Spherion Announces Fourth Quarter 2009 Financial Results
FORT LAUDERDALE, Fla., Feb. 3 /PRNewswire-FirstCall/ -- Spherion Corporation (NYSE: SFN) today announced financial results for the fourth quarter and fiscal year ended December 27, 2009.
Spherion president and CEO Roy Krause commented, "We are pleased with the Company's fourth quarter operating performance. Revenues increased by more than 8% from the prior quarter and adjusted EBITDA, as a percentage of revenue, exceeded 3% for the quarter. We are optimistic that our business is well positioned for organic growth and EBITDA margin expansion as the economic recovery continues."
FINANCIAL HIGHLIGHTS
- Fourth quarter 2009 revenues were $456 million, compared with $508 million last year.
- Earnings from continuing operations in the fourth quarter were $0.2 million, or $0.00 per share, compared with a loss of $126.2 million, or $2.45 per share, in the prior year.
- Adjusted earnings from continuing operations (defined below) in the fourth quarter were $3.2 million, or $0.06 per share, compared with adjusted earnings in the same prior year period of $0.8 million, or $0.02 per share.
- Adjusted EBITDA (defined below) in the fourth quarter was $14.8 million, or 3.2% of revenues, compared with $9.0 million, or 1.8% of revenues, in the prior year.
- Revenues for the full year 2009 were $1.7 billion compared with $2.2 billion for 2008. Adjusted earnings from continuing operations for the full year 2009 were $0.2 million, or $0.00 per share, compared with earnings of $12.6 million, or $0.24 per share, for 2008. Adjusted EBITDA for 2009 was $34.0 million compared with $54.6 million for 2008.
- Net debt was $5.6 million at the end of 2009, compared with $31.7 million at the end of 2008. Availability under the credit facility was $103.0 million as of the end of December.
Krause continued, "Our focused operating approach and expanded Professional Services business mix helped us achieve our adjusted EBITDA goal of 2.0% for the 2009 year. This level of EBITDA return is almost double the level achieved during the last economic downturn. The acquisition of Tatum announced earlier this week provides additional high margin professional services that will provide us the opportunity to accelerate our growth and operating leverage."
FOURTH QUARTER OPERATING PERFORMANCE
Within Professional Services, fourth quarter revenues were down 18.6% compared with the same prior year period, and were up 4.3% from the third quarter. Gross profit margins in fourth quarter 2009 were 27.9% compared with 26.8% in the third quarter. SG&A was up 4.2% sequentially compared with the third quarter and represented 22.3% of revenues this quarter, compared with 22.4% in the third quarter. Segment operating profit was $9.2 million, or 5.5% of revenues, compared with $7.1 million, or 3.4% of revenues, last year and $7.0 million in the third quarter, or 4.4% of revenues.
Year over year revenues in Staffing Services for the quarter were down 4.5% compared with the same period last year, and up 11.0% compared with the third quarter. Gross profit margins were 15.5% in fourth quarter 2009 compared with 14.9% in the third quarter. SG&A expenses as a percentage of revenues were 14.3% in fourth quarter 2009 compared with 14.8% in the third quarter. Segment operating profit was $3.4 million, or 1.2% of revenues, compared with $0.8 million, or 0.2% of revenues, last year and $0.2 million last quarter, or 0.1% of revenues.
OTHER ITEMS
The Company recorded restructuring and other charges during the quarter of $2.0 million ($1.2 million after tax or $0.02 per share) related primarily to adverse developments in a prior year legal matter and severance costs related to cost savings initiatives. Additionally, the Company partially wrote down the value attributed to the Todays Office Professionals tradename. The intangible impairment charge of $2.9, million ($1.8 million after tax or $0.03 per share) resulted from the planned 2010 movement of certain larger accounts historically serviced by Todays to the Company's Spherion branded staffing operation.
The Company purchased 550,951 shares of its common stock during the fourth quarter of 2009 at an average price of $5.77 per share under the Board of Directors' authorization to offset the dilution of employee benefit plans.
OUTLOOK
Revenues per day in January were about 5% lower than during the fourth quarter, consistent with a normal seasonal pull back in our industry. On a year over year basis, revenues per day in January were about flat compared with January 2009. However, Professional Services revenues per day were up about 1% compared with the fourth quarter and up about 2% compared with January 2009.
INVITATION TO CONFERENCE CALL
Management will host its conference call February 4, 2010 at 9:00 a.m. Eastern time to discuss information contained in this release and to discuss its previously announced acquisition of Tatum, LLC. Management will also discuss information related to that acquisition in a Power Point presentation posted in the Investor Relations section, Presentations page, of our website at www.Spherion.com. The call may be accessed in one of the following ways:
Via the Telephone:
Please dial 1-(800) 230-1766
The conference call leader is Roy Krause
The pass code: Spherion Earnings Call
Via the Internet:
You may access the call via the Internet through the Company's Web site: www.spherion.com.
Replay:
A replay of the call will be available one hour after the live call has ended. You may listen to the replay of the call over the Internet through www.spherion.com.
ABOUT SPHERION
Spherion Corporation (NYSE: SFN) is a strategic workforce solutions company that provides recruiting, staffing, consulting and outsourcing 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 strategic workforce solutions that improve business performance. Spherion provides its services to approximately 8,000 customers, from Fortune 500 companies to a wide range of small and mid-size organizations. Employing more than 160,000 people annually through its network, Spherion is one of North America's largest employers providing general staffing, technology services, professional services and 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 customer 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, impairment of goodwill and other intangibles, 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, impairment of goodwill and other intangibles, 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
------------------
December 27, December 28,
2009 2008
-------- ---------
Revenues(1) $455,634 $507,541
Cost of services 364,379 402,440
-------- ---------
Gross profit(2) 91,255 105,101
-------- ---------
Selling, general and administrative
expenses 81,765 101,425
Goodwill and intangible asset
impairment 2,900 149,793
Amortization of intangibles 1,635 2,018
Interest expense 1,413 806
Interest income (42) (87)
Restructuring and other charges 2,022 9,487
-------- ---------
89,693 263,442
-------- ---------
Earnings (loss) from continuing
operations before income taxes 1,562 (158,341)
Income tax (expense) benefit (1,383) 32,134
-------- ---------
Earnings (loss) from continuing
operations 179 (126,207)
Loss from discontinued
operations, net of tax (5) (34)
-------- ---------
Net earnings (loss) $174 $(126,241)
======== =========
Earnings (loss) per share, Basic
and Diluted:
Earnings (loss) from continuing
operations $- $(2.45)
Loss from discontinued
operations - (0.00)
-------- ---------
$- $(2.45)
======== =========
Weighted-average shares used in
computation of earnings (loss) per share:
Basic 51,174 51,482
Diluted 53,044 51,482
(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)
Twelve Months Ended
-------------------
December 27, December 28,
2009 2008
-------- ---------
Revenues(1) $1,710,880 $2,189,156
Cost of services 1,371,735 1,707,153
-------- ---------
Gross profit(2) 339,145 482,003
-------- ---------
Selling, general and
administrative expenses 325,688 448,615
Goodwill and intangible asset
impairment 2,900 149,793
Amortization of intangibles 6,514 8,142
Interest expense 4,126 5,703
Interest income (173) (407)
Restructuring and other charges 7,091 11,427
-------- ---------
346,146 623,273
-------- ---------
Loss from continuing operations
before income taxes (7,001) (141,270)
Income tax benefit 1,077 26,713
-------- ---------
Loss from continuing operations (5,924) (114,557)
Loss from discontinued
operations, net of tax (404) (3,932)
-------- ---------
Net loss $(6,328) $(118,489)
======== ==========
Loss per share, Basic and
Diluted:(3)
Loss earnings from continuing
operations $(0.11) $(2.14)
Loss from discontinued
operations (0.01) (0.07)
-------- ---------
$(0.12) $(2.22)
======== =========
Weighted-average shares used
in computation of loss per share:
Basic 51,810 53,490
Diluted 51,810 53,490
(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 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)
December 27, December 28,
Assets 2009 2008
-------- ---------
Current Assets:
Cash and cash equivalents $8,034 $7,601
Receivables, less allowance for
doubtful accounts of $2,261 and
$2,978, respectively 228,180 269,203
Deferred tax asset 10,236 11,198
Other current assets 11,430 14,430
-------- ---------
Total current assets 257,880 302,432
Property and equipment, net of
accumulated depreciation of
$140,985 and $128,323 respectively 49,737 67,269
Deferred tax asset 135,695 132,412
Goodwill, trade names and other
intangibles, net 58,237 65,856
Other assets 22,042 16,412
-------- ---------
$523,591 $584,381
======== =========
Liabilities and Stockholders' Equity
Current Liabilities:
Current portion of long-term
debt and revolving lines of credit $12,352 $37,699
Accounts payable and other
accrued expenses 57,403 67,638
Accrued salaries, wages and
payroll taxes 46,381 49,888
Accrued insurance reserves 19,037 20,145
Accrued income tax payable 806 1,236
Other current liabilities 6,399 13,234
-------- ---------
Total current liabilities 142,378 189,840
Long-term debt, net of current portion 1,246 1,646
Accrued insurance reserves 14,617 16,912
Deferred compensation 14,702 12,404
Other long-term liabilities 4,692 7,391
-------- ---------
Total liabilities 177,635 228,193
-------- ---------
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,
15,896,160 and 13,860,739
shares, respectively (113,421) (106,500)
Additional paid-in capital 853,516 850,653
Accumulated deficit (398,210) (391,882)
Accumulated other comprehensive
income 3,418 3,264
-------- ---------
Total stockholders' equity 345,956 356,188
-------- ---------
$523,591 $584,381
======== =========
SPHERION CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION
(unaudited, in thousands, except per share amounts)
Three Months Ended Twelve Months Ended
-------------------------- -------------------------
December 27, December 28, December 27, December 28,
2009 2008 2009 2008
------------ ------------ ------------ ------------
Adjusted earnings
from continuing
operations $3,176 $820 $160 $12,587
Adjustment of tax
valuation allowance - - - 1,064
Impairment of
goodwill and other
intangibles, net of
tax benefit (1,766) (121,249) (1,766) (121,249)
Restructuring and
other charges, net
of tax benefit (1,231) (5,778) (4,318) (6,959)
------------ ------------ ------------ ------------
Earnings (loss)
from continuing
operations 179 (126,207) (5,924) (114,557)
------------ ------------ ------------ ------------
Loss from
discontinued
operations, net
of tax (5) (34) (404) (3,932)
------------ ------------ ------------ ------------
Net earnings (loss) $174 $(126,241) $(6,328) $(118,489)
============ ============ ========== ============
Per share-Diluted
amounts (1) :
Adjusted earnings
from continuing
operations $0.06 $0.02 - $0.24
Adjustment of tax
valuation allowance - - - 0.02
Impairment of
goodwill and other
intangibles, net
of tax benefit (0.03) (2.36) (0.03) (2.27)
Restructuring and
other charges, net
of tax benefit (0.02) (0.11) (0.08) (0.13)
------------ ------------ ------------ ------------
Earnings (loss)
from continuing
operations - (2.45) (0.11) (2.14)
------------ ------------ ------------ ------------
Loss from
discontinued
operations, net
of tax - - (0.01) (0.07)
------------ ------------ ------------ ------------
Net earnings (loss) $ - $(2.45) $(0.12) $(2.22)
============ ============ ========== ============
Weighted-average
shares used in
computation of
earnings (loss) per
share 53,044 51,482 51,810 53,490
(1) Earnings (loss) 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 Twelve Months Ended
-------------------------- -------------------------
December 27, December 28, December 27, December 28,
2009 2008 2009 2008
------------ ------------ ------------ ------------
Adjusted EBITDA
from continuing
operations $14,808 $8,962 $33,964 $54,620
Interest income 42 87 173 407
Interest expense (1,413) (806) (4,126) (5,703)
Impairment of
goodwill and other
intangibles (2,900) (149,793) (2,900) (149,793)
Restructuring and
other charges (2,022) (9,487) (7,091) (11,427)
Depreciation and
amortization (6,953) (7,304) (27,021) (29,374)
------------ ------------ ------------ ------------
Earnings (loss)
from continuing
operations before
income taxes 1,562 (158,341) (7,001) (141,270)
------------ ------------ ------------ ------------
Income tax (expense)
benefit (1,383) 32,134 1,077 26,713
------------ ------------ ------------ ------------
Earnings (loss)
from continuing
operations $179 $(126,207) $(5,924) $(114,557)
============ ============ ========== ============
Adjusted EBITDA as
a percentage of
revenue 3.2% 1.8% 2.0% 2.5%
SPHERION CORPORATION AND SUBSIDIARIES
SEGMENT INFORMATION
(unaudited, dollar amounts in thousands)
Three Months Ended Twelve Months Ended
------------------ --------------------
Dec. 27, Sept. 27, Dec. 28, Dec. 27, Dec. 28,
2009 2009 2008 2009 2008
---- ---- ---- ---- ----
Revenues:
Professional
Services $167,857 $160,873 $206,105 $681,686 $930,965
Staffing
Services 287,777 259,324 301,436 1,029,194 1,258,191
------- ------- ------- ---------- ----------
Segment
revenue $455,634 $420,197 $507,541 $1,710,880 $2,189,156
======== ======== ======== ========== ==========
Gross profit:
Professional
Services $46,755 $43,045 $55,935 $185,401 $272,421
Staffing
Services 44,500 38,594 49,166 153,744 209,582
------ ------ ------ -------- --------
Segment
gross
profit $91,255 $81,639 $105,101 $339,145 $482,003
======= ======= ======== ======== ========
Segment SG&A:
Professional
Services $(37,508) $(35,995) $(48,828) $(158,476) $(228,614)
Staffing
Services (41,072) (38,371) (48,414) (154,800) (203,289)
------- ------- ------- --------- ---------
Segment
SG&A $(78,580) $(74,366) $(97,242) $(313,276) $(431,903)
======== ======== ======== ========= =========
Segment
operating
profit (loss):
Professional
Services $9,247 $7,050 $7,107 $26,925 $43,807
Staffing
Services 3,428 223 752 (1,056) 6,293
----- --- --- ------- ------
Segment
operating
profit 12,675 7,273 7,859 25,869 50,100
Unallocated
corporate
costs (3,185) (3,094) (4,183) (12,412) (16,712)
Goodwill and
intangible
asset
impairment (2,900) - (149,793) (2,900) (149,793)
Amortization
of
intangibles (1,635) (1,624) (2,018) (6,514) (8,142)
Interest
expense (1,413) (1,228) (806) (4,126) (5,703)
Interest
income 42 41 87 173 407
Restructuring
and other
charges (2,022) (896) (9,487) (7,091) (11,427)
------ ---- ------ ------ -------
Earnings
(loss) from
continuing
operations
before
income taxes $1,562 $472 $(158,341) $(7,001) $(141,270)
====== ==== ========= ======= =========
MEMO:
Gross profit
margin:
Professional
Services 27.9% 26.8% 27.1% 27.2% 29.3%
Staffing
Services 15.5% 14.9% 16.3% 14.9% 16.7%
Total
Spherion 20.0% 19.4% 20.7% 19.8% 22.0%
Segment SG&A:
Professional
Services 22.3% 22.4% 23.7% 23.2% 24.6%
Staffing
Services 14.3% 14.8% 16.1% 15.0% 16.2%
Total
Spherion 17.2% 17.7% 19.2% 18.3% 19.7%
Segment operating
profit (loss):
Professional
Services 5.5% 4.4% 3.4% 3.9% 4.7%
Staffing
Services 1.2% 0.1% 0.2% (0.1%) 0.5%
Total
Spherion 2.8% 1.7% 1.5% 1.5% 2.3%
Segment revenue
per billing day:
Professional
Services $2,707 $2,554 $3,324 $2,705 $3,694
Staffing
Services $4,642 $4,116 $4,862 $4,084 $4,993
Total
Spherion(1)$7,349 $6,670 $8,186 $6,789 $8,687
Supplemental Cash
Flow and Other
Information:
Operating
cash flow $10,508 $(7,822) $35,477 $41,082 $79,183
Capital
expenditures $286 $303 $1,716 $2,120 $8,935
Depreciation
and
amortization $6,953 $6,607 $7,303 $27,021 $29,373
DSO 46 50 49 46 49
Billing Days 62.0 63.0 62.0 252 252
(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 Twelve Months Ended
------------------ --------------------
Dec. 27, Sept. 27, Dec. 28, Dec. 27, Dec. 28,
2009 2009 2008 2009 2008
---- ---- ---- ---- ----
Professional
Services
Revenues by Skill:
Information
Technology $113,684 $110,584 $130,057 $454,238 $581,331
Finance &
Accounting 21,120 20,527 23,385 87,068 107,555
Administration 15,470 14,431 28,659 71,180 123,820
Other 17,583 15,331 24,004 69,200 118,259
------ ------ ------ ------ -------
Segment Revenues $167,857 $160,873 $206,105 $681,686 $930,965
======== ======== ======== ======== ========
Revenues by
Service:
Temporary
Staffing &
Other $163,103 $156,024 $199,404 $662,263 $882,227
Permanent
Placement 4,754 4,849 6,701 19,423 48,738
----- ----- ----- ------ ------
Segment
Revenues $167,857 $160,873 $206,105 $681,686 $930,965
======== ======== ======== ======== ========
Gross Profit
Margin by
Service:
(As % of
Applicable
Revenues)
Temporary
Staffing &
Other 25.8% 24.5% 24.7% 25.1% 25.4%
Permanent
Placement 100.0% 100.0% 100.0% 100.0% 100.0%
Total
Professional
Services 27.9% 26.8% 27.1% 27.2% 29.3%
Revenues per
billing day by
Skill: (1)
Information
Technology $1,834 $1,755 $2,098 $1,803 $2,307
Finance &
Accounting $341 $326 $377 $346 $427
Administration $250 $229 $462 $282 $491
Other $284 $243 $387 $275 $469
Revenues per
billing day by
Service: (1)
Temporary Staffing
& Other $2,631 $2,477 $3,216 $2,628 $3,501
Permanent Placement $77 $77 $108 $77 $193
Staffing Services
Revenues by Skill:
Clerical $175,306 $157,691 $184,267 $645,451 $757,941
Light
Industrial 112,471 101,633 117,169 383,743 500,250
------- ------- ------- ------- -------
Segment
Revenues $287,777 $259,324 $301,436 $1,029,194 $1,258,191
======== ======== ======== ========== ==========
Revenues by
Service:
Temporary
Staffing
& Other $285,970 $257,975 $299,122 $1,022,954 $1,244,634
Permanent
Placement 1,807 1,349 2,314 6,240 13,557
----- ----- ----- ----- ------
Segment
Revenues $287,777 $259,324 $301,436 $1,029,194 $1,258,191
======== ======== ======== ========== ==========
Gross Profit
Margin by
Service:
(As % of
Applicable
Revenues)
Temporary
Staffing &
Other 14.9% 14.4% 15.7% 14.4% 15.7%
Permanent
Placement 100.0% 100.0% 100.0% 100.0% 100.0%
Total
Staffing
Services 15.5% 14.9% 16.3% 14.9% 16.7%
Revenues per
billing day by
Skill: (1)
Clerical $2,828 $2,503 $2,972 $2,561 $3,008
Light Industrial $1,814 $1,613 $1,890 $1,523 $1,985
Revenues per
billing day by
Service: (1)
Temporary Staffing
& Other $4,612 $4,095 $4,825 $4,059 $4,939
Permanent
Placement $29 $21 $37 $25 $54
(1) Segment Revenue per billing day is calculated independently for each
segment and may not add due to rounding.
SOURCE Spherion Corporation
WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM?
Newsrooms &
Influencers
Digital Media
Outlets
Journalists
Opted In
Share this article