DALLAS, May 6 /PRNewswire-FirstCall/ -- SOURCECORP, Inc. (Nasdaq: SRCP), a
leading provider of business process outsourcing (BPO) and consulting
solutions, today reported revenues for the first quarter of 2004 of
$110.3 million compared to $109.5 million in the prior year quarter, an
increase of 0.8%, driven largely by incremental project work from Class Action
Claims Administration and seasonal volumes in Statement Solutions. As
previously announced, the Company reached a final settlement on a legal matter
which reduced net income by $2.3 million to $5.0 million and earnings per
share by $0.14 to $0.30 versus net income of $8.2 million and earnings per
share of $0.47 in the first quarter of 2003. Excluding the legal settlement
and related legal costs, earnings per share would have been $0.44 during 2004,
exceeding average analyst expectations by $0.01.
The Company achieved very strong new sales during the first quarter of
2004. New sales are expected to produce revenue of $52.4 million over their
contractual term, representing the second most successful quarter in the
Company's history, and the highest level since the third quarter of 2001.
"We are extremely pleased with the progress of our sales results," stated
Mr. Ed H. Bowman, Jr., President and CEO of SOURCECORP. "We currently have
the largest sales pipeline in our Company's history, which we believe is a
result of the investments made in our technology infrastructure and operating
platform, strengthening of our national sales presence and an intense focus on
customer satisfaction."
Summary of Financial Highlights
(in $ millions, except for earnings per share data)
(Unaudited)
Quarter Ended
March 31, March 31, %
2004 2003 Change
Revenue $110.3 $109.5 1%
Operating Income 9.1 15.0 -39%
Net Income 5.0 8.2 -39%
Diluted EPS $0.30 $0.47 -36%
Operating cash flow for the first quarter of 2004 was $0.7 million
compared to $10.9 million during the same period in 2003. The lower operating
cash flow is attributable to slower collection cycles, higher incentive
compensation payments and the receipt of an income tax refund in the prior
year. Days Sales Outstanding increased during the quarter by four days to
46 business days due primarily to the predominance of government work
completed during the fourth quarter of 2003 and the first quarter of 2004,
which typically has longer order-to-cash cycles. The Company has since
experienced stronger cash collections during the month of April. However,
full year operating cash flow guidance should be lowered from
$50 - $55 million to $40 - $45 million due to the payment of the legal
settlement and related costs previously mentioned and timing related to
accounts receivable collections. The Company's debt to total capital was 20%
at the end of the current quarter.
SOURCECORP Announces Plans to Divest Certain Asset Groups
We are also announcing the Company's plan to divest of all operations in
the direct mail market and two small medical records management operations in
the Seattle, Washington area (collectively "asset groups"). This decision
allows greater focus on core growth markets. The asset groups' after tax loss
in the first quarter of 2004 and for the full year of 2003 was $0.03 and
$0.05, respectively.
As a result of the decision to divest the asset groups, the Company will
reclassify related operating assets as available for sale during the quarter
ended June 30, 2004 and up to the time of disposition. The Company will also
record any estimated impairment losses during the same period. Any gain or
loss on disposition will be recorded during the quarter of actual sale, but
it's expected for all disposition activities to conclude within the next
12 months. The expected impairment losses, net of any expected gain or loss
on disposition related to these activities, which have yet to be finalized,
are estimated to be between $1.5 and $2.5 million, net of taxes. Beginning
during the second quarter of 2004, the asset groups' operating results and any
impairment losses will be classified as discontinued operations.
Company Financial Outlook
During the remainder of 2004, we expect to see continuing positive results
from our strengthening sales pipeline and new contract wins. We are
anticipating full year revenues from continuing operations in the range of
$405 to $420 million, and earnings per share from continuing operations in the
range of $1.65 to $1.75, prior to deducting the $0.14 charge related to the
legal matter previously discussed. The following chart summarizes the
Company's guidance revision:
Current Guidance Previous Guidance
Low High Low High
Continuing Operations
-- Before legal settlement $1.65 $1.75 $1.65 $1.70
-- Legal settlement and
related costs (0.14) (0.14) --- ---
Total Continuing Operations $1.51 $1.61 $1.65 $1.70
Discontinued Operations
-- Operating Results $(0.10) $(0.06) $0.05 $0.10
-- Impairment losses and
net gain/loss on Sale (0.15) (0.10) --- ---
Total Discontinued Operations $(0.25) $(0.16) $0.05 $0.10
Total Company $1.26 $1.45 $1.70 $1.80
About SOURCECORP(R)
SOURCECORP, Incorporated provides business process outsourcing solutions
and specialized high value consulting services to clients throughout the
U.S. SOURCECORP focuses on business processes in information-intensive
industries including healthcare, legal, financial services, government and
transportation & logistics. Headquartered in Dallas, the Company serves
clients throughout the United States through a network of locations in the US,
Mexico and India.
SOURCECORP is a component of both the S&P SmallCap 600 Index and the
Russell 2000 Index. The Company has been cited among the Top 100 Hot Growth
Companies by BusinessWeek magazine. SOURCECORP has also been recognized twice
by Forbes magazine as one of the 200 Best Small Companies, based on return
equity, sales growth, and EPS growth, and by FORTUNE magazine as one of
America's 100 Fastest Growing Public Companies. For more information
about SOURCECORP's solutions, including case-study examples, visit
the SOURCECORP website at http://www.srcp.com
The statements in this press release, which are not historical fact, are
forward-looking statements that involve risks and uncertainties, which could
cause actual results to differ materially from such forward-looking
statements. These forward-looking statements include, but are not limited to,
any financial estimates, projections, and estimates of future contract values
included in this press release. The aforementioned risks and uncertainties
include, without limitation, the risks of integrating our operating companies
of the timing and magnitude of technological advances, of the occurrences of a
diminution in our existing customers' needs for our services, of a change in
the amount companies outsource business processes, of the impact to margins
resulting from a change in revenue mix as well as the risks detailed
in SOURCECORP's filings with the Securities and Exchange Commission, including
without limitation, those detailed under the heading "Risk Factors" in the
Company's most recent annual report on Form 10-K. SOURCECORP disclaims any
intention or obligation to revise any forward-looking statements, including
financial estimates, whether as a result of new information, future events, or
otherwise, except as required by law.
SOURCECORP(TM)
Condensed Consolidated Statements of Operations
In Thousands (Except Earnings Per Share)
(Unaudited)
Three Months Ended
March 31,
2004 2003
Total Revenue $110,348 $109,525
Cost of Services 63,541 64,512
Depreciation 3,622 3,536
Gross Profit 43,185 41,477
SG&A 33,999 26,433
Amortization 89 89
Operating Income 9,097 14,955
Other expense, net 764 1,324
Income before income taxes 8,333 13,631
Provision for income taxes 3,333 5,452
Net Income $5,000 $8,179
Weighted Avg. Shares
Basic 16,096 17,205
Diluted 16,448 17,226
Earnings Per Share
Basic $0.31 $ 0.48
Diluted $0.30 $ 0.47
SOURCECORP(TM)
CONDENSED CONSOLIDATED BALANCE SHEETS
In Thousands
(Unaudited)
March 31, December 31,
ASSETS 2004 2003
CURRENT ASSETS
Cash $4,155 $2,097
Accounts receivable (net) 80,226 73,566
Deferred tax asset 6,097 6,072
Other current 7,578 7,111
Total current assets 98,056 88,846
Property, plant & equipment (net) 42,768 42,825
Goodwill and other intangibles (net) 337,334 328,036
Other noncurrent 10,388 10,566
Total Assets $488,546 $470,273
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $61,042 $57,477
Current maturities of long-term obligations 249 209
Income taxes payable 4,003 2,186
Total current liabilities 65,294 59,872
Long-term debt 78,554 73,390
Deferred taxes and other long-term liabilities 27,696 25,923
Total Liabilities 171,544 159,185
STOCKHOLDERS' EQUITY
Common stock 162 162
Additional paid-in-capital 198,813 194,999
Treasury stock (982) (982)
Deferred compensation (5,227) (2,327)
Retained earnings 124,236 119,236
Total Stockholders' Equity 317,002 311,088
Total Liabilities and Stockholders' Equity $488,546 $470,273
SOURCECORP(TM)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
In Thousands
(Unaudited)
Three Months Ended
March 31,
2004 2003
Net Income $5,000 $8,179
Adjustments to reconcile net income to cash
provided by operating activities
Depreciation and amortization 3,711 3,625
Deferred tax provision 1,424 1,581
Compensation expense on restricted
stock grants 554 ---
Changes in working capital (9,979) (2,503)
Net cash provided by operating activities 710 10,882
Cash flows form investing activities:
Purchase of property, plant and equipment (3,407) (2,939)
Proceeds from disposition of property,
plant and equipment 9 ---
Cash paid for acquisitions, net of
cash acquired (400) (445)
Net cash used for investing activities (3,798) (3,384)
Cash flows from financing activities:
Proceeds from exercise of common stock options 94 ---
Cash paid for common stock repurchased --- (12,750)
Proceeds from long-term obligations 92,745 73,335
Principal payments on long-term obligations (87,693) (68,683)
Cash paid for debt issuance costs --- (75)
Net cash provided by (used for) financing
activities 5,146 (8,173)
Net increase (decrease) in cash and cash
equivalents 2,058 (675)
Cash and cash equivalents, beginning of period 2,097 3,217
Cash and cash equivalents, end of period $4,155 $2,542
SOURCE SOURCECORP
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Related links:
http://www.srcp.com
Company News On-Call:
http://www.prnewswire.com/comp/117986.html
CONTACT:
Barry Edwards, EVP & Chief Financial Officer,
+1-214-740-6690, or Bryan Hill, VP & Chief Accounting Officer,
+1-214-740-6695, both of SOURCECORP
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