On Assignment Inc. (ASGN, Financial) filed Quarterly Report for the period ended 2011-05-10.
On Assignment Inc. has a market cap of $405 million; its shares were traded at around $11.02 with a P/E ratio of 39.4 and P/S ratio of 0.9.
IT and Engineering segment gross profit increased $8.4 million, or 66.7 percent, primarily due to a $24.3 million, or 67.9 percent increase in revenues, partially offset by a 24 basis point contraction in gross margin. The contraction in gross margin was primarily due to a $2.0 million, or 87.1 percent increase in other employee expenses, partially offset by a $0.4 million increase in direct hire and conversion fee revenues and 4.4 percent increase in bill/pay spread.
For the quarter ended March 31, 2011, SG&A expenses increased $6.9 million, or 23.2 percent, to $36.8 million from $29.8 million for the same period in 2010. The increase in SG&A expenses was primarily due to a $6.6 million, or 24.1 percent increase in compensation and benefits. The increase in compensation and benefits was due to (i) a $3.3 million increase in bonuses, commissions and stock-based compensation as a result of increased revenue and the attainment of incentive compensation targets, (ii) a $1.4 million increase in compensation expenses as a result of increased headcount related to the Cambridge, Sharpstream and Valesta acquisitions and (iii) a $0.5 million increase in acquisition costs primarily related to the Valesta acquisition. Total SG&A expenses as a percentage of revenues decreased to 28.4 percent for the three months ended March 31, 2011 compared with 31.0 percent in the same period in 2010.
Net cash used in investing activities was $19.2 million in the three months ended March 31, 2011 compared with $1.2 million in the same period in 2010. Cash paid for acquisitions was approximately $17.1 million and capital expenditures for information technology projects, leasehold improvements and various property and equipment purchases increased $1.4 million to $2.7 million in the three months ended March 31, 2011. Most of the increase related to the build-out of our new corporate headquarters, which provides us with a larger space to accommodate future growth at a lower annual cost. We estimate that capital expenditures for 2011 will be approximately $7.4 million.
Net cash provided by financing activities was $11.5 million for the three months ended March 31, 2011, compared with net cash used by financing activities of $0.3 million for the same period in 2010. In 2011, we received $25.5 million in proceeds from new borrowings on our line of credit, of which $13.8 million of the proceeds were used to pay off our long-term debt.
There have been no material changes to the information included in our Annual Report on Form 10-K for the year ended December 31, 2010. We are exposed to certain market risks arising from transactions in the normal course of business, principally risks associated with foreign currency fluctuations and changes in interest rates. We are exposed to foreign currency risk from the translation of foreign operations into U.S. dollars. Based on the relative size and nature of our foreign operations, we do not believe that a ten percent change in the value of foreign currencies relative to the U.S. dollar would have a material impact on our financial statements. Our primary exposure to market risk is interest rate risk associated with our debt instruments. See “Item 2. Management s Discussion and Analysis of Financial Condition and Results of Operations” for further description of our debt instruments. Excluding the effect of our interest rate swap agreement, a hypothetical 1.0 percent change in interest rates on variable rate debt would have resulted in interest expense fluctuating approximately $0.8 million based on $78.5 million of debt outstanding for any twelve month period. Including the effect of our interest rate swap agreement, a 1.0 percent change in interest rates on variable debt would have resulted in interest expense fluctuating approximately $0.8 million based on $78.5 million of debt outstanding for any twelve month period.
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On Assignment Inc. has a market cap of $405 million; its shares were traded at around $11.02 with a P/E ratio of 39.4 and P/S ratio of 0.9.
Highlight of Business Operations:
Revenues for our Healthcare segment (comprised of our Nurse Travel and Allied Healthcare lines of business) increased $1.3 million, or 6.8 percent. Nurse Travel revenues increased $0.7 million, or 7.7 percent, to $9.7 million. The increase was due primarily to a 7.6 percent increase in the average number of nurses on assignment. Allied Healthcare revenues increased $0.6 million, or 6.0 percent, to $10.1 million primarily due to a 4.4 percent increase in the average bill rate, the effects of which were partially offset by a 2.9 percent decrease in the average number of contract professionals on assignment. Based on our research and client feedback, the increase in revenues was attributable to improved economic trends in the healthcare sector, which contributed to the increase in the number of travelers on assignment, open orders and average bill rates. While the Allied Healthcare operating environment continued to demonstrate signs of improvement, growth was constrained by the following specific factors: 1) poor weather, 2) holidays, 3) clients continued focus on cost containment and 4) an economic recovery that is not consistent nationwide as certain regions have yet to recover from the end of the recession.IT and Engineering segment gross profit increased $8.4 million, or 66.7 percent, primarily due to a $24.3 million, or 67.9 percent increase in revenues, partially offset by a 24 basis point contraction in gross margin. The contraction in gross margin was primarily due to a $2.0 million, or 87.1 percent increase in other employee expenses, partially offset by a $0.4 million increase in direct hire and conversion fee revenues and 4.4 percent increase in bill/pay spread.
For the quarter ended March 31, 2011, SG&A expenses increased $6.9 million, or 23.2 percent, to $36.8 million from $29.8 million for the same period in 2010. The increase in SG&A expenses was primarily due to a $6.6 million, or 24.1 percent increase in compensation and benefits. The increase in compensation and benefits was due to (i) a $3.3 million increase in bonuses, commissions and stock-based compensation as a result of increased revenue and the attainment of incentive compensation targets, (ii) a $1.4 million increase in compensation expenses as a result of increased headcount related to the Cambridge, Sharpstream and Valesta acquisitions and (iii) a $0.5 million increase in acquisition costs primarily related to the Valesta acquisition. Total SG&A expenses as a percentage of revenues decreased to 28.4 percent for the three months ended March 31, 2011 compared with 31.0 percent in the same period in 2010.
Net cash used in investing activities was $19.2 million in the three months ended March 31, 2011 compared with $1.2 million in the same period in 2010. Cash paid for acquisitions was approximately $17.1 million and capital expenditures for information technology projects, leasehold improvements and various property and equipment purchases increased $1.4 million to $2.7 million in the three months ended March 31, 2011. Most of the increase related to the build-out of our new corporate headquarters, which provides us with a larger space to accommodate future growth at a lower annual cost. We estimate that capital expenditures for 2011 will be approximately $7.4 million.
Net cash provided by financing activities was $11.5 million for the three months ended March 31, 2011, compared with net cash used by financing activities of $0.3 million for the same period in 2010. In 2011, we received $25.5 million in proceeds from new borrowings on our line of credit, of which $13.8 million of the proceeds were used to pay off our long-term debt.
There have been no material changes to the information included in our Annual Report on Form 10-K for the year ended December 31, 2010. We are exposed to certain market risks arising from transactions in the normal course of business, principally risks associated with foreign currency fluctuations and changes in interest rates. We are exposed to foreign currency risk from the translation of foreign operations into U.S. dollars. Based on the relative size and nature of our foreign operations, we do not believe that a ten percent change in the value of foreign currencies relative to the U.S. dollar would have a material impact on our financial statements. Our primary exposure to market risk is interest rate risk associated with our debt instruments. See “Item 2. Management s Discussion and Analysis of Financial Condition and Results of Operations” for further description of our debt instruments. Excluding the effect of our interest rate swap agreement, a hypothetical 1.0 percent change in interest rates on variable rate debt would have resulted in interest expense fluctuating approximately $0.8 million based on $78.5 million of debt outstanding for any twelve month period. Including the effect of our interest rate swap agreement, a 1.0 percent change in interest rates on variable debt would have resulted in interest expense fluctuating approximately $0.8 million based on $78.5 million of debt outstanding for any twelve month period.
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