discontinued operations, net of tax (116) (3,043)
---- ------
Net earnings $287 $2,306
==== ======
Earnings per share, Basic and Diluted:
Earnings from continuing operations $0.01 $0.10
Loss from discontinued operations - (0.06)
----- -----
$0.01 $0.04
===== =====
Weighted-average shares used in computation
of earnings per share:
Basic 52,030 54,352
Diluted 53,528 54,826
(1) Includes sales of all company-owned and franchised offices and
royalties on sales of area-based franchised offices.
(2) Gross profit is revenues less temporary employee wages, employment
related taxes such as FICA, federal and state unemployment taxes,
medical and other insurance for temporary employees, workers'
compensation, benefits, billable expenses and other direct costs.
SPHERION CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share amounts)
Six Months Ended
----------------
June 28, June 29,
2009 2008
---- ----
Revenues(1) $835,049 $1,139,440
Cost of services 668,798 881,085
------- -------
Gross profit(2) 166,251 258,355
------- -------
Selling, general and administrative expenses 166,463 238,778
Amortization of intangibles 3,255 4,087
Interest expense 1,485 3,324
Interest income (90) (251)
Restructuring and other charges 4,173 1,940
----- -----
175,286 247,878
------- -------
(Loss) earnings from continuing operations
before income taxes (9,035) 10,477
Income tax benefit (expense) 2,985 (2,935)
----- ------
(Loss) earnings from continuing operations (6,050) 7,542
Loss from discontinued operations, net of tax (399) (3,954)
---- ------
Net (loss) earnings $(6,449) $3,588
======= ======
(Loss) earnings per share, Basic:(3)
(Loss) earnings from continuing operations $(0.12) $0.14
Loss from discontinued operations (0.01) (0.07)
----- -----
$(0.12) $0.07
====== =====
(Loss) earnings per share, Diluted:(3)
(Loss) earnings from continuing operations $(0.12) $0.14
Loss from discontinued operations (0.01) (0.07)
----- -----
$(0.12) $0.06
====== =====
Weighted-average shares used in computation
of (loss) earnings per share:
Basic 52,162 55,049
Diluted 52,162 55,567
(1) Includes sales of all company-owned and franchised offices and
royalties on sales of area-based franchised offices.
(2) Gross profit is revenues less temporary employee wages, employment
related taxes such as FICA, federal and state unemployment taxes,
medical and other insurance for temporary employees, workers'
compensation, benefits, billable expenses and other direct costs.
(3) Earnings per share amounts are calculated independently for each
component and may not add due to rounding.
SPHERION CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, except share data)
June 28, December 28,
Assets 2009 2008
---- ----
Current Assets:
Cash and cash equivalents $5,856 $7,601
Receivables, less allowance for
doubtful accounts of $2,214 and
$2,978, respectively 228,939 269,203
Deferred tax asset 10,202 11,198
Other current assets 10,751 14,430
------ ------
Total current assets 255,748 302,432
Property and equipment, net of
accumulated depreciation of
$131,258 and $128,323 respectively 58,171 67,269
Deferred tax asset 136,831 132,412
Goodwill, trade names and other
intangibles, net 62,977 65,856
Other assets 15,868 16,412
------ ------
$529,595 $584,381
======== ========
Liabilities and Stockholders'
Equity
Current Liabilities:
Current portion of long-term debt
and revolving lines of credit $4,978 $37,699
Accounts payable and other
accrued expenses 64,584 67,638
Accrued salaries, wages and
payroll taxes 47,793 49,888
Accrued insurance reserves 19,753 20,145
Accrued income tax payable 568 1,236
Other current liabilities 8,407 13,234
----- ------
Total current liabilities 146,083 189,840
Long-term debt, net of current portion 1,583 1,646
Accrued insurance reserves 15,309 16,912
Deferred compensation 11,789 12,404
Other long-term liabilities 5,557 7,391
----- -----
Total liabilities 180,321 228,193
------- -------
Stockholders' Equity:
Preferred stock, par value $0.01
per share; authorized, 2,500,000
shares; none issued or outstanding - -
Common stock, par value $0.01
per share; authorized,
200,000,000; issued
65,341,609 shares 653 653
Treasury stock, at cost,
15,096,703 and 13,860,739
shares, respectively (109,379) (106,500)
Additional paid-in capital 853,018 850,653
Accumulated deficit (398,331) (391,882)
Accumulated other comprehensive
income 3,313 3,264
----- -----
Total stockholders' equity 349,274 356,188
------- -------
$529,595 $584,381
======== ========
SPHERION CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION
(unaudited, in thousands, except per share amounts)
Three Months Six Months
Ended Ended
------------ ----------
June 28, June 29, June 28, June 29,
2009 2008 2009 2008
---- ---- ---- ----
Adjusted earnings
(loss) from continuing
operations $631 $4,860 $(3,509) $7,659
Adjustment of tax
valuation allowance - 1,064 - 1,064
Restructuring and other
charges, net of tax
benefit (228) (575) (2,541) (1,181)
--- ----- ------ -----
Earnings (loss) from
continuing operations 403 5,349 (6,050) 7,542
--- ----- ------ -----
Loss from discontinued
operations, net of tax (116) (3,043) (399) (3,954)
---- ------ ------- ------
Net earnings (loss) $287 $2,306 $(6,449) $3,588
==== ====== ======= ======
Per share-Diluted
amounts (1) :
Adjusted earnings
(loss) from continuing
operations $0.01 $0.09 $(0.07) $0.14
Adjustment of tax
valuation allowance - 0.02 - 0.02
Restructuring and other
charges, net of tax
benefit - (0.01) (0.05) (0.02)
---- ---- ----- ----
Earnings (loss) from
continuing operations 0.01 0.10 (0.12) 0.14
---- ---- ----- ----
Loss from discontinued
operations, net of tax - (0.06) (0.01) (0.07)
----- ----- ------ -----
Net earnings (loss) $0.01 $0.04 $(0.12) $0.06
===== ===== ====== =====
Weighted-average shares
used in computation of
earnings (loss) per
share 53,528 54,826 52,162 55,567
(1)Earnings per share amounts are calculated independently for each
component and may not add due to rounding.
RECONCILIATION OF ADJUSTED EBITDA TO EARNINGS (LOSS) FROM
CONTINUING OPERATIONS
Three Months Ended Six Months Ended
------------------ ----------------
June 28, June 29, June 28, June 29,
2009 2008 2009 2008
---- ---- ---- ----
Adjusted EBITDA from
continuing operations $9,367 $16,572 $9,994 $30,232
Interest income 37 72 90 251
Restructuring and other
charges (374) (944) (4,173) (1,940)
Interest expense (727) (1,575) (1,485) (3,324)
Depreciation and
amortization (2) (6,674) (7,303) (13,461) (14,742)
----- ----- ------ ------
Earnings (loss) from
continuing operations
before income taxes 1,629 6,822 (9,035) 10,477
----- ----- ------ ------
Income tax (expense)
benefit (1,226) (1,473) 2,985 (2,935)
---- ------ ------- ------
Earnings (loss) from
continuing operations $403 $5,349 $(6,050) $7,542
==== ====== ======= ======
Adjusted EBITDA as a
percentage of revenue 2.3% 2.9% 1.2% 2.7%
(2)Includes depreciation and amortization from continuing operations
only.
SPHERION CORPORATION AND SUBSIDIARIES
SEGMENT INFORMATION
(unaudited, dollar amounts in thousands)
Three Months Ended Six Months Ended
------------------ ----------------
June 28, March 29, June 29, June 28, June 29,
2009 2009 2008 2009 2008
---- ---- ---- ---- ----
Revenues:
Professional
Services $171,184 $181,772 $245,444 $352,956 $499,512
Staffing
Services 237,943 244,150 317,533 482,093 639,928
------- ------- ------- -------- --------
Segment
revenues $409,127 $425,922 $562,977 $835,049 $1,139,440
======== ======== ======== ======== ==========
Gross profit:
Professional
Services $47,253 $48,348 $75,183 $95,601 $150,763
Staffing
Services 35,897 34,753 55,004 70,650 107,592
------ ------ ------ ------- --------
Segment gross
profit $83,150 $83,101 $130,187 $166,251 $258,355
======= ======= ======== ======== ========
Segment SG&A:
Professional
Services $(39,299) $(45,674) $(61,366) $(84,973) $(123,115)
Staffing
Services (36,550) (38,807) (53,445) (75,357) (107,383)
------- ------- ------- -------- ---------
Segment SG&A $(75,849) $(84,481) $(114,811) $(160,330) $(230,498)
======== ======== ========= ========= =========
Segment operating
profit (loss):
Professional
Services $7,954 $2,674 $13,817 $10,628 $27,648
Staffing
Services (653) (4,054) 1,559 (4,707) 209
---- ------ ----- ------- ----
Segment
operating
profit (loss) 7,301 (1,380) 15,376 5,921 27,857
Unallocated
corporate costs (2,983) (3,150) (4,064) (6,133) (8,280)
Amortization
of intangibles (1,625) (1,630) (2,043) (3,255) (4,087)
Interest expense (727) (758) (1,575) (1,485) (3,324)
Interest income 37 53 72 90 251
Restructuring and
other charges (374) (3,799) (944) (4,173) (1,940)
---- ------ ---- ------ ------
Earnings (loss)
from continuing
operations before
income taxes $1,629 $(10,664) $6,822 $(9,035) $10,477
====== ======== ====== ======= =======
MEMO:
Gross profit
margin:
Professional
Services 27.6% 26.6% 30.6% 27.1% 30.2%
Staffing Services 15.1% 14.2% 17.3% 14.7% 16.8%
Total Spherion 20.3% 19.5% 23.1% 19.9% 22.7%
Segment SG&A:
Professional
Services 23.0% 25.1% 25.0% 24.1% 24.6%
Staffing Services 15.4% 15.9% 16.8% 15.6% 16.8%
Total Spherion 18.5% 19.8% 20.4% 19.2% 20.2%
Segment operating
profit (loss):
Professional
Services 4.6% 1.5% 5.6% 3.0% 5.5%
Staffing Services (0.3%) (1.7%) 0.5% (1.0%) 0.0%
Total Spherion 1.8% (0.3%) 2.7% 0.7% 2.4%
Segment revenue
per billing day:
Professional
Services $2,696 $2,863 $3,835 $2,779 $3,933
Staffing Services $3,747 $3,845 $4,961 $3,796 $5,039
Total
Spherion (1) $6,443 $6,707 $8,797 $6,575 $8,972
Supplemental
Cash Flow and
Other
Information:
Operating cash
flow $26,474 $11,922 $28,377 $38,396 $36,640
Capital
expenditures $703 $828 $2,256 $1,531 $4,863
Depreciation and
amortization $6,674 $6,787 $7,303 $13,461 $14,742
DSO 51 53 52 51 52
Billing Days 63.5 63.5 64.0 127.0 127.0
(1) Segment Revenue per billing day is calculated independently for
each segment and may not add due to rounding.
SPHERION CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION
(unaudited, dollar amounts in thousands)
Three Months Ended Six Months Ended
------------------ ----------------
June 28, March 29, June 29, June 28, June 29,
2009 2009 2008 2009 2008
-------- --------- -------- -------- --------
Professional
Services
Revenues by
Skill:
Information
Technology $112,673 $117,297 $151,060 $229,970 $309,200
Finance &
Accounting 22,990 22,431 29,584 45,421 58,412
Administration 18,848 22,431 33,520 41,279 65,452
Other 16,673 19,613 31,280 36,286 66,448
------ ------ ------ ------ ------
Segment
Revenues $171,184 $181,772 $245,444 $352,956 $499,512
======== ======== ======== ======== ========
Revenues by
Service:
Temporary
Staffing &
Other $166,475 $176,661 $229,341 $343,136 $469,711
Permanent
Placement 4,709 5,111 16,103 9,820 29,801
----- ----- ------ ----- ------
Segment
Revenues $171,184 $181,772 $245,444 $352,956 $499,512
======== ======== ======== ======== ========
Gross Profit
Margin by
Service:
(As % of
Applicable
Revenues)
Temporary
Staffing &
Other 25.6% 24.5% 25.8% 25.0% 25.8%
Permanent
Placement 100.0% 100.0% 100.0% 100.0% 100.0%
Total
Professional
Services 27.6% 26.6% 30.6% 27.1% 30.2%
Revenues per
billing day
by Skill: (1)
Information
Technology $1,774 $1,847 $2,360 $1,811 $2,435
Finance &
Accounting $362 $353 $462 $358 $460
Administration $297 $353 $524 $325 $515
Other $263 $309 $489 $286 $523
Revenues per
billing day
by Service: (1)
Temporary
Staffing &
Other $2,622 $2,782 $3,583 $2,702 $3,699
Permanent
Placement $74 $80 $252 $77 $235
Staffing
Services
Revenues by
Skill:
Clerical $151,296 $161,158 $191,655 $312,454 $383,721
Light
Industrial 86,647 82,992 125,878 169,639 256,207
------ ------ ------- ------- -------
Segment
Revenues $237,943 $244,150 $317,533 $482,093 $639,928
======== ======== ======== ======== ========
Revenues by
Service:
Temporary
Staffing &
Other $236,629 $242,380 $314,030 $479,009 $631,879
Permanent
Placement 1,314 1,770 3,503 3,084 8,049
----- ----- ----- ----- -----
Segment
Revenues $237,943 $244,150 $317,533 $482,093 $639,928
======== ======== ======== ======== ========
Gross Profit
Margin by
Service:
(As % of
Applicable
Revenues)
Temporary
Staffing &
Other 14.6% 13.6% 16.4% 14.1% 15.8%
Permanent
Placement 100.0% 100.0% 100.0% 100.0% 100.0%
Total
Staffing
Services 15.1% 14.2% 17.3% 14.7% 16.8%
Revenues per
billing day
by Skill: (1)
Clerical $2,383 $2,538 $2,995 $2,460 $3,021
Light
Industrial $1,365 $1,307 $1,967 $1,336 $2,017
Revenues per
billing day
by Service: (1)
Temporary
Staffing &
Other $3,726 $3,817 $4,907 $3,772 $4,975
Permanent
Placement $21 $28 $55 $24 $63
(1) Segment Revenue per billing day is calculated independently for each
segment and may not add due to rounding.
SOURCE Spherion Corporation
SOURCE: Spherion Corporation
Web site: http://www.spherion.com/
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