COMSYS IT Partners - COMSYS IT Partners, Inc. Reports 2009 Second Quarter Results

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COMSYS IT Partners, Inc. Reports 2009 Second Quarter Results

HOUSTON, Jul 29, 2009 (BUSINESS WIRE) -- COMSYS IT Partners, Inc. (NASDAQ:CITP), a leading provider of information technology staffing and consulting services, today announced its financial results for the second quarter ended June 28, 2009.

Second Quarter 2009 Financial Results

Revenue was $156.8 million, down 14.8% from $184.1 million during the second quarter of 2008. On an acquisition-adjusted basis (i.e. including the acquisitions made in the prior year on a pro forma basis), revenue declined by 16.7% from the prior-year period.
Revenue declined sequentially from $162.7 million in the first quarter of 2009. The decline of 3.6% was an improvement over the sequential declines in the prior three quarters.
Net income was $2.4 million, or $0.11 per common share, down from $6.2 million, or $0.30 per common share, in the second quarter of 2008.
Results for the second quarter of 2009 also included previously announced restructuring charges of approximately $0.3 million. Excluding these charges, net income in the quarter would have been $2.7 million, or $0.13 per common share.
EBITDA, excluding restructuring costs, in the second quarter of 2009 was $6.0 million compared with $10.5 million in the second quarter of 2008 and $4.9 million in the first quarter of 2009. EBITDA, excluding restructuring costs, is a non-GAAP measure defined below.
Excess availability under COMSYS' revolving credit facility at the end of the second quarter was $56.8 million.

Year-to-Date 2009 Financial Results

Revenue was $319.5 million in the first six months of 2009, down 13.1% from $367.4 million during the first six months of 2008. On an acquisition-adjusted basis (i.e. including the acquisitions made in the prior year on a pro forma basis), revenue declined by 14.8% from the prior-year period.
Net income was $0.5 million in the first six months of 2009, or $0.02 per common share, down from $11.3 million, or $0.55 per common share, in the first six months of 2008.
Results for the first six months of 2009 also included previously announced restructuring charges of approximately $3.9 million. Excluding these charges, net income in the period would have been $4.5 million, or $0.21 per common share.
EBITDA, excluding restructuring costs, in the first six months of 2009 was $10.9 million compared with $20.4 million in the first six months of 2008.

"Our operations are performing well in this challenging environment and we are pleased with the progress we continue to make against a number of our longer-term priorities," said Larry L. Enterline, COMSYS Chief Executive Officer. "With our strong balance sheet and liquidity and our improved performance against our peers, we have chosen to make a number of selected investments in TAPFIN, our healthcare and government verticals, and other parts of our business at a time when many others are focused primarily on defensive cost cutting. We are not expecting to see dramatic results from any of those efforts until the broader economy improves; but, we are confident that we are strengthening our competitive position during this difficult period and optimistic about the opportunities that we are creating for COMSYS in the next expansion."

Enterline added, "As always, I would like to thank our operations leaders and their staffs for their ongoing strong efforts. Their continued focus and dedication will ensure that we continue to meet our clients' needs in this difficult environment."

Amy Bobbitt, COMSYS Senior Vice President and Chief Accounting Officer, commented, "Billable hours in the second quarter were down overall versus last year, but the rate of decline in our average weekly billable hours since the beginning of May has slowed. On a sequential basis, after eliminating the impact of higher payroll taxes in the first quarter this year, gross margin improved by 50 basis points over the first quarter of 2009. This increase resulted from improved management of pay rates and lower reimbursable expense revenue, partially offset by lower fee income from permanent placement and vendor management services."

Bobbitt continued, "Our debt at the end of the quarter was $52.2 million, a decrease from $60.0 million at the end of the first quarter of 2009. We expect to further reduce our debt balance through the remainder of 2009."

Selected operating data and reconciliations of non-GAAP financial measures to GAAP results for the second quarter ended June 28, 2009, are included below.

Conference Call Information

COMSYS will host a conference call tomorrow (July 30) at 10:00 a.m. Eastern time to discuss the quarterly financial results. The conference call-in number is (913) 981-5578 and the confirmation number is 1149877. The call will also be web cast live at www.comsys.com and www.earnings.com and replayed for 30 days at www.comsys.com. A seven-day telephonic replay of this conference call will be available by dialing (719) 457-0820. Callers should use the pass code 1149877 to gain access to the replay, which will be available through the end of the day on August 6, 2009.

About COMSYS IT Partners

COMSYS IT Partners, Inc. (NASDAQ:CITP) is a leading IT services company with 50 offices across the U.S. and offices in Puerto Rico, Canada and the U.K. COMSYS service offerings include contingent and direct hire placement of IT professionals and a wide range of technical services and solutions addressing requirements across the enterprise. TAPFIN Process Solutions delivers critical management solutions across the resource spectrum from contingent workers to outsourced services.

Forward-looking Statements

Certain information contained in this press release may be deemed forward-looking statements regarding events and financial trends that could affect our plans, objectives, future operating results, financial condition, performance and business. These statements may be identified by words such as "estimate," "forecast," "plan," "intend," "believe," "should," "expect," "anticipate," or variations or negatives thereof, or by similar or comparable words or phrases. These forward-looking statements are largely based on our expectations and beliefs concerning future events, which reflect estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently known market conditions and other factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control, including:

economic declines that affect our business, including our profitability, liquidity or the ability to comply with applicable loan covenants;
the financial stability of our lenders and their ability to honor their commitments related to our credit agreements;
whether governments will amend existing regulations or impose additional regulations or licensing requirements in such a manner as to increase our costs of doing business or restrict access to qualified technology workers;
the risk of increased tax rates;
adverse changes in credit and capital markets conditions that may affect our ability to obtain financing or refinancing on favorable terms or that may warrant changes to existing credit terms;
the financial stability of our customers and other business partners and their ability to pay their outstanding obligations or provide committed services;
changes in levels of unemployment and other economic conditions in the United States, or in particular regions or industries;
the impact of competitive pressures on our ability to maintain or improve our operating margins, including pricing pressures as well as any change in the demand for our services;
the risk in an uncertain economic environment of increased incidences of employment disputes, employment litigation and workers' compensation claims;
our success in attracting, training, retaining and motivating billable consultants and key officers and employees;
our ability to shift a larger percentage of our business mix into IT solutions, project management and business process outsourcing and, if successful, our ability to manage those types of business profitably;
weakness or reductions in corporate information technology spending levels;
our ability to maintain existing client relationships and attract new clients in the context of changing economic or competitive conditions;
the entry of new competitors into the U.S. staffing services market due to the limited barriers to entry or the expansion of existing competitors in that market;
increases in employment-related costs such as healthcare and unemployment taxes;
the possibility of our incurring liability for the activities of our billable consultants or for events impacting our billable consultants on our clients' premises;
the risk that we may be subject to claims for indemnification under our customer contracts;
the risk that cost cutting or restructuring activities could cause an adverse impact on certain of our operations; and
adverse changes to management's periodic estimates of future cash flows that may affect our assessment of our ability to fully recover our goodwill.

Although we believe our estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond our control. In addition, management's assumptions about future events may prove to be inaccurate. Management cautions all readers that the forward-looking statements contained in this report are not guarantees of future performance, and we cannot assure any reader that those statements will be realized or that the forward-looking events and circumstances will occur. Actual results may differ materially from those anticipated or implied in the forward-looking statements due to various factors, including the factors listed in this section and the "Risk Factors" section contained in our Annual Report on Form 10-K as filed with the Securities and Exchange Commission. All forward-looking statements speak only as of the date of this report. We do not intend to publicly update or revise any forward-looking statements as a result of new information, future events or otherwise, except as required by law. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.




COMSYS IT PARTNERS, INC.
OPERATING DATA, SUPPLEMENTAL CASH FLOW INFORMATION AND NON-GAAP MEASURES
(IN THOUSANDS, EXCEPT OPERATING DATA)

	Three Months Ended
Operating Data:	June 28,			March 29,			June 29,
	2009			2009			2008
Billing days		64			64			64
Billable hours		2,050,677			2,092,521			2,294,540
Revenue per billing day, excluding reimbursable expense revenue (in thousands)	$	2,408		$	2,490		$	2,801
Average bill rate	$	70.84		$	71.63		$	74.02
Gross margin		24.5	%		23.4	%		24.4	%
Effective tax rate		6.1	%		(7.7	%)		4.6	%
DSO		43			44			50
Average daily net debt balance (in millions)	$	59.8		$	57.9		$	82.6


	Three Months Ended
Supplemental Cash Flow Information:	June 28,			March 29,			June 29,
	2009			2009			2008
Net cash provided by (used in) operating activities	$	8,637		$	(6,748	)	$	2,629
Stock-based compensation	$	904		$	867		$	1,183
Capital expenditures	$	251		$	439		$	2,143


	Three Months Ended									Six Months Ended
Non-GAAP Financial Measures:	June 28,			March 29,			June 29,			June 28,			June 29,
	2009			2009			2008			2009			2008
EBITDA, excluding restructuring costs:
GAAP net income (loss)	$	2,386		$	(1,871	)	$	6,212		$	515		$	11,316
Depreciation and amortization		2,050			2,074			1,898			4,124			3,718
Restructuring costs		321			3,620			-			3,941			-
Interest expense, net		1,126			952			1,279			2,078			2,882
Other income, net		(67	)		(105	)		(172	)		(172	)		(225	)
Income tax expense		216			243			1,324			459			2,742
EBITDA, excluding restructuring costs	$	6,032		$	4,913		$	10,541		$	10,945		$	20,433
EBITDA, excluding restructuring costs, as a % of GAAP revenue		3.8	%		3.0	%		5.7	%		3.4	%		5.6	%

A non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles ("GAAP"). We believe EBITDA, excluding restructuring costs, to be relevant and useful information to our investors in assessing our financial operating results as these measures are used by our management in evaluating our financial performance, liquidity, our ability to service debt and fund capital expenditures. However, these measures should be considered in addition to, and not as a substitute for, or superior to, measures of financial performance prepared in accordance with generally accepted accounting principles, and may not be comparable to similarly titled measures reported by other companies. The non-GAAP measures included in this press release have been reconciled to the nearest GAAP measures as required under SEC rules regarding the use of non-GAAP financial measures.




COMSYS IT PARTNERS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

	Three Months Ended									Six Months Ended
	June 28,			March 29,			June 29,			June 28,			June 29,
	2009			2009			2008			2009			2008
Revenues from services	$	156,765		$	162,694		$	184,064		$	319,459		$	367,447
Cost of services		118,386			124,598			139,232			242,984			277,959
Gross profit		38,379			38,096			44,832			76,475			89,488
Operating costs and expenses:
Selling, general and administrative		32,347			33,183			34,291			65,530			69,055
Restructuring costs		321			3,620			-			3,941			-
Depreciation and amortization		2,050			2,074			1,898			4,124			3,718
		34,718			38,877			36,189			73,595			72,773
Operating income (loss)		3,661			(781	)		8,643			2,880			16,715
Interest expense, net		1,126			952			1,279			2,078			2,882
Other income, net		(67	)		(105	)		(172	)		(172	)		(225	)
Income (loss) before income taxes		2,602			(1,628	)		7,536			974			14,058
Income tax expense		216			243			1,324			459			2,742
Net income (loss)	$	2,386		$	(1,871	)	$	6,212		$	515		$	11,316

Net income (loss) per common share:
Basic	$	0.11		$	(0.09	)	$	0.31		$	0.02		$	0.56
Diluted	$	0.11		$	(0.09	)	$	0.30		$	0.02		$	0.55

Weighted average shares outstanding:
Basic		19,796			19,774			19,592			19,785			19,585
Diluted		19,796			19,774			20,636			19,785			20,628




COMSYS IT PARTNERS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PAR VALUE AMOUNTS)

	June 28,			December 28,
	2009			2008
Assets
Current assets:
Cash	$	1,771		$	22,695
Accounts receivable, net of allowance of $3,554 and $3,232, respectively		182,333			202,297
Prepaid expenses and other		3,518			3,116
Restricted cash		2,486			2,489
Total current assets		190,108			230,597
Fixed assets, net		14,937			16,596
Goodwill		88,962			89,064
Other intangible assets, net		10,173			11,962
Deferred financing costs, net		3,002			1,175
Restricted cash		308			308
Other assets		1,144			1,478
Total assets	$	308,634		$	351,180

Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	128,072		$	156,528
Payroll and related taxes		25,872			25,975
Interest payable		248			337
Other current liabilities		9,787			9,728
Total current liabilities		163,979			192,568
Long-term debt		52,174			69,692
Other noncurrent liabilities		6,827			5,435
Total liabilities		222,980			267,695

Commitments and contingencies

Stockholders' equity:
Preferred stock, no par value; 5,000,000 shares authorized; none issued		-			-
Common stock, par value $.01; 95,000,000 shares authorized and 20,816,746 shares outstanding; 95,000,000 shares authorized and 20,465,028 shares outstanding, respectively		207			203
Common stock warrants		1,734			1,734
Accumulated other comprehensive loss		(182	)		(90	)
Additional paid-in capital		229,102			227,360
Accumulated deficit		(145,207	)		(145,722	)
Total stockholders' equity		85,654			83,485
Total liabilities and stockholders' equity	$	308,634		$	351,180

CITP_F

SOURCE: COMSYS IT Partners, Inc.

COMSYS IT Partners, Inc.
David L. Kerr
Senior Vice President - Corporate Development
713-386-1420
dkerr@comsys.com
or
Amy Bobbitt
Senior Vice President & Chief Accounting Officer
480-777-6680
abobbitt@comsys.com

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