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FORT LAUDERDALE, Fla., Oct. 28 /PRNewswire-FirstCall/ -- Spherion Corporation (NYSE: SFN) today announced financial results for the third quarter ended September 27, 2009.
Spherion president and CEO Roy Krause commented, "Our revenues in the third quarter increased nearly 3% from the prior quarter as the economy continued to show signs of improvement. Additionally, we once again exceeded our 2.0% EBITDA target due to focused cost management."
FINANCIAL HIGHLIGHTS
- Third quarter 2009 revenues were $420 million, compared with $542 million last year.
- Loss from continuing operations in the third quarter was $0.1 million, or $0.00 per share, compared with earnings of $4.1 million, or $0.08 per share, in the prior year.
- Adjusted earnings from continuing operations (defined below) in the third quarter were $0.5 million, or $0.01 per share, compared with adjusted earnings in the same prior year period of $4.1 million, or $0.08 per share.
- Adjusted EBITDA (defined below) in the third quarter was $9.2 million, or 2.2% of revenues, compared with $15.4 million, or 2.8% of revenues, in the prior year.
- Revenues for the first nine months of 2009 were $1.3 billion compared with $1.7 billion for the same period in 2008. Adjusted loss from continuing operations for the first nine months of 2009 was $3.0 million, or $0.06 per share, compared with earnings of $11.8 million, or $0.22 per share, for the same period in 2008. Adjusted EBITDA for the first nine months was $19.2 million compared with $45.7 million for the same period last year.
- Net debt was $11.7 million at the end of the third quarter, compared with $31.7 million at the end of 2008. Availability under the credit facility was $101.7 million as of the end of September.
Krause continued, "As the economic recovery takes hold, our focus is now shifting towards growing operating margins through expansion of our higher value services such as recruitment process outsourcing, where we are the industry leader, and professional staffing and solutions, while continuing our focus on operational effectiveness. I believe that we are well positioned operationally and strategically to emerge from this tumultuous period with a more balanced mix of business."
THIRD QUARTER OPERATING PERFORMANCE
Within Professional Services, third quarter revenues were down compared with both the same prior year period and the second quarter, 28.6% and 6.0%, respectively. Gross profit margins in third quarter 2009 were 26.8% compared with 27.6% in the second quarter. SG&A was down 8.4% sequentially compared with the second quarter and represented 22.4% of revenues this quarter compared with 23.0% of revenues in the second quarter. Segment operating profit was $7.1 million, or 4.4% of revenues, compared with $9.1 million, or 4.0% of revenues, last year and $8.0 million in the second quarter, or 4.6% of revenues.
Year over year revenues in Staffing Services for the quarter were down 18.2% compared with the same period last year and up 9.0% compared with the second quarter. Gross profit margins were 14.9% in third quarter 2009 compared with 15.1% in the second quarter. SG&A expenses as a percentage of revenues were 14.8% in third quarter 2009 compared with 15.4% in the second quarter. Segment operating profit was $0.2 million, or 0.1% of revenues, compared with $5.3 million, or 1.7% of revenues, last year and a loss of $0.7 million last quarter, or (0.3%) of revenues.
OTHER ITEMS
The Company purchased 405,864 shares of its common stock during the third quarter of 2009 at an average price of $5.74 per share. The Company continues to purchase shares under the Board of Directors' authorization to offset the dilution of employee benefit plans.
OUTLOOK
Revenues per day in the first three weeks of October were about 5% higher than during the third quarter. The current economic environment and the impact of the holiday season make it difficult to predict how revenues will trend throughout the remainder of the fourth quarter.
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 575 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 SourceRight Solutions for 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 and we may be unable to compete successfully against existing or new competitors; Economic conditions - any further significant economic downturn could result in less demand from customers and lower revenues; 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 the amount of availability we may 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. 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
------------------
September 27, September 28,
2009 2008
------------ ------------
Revenues(1) $420,197 $542,175
Cost of services 338,558 423,628
------- -------
Gross profit(2) 81,639 118,547
------- -------
Selling, general and administrative expenses 77,460 108,412
Amortization of intangibles 1,624 2,037
Interest expense 1,228 1,573
Interest income (41) (69)
Restructuring and other charges 896 -
------- -------
81,167 111,953
------- -------
Earnings from continuing operations before 472 6,594
income taxes
Income tax expense (525) (2,486)
------- -------
(Loss) earnings from continuing operations (53) 4,108
Earnings from discontinued operations,
net of tax - 56
------- -------
Net (loss) earnings $(53) $4,164
======= =======
(Loss) earnings per share, Basic and Diluted:
(Loss) earnings from continuing operations $- $0.08
Earnings from discontinued operations - -
------- -------
$- $0.08
======= =======
Weighted-average shares used in computation of
(loss) earnings per share:
Basic 51,743 52,336
Diluted 51,743 52,873
(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)
Nine Months Ended
-----------------
September 27, September 28,
2009 2008
------------ ------------
Revenues(1) $1,255,246 $1,681,615
Cost of services 1,007,356 1,304,713
----------- -----------
Gross profit(2) 247,890 376,902
----------- -----------
Selling, general and administrative expenses 243,923 347,190
Amortization of intangibles 4,879 6,124
Interest expense 2,713 4,897
Interest income (131) (320)
Restructuring and other charges 5,069 1,940
----------- ----------
256,453 359,831
----------- ----------
(Loss) earnings from continuing operations
before income taxes (8,563) 17,071
Income tax benefit (expense) 2,460 (5,421)
----------- ----------
(Loss) earnings from continuing operations (6,103) 11,650
Loss from discontinued operations,
net of tax (399) (3,898)
----------- ----------
Net (loss) earnings $(6,502) $7,752
=========== ==========
(Loss) earnings per share, Basic:(3)
(Loss) earnings from continuing operations $(0.12) $0.22
Loss from discontinued operations (0.01) (0.07)
----------- ----------
$(0.12) $0.14
=========== ==========
(Loss) earnings per share, Diluted:(3)
(Loss) earnings from continuing operations $(0.12) $0.21
Loss from discontinued operations (0.01) (0.07)
----------- ----------
$(0.12) $0.14
=========== ==========
Weighted-average shares used in computation of
(loss) earnings per share:
Basic 52,022 54,143
Diluted 52,022 54,668
(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) (Loss) 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)
September 27, December 28,
Assets 2009 2008
------------ -----------
Current Assets:
Cash and cash equivalents $5,555 $7,601
Receivables, less allowance for doubtful
accounts of $2,353 and $2,978,
respectively 229,499 269,203
Deferred tax asset 9,074 11,198
Other current assets 13,481 14,430
------------ -----------
Total current assets 257,609 302,432
Property and equipment, net of accumulated
depreciation of $136,009 and $128,323
respectively 54,275 67,269
Deferred tax asset 137,745 132,412
Goodwill, trade names and other intangibles, net 61,380 65,856
Other assets 21,719 16,412
------------ -----------
$532,728 $584,381
============ ===========
Liabilities and Stockholders' Equity
Current Liabilities:
Current portion of long-term debt and revolving
lines of credit $15,671 $37,699
Accounts payable and other accrued expenses 59,327 67,638
Accrued salaries, wages and payroll taxes 47,594 49,888
Accrued insurance reserves 20,308 20,145
Accrued income tax payable 678 1,236
Other current liabilities 6,564 13,234
------------ -----------
Total current liabilities 150,142 189,840
Long-term debt, net of current portion 1,541 1,646
Accrued insurance reserves 14,434 16,912
Deferred compensation 13,635 12,404
Other long-term liabilities 5,140 7,391
------------ -----------
Total liabilities 184,892 228,193
------------ -----------
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, 15,392,803 and (110,675) (106,500)
13,860,739 shares, respectively
Additional paid-in capital 852,872 850,653
Accumulated deficit (398,384) (391,882)
Accumulated other comprehensive income 3,370 3,264
------------ -----------
Total stockholders' equity 347,836 356,188
------------ -----------
$532,728 $584,381
============ ===========
SPHERION CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION
(unaudited, in thousands, except per share amounts)
Three Months Ended Nine Months Ended
------------------ -----------------
September 27, September 28, September 27, September 28,
2009 2008 2009 2008
------------ ------------ ------------ ------------
Adjusted earnings
(loss) from
continuing
operations $493 $4,108 $(3,016) $11,767
Adjustment of tax
valuation
allowance - - - 1,064
Restructuring and
other charges,
net of tax
benefit (546) - (3,087) (1,181)
------- ------- ------- -------
(Loss) earnings
from continuing
operations (53) 4,108 (6,103) 11,650
------- ------- ------- -------
Earnings (loss)
from discontinued
operations, net
of tax - 56 (399) (3,898)
------- ------- ------- -------
Net (loss)
earnings $(53) $4,164 $(6,502) $7,752
======= ======= ======= =======
Per share-Diluted amounts (1) :
Adjusted earnings
(loss) from
continuing
operations $0.01 $0.08 $(0.06) $0.22
Adjustment of tax
valuation
allowance - - - 0.02
Restructuring and
other charges,
net of tax
benefit (0.01) - (0.06) (0.02)
------- ------- ------- -------
Earnings (Loss)
from continuing
operations - 0.08 (0.12) 0.21
------- ------- ------- -------
Loss from
discontinued
operations, net
of tax - - (0.01) (0.07)
------- ------- ------- -------
Net earnings
(loss) $- $0.08 $(0.12) $0.14
======= ======= ======= =======
Weighted-average
shares used in
computation of
earnings (loss)
per share 51,743 52,873 52,022 54,668
(1) Earnings (loss) per share amounts are calculated independently for
each component and may not add due to rounding.
RECONCILIATION OF ADJUSTED EBITDA TO (LOSS) EARNINGS FROM CONTINUING
OPERATIONS
Three Months Ended Nine Months Ended
------------------ -----------------
September 27, September 28, September 27, September 28,
2009 2008 2009 2008
------------ ------------ ------------ ------------
Adjusted EBITDA
from continuing
operations $9,162 $15,426 $19,156 $45,658
Interest income 41 69 131 320
Restructuring and
other charges (896) - (5,069) (1,940)
Interest expense (1,228) (1,573) (2,713) (4,897)
Depreciation and
amortization (2) (6,607) (7,328) (20,068) (22,070)
----- ----- ------ ------
Earnings (loss)
from continuing
operations before
income taxes 472 6,594 (8,563) 17,071
----- ----- ------ ------
Income tax
(expense)
benefit (525) (2,486) 2,460 (5,421)
----- ------ ------- ------
(Loss) earnings
from continuing
operations $(53) $4,108 $(6,103) $11,650
===== ====== ======= =======
Adjusted EBITDA
as a percentage
of revenue 2.2% 2.8% 1.5% 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 Nine Months Ended
------------------ -----------------
September June September September September
27, 28, 28, 27, 28,
2009 2009 2008 2009 2008
--------- ---- -------- -------- --------
Revenues:
Professional
Services $160,873 $171,184 $225,348 $513,829 $724,860
Staffing
Services 259,324 237,943 316,827 741,417 956,755
------- ------- ------- ------- -------
Segment
revenues $420,197 $409,127 $542,175 $1,255,246 $1,681,615
======== ======== ======== ========== =========
Gross profit:
Professional
Services $43,045 $47,253 $65,723 $138,646 $216,486
Staffing
Services 38,594 35,897 52,824 109,244 160,416
------ ------ ------ ------- -------
Segment gross
profit $81,639 $83,150 $118,547 $247,890 $376,902
======= ======= ======== ======== ========
Segment SG&A:
Professional
Services $(35,995) $(39,299) $(56,671) $(120,968) $(179,786)
Staffing
Services (38,371) (36,550) (47,492) (113,728) (154,875)
------- ------- ------- -------- --------
Segment SG&A $(74,366) $(75,849) $(104,163) $(234,696) $(334,661)
======== ======== ========= ========= =========
Segment operating
profit (loss):
Professional
Services $7,050 $7,954 $9,052 $17,678 $36,700
Staffing
Services 223 (653) 5,332 (4,484) 5,541
------- ------- ------ ------- -------
Segment
operating
profit (loss) 7,273 7,301 14,384 13,194 42,241
Unallocated
corporate costs (3,094) (2,983) (4,249) (9,227) (12,529)
Amortization of
intangibles (1,624) (1,625) (2,037) (4,879) (6,124)
Interest expense (1,228) (727) (1,573) (2,713) (4,897)
Interest income 41 37 69 131 320
Restructuring and
other charges (896) (374) - (5,069) (1,940)
------ ------ ----- ------ -------
Earnings (loss)
from continuing
operations
before income
taxes $472 $1,629 $6,594 $(8,563) $17,071
===== ====== ====== ======= =======
Gross profit margin:
Professional
Services 26.8% 27.6% 29.2% 27.0% 29.9%
Staffing Services 14.9% 15.1% 16.7% 14.7% 16.8%
Total Spherion 19.4% 20.3% 21.9% 19.7% 22.4%
Segment SG&A:
Professional
Services 22.4% 23.0% 25.1% 23.5% 24.8%
Staffing Services 14.8% 15.4% 15.0% 15.3% 16.2%
Total Spherion 17.7% 18.5% 19.2% 18.7% 19.9%
Segment operating
profit (loss):
Professional
Services 4.4% 4.6% 4.0% 3.4% 5.1%
Staffing Services 0.1% (0.3%) 1.7% (0.6%) 0.6%
Total Spherion 1.7% 1.8% 2.7% 1.1% 2.5%
Segment revenue per
billing day:
Professional
Services $2,554 $2,696 $3,577 $2,704 $3,815
Staffing
Services $4,116 $3,747 $5,029 $3,902 $5,036
Total
Spherion (1) $6,670 $6,443 $8,606 $6,607 $8,851
Supplemental Cash
Flow and Other
Information:
Operating cash
flow $(7,822) $26,474 $7,066 $30,574 $43,706
Capital
expenditures $303 $703 $2,356 $1,834 $7,219
Depreciation and
amortization $6,607 $6,674 $7,328 $20,068 $22,070
DSO 50 50 53 50 53
Billing Days 63.0 63.5 63.0 190.0 190.0
(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 Nine Months Ended
------------------ -----------------
September June September September September
27, 28, 28, 27, 28,
2009 2009 2008 2009 2008
-------- ---- --------- --------- ---------
Professional Services
Revenues by Skill:
Information
Technology $110,584 $112,673 $142,074 $340,554 $451,274
Finance &
Accounting 20,527 22,990 25,758 65,948 84,170
Administration 14,431 18,848 29,709 55,710 95,161
Other 15,331 16,673 27,807 51,617 94,255
------ ------ ------ ------ ------
Segment
Revenues $160,873 $171,184 $225,348 $513,829 $724,860
======== ======== ======== ======== ========
Revenues by Service:
Temporary
Staffing &
Other $156,024 $166,475 $213,112 $499,160 $682,823
Permanent
Placement 4,849 4,709 12,236 14,669 42,037
-------- -------- -------- -------- --------
Segment
Revenues $160,873 $171,184 $225,348 $513,829 $724,860
======== ======== ======== ======== ========
Gross Profit Margin
by Service:
(As % of
Applicable Revenues)
Temporary
Staffing &
Other 24.5% 25.6% 25.1% 24.8% 25.5%
Permanent
Placement 100.0% 100.0% 100.0% 100.0% 100.0%
Total
Professional
Services 26.8% 27.6% 29.2% 27.0% 29.9%
Revenues per billing
day by Skill: (1)
Information
Technology $1,755 $1,774 $2,255 $1,792 $2,375
Finance &
Accounting $326 $362 $409 $347 $443
Administration $229 $297 $472 $293 $501
Other $243 $263 $441 $272 $496
Revenues per
billing day
by Service: (1)
Temporary
Staffing &
Other $2,477 $2,622 $3,383 $2,627 $3,594
Permanent
Placement $77 $74 $194 $77 $221
Staffing Services
Revenues by
Skill:
Clerical $157,691 $151,296 $189,953 $470,145 $573,674
Light
Industrial 101,633 86,647 126,874 271,272 383,081
------- ------ ------- ------- -------
Segment
Revenues $259,324 $237,943 $316,827 $741,417 $956,755
======== ======== ======== ======== ========
Revenues by Service:
Temporary
Staffing &
Other $257,975 $236,629 $313,633 $736,984 $945,512
Permanent
Placement 1,349 1,314 3,194 4,433 11,243
------- ------- ------- ------- -------
Segment
Revenues $259,324 $237,943 $316,827 $741,417 $956,755
======== ======== ======== ======== ========
Gross Profit
Margin by Service:
(As % of Applicable Revenues)
Temporary
Staffing &
Other 14.4% 14.6% 15.8% 14.2% 15.8%
Permanent
Placement 100.0% 100.0% 100.0% 100.0% 100.0%
Total Staffing
Services 14.9% 15.1% 16.7% 14.7% 16.8%
Revenues per billing
day by Skill: (1)
Clerical $2,503 $2,383 $3,015 $2,474 $3,019
Light
Industrial $1,613 $1,365 $2,014 $1,428 $2,016
Revenues per billing
day by Service: (1)
Temporary
Staffing &
Other $4,095 $3,726 $4,978 $3,879 $4,976
Permanent
Placement $21 $21 $51 $23 $59
(1) Segment Revenue per billing day is calculated independently for each
segment and may not add due to rounding.
SOURCE: Spherion Corporation
Web site: http://www.spherion.com/
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