John,
I called both FAMH and the PR firm today.
First, I talked to Michelle in New York. In a nutshell, she told me the Miami office is nowhere near opening. She said they are still looking at possible locations. She said they expect it to open "sometime in the first quarter." March?
I also called CA, talked to Jennifer. Ira was there when I called, as he was when you called. I asked her what sort of jobs they filled, since I have never seen it explained on the thread. She gave me the "higher-end employee leasing" speech. When asked what that meant, she said "executive level." When asked for examples, she said they place nurses, paralegals, and (only occasionally) attorneys. Nurses and paralegals, "higher end"? Guess it depends on your perspective.
The third quarter results of $1.3 million income on $1.7 million still confounded me, so I asked her a few questions. I decided to start at the beginning (revenues) and work forward. So I asked Jennifer what percentage of FAMH revenue comes from employee leasing, and what percentage comes from permanent placing. She said, "Hold on, I'll ask Ira."
Ira told her, and she relayed to me, that around 85 percent of their revenue comes from temporary staffing, and about 15 percent comes from permanent placement.
Everybody with me so far? Okay, suppose they had an OUTSTANDING permanent placement record in the third quarter, like twice as many perm placements as usual. Instead of 15 percent, it was 30 percent of their revenue. (Actually, if you do the math, 30 percent would be more than twice, assuming steady revenue from temps. I'm pretty sure. Someone can check my math.)
So... we will assume that 30 percent, or about $570,000, of the revenue total is from permanent placements. I will also assume that the placements are "Pure profit", as Cheryl put it in Post#372. That they cost the company nothing to do. (Which proved to be false, anyway... as I will point out later. For the sake of argument I'll assume the earnings cost nothing to bring in.)
That leaves us with $1.13 million in revenues, and $730,000 in income. That would mean that they made about a 65 percent profit margin on temporary staffing! Compared to 30 percent in the rest of the industry? I can't imagine how... can you?
Please note that the leftover expenses, about $400,000 must cover A) the temps salaries, B) FAMH staff salaries, C) promotional costs for the company, and D) normal operating expenses, including rent at six offices, including the Trump Tower one.
Even if they charged employers THREE TIMES what they paid the temps (i.e., revenues were 1.13 million, and temps were paid 370,000) that leaves us with $760,000, or... drum roll please... $30,000 to pay FAMH salaries for the quarter, along with the expense of running six offices. Of course, some of the money most have come from the financing arm, as well... and I doubt they loan out money at 65 percent.
Where did these permanent placements come from, I asked Jennifer? She said they came from temps who had worked somewhere a long time and then were permanently placed. So, the perm placements could NOT be "pure profit," since these people were also paid salaries by FAMH for at least part of the quarter. So we cannot count them as 100 percent profit. They cost money to begin with.
Something is not right here.
Anyone wishing to show, mathematically, where the 74 percent profit margin could have come from, please let me know. I am extremely curious. If the company still clings to those earnings and tells you that they are true (I can't help recalling the "21 Myriad offices in Utah and California"), please ask them to give you some rough figures like I have sketched out, so that we can A) work with them, and B) come to our own conclusions.
I think third quarter financials are critical, since if they are bad, then the rest of the quarters can't be trusted. I still believe (and the "earnings" would make sense this way) that they are counting receivables as earnings. If not, a lot of expenses evaporated somewhere.
Thank you for your time and reading this far, whether you like me or not. Please keep an open mind.
Not bad for an English major, huh? <g> |
