Comsys IT Partners guides for Q1 below the Street
Comsys IT Partners, Inc. (Nasdaq: CITP) this morning reported fourth-quarter results in line with the Street, but issued first-quarter earnings and revenue guidance below the consensus on Wall Street.
The provider of information technology staffing and consulting services issued revenue guidance for the first quarter of 2008 in a range of $181 million to $186 million and net income guidance in the range of $5.1 million to $5.9 million, or approximately $0.25 to $0.29 per diluted share. The consensus of two analysts polled by Thomson Financial was for earnings of $ 0.41 per share on revenues of $187.60 million.
Comsys noted that the estimated net income amounts include the seasonal impact of payroll-related taxes that the company experiences in the first quarter of each year and are based on an effective tax rate of 24% (up from 7.6% in the first quarter of 2007).
“… Guidance for the first quarter is below consensus expectations due to slowing demand given building macro headwinds,” Robert W. Baird analyst Mark Marcon wrote in a research note this morning.
News of the company’s first-quarter guidance took the forefront, pushing the stock downward despite fourth-quarter results that clocked in in line with the Street.
For the three months ended Dec. 30, 2007, the Houston, Texas-based company recorded net income of $8.7 million, or $0.43 per diluted share, in line with the mean estimate of two analysts polled by Thomson Financial.
Comsys noted that results for the fourth quarter included a pre-tax charge of $1 million, or $0.05 per diluted share, related to the potential uncollectible accounts receivable exposure resulting from the bankruptcy of VMS provider.
For the fourth quarter of 2006, the company reported net income of $5.2 million, or $0.26 per diluted share, which included a pre-tax charge of $0.7 million, or $0.04 per diluted share, related to a loss on early extinguishment of debt.
Comsys specifically attributed its bottom-line results to a decrease in interest expense due to lower debt levels, and continued strength in the company’s gross margins. Although, the company did note that revenue softened during the fourth quarter, Comsys said its process initiatives and ability to generate cash and repay debt throughout the year have positioned it well for the uncertain economic times ahead that many are now forecasting.
“The company is performing well given the macro headwinds — EBIT increased 27% due to 60 bps of gross margin expansion and a 53% reduction in interest expense,” wrote Marcon. “[However,] revenue growth is still lacking, declining by 2.1% on an organic basis.”
Revenue for the quarter was $183.3 million, down 1% from $184.7 million for the fourth quarter of 2006, and slightly above the $182.8 million two analysts polled by Thomson Financial were on average forecasting.
Shares of Comsys (CITP) skidded 17.61%, or $2.06, to $9.64 at 12:48 p.m. ET. Shares of Comsys have been trading in the range of $9.35 to $25.36 for the past 52 weeks.
