PRGX Global, Inc. Announces First Quarter 2013 Financial Results

PRGX Global, Inc. Announces First Quarter 2013 Financial Results

Highlights

  *Q1 revenue of $45.1M and Adjusted EBITDA of $4.4M, in line with previously
    announced ranges
  *Profit Optimization Q1 revenue reflects both sequential and year-over-year
    growth
  *Recovery Audit Services – Americas Q1 gross margin percentage increased
    over Q1 2012 despite revenue challenges, reflecting ongoing impact of the
    Service Delivery Model Redesign program
  *Awaiting results of bid for Centers for Medicare & Medicaid Services (CMS)
    Medicare Part A/B Recovery Audit Contractor (RAC) Program

ATLANTA, April 29, 2013 (GLOBE NEWSWIRE) -- PRGX Global, Inc. (Nasdaq:PRGX),
the world's leading provider of recovery audit services and the pioneer in
Profit Discovery™, today announced its unaudited financial results for the
first quarter ended March 31, 2013.

"We had a tough quarter. Two of our three growth levers, including the core
recovery audit business which is by far the largest part of our revenue,
underperformed compared to the same quarter last year. Historically, our
portfolio of clients and services has insulated us from volatility within and
across our business segments. Q1 2013 represents the rare instance where
multiple challenges worked against us. That said, we expect the remainder of
the year to improve for our core business and for our profit optimization
service line to continue to gain market traction. The financial performance of
our healthcare business, which was expected to grow in 2013 under our current
RAC Program subcontracts, will be largely dependent on the outcome of the CMS
RAC Program rebid and the related transition timelines," said Romil Bahl,
president and chief executive officer.

"In our Recovery Audit Services segments, revenue was impacted by delays at
key retail clients and in our commercial business. However, we expect the
majority of this revenue will not be lost but rather shifted to later in the
year. Our Europe/Asia-Pacific (EAP) business is still being affected by the
tough macroeconomic environment in Europe that recently put three clients into
bankruptcy. Our EAP leadership team has plans in place to both address revenue
as well as drive efficiencies by deploying our global service delivery model,"
continued Bahl.

"In our New Services segment, our Healthcare Claims Recovery Audit team dealt
with claim delays resulting from Medicare claims processing system changes as
well as a temporary drop in findings rates. The team restored the findings
rates back to historical levels by quarter end, while also working on our
proposal to CMS for the Medicare Part A/B RAC program rebid. We are committed
to maximizing the recoveries we can generate for CMS under the current
contract and eagerly await the results of the rebid," said Bahl.

"Finally, the Profit Optimization team continued on the positive trajectory
that it had coming out of 2012, including some nice wins in our newer
services. Together our different teams are building a consolidated value
proposition that is resonating with our clients and has us excited about the
future," concluded Bahl.

Consolidated Results for Three Months Ended March 31, 2013

Consolidated revenue for the first quarter of 2013 decreased 12.7% to $45.1
million compared to $51.6 million in the same prior year period. After
adjusting for changes in foreign exchange rates, consolidated first quarter
revenue in 2013 decreased 11.9% compared to the same period in 2012.

  Recovery Audit Services – Americas revenue for the first quarter of 2013
  decreased 8.9% to $26.2 million compared to $28.8 million in the same period
  in the prior year. On a constant dollar basis, adjusted for changes in
  foreign exchange rates, Recovery Audit Services – Americas revenue decreased
  by 8.4% compared to 2012.

  Recovery Audit Services – Europe/Asia-Pacific revenue for the first quarter
  of 2013 decreased 23.0% to $11.0 million compared to $14.3 million in the
  same period in the prior year. On a constant dollar basis, adjusted for
  changes in foreign exchange rates, Recovery Audit Services –
  Europe/Asia-Pacific revenue decreased by 21.4% compared to 2012.

  New Services revenue for the first quarter of 2013 decreased 8.1% to $7.8
  million compared to $8.5 million in the same period in the prior year. The
  New Services segment represents Healthcare Claims Recovery Audit services
  and our Profit Optimization services. Revenue from New Services represented
  17.4% of consolidated revenue for the first quarter of 2013 compared to
  16.5% of consolidated revenue in the same period in the prior year.

Total cost of revenue for the first quarter of 2013 was $30.4 million, or
67.4% of revenue, compared to $34.2 million, or 66.3% of revenue, in the same
period in the prior year. Total cost of revenue included decreases in both of
our recovery audit segments driven by the expanded use of our Next-Generation
Recovery Audit service model. Cost of revenue as a percentage of revenue
declined in the Recovery Audit Services – Americas segment, but increased in
the Company's other two reporting segments. SG&A for the first quarter of 2013
was $11.7 million, or 26.0% of revenue, compared to $12.6 million, or 24.5% of
revenue, in the same period in the prior year. Depreciation and amortization
expenses were $3.3 million in the first quarter of 2013 compared to $3.8
million in the prior year first quarter. Net loss for the first quarter of
2013 was $(0.5) million, or $(0.02) per basic and diluted share, compared to
net earnings of $0.3 million, or $0.01 per basic and diluted share, for the
same period in 2012. Net cash provided by operating activities for the first
quarter of 2013 was $0.8 million compared to $2.0 million in the first quarter
of 2012. The decrease in net cash provided by operating activities is
primarily due to lower operating income resulting from reduced revenue.

Adjusted EBITDA for the first quarter of 2013 was $4.4 million compared to
$6.8 million of Adjusted EBITDA for the same period in 2012. The 2013 first
quarter Adjusted EBITDA is earnings before interest, taxes, depreciation and
amortization (EBITDA) excluding a charge of $1.3 million related to
stock-based compensation, a $0.1 million charge for acquisition obligations
classified as compensation, and $0.4 million of foreign currency losses on
short-term intercompany balances. The comparable Adjusted EBITDA amount for
the first quarter of 2012 excludes from EBITDA for such period a $1.4 million
charge for stock-based compensation, $0.2 million in wage claim costs, $0.2
million of transformation severance and related expenses, a $0.1 million
charge for acquisition obligations classified as compensation and $0.3 million
of foreign currency gains on short-term intercompany balances. Schedule 3
attached to this press release provides a reconciliation of net earnings
(loss) to each of EBIT (earnings before interest and taxes), EBITDA and
Adjusted EBITDA.

Liquidity

At March 31, 2013, the Company had unrestricted cash and cash equivalents of
$37.8 million and had no borrowings against its revolving credit facility.
Bank debt outstanding at quarter end was $5.3 million, which represented the
outstanding balance on a variable rate term loan due quarterly through
December 2013, with a final payment due in January 2014.

First Quarter Earnings Call

As previously announced, management will hold a conference call tomorrow
morning at 8:30 AM (Eastern time) to discuss the Company's first quarter 2013
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 33409158.

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, 2013. 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/windows/mediaplayer.

About PRGX Global, Inc.

Headquartered in Atlanta, Georgia, PRGX Global, Inc. is the world's leading
provider of recovery audit services. With over 1,700 employees, the Company
operates and serves clients in more than 30 countries and provides its
services to over 75% of the top 30 global retailers. PRGX is also pioneering
Profit Discovery, a unique combination of audit, analytics and advisory
services that improves client financial performance. For additional
information, please visit PRGX at www.prgx.com.

Forward-Looking Statements

In 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 plans and anticipated financial
results for the remainder of 2013, the outcome of the rebid of Medicare RAC
program contracts and associated transitions and resulting anticipated impacts
on the Company's financial results, and the expected benefits of the Company's
redesigned recovery audit service delivery model. 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, changes to Medicare and Medicaid recovery audit contractor programs
and the outcome of the rebid of the Medicare RAC program contracts, 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 13, 2013. 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 earnings (loss) to each of EBIT, EBITDA and Adjusted EBITDA.



SCHEDULE 1
PRGX Global, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(Amounts in thousands, except per share data)
(Unaudited)
                                                                   
                                                                   
                                                          Three Months
                                                          Ended March 31,
                                                          2013      2012
                                                                   
Revenue                                                    $45,101 $51,649
Operating expenses:                                                 
Cost of revenue                                            30,407   34,218
Selling, general and administrative expenses               11,711   12,637
Depreciation of property and equipment                     2,008    1,513
Amortization of intangible assets                          1,276    2,327
Total operating expenses                                   45,402   50,695
                                                                   
Operating income (loss)                                    (301)    954
                                                                   
Foreign currency transaction (gains) losses on short-term  357      (339)
intercompany balances
Interest expense (income), net                             (217)    504
Earnings (loss) before income taxes                        (441)    789
                                                                   
Income tax expense                                         56       497
                                                                   
Net earnings (loss)                                        $(497)  $292
                                                                   
                                                                   
Basic earnings (loss) per common share                     $(0.02) $0.01
                                                                   
Diluted earnings (loss) per common share                   $(0.02) $0.01
                                                                   
Weighted average common shares outstanding:                         
Basic                                                      28,770   25,309
Diluted                                                    28,770   25,765



SCHEDULE 2
PRGX Global, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Amounts in thousands)
(Unaudited)
                                                              
                                                              
                                                    March 31,  December 31,
                                                    2013       2012
                                                              
ASSETS
Current assets:                                                
Cash and cash equivalents                            $37,787  $37,806
Restricted cash                                      129       65
Receivables:                                                   
Contract receivables, net                            38,284    45,127
Employee advances and miscellaneous receivables, net 1,198     1,352
Total receivables                                    39,482    46,479
                                                              
Prepaid expenses and other current assets            4,124     3,853
Total current assets                                 81,522    88,203
                                                              
Property and equipment, net                          19,555    19,574
Goodwill                                             13,611    13,669
Intangible assets, net                               16,934    18,399
Deferred income taxes                                1,630     1,552
Other assets                                         1,742     2,189
Total assets                                       $134,994 $143,586
                                                              
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:                                           
Accounts payable and accrued expenses                $11,674  $14,136
Accrued payroll and related expenses                 13,652    20,874
Refund liabilities and deferred revenue              8,639     8,530
Current portion of debt                              5,250     3,000
Business acquisition obligations                     3,098     4,218
Total current liabilities                            42,313    50,758
                                                              
Long-term debt                                       --       3,000
Noncurrent business acquisition obligations          --       2,479
Other long-term liabilities                          2,276     2,697
Total liabilities                                    44,589    58,934
                                                              
Shareholders' equity:                                          
Common stock                                         289       279
Additional paid-in capital                           600,769   594,045
Accumulated deficit                                  (513,697) (513,200)
Accumulated other comprehensive income               3,044     3,528
Total shareholders' equity                           90,405    84,652
                                                              
Total liabilities and shareholders' equity         $134,994 $143,586



SCHEDULE 3
PRGX Global, Inc. and Subsidiaries
Reconciliation of Net Earnings (Loss) to EBIT, EBITDA and Adjusted EBITDA
(Amounts in thousands)
(Unaudited)
                                                           
                                         Three Months
                                         Ended March 31,
                                         2013               2012
Reconciliation of net earnings (loss) to                    
EBIT, EBITDA
and Adjusted EBITDA:                                        
                                                           
Net earnings (loss)                       $(497)           $292
                                                           
Income tax expense                        56                497
Interest expense (income), net            (217)             504
                                                           
EBIT                                      (658)             1,293
                                                           
Depreciation of property and equipment    2,008             1,513
Amortization of intangible assets         1,276             2,327
                                                           
EBITDA                                    2,626             5,133
                                                           
Foreign currency transaction (gains)
losses on short-term intercompany         357               (339)
balances
Acquisition obligations classified as     56                101
compensation
Transformation severance and related      --               242
expenses
Wage claim costs                          --               249
Stock-based compensation                  1,318             1,401
                                                           
Adjusted EBITDA                           $4,357           $6,787
                                                           
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
                                                          Ended March 31,
                                                          2013      2012
Cash flows from operating activities:                               
Net earnings (loss)                                        $(497)  $292
Adjustments to reconcile net earnings (loss) to net cash            
provided by operating activities:
Depreciation and amortization                              3,284    3,840
Amortization of deferred debt costs                        46       46
Stock-based compensation expense                           1,318    1,401
Foreign currency transaction (gains) losses on short-term 357      (339)
intercompany balances
Decrease in receivables                                    6,670    1,187
Decrease in accounts payable, accrued payroll and other   (9,338)  (5,482)
accrued expenses
Other, primarily changes in assets and liabilities         (991)    1,029
Net cash provided by operating activities                  849      1,974
                                                                   
Cash flows from investing activities:                               
Business acquisitions                                      --      (997)
Purchases of property and equipment, net of disposals      (2,207)  (1,967)
Net cash used in investing activities                      (2,207)  (2,964)
                                                                   
Cash flows from financing activities:                               
Net proceeds from issuance of common stock                 4,118    --
Other, net                                                 (2,500)  (1,571)
Net cash provided by (used in) financing activities        1,618    (1,571)
                                                                   
Effect of exchange rates on cash and cash equivalents      (279)    416
                                                                   
Net decrease in cash and cash equivalents                  (19)     (2,145)
                                                                   
Cash and cash equivalents at beginning of period           37,806   20,337
                                                                   
Cash and cash equivalents at end of period                 $ 37,787 $ 18,192



SCHEDULE 5
PRGX Global, Inc. and Subsidiaries
Results by Operating Segment *
(Amounts in thousands)
(Unaudited)
                                                               
                                                               
                                    Three Months Ended
                                    March 31,
                                    2013            2012         Change
Revenue                                                         
Recovery Audit Services - Americas   $26,242       $28,813    $(2,571)
Recovery Audit Services -            11,017         14,305      (3,288)
Europe/Asia-Pacific
New Services                         7,842          8,531       (689)
Total                                $45,101       $51,649    $(6,548)
                                                               
Cost of revenue                                                 
Recovery Audit Services - Americas   $14,350       $15,952    $1,602
Recovery Audit Services -            9,245          11,075      1,830
Europe/Asia-Pacific
New Services                         6,812          7,191       379
Total                                $30,407       $34,218    $3,811
                                                               
Selling, general and administrative expenses                     
Recovery Audit Services - Americas   $4,320        $4,862     $542
Recovery Audit Services -            517            1,251       734
Europe/Asia-Pacific
New Services                         1,481          1,397       (84)
Corporate                            5,393          5,127       (266)
Total                                $11,711       $12,637    $926
                                                               
Depreciation of property and                                    
equipment
Recovery Audit Services - Americas   $1,368        $915       $(453)
Recovery Audit Services -            112            40          (72)
Europe/Asia-Pacific
New Services                         528            558         30
Total                                $2,008        $1,513     $(495)
                                                               
Amortization of intangible assets                               
Recovery Audit Services - Americas   $698          $1,586     $888
Recovery Audit Services -            396            539         143
Europe/Asia-Pacific
New Services                         182            202         20
Total                                $1,276        $2,327     $1,051
                                                               
Operating income (loss)                                         
Recovery Audit Services - Americas   $5,506        $5,498     $8
Recovery Audit Services -            747            1,400       (653)
Europe/Asia-Pacific
New Services                         (1,161)        (817)       (344)
Corporate                            (5,393)        (5,127)     (266)
Total                                $(301)        $954       $(1,255)
                                                               
Adjusted EBITDA                                                 
Recovery Audit Services - Americas   $7,572        $8,338     $(766)
Recovery Audit Services -            1,255          2,036       (781)
Europe/Asia-Pacific
New Services                         (395)          139         (534)
Corporate                            (4,075)        (3,726)     (349)
Total                                $4,357        $6,787     $(2,430)
                                                               
*The Recovery Audit Services - Americas segment represents recovery audit
services, excluding New 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 New Services segment represents Healthcare Claims Recovery Audit
services and Profit Optimization services.

CONTACT: PRGX Global, Inc.
         investor-relations@prgx.com
         Phone: 770-779-3011

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