SOURCE: Analysts International Corporation

Analysts International Corporation

August 05, 2009 17:44 ET

Analysts International Corporation Reports Second Quarter 2009 Financial Results

MINNEAPOLIS, MN--(Marketwire - August 5, 2009) - Analysts International Corporation (NASDAQ: ANLY)

--  31% decline in revenue from existing business operations
--  20% decline in revenue due to the planned exit from low-margin and non-
    core lines of business
--  Margins improved 390 basis points
--  Selling, administrative and other operating costs reduced by $2.6
    million or 20%
--  $4.6 million in cash with excess credit facility availability of $10.4
    million
--  Subsequent to the close of the quarter, sold value-added reseller
    (VAR) business for $3.0 million in cash and $750,000 in contingent
    consideration
    

Analysts International Corporation (AIC) (NASDAQ: ANLY), an information technology services company, today announced results for the second quarter ended July 4, 2009. The Company reported revenue of $40.5 million for the second quarter of 2009 compared to $82.0 million for the second quarter of 2008. The Company reported a net loss of $6.6 million, or $0.26 per share, for the second quarter of 2009, compared to a net loss of $1.0 million, or $0.04 per share, for the second quarter of 2008.

The second quarter 2009 loss includes non-cash charges of $4.0 million, or $0.16 per share, resulting from a $2.3 million impairment of customer list intangible assets and a $1.7 million charge for restructuring and other severance related costs. Last year, the second quarter 2008 loss included a $0.9 million charge, or $0.04 per share, for restructuring, severance and other consulting costs.

"Despite the continued decrease in demand for IT products and services and the resulting reduction in our business volume in the second quarter of 2009, we are beginning to see additional opportunities emerge within the public sector and are aggressively pursuing that business," said Elmer Baldwin, President and CEO. "At the same time, we continue to make the investments required to ensure AIC is well positioned for future growth. During the second quarter, we invested in strengthening our sales organization; in our public sector solution offerings, especially those that align with our Microsoft and Lawson partnerships; and in our people, our systems and our operating processes with the intent of improving our brand and overall business performance. We will continue making these types of investments throughout the second half of the year."

"The recent sale of our VAR business strengthens our balance sheet and liquidity, enabling us to streamline our operations and focus on growing our core services," said Randy Strobel, Chief Financial Officer. "We have maintained our cash position from the end of the first quarter of 2009 and have no debt outstanding. We continue to reduce our SG&A expenses in response to the overall decline in business activity and will seek additional opportunities for improvement throughout the balance of fiscal year 2009."

2009 Second Quarter and Year-to-Date Review

Our revenues decreased $41.5 million, or 50.6%, in the second quarter 2009 compared to the second quarter 2008, and by $79.1 million, or 48.0%, for the first half of fiscal 2009, when compared to the comparable period of 2008, primarily due to our planned exit from non-core and low-margin lines of business, the negative effect the economic environment has had on the demand for our IT professional services, a reduction in volume at our largest customer and a decline in product demand.

In the second quarter of 2009, gross margins were $8.0 million, or 19.7 percent of revenue, compared to $13.0 million, or 15.8 percent of revenue, in the second quarter of 2008. Gross margins were $17.1 million, or 19.9 percent of revenue, in the first half of fiscal 2009, compared to $27.6 million, or 16.8 percent of revenue, in the first half of fiscal 2008. The increase in gross margins as a percent of revenue reflects the impact of implementing our strategy of exiting low margin lines of business and accounts, and the reduction in lower margin product sales.

Selling, administrative and other general expenses declined by $2.6 million in the second quarter of 2009, when compared to the second quarter of 2008, and by $5.3 million for the first half of fiscal 2009, when compared to the comparable period of 2008. This is largely a result of our efforts to reduce operating costs as part of the business transformation plan that was announced in early 2008.

We generated cash from operations of $0.3 million in the second quarter 2009 compared to $2.6 million in the second quarter of 2008. We generated cash from operations of $3.1 million in the first half of fiscal 2009 compared to cash generated of $1.1 million in the first half of fiscal 2008. As of July 4, 2009, we had a cash balance of $4.6 million, excess availability of $10.4 million and no borrowings under our credit facility.

Second Quarter 2009 Conference Call

We will host a conference call on Thursday, August 6 at 9:00 a.m. CT to discuss the second quarter 2009 financial results. Participants may access the call by dialing 1.866.233.5281, or 1.416.849.6199 for international participants, and asking for the Analysts International conference call. Live audio of the conference may also be accessed via the Internet at www.analysts.com, where it will be archived. Interested parties can also hear a replay of the call from 12:00 p.m. CT on August 6, 2009, to 10:59 p.m. CT on August 13, 2009, by calling 1.866.245.6755, or 1.416.915.1035 for international callers, and using access code 445728.

About Analysts International Corporation

Analysts International Corporation (NASDAQ: ANLY) is an information technology services company focused on providing configured solutions for its clients. AIC serves a broad portfolio of clients throughout the United States with technology staffing, collaboration solutions, infrastructure solutions, project and application solutions and managed services offerings. For more information, visit us online at www.analysts.com.

Cautionary Statement for the Purpose of Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995

This press release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements made in this press release or during the conference call referred to herein by AIC, its CEO Elmer Baldwin, or its CFO Randy Strobel, regarding, for instance: (i) AIC's commitment to executing its business transformation plan and its 2009 objectives; (ii) AIC's intention to reduce expenses and exit lower margin and non-core lines of business; (iii) management's beliefs with respect to the impact of cost reduction initiatives and strategic decisions; and (iv) the potential impact of the sale of AIC's VAR business, are forward-looking statements. These forward-looking statements are based on current information, which we have assessed, which by its nature is dynamic and subject to rapid and even abrupt changes. Forward-looking statements include statements expressing the intent, belief or current expectations of AIC and members of our management team and involve certain risks and uncertainties, including (i) the risk that management may not fully or successfully implement its business transformation plan; (ii) the risk that AIC will not be able to successfully reduce costs or exit non-core or less desirable areas of the business in a timely manner or on favorable terms; (iii) prevailing market conditions in the IT services industry, including intense competition for billable technical personnel at competitive rates and strong pricing pressures from many of our largest clients and difficulty in identifying, attracting and retaining qualified billable technical personnel; (iv) potentially incorrect assumptions by management with respect to the downturn in the economy or the impact of prior cost reduction initiatives and strategic decisions; and (v) other economic, business, market, financial, competitive and/or regulatory factors affecting AIC's business generally, including those set forth in AIC's filings with the SEC. You are cautioned not to place undue reliance on these or any forward-looking statements, which speak only as of the date of this press release and conference call.

                    Analysts International Corporation
                  Consolidated Statements of Operations
                               (Unaudited)

                                 Three Months Ended     Six Months Ended
                                --------------------  --------------------
(In thousands except per share   July 4,   June 28,    July 4,   June 28,
 amounts)                         2009       2008       2009       2008
                                ---------  ---------  ---------  ---------

Revenue:
Professional services provided
 directly                       $  35,053  $  58,162  $  75,876  $ 118,902
Professional services provided
 through subsuppliers                 678     14,230      1,551     28,326
Product sales                       4,797      9,598      8,233     17,565
                                ---------  ---------  ---------  ---------
Total revenue                      40,528     81,990     85,660    164,793

Expenses:
Cost of services provided
 directly                          27,821     46,491     60,109     94,108
Cost of services provided
 through subsuppliers                 643     13,730      1,474     27,304
Cost of product sales               4,079      8,793      7,008     15,783
Selling, administrative and
 other operating costs             10,318     12,940     21,347     26,629
Restructuring costs and other
 severance related costs            1,725        729      1,791      2,368
Impairment of intangible assets     2,268          -      2,268          -
Amortization of intangible
 assets                               224        279        447        558
                                ---------  ---------  ---------  ---------
Total expenses                     47,078     82,962     94,444    166,750

Operating loss                     (6,550)      (972)    (8,784)    (1,957)

Non-operating income                   13         36         27         70
Interest expense                       (3)       (43)       (11)      (135)
                                ---------  ---------  ---------  ---------

Loss before income taxes           (6,540)      (979)    (8,768)    (2,022)

Income tax expense                     12          5         18          9
                                ---------  ---------  ---------  ---------

Net loss                        $  (6,552) $    (984) $  (8,786) $  (2,031)
                                =========  =========  =========  =========

Per common share (basic):
Net loss                        $   (0.26) $   (0.04) $   (0.35) $   (0.08)

Per common share (diluted):
Net loss                        $   (0.26) $   (0.04) $   (0.35) $   (0.08)

Weighted-average shares
 outstanding:
  Basic                            24,925     24,913     24,925     24,913
  Diluted                          24,925     24,913     24,925     24,913




                    Analysts International Corporation
                  Condensed Consolidated Balance Sheets
                                (Unaudited)



                                                        July 4,  January 3,
(In thousands)                                           2009       2009
                                                      ---------- ----------

ASSETS
Current assets:
Cash and cash equivalents                             $    4,559 $    2,288
Accounts receivable, less allowance for doubtful
 accounts                                                 29,348     40,814
Other current assets                                       1,127      1,521
                                                      ---------- ----------
Total current assets                                      35,034     44,623

Property and equipment, net                                2,777      3,081
Other assets, net                                          3,779      6,550
                                                      ---------- ----------
Total assets                                          $   41,590 $   54,254
                                                      ========== ==========

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
Accounts payable                                      $   10,229 $   15,581
Line of credit                                                --         --
Salaries and benefits                                      3,885      3,249
Deferred revenue                                           1,103      1,473
Deferred compensation                                        253        275
Restructuring accrual                                        718        184
Other current liabilities                                    962      1,025
                                                      ---------- ----------
Total current liabilities                                 17,150     21,787

Non-current liabilities:
Deferred compensation                                      1,264      1,391
Restructuring accrual                                      1,098         65
Other long-term liabilities                                  256        616

Shareholders' equity                                      21,822     30,395
                                                      ---------- ----------
Total liabilities and shareholders' equity            $   41,590 $   54,254
                                                      ========== ==========





                    Analysts International Corporation
              Reconciliation of non-GAAP Financial Measures
                                (Unaudited)



                                    Three Months Ended   Six Months Ended
                                    ------------------  ------------------
                                     July 4,  June 28,   July 4,  June 28,
(In thousands)                        2009      2008      2009      2008
                                    --------  --------  --------  --------

Net loss as reported                $ (6,552) $   (984) $ (8,786) $ (2,031)
Plus:
Impairment of intangible assets        2,268        --     2,268        --
Restructuring costs and other
 severance related costs               1,725       729     1,791     2,368
Other consulting costs                    --       180        --       406
                                    --------  --------  --------  --------

(Loss) income before other
 reconciling items                    (2,559)      (75)   (4,727)      743

Stock based compensation expense         117       157       213       260
Depreciation                             391       389       767       803
Amortization                             224       279       447       558
Net interest and non-operating
 (income) expense                        (10)        7       (16)       65
Income tax expense                        12         5        18         9
                                    --------  --------  --------  --------

Adjusted EBITDA*                    $ (1,825) $    762  $ (3,298) $  2,438
                                    ========  ========  ========  ========

* Non-GAAP Financial Information

In evaluating the Company's business, the Company's management considers and uses Adjusted EBITDA as a supplemental measure of operating performance. Adjusted EBITDA refers to a financial measure that the Company defines as net income (loss) excluding interest, taxes, depreciation, amortization, share-based compensation, special charges and other gains and losses that are not related to the Company's operations. This measure is an essential component of the Company's internal planning process because it facilitates period-to-period comparisons of the Company's operating performance by eliminating potential differences in net income (loss) caused by the existence and timing of certain non-cash items, special charges and other gains and losses. This measure should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results. The non-GAAP financial measure included in this press release has been reconciled to the nearest GAAP measure.

Contact Information

  • Media Contact:
    Marne Oberg
    Analysts International Corporation
    (952) 838-2867