COMSYS IT Partners, Inc. Reports 2009 First Quarter Results and Announces Stock Repurchase Program

Business Wire, April 30, 2009

HOUSTON, Texas -- COMSYS IT Partners, Inc. (NASDAQ:CITP), a leading provider of information technology staffing and consulting services, today announced results for its first quarter ended March 29, 2009.

First Quarter 2009 Financial Results Include Additional Restructuring Charges

• Revenue was $162.7 million, down 11.3% from $183.4 million during the first quarter of 2008. On an acquisition-adjusted basis (i.e. including the acquisitions in the prior year on a pro forma basis), revenue declined by 12.9% from the prior-year period.
• Net loss was $1.9 million, or $0.09 per common share, down from net income of $5.1 million, or $0.25 per share, in the first quarter of 2008.
• Results for the first quarter of 2009 also included restructuring charges of approximately $3.6 million. Excluding these charges, net income in the quarter would have been $1.7 million, or $0.08 per common share.
• EBITDA (a non-GAAP measure defined below), excluding restructuring costs, in the first quarter of 2009 was $4.9 million compared with $9.9 million in the first quarter of 2008 and $9.2 million in the fourth quarter of 2008.
• The Company continued to generate strong cash flow and, despite the normal seasonal cash needs in the first quarter, average daily net debt for the first quarter declined to $57.9 million from $60.7 million in the fourth quarter of 2008.

COMSYS also announced today that its Board of Directors has authorized the repurchase of up to $5.0 million of the Company’s common stock from time to time on the open market or in privately negotiated transactions. The timing and amount of any shares repurchased will be determined by the Company’s management based on its evaluation of market conditions and other factors. The repurchase program may be suspended or discontinued at any time until its termination on April 27, 2010.

“We are pleased with our first quarter results, considering that the quarter was another difficult one for the broader economy and continued to put a great deal of pressure on many of our customers,” said Larry L. Enterline, COMSYS Chief Executive Officer. “While we are gratified that we began to see a leveling off of the downward trend in billable hours over the past month, we are not yet ready to call a bottom. We remain in close contact with our customers as we continue to monitor the overall business environment, and we intend to continue providing them the best possible services. We are also continuing to work hard on our productivity and efficiency initiatives and on our balance sheet, as we believe that successes in these areas will position us well for the next expansion.”

Enterline added, “As always, I would like to thank our operations leaders and their staffs for their ongoing strong efforts. Their focus and dedication will ensure that we continue to support our customers in this difficult environment.”

Amy Bobbitt, Senior Vice President and Chief Accounting Officer, commented, “Billable hours in the first quarter were down overall versus last year, but the rate of decline in our average weekly billable hours trend, measured on a rolling four-week basis, has improved over the past 10 weeks after significant declines in January. Gross margin declined by 100 basis points in the first quarter versus the same period last year. Half of this decline resulted from lower permanent placement revenue and the balance of the decline came from our core staffing business. On a sequential basis, after eliminating the impact of higher payroll taxes in the first quarter this year, gross margin improved by 10 basis points over the fourth quarter of 2008.”

Liquidity

During the quarter the Company completed a two-year extension of its credit facility to March 2012. This extension provides COMSYS with the financial flexibility to make appropriate investments in the business and maintain its infrastructure. This amendment also allows the Company to take the stock buyback actions announced herein.

The Company expects to continue to pay down debt during 2009. Excess availability at the end of the first quarter was $48.5 million. There are no significant restrictions limiting borrowings under the Company’s revolver.

Restructuring

The restructuring announced in November 2008 has essentially been completed, and the cost associated with the restructuring was approximately $1 million higher than originally expected. The increase was primarily due to the deteriorating sublease market in the area of the Company’s Washington, D.C. area lease, where the Company has abandoned substantial back office space. As a result of these conditions, the Company lowered its expectations for a sublease recovery on that space from what was originally estimated.