DALLAS, Aug. 5 /PRNewswire-FirstCall/ -- SOURCECORP, Inc. (Nasdaq: SRCP),
a leading provider of business process outsourcing (BPO) and consulting
solutions, today reported revenues for continuing operations for the second
quarter of 2004 of $97.5 million. This compares to $92.2 million in the prior
year quarter, an increase of 5.7%, driven largely by solid growth in our
critical statements business, higher project revenue from Legal offerings,
stronger volumes in our Healthcare offerings related to project staffing and
scanning services, and $2 million from the KeyPoint acquisition which closed
in the second quarter. Diluted earnings per share from continuing operations
were $0.39, a 6.0% increase over last year's second quarter, and in line with
Company and analysts' expectations.
Summary of Financial Highlights from Continuing Operations
(in $ millions, except for earnings per share data)
(Unaudited)
Quarter Ended
June 30, 2004 June 30, 2003 % Change
Revenue $ 97.5 $ 92.2 5.7%
Operating Income 11.6 10.7 8.2%
Net Income 6.4 6.0 6.0%
Diluted EPS $ 0.39 $ 0.37 6.0%
New sales were strong for the second consecutive quarter, and are expected
to produce revenue of $53.1 million over their contractual terms. "We are
pleased with our continued progress in sales and have just completed our best
first half of sales results in the history of the Company," stated Mr. Ed H.
Bowman, Jr., President and CEO. "We believe these strong sales are a result
of our actions over the last year in strengthening our national sales
presence, an intense focus on customer satisfaction, and the investments made
in our technology infrastructure and operating platforms."
Trend of New Business Wins
Total Contract Value Closed
New & Existing (Renewal) Customers
in millions
2002 Quarterly 2003 Quarterly 2004 Quarterly
Average Average Average
$32.8 $30.1 $52.5
Operating cash flow from continuing operations for the second quarter of
2004 was $5.1 million compared to $28.6 million during the same period in
2003. The lower operating cash flow is attributable to slower collection
cycles, primarily from large government contracts, and the full payment of the
large legal settlement discussed last quarter. However, past due collections
in July have been strong, approximating $10 million. This improving cash flow
is reflected in a reduction of our outstanding bank debt by $17.5 million
since the end of June. Days Sales Outstanding increased during the quarter by
5 days to 51 business days. The Company reaffirms the previously announced
annual operating cash flow from continuing operations guidance of $40 to
$45 million.
Stock Repurchase
During the second quarter of 2004, we acquired 361,415 shares of our
common stock at an average cost of $25.73 per share or $9.3 million,
completing our original $30 million stock repurchase program. The Board of
Directors has authorized the purchase of up to an additional $20 million of
outstanding common stock on the open market as market or business conditions
warrant.
SOURCECORP Completes Divestiture of Certain Asset Groups
At the end of the second quarter and beginning of the third quarter, we
completed the previously announced divestiture of our Print and Mail operation
and two small medical records operations. The sale of these operations
resulted in receipt of cash proceeds of $0.8 million in the second quarter and
$6.4 million in the third quarter. There is an additional $2.2 million in
subordinated notes and contingent consideration due over the next two years
related to the Print & Mail divestiture and one of the medical records
operations. The divestiture plan combined for a $1.8 million after-tax loss,
or $0.11 per diluted share during the second quarter.
Company Financial Outlook
We are reaffirming guidance from continuing operations for revenues in the
range of $405 million to $420 million, and earnings per share from continuing
operations of $1.65 to $1.75 prior to the $0.14 charge related to the legal
settlement in the first quarter. Due to better than expected results, we are
updating the total projected loss from discontinued operations from ($0.16) to
($0.25) in our previous guidance to ($0.14) to ($0.16). The Company's ability
to exceed the low end of the EPS range is dependent upon beginning work on two
very large contracts during the third quarter.
EPS Current Guidance
Low High
Continuing Operations
-- Before legal settlement $ 1.65 $ 1.75
-- Legal settlement and related costs (0.14) (0.14)
Total Continuing Operations $ 1.51 $ 1.61
Loss from Discontinued Operations $(0.16) $(0.14)
Total Company $ 1.35 $ 1.45
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
U.S., Mexico and India. SOURCECORP is a component of both the S&P SmallCap
600 Index and the Russell 2000 Index.
For more information about SOURCECORP's solutions 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
June 30,
2004 2003
Total Revenue $97,450 $92,174
Cost of Services 58,194 54,402
Depreciation 2,983 3,044
Gross Profit 36,273 34,728
SG&A 24,405 23,957
Amortization 312 88
Operating Income 11,556 10,683
Other expense, net 946 676
Income from continuing operations
before income taxes 10,610 10,007
Provision for income taxes 4,244 4,003
Net Income from Continuing Operations 6,366 6,004
Loss from Discontinued Operations,
net of tax 1,813 347
Net Income $ 4,553 $ 5,657
Net Income (Loss) Per share
Basic
Continuing Operations $ 0.40 $ 0.37
Discontinued Operations $ (0.12) $ (0.02)
Total Operations $ 0.28 $ 0.35
Diluted
Continuing Operations $ 0.39 $ 0.37
Discontinued Operations $ (0.11) $ (0.02)
Total Operations $ 0.28 $ 0.35
Weighted Average Common Shares
Outstanding
Basic 16,014 16,319
Diluted 16,374 16,381
SOURCECORP(TM)
Condensed Consolidated Statements of Operations
In Thousands (Except Earnings Per Share)
(Unaudited)
Six Months Ended
June 30,
2004 2003
Total Revenue $199,209 $190,638
Cost of Services 115,335 111,241
Depreciation 6,204 6,132
Gross Profit 77,670 73,265
SG&A 55,793 47,750
Amortization 401 177
Operating Income 21,476 25,338
Other expense, net 1,721 2,007
Income from continuing operations
before income taxes 19,755 23,331
Provision for income taxes 7,902 9,332
Net Income from Continuing Operations 11,853 13,999
Loss from Discontinued Operations,
net of tax 2,300 163
Net Income $ 9,553 $ 13,836
Net Income (Loss) Per share
Basic
Continuing Operations $ 0.74 $ 0.84
Discontinued Operations $ (0.14) $ (0.01)
Total Operations $ 0.60 $ 0.83
Diluted
Continuing Operations $ 0.72 $ 0.83
Discontinued Operations $ (0.14) $ (0.01)
Total Operations $ 0.58 $ 0.82
Weighted Average Common Shares
Outstanding
Basic 16,055 16,762
Diluted 16,411 16,804
SOURCECORP(TM)
CONDENSED CONSOLIDATED BALANCE SHEETS
In Thousands
(Unaudited)
June 30, December 31,
ASSETS 2004 2003
CURRENT ASSETS
Cash $ 5,436 $ 2,097
Accounts receivable (net) 82,385 67,873
Deferred tax asset 6,402 6,072
Other current 6,077 5,251
Assets of discontinued operations 9,718 14,658
Total current assets 110,018 95,951
Property, plant & equipment (net) 38,149 35,902
Goodwill and other intangibles (net) 351,894 328,036
Other non-current 10,234 10,384
Total Assets $510,295 $470,273
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued
liabilities $ 53,929 $ 52,054
Current maturities of long-term
obligations 232 209
Income taxes payable 5,686 2,186
Liabilities of discontinued operations 3,862 5,423
Total current liabilities 63,709 59,872
Long-term debt 104,639 73,390
Deferred taxes and other long-term
liabilities 28,840 25,923
Total Liabilities 197,188 159,185
STOCKHOLDERS' EQUITY
Common stock 158 162
Additional paid-in-capital 195,528 194,999
Treasury stock (982) (982)
Deferred compensation (5,559) (2,327)
Retained earnings 123,962 119,236
Total Stockholders' Equity 313,107 311,088
Total Liabilities and Stockholders'
Equity $510,295 $470,273
SOURCECORP(TM)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
In Thousands
(Unaudited)
Six Months Ended
June 30,
2004 2003
Net income from continuing operations $11,853 $13,999
Adjustments to reconcile net income
to cash provided by operating
activities
Depreciation and amortization 6,605 6,309
Deferred tax provision 3,153 4,023
Compensation expense on restricted
stock grants 1,120 86
Loss (gain) on sale of property,
plant and equipment 125 (344)
Changes in working capital (17,693) 13,939
Net cash provided by operating
activities from
continuing operations 5,163 38,012
Cash flows from investing activities:
Purchase of property,
plant and equipment (8,339) (6,454)
Proceeds from disposition of
property, plant and equipment 21 369
Proceeds from divestiture 750 ---
Cash paid for acquisitions,
net of cash acquired (14,958) (3,044)
Net cash used for investing
activities from
continuing operations (22,526) (9,129)
Cash flows from financing activities:
Proceeds from exercise of common
stock options 389 9
Cash paid for common stock
repurchased (9,298) (18,091)
Proceeds from long-term
obligations 174,634 111,946
Principal payments on
long-term obligations (143,510) (125,101)
Cash paid for debt issuance costs --- (305)
Net cash provided by
(used for) financing
activities from continuing
operations 22,215 (31,542)
Net cash (used) provided by
discontinued operations (1,513) 2,164
Net increase (decrease) in cash
and cash equivalents 3,339 (495)
Cash and cash equivalents,
beginning of period 2,097 3,217
Cash and cash equivalents,
end of period $5,436 $2,722
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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