Financial Results above previously-announced
estimates
ASGN Incorporated (NYSE: ASGN), a leading provider of IT and
professional services in the technology, creative/digital,
engineering, life sciences fields across commercial and government
sectors, today reported financial results for the quarter ended
June 30, 2018.
Highlights
- Revenues were $878.5 million, up 34.5
percent (10.1 percent on a pro forma basis) over the second quarter
of 2017. Pro forma assumes the acquisition of ECS occurred at the
beginning of 2017.
- Net income was $33.6 million ($0.63 per
diluted share), up from $33.1 million ($0.62 per diluted share) in
the second quarter of 2017.
- Adjusted Net Income (a non-GAAP
measure) was $58.7 million ($1.11 per diluted share), up from $41.5
million ($0.78 per diluted share) in the second quarter of
2017.
- Adjusted EBITDA (a non-GAAP measure)
was $106.6 million (12.1 percent of revenues), up from $80.5
million (12.3 percent of revenues) in the second quarter of
2017.
- Cash flows from operating activities
were $76.7 million, up from $39.8 million in the second quarter of
2017.
- Free cash flow (a non-GAAP measure) was
$68.4 million, or 7.8 percent of revenues.
- Effective April 2, 2018, acquired ECS
Federal, LLC ("ECS") for $775.0 million in cash and amended the
credit facility. Operating results of ECS were included in ASGN's
consolidated results for the full quarter and were accretive to
ASGN's Adjusted Net Income and Adjusted Earnings per Share.
- During the quarter, paid down $133.0
million of debt and the leverage ratio (a non-GAAP measure) was 3.2
to 1 at June 30, 2018, down from 3.7 to 1, which was the leverage
ratio after completion of the ECS acquisition on April 2,
2018.
- During the quarter, ECS secured $162.4
million in new awards, which are included in its $1.4 billion
contract backlog as of June 30, 2018.
Management Commentary
"The U.S. economy is performing well and across our customer
base of commercial and government organizations, we are seeing
investment in advancing their businesses and services,” commented
Peter Dameris, CEO of ASGN. “Against this positive economic
backdrop, ASGN executed well and we were able to grow substantially
faster than the published industry growth rates for the 18th
consecutive quarter. We expect our size and service offerings will
continue to position ASGN to generate solid above-market growth in
the quarters ahead."
Second Quarter 2018 Financial Results
Revenues were $878.5 million, up 34.5 percent year-over-year
(10.1 percent on a pro forma basis). Pro forma results assume the
acquisition of ECS occurred at the beginning of 2017.
Assignment revenues for our Apex and Oxford segments totaled
$684.0 million, up 10.3 percent year-over-year and permanent
placement revenues were $39.4 million (4.5 percent of revenues)
compared with $33.3 million (5.1 percent of revenues) in the second
quarter of 2017. Revenues for the quarter included $155.1 million
in revenues from ECS, which was acquired on April 2, 2018. ECS is
being reported as a separate operating segment.
Our largest segment, Apex, accounted for 64.6 percent of total
revenues and grew 12.9 percent year-over-year. Our Oxford Segment
accounted for 17.7 percent of total revenues and was up 3.3 percent
year-over-year. Our ECS Segment accounted for 17.7 percent of total
revenues and was up 7.1 percent year-over-year on a pro forma
basis.
Gross profit was $263.9 million, up $50.9 million, or 23.9
percent year-over-year. Gross margin was 30.0 percent, compared
with 32.6 percent in the second quarter of 2017. The compression in
gross margin was primarily due to the inclusion of ECS which has
lower margins than our other segments. On a pro forma basis, gross
margin was 30.0 percent compared with 30.3 percent in the second
quarter of 2017. Pro forma assumes the acquisition of ECS occurred
at the beginning of 2017.
Selling, general and administrative (“SG&A”) expenses were
$179.6 million (20.4 percent of revenues), compared with $145.2
million (22.2 percent of revenues) in the second quarter of 2017.
SG&A expenses for the quarter included acquisition, integration
and strategic planning expenses of $3.5 million, compared with $0.7
million in the second quarter of 2017.
Amortization of intangible assets was $18.5 million, up from
$8.3 million in the second quarter of 2017. The increase is related
to the intangible assets from the ECS acquisition.
Interest expense was $20.6 million compared with $6.1 million in
the second quarter of 2017. Interest expense for the quarter was
comprised of (i) $13.3 million of interest on the credit facility,
(ii) $5.8 million of costs related to the amendment of our credit
facility in conjunction with the acquisition of ECS and (iii) $1.5
million of amortization of deferred loan costs.
The effective tax rate for the quarter was 25.5 percent, which
reflected the lower federal corporate tax rate related to the
recently enacted Tax Cuts and Jobs Act, as well as a $0.7 million
reduction in income taxes for excess tax benefits on stock-based
compensation.
Net income was $33.6 million ($0.63 per diluted share), up from
$33.1 million ($0.62 per diluted share) in the second quarter of
2017. Adjusted Net Income (a non-GAAP measure) was $58.7 million
($1.11 per diluted share), up from $41.5 million ($0.78 per diluted
share) in the second quarter of 2017. Adjusted EBITDA (a non-GAAP
measure) was $106.6 million (12.1 percent of revenues), up from
$80.5 million (12.3 percent of revenues) in the second quarter of
2017. Reconciliations between GAAP and non-GAAP measures are
included in this release.
Cash flows from operating activities were $76.7 million and free
cash flow (a non-GAAP measure) was $68.4 million. At June 30, 2018,
our leverage ratio (a non-GAAP measure) was 3.2 to 1, down from 3.7
to 1, which was the leverage ratio after completion of the ECS
acquisition.
Third Quarter 2018 Financial Estimates
ASGN is providing financial estimates for the third quarter of
2018. These estimates do not include any acquisition, integration
or strategic planning expenses and assume no deterioration in the
markets that ASGN serves. These estimates also assume no
significant change in foreign exchange rates. Reconciliations of
estimated net income to the estimated non-GAAP measures are
included in this release.
- Revenues of $888.0 million to $898.0
million
- Gross margin of 29.8 percent to 30.3
percent
- SG&A expenses (excludes
amortization of intangible assets) of $180.2 million to $182.6
million (includes $7.0 million in depreciation and $8.9 million in
stock-based compensation expense)
- Amortization of intangible assets of
$18.6 million
- Effective tax rate of 26.5 percent
(before any excess tax benefits related to stock-based
compensation)
- Net income of $37.9 million to $41.6
million
- Earnings per diluted share of $0.71 to
$0.78
- Diluted shares outstanding of 53.1
million
- Adjusted EBITDA(1) (a non-GAAP measure)
of $103.0 million to $108.0 million
- Adjusted Net Income (a non-GAAP
measure) of $56.2 million to $59.8 million
- Adjusted Net Income per diluted
share(2) (a non-GAAP measure) of $1.06 to $1.13
_______________
(1)
Depreciation of $2.6 million included in
costs of services related to an ECS project and depreciation of
$7.0 million included in SG&A expenses are added back in the
determination of Adjusted EBITDA.
(2)
Does not include the “Cash Tax Savings on
Indefinite-lived Intangible Assets.” These savings total $6.8
million each quarter, or $0.13 per diluted share, and represent the
economic value of the tax deduction that we receive from the
amortization of goodwill and trademarks.
Our financial estimates above are based on our estimate of
“Billable Days” which are Business Days (calendar days for the
period less weekends and holidays) adjusted for other factors, such
as the day of the week a holiday occurs, additional time taken off
around holidays, year-end client furloughs and inclement weather.
For the third quarter, we estimate Billable Days of 62.4 (for our
Apex and Oxford segments), which is 0.2 fewer than the third
quarter of 2017 and 1.3 fewer than the second quarter of 2018. Each
Billable Day is approximately $11.5 million in revenues. On a pro
forma basis, which assumes the acquisition of ECS occurred at the
beginning of 2017, our revenue estimates imply year-over-year
growth of 8.3 to 9.5 percent.
Conference Call
ASGN will hold a conference call today at 5:00 p.m. EDT to
review its financial results for the second quarter. The dial-in
number is 800-230-1093 (+1-612-234-9959 for callers outside the
United States) and the conference ID number is 450933. Participants
should dial in ten minutes before the call. The prepared remarks,
supplemental materials, and the webcast for this call can be
accessed at asgn.com.
A replay of the conference call will be available beginning
Wednesday, July 25, 2018 at 7:00 p.m. EDT until midnight on
Wednesday, August 8, 2018. The access number for the replay is
800-475-6701 (+1-320-365-3844 outside the United States) and the
conference ID number is 450933.
About ASGN Incorporated
ASGN Incorporated (NYSE: ASGN) is a leading provider of IT and
professional services in the technology, creative/digital,
engineering and life sciences fields across commercial and
government sectors. Operating through its Apex, Oxford and ECS
segments, ASGN helps leading corporate enterprises and government
organizations develop, implement and operate critical IT and
business solutions through its integrated offering of professional
staffing and IT solutions.
Our mission as an organization is to be the most trusted partner
for companies seeking highly skilled human capital and integrated
solutions to fulfill their strategic and operational needs. ASGN
was founded in 1985 and is headquartered in Calabasas, California.
For more information, visit us at asgn.com.
Reasons for Presentation of Non-GAAP Financial
Measures
Statements in this release and the accompanying financial
information 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
accounting principles generally accepted in the United States
("GAAP"), and is intended to enhance an overall understanding of
our current financial performance. 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 a reconciliation of each non-GAAP financial measure to the
most directly comparable GAAP financial measure. Below is a
discussion of our non-GAAP financial measures.
Pro forma revenues and gross profit by segment are presented to
provide a more consistent basis for comparison between quarters.
Pro forma was prepared as if the acquisition of ECS was consummated
at the beginning of 2017. Although the pro forma segment data are
considered non-GAAP measures, they were calculated in the same
manner as the consolidated pro forma data, which are GAAP
measures.
EBITDA (earnings before interest, taxes, depreciation and
amortization of intangible assets) and Adjusted EBITDA (EBITDA plus
stock-based compensation expense and, as applicable, acquisition,
integration and strategic planning expenses, write-off of loan
costs and impairment charges) are used to determine a portion of
the compensation for some of our executives and employees.
Stock-based compensation expense is added to arrive at Adjusted
EBITDA because it is a non-cash expense. Write-off of loan costs,
acquisition, integration and strategic planning expenses and
impairment charges are added, as applicable, to arrive at Adjusted
EBITDA as they are not indicative of the performance of our core
business on an ongoing basis.
Non-GAAP net income (net income, less income (loss) from
discontinued operations, net of tax, plus, as applicable, credit
facility amendment expenses, acquisition, integration and strategic
planning expenses, accretion of fair value discount on contingent
consideration, impairment charges, and the tax effect of these
items) provides a method for assessing our operating results in a
manner that is focused on the performance of our core business on
an ongoing basis. Adjusted Net Income (Non-GAAP net income plus
amortization of intangible assets, less income taxes on
amortization for financial reporting purposes not deductible for
income tax purposes) provides a method for assessing our operating
results in a manner that is focused on the performance of our core
business on an ongoing basis, adjusted for some of the cash flows
associated with amortization of intangible assets to more fully
present the performance of our acquisitions.
Constant currency information removes the effect of
year-over-year changes in foreign currency exchange rates. Constant
currency information is calculated using the foreign currency
exchange rates from the same period in the prior year.
Billable Days are Business Days (calendar days for the period
less weekends and holidays) adjusted for other factors, such as the
day of the week a holiday occurs, additional time taken off around
holidays, year-end client furloughs and inclement weather. In order
to remove the fluctuations caused by comparable periods having
different billable days, revenues on a Same Billable Days basis are
calculated by taking the current period average revenue per
billable day, multiplied by the number of billable days from the
same period in the prior year.
The term Same Billable Days and Constant Currency basis means
that the impact of year-over-year changes in foreign currency
exchange rates has been removed from the Same Billable Days basis
calculation.
Free cash flow is defined as net cash provided by (used in)
operating activities, less capital expenditures. Management
believes this provides useful information to investors about the
amount of cash generated by the business that can be used for
strategic opportunities. Our leverage ratio provides information
about our compliance with loan covenants and is calculated in
accordance with our credit agreement, as filed with the Securities
and Exchange Commission ("SEC"), by dividing our total indebtedness
by trailing 12 months Adjusted EBITDA.
Reasons for Presentation of Operating Metrics and
Supplemental Information
Operating metrics are intended to enhance the overall
understanding of our business and our current financial
performance. These operating metrics might not be calculated in the
same manner as, and thus might not be comparable to, similarly
titled metrics reported by other companies. Contract backlog for
our ECS segment represents the estimated amount of future revenues
to be recognized under negotiated contracts and task orders. The
operating metrics for the Apex and Oxford segments presented on
this release are calculated as follows: average number of staffing
consultants are full time equivalent staffing consultant headcount
in the quarter; average number of contract professionals and
average number of customers are the number of contract
professionals employed each week and the number of customers served
each week, averaged for the quarter, respectively (average is
weighted by total number of hours billed per week); top 10
customers as a percentage of revenue are the 10 largest clients
defined by the revenue generated in the quarter, divided by total
revenues in the quarter; gross profit per staffing consultant is
gross profit for the quarter divided by the average number of
staffing consultants; average bill rate is total assignment revenue
client billings in the quarter divided by total hours billed in the
quarter.
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 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, amortization, effective tax rate,
net income, diluted shares outstanding, contract backlog, Adjusted
EBITDA, Adjusted Net Income, and related per share amounts (as
applicable) 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 clients, the availability of qualified
contract professionals, management of our growth, continued
performance and improvement of our enterprise-wide information
systems, our ability to manage our litigation matters, the
successful integration of our acquired subsidiaries, and other
risks detailed from time to time in our reports filed with
the SEC, including our Annual Report on Form 10-K for the year
ended December 31, 2017, as filed with
the SEC on March 1, 2018 and our Quarterly Report on
Form 10-Q for the quarter ended March 31, 2018, as filed with the
SEC on May 10, 2018. 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)
Three Months Ended Six Months Ended June 30,
March 31, June 30, 2018 2017 2018 2018
2017 Revenues $ 878,509 $ 653,313 $
685,173 $ 1,563,682 $ 1,279,841 Costs of services 614,663
440,376 467,436 1,082,099 868,760 Gross
profit 263,846 212,937 217,737 481,583 411,081 Selling, general and
administrative expenses 179,616 145,177 164,444 344,060 291,249
Amortization of intangible assets 18,548 8,299 7,601
26,149 16,763 Operating income 65,682 59,461
45,692 111,374 103,069 Interest expense (20,573 ) (6,067 ) (6,545 )
(27,118 ) (14,568 ) Income before income taxes 45,109 53,394 39,147
84,256 88,501 Provision for income taxes 11,508 20,158
9,907 21,415 32,883 Income from
continuing operations 33,601 33,236 29,240 62,841 55,618 Loss from
discontinued operations,
net of tax
(40 ) (139 ) (148 ) (188 ) (130 ) Net income $ 33,561 $
33,097 $ 29,092 $ 62,653 $ 55,488
Per share income from continuing operations and net income:
Basic $ 0.64 $ 0.63 $ 0.56 $ 1.20 $
1.05 Diluted $ 0.63 $ 0.62 $ 0.55 $
1.19 $ 1.04 Number of shares and share
equivalents
used to calculate earnings per share:
Basic 52,305 52,823 52,178 52,242
52,741 Diluted 53,010 53,473 52,831
52,920 53,375
SEGMENT FINANCIAL INFORMATION
(Unaudited)
FOR THE THREE AND SIX MONTHS ENDED JUNE
30, 2018 AND 2017
(Dollars in millions)
Reported Pro Forma Three Months Ended
Six Months Ended Three Months Ended Six Months
Ended June 30, June 30, June 30, June 30, 2018
2017 2018 2017 2018 2017
2018 2017 Revenues: Apex: Assignment $ 553.7 $
491.3 $ 1,078.6 $ 962.6 $ 553.7 $ 491.3 $ 1,078.6 $ 962.6 Permanent
placement 13.9 11.2 27.5 22.4 13.9
11.2 27.5 22.4 567.6 502.5 1,106.1
985.0 567.6 502.5 1,106.1 985.0 Oxford: Assignment 130.3 128.7
255.7 251.9 130.3 128.7 255.7 251.9 Permanent placement 25.5
22.1 46.8 42.9 25.5 22.1 46.8
42.9 155.8 150.8 302.5 294.8 155.8 150.8 302.5 294.8
ECS 155.1 — 155.1 — 155.1 144.9 304.2 281.8
Consolidated: Assignment 684.0 620.0 1,334.3 1,214.5 684.0 620.0
1,334.3 1,214.5 Permanent placement 39.4 33.3 74.3 65.3 39.4 33.3
74.3 65.3 ECS 155.1 — 155.1 — 155.1
144.9 304.2 281.8 $ 878.5 $
653.3 $ 1,563.7 $ 1,279.8 $ 878.5 $
798.2 $ 1,712.8 $ 1,561.6 Percentage of total
revenues: Apex 64.6 % 76.9 % 70.7 % 77.0 % 64.6 % 63.0 % 64.6 %
63.1 % Oxford 17.7 % 23.1 % 19.3 % 23.0 % 17.7 % 18.9 % 17.7 % 18.9
% ECS 17.7 % — % 10.0 % — % 17.7 % 18.1 % 17.7 % 18.0 % 100.0 %
100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
Assignment 77.9 % 94.9 % 85.3 % 94.9 % 77.9 % 77.7 % 77.9 % 77.8 %
Permanent placement 4.5 % 5.1 % 4.8 % 5.1 % 4.5 % 4.2 % 4.3 % 4.2 %
ECS 17.6 % — % 9.9 % — % 17.6 % 18.1 % 17.8 % 18.0 % 100.0 % 100.0
% 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % Domestic
95.4 % 95.0 % 95.0 % 95.1 % 95.4 % 95.9 % 95.4 % 96.0 % Foreign 4.6
% 5.0 % 5.0 % 4.9 % 4.6 % 4.1 % 4.6 % 4.0 % 100.0 % 100.0 % 100.0 %
100.0 % 100.0 % 100.0 % 100.0 % 100.0 % Gross profit: Apex $ 169.7
$ 150.3 $ 328.3 $ 290.2 $ 169.7 $ 150.3 $ 328.3 $ 290.2 Oxford 65.5
62.7 124.6 120.9 65.5 62.7 124.6 120.9 ECS 28.7 —
28.7 — 28.7 28.7 55.4 56.9
Consolidated $ 263.9 $ 213.0 $ 481.6 $
411.1 $ 263.9 $ 241.7 $ 508.3 $ 468.0
Gross margin: Apex 29.9 % 29.9 % 29.7 % 29.5 % 29.9 % 29.9 %
29.7 % 29.5 % Oxford 42.0 % 41.6 % 41.2 % 41.0 % 42.0 % 41.6 % 41.2
% 41.0 % ECS 18.5 % — % 18.5 % — % 18.5 % 19.8 % 18.2 % 20.2 %
Consolidated 30.0 % 32.6 % 30.8 % 32.1 % 30.0 % 30.3 % 29.7 % 30.0
%
SELECTED CASH FLOW INFORMATION
(Unaudited)
FOR THE THREE AND SIX MONTHS ENDED JUNE
30, 2018 AND 2017
(In thousands)
Three Months Ended
Six Months Ended 2018 2017 2018
2017 Cash provided by operating activities $
76,746 $ 39,793 $ 131,479 $ 83,593 Capital expenditures (8,395 )
(6,416 ) (14,593 ) (13,208 ) Free cash flow (non-GAAP measure) $
68,351 $ 33,377 $ 116,886 $ 70,385
Cash used in investing activities(1) $ (769,012 ) $ (6,581 )
$ (775,230 ) $ (13,356 ) Cash provided by (used in) financing
activities(1) $ 660,150 $ (39,077 ) $ 652,483 $ (79,292 )
(1)
Investing and financing activities in 2018
included the ECS acquisition and related financing.
SELECTED CONSOLIDATED BALANCE SHEET
DATA
AS OF JUNE 30, 2018 AND DECEMBER 31,
2017
(In thousands)
2018 2017 (Unaudited) Cash and cash equivalents $ 44,657 $
36,667 Accounts receivable, net 558,040 428,536 Total current
assets 637,305 499,523 Goodwill and intangible assets, net
1,941,210 1,246,861 Total assets 2,675,034 1,810,129 Total current
liabilities 279,120 166,717 Working capital 358,185 332,806
Long-term debt 1,240,886 575,213 Other long-term liabilities 86,286
76,808 Stockholders’ equity 1,068,742 991,391
RECONCILIATION OF NET INCOME TO EBITDA
(NON-GAAP MEASURE) AND
ADJUSTED EBITDA (NON-GAAP MEASURE)
(Unaudited)
FOR THE THREE AND SIX MONTHS ENDED JUNE
30, 2018 AND 2017
(In thousands)
Three Months Ended Six Months Ended 2018
2017 2018 2017 Net income $ 33,561 $
33,097 $ 62,653 $ 55,488 Loss from discontinued operations,
net of tax
40 139 188 130 Interest expense 20,573 6,067 27,118 14,568
Provision for income taxes 11,508 20,158 21,415 32,883 Depreciation
10,038 6,068 16,850 12,079 Amortization of intangible assets 18,548
8,299 26,149 16,763 EBITDA (non-GAAP measure)
94,268 73,828 154,373 131,911 Stock-based compensation 8,870 5,991
13,761 11,561 Acquisition, integration and strategic planning
expenses 3,465 725 13,230 1,635 Adjusted
EBITDA (non-GAAP measure) $ 106,603 $ 80,544 $
181,364 $ 145,107
RECONCILIATION OF NET INCOME TO
NON-GAAP NET INCOME AND
ADJUSTED NET INCOME (NON-GAAP
MEASURE) (Unaudited)
FOR THE THREE AND SIX MONTHS ENDED JUNE
30, 2018 AND 2017
(In thousands, except per share
amounts)
Three Months Ended Six Months Ended 2018
2017 2018 2017 Net income $ 33,561 $
33,097 $ 62,653 $ 55,488 Loss from discontinued operations, net of
tax 40 139 188 130 Credit facility amendment expenses(1) 5,811 (104
) 6,159 1,924 Acquisition, integration and strategic planning
expenses 3,465 725 13,230 1,635 Tax effect on adjustments (2,421 )
(242 ) (5,060 ) (1,388 ) Non-GAAP net income 40,456 33,615 77,170
57,789 Amortization of intangible assets 18,548 8,299 26,149 16,763
Income taxes on amortization for financial reporting purposes not
deductible for income tax purposes (269 ) (406 ) (538 ) (812 )
Adjusted Net Income (non-GAAP measure)(2) $ 58,735 $ 41,508
$ 102,781 $ 73,740 Per diluted share:
Net income $ 0.63 $ 0.62 $ 1.19 $ 1.04 Adjustments 0.48 0.16
0.75 0.34 Adjusted Net Income (non-GAAP
measure)(2) $ 1.11 $ 0.78 $ 1.94 $ 1.38
Weighted average common and common equivalent shares
outstanding (diluted) 53,010 53,473 52,920
53,375
(1)
During the six months ended June 30, 2018
we incurred $22.5 million in fees related to the amendment to our
credit facility to fund the acquisition of ECS, of which $6.2
million were expensed as incurred and included in interest expense.
The remaining $16.3 million fees were capitalized and are being
amortized over the term of the credit facility. During the six
months ended June 30, 2017 we amended our credit facility and
incurred $2.5 million in fees, of which $1.9 million were expensed
as incurred and included in interest expense, while the remaining
were capitalized and are being amortized over the term of the
credit facility.
(2)
Does not include the “Cash Tax Savings on
Indefinite-lived Intangible Assets.” These savings total $6.8
million per quarter (approximately $0.13 per diluted share) and
represent the economic value of the tax deduction that we receive
from the amortization of goodwill and trademarks.
OPERATING METRICS (Unaudited)
APEX AND OXFORD SEGMENTS
Q2 2018 Q1 2018 Q2 2017 Average number of staffing
consultants: Apex 1,532 1,526 1,441 Oxford 929 916 925 Average
number of customers: Apex 3,666 3,630 3,502 Oxford 1,002 1,004
1,063 Average number of contract professionals(1): Apex 19,536
18,720 17,525 Oxford 2,913 2,743 2,818 Top 10 customers as a
percentage of revenues: Apex 23.9 % 25.2 % 26.9 % Oxford 11.9 %
12.8 % 10.1 % Average bill rate: Apex $ 59.53 $ 58.16 $ 57.81
Oxford $ 101.51 $ 101.23 $ 100.14 Gross profit per staffing
consultant: Apex $ 111,000 $ 104,000 $ 104,000 Oxford $ 71,000 $
65,000 $ 68,000
(1)
Average number of contract professionals
placed on assignment each week that are considered our employees;
this number does not include employees of our subcontractors.
ECS SEGMENT SUPPLEMENTAL INFORMATION
(Unaudited)
MIX OF REVENUES BY CONTRACT
TYPE(1)
Q2 2018
Q1 2018 Q2 2017 Firm-fixed-price 28.8 % 30.1 % 39.8 % Time and
materials 31.6 % 33.0 % 31.9 % Cost-plus-fixed-fee 39.6 % 36.9 %
28.3 %
MIX OF REVENUES BY CUSTOMER
Q2 2018 Q1 2018 Q2 2017 Department of Defense and
Intelligence Agencies 61.6 % 59.3 % 59.5 % Federal Civilian 32.9 %
34.5 % 33.8 % Commercial and Other 5.5 % 6.2 % 6.7 %
CONTRACT BACKLOG(2) (In
millions)
June 30,2018
March 31,2018
June 30,2017
Funded Contract Backlog(3) $
298.1
$
331.5
$ 224.2 Negotiated Unfunded Contract Backlog(4)
1,137.0
1,180.1
1,250.6 Contract Backlog $
1,435.1
$
1,511.6
$ 1,474.8 Information for the periods prior to the ECS
acquisition date of April 2, 2018 is presented on a pro forma
basis.
(1)
Firm-fixed-price ("FFP") contracts provide
for a fixed price for specified products, systems and/or services.
Time and materials ("T&M") contracts provide for payments based
on fixed hourly rates for each direct labor hour expended and
reimbursements for allowable material costs and out-of-pocket
expenses. Cost-plus-fixed-fee ("CPFF") contracts provide for
reimbursement of our direct contract costs and allowable and
allocable indirect costs, plus the negotiated profit margin or
fee.
(2)
Contract backlog represents the estimated
amount of future revenues to be recognized under negotiated
contracts and task orders as work is performed. Contract backlog
excludes awards which have been protested by competitors until the
protest is resolved in our favor. ECS segregates contract backlog
into two categories, funded contract backlog and negotiated
unfunded contract backlog.
(3)
Funded contract backlog for contracts with
U.S. government agencies primarily represents contracts for which
funding has been formally awarded less revenues previously
recognized on these contracts, and does not include the unfunded
portion of contracts where funding is incrementally awarded or
authorized by the U.S. government even though the contract may call
for performance over a number of years. Funded contract backlog for
contracts with non-government agencies represents the estimated
value of contracts which may cover multiple future years, less
revenues previously recognized on these contracts.
(4)
Negotiated unfunded contract backlog
represents the estimated future revenues to be earned from
negotiated contract awards for which funding has not been awarded
or authorized, and unexercised priced contract options. Negotiated
unfunded contract backlog does not include any estimate of future
potential task orders expected to be awarded under indefinite
delivery, indefinite quantity (IDIQ), U.S. General Services
Administration (GSA) schedules or other master agreement contract
vehicles.
FINANCIAL ESTIMATES FOR Q3 2018
RECONCILIATION OF ESTIMATED NET INCOME
TO ESTIMATED NON-GAAP MEASURES
(In millions, except per share data)
Low High Net income(1)(2) $ 37.9 $ 41.6 Interest expense
14.4 14.4 Provision for income taxes(2) 13.6 14.9 Depreciation(3)
9.6 9.6 Amortization of intangible assets 18.6 18.6 EBITDA
(non-GAAP measure) 94.1 99.1 Stock-based compensation 8.9
8.9 Adjusted EBITDA (non-GAAP measure) $ 103.0 $ 108.0
Low High Net income(1)(2)
$ 37.9 $ 41.6 Amortization of intangible assets 18.6 18.6 Income
taxes on amortization for financial reporting purposes not
deductible for income tax purposes (0.3 ) (0.3 ) Other —
(0.1 ) Adjusted Net Income (non-GAAP measure)(4) $ 56.2 $
59.8 Per diluted share: Net income $ 0.71 $ 0.78
Adjustments 0.35 0.35 Adjusted Net Income (non-GAAP
measure)(4) $ 1.06 $ 1.13 Weighted average
common and common equivalent shares outstanding (diluted) 53.1
53.1
(1)
These estimates do not include
acquisition, integration, or strategic planning expenses.
(2)
These estimates do not include excess tax
benefits related to stock-based compensation.
(3)
Composed of $2.6 million of depreciation
included in costs of services related to an ECS project and $7.0
million of depreciation included in SG&A expenses.
(4)
Does not include the “Cash Tax Savings on
Indefinite-lived Intangible Assets.” These savings total $6.8
million per quarter ($0.13 per diluted share) and represent the
economic value of the tax deduction that we receive from the
amortization of goodwill and trademarks.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180725005824/en/
ASGN IncorporatedEd PierceChief Financial
Officer818-878-7900
ASGN (NYSE:ASGN)
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