Analysts International Corporation (AIC) (NASDAQ: ANLY), an
information technology services company, today announced financial
results for the second quarter 2013, which ended on June 29, 2013.
- Revenue for the quarter was $25.7 million, compared with $27.1
million in Q2 2012 and $24.6 million in Q1 2013
- Gross profit margin was 22.6%, compared with 23.1% in Q2 2012
and 22.7% in Q1 2013
- Total operating costs were $5.3 million, compared with $5.7
million in Q2 2012 and $5.3 million in Q1 2013
- Net income was $0.5 million, or $0.10 per share, for both the
2013 and 2012 second quarters and $0.2 million, or $0.04 per share,
in Q1 2013
- Net income for the first six months of 2013 totaled $748,000,
or $0.15 per share, up from $731,000, or $0.14 per share, for the
first six months of 2012
- The Company generated $0.9 million in operating cash flow and
ended the quarter with $6.5 million in cash and no amounts
outstanding under its credit facility
"As anticipated, second quarter revenue was up from Q1, and we
continue to grow net income and cash. Our revenue from strategic
accounts grew 14 percent year over year and now represents nearly
two-thirds of our total revenue," said Brittany McKinney, AIC
President and CEO. "We remain confident in our strategic
account-focused strategy and our ability to deliver high value to
clients, built around the specific technology skill sets they
need."
2013 Second Quarter and Year-to-Date
Review Second quarter revenue increased $1.2 million, or 4.8%,
from the first quarter 2013 revenue and decreased $1.3 million, or
4.9%, from the second quarter of 2012. When compared to the prior
year quarter, the decrease in revenue is due to a 4.8% decrease in
the number of hours billed, which was partially offset by a 0.3%
increase in average billing rates. For the first half of 2013,
revenue decreased $3.5 million, or 6.5%, to $50.3 million. When
compared to the first half of fiscal 2012, billable hours decreased
6.7%, which was partially offset by a 1.1% increase in average
billing rates. There were 64 billing days in the second quarter of
both fiscal years 2013 and 2012 and 128 billing days in the first
half of both 2013 and 2012.
Year over year, revenue was negatively impacted by the continued
attrition in markets the Company previously exited and the loss of
one major account in late 2012, as discussed in prior quarters.
These two factors resulted in a combined negative revenue impact of
$0.8 million in the second quarter of 2013 and $1.9 million for the
first half of fiscal 2013.
In the second quarter of 2013, gross profit was $5.8 million, or
22.6% of revenue, compared to $6.3 million, or 23.1% of revenue in
the second quarter of 2012. In the first half of 2013, gross profit
was $11.4 million, or 22.6% of revenue, compared to $12.6 million,
or 23.5% of revenue, in the first half of fiscal 2012. The decrease
in second quarter and first half of 2013 gross profit rate is
primarily due to changes in revenue mix compared to the prior year
periods.
Total operating expenses were $5.3 million, or 20.5% of revenue,
for the second quarter of 2013, compared to $5.7 million, or 21.1%
of revenue, for the second quarter of 2012. For the first half of
fiscal 2013, operating expenses were $10.6 million, or 21.1% of
revenue, compared to $11.9 million, or 22.1% of revenue, for the
first half of fiscal 2012. The decrease in operating expense for
both the second quarter and first half of fiscal 2013 was primarily
the result of lower sales and recruiting expenses.
In the second quarter of 2013, the Company generated EBITDA of
$0.7 million, flat with EBITDA of $0.7 million in the second
quarter of 2012. EBITDA for the first half of 2013 totaled $1.1
million, even with $1.1 million for the first half of 2012.
The Company generated $0.9 million in positive cash flow from
operations during the second quarter of 2013, and ended the quarter
with a cash balance of $6.5 million and no borrowings from its $15
million credit facility. Additionally, DSO decreased from 61 days
in the first quarter of 2013 to 58 days in the second quarter.
Update on Key Operating Objectives The
Company has previously discussed four key objectives for 2013:
growing strategic accounts, building AIC's talent community,
focusing on application-based specialties and increasing personal
accountability and a team-based approach. Following is an update on
the progress against those objectives as well as other operational
details through the second quarter.
Strategic Accounts: The Company remains
committed to its strategic account focus. Second quarter revenue
from strategic accounts grew 14% year over year with over half of
the Company's strategic accounts achieving double digit revenue
growth. The Company is directing its sales focus and investments to
the greatest opportunities for growth, which today is within these
existing accounts.
To support the Company's growth efforts, the Company continues
to refine its sales and recruiting model, including expanding its
team-based approach in top growth accounts and building a more
scalable, cost-effective recruiting model. In addition, the Company
intends to increase its prospecting efforts to expand its client
portfolio and reduce its concentration risk.
Talent Communities: In order to grow, the
Company also needs to attract and retain the talent necessary to
meet client demand and compete for talent in a challenging labor
market that remains tight, with overall IT unemployment around 3%.
In addition to providing competitive pay and benefits, the Company
believes that it must differentiate to be an employer of choice.
The Company is therefore developing and expanding its online talent
communities, which are focused on providing best practices,
training materials, collaboration forums and other pertinent
content to support its consultants in the field.
The Company's consultant attrition rate has continued to
steadily decline. The biggest change in consultant attrition in
2013 has been a decrease in client hires and fewer consultants
leaving before assignment end dates to pursue other opportunities.
The Company is executing a number of programs and actions geared
toward helping retain its consultants.
Application-Based Specialties: The
Company's third objective is to focus on those specific,
high-growth areas where it can leverage its existing strengths,
skill sets and momentum, including areas such as enterprise
information management (EIM), project management and the health
care industry. In Q2, the Company achieved its highest quarterly
revenue from project management related engagements in five
quarters and continues to increase its talent network of qualified
project managers.
The Company is also making progress on positioning itself in the
enterprise information management and health care spaces. The
Company recently signed a master services agreement with a marquee
health care account that will provide the Company with incremental
long-term revenue opportunities.
Personal Accountability and Team-Based
Approach: The Company continues to change its culture from
transaction-based, individual efforts to collaborative teams with a
strategic account focus. The Company believes these efforts are a
key contributing factor to the growth it has seen in its strategic
accounts.
About Analysts International Corporation
Analysts International Corporation (AIC) is an IT services firm
fully dedicated to the success and satisfaction of its clients.
From IT staffing to project-based solutions, AIC provides a broad
range of services designed to help businesses and government
agencies drive value, control costs and deliver on the promise of a
more efficient and productive enterprise. The Company offers a
flexible, collaborative approach; clear industry perspective; and
the breadth, scale and experience to deliver results. For more
information, visit www.analysts.com.
Cautionary Statement for the Purpose of Safe
Harbor Provisions of the Private Securities Litigation Reform Act
of 1995
This press release contains forward-looking statements within
the meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, as amended. Any statements made in
this press release that are not statements of historical fact may
be deemed to be forward-looking statements. Without limiting the
foregoing, words such as "may," "will," "expect," "believe,"
"anticipate," "estimate" or "continue," or comparable terminology,
are intended to identify forward-looking statements. Statements by
the Company, its President and CEO Brittany McKinney or its CFO
Lynn Blake, regarding, for instance, the effectiveness of the
Company's sales and marketing strategies, current expectations as
to future financial performance and the Company's ability to
execute against its strategic plan, increase revenues, maintain
profitability, achieve anticipated gross profit margin rates, build
cash, control costs and return value to its shareholders, are
forward-looking statements.
Such forward-looking statements are based on current
information, which we have assessed, that by its nature is dynamic
and subject to rapid and even abrupt changes. Although we believe
that the expectations conveyed by the forward-looking statements
are reasonable based on information available to us on the date
such forward-looking statements were made, no assurances can be
given as to future results, levels of activity and achievements. As
such, future results may differ materially in response to a change
in actual facts and circumstances.
Forward-looking statements include, for example, statements
expressing the intent, belief or current expectations of AIC and
members of our management team and involve certain risks and
uncertainties, including (i) the risk that management may not fully
or successfully implement its business plan or maintain
profitability in the future; (ii) the risk that AIC will not be
able to realize the benefits of its investments or exploit other
opportunities of the business in a timely manner or on favorable
terms; (iii) prevailing market conditions in the IT services
industry, including intense competition for billable technical
personnel at competitive rates, strong pricing pressures from many
of our largest clients and difficulty in identifying, attracting
and retaining qualified billable technical personnel; (iv)
potentially incorrect assumptions by management with respect to the
financial effect of prior cost reduction initiatives and current
strategic decisions; and (v) other economic, business, market,
financial, competitive and/or regulatory factors affecting AIC's
business generally, including those set forth
in AIC's filings with the SEC. Any forward-looking statements in
this press release are qualified by the assumptions that are stated
or inherent in such forward-looking statements. Although we believe
that these assumptions are reasonable based on the information
available to us on the date such assumptions were made, this list
is not exhaustive of the factors that may affect any of the
forward-looking statements and the reader should not place an undue
reliance on these assumptions and such forward-looking statements,
which speak only as of the date of this press release. Such
forward-looking statements should be read in conjunction with the
Company's filings with the SEC. AIC assumes no responsibility to
update the forward-looking statements contained in this
release.
Analysts International Corporation
Consolidated Statements of Operations
(unaudited)
Three Months Ended Six Months Ended
-------------------- --------------------
(In thousands, except per share June 29, June 30, June 29, June 30,
amounts) 2013 2012 2013 2012
---------- --------- --------- ---------
Revenues $ 25,743 $ 27,079 $ 50,306 $ 53,802
Cost of revenues 19,933 20,827 38,928 41,174
---------- --------- --------- ---------
Gross profit 5,810 6,252 11,378 12,628
Selling, administrative and
other operating costs 5,281 5,590 10,602 11,776
Restructuring costs and other
severance related costs - 113 - 113
---------- --------- --------- ---------
Total operating expenses 5,281 5,703 10,602 11,889
Operating income 529 549 776 739
Interest expense - (1) (1) (2)
---------- --------- --------- ---------
Income before income taxes 529 548 775 737
Income tax expense 10 15 27 6
---------- --------- --------- ---------
Net income (comprehensive
income) $ 519 $ 533 $ 748 $ 731
========== ========= ========= =========
Per common share:
Basic income (comprehensive
income) $ 0.10 $ 0.10 $ 0.15 $ 0.14
Diluted income (comprehensive
income) $ 0.10 $ 0.10 $ 0.15 $ 0.14
Weighted-average shares
outstanding:
Basic 5,111 5,075 5,101 5,059
Diluted 5,130 5,103 5,119 5,106
Analysts International Corporation
Condensed Consolidated Balance Sheets
(unaudited)
June 29, December 29,
(In thousands) 2013 2012
-------------- --------------
ASSETS
Current assets:
Cash and cash equivalents $ 6,454 $ 5,792
Accounts receivable, less allowance for
doubtful accounts 16,493 16,095
Other current assets 837 281
-------------- --------------
Total current assets 23,784 22,168
Property and equipment, net 2,239 2,366
Other assets, net 130 185
-------------- --------------
Total assets $ 26,153 $ 24,719
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,517 $ 2,651
Salaries and benefits 2,368 1,724
Deferred revenue 469 331
Deferred compensation 48 62
Other current liabilities 508 529
-------------- --------------
Total current liabilities 5,910 5,297
Non-current liabilities:
Deferred compensation 212 270
Other long-term liabilities - 4
Shareholders' equity 20,031 19,148
-------------- --------------
Total liabilities and shareholders' equity $ 26,153 $ 24,719
============== ==============
Analysts International Corporation
Reconciliation of non-GAAP Financial Measures
(unaudited)
Three Months Ended Six Months Ended
--------------------- ---------------------
June 29, June 30, June 29, June 30,
(In thousands) 2013 2012 2013 2012
---------- ---------- ---------- ----------
Net income as reported $ 519 $ 533 $ 748 $ 731
Plus:
Depreciation 169 163 337 314
Net interest and non-operating
expense - 1 1 2
Income tax expense 10 15 27 6
---------- ---------- ---------- ----------
EBITDA* $ 698 $ 712 $ 1,113 $ 1,053
========== ========== ========== ==========
* Non-GAAP Financial Information
In evaluating the Company's business, the Company's management
considers and uses EBITDA as a supplemental measure of operating
performance. EBITDA refers to a financial measure that the Company
defines as net income (loss) excluding interest, taxes and
depreciation that are not related to the Company's operations. This
measure is an essential component of the Company's internal
planning process because it facilitates period-to-period
comparisons of the Company's operating performance by eliminating
potential differences in net income caused by the existence and
timing of certain non-cash items, special charges and other gains
and losses. This measure should be considered in addition to
results prepared in accordance with GAAP, but should not be
considered a substitute for or superior to GAAP results. The
non-GAAP financial measure included in this press release has been
reconciled to the nearest GAAP measure.
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Media Contact: Marne Oberg Analysts International
Corporation 952.838.2867 Email Contact
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