Correcting and replacing on assignment reports results for fourth
quarter and full year 2013
Calabasas, calif.--(business wire)--the press release issued earlier today contained a typographical error related to its sg&a expense estimates for the full year 2014. the release below corrects the statement “sg&a (excludes amortization of intangible assets)” under financial estimates for 2014 - full year 2014. the statement now reads “sg&a (includes amortization of intangible assets)”. the corrected release reads: on assignment reports results for fourth quarter and full year 2013 revenues up 14.7 percent year-over-yeareps & adjusted ebitda above estimates on assignment, inc. (nyse: asgn), a leading global provider of diversified professional staffing solutions, today reported results for the quarter ended december 31, 2013. fourth quarter highlights revenues were $423.6 million, up 14.7 percent year-over-year and 0.5 percent sequentially. adjusted income from continuing operations (a non-gaap measure defined below) was $27.5 million ($0.50 per diluted share). income from continuing operations (excluding $1.5 million after tax of acquisition and strategic planning expenses, which were not included in our estimates) was $19.0 million ($0.35 per diluted share). income from continuing operations as reported (which includes the acquisition and strategic planning expenses) was $17.4 million ($0.32 per diluted share). adjusted ebitda (a non-gaap measure defined below) was $48.4 million, up from $39.4 million in fourth quarter of 2012. percentage of gross profit converted into adjusted ebitda was 37.3 percent. closed the sale of allied healthcare unit (“allied”) for $28.7 million (a gain of $16.4 million, net-of-tax) and acquired whitaker medical, llc (“whitaker”), a physician staffing business, and cybercoders holdings, inc. (“cybercoders”), a permanent placement recruiting firm. leverage ratio (total indebtedness to trailing twelve months adjusted ebitda) was 2.2 to 1 at december 31, 2013, down from 2.9 to 1 at december 31, 2012. commenting on the results, peter dameris, president and chief executive officer of on assignment, inc., said, “we reported strong financial performance for the quarter, completed the sale of our allied healthcare unit and acquired two businesses, which we believe further solidify our position as a top player in each of the markets we serve. revenues, gross profit, income from continuing operations and adjusted ebitda were above the high-end of our estimates. we believe we are well positioned and have good momentum going into 2014.” fourth quarter 2013 results operating results for the fourth quarter include the results of the businesses acquired in december from the date of acquisition (december 2, 2013 for whitaker and december 6, 2013 for cybercoders) through the end of the quarter. whitaker’s results are included in the physician segment and cybercoders’ results are included in the oxford segment. during the quarter, the company completed the sale of certain operating assets of its allied healthcare division. as a result of the sale, the operating results of this division have been reported as discontinued operations on a retrospective basis. excluded from the sale was the company’s healthcare information management practice (“him”). this practice is now included in the oxford segment. revenues for the quarter were $423.6 million, up 14.7 percent year-over-year and 0.5 percent sequentially. consolidated revenues included $5.9 million in revenues from whitaker and cybercoders (the “acquisitions”) for the period from the date of acquisition through the end of the quarter. excluding results from the acquisitions, revenues were $417.7 million, up 13.1 percent year-over-year. our information technology businesses (apex systems and oxford, which now includes cybercoders and him), grew 16.0 percent year-over-year (14.9 percent excluding cybercoders) and accounted for 90 percent of the revenue growth in the quarter. our non-information technology segments (life sciences and physician) were up 8.3 percent year-over-year (4.9 percent excluding whitaker). gross profit was $129.8 million, up 15.8 percent year-over-year and up 2.0 percent sequentially. this improvement was primarily due to growth in revenues and expansion in gross margin. gross margin for the quarter was 30.6 percent, up from 30.3 percent in the fourth quarter of 2012 and up from 30.2 percent in the third quarter of 2013. the year-over-year expansion in gross margin was mainly attributable to a higher mix of permanent placement revenues (2.1 percent of revenues for the quarter compared with 1.8 percent in the fourth quarter of 2012) and slightly higher contract margins. the higher mix of permanent placement revenues in the quarter was attributable to the inclusion of cybercoders, which accounted for $2.7 million of the $8.9 million in permanent placement revenues. selling, general and administrative (“sg&a”) expenses were $90.2 million (21.3 percent of revenues), up from $77.9 million (21.1 percent of revenues) in the fourth quarter of 2012. sg&a expenses for the acquired businesses were $2.8 million (0.7 percent of revenues). excluding the results from the acquired businesses, sg&a expenses were 20.9 percent of revenues for the quarter down from 21.1 percent in the fourth quarter of 2012. sg&a expenses for the quarter included a (i) $1.6 million benefit from a favorable outcome of an earn-out obligation and (ii) acquisition and strategic planning expenses of $2.6 million. amortization of intangible assets was $5.9 million, compared with $6.8 million in the fourth quarter of 2012 and $5.2 million in the third quarter of 2013. the sequential increase of $0.7 million related to incremental amortization from the acquisitions. interest expense for the quarter was $3.4 million compared with $5.4 million in the fourth quarter of 2012. interest expense for the quarter was comprised of interest on the credit facility of $3.1 million and amortization of capitalized loan costs of $0.3 million. the leverage ratio (total indebtedness to trailing twelve months adjusted ebitda) at december 31, 2013 was 2.2 to 1, down from 2.9 to 1 at december 31, 2012. the effective income tax rate for the quarter was 42.4 percent and the effective rate was 41.6 percent for the full year. the sequential increase in the effective tax rate primarily related to the portion of acquisition expenses incurred in the quarter that are not deductible for income tax purposes. adjusted ebitda (earnings before interest, taxes, depreciation, and amortization of identifiable intangible assets plus equity-based compensation expense, acquisition-related costs and fees and expenses related to our strategic planning initiatives), was $48.4 million, up from $39.4 million for the fourth quarter of 2012. adjusted ebitda for the quarter included a $1.6 million benefit related to a reduction in an earn-out obligation. adjusted income from continuing operations was $27.5 million ($0.50 per diluted share). income from continuing operations (which includes acquisition and strategic planning expenses of $2.6 million, or $1.5 million net of income taxes) was $17.4 million ($0.32 per diluted share) compared with $12.0 million ($0.22 per diluted share) for the fourth quarter of 2012. net income, which is comprised of (i) income from continuing operations of $17.4 million, (ii) the gain on sale of discontinued operations, net-of-tax of $16.4 million and (iii) income (loss) of discontinued operations of ($1.4) million totaled $32.4 million ($0.59 per diluted share) compared with $14.2 million ($0.26 per diluted share) in the fourth quarter of 2012. net income for the quarter included acquisition-related costs and strategic planning expenses of $2.6 million ($1.5 million, or $0.03 per diluted share, after tax). financial estimates for 2014 on assignment is providing financial estimates from continuing operations for the first quarter and full year 2014. these estimates do not include acquisition/integration costs, strategic planning expenses or any costs or expenses related to any future debt refinancing and assume no deterioration in the staffing markets that on assignment serves. first quarter 2014 revenues of $434.0 million to $438.0 million gross margin of 30.6 percent to 30.9 percent sg&a (excludes amortization of intangible assets) of $102.5 to $104.0 million (includes $2.7 million in depreciation and $3.6 million in equity-based compensation expense) amortization of intangible assets of $6.2 million adjusted ebitda of $37.0 million to $38.5 million effective tax rate of 41.5 percent adjusted income from continuing operations of $20.8 million to $21.6 million adjusted income from continuing operations per diluted share of $0.38 to $0.39 income from continuing operations of $12.1 million to $13.0 million income from continuing operations per diluted share of $0.22 to $0.24 diluted shares outstanding of 55.2 million these estimates reflect normal seasonality in the business, except for the inclement weather in january and february, which is estimated to have an adverse effect on revenues of approximately $3 to $5 million. these estimates assume year-over-year revenue growth in mid-teens for apex systems, low teens for oxford (includes cybercoders and him practice), mid-single digits for life sciences and high-teens for physician. on a pro forma basis (which assumes the acquisitions occurred at the beginning of 2013), the assumed growth rate for the oxford segment is flat and for the physician segment is a low single digit decline. full year 2014 revenues of $1,875.0 million to $1,905.0 million gross margin of 31.8 percent to 32.0 percent sg&a (includes amortization of intangible assets) of $450.0 to $455.0 million (includes $12.9 million in depreciation and $17.2 million in equity-based compensation expense) amortization of intangible assets of $24.5 million adjusted ebitda of $202.0 million to $210.0 million effective tax rate of 41.5 percent adjusted income from continuing operations of $113.7 million to $118.4 million adjusted income from continuing operations per diluted share of $2.04 to $2.13 income from continuing operations of $79.3 million to $84.0 million income from continuing operations per diluted share of $1.42 to $1.51 diluted shares outstanding of 55.7 million these estimates assume year-over-year revenue growth in low-teens for our it segments (apex systems and oxford) and mid-single digits for life sciences and physician. the growth rate is calculated using pro forma 2013 revenues, which assume the acquisitions occurred at the beginning of 2013. pro forma 2013 revenues were approximately $1.7 billion. the difference between adjusted income from continuing operations and income from continuing operations is approximately $34.4 million and is comprised of amortization of intangibles and the cash income tax shield, less excess estimated capital expenditures over depreciation after income taxes. these estimates do not include an estimate for acquisition/integration costs, strategic planning expenses or costs or expenses related to any future debt refinancing. conference call on assignment will hold a conference call today at 4:30 p.m. est to review its fourth quarter financial results. the dial-in number is 800-288-8976 (+1-612-332-0107 for callers outside the united states) and the conference id number is 317422. participants should dial in ten minutes before the call. a replay of the conference call will be available beginning today at 7:30 p.m. est and ending at 11:30 p.m. est on wednesday, february 19, 2014. the access number for the replay is 800-475-6701 (+1-320-365-3844 for callers outside the united states) and the conference id number 317422. this call is being webcast by thomson/ccbn and can be accessed via on assignment's web site at www.onassignment.com. individual investors can also listen at thomson/ccbn's site at www.fulldisclosure.com or by visiting any of the investor sites in thomson/ccbn's individual investor network. about on assignment on assignment, inc. (nyse: asgn), is a leading global provider of in-demand, skilled professionals in the growing technology, healthcare and life sciences sectors, where quality people are the key to success. the company goes beyond matching rÉsumÉs with job descriptions to match people they know into positions they understand for temporary, contract-to-hire, and direct hire assignments. clients recognize on assignment for their quality candidates, quick response, and successful assignments. professionals think of on assignment as career-building partners with the depth and breadth of experience to help them reach their goals. on assignment was founded in 1985 and went public in 1992. the company, which is headquartered in calabasas, california, operates through a network of branch offices throughout the united states, canada, united kingdom, netherlands, ireland and belgium. additionally, physician placements are made in australia and new zealand. to learn more, visit http://www.onassignment.com. reasons for presentation of non-gaap financial measures statements in this release and the supplemental financial information accompanying include non-gaap financial measures. such information is provided as additional information, not as an alternative to our consolidated financial statements presented in accordance with gaap, and is intended to enhance an overall understanding of our current financial performance. the supplemental financial information sets forth financial measures reviewed by our management to evaluate our operating performance. such measures also are used to determine a portion of the compensation for some of our executives and employees. we believe the non-gaap financial measures provide useful information to management, investors and prospective investors by excluding certain charges and other amounts that we believe are not indicative of our core operating results. these non-gaap measures are included to provide management, our investors and prospective investors with an alternative method for assessing our operating results in a manner that is focused on the performance of our ongoing operations and to provide a more consistent basis for comparison between quarters. one of the non-gaap financial measures presented is ebitda (earnings before interest, taxes, depreciation, and amortization of identifiable intangible assets), other terms include adjusted ebitda (ebitda plus equity-based compensation expense, impairment charges, write-off of loan fees, acquisition related costs and strategic planning costs) and non-gaap income from continuing operations (income from continuing operations, plus acquisition related expenses, deferred financing fees written-off and strategic planning costs, net of tax) and adjusted income from continuing operations and related per share amounts. these terms might not be calculated in the same manner as, and thus might not be comparable to, similarly titled measures reported by other companies. the financial statement tables that accompany this press release include reconciliation of each non-gaap financial measure to the most directly comparable gaap financial measure. safe harbor certain statements made in this news release are “forward-looking statements” within the meaning of section 21e of the securities exchange act of 1934, as amended, and involve a high degree of risk and uncertainty. forward-looking statements include statements regarding the company's anticipated future financial and operating performance. all statements in this release, other than those setting forth strictly historical information, are forward-looking statements. forward-looking statements are not guarantees of future performance, and actual results might differ materially. in particular, the company makes no assurances that the estimates of revenues, gross margin, sg&a, adjusted ebitda, income from continuing operations, adjusted income from continuing operations, earnings per share or earnings per diluted share set forth above will be achieved. factors that could cause or contribute to such differences include actual demand for our services, our ability to attract, train and retain qualified staffing consultants, our ability to remain competitive in obtaining and retaining temporary staffing clients, the availability of qualified temporary professionals, management of our growth, continued performance of our enterprise-wide information systems, and other risks detailed from time to time in our reports filed with the securities and exchange commission, including our annual report on form 10-k for the year ended december 31, 2012, as filed with the sec on march 18, 2013, our report on form 8-k filed with the sec on june 13, 2013, and our forms 10-q for the quarterly periods ended march 31, 2013, june 30, 2013, and september 30, 2013 as filed with the sec on may 9, 2013, august 2, 2013, and november 5, 2013, respectively. we specifically disclaim any intention or duty to update any forward-looking statements contained in this news release. summary consolidated statements of operations (unaudited) (in thousands, except per share amounts) 2012(1) 2013(2) 2012(1) supplemental segment financial information (unaudited) (in thousands) 2012(1) 2013(2) 2012(1) selected cash flow information (unaudited) (in thousands) selected consolidated balance sheet data (unaudited) (in thousands) reconciliation of gaap income from continuing operations and earnings per share to non-gaap adjusted ebitda and adjusted ebitda per diluted share (unaudited) (in thousands, except per share amounts) 2012 (1) september 30, 2013 (2) 0.37 2012 (1) reconciliation of gaap income and eps to non-gaap income and eps (unaudited) (in thousands, except per share amounts) 2012 (1) 2013 (2) 2012 (1) calculation of adjusted earnings per share (unaudited) (in thousands, except per share amounts) as adjusted (1) (2) (3) (4) supplemental financial information – revenues and gross margins (unaudited) (dollars in thousands) lifesciences (2.8) % (1) oxford's overall blended bill rate is lower due to the inclusion of him and cybercoders. supplemental financial information – key metrics (unaudited) december 31,2013 september 30,2013
