Transcript Generic MPS Group Presentation

Robert W. Baird Conference
February 25, 2009
Tim Payne
CEO
Forward-Looking Statements
All information presented that is not historical should be
considered forward-looking statements that are subject to
certain risks, uncertainties or assumptions and may be affected
by certain other factors, including but not limited to the specific
factors discussed in the Company’s periodic filings with the
SEC. Should one or more of these risks, uncertainties or other
factors materialize, or should underlying assumptions prove
incorrect, actual results, performance or achievements
expressed or implied by such forward-looking statements may
vary materially from those expressed or implied in this
presentation. Forward-looking statements are not guarantees
of performance and the Company undertakes no obligation to
update publicly any of the information presented in light of new
information or future events.
3
Today’s Topics
• MPS Group Overview
• Current Professional Hiring Environment
• Financial Position
• Discussion
4
MPS Group
• One of the world’s largest providers of
white-collar staffing services
• Contract
• Permanent Placement
• 2008 Revenue 2.2 billion
• $115.4 million in operating income (before
•
SFAS 142 charge)
224 offices in 12 countries
5
Geographic Expansion
Shanghai
United States
58.5%
United Kingdom 33.9%
Canada
1.8%
Europe
4.8%
Australia
0.8%
Asia
0.2%
Percentages based on 2008 revenue
6
Brand Strategy
7
Mix of Services
Accounting
29%
Healthcare
Information
Technology
6%
42%
Engineering
14%
Legal 9%
8
Percentages based on 2008 revenue
Why White Collar Staffing?
1970
1975
1980
Bureau of Labor Statistics Early 2008
1985
1990
9
1995
2000
2005
2007
Current Professional Hiring
Environment
Professional Hiring Environment
• Current recession dates to December
2007
• Professional hiring remained fairly
strong through first half of 2008
• Not true for blue collar / administrative
• September 2008 financial crisis created
a “shock to the system”
• Resulting in poor professional hiring
conditions for remainder of 2008
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-25%
9
10--002
11-02
12-02
1-023
2-03
3-03
4-03
5-03
6-03
7-03
8-03
9
10--003
11-03
12-03
1-034
2-04
3-04
4-04
5-04
6-04
7-04
8-04
9
10--004
11-04
12-04
1-045
2-05
3-05
4-05
5-05
6-05
7-05
8-05
910-005
11-05
12-05
1-056
2-06
3-06
4-06
5-06
6-06
7-06
8-06
9
10--006
11-06
12-06
1-067
2-07
3-07
4-07
5-07
6-07
7-07
8-07
9
10--007
11-07
12-07
1-078
2-08
3-08
4-08
5-08
6-08
7-08
8-08
9
10--008
11-08
12-08
1-089
Temp Employment: YOY Change
10%
MPS Group grew until
October 2008
5%
0%
-5%
-10%
-15%
-20%
Recession began
December 2007
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The Hiring Cycle
Early Recession
Temping cut as
companies cut
costs
Bull Economy
Strong Economy
Bull Economy
Strong Economy
Temping demand
high as skilled
workers in shortage
Temping slows as
focus switches to
“perm” resources
Improving Economy
With huge backlog,
hesitant to hire FTE’s,
companies turn to
temping companies
13
Shed Happens
• We know clients will shed temporary
•
workers during downturns
We have an operating model that
adjusts simultaneous with shedding
• Variable cost model
• Changes made after last recession
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Last Time Around
Mix of
Revenue
Geographic
Coverage
Financial
Strength
Bench
Businesses
Year 2000
Today
60%
43%
IT revenue
IT revenue in 4Q08
75%
62%
US revenue
US revenue in 4Q08
$83 million
Net debt position
Net cash - 12/31/08
16%
5%
Revenue from “bench” Revenue from “bench”
15
Company Position Today
• High demand professional specialties
• Diverse service offerings
• Variable cost business model
• Strong balance sheet
• Experienced management team
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Investment Considerations
• Long term supply of and demand for
white collar talent
• Anticipated duration of current
recession
• Secular trend toward greater use of
temporary white collar talent
• Historical behavior of employmentrelated stocks in an improving
economy
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Tyra Tutor
SVP – Corporate Development
Financial Position
Full-Year Revenue
$’s in billions
$2.2
$2.0
$1.8
$1.6
$1.4
$1.2
$1.0
2002
2003
2004
2005
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2006
2007
2008
Full-Year Operating Income
$’s in millions
$141.0
$121.0
$101.0
$81.0
$61.0
$41.0
$21.0
$1.0
2002
2003
2004
2005
* = Before non-cash charge
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2006
2007
2008*
FAS 142: Goodwill Write-down
• Each fourth quarter the goodwill valuation is
•
•
•
reviewed
With declining valuations for our peer group
and uncertain economic conditions, fourthquarter review resulted in goodwill
impairment charge
Charge was non-cash and does not impact
availability of borrowings from credit facility
Goodwill balance at 12/31/08 was $282 million
22
2008 Revenue & Margins
Segment ($’s in millions)
NA Professional
$727
2008
Gross
Margin
30.7%
NA Information Technology
$614
31.0%
6.9%
International Professional
$553
29.8%
4.7%
International IT
$329
17.7%
3.9%
$2,222
28.7%
5.2%
MPS Group Consolidated
2008
Revenue
* = Before non-cash charge
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2008
Operating
Margin*
9.0%
Fourth Quarter 2008 Results
• On February 5th, we released 4Q08
results
• Earnings per share was at high-end of
management’s October guidance
• Revenue was below guidance due to
•
volatile, negative valuation of the
British pound
Generated $49 million in operating cash
flow
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4Q2008 Revenue & Margins
4Q2008
Year-Over-Year
Revenue Change
-4.6%
4Q2008
Operating
Margin*
8.2%
NA Information Technology
-12.0%
6.2%
International Professional
-26.4%
1.8%
International IT
-18.9%
4.4%
MPS Group Consolidated
-14.5%
4.0%
Segment
NA Professional
* = Before non-cash charge
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Variable Cost Business Model
• Temporary Staffing
• Expense of a temporary employee ends
simultaneously with an assignment end
• Variable compensation (commissions and
bonuses) reduced
• Permanent Placement Fees
• Variable compensation reduced
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Balance Sheet Highlights-12/31/08
Cash
Accounts receivable
Other current assets
Goodwill, net
Other long-term assets
Total assets
$90,566
282,093
24,198
293,275
105,760
$795,892
Current liabilities
Long-term notes payable
Other liabilities
Stockholders’ equity
Total liabilities & equity
$173,147
7,313
23,962
591,470
$795,892
Working capital
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$223,710
Cash Flow From Operations
$’s in millions
Cash flow from
operations
2008
2007
2006 2005
2004
2003
2002
2001
$134
$132
$107
$51
$65
$112
$174
$92
• Strong cash flow from operations
• Have $250 million credit facility, which contains
favorable borrowing terms and expires Nov. 2011
• $7 million drawn on line as of 12/31/08
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Working Capital
• When operations slow, cash flow typically
accelerates
• We pay temporary employees weekly and receive
payment from clients about seven weeks later
• As we slow, the cost of temporary employees
stops immediately, but we continue to collect the
receivables
• Favorable income tax deduction
• In the U.S., our previous acquisitions provide a
$50 million tax deduction through 2011, making
our cash taxes less than the tax provision
• Cost reduction measures in place
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Cash Flow Trends
$’s in millions
Cash flow from
operations
2008 2007 2006 2005
2004
2003
2002
2001
$134 $132 $107
$51
$65
$112
$174
$92
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First Quarter 2009 Guidance
• First quarter revenue and EPS guidance was
•
•
provided on February 5, 2009
EPS $0.02 to $0.07
Revenue $410 to $450 million
• If 1Q09 revenue is at mid-point of guidance
•
(assume $425 million), the year-over-year revenue
decrease is approximately 25%
Using the same assumption, but on a constant
currency basis, revenue decrease is
approximately 15%
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Financial Summary
• Strong cash position
• Strong cash flow, even in downturn
• Line of credit in place
• Expense control
• Variable cost business model
• Cost reduction measures in place
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Discussion
Reg. G Reconciliations
Non-GAAP to GAAP
2008 Operating Income/Margin
NA
Prof.
NA
IT
Int’l
Prof.
Int’l
IT
MPS
Group
MPS
Group
(in millions)
Operating
income/margin
before goodwill
impairment charge
Goodwill impairment
charge
9.0%
6.9%
4.7%
3.9%
5.2%
$115.4
6.9%
33.4%
17.1%
9.1%
17.1%
$379.3
Operating
income/margin
2.1%
-26.5%
-12.4%
-5.2%
-11.9%
-$263.9
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4Q2008 Operating Margin
Operating margin
before goodwill
impairment charge
NA
Prof.
NA
IT
Int’l
Prof.
Int’l
IT
MPS
Group
8.2%
6.2%
1.8%
4.4%
4.0%
144.6%
85.9%
44.8%
17.1%
-21.4% -138.4%
-84.1%
-40.4%
-73.8%
Goodwill impairment 29.6%
charge
Operating margin
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U.S. Unemployment Rate
Overall Rate at 7.6%
12.0%
10.0%
8.0%
Jan-08
Sep-08
Jan-09
6.0%
4.0%
2.0%
0.0%
Bachelor's
Degree
High School
Degree
Where we focus
37
No High
School
2008 Revenue & Gross Margin
Professional NA Businesses
Engineering Staffing
$318
2008
Gross
Margin
25.2%
Legal
$183
34.9%
Healthcare
$127
28.4%
Accounting
$97
44.3%
($’s in millions)
38
2008
Revenue