Superior Consultant Reports Quarterly Profit, Anticipates Exceeding
Targets For 2004 Superior expects continued profitability and
growth SOUTHFIELD, Mich., April 29 /PRNewswire-FirstCall/ --
Superior Consultant Holdings Corporation today reported its first
quarter 2004 operating results and that it expects to exceed its
2004 targets. For the first quarter of 2004, the company reported
net revenue of $24.6 million, compared with $21.9 million in the
same quarter a year ago. The company reported positive EBITDA for
the quarter of $1.8 million and earnings per diluted share of
$0.02, compared with EBITDA of $0.3 million and a net loss of
($0.08) per share in the same quarter last year. Outsourcing net
revenue increased 45.0% over the same quarter in the prior year.
Following a competitive bid process, the company has been selected
as vendor of choice for a new, multi-year, multi-million dollar
outsourcing contract with a West Coast health system; contract
negotiations are in the final stages. Superior has reached
agreement on all major items in another previously announced
multi-year, multi-million dollar outsourcing contract negotiation
with a Midwest health system. The combined value of these
contracts, if successfully concluded, is approximately $100
million. The company's outsourcing sales prospect pipeline
increased to $790 million. "The past quarter marks a significant
step forward in the plans we announced three years ago to
transition to a strong recurring revenue model," said Chief
Executive Officer Richard D. Helppie. "Building upon high client
satisfaction and industry recognition as the best value in
healthcare information technology, we have seen the results of our
investments and corporate focus as we mark our sixth consecutive
quarter of in-line performance, a second straight quarter of
profitability, and an expectation of further growth in revenue and
profitability. Superior's revenue from long- term, recurring
revenue contracts is approaching 50%, and we currently have a
backlog of $268 million in sold work. Additionally, we have two
multi-year outsourcing agreements in the final stages of
negotiations, which we expect will add approximately $100 million
to our backlog." "Superior increased its revenue over the same
quarter last year and achieved additional operating efficiencies,"
said Richard R. Sorensen, Chief Financial Officer. "We reported
increases in our profit, operating margin and EBITDA, and we ended
the quarter with $12.2 million in cash. Uses of cash during the
quarter consisted primarily of the purchase of software and
equipment related to our outsourcing contracts, debt service
associated with our financing arrangements, and stock repurchases.
Additionally, in the second quarter we secured commitments for
increased financing capacity and expect to further add to our
available cash through the sale of under-utilized real estate."
SG&A in the first quarter improved to 24.1% of net revenue from
26.0% last quarter and 31.1% in the same quarter of 2003. Days
Sales Outstanding (DSO) were 49, compared with 46 last quarter and
59 one year ago. Operating margin improved to 1.8% in the quarter,
compared with 1.0% in the prior quarter, excluding restructuring
recovery, and (3.7%) in the same quarter of 2003. Gross margin for
the quarter was 25.9%, compared with 27.4% in the same quarter one
year ago. "During the quarter, we focused on delivery of our
outsourcing and consulting commitments," said George S. Huntzinger,
President and Chief Operating Officer. "Superior's transformational
outsourcing solution has generated high satisfaction among our
clients as it continues to propel them toward achievement of their
business goals. Supported by world-class infrastructure, our
single-source application delivery and process change approach
provides clients a faster and more significant return on their
information technology investment. Accordingly, during the quarter
we continued to focus on development and delivery of best practices
solutions. From an economic perspective, the Superior Processing
Center has reached a utilization level where it has transitioned
from the investment stage to become a contributor to gross margin."
"In consulting, we gained new clinical transformation and revenue
cycle engagements during the quarter, we saw a 77% revenue increase
in interim management engagements, and we noted revenue growth in
some of our vendor application delivery areas," Huntzinger
continued. "We sold 12 consulting engagements valued in excess of
$200,000, and two of our new clients during the quarter awarded us
contracts valued in excess of $100,000. Accepted proposals for
consulting work totaled $11.5 million for the first quarter, and
our pipeline for consulting opportunities increased during the
quarter. Thus far in 2004, we have added $33.2 million in
consulting sales, including a $12.5 million, multi-year,
enterprise-wide electronic medical records and implementation
engagement, with physician order entry and decision support, which
closed in the second quarter," Huntzinger concluded. OUTLOOK
"Dramatic results can be achieved in terms of healthcare quality,
operational improvement and cost reduction by applying specific
digital technology and process change to the healthcare delivery
continuum," said Helppie. "In recent years, backed by two decades
of hands-on industry experience, Superior constructed both a set of
solutions to enable healthcare organizations to achieve tangible
results and a new business model with greater recurring revenue. As
a result, we are seeing more opportunities to make an even bigger
impact in the healthcare industry." Based on the results for the
first quarter, the current sales prospect pipeline, and other
factors, Superior anticipates that 2004 results will exceed the
previously published guidance. Net revenue is expected to be above
the previously announced range of approximately $102 million to
$107 million, earnings per basic share is expected to be above the
previously announced $0.08 to $0.13, and EBITDA is expected to
exceed the previously announced guidance range of $8.0 to $8.5
million. The revenue forecast is based on revenue recognized in the
first quarter, a current booked backlog of $56.7 million for the
remainder of the year, and client indications of an additional
$10.6 million. As previously announced, the company expects to
continue to show quarterly improvement over comparable 2003
quarters throughout the year. The company's guidance is also
predicated on anticipated success in winning and servicing new
outsourcing and consulting contracts, achievement of the
anticipated revenue mix between outsourcing and consulting, and
continued expense controls. Early in the second quarter, the
company received an unsolicited purchase offer for an office
building and subsequently reached an agreement for its sale. The
transaction is expected to add approximately $1.7 million in cash
to the company's balance sheet. Superior expects that the
transaction will result in a non-cash write-down of approximately
$450,000 to reflect the difference between the sale price and the
net book value of the building, plus approximately $100,000 in
commission charges. The write-down is expected to be substantially
offset during the year by replacing the building with more
efficient facilities. Superior anticipates continued capital
expenditures in connection with the launch and service of
outsourcing relationships. The company expects to meet the capital
and cash requirements through the associated outsourcing revenue
streams, operating cash flow, and financing sources. In April, the
company negotiated a larger, more favorable line of credit with
Fifth Third Bank. In addition, the company negotiated other credit
lines for equipment and software financing. Helppie concluded, "We
remain on a steady course to gain efficiency in our operations, to
further develop a compelling transformational outsourcing solution
and complementary consulting services, and to build a solid
recurring revenue stream. Our success to date is evident in our
position as the quality and value leader of healthcare outsourcing
and consulting solutions and our strengthening financial
performance and profitability. Superior's extraordinary work force
is the key to our past success and our future. Our Superior
colleagues look forward to continuing opportunities for growth in
2004 and beyond, as well as additional ways to serve our clients
and create value for all of our stakeholders." Conference Call
Broadcast: Superior Consultant's senior executives will discuss the
first quarter 2004 results during an investor teleconference
scheduled for 11:00 a.m. eastern time on Friday, April 30, 2004. To
listen to the broadcast, participants may log onto
http://www.superiorconsultant.com/ and go to the "Investors"
section of the Web site. We suggest you log onto the Web site 10
minutes prior to the conference call to download and install any
necessary software. Conference Call Replay: An online replay will
be available after 2:30 p.m. eastern time on Friday, April 30,
2004, under the "Investors" section of
http://www.superiorconsultant.com/ . Statements included in this
press release which are not historical in nature, are intended to
be, and are hereby identified as "forward-looking statements" for
purposes of the safe harbor provided by Section 21E of the
Securities Exchange Act of 1934, as amended by Public Law 104-67.
Forward- looking statements may be identified by words including,
but not limited to: "anticipate," "believe," "intends,"
"estimates," "promises," "expect," "should," "conditioned upon" and
similar expressions. This release contains forward-looking
statements relating to future financial results or business
expectations. Business plans may change as circumstances warrant.
Actual results may differ materially as a result of factors and
events which the company is unable to accurately predict or over
which the company has no control. Such factors include, but are not
limited to: the award or loss of significant client assignments,
timing of contracts, recruiting and new business solicitation
efforts, the healthcare market's acceptance of and demand for the
company's offerings, demands upon and consumption of the company's
cash and cash equivalent resources or changes in the company's
access to working capital, regulatory changes and other factors
affecting the financial constraints on the company's clients,
competitive pressures (both domestic and foreign), the ability to
successfully manage currency risk, obtain foreign work permits and
otherwise successfully execute and manage international contracts,
economic factors specific to healthcare, general economic
conditions, unforeseen disruptions in transportation,
communications or other infrastructure components, acquisitions
under consideration and the ability to integrate acquisitions on a
timely basis. Additional information regarding these risk factors
and others, and additional information concerning the company are
included in the company's reports on file with the Securities and
Exchange Commission. About Superior Consultant Holdings Corporation
Recipient of Frost & Sullivan's 2003 Best Bang for the Buck
Award for providing services and solutions with the highest ratio
of value to cost, Superior Consultant is a leading national
provider of transformational outsourcing, management and
information technology consulting services and solutions to the
healthcare industry. Superior specializes in Digital Business
Transformation(TM) services that enable clients to thrive in the
information-driven economy, and its transformational outsourcing,
management and information technology consulting services and
solutions help clients plan and execute better business strategies
and meet their fiscal challenges while advancing clinical quality.
Superior's best practices outsourcing model includes a full range
of flexible business process and information technology solutions,
including data center services, 24/7/365 network monitoring and
help desk services, facility management, interim management, and
application outsourcing services. For 20 years, Superior has been
recognized as an innovative leader within the healthcare industry
and has been rewarded with full and partial outsourcing contracts,
thousands of engagements, approximately 150 interim management
assignments, and nearly 3,000 clients. For more information on
Superior Consultant Holdings Corporation simply dial 1-800-PRO-INFO
and enter the Company ticker: SUPC (a no-cost fax-on- demand
service) or visit the Company's Web site at
http://www.superiorconsultant.com/ . SUPERIOR CONSULTANT HOLDINGS
CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands) (Unaudited) March 31, December 31, ASSETS 2004 2003
Current assets Cash and cash equivalents $12,200 $12,688 Accounts
receivable, net 13,341 12,592 Other current assets 3,736 4,000
Total current assets 29,277 29,280 Property and equipment, net
25,319 24,235 Other long-term assets 295 338 Total Assets $54,891
$53,853 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities
Notes payable to bank $2,400 $1,900 Other current liabilities
17,093 16,300 Total current liabilities 19,493 18,200 Senior
subordinated debentures, net 7,578 7,552 Long-term liabilities
4,640 5,185 Stockholders' equity 23,180 22,916 Total Liabilities
and Stockholders' Equity $54,891 $53,853 SUPERIOR CONSULTANT
HOLDINGS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (In thousands, except per share amounts)
(Unaudited) Three Months Ended March 31, December 31, March 31,
2004 2003 2003 Revenue Consulting Revenue before reimbursements
(net revenue) $13,169 $13,326 $13,991 Out-of-pocket reimbursements
(1) 1,459 1,688 1,773 Total consulting revenue 14,628 15,014 15,764
Outsourcing Revenue before reimbursements (net revenue) 11,453
11,249 7,900 Out-of-pocket reimbursements (1) 108 164 78 Total
outsourcing revenue 11,561 11,413 7,978 Consolidated revenue 26,189
26,427 23,742 Cost of services Consulting Cost of services before
reimbursements (net cost of services) 8,445 7,874 8,481
Out-of-pocket reimbursements (1) 1,459 1,688 1,773 Total consulting
cost of services 9,904 9,562 10,254 Outsourcing Cost of services
before reimbursements (net cost of services) 9,812 10,109 7,403
Out-of-pocket reimbursements (1) 108 164 78 Total outsourcing cost
of services 9,920 10,273 7,481 Consolidated cost of services 19,824
19,835 17,735 Gross Profit Consulting 4,724 5,452 5,510 Outsourcing
1,641 1,140 497 Consolidated gross profit 6,365 6,592 6,007
Selling, general and administrative expenses 5,923 6,390 6,815
Restructuring recovery, net - (193) - Earnings (loss) from
operations 442 395 (808) Other expense, net (256) (288) (79)
Earnings (loss) before income tax benefit 186 107 (887) Income tax
benefit - - - Net earnings (loss) $186 $107 $(887) Net earnings
(loss) per share Basic $0.02 $0.01 $(0.08) Diluted $0.02 $0.01
$(0.08) Weighted average number of common shares outstanding Basic
10,358 10,377 10,765 Diluted 11,686 11,361 10,765 SUPERIOR
CONSULTANT HOLDINGS CORPORATION AND SUBSIDIARIES SUPPLEMENTAL
INFORMATION (In thousands) (Unaudited) Three Months Ended March 31,
December 31, March 31, 2004 2003 2003 GAAP to Non-GAAP
Reconciliations: Consolidated revenue $26,189 $26,427 $23,742 Less:
Out-of-pocket reimbursements (1) (1,567) (1,852) (1,851) Net
Revenue $24,622 $24,575 $21,891 Operating expenses Consolidated
cost of services $19,824 $19,835 $17,735 Selling, general and
administrative expenses 5,923 6,390 6,815 Restructuring recovery,
net - (193) - Operating expenses - GAAP 25,747 26,032 24,550 Less:
recovery, net - 193 - Less: Out-of-pocket reimbursements (1)
(1,567) (1,852) (1,851) Operating expenses, as adjusted $24,180
$24,373 $22,699 Net earnings (loss) $186 $107 $(887) Depreciation
and amortization 1,356 1,358 1,081 Interest expense, net 256 340 79
Income tax benefit - - - EBITDA $1,798 $1,805 $273 Capital
expenditures, net of financing $2,606 $2,462 $1,683 Gross profit %
- Consulting (1) 35.9% 40.9% 39.4% Gross profit % - Outsourcing (1)
14.3% 10.1% 6.3% Gross profit % - Consolidated (1) 25.9% 26.8%
27.4% SGA % 24.1% 26.0% 31.1% Headcount 592 609 574 (1) In November
2001, the Financial Accounting Standards Board issued Staff
Announcement Topic No. D-103, "Income Statement Characterization of
Reimbursements Received for Out-of-Pocket Expenses Incurred," which
states that reimbursements received for out-of-pocket expenses
should be characterized as revenue in the income statement. The
application of Staff Announcement Topic No. D-103 does not have an
impact on current or previously reported net earnings (loss) or
earnings (loss) per share. We will continue to use net revenue
(revenue before out-of-pocket reimbursements) and net cost of
services (cost of services before out-of-pocket reimbursements) to
compute percentage and margin calculations, as well as for purposes
of comparing the results of operations for the quarter ended March
31, 2004, to the quarters ended December 31, 2003, and March 31,
2003. DATASOURCE: Superior Consultant Holdings Corporation CONTACT:
Richard D. Helppie - Chief Executive Officer, Richard R. Sorensen -
Chief Financial Officer, or Susan M. Synor - Executive Vice
President, of Superior Consultant Holdings Corporation,
+1-248-386-8300 Web site: http://www.superiorconsultant.com/
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