PRGX Global, Inc. Announces First Quarter 2014 Financial Results

PRGX Global, Inc. Announces First Quarter 2014 Financial Results

ATLANTA, April 28, 2014 (GLOBE NEWSWIRE) -- PRGX Global, Inc. (Nasdaq:PRGX),
the world's leading provider of accounts payable recovery audit services and
the pioneer in Profit Discovery™, today announced its unaudited financial
results for the first quarter ended March 31, 2014.

Consolidated revenue for the first quarter of 2014 was $37.9 million compared
to $45.1 million in the same prior year period, a decrease of 16.0%. After
adjusting for changes in foreign exchange rates, consolidated revenue for the
first quarter of 2014 decreased 15.3% compared to the same period in 2013.
Beginning with the first quarter of 2014, the former New Services segment is
now being reported as two segments: Adjacent Services, which were formerly
referred to as Profit Optimization services, and Healthcare Claims Recovery
Audit services.

  Recovery Audit Services – Americas revenue for the first quarter of 2014 was
  $24.8 million compared to $26.2 million in the same period in the prior
  year, a decrease of 5.5%. On a constant dollar basis, adjusted for changes
  in foreign exchange rates, Recovery Audit Services – Americas revenue
  decreased 3.3% compared to 2013. The decrease in revenue was primarily
  attributable to the delay of several large claims and a delayed audit start
  in a large legacy client.

  Recovery Audit Services – Europe/Asia-Pacific revenue for the first quarter
  of 2014 was $9.7 million compared to $11.0 million in the same period in the
  prior year, a decrease of 11.9%. On a constant dollar basis, adjusted for
  changes in foreign exchange rates, Recovery Audit Services –
  Europe/Asia-Pacific revenue decreased 14.6% compared to 2013. Similar to the
  Americas, the revenue decline was primarily attributable to claim delays at
  a significant client.

  Adjacent Services revenue for the first quarter of 2014 was $2.3 million
  compared to $3.9 million in the same period in the prior year, a decrease of
  42.1%. The decrease in revenue was due to a weak backlog coming into 2014
  compared to 2013.

  Healthcare Claims Recovery Audit Services revenue for the first quarter of
  2014 was $1.1 million compared to $3.9 million in the same period in the
  prior year, a decrease of 71.3%. Healthcare Claims Recovery Audit Services
  consist primarily of services provided under subcontracts related to the
  Medicare RAC program. The decrease in revenue was primarily attributable to
  the reduced scope of the current Medicare RAC program.

Adjusted EBITDA for the first quarter of 2014 was $0.5 million compared to
$3.6 million of Adjusted EBITDA for the same period in 2013, a decline of $3.1
million. The reduction in Adjusted EBITDA included a decline in Healthcare
Claims Recovery Audit Services Adjusted EBITDA of $1.3 million and a decline
in Adjacent Services Adjusted EBITDA of $1.2 million. Schedule 3 attached to
this press release provides a reconciliation of net loss to each of EBIT
(earnings before interest and taxes), EBITDA and Adjusted EBITDA.

Net loss for the first quarter of 2014 was $(3.7) million, or $(0.12) per
basic and diluted share, compared to a net loss of $(0.5) million, or $(0.02)
per basic and diluted share, for the same period in 2013. Net cash provided by
operating activities for the first quarter of 2014 was $2.9 million compared
to $0.8 million in the first quarter of 2013.

"While our first quarter results were disappointing, they were not unexpected.
These results reflect the anticipated declines in the Healthcare Claims
Recovery Audit and Adjacent Services segments. On a positive note, our core
recovery audit business remains solid, although Q1 results were negatively
impacted by several timing delays which we expect to be fully resolved by the
end of 2014," said Ron Stewart, president and chief executive officer.
"Additionally, I am pleased we were able to reduce our operating expenses by
over $4.0 million in the quarter compared to last year."

"We are now fully engaged with the implementation of our revised strategy. Our
"Blue Chip" client list and attractive value proposition, coupled with the
most talented team in the industry and an unmatched global footprint, affirms
my confidence in PRGX. I am confident we have built a solid business platform
from which to achieve sustainable profitability," concluded Mr. Stewart.

At March 31, 2014, the Company had unrestricted cash and cash equivalents of
$45.7 million, no borrowings against its revolving credit facility, and no
bank debt outstanding.

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 2014
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 29060487.

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, 2014. 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 accounts payable recovery audit services. With over 1,600
employees, the Company operates and serves clients in more than 30 countries
and provides its services to over 75% of the top 20 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 overall condition and growth
prospects, anticipated plans and financial results for the remainder of 2014,
the strength of the Company's core recovery audit business, the Company's
decision to withdraw from the Medicare RAC rebid process, the long term
business objectives for the Company, including its Healthcare Claims Recovery
Audit business and its Adjacent Services business. 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 effects of the Company's decision to withdraw from the Medicare RAC
rebid process, 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 14, 2014. 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 loss to each of EBIT, EBITDA and Adjusted EBITDA.



SCHEDULE 1
PRGX Global, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Amounts in thousands, except per share data)
(Unaudited)
                                                                   
                                                                   
                                                         Three Months
                                                         Ended March 31,
                                                         2014       2013
                                                                   
Revenue                                                   $37,901  $45,101
Operating expenses:                                                 
Cost of revenue                                           27,467    30,184
Selling, general and administrative expenses              11,341    11,934
Depreciation of property and equipment                    1,682     2,008
Amortization of intangible assets                         903       1,276
Total operating expenses                                  41,393    45,402
                                                                   
Operating loss                                            (3,492)   (301)
                                                                   
Foreign currency transaction (gains) losses on short-term 15        357
intercompany balances
Interest expense (income), net                            54        (217)
Loss before income taxes                                  (3,561)   (441)
                                                                   
Income tax expense                                        113       56
                                                                   
Net loss                                                  $(3,674) $(497)
                                                                   
                                                                   
Basic earnings (loss) per common share                    $(0.12)  $(0.02)
                                                                   
Diluted earnings (loss) per common share                  $(0.12)  $(0.02)
                                                                   
Weighted average common shares outstanding:                         
Basic                                                     30,159    28,770
Diluted                                                   30,159    28,770



SCHEDULE 2
PRGX Global, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Amounts in thousands)
(Unaudited)
                                                              
                                                              
                                                    March 31,  December 31,
                                                    2014       2013
ASSETS
Current assets:                                                
Cash and cash equivalents                            $45,697  $43,700
Restricted cash                                      126       57
Receivables:                                                   
Contract receivables, net                            31,411    38,079
Employee advances and miscellaneous receivables, net 1,703     2,242
Total receivables                                    33,114    40,321
                                                              
Prepaid expenses and other current assets            3,814     3,917
Total current assets                                 82,751    87,995
                                                              
Property and equipment, net                          13,190    13,994
Goodwill                                             13,691    13,686
Intangible assets, net                               12,693    13,582
Deferred income taxes                                1,690     1,701
Other assets                                         1,379     1,871
Total assets                                       $125,394 $132,829
                                                              
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:                                           
Accounts payable and accrued expenses                $7,640   $10,809
Accrued payroll and related expenses                 13,991    15,415
Refund liabilities and deferred revenue              7,875     8,109
Business acquisition obligations                     --       3,156
Total current liabilities                            29,506    37,489
                                                              
Other long-term liabilities                          1,421     1,512
Total liabilities                                    30,927    39,001
                                                              
Shareholders' equity:                                          
Common stock                                         301       294
Additional paid-in capital                           609,182   604,806
Accumulated deficit                                  (517,060) (513,386)
Accumulated other comprehensive income               2,044     2,114
Total shareholders' equity                           94,467    93,828
                                                              
Total liabilities and shareholders' equity         $125,394 $132,829



SCHEDULE 3
PRGX Global, Inc. and Subsidiaries
Reconciliation of Net Loss to EBIT, EBITDA and Adjusted EBITDA
(Amounts in thousands)
(Unaudited)
                                                            
                                                            
                                          Three Months
                                          Ended March 31,
                                          2014               2013
Reconciliation of net loss to EBIT, EBITDA                   
and Adjusted EBITDA:
                                                            
Net loss                                   $(3,674)         $(497)
                                                            
Income tax expense                         113               56
Interest expense (income), net             54                (217)
                                                            
EBIT                                       (3,507)           (658)
                                                            
Depreciation of property and equipment     1,682             2,008
Amortization of intangible assets          903               1,276
                                                            
EBITDA                                     (922)             2,626
                                                            
Foreign currency transaction (gains)       15                357
losses on short-term intercompany balances
Acquisition-related charges (benefits)     19                (666)
Transformation severance and related       385               --
expenses
Stock-based compensation                   1,021             1,318
                                                            
Adjusted EBITDA                            $518             $3,635
                                                            
                                                            
                                                            
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,
                                                         2014       2013
Cash flows from operating activities:                               
Net loss                                                  $ (3,674) $(497)
Adjustments to reconcile net loss to net cash provided by           
operating activities:
Depreciation and amortization                             2,585     3,284
Amortization of deferred debt costs                       16        46
Stock-based compensation expense                          1,021     1,318
Foreign currency transaction (gains) losses on short-term 15        357
intercompany balances
Decrease in receivables                                   7,232     6,670
Decrease in accounts payable, accrued payroll and other   (4,983)   (9,338)
accrued expenses
Other, primarily changes in assets and liabilities        700       (991)
Net cash provided by operating activities                 2,912     849
                                                                   
Cash flows from investing activities:                               
Purchases of property and equipment, net of disposals     (844)     (2,207)
Net cash used in investing activities                     (844)     (2,207)
                                                                   
Cash flows from financing activities:                               
Net proceeds from issuance of common stock                --       4,118
Other, net                                                80        (2,500)
Net cash provided by financing activities                 80        1,618
                                                                   
Effect of exchange rates on cash and cash equivalents     (151)     (279)
                                                                   
Net increase (decrease) in cash and cash equivalents      1,997     (19)
                                                                   
Cash and cash equivalents at beginning of period          43,700    37,806
                                                                   
Cash and cash equivalents at end of period                $ 45,697  $ 37,787




SCHEDULE 5
PRGX Global, Inc. and Subsidiaries
Results by Operating Segment *
(Amounts in thousands)
(Unaudited)
                                                            
                                                            
                               Three Months Ended
                               March 31,
                                                            
                               2014            2013           Change
Revenue                                                      
Recovery Audit Services -       $24,798       $26,242      $(1,444)
Americas
Recovery Audit Services -       9,702          11,017        (1,315)
Europe/Asia-Pacific
Adjacent Services               2,283          3,943         (1,660)
Healthcare Claims Recovery      1,118          3,899         (2,781)
Audit Services
Total                           $37,901       $45,101      $(7,200)
                                                            
Cost of revenue                                              
Recovery Audit Services -       $14,635       $14,350      $(285)
Americas
Recovery Audit Services -       7,417          9,022         1,605
Europe/Asia-Pacific
Adjacent Services               3,035          3,200         165
Healthcare Claims Recovery      2,380          3,612         1,232
Audit Services
Total                           $27,467       $30,184      $2,717
                                                            
Selling, general and                                         
administrative expenses
Recovery Audit Services -       $4,213        $4,320       $107
Americas
Recovery Audit Services -       1,804          740           (1,064)
Europe/Asia-Pacific
Adjacent Services               566            717           151
Healthcare Claims Recovery      624            764           140
Audit Services
Corporate                       4,134          5,393         1,259
Total                           $11,341       $11,934      $593
                                                            
Depreciation of property and                                 
equipment
Recovery Audit Services -       $1,256        $1,368       $112
Americas
Recovery Audit Services -       146            112           (34)
Europe/Asia-Pacific
Adjacent Services               160            155           (5)
Healthcare Claims Recovery      120            373           253
Audit Services
Total                           $1,682        $2,008       $326
                                                            
Amortization of intangible                                   
assets
Recovery Audit Services -       $500          $698         $198
Americas
Recovery Audit Services -       307            396           89
Europe/Asia-Pacific
Adjacent Services               96             182           86
Total                           $903          $1,276       $373
                                                            
Operating income (loss)                                      
Recovery Audit Services -       $4,194        $5,506       $(1,312)
Americas
Recovery Audit Services -       28             747           (719)
Europe/Asia-Pacific
Adjacent Services               (1,574)        (311)         (1,263)
Healthcare Claims Recovery      (2,006)        (850)         (1,156)
Audit Services
Corporate                       (4,134)        (5,393)       1,259
Total                           $(3,492)      $(301)       $(3,191)
                                                            
Adjusted EBITDA                                              
Recovery Audit Services -       $5,958        $7,582       $(1,624)
Americas
Recovery Audit Services -       560            523           37
Europe/Asia-Pacific
Adjacent Services               (1,156)        82            (1,238)
Healthcare Claims Recovery      (1,731)        (477)         (1,254)
Audit Services
Corporate                       (3,113)        (4,075)       962
Total                           $518          $3,635       $(3,117)
                                                            
* The Recovery Audit Services - Americas segment represents recovery audit
services, excluding Healthcare Claims Recovery Audit Services, provided in the
United States, Canada and Latin America. The Recovery Audit Services -
Europe/Asia-Pacific segment represents recovery audit services, excluding
Healthcare Claims Recovery Audit Services, provided in Europe, Asia and the
Pacific region. The Adjacent Services segment (formerly known as Profit
Optimization services) represents data transformation and financial advisory
services. The Healthcare Claims Recovery Audit Services segment represents
recovery audit services for healthcare claims, which consist primarily of
services provided under subcontracts related to the Medicare Recovery Audit
Contractor program.

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

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