Current HR Marketplace Earnings and M&A News

HRmarketer lists the previous quarter's earnings from publicly traded HR and HR-related companies and all the latest M&A activity in the HR marketplace.

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Spring/Summer 2008

Latest Earnings from Publicly Traded "HR" Companies:

• Automatic Data Processing Inc. (ADP): Reported that profits jumped 6 percent in its fiscal third quarter as a stagnant economy slowed growth at many clients' payrolls. Automatic Data Processing earned $413.6 million, or 79 cents per share, compared with profit of $388.9 million, or 70 cents per share, in the year-ago period. Analysts polled by Thomson Financial forecast profit of 75 cents per share in the quarter ended March 31. Revenue surged 12 percent to $2.43 billion from $2.17 billion.
  
  
• Aon Corp. (AOC): Reported results for the first quarter ended March 31, 2008. Net income increased 2% to $218 million or $0.68 per share, compared to $213 million or $0.66 per share for the prior year quarter. Net income from continuing operations increased 8% to $179 million or $0.56 per share, compared to $165 million or $0.51 per share for the prior year quarter. Certain items that impacted first quarter results and comparisons with the prior year quarter are detailed in the reconciliation of non-GAAP measures on page 10 of this press release. Net income from continuing operations per share, excluding certain items, increased 25% to $0.71 compared to $0.57 for the prior year quarter.
  
  
• Administaff Inc. (ASF): Reported its first-quarter profit jumped 57 percent, beating Wall Street expectations. For the three months ended March 31, the company reported income of $13.2 million, or 51 cents per share, compared with $8.4 million, or 30 cents per share, in the year-ago period. Results are based on 25.8 million shares outstanding in the 2008 quarter and 28.2 million shares outstanding in the prior-year quarter. Analysts polled by Thomson Financial, on average, estimated earnings of 48 cents per share on sales of $460.2 million. Revenue rose 12 percent to $456.1 million from $407.8 million in the first quarter of 2007.
  
  
• Convergys Corp. (CVG): Reported that its profit slid 18 percent in the first quarter as expenses rose while revenue was flat. Convergys earned $35.9 million, or 28 cents per share, in the first quarter, compared with profit of $43.6 million, or 31 cents per share, in the first quarter last year. The per-share results reflected an 8.2 percent reduction in the number of shares outstanding year-over-year, reflecting the company's share repurchase program. Profit topped analysts' average forecast by a penny per share, according to a Thomson Financial survey. Revenue, which the company derives mostly from consulting contracts, slipped marginally to $716.4 million from $719.9 million.
  
  
• Equifax Inc. (EFX): Reported its first-quarter profit fell 5 percent due to increased expenses related to its 2007 acquisition of Talx Corp., a provider of employment verification services. First-quarter earnings for the three months ended March 31 fell to $65.7 million, or 50 cents per share, from $69 million, or 55 cents per share, in the prior year. Equifax attributed the earnings shortfall to increased intangible amortization expense related to the company's acquisition of Talx and interest expense on debt incurred to finance the deal. Excluding those costs, earnings totaled 60 cents per share. On average, analysts surveyed by Thomson Financial, who generally exclude one-time items, forecast earnings of 57 cents per share. Quarterly revenue jumped 24 percent to $503.1 million, from $405.1 million in the first quarter of 2007.
  
  
• Gevity HR Inc. (GVHR): Reported its first quarter gross profit benefited from another strong performance in the company's workers' compensation program, which is entirely attributable to the Gevity Edge segment. The workers' compensation program contributed $5.8 million toward gross profit notwithstanding the effects of lower wages and Florida's reduced workers' compensation rates. Conversely, the company experienced a sequential reduction in professional service fees due to the aforementioned reduction in the Gevity Edge client portfolio. In total, Gevity reported first quarter gross profit of $35.2 million in 2008 compared to $51.2 million in the fourth quarter of 2007 and $45.4 million in the year earlier period. Of the first quarter gross profit reported in 2008, $34.2 million was generated by the Gevity Edge segment.
  
  
• Hewitt Associates Inc. (HEW): Reported its profit more than tripled in the fiscal second quarter as the outsourcer and consultant bought other companies and added new clients. Hewitt Associates earned $44.5 million, or 43 cents per share, in the three months ended March 31, compared with profit of $13 million, or 12 cents per share, in the fiscal second quarter last year. Operating income, which excludes certain unusual costs, was 37 cents per share. Analysts polled by Thomson Financial forecast profit of 38 cents per share in the second quarter. Revenue climbed 8 percent to $789.5 million from $733.8 million. Analysts expected revenue of $753 million.
  
  
• INfe Human Resources Inc. (IFHR): Reported strong financial performance for 2007, achieving a 34% increase in revenue, a 28% increase in EBITDA and a higher gross margin. For fiscal year ended November 30, 2007, INfe Human Resources generated revenues of $8,603,150.
  
  
• Kenexa (KNXA): Reported its first-quarter profit edged up 2 percent on higher subscription and professional services revenue. Net income grew to $4.8 million, or 20 cents per share, from $4.7 million, or 19 cents per share, a year ago. Excluding one-time items, the company earned $7.3 million, or 31 cents per share, in the latest period. Revenue rose 14 percent to $48.2 million from $42.2 million, helped by a 13 percent gain in subscription revenue to $39.2 million and a 20 percent jump in professional services and other revenue. Analysts surveyed by Thomson Financial expected profit of 23 cents per share, excluding stock-based compensation costs, on revenue of $48.8 million.
  
  
• Manpower Inc. (MAN): Reported its first-quarter profit surged 27 percent, helped by favorable foreign currency exchange. For the period ended March 31, earnings increased to $75.5 million, or 94 cents per share, from $59.5 million, or 69 cents per share, in the prior year. Analysts expected net income of 82 cents per share, according to a Thomson Financial poll. Manpower generates the majority of its revenue and operating profit overseas. With the dollar hitting record lows against the euro and weakening against other currencies, the company said favorable foreign currency exchange boosted earnings by 14 cents per share. Quarterly sales grew 19 percent to $5.39 billion from $4.54 billion to beat Wall Street's estimate of $5.26 billion.
  
  
• Monster Worldwide, Inc. (MNST): Reported its first-quarter profit fell but revenue and adjusted profit beat Wall Street estimates. Several analysts reacted fairly positively to the report but maintained cautious views of the future. Shares of Monster, which operates the Monster.com Web site, rose 92 cents, or 3.6 percent, to close at $26.48. In the past year, the stock has traded between $21.72 and $50.28. Monster said late Thursday that it earned 18 cents per share, or 24 cents per share on an adjusted basis, on $370.4 million in revenue. Analysts polled by Thomson Financial expected an adjusted profit of 22 cents per share on $362.9 million in revenue.
  
  
• Oracle (ORCL): Reported fiscal 2008 Q3 GAAP earnings per share were up 30% to $0.26, compared to the same quarter last year. Third quarter total GAAP revenues were up 21% to $5.3 billion, while quarterly GAAP operating income was up 35% to $1.9 billion and GAAP net income was up 30% to $1.3 billion. Total GAAP software revenues were up 21% to $4.2 billion with GAAP new software license revenues up 16% to $1.6 billion. Database and middleware new license revenues were up 20% and applications new license revenues were up 7%. GAAP software license updates and product support revenues were up 25% to $2.6 billion. Service revenues were up 21% to $1.1 billion, compared to the same quarter last year.
  
  
• Paychex Inc. (PAYX): Reported its fiscal third-quarter profit rose 13 percent on a jump in service revenue. Paychex earned $142.5 million, or 39 cents per share, compared with $126.6 million, or 33 cents per share, for the same quarter in 2007. Revenue rose 9.7 percent to $532.2 million from $485.3 million in the year-ago period. Analysts polled by Thomson Financial expected a profit of 39 cents per share on $533.3 million in revenue. Payroll service revenue rose 8.3 percent to $374.2 million on client base growth, higher check volume and price increases, while human resource services revenue jumped 18 percent to $120.6 million.
  
  
• Saba (SABA): Reported it swung to a third-quarter profit, helped by an increase in license revenue. Saba earned $158,000 or a penny per share, compared with a loss of $1.2 million or 4 cents per share, in the 2007 third-quarter. Excluding one-time items, the company earned 6 cents per share compared with a profit of 2 cents per share in 2007. Sales rose 10 percent, to $27.4 million from $24.8 million last year. Analysts polled by Thomson Financial, on average, expected profit of 5 cents per share on sales of $27.5 million. Analyst estimates typically exclude special items.
  
  
• SAP AG (SAP): Reported its profit fell 22 percent in the first quarter because of the weaker dollar and costs associated with an acquisition, but sales rose and the company lifted its 2008 outlook. SAP, whose programs help companies do back-office work such as payroll, inventory management and accounting, said net profit for the January-March period fell to 242 million euros ($376.8 million) from 310 million euros a year earlier. That was lower that the 296 million euros ($460.9 million) that analysts surveyed by Dow Jones Newswires had forecast. That sent SAP shares down 2 percent to close at 32.39 euros ($50.56) in Frankfurt.
  
  
• Taleo Corp. (TLEO): Reported its total revenue for the first quarter was $37.2 million, representing an increase of 30% on a year-over-year basis. Application revenue for the first quarter was $30.2 million, an increase of 28% on a year-over-year basis. Taleo's customer base grew to over 1,700 customers with more than 1.2 million users due to the acquisition of Vurv Technology. Net income in accordance with accounting principles generally accepted in the United States, or GAAP, was $1.6 million for the first quarter, compared to net income of $0.9 million for the same period last year.
  
  
• Ultimate Software (ULTI): Reported its financial results for the first quarter of 2008. Ultimate Software reported total revenues of $43.5 million, an increase of 19% compared with the first quarter of 2007, and recurring revenues of $25.7 million, a 32% increase over the first quarter of the previous year. GAAP net income for the first quarter of 2008 was $0.3 million, or $0.01 per diluted share, versus $1.3 million, or $0.05 per diluted share, for the first quarter of 2007. New annual recurring revenues (ARR) were $8.5 million for the first quarter of 2008, a 41% increase over those for the first quarter of 2007.
  
  
• Watson Wyatt Worldwide Inc. (WW): Reported revenues that were $457.5 million for the quarter, an increase of 16% (14% constant currency) from the third quarter of fiscal 2007 revenues of $395.6 million. Excluding the impact of acquisitions and changes in foreign exchange rates, revenues increased 6% from the third quarter of fiscal 2007. Net income for the third quarter of fiscal 2008 was $42.5 million, or $0.96 per diluted share, an increase from $33.8 million or $0.76 per diluted share in the prior-year third quarter. When compared to prior-year third quarter, exchange rates had a positive impact of $0.01 per diluted share on net income.
  
  
• Workstream Inc. (WSTM): Reported revenues that were $6.2 million compared to $7.0 million during the same period last year. The year over year decline in revenues was primarily attributable to lower recurring software revenues. EBITDA, or earnings before interest, taxes, depreciation and amortization, was $(4.7) million, compared to $(1.7) million during the same period last year. Net loss for the period in accordance with accounting principles generally accepted in the United States, or GAAP, was $(19.7) million, reflecting the recording of $13.1 million of interest expense during the quarter related to the Company’s common stock warrant liability. GAAP Earnings per share for the quarter were $(0.38) with 52 million weighted average shares outstanding.
  
  

Latest M&A Activity in the HR marketplace:

• Accurate Background Inc., a solution driven leader in the background screening industry, today announced the expansion of its fingerprinting network through the purchase of assets including livescan capture systems and custom electronic Biometric Information Processing System (eBIT) software from Cross Match Technologies, Inc., a global provider of biometric identity management systems.
  
  
• Adecco India, the Indian arm of the world’s largest HR Services company announced the acquisition of Ajinkya, India’s leading blue-collar temping company.
  
  
• Allsec Technologies, an Indian business process outsourcing firm, has bought Philippines-based Kingdom Builders Inc., which has been operating a two-year-old, 150-seat facility in Ortigas, Pasig City. Paolo Narciso, senior vice president for business development, said Allsec Technologies will offer web development and hosting services, including human resource and payroll services.
  
  
• Allegis Group acquired TVA Infotech, a Bangalore-based IT recruitment firm. The financial terms of the acquisition were not disclosed. Through the acquisition, Allegis aims to strengthen its abilities in the human resource market across the country as well as improve its recruiting capabilities. Post-acquisition, TVA will be renamed as TVA Allegis.
  
  
• api software, inc. (API), a provider of labor resource management software solutions for healthcare organizations, acquired ENEPCS™ (Expert Nurse Estimation Patient Classification System), an automated system that measures clinical workload and provides the number of hours and skill mix required to meet patient needs.
  
  
• Arthur J. Gallagher & Co. announced the acquisition of RSI of Mount Laurel, New Jersey. Founded in 1980, RSI offers employee benefit consulting and brokerage services that include strategic analysis and plan design, human resource services, benefit outsourcing, retirement plan consulting and employee communications support.
  
  
• Arthur J. Gallagher & Co. announced the acquisition of The Commonwealth Consulting Group of Jenkintown, Pennsylvania. The Commonwealth Consulting Group (CCG) was founded in 1994 and offers a complete line of employee benefit brokerage and consultative services.
  
  
• Arthur J. Gallagher & Co. announced the acquisition of Bankers Financial Benefits of Oklahoma City, Oklahoma. Terms of the transaction were not disclosed.
  
  
• Arthur J. Gallagher & Co. acquired Fairport, N.Y.-based Providium Consulting Group LLC for an undisclosed amount.
  
  
• Brown & Brown, Inc. announced the asset acquisition of MEW Custom Staffing, L.L.C. by a subsidiary of Brown & Brown, Inc. Custom Outsourcing is a human resource outsourcing and insurance agency serving clients throughout the state of Florida, with annualized revenues of approximately $1.5 million.
  
  
• Ceridian announced it acquired certain assets of COLT Express Outsourcing, Inc., a California-based benefits administration outsourcing company.
  
  
• COA Solutions Ltd, a UK provider of business and information management systems, announced the acquisition of UK human resource (HR) software company, ASR Computers Ltd.
  
  
• COA Solutions Ltd, a provider UK provider of business and information management systems, announced the acquisition of UK eProcurement solutions and services specialist, Belmin Group Ltd.
  
  
• CoAdvantage Inc. completed the acquisition of Nelco Inc. and PlanSource. The acquisitions are expected to significantly increase profits for 10-year-old CoAdvantage, making it one of the top 10 professional employer organizations (PEOs) in the country, with 2007 total projected net revenue of $106 million.
  
  
• EBS On Line, a payroll processing service provider, and Ascentis Corporation, a human resource management systems (HRMS) company based in Bellevue, Washington, announced today that they have merged. The companies will operate under the Ascentis name.
  
  
• G&A Partners, a Houston-based Human Resource (HR) and administrative services c
  
  
• Global BPO Services Corp. announced that it has entered into a definitive acquisition agreement to acquire 100% of the outstanding equity in Stream Holdings Corporation ("Stream"), a business process outsourcing ("BPO") services firm, including human resources.
  
  
• Hewitt Associates announced the acquisition of New Bridge Street Consultants, a compensation consulting firm in the United Kingdom.
  
  
• Hewitt Associates will acquire CSi, a specialist compensation consultancy in Australia and New Zealand.
  
  
• JobsInLogistics.com, a niche job board for the transportation, logistics and supply chain professions, announced the acquisition of TruckJobs.com, one of the pioneers of Internet job boards.
  
  
• Kenexa has acquired London-based Quorum International, a provider of recruitment process outsourcing (RPO) services to multi-national corporations throughout Europe, the Middle East, and Africa.
  
  
• Manpower Inc., a world leader in the employment services industry, announced today that it has acquired Clarendon Parker Middle East FZ LLC (CPME), the region's largest professional recruitment provider. As a result, Manpower Middle East becomes the clear market leader for employment services in the region. CPME has operations in United Arab Emirates, Bahrain, Kuwait, Qatar and Saudi Arabia.
  
  
• MetLife, Inc. announced that it has completed its acquisition of SafeGuard Health Enterprises, Inc. (SafeGuard).
  
  
• Oasis Outsourcing Holdings Inc., a privately held professional employer organization with an office in Sarasota, said Monday that it has acquired Professional Employer Plans Inc., Advantage Employer Solutions Inc. and related companies, which are headquartered in Tampa. These companies provide small- and medium-sized businesses in a variety of industries with human resources, payroll processing, benefits and risk management services.
  
  
• Taleo signed a definitive agreement to acquire Jacksoville Fl.-based Vurv Technology Inc., a privately held provider of human resources software, for approximately $128.8 million in cash and stock.
  
  
• TriNet Group has acquired LMC Resources Inc. of Denver, a human resource consulting firm.
  
  
• Workday acquired Cape Clear Software, one of the last remaining independent providers of an enterprise service bus, which is middleware technology for integrating applications using Web services.