PRGX Global, Inc. Announces Fourth Quarter and Full Year 2017 Financial Results
PRGX Global, Inc. Announces Fourth Quarter and Full Year 2017 Financial Results
  • Kim Min-jee Reporter
  • 승인 2018.03.03 12:40
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  1. March 01, 2018 (GLOBE NEWSWIRE) -- PRGX Global, Inc. (Nasdaq:PRGX), a global leader in Recovery Audit and Spend Analytics services, today announced its unaudited financial results for the fourth quarter and year ended December 31, 2017.

“We are pleased to report a strong finish for 2017, with fourth quarter revenue and adjusted EBITDA from continuing operations growing 17% and 41%, respectively, on a year-over-year, constant dollar basis. These results mark our sixth consecutive quarter of revenue and adjusted EBITDA growth. For the year, we grew revenue by over 14% and adjusted EBITDA from continuing operations by over 25% on a year-over-year, constant dollar basis, with each service line and region showing revenue growth on a constant dollar basis. Cash flow from operations in 2017 exceeded $13 million, an increase of over 30% compared to the prior year,” said Ron Stewart, president and chief executive officer.

“Four years ago, we laid out a strategy to refocus on our core recovery audit business and invest in people, processes and technology to drive growth and extend our client value proposition. Our 2017 performance confirms that we are making significant progress in our transformation journey, delivering meaningful, sustainable and more predictable growth,” continued Stewart.

“Looking ahead, we believe our ability to generate meaningful operating cash flow, coupled with our increasing financial strength and flexibility, positions us to continue growing in 2018 and beyond. For 2018, we are projecting continued growth, including year-over-year revenue growth in the range of 8% to 10% and adjusted EBITDA growth in the range of 17% to 22%,” concluded Stewart.

Consolidated Results from Continuing Operations for the Three Months Ended December 31, 2017

  1. revenue from continuing operations for the fourth quarter of 2017 was $47.1 million, compared to $39.2 million for the same period last year, an increase of 20.2%. Fourth quarter 2017 revenue from the Recovery Audit Services segments was $46.4 million compared to $38.1 million in the prior year, and from the Adjacent Services segment was $0.7 million compared to $1.1 million in 2016. On a constant dollar basis adjusted for changes in foreign exchange rates, revenue increased by 17.0% in the fourth quarter of 2017, compared to the same period in the prior year. On a constant dollar basis, revenue from the Recovery Audit Services segments increased 18.7% in the fourth quarter of 2017 compared to the same period in 2016.

Total cost of revenue from continuing operations for the fourth quarter of 2017 was $26.7 million, or 56.8% of revenue, compared to $23.9 million, or 60.9% of revenue, in the same period last year, representing a 4.1 % improvement as a percentage of revenue.

  1. expenses from continuing operations for the fourth quarter of 2017 were $12.8 million, compared to $11.0 million in the prior year period. The increase in SG&A expenses was primarily attributable to operating costs associated with the Cost & Compliance Associates (“C&CA”) acquired business that was not in the prior year and incentive-based compensation expense.

Consolidated net income from continuing operations for the fourth quarter of 2017 was $5.7 million, or $0.26 per basic and diluted share, compared to net income of $0.2 million, or $0.01 per basic and diluted share, for the same period in 2016. The year-over-year change was primarily driven by the increase in revenue and improvement in cost of revenue and a $2.3 million acquisition-related income item resulting from an earn-out adjustment.

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA) from continuing operations for the fourth quarter of 2017 was $9.3 million, or 19.8% of revenue, compared to Adjusted EBITDA of $6.3 million, or 16.2% of revenue, in the fourth quarter of 2016, an increase of $3.0 million or 46.8%. Schedule 3 attached to this press release provides a reconciliation of net income (loss) to each of EBIT (Earnings Before Interest and Taxes), EBITDA and Adjusted EBITDA.

Consolidated Results from Continuing Operations for the Year Ended December 31, 2017

  1. revenue from continuing operations for the year ended December 31, 2017 was $161.6 million, compared to $140.8 million in 2016, an increase of 14.8%. On a constant dollar basis adjusted for changes in foreign exchange rates, revenue increased by 14.1% in the year ended December 31, 2017, compared to the prior year. On a constant dollar basis, revenue from the Recovery Audit Services segments increased 14.2% in the year ended December 31, 2017 compared to 2016. Revenue from the Adjacent Services segment increased 11.5% on a constant dollar basis for the year ended December 31, 2017 compared to the prior year.

Total cost of revenue from continuing operations for the year ended December 31, 2017 was $102.1 million, or 63.1% of revenue, compared to $91.3 million, or 64.8% of revenue, in 2016, an improvement of 1.7% as a percentage of revenue.

  1. expenses from continuing operations for the year ended December 31, 2017 were $46.9 million, compared to $39.4 million in the prior year. The increase in SG&A expenses was primarily attributable to operating costs associated with the Lavante and C&CA acquired businesses that were not in the prior year and an increase in our stock-based compensation. The increase was partially offset by other cost reductions.

Consolidated net income from continuing operations for the year ended December 31, 2017 was $4.6 million, or $0.21 per basic and diluted share, compared to net income of $2.2 million, or $0.10 per basic and diluted share, for the prior year.

Adjusted EBITDA from continuing operations for the year ended December 31, 2017 was $21.3 million, or 13.2% of revenue, compared to Adjusted EBITDA of $16.6 million, or 11.8% of revenue, for the prior year, an increase of $4.8 million or 28.6%. Schedule 3 attached to this press release provides a reconciliation of net income (loss) to each of EBIT, EBITDA and Adjusted EBITDA.

Cash Flow and Liquidity

Net cash provided by operating activities for the fourth quarter of 2017 was $10.0 million, compared to $3.9 million in the fourth quarter of the prior year, and $13.5 million for the year ended December 31, 2017 compared to $10.1 million in in the prior year.

At December 31, 2017, the Company had unrestricted cash and cash equivalents of $18.8 million, and borrowings of $13.6 million against its $35.0 million revolving credit facility.

Fourth Quarter Earnings Call

As previously announced, management will hold a conference call later today at 5:00 PM (Eastern time) to discuss the Company’s fourth quarter and full year 2017 financial results. To access the conference call, listeners in the U.S. and Canada should dial (877) 755-7423 at least 5 minutes prior to the start of the conference. Listeners outside the U.S. and Canada should dial (678) 894-3069. To be admitted to the call, listeners should use passcode 4470009.

This teleconference will also be audiocast on the Internet at www.prgx.com (click on "Events & Presentations" under "Investors"). A replay of the audiocast will be available at the same location on www.prgx.com beginning approximately two hours after the conclusion of the live audiocast, extending through June 30, 2018. Please note that the Internet audiocast is “listen-only.” Microsoft Windows Media Player is required to access the live audiocast and the replay and can be downloaded from www.microsoft.com/en-us/downloads.

About PRGX

PRGX Global, Inc. is a global leader in Recovery Audit and Spend Analytics services. With over 1,500 employees, the Company serves clients in more than 30 countries and provides its services to 75% of the top 20 global retailers and over 30% of the top 50 companies in the Fortune 500. PRGX delivers more than $1 billion in cash flow improvement for its clients each year. The creator of the recovery audit industry more than 40 years ago, PRGX continues to innovate through technology and expanded service offerings. In addition to Recovery Audit, PRGX provides Contract Compliance, Spend Analytics and Supplier Information Management services to improve clients' financial performance and manage risk. For additional information on PRGX, please visit www.prgx.com

Forward-Looking Statements

  1. addition to historical information, this press release includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include both implied and express statements regarding the Company's overall condition and growth prospects, the Company's execution of its business strategy, the sustainability and predictability of the Company’s growth, and the Company's expectations regarding its 2018 financial performance. Such forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to differ materially from the historical results or from any results expressed or implied by such forward-looking statements. Risks that could affect the Company's future performance include revenue that does not meet expectations or justify costs incurred, the Company's ability to develop material sources of new revenue in addition to revenue from its core recovery audit services, changes in the market for the Company's services, the Company's ability to retain and attract qualified personnel, the Company's ability to integrate recent and future acquisitions, uncertainty in the credit markets, the Company's ability to maintain compliance with its financial covenants, client bankruptcies, loss of major clients, and other risks generally applicable to the Company's business. For a discussion of other risk factors that may impact the Company's business, please see the Company's filings with the Securities and Exchange Commission, including its Form 10-K filed on March 16, 2017. The Company disclaims any obligation or duty to update or modify these forward-looking statements

Non-GAAP Financial Measures

EBIT, EBITDA and Adjusted EBITDA are all "non-GAAP financial measures" presented as supplemental measures of the Company's performance. They are not presented in accordance with accounting principles generally accepted in the United States, or GAAP. The Company believes these measures provide additional meaningful information in evaluating its performance over time, and that the rating agencies and a number of lenders use EBITDA and similar measures for similar purposes. In addition, a measure similar to Adjusted EBITDA is used in the restrictive covenants contained in the Company's secured credit facility. However, EBIT, EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation, or as substitutes for analysis of the Company's results as reported under GAAP. In addition, in evaluating EBIT, EBITDA and Adjusted EBITDA, you should be aware that, as described above, the adjustments may vary from period to period and in the future the Company will incur expenses such as those used in calculating these measures. The Company's presentation of these measures should not be construed as an inference that future results will be unaffected by unusual or nonrecurring items. Schedule 3 to this press release provides a reconciliation of net income (loss) to each of EBIT, EBITDA and Adjusted EBITDA.

This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: PRGX Global, Inc.
CONTACT: PRGX Global, Inc.
investor-relations@prgx.com
Phone: 770-779-3011

 

SCHEDULE 1
PRGX Global, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Amounts in thousands, except per share data)
(Unaudited)
                     
        Three Months   Twelve Months
        Ended December 31,   Ended December 31,
        2017   2016   2017   2016
                     
Revenue   $ 47,074   $ 39,183   $ 161,620   $ 140,844
Operating expenses:              
  Cost of revenue 26,746   23,855   102,052   91,299
  Selling, general and administrative expenses 12,792   11,048   46,941   39,399
  Depreciation of property and equipment 1,107   1,209   4,569   5,033
  Amortization of intangible assets 1,468   650   3,634   1,832
  Acquisition-related adjustments (2,283)   -   (2,283)   -
  Total operating expenses 39,830   36,762   154,913   137,563
                     
  Operating income 7,244   2,421   6,707   3,281
                     
Foreign currency transaction (gains) losses              
  on short-term intercompany balances (263)   1,060   (2,190)   84
Interest expense (income), net 1,312   (98)   1,539   (153)
Other loss (income) 17   19   (160)   (121)
  Income from continuing operations before income taxes 6,178   1,440   7,518   3,471
                     
Income tax expense 526   1,263   2,962   1,242
                     
  Net income from continuing operations $ 5,652   $ 177   $ 4,556   $ 2,229
                     
Discontinued operations:              
Loss from discontinued operations $ (343)   $ (410)   $ (1,372)   $ (1,324)
Other (income) loss -   -   -   -
Income tax expense (benefit) -   -   -   -
  Net loss from discontinued operations $ (343)   $ (410)   $ (1,372)   $ (1,324)
                     
  Net income (loss) $ 5,309   $ (233)   $ 3,184   $ 905
                     
Basic earnings (loss) per common share:              
Basic from continuing operations $ 0.26   $ 0.01   $ 0.21   $ 0.10
Basic from discontinued operations (0.02)   (0.02)   (0.06)   (0.06)
Total basic earnings (loss) per common share $ 0.24   $ (0.01)   $ 0.15   $ 0.04
                     
Diluted earnings (loss) per common share:              
Diluted from continuing operations $ 0.26   $ 0.01   $ 0.21   $ 0.10
Diluted from discontinued operations (0.02)   (0.02)   (0.06)   (0.06)
Total diluted earnings (loss) per common share $ 0.24   $ (0.01)   $ 0.15   $ 0.04
                     
Weighted average common shares outstanding:              
  Basic   22,017   21,857   21,937   21,969
  Diluted   22,303   21,924   22,111   22,016
                     
                     

 

SCHEDULE 2
PRGX Global, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Amounts in thousands)
(Unaudited)
                   
                   
              December 31,   December 31,
              2017   2016
                   
      ASSETS
Current assets:            
  Cash and cash equivalents     $ 18,823   $ 15,723
  Restricted cash       51   47
  Receivables:            
    Contract receivables, net   38,767   31,464
    Employee advances and miscellaneous receivables, net   1,665   2,184
      Total receivables     40,432   33,648
                   
  Prepaid expenses and other current assets   4,608   3,363
      Total current assets     63,914   52,781
                   
Property and equipment, net     17,478   12,236
Goodwill         17,648   13,823
Intangible assets, net     18,478   10,998
Deferred income taxes     1,538   2,269
Other assets       1,162   1,367
      Total assets     $ 120,218   $ 93,474
                   
                   
      LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:            
  Accounts payable and accrued expenses   $ 8,548   $ 7,299
  Accrued payroll and related expenses   18,194   13,868
  Refund liabilities and deferred revenue   9,295   9,230
  Short-term debt       48   3,600
  Other current liabilities     3,759   2,078
      Total current liabilities     39,844   36,075
                   
Refund liabilities       957   804
Long-term debt       13,526   -
Other long-term liabilities     5,577   4,205
      Total liabilities     59,904   41,084
                   
Shareholders' equity:          
  Common stock       224   218
  Additional paid-in capital     580,032   575,118
  Accumulated deficit     (520,049)   (523,233)
  Accumulated other comprehensive income   107   287
      Total shareholders' equity   60,314   52,390
                   
      Total liabilities and shareholders' equity   $ 120,218   $ 93,474
                   

 

SCHEDULE 3
PRGX Global, Inc. and Subsidiaries
Reconciliation of Net Income (Loss) to EBIT, EBITDA and Adjusted EBITDA
(Amounts in thousands)
(Unaudited)
                   
                   
      Three Months   Twelve Months
      Ended December 31,   Ended December 31,
      2017   2016   2017   2016
Reconciliation of net income (loss) to EBIT, EBITDA              
  and Adjusted EBITDA:              
                   
Net income (loss) $ 5,309   $ (233)   $ 3,184   $ 905
                   
  Income tax expense 526   1,263   2,962   1,242
  Interest expense (income), net 1,312   (98)   1,539   (153)
                   
EBIT   7,147   932   7,685   1,994
                   
  Depreciation of property and equipment 1,109   1,209   4,577   5,047
  Amortization of intangible assets 1,468   650   3,634   1,832
                   
EBITDA 9,724   2,791   15,896   8,873
                   
  Foreign currency transaction (gains) losses              
  on short-term intercompany balances (263)   1,060   (2,190)   84
  Acquisition-related adjustments (2,283)   -   (2,283)   -
  Transformation severance and related              
  expenses 74   149   1,666   1,383
  Other loss (income) 17   20   (160)   (121)
  Stock-based compensation 1,690   1,900   7,052   5,123
                   
Adjusted EBITDA $ 8,959   $ 5,920   $ 19,981   $ 15,342
                   
Adjusted EBITDA from continuing operations $ 9,300   $ 6,329   $ 21,345   $ 16,598
Adjusted EBITDA from discontinued operations $ (341)   $ (409)   $ (1,364)   $ (1,256)
                   
                   
EBIT, EBITDA and Adjusted EBITDA are all "non-GAAP financial measures" presented as supplemental measures of our performance. They are not presented in accordance with accounting principles generally accepted in the United States, or GAAP. The Company believes these measures provide additional meaningful information in evaluating the Company's performance over time, and that the rating agencies and a number of lenders use EBIT, EBITDA and similar measures for similar purposes. In addition, a measure similar to Adjusted EBITDA is used in the restrictive covenants contained in the Company’s secured credit facility. However, EBIT, EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation, or as substitutes for analysis of our results as reported under GAAP. In addition, in evaluating EBIT, EBITDA and Adjusted EBITDA, you should be aware that in the future we will incur expenses such as those used in calculating these measures. Our presentation of these measures should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items.

 

 
SCHEDULE 4
PRGX Global, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Amounts in thousands)
(Unaudited)
                     
                     
        Three Months   Twelve Months
        Ended December 31,   Ended December 31,
        2017   2016   2017   2016
Cash flows from operating activities:              
  Net income (loss) $ 5,309   $ (233)   $ 3,184   $ 905
                     
  Adjustments to reconcile net income (loss) to net cash              
    provided by operating activities:              
      Depreciation and amortization 2,575   1,862   8,203   6,879
      Amortization of deferred debt costs 9   60   85   60
      Deferred income taxes 933   614   798   (861)
      Stock-based compensation expense 1,690   1,900   7,052   5,123
      Changes in fair value of contingent consideration (2,283)   -   (2,283)   -
      Foreign currency transaction (gains) losses on              
      short-term intercompany balances (263)   1,060   (2,190)   84
      (Increase) decrease in receivables (3,704)   (3,379)   (4,418)   (3,848)
      Increase (decrease) in accounts payable, accrued              
      payroll and other accrued expenses 2,109   2,571   1,790   3,823
      Other, primarily changes in assets and liabilities 3,664   (511)   1,239   (2,047)
      Net cash provided by operating activities 10,039   3,944   13,460   10,118
                     
Cash flows from investing activities:              
  Acquistion of businesses, net of cash acquired -   (3,669)   (10,128)   (3,669)
  Purchases of property and equipment, net of disposals (2,922)   (1,239)   (9,355)   (5,887)
      Net cash used in investing activities (2,922)   (4,908)   (19,483)   (9,556)
                     
Cash flows from financing activities:              
  Borrowings under line of credit -   3,600   10,000   3,600
  Repurchase of common stock (100)   (10)   (100)   (3,772)
  Other, net 342   194   1,083   108
      Net cash provided by (used in) financing activities 242   3,784   10,983   (64)
                     
Effect of exchange rates on cash and cash equivalents (468)   (267)   (1,860)   103
                     
      Net increase in cash and cash equivalents 6,891   2,553   3,100   601
                     
Cash and cash equivalents at beginning of period 11,932   13,170   15,723   15,122
                     
Cash and cash equivalents at end of period $18,823   $15,723   $18,823   $15,723
                     
                     

 

SCHEDULE 5
PRGX Global, Inc. and Subsidiaries
Results by Operating Segment *
(Amounts in thousands)
(Unaudited)
                           
                           
    Three Months Ended     Twelve Months Ended
    December 31,     December 31,
                           
    2017   2016   Change     2017   2016   Change
Revenue                        
  Recovery Audit Services - Americas $ 31,481   $ 27,453   $ 4,028     $ 113,122   $ 99,861   $ 13,261
  Recovery Audit Services - Europe/Asia-Pacific 14,931   10,652   4,279     44,372   37,335   7,037
  Adjacent Services 662   1,078   (416)     4,126   3,648   478
  Total $ 47,074   $ 39,183   $ 7,891     $ 161,620   $ 140,844   $ 20,776
                           
Cost of revenue                        
  Recovery Audit Services - Americas $ 17,809   $ 15,969   $ 1,840     $ 68,963   $ 60,706   $ 8,257
  Recovery Audit Services - Europe/Asia-Pacific 7,377   6,145   1,232     26,930   24,802   2,128
  Adjacent Services 1,560   1,741   (181)     6,159   5,791   368
  Total $ 26,746   $ 23,855   $ 2,891     $ 102,052   $ 91,299   $ 10,753
                           
Selling, general and administrative expenses                        
  Recovery Audit Services - Americas $ 2,090   $ 1,987   $ 103     $ 9,410   $ 8,421   $ 989
  Recovery Audit Services - Europe/Asia-Pacific 1,339   1,040   299     6,586   5,442   1,144
  Adjacent Services 695   803   (108)     3,735   1,469   2,266
  Corporate ** 6,385   7,218   (833)     24,927   24,067   860
  Total $ 10,509   $ 11,048   $ (539)     $ 44,658   $ 39,399   $ 5,259
                           
Depreciation of property and equipment                        
  Recovery Audit Services - Americas $ 687   $ 888   $ (201)     $ 3,165   $ 3,750   $ (585)
  Recovery Audit Services - Europe/Asia-Pacific 146   150   (4)     599   529   70
  Adjacent Services 274   171   103     805   754   51
  Total $ 1,107   $ 1,209   $ (102)     $ 4,569   $ 5,033   $ (464)
                           
Amortization of intangible assets                        
  Recovery Audit Services - Americas $ 933   $ 359   $ 574     $ 1,919   $ 1,477   $ 442
  Recovery Audit Services - Europe/Asia-Pacific 142   -   142     142   -   142
  Adjacent Services 393   291   102     1,573   355   1,218
  Total $ 1,468   $ 650   $ 818     $ 3,634   $ 1,832   $ 1,802
                           
Operating income (loss)                        
  Recovery Audit Services - Americas $ 9,962   $ 8,250   $ 1,712     $ 29,665   $ 25,507   $ 4,158
  Recovery Audit Services - Europe/Asia-Pacific 5,927   3,317   2,610     10,115   6,562   3,553
  Adjacent Services (2,260)   (1,928)   (332)     (8,146)   (4,721)   (3,425)
  Corporate (6,385)   (7,218)   833     (24,927)   (24,067)   (860)
  Total $ 7,244   $ 2,421   $ 4,823     $ 6,707   $ 3,281   $ 3,426
                           
Adjusted EBITDA                        
  Recovery Audit Services - Americas $ 11,582   $ 9,498   $ 2,084     $ 35,062   $ 31,251   $ 3,811
  Recovery Audit Services - Europe/Asia-Pacific 6,288   3,495   2,793     11,511   7,403   4,108
  Adjacent Services (1,578)   (1,346)   (232)     (5,448)   (3,354)   (2,094)
  Corporate (6,992)   (5,318)   (1,674)     (19,780)   (18,702)   (1,078)
  Total $ 9,300   $ 6,329   $ 2,971     $ 21,345   $ 16,598   $ 4,747
                           
* The Recovery Audit Services - Americas segment represents recovery audit services provided in the United States, Canada and Latin America. The Recovery Audit Services - Europe/Asia-Pacific segment represents recovery audit services provided in Europe, Asia and the Pacific region. The Adjacent Services segment represents spend analytics and supplier information management services.
                           
** Corporate - Includes $2,283 of acquisition-related adjustments in the three months and twelve ended December 31, 2017.
                           

 

 


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