Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D)

OF THE SECURITIES EXCHANGE ACT OF 1934

November 1, 2018

Date of Report (Date of earliest event reported)

 

 

PRGX Global, Inc.

(Exact Name of Registrant as Specified in Its Charter)

 

 

Georgia

(State or Other Jurisdiction of Incorporation)

 

0-28000   58-2213805
(Commission File Number)   (IRS Employer Identification No.)

 

600 Galleria Parkway, Suite 100, Atlanta, Georgia   30339-5949
(Address of Principal Executive Offices)   (Zip Code)

770-779-3900

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Item 2.02.

Results of Operations and Financial Condition.

The following information is being furnished pursuant to Item 2.02 of Form 8-K. This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

On November 1, 2018, PRGX Global, Inc. issued a press release announcing its unaudited results for the third quarter of 2018, a copy of which is furnished herewith as Exhibit 99.1.

 

Item 9.01.

Financial Statements and Exhibits

 

(d)

Exhibits

The following exhibit is furnished herewith:

 

  99.1

Press Release dated November 1, 2018


EXHIBIT INDEX

 

Exhibit

Number

  

Description of Exhibits

99.1    Press Release dated November 1, 2018


SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

PRGX Global, Inc.
By:  

/s/ Victor A. Allums

  Victor A. Allums
 

Senior Vice President, Secretary and

General Counsel

Dated: November 1, 2018

EX-99.1

Exhibit 99.1

 

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Press Release

PRGX Global, Inc. Announces Third Quarter 2018 Financial Results

ATLANTA, November 1, 2018 - PRGX Global, Inc. (Nasdaq: PRGX), a global leader in Recovery Audit and Spend Analytics services, today announced its unaudited financial results for the three and nine months ended September 30, 2018.

“We are pleased to report our ninth consecutive quarter of year-over-year revenue and adjusted EBITDA growth from continuing operations. Revenue increased approximately 4% on a year-over-year constant dollar basis, with growth in both adjacent services and recovery audit. Adjacent services had a particularly strong quarter, growing more than 155% on a year-over-year constant dollar basis. We also benefited from increasing operating leverage, with adjusted EBITDA increasing over 3% on a year-over-year constant dollar basis, including the considerable investment in our sales, marketing and product development resources. Our comparative results are particularly impressive given our strong growth in revenue and adjusted EBITDA in the third quarter last year and over $2 million of delayed revenue in our recovery audit business, all of which we expect to recognize in the fourth quarter,” said Ron Stewart, president and chief executive officer.

“As promised, our investment in sales and marketing has provided significant momentum across all service lines and geographies. Year-to-date we have already added more new clients and closed over 85 engagements with more projected total contract value than in all of 2017, including two large advisory engagements and the second largest SaaS agreement signed in the company’s history. Given our continuing strong performance, we remain on track to meet our 2018 guidance of year-over-year revenue growth in the range of 8% to 10% and adjusted EBITDA growth in the range of 17% to 22%,” concluded Stewart.

Consolidated Results from Continuing Operations for the Three Months Ended September 30, 2018

Consolidated revenue from continuing operations for the third quarter of 2018 was $43.3 million, compared to $42.5 million for the same period last year, an increase of 2.0%. Third quarter 2018 revenue from the Recovery Audit Services segments was $41.0 million compared to $41.5 million in the prior year, and from the Adjacent Services segment was $2.3 million compared to $0.9 million in 2017. On a constant dollar basis adjusted for changes in foreign exchange rates, consolidated revenue from continuing operations increased by 3.6% in the third quarter of 2018, compared to the same period in the prior year. On a constant dollar basis, revenue from the Recovery Audit Services segments increased 0.2% and revenue from the Adjacent Services segment increased 155.6% for the third quarter of 2018 compared to the same period in 2017.

Total cost of revenue from continuing operations for the third quarter of 2018 was $26.1 million, or 60.4% of revenue, compared to $26.7 million, or 62.8% of revenue, in the same period last year, an improvement of approximately 240 basis points in gross margin as a percentage of revenue.


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Selling, general and administrative expenses from continuing for the third quarter of 2018 were $12.5 million, compared to $12.2 million in the prior year period. The increase in SG&A expenses for this period was primarily attributable to planned investments in our global go-to-market teams and product development organization.

Consolidated net income from continuing operations for the third quarter of 2018 was $2.6 million, or $0.11 per basic and diluted share, compared to net income of $0.7million, or $0.05 per basic and diluted share, for the same period in 2017.

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA) from continuing operations for the third quarter of 2018 was $6.4 million, or 14.9% of revenue, compared to Adjusted EBITDA of $6.4 million, or 15.1% of revenue, in the third quarter of 2017. Schedule 3 attached to this press release provides a reconciliation of net loss to each of EBIT (Earnings Before Interest and Taxes), EBITDA and Adjusted EBITDA.

Consolidated Results from Continuing Operations for the Nine Months Ended September 30, 2018

Consolidated revenue from continuing operations for the nine months ended September 30, 2018 was $122.1 million, compared to $114.5 million for the same period last year, an increase of 6.6%. For the nine months ended September 30, 2018, revenue from the Recovery Audit Services segments was $117.3 million compared to $111.1 million in the prior year, and from the Adjacent Services segment was $4.8 million compared to $3.5 million in 2017. On a constant dollar basis adjusted for changes in foreign exchange rates, consolidated revenue from continuing operations increased by 5.8% in the nine months ended September 30, 2018, compared to the same period in the prior year. On a constant dollar basis, revenue from the Recovery Audit Services segments increased 4.8% and revenue from the Adjacent Services segment increased 36.9% for the for the nine months ended September 30, 2018 compared to the same period in 2017.

Total cost of revenue from continuing operations for the nine months ended September 30, 2018 was $78.3 million, or 64.1% of revenue, compared to $75.3 million, or 65.7% of revenue, in the same period last year, an improvement of approximately 160 basis points in gross margin as a percentage of revenue.

SG&A expenses from continuing operations for the nine months ended September 30, 2018 were $36.6 million, compared to $34.1 million in the prior year period. The increase in SG&A expenses for this period was primarily attributable to planned investments in our product development organization and global go-to-market team.

Consolidated net loss from continuing operations for the nine months ended September 30, 2018 was $2.6 million, or a negative $0.12 per basic and diluted share, compared to a net loss of $1.1 million, or a negative $0.05 per basic and diluted share, for the same period in 2017.


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Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA) from continuing operations for the nine months ended September 30, 2018 was $13.8 million, or 11.3% of revenue, compared to Adjusted EBITDA of $12.0 million, or 10.5% of revenue, for the same period in the prior year. Schedule 3 attached to this press release provides a reconciliation of net income (loss) to each of EBIT (Earnings Before Interest and Taxes), EBITDA and Adjusted EBITDA.

Cash Flow and Liquidity

Net cash provided by operating activities for the third quarter of 2018 was $3.1 million compared to net cash provided of $2.3 million for the third quarter of the prior year. For the nine months ended September 30, 2018, net cash used by operating activities was $3.4 million compared to net cash provided of $3.6 million for the same period in the prior year.

At September 30, 2018, the Company had unrestricted cash and cash equivalents of $10.6 million, and borrowings of $17.6 million against its $35.0 million revolving credit facility.

Stock Repurchase Program

The Company’s Board of Directors recently approved a $15 million increase (to $75 million) in the Company’s stock repurchase program and extended the duration of the program to December 31, 2019. Since the February 2014 announcement of the program, the Company has repurchased 8.6 million shares of its common stock for an aggregate cost of $44.5 million. As of October 26, 2018, the Company had approximately 23.6 million shares of common stock outstanding.

Third Quarter Earnings Call

As previously announced, management will hold a conference call later today at 5:00 PM (Eastern time) to discuss the Company’s third quarter 2018 financial results. To access the conference call, listeners in the U.S. and Canada should dial (877) 755-7423 at least 5 minutes prior to the start of the conference. Listeners outside the U.S. and Canada should dial (678) 894-3069. To be admitted to the call, listeners should use passcode 7434559.

This teleconference will also be audiocast on the Internet at www.prgx.com (click on “Events & Presentations” under “Investors”). A replay of the audiocast will be available at the same location on www.prgx.com beginning approximately two hours after the conclusion of the live audiocast, extending through December 31, 2018. Please note that the Internet audiocast is “listen-only.” Microsoft Windows Media Player is required to access the live audiocast and the replay and can be downloaded from www.microsoft.com/en-us/downloads.


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About PRGX

PRGX Global, Inc. is a global leader in Recovery Audit and Spend Analytics services. With over 1,500 employees, the Company serves clients in more than 30 countries and provides its services to 75% of the top 20 global retailers and over 25% of the top 50 companies in the Fortune 500. PRGX delivers more than $1 billion in cash flow improvement for its clients each year. The creator of the recovery audit industry more than 40 years ago, PRGX continues to innovate through technology and expanded service offerings. In addition to Recovery Audit, PRGX provides Contract Compliance, Spend Analytics and Supplier Information Management services to improve clients’ financial performance and manage risk. For additional information on PRGX, please visit www.prgx.com

Forward-Looking Statements

In addition to historical information, this press release includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include both implied and express statements regarding the Company’s overall condition and growth prospects, the Company’s execution of its business strategy, the Company’s expected revenue from client engagements, the Company’s sales pipeline, and the Company’s expectations regarding its 2018 financial performance. Such forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to differ materially from the historical results or from any results expressed or implied by such forward-looking statements. Risks that could affect the Company’s future performance include revenue that does not meet expectations or justify costs incurred, the Company’s ability to develop material sources of new revenue in addition to revenue from its core recovery audit services, changes in the market for the Company’s services, the Company’s ability to retain and attract qualified personnel, the Company’s ability to integrate recent and future acquisitions, uncertainty in the credit markets, the Company’s ability to maintain compliance with its financial covenants, client bankruptcies, loss of major clients, and other risks generally applicable to the Company’s business. For a discussion of other risk factors that may impact the Company’s business, please see the Company’s filings with the Securities and Exchange Commission. The Company disclaims any obligation or duty to update or modify these forward-looking statements

Non-GAAP Financial Measures

EBIT, EBITDA and Adjusted EBITDA are all “non-GAAP financial measures” presented as supplemental measures of the Company’s performance. They are not presented in accordance with accounting principles generally accepted in the United States, or GAAP. The Company believes these measures provide additional meaningful information in evaluating its performance over time, and that the rating agencies and a number of lenders use EBITDA and similar measures for similar purposes. In addition, a measure similar to Adjusted EBITDA is used in the restrictive covenants contained in the Company’s secured credit facility. However, EBIT, EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation, or as substitutes for analysis of the Company’s results as


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reported under GAAP. In addition, in evaluating EBIT, EBITDA and Adjusted EBITDA, you should be aware that, as described above, the adjustments may vary from period to period and in the future the Company will incur expenses such as those used in calculating these measures. The Company’s presentation of these measures should not be construed as an inference that future results will be unaffected by unusual or nonrecurring items. Schedule 3 to this press release provides a reconciliation of net income (loss) to each of EBIT, EBITDA and Adjusted EBITDA.

This news release was distributed by GlobeNewswire, www.globenewswire.com

CONTACT: PRGX Global, Inc.

investor-relations@prgx.com

Phone: 770-779-3011


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SCHEDULE 1

PRGX Global, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Amounts in thousands, except per share data)

(Unaudited)

 

     Three Months
Ended September 30,
    Nine Months
Ended September 30,
 
     2018     2017     2018     2017  

Revenue, net

   $ 43,320     $ 42,467     $ 122,143     $ 114,546  

Operating expenses:

        

Cost of revenue

     26,146       26,675       78,332       75,306  

Selling, general and administrative expenses

     12,521       12,189       36,594       34,149  

Depreciation of property and equipment

     1,713       1,133       5,296       3,462  

Amortization of intangible assets

     872       722       2,524       2,166  

Acquisition-related adjustment (income) loss

     (1,640     —         (1,640     —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     39,612       40,719       121,106       115,083  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss) from continuing operations

     3,708       1,748       1,037       (537

Foreign currency transaction losses (gains) on short-term intercompany balances

     70       (418     730       (1,927

Interest expense, net

     416       142       1,300       227  

Other loss (income)

     (1     17       16       (177
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before income taxes

     3,223       2,007       (1,009     1,340  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income tax expense

     597       930       1,573       2,436  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) from continuing operations

   $ 2,626     $ 1,077     $ (2,582   $ (1,096
  

 

 

   

 

 

   

 

 

   

 

 

 

Discontinued operations:

        

Loss from discontinued operations

     (325     (344     (684     (1,029

Income tax expense

     —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss from discontinued operations

     (325     (344     (684     (1,029

Net income (loss)

   $ 2,301     $ 733     $ (3,266   $ (2,125
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic income (loss) per common share:

        

Basic income (loss) from continuing operations

   $ 0.11     $ 0.05     $ (0.12   $ (0.05

Basic loss from discontinued operations

     (0.01     (0.02     (0.02     (0.05
  

 

 

   

 

 

   

 

 

   

 

 

 

Total basic income (loss) per common share

   $ 0.10     $ 0.03     $ (0.14   $ (0.10
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted income (loss) per common share:

        

Diluted income (loss) from continuing operations

   $ 0.11     $ 0.05     $ (0.11   $ (0.05

Diluted loss from discontinued operations

     (0.01     (0.02     (0.03     (0.05
  

 

 

   

 

 

   

 

 

   

 

 

 

Total diluted income (loss) per common share

   $ 0.10     $ 0.03     $ (0.14   $ (0.10
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares outstanding:

        

Basic

     23,558       22,498       23,142       22,225  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     24,207       22,761       23,142       22,225  
  

 

 

   

 

 

   

 

 

   

 

 

 


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SCHEDULE 2

PRGX Global, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Amounts in thousands)

(Unaudited)

 

     September 30,
2018
    December 31,
2017
 

ASSETS

 

Current assets:

    

Cash and cash equivalents

   $ 10,483     $ 18,823  

Restricted cash

     110       51  

Receivables:

    

Contract receivables, net

     37,553       38,767  

Employee advances and miscellaneous receivables, net

     1,446       1,665  
  

 

 

   

 

 

 

Total receivables

     38,999       40,432  

Prepaid expenses and other current assets

     3,660       4,608  
  

 

 

   

 

 

 

Total current assets

     53,252       63,914  

Property and equipment, net

     19,999       17,478  

Goodwill

     17,569       17,648  

Intangible assets, net

     15,870       18,478  

Deferred income taxes

     1,398       1,538  

Other assets

     1,729       1,162  
  

 

 

   

 

 

 

Total assets

   $ 109,817     $ 120,218  
  

 

 

   

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

Current liabilities:

    

Accounts payable and accrued expenses

   $ 5,518     $ 8,548  

Accrued payroll and related expenses

     10,609       13,078  

Refund liabilities

     8,203       7,864  

Deferred revenue

     1,142       1,431  

Current portion of long-term debt

     48       48  

Current portion of long-term incentive compensation liability

     —         5,116  

Current portion of business acquisition obligations

     3,992       3,759  
  

 

 

   

 

 

 

Total current liabilities

     29,512       39,844  

Long-term debt

     17,549       13,526  

Business acquisition obligations

     —         5,135  

Refund liabilities

     263       957  

Other long-term liabilities

     412       442  
  

 

 

   

 

 

 

Total liabilities

     47,736       59,904  
  

 

 

   

 

 

 

Shareholders’ equity:

    

Common stock

     236       224  

Additional paid-in capital

     585,553       580,032  

Accumulated deficit

     (523,315     (520,049

Accumulated other comprehensive income

     (393     107  
  

 

 

   

 

 

 

Total shareholders’ equity

     62,081       60,314  
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 109,817     $ 120,218  
  

 

 

   

 

 

 


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SCHEDULE 3

PRGX Global, Inc. and Subsidiaries

Reconciliation of Net Income (Loss) to EBIT, EBITDA and Adjusted EBITDA

(Amounts in thousands)

(Unaudited)

 

     Three Months
Ended September 30,
    Nine Months
Ended September 30,
 
     2018     2017     2018     2017  

Reconciliation of net income (loss) to EBIT, EBITDA and Adjusted EBITDA:

        

Net income (loss)

   $ 2,301     $ 733     $ (3,266   $ (2,125

Income tax expense

     597       930       1,573       2,436  

Interest expense, net

     416       142       1,300       227  
  

 

 

   

 

 

   

 

 

   

 

 

 

EBIT

     3,314       1,805       (393     538  

Depreciation of property and equipment

     1,713       1,135       5,297       3,468  

Amortization of intangible assets

     872       722       2,524       2,166  
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

     5,899       3,662       7,428       6,172  

Foreign currency transaction losses (gains) on short-term intercompany balances

     70       (418     730       (1,927

Acquisition-related adjustment (income) loss

     (1,640     —         (1,640     —    

Transformation severance and related expenses

     439       692       2,428       1,592  

Other (income) loss

     (1     17       16       (177

Stock-based compensation

     1,341       2,107       4,159       5,362  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 6,108     $ 6,060     $ 13,121     $ 11,022  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA from continuing operations

   $ 6,433     $ 6,402     $ 13,804     $ 12,045  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA from discontinued operations

   $ (325   $ (342   $ (683   $ (1,023
  

 

 

   

 

 

   

 

 

   

 

 

 

EBIT, EBITDA and Adjusted EBITDA are all “non-GAAP financial measures” presented as supplemental measures of our performance. They are not presented in accordance with accounting principles generally accepted in the United States, or GAAP. The Company believes these measures provide additional meaningful information in evaluating the Company’s performance over time, and that the rating agencies and a number of lenders use EBIT, EBITDA and similar measures for similar purposes. In addition, a measure similar to Adjusted EBITDA is used in the restrictive covenants contained in the Company’s secured credit facility. However, EBIT, EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation, or as substitutes for analysis of our results as reported under GAAP. In addition, in evaluating EBIT, EBITDA and Adjusted EBITDA, you should be aware that in the future we will incur expenses such as those used in calculating these measures. Our presentation of these measures should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items.


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SCHEDULE 4

PRGX Global, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Amounts in thousands)

(Unaudited)

 

     Three Months
Ended September 30,
    Nine Months
Ended September 30,
 
     2018     2017     2018     2017  

Cash flows from operating activities:

        

Net income (loss)

   $ 2,301     $ 733     $ (3,266   $ (2,125

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

        

Depreciation and amortization

     2,585       1,855       7,820       5,628  

Amortization of deferred loan costs

     21       57       53       77  

Deferred income taxes

     —         —         169       —    

Stock-based compensation expense

     1,341       2,107       4,159       5,362  

Changes in fair value of contingent consideration

     (1,640     —         (1,640     —    

Foreign currency transaction losses (gains) on short-term intercompany balances

     70       (418     730       (1,927

Long-term incentive compensation payout

     (998     —         (6,378     —    

Decrease (increase) in receivables

     668       (2,867     550       (714

(Decrease) increase in accounts payable, accrued payroll and other accrued expenses

     (613     (601     (6,222     (319

Other, primarily changes in assets and liabilities

     (743     1,416       537       (2,425
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) operating activities

     2,992       2,282       (3,488     3,557  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from investing activities:

        

Purchases of property and equipment, net of disposals

     (2,572     (2,390     (7,899     (6,433

Acquistion of businesses, net of cash acquired

     —         —         19       (10,128
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

     (2,572     (2,390     (7,880     (16,561
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from financing activities:

        

Net borrowings under line of credit

     —         —         4,000       10,000  

Payment of earnout liability related to business acquisitions

     —         —         (4,000     —    

Other, net

     884       —         2,841       605  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by financing activities

     884       —         2,841       10,605  
  

 

 

   

 

 

   

 

 

   

 

 

 

Effect of exchange rates on cash and cash equivalents

     (552     (830     187       (1,392
  

 

 

   

 

 

   

 

 

   

 

 

 

Net change in cash and cash equivalents

     752       (938     (8,340     (3,791

Cash and cash equivalents at beginning of period

     9,731       12,870       18,823       15,723  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $  10,483     $  11,932     $ 10,483     $ 11,932  
  

 

 

   

 

 

   

 

 

   

 

 

 


LOGO

 

SCHEDULE 5

PRGX Global, Inc. and Subsidiaries

Results by Operating Segment *

(Amounts in thousands)

(Unaudited)

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2018     2017     Change     2018     2017     Change  

Revenue

            

Recovery Audit Services - Americas

   $ 28,806     $ 30,705     $ (1,899   $ 83,676     $ 81,641     $ 2,035  

Recovery Audit Services - Europe/Asia-Pacific

     12,191       10,837       1,354       33,663       29,441       4,222  

Adjacent Services

     2,323       925       1,398       4,804       3,464       1,340  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 43,320     $ 42,467     $ 853     $ 122,143     $ 114,546     $ 7,597  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenue

            

Recovery Audit Services - Americas

   $ 17,602     $ 18,552     $ (950   $ 52,866     $ 51,154     $ 1,712  

Recovery Audit Services - Europe/Asia-Pacific

     6,632       6,650       (18     20,551       19,553       998  

Adjacent Services

     1,912       1,473       439       4,915       4,599       316  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 26,146     $ 26,675     $ (529   $ 78,332     $ 75,306     $ 3,026  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Selling, general and administrative expenses

            

Recovery Audit Services - Americas

   $ 3,058     $ 2,662     $ 396     $ 8,746     $ 7,320     $ 1,426  

Recovery Audit Services - Europe/Asia-Pacific

     2,535       2,114       421       5,643       5,247       396  

Adjacent Services

     569       910       (341     1,423       3,040       (1,617

Corporate**

     4,719       6,503       (1,784     19,142       18,542       600  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 10,881     $ 12,189     $ (1,308   $ 34,954     $ 34,149     $ 805  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Depreciation of property and equipment

            

Recovery Audit Services - Americas

   $ 1,260     $ 789     $ 471     $ 3,876     $ 2,478     $ 1,398  

Recovery Audit Services - Europe/Asia-Pacific

     164       161       3       512       453       59  

Adjacent Services

     289       183       106       908       531       377  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 1,713     $ 1,133     $ 580     $ 5,296     $ 3,462     $ 1,834  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Amortization of intangible assets

            

Recovery Audit Services - Americas

   $ 445     $ 329     $ 116     $ 1,218     $ 986     $ 232  

Recovery Audit Services - Europe/Asia-Pacific

     37       —         37       136       —         136  

Adjacent Services

     390       393       (3     1,170       1,180       (10
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 872     $ 722     $ 150     $ 2,524     $ 2,166     $ 358  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

            

Recovery Audit Services - Americas

   $ 6,441     $ 8,373     $ (1,932   $ 16,970     $ 19,703     $ (2,733

Recovery Audit Services - Europe/Asia-Pacific

     2,823       1,912       911       6,821       4,188       2,633  

Adjacent Services

     (837     (2,034     1,197       (3,612     (5,886     2,274  

Corporate

     (4,719     (6,503     1,784       (19,142     (18,542     (600
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 3,708     $ 1,748     $ 1,960     $ 1,037     $ (537   $ 1,574  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

            

Recovery Audit Services - Americas

   $ 8,325     $ 9,540     $ (1,215   $ 22,792     $ 23,480     $ (688

Recovery Audit Services - Europe/Asia-Pacific

     3,008       2,433       575       8,468       5,223       3,245  

Adjacent Services

     (160     (1,198     1,038       (1,468     (3,870     2,402  

Corporate

     (4,740     (4,373     (367     (15,988     (12,788     (3,200
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 6,433     $ 6,402     $ 31     $ 13,804     $ 12,045     $ 1,759  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

*

The Recovery Audit Services - Americas segment represents recovery audit services provided in the United States, Canada and Latin America. The Recovery Audit Services - Europe/Asia-Pacific segment represents recovery audit services provided in Europe, Asia and the Pacific region. The Adjacent Services segment represents spend analytics and supplier information management services.

**

Corporate - Includes a $1,640 acquisition-related adjustment that reduced expenses in the three months and nine months ended September 30, 2018.