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

July 28, 2020

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))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, no par value   PRGX   The Nasdaq Global Select Market

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 July 28, 2020, PRGX Global, Inc. issued a press release announcing its unaudited results for the second quarter of 2020, 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 July 28, 2020


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, General Counsel and Secretary

Dated: July 28, 2020

EX-99.1

Exhibit 99.1

 

LOGO

Press Release

PRGX Global, Inc. Announces Second Quarter 2020 Financial Results

Increasing 2020 Adjusted EBITDA Guidance

ATLANTA, July 28, 2020 — PRGX Global, Inc. (Nasdaq: PRGX), a global leader in Recovery Audit and Spend Analytics services, today announced its unaudited financial results for the second quarter and six months ended June 30, 2020.

Quarterly Highlights

 

   

Revenue of $39.0 million, which was negatively impacted by approximately $0.7 million from a strengthening U.S. dollar compared to the same period last year

 

   

Net income from continuing operations of $0.4 million compared to a loss of $4.2 million in the same period last year

 

   

Adjusted EBITDA from continuing operations of $7.6 million, the highest second quarter Adjusted EBITDA in seven years and a 165% increase compared to the second quarter of 2019

 

   

Increasing 2020 annual guidance for Adjusted EBITDA to a revised range of $29 million to $30 million

 

     For the Three Months
Ended June 30,
    For the Six Months
Ended June 30,
 
Selected Financial Data (dollars in thousands)    2020      2019     % Change     2020     2019     % Change  

Revenue

             

Recovery Audit Services—Americas

   $ 26,962    $ 28,935     -6.8   $ 53,185   $ 56,308     -5.5

Recovery Audit Services—Europe/Asia-Pacific

     11,157      11,836     -5.7     20,942     21,595     -3.0

Adjacent Services

     892      1,203     -25.9     1,723     2,875     -40.1

Total

   $ 39,011    $ 41,974     -7.1   $ 75,850   $ 80,778     -6.1

Net income (loss) from continuing operations

     418      (4,176     110.0     (3,465     (8,417     58.8

Non-GAAP Financial Measures

             

Adjusted EBITDA from continuing operations

   $ 7,555    $ 2,856     164.5   $ 11,023   $ 4,589     140.2

“We continue to deliver on our promises of fiscal discipline, improved productivity, and expanded operating leverage in 2020. We achieved another milestone in the second quarter of 2020, delivering our highest second quarter Adjusted EBITDA in seven years. More than 75 percent of our revenue comes from clients engaged in providing essential goods and services, and our clients continue to look to PRGX to help them generate working capital during this challenging pandemic period. Our employees around the world stepped up to the challenge of working remotely to deliver strong results for the quarter. I am very pleased with our improved financial performance in the second quarter and over the last several quarters, and am confident that we can continue to deliver strong results going forward,” said Ron Stewart, President and Chief Executive Officer.

“In the second quarter we continued rolling out our next generation global audit platform which is strategically important to enabling additional margin improvement and increased audit revenue. Based on strong operating results in the first half of the year and further revenue generation opportunities from our solid client base and robust audit operations productivity, we are increasing the lower end of our 2020 Adjusted EBITDA guidance and establishing a revised range of $29 million to $30 million. We also continue to expect a significant improvement in free cash flow compared to 2019,” concluded Stewart.


 

 

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Unaudited Consolidated Results from Continuing Operations for the Three Months Ended June 30, 2020

Consolidated revenue for the second quarter of 2020 was $39.0 million, compared to $42.0 million for the same period in 2019, a decrease of 7.1%. Second quarter 2020 revenue from the Recovery Audit Services segments was $38.1 million compared to $40.8 million in the second quarter of the prior year, and from the Adjacent Services segment was $0.9 million compared to $1.2 million in 2019. On a constant dollar basis adjusted for changes in foreign exchange rates, revenue decreased by 5.4% in the second quarter of 2020 compared to the same period in the prior year.

Total cost of revenue from continuing operations for the second quarter of 2020 was $20.6 million, or 52.8% of revenue, compared to total cost of revenue from continuing operations of $26.3 million, or 62.7% of revenue, for the same period in the prior year.

Selling, general and administrative expenses from continuing operations for the second quarter of 2020 were $14.7 million compared to selling, general and administrative expenses from continuing operations of $15.7 million in the prior year period.

Consolidated net income from continuing operations for the second quarter of 2020 was $0.4 million, or $0.02 per basic and diluted share, compared to consolidated net loss from continuing operations of $4.2 million, or $(0.18) per basic and diluted share, for the same period in 2019.

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA) from continuing operations for the second quarter of 2020 was $7.6 million, or 19.4% of revenue, compared to Adjusted EBITDA from continuing operations of $2.9 million, or 6.8% of revenue, for the second quarter of 2019, an increase of $4.7 million or 164.5%.

Schedule 4 attached to this press release provides a reconciliation of net income (loss) to each of Earnings Before Interest and Taxes (EBIT), Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA.

Unaudited Consolidated Results from Continuing Operations for the Six Months Ended June 30, 2020

Consolidated revenue for the six months ended June 30, 2020 was $75.9 million, compared to $80.8 million for the same period in 2019, a decrease of 6.1%. For the six months ended June 30, 2020, revenue from the Recovery Audit Services segments was $74.1 million compared to $77.9 million in the prior year, and from the Adjacent Services segment was $1.7 million compared to $2.9 million in 2019. On a constant dollar basis adjusted for changes in foreign exchange rates, revenue decreased by 4.4% for the six months ended June 30, 2020 compared to the same period in the prior year.

Total cost of revenue from continuing operations for the six months ended June 30, 2020 was $43.1 million, or 56.8% of revenue, compared to total cost of revenue from continuing operations of $51.5 million, or 63.8% of revenue, for the same period in the prior year.

Selling, general and administrative expenses from continuing operations for the six months ended June 30, 2020 were $28.2 million compared to selling, general and administrative expenses from continuing operations of $29.7 million in the prior year period.

Consolidated net loss from continuing operations for the six months ended June 30, 2020 was $3.5 million, or $(0.15) per basic and diluted share, compared to consolidated net loss from continuing operations of $8.4 million, or $(0.37) per basic and diluted share, for the same period in 2019.

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA) from continuing operations for the six months ended June 30, 2020 was $11.0 million, or 14.5% of revenue, compared to Adjusted EBITDA from continuing operations of $4.6 million, or 5.7% of revenue, for the same period in 2019, an increase of $6.4 million or 140.2%.

Schedule 4 attached to this press release provides a reconciliation of net income (loss) to each of EBIT, EBITDA and Adjusted EBITDA.


 

 

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Cash Flow and Liquidity

Net cash provided by operating activities for the second quarter of 2020 was $7.0 million, compared to net cash used by operating activities of $0.1 million in the second quarter of the prior year and net cash provided by operating activities was $12.3 million for the six months ended June 30, 2020 compared to net cash used of $2.4 million in the same period in the prior year.

At June 30, 2020, the Company had unrestricted cash and cash equivalents of $21.1 million, and borrowings of $37.0 million against its $60.0 million revolving credit facility.

Guidance

For 2020, Adjusted EBITDA from continuing operations is expected to be in the range of $29 million to $30 million.

Second 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 second quarter 2020 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 9289271.

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, 2020. 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.

About PRGX

PRGX helps companies spot value in their source-to-pay processes that other sophisticated solutions didn’t get to before. Having identified more than 300 common points of leakage, we help companies reach wider, dig deeper, and act faster to get more value out of their source-to-pay data. We pioneered this industry nearly 50 years ago, and today we help clients in more than 30 countries take back $1.2 billion in annual cash flow. It’s why 75% of top global retailers and a third of the largest companies in the Fortune 500 rely on us. 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, and the Company’s expectations regarding its 2020 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 impact of the COVID-19 pandemic on the Company or its clients, 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 execute on its profitability improvement efforts, 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.


 

 

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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 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 4 to this press release provides a reconciliation of net income (loss) to each of EBIT, EBITDA and Adjusted EBITDA.

CONTACT: PRGX Global, Inc.

investor-relations@prgx.com

Phone: 770-779-3011


 

 

LOGO

 

SCHEDULE 1

PRGX Global, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Amounts in thousands, except per share data)

(Unaudited)

 

     Three Months
Ended June 30,
    Six Months
Ended June 30,
 
     2020     2019     2020     2019  

Revenue, net

   $ 39,011   $ 41,974   $ 75,850   $ 80,778

Operating expenses:

        

Cost of revenue

     20,584     26,312     43,118     51,547

Selling, general and administrative expenses

     14,726     15,748     28,190     29,665

Depreciation of property, equipment and software assets

     1,965     2,381     4,106     4,584

Amortization of intangible assets

     828     872     1,657     1,734
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     38,103     45,313     77,071     87,530
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss) from continuing operations

     908     (3,339     (1,221     (6,752

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

     (819     (77     637     129

Interest expense, net

     303     592     645     1,065

Other loss (income)

     2     11     2     (8
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before income tax

     1,422     (3,865     (2,505     (7,938

Income tax expense

     1,004     311     960     479
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) from continuing operations

   $ 418   $ (4,176   $ (3,465   $ (8,417
  

 

 

   

 

 

   

 

 

   

 

 

 

Discontinued operations:

        

Loss from discontinued operations

     —         (103     —         (258

Income tax expense

     —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss from discontinued operations

     —         (103     —         (258

Net income (loss)

   $ 418   $ (4,279   $ (3,465   $ (8,675
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic income (loss) per common share:

        

Basic income (loss) from continuing operations

   $ 0.02   $ (0.18   $ (0.15   $ (0.37

Basic loss from discontinued operations

     —         —         —         (0.01
  

 

 

   

 

 

   

 

 

   

 

 

 

Total basic income (loss) per common share

   $ 0.02   $ (0.18   $ (0.15   $ (0.38
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted income (loss) per common share:

        

Diluted income (loss) from continuing operations

   $ 0.02   $ (0.18   $ (0.15   $ (0.37

Diluted loss from discontinued operations

     —         —         —         (0.01
  

 

 

   

 

 

   

 

 

   

 

 

 

Total diluted income (loss) per common share

   $ 0.02   $ (0.18   $ (0.15   $ (0.38
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares outstanding:

        

Basic

     22,606     22,763     22,542     22,687
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     22,716     22,763     22,542     22,687
  

 

 

   

 

 

   

 

 

   

 

 

 


 

 

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SCHEDULE 2

PRGX Global, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Amounts in thousands)

(Unaudited)

 

     June 30,
2020
    December 31,
2019
 
ASSETS             

Current assets:

    

Cash and cash equivalents

   $ 21,061   $ 14,982

Restricted cash

     123     46

Receivables:

    

Contract receivables, net

     36,060     43,112

Employee advances and miscellaneous receivables, net

     740     704
  

 

 

   

 

 

 

Total receivables

     36,800     43,816

Prepaid expenses and other current assets

     4,062     5,582
  

 

 

   

 

 

 

Total current assets

     62,046     64,426

Property, equipment and software, net

     19,137     17,746

Operating lease right-of-use assets

     11,044     10,969

Goodwill

     14,962     15,070

Intangible assets, net

     9,714     11,506

Deferred income taxes

     3,636     3,921

Other assets

     1,396     1,828
  

 

 

   

 

 

 

Total assets

   $ 121,935   $ 125,466
  

 

 

   

 

 

 
LIABILITIES AND SHAREHOLDERS’ EQUITY             

Current liabilities:

    

Accounts payable and accrued expenses

   $ 2,094   $ 4,326

Accrued payroll and related expenses

     14,070     12,951

Current portion of operating lease liabilities

     4,077     3,717

Refund liabilities

     4,152     4,513

Deferred revenue

     1,970     2,217

Current portion of long-term debt

     —         17
  

 

 

   

 

 

 

Total current liabilities

     26,363     27,741

Long-term debt

     36,650     36,603

Long-term operating lease liabilities

     7,368     7,435

Refund liabilities

     21     9

Deferred income taxes

     628     628
  

 

 

   

 

 

 

Total liabilities

     71,030     72,416
  

 

 

   

 

 

 

Shareholders’ equity:

    

Common stock

     236     234

Additional paid-in capital

     584,922     582,404

Accumulated deficit

     (532,641     (529,176

Accumulated other comprehensive income

     (1,612     (412
  

 

 

   

 

 

 

Total shareholders’ equity

     50,905     53,050
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 121,935   $ 125,466
  

 

 

   

 

 

 


 

 

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SCHEDULE 3

PRGX Global, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Amounts in thousands)

(Unaudited)

 

     Three Months
Ended June 30,
    Six Months
Ended June 30,
 
     2020     2019     2020     2019  

Cash flows from operating activities:

        

Net income (loss)

   $ 418   $ (4,279   $ (3,465   $ (8,675

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

        

Depreciation and amortization

     2,793     3,253     5,763     6,318

Operating lease right-of-use asset expense

     1,043     1,113     2,195     2,248

Amortization of deferred loan costs

     24     61     48     117

Noncash interest expense

     298     —         643     —    

Stock-based compensation expense

     1,876     1,662     3,196     3,046

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

     (819     (77     637     129

Deferred income taxes

     —         —         338     —    

Changes in operating assets and liabilities

        

Billed receivables

     (581     2,180     4,550     6,593

Unbilled receivables

     (166     (1,790     2,018     (851

Prepaid expenses and other current assets

     (1,145     (1,812     1,438     (1,296

Operating lease liabilities

     (970           (1,979      

Other assets

     11     (462     (53     (1,567

Accounts payable and accrued expenses

     1,910     118     (3,890     (2,930

Accrued payroll and related expenses

     2,085     (32     1,326     (4,970

Refund liabilities

     85     223     (270     (314

Deferred revenue

     177     (247     (224     (292
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) operating activities

     7,039     (89     12,271     (2,444
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from investing activities:

        

Purchases of property, equipment and software, net of disposal proceeds

     (3,103     (3,199     (5,620     (7,640
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

     (3,103     (3,199     (5,620     (7,640
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from financing activities:

        

Repayments of credit facility

     (23,000     (3,000     (38,000     (3,000

Proceeds from credit facility

     15,000     6,000     38,000     14,400

Payment of deferred loan costs

     —         (47     —         (394

Payment of earnout liability related to business acquisitions

     —         —         —         (479

Restricted stock repurchased from employees for withholding taxes

     (115     (246     (398     (750

Repurchases of common stock

     —         —         (284     (2,228

Proceeds from option exercises

     —         170     —         221
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash (used in) provided by financing activities

     (8,115     2,877     (682     7,770
  

 

 

   

 

 

   

 

 

   

 

 

 

Effect of exchange rates on cash and cash equivalents

     49     (225     187     (55
  

 

 

   

 

 

   

 

 

   

 

 

 

Net (decrease) increase in cash, cash equivalents and restricted cash

     (4,130     (636     6,156     (2,369

Cash, cash equivalents and restricted cash at beginning of period

     25,314     12,286     15,028     14,019
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash, cash equivalents and restricted cash at end of period

   $ 21,184   $ 11,650   $ 21,184   $ 11,650
  

 

 

   

 

 

   

 

 

   

 

 

 

Supplemental disclosure of cash flow information:

        

Cash paid during the period for interest

   $ 345   $ 60   $ 716   $ 385
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash paid during the period for income taxes, net of refunds received

   $ 640   $ 859   $ 804   $ 1,638
  

 

 

   

 

 

   

 

 

   

 

 

 


 

 

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SCHEDULE 4

PRGX Global, Inc. and Subsidiaries

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

(Amounts in thousands)

(Unaudited)

 

     Three Months
Ended June 30,
    Six Months
Ended June 30,
 
     2020     2019     2020     2019  

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

        

Net income (loss)

   $ 418   $ (4,279   $ (3,465   $ (8,675

Income tax expense

     1,004     311     960     479

Interest expense, net

     303     592     645     1,065
  

 

 

   

 

 

   

 

 

   

 

 

 

EBIT

     1,725     (3,376     (1,860     (7,131

Depreciation of property, equipment and software assets

     1,965     2,381     4,106     4,584

Amortization of intangible assets

     828     872     1,657     1,734
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

     4,518     (123     3,903     (813

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

     (819     (77     637     129

Transformation, severance, and other expenses

     672     1,280     1,979     1,977

Investigation and settlement of employment matter

     1,306     —         1,306     —    

Other loss (income)

     2     11     2     (8

Stock-based compensation

     1,876     1,662     3,196     3,046
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 7,555   $ 2,753   $ 11,023   $ 4,331
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA from continuing operations

   $ 7,555   $ 2,856   $ 11,023   $ 4,589
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA from discontinued operations

   $ —     $ (103   $ —     $ (258
  

 

 

   

 

 

   

 

 

   

 

 

 

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.


 

 

LOGO

 

SCHEDULE 5

PRGX Global, Inc. and Subsidiaries

Results by Operating Segment *

(Amounts in thousands)

(Unaudited)

 

     Three Months
Ended June 30,
    Six Months
Ended June 30,
 
     2020     2019     Change     2020     2019     Change  

Revenue, net

            

Recovery Audit Services—Americas

   $ 26,962   $ 28,935   $ (1,973   $ 53,185   $ 56,308   $ (3,123

Recovery Audit Services—Europe/Asia-Pacific

     11,157     11,836     (679     20,942     21,595     (653

Adjacent Services

     892     1,203     (311     1,723     2,875     (1,152
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 39,011   $ 41,974   $ (2,963   $ 75,850   $ 80,778   $ (4,928
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenue

            

Recovery Audit Services—Americas

   $ 14,346   $ 16,076   $ (1,730   $ 30,334   $ 31,939   $ (1,605

Recovery Audit Services—Europe/Asia-Pacific

     5,742     7,189     (1,447     11,999     13,915     (1,916

Adjacent Services

     496     3,047     (2,551     785     5,693     (4,908
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 20,584   $ 26,312   $ (5,728   $ 43,118   $ 51,547   $ (8,429
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Selling, general and administrative expenses

            

Recovery Audit Services—Americas

   $ 1,712   $ 3,647   $ (1,935   $ 4,227   $ 7,026   $ (2,799

Recovery Audit Services—Europe/Asia-Pacific

     1,545     2,639     (1,094     2,549     4,752     (2,203

Adjacent Services

     (40     398     (438     (53     909     (962

Corporate

     11,509     9,064     2,445     21,467     16,978     4,489
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 14,726   $ 15,748   $ (1,022   $ 28,190   $ 29,665   $ (1,475
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Depreciation of property, equipment and software assets

            

Recovery Audit Services—Americas

   $ 1,777   $ 1,919   $ (142   $ 3,715   $ 3,681   $ 34

Recovery Audit Services—Europe/Asia-Pacific

     155     182     (27     324     344     (20

Adjacent Services

     33     280     (247     67     559     (492
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 1,965   $ 2,381   $ (416   $ 4,106   $ 4,584   $ (478
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Amortization of intangible assets

            

Recovery Audit Services—Americas

   $ 408   $ 438   $ (30   $ 816   $ 876   $ (60

Recovery Audit Services—Europe/Asia-Pacific

     41     48     (7     83     85     (2

Adjacent Services

     379     386     (7     758     773     (15
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 828   $ 872   $ (44   $ 1,657   $ 1,734   $ (77
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

            

Recovery Audit Services—Americas

   $ 8,719   $ 6,855   $ 1,864   $ 14,093   $ 12,786   $ 1,307

Recovery Audit Services—Europe/Asia-Pacific

     3,674     1,778     1,896     5,987     2,499     3,488

Adjacent Services

     24     (2,908     2,932     166     (5,059     5,225

Corporate

     (11,509     (9,064     (2,445     (21,467     (16,978     (4,489
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 908   $ (3,339   $ 4,247   $ (1,221   $ (6,752   $ 5,531
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA from continuing operations

            

Recovery Audit Services—Americas

   $ 11,231   $ 9,462   $ 1,769   $ 19,639   $ 17,721   $ 1,918

Recovery Audit Services—Europe/Asia-Pacific

     4,051     2,130     1,921     6,783     3,173     3,610

Adjacent Services

     483     (1,637     2,120     1,118     (3,104     4,222

Corporate

     (8,210     (7,099     (1,111     (16,517     (13,201     (3,316
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 7,555   $ 2,856   $ 4,699   $ 11,023   $ 4,589   $ 6,434
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

* 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 advisory services, spend analytics and supplier information management services.