SFN Stifel Financial Corp. 5.375% Senior Notes Due December 2022

FORT LAUDERDALE, Fla., February 2, 2011 /PRNewswire/ -- SFN Group, Inc. (NYSE: SFN) today announced financial results for the fourth quarter ended December 26, 2010.  

SFN Group President and CEO Roy Krause commented, "Our fourth quarter and full year results reflect solid execution of our strategy and disciplined operational management.  We took advantage of improving industry trends to grow revenue, particularly within Professional Services, improve EBITDA margins to 3.0% for the full year and generate significant operating cash flow.  I would like to thank our associates for delivering strong results in 2010."

FINANCIAL HIGHLIGHTS

• Fourth quarter 2010 revenues were $549 million compared with $456 million last year, an increase of 20.5%.  
• Earnings from continuing operations in the fourth quarter were $9.4 million, or $0.17 per share on a diluted basis, compared with breakeven results in the prior year.  
• Adjusted earnings from continuing operations (defined below) in the fourth quarter were $9.4 million, or $0.17 per share, compared with adjusted earnings from continuing operations in the same prior-year period of $3.2 million, or $0.06 per share.
• Adjusted EBITDA (defined below) in the fourth quarter was $24.3 million, or 4.4% of revenues, compared with $14.8 million, or 3.2% of revenues, in the prior year.  
• In 2010, revenues were $2.1 billion for the full year compared with $1.7 billion in 2009.  Adjusted EBITDA increased to $62.5 million, or 3.0% of revenue, for the 12 month period in 2010, compared with $34.0 million, or 2.0% of revenue, for the same period in 2009.
• Operating cash flow in the fourth quarter was $46.5 million and total debt was $5.0 million at the end of the period.  Availability under the credit facility was $157.6 million as of the end of the quarter.

Krause continued, "Longer-term industry dynamics are positive, and we are positioned well for continued growth.  In the second half of 2010, we made operating investments in sales and recruiting staff to further organic growth.  Additionally, in the fourth quarter, we repaid the balance on our revolver with our strong cash flow.  Future investments will be focused on expanding our presence in key Professional Services areas and share repurchases, as appropriate."

FOURTH QUARTER OPERATING PERFORMANCE

In the fourth quarter, Professional Services revenues were up 28.8% compared with the same prior-year period.  Professional Services represented 46.3% of total Company revenues and experienced increases due to the first quarter Tatum LLC acquisition and continued year-over-year growth in all skills and services.  Gross profit margin of 28.2% is up 350 basis points from the same period last year, primarily a result of increased pay/bill spreads, growth in higher-margin outsourcing and permanent placement services and lower payroll taxes. Segment operating profit was $14.4 million in the fourth quarter, or 5.6% of revenues, compared with $9.3 million or 4.7% in the prior year.  

Staffing Services revenues increased 14.2% year over year in the fourth quarter compared with the same period last year.  Gross profit margins increased 50 basis points compared with last year, primarily as a result of increased pay/bill spreads.  SG&A expenses were $41.1 million or 14% of revenue in 2010, a 110 basis point improvement from the same period last year.  Segment operating profit increased to $8.7 million or 3.0% of revenues, compared with $3.4 million or 1.3% of revenues in the fourth quarter of last year.

SHARE REPURCHASES

During the fourth quarter, the Company purchased approximately 500,000 shares at an average price of $9.69 per share.  Under its existing authorization, the Company may purchase up to an average of 50,000 shares per week or 2.6 million shares on an annual basis.

OUTLOOK

Revenue trends in the first four weeks of January 2011 are consistent with normal seasonal pullback in revenues in the first quarter of approximately 5% to 8% compared with the fourth quarter of 2010.  Based on continued improvements in industry trends and anticipated growth in our business, we expect to further improve our operating leverage and increase our adjusted EBITDA margin by 50 to 90 basis points over the course of the year, generating a full-year adjusted EBITDA margin of between 3.5% and 3.9% of revenue in 2011.

INVITATION TO CONFERENCE CALL

Management will host its conference call on February 3, 2011 at 9:00 a.m. Eastern time to discuss information contained in this release.  The call may be accessed in one of the following ways:

Via the Telephone:

Please dial 1 (800) 230-1085

The conference call leader is Roy Krause

The pass code: SFN Group Fourth Quarter Earnings Call

Via the Internet:  

You may access the call via the Internet through the Company's website: www.sfngroup.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.sfngroup.com.  

ABOUT SFN GROUP, INC.

SFN Group (NYSE:SFN) is a strategic workforce solutions company that provides professional services and general staffing to help businesses more effectively source, deploy and manage people and the work they do.  As an industry pioneer, SFN Group has sourced, screened and placed millions of individuals in temporary, temp-to-hire and full-time jobs for more than 60 years.

With approximately 560 locations in the United States and Canada, SFN delivers strategic workforce solutions that improve business performance.  From outsourcing to technology to professional services to staffing, SFN delivers the best combination of people, performance and service to improve the way work gets done.  It provides its services to over 8,000 customers, from Fortune 500 companies to a wide range of small and mid-size organizations.  The company employs more than 170,000 people annually through its network and is one of North America's largest employers. SFN provides its solutions through a family of specialized businesses:  Technisource, Tatum, The Mergis Group, Todays Office Professionals, SourceRight Solutions and Spherion Staffing Services.  To learn more, visit www.sfngroup.com.

This release contains statements that are forward looking in nature, within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, 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 – significant economic downturns could result in lower demand from customers and lower revenues; Government regulation - government regulation may significantly increase our costs, including payroll-related costs and unemployment taxes; Third-Party Vendor Managers – providing our services through third-party vendor managers may expose us to financial losses; Customers – a loss of customers, or the deterioration in the financial condition of customers, may have a material impact on our results of operations; Debt and debt compliance – market conditions and failure to meet certain covenant requirements could impact the amount of availability we may borrow under our revolving lines of credit and the cost of our borrowings; Business strategy – we may not achieve the intended effects of our business strategy; Termination provisions - certain customer contracts contain termination provisions and pricing risks that could decrease revenues, profitability and cash flow; 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 – acquisitions and related integration activities could have a material adverse effect on our financial condition, results of operation and cash flows; Business interruptions – business interruptions could have an adverse effect on our operations; Personnel - our business is dependent upon the availability of qualified personnel, and we may lose key personnel which could cause our business to suffer; Tax filings – regulatory challenges to our tax filing positions could result in additional taxes; 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; Workers' compensation insurance – unexpected changes in claim trends or regulations could result in significant increased costs;  and International operations – we are subject to business risks associated with our operations in Canada, which could make those operations significantly more costly.  These and additional factors discussed in this release and in SFN'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.

SFN Group, Inc. 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 items.  Items excluded from the calculation of adjusted earnings from continuing operations include restructuring and other charges related to acquisition transaction and integration expenses and cost reduction initiatives and impairment of goodwill and other intangibles.  Adjusted EBITDA from continuing operations is a non-GAAP financial measure which excludes interest, impairment of goodwill and other intangibles, restructuring and other charges, taxes, depreciation and amortization from earnings (loss) 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.