A COMPANY THAT IS GOING TO DO 20-25C A SHARE EPS AND IS TRADING AT 11/16THS?????
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I'M IN!
ALRC : ALTERNATIVE RESOURCES (NASDAQ)
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Alternative Resources Corporation Expects a Significant Increase in E.P.S. And EBITDA for 2001.
BARRINGTON, Ill., Jan 4, 2001 /PRNewswire via COMTEX/ -- Alternative Resources Corporation (ARC) (Nasdaq: ALRC chart, msgs), a leading provider of information technology services, announced today its expectations for the fourth quarter of 2000 and outlook for fiscal 2001. The company also reiterated the announcement of the extension of its credit agreement into the second quarter of 2001.
Outlook for the fourth quarter
The company expects EBITDA to be up significantly from the $ 900 Thousand for the third quarter while revenue will be down slightly from the third quarter due to normal seasonality. The fourth quarter should be the fourth consecutive quarter of improved EBITDA performance. The company attributes the improvements in EBITDA to the impact of the cost actions previously taken and a strengthening of its gross margins. Those cost actions include:
-- Reduced headcount by 25%.
-- Eliminated 100,000 square feet of office space.
-- Centralized all administrative functions.
-- Eliminated over $1 million in professional service fees
-- Implemented "Next Level Careers Exchange", the company's IT talent
exchange, to enhance recruiting and redeployment productivity.
These cost actions are expected to result in savings in excess of $12 million annually. All of the actions necessary to realize the savings have already been taken.
As noted in the Company's Third Quarter Earnings release, the company expects to take a charge principally for the write off of goodwill attributable to the CGI acquisition in 1997. The write off is estimated to be in the range of $35-$37 million.
Outlook for 2001
The company's plans for 2001 can be summarized as follows:
-- Drive growth by focusing the company's product offerings on its core
competencies: IT Operations and Hot Skills Staffing, Help Desk, Desk
Top Support, Technology Deployment and the consulting practices that
support these product lines.
-- Leverage the company's IT Exchange for increased recruiting
productivity
-- Maintain strict controls on costs
-- Continue to pay down debt through increasing generation of positive
EBITDA
-- Refinance the outstanding debt with a conventional long term facility
Overall, the company expects revenue to grow about 4% to 5% to approximately $273 million.
The company has begun to experience revenue growth in its operations support and programming services time and material business. This is being driven by a more stable sales force, it's "Next Level Careers Exchange" and a slightly more favorable marketplace. The company expects these factors to continue into 2001 generating growth of about 6% for this portion of the business to approximately $195 million.
In the Solutions business, the company will be focusing its efforts on Help Desk, Desk Top Support, Technology Deployment, and the consulting practices which support those services. The company has continued to receive the highest quality ratings from an independent, nationally recognized research organization, and has developed a substantial source of referenceable accounts. The company expects revenues from this business to remain constant at about $78 million with revenue growth in Technology Deployment, offset by a reduction in consulting services revenue from a more streamlined focus.
The company has generated substantial interest and is building a pipeline of business for its Technology Deployment service offering. The company expects this service offering to grow in excess of 50% to $10 million, with additional growth possible depending on the speed with which companies move to deploy Windows 2000.
Although revenue is expected to grow modestly in 2001, EBITDA is expected to grow substantially. During 2000, the company will be slightly positive in EBITDA at approximately $1 million. However, the company anticipates EBITDA in the range of 6%-7% of revenue for 2001 largely due to the full realization of over $12 million of cost savings from the actions taken in 2000. Gross Margins will remain at approximately 30%.
For 2001, the company also expects interest expense to be about $5.5 million and depreciation and amortization of approximately $5.4 million. Earnings per share is expected to be in the range of $.20 to $.25.
Raymond R. Hipp, Chairman and Chief Executive Officer commented, "I am excited about how the company is positioned as we enter 2001. We are through our restructuring, we have focused our product offerings and significantly reduced our cost structure. ARC is poised for a profitable 2001."
Bank Financing
As previously announced, the company has reached an agreement with its current bank group to extend its loan facility to May 5, 2001. The company believes that the extension will allow the company to continue to pursue other long term financing arrangements. As of December 22, 2000 the company had a borrowing capacity of $53.7 million and loans of $44.2 million. The excess availability is considered adequate funding during the extension period.
About ARC
ARC is a leading provider of information technology management and staffing services. The company has developed a significant, high quality business in the IT staffing industry with an emphasis on Help Desk, Desktop Support and Technology Deployment Service offerings. The company also has a consulting practice which supports those service offerings. The company operates through 41 field offices and 3 regional recruiting centers with over 115 personnel in field sales, supported by 80 recruiters and its unique organization of over 60 client support managers. The company serves Fortune 1000 and mid-sized clients throughout the US and Canada.
Except for historical information, all of the statements, expectations and assumptions contained in the foregoing are forward-looking statements that involve a number of risks and uncertainties that could cause actual future results to differ materially from those anticipated in the forward looking statements, including, but not limited to, the company's ability to attract and retain qualified technology professionals, to initiate and develop client relationships, to identify and respond to trends in information technology, to gain market acceptance of service offerings, to complete cost reductions and competitive influences as well as other risks described from time to time in the company's filings with the Securities and Exchange Commission. Although the company has used its best efforts to be accurate in making those forward-looking statements, there can be no assurance that the assumptions made by management will materialize. In addition, the information set forth in the company's Form 10-K for the fiscal year ended December 31, 1999, describes certain additional risks and uncertainties that could cause actual results to vary materially from the future results covered in such forward-looking statements. The company undertakes no obligation to publicly revise or update the forward looking statements to reflect new information, subsequent events or otherwise. The above statements are based exclusively on current expectations and do not include the potential impact of any business combinations or divestitures that may be completed after the date of this release.
Source: s Corporation
Contact:
Steven Purcell, Chief Financial Officer of Alternative
Resources Corporation, 847-381-6701, Ext. 4251
URL: arcnow.com
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