TMP Worldwide's adjusted diluted EPS up 200% to $0.15 for the fourth quarter of 1999; beats First Call analysts' earnings estimates by 25%, or $0.03 per share
FOR THE THREE MONTHS ENDED DECEMBER 31, 1999
Total Commissions and Fees Up 27.2% to $204.3 million
-- Interactive Division Commissions and Fees Up 189.6% to $50.6 millionAdjusted Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) Up 82.1% to $30.0 million Adjusted Net Income Up 219.9% to $12.5 million Adjusted Fully Diluted EPS Up 200.0% to $0.15 compared to prior year at $0.05 Fully Diluted Weighted Average Shares Outstanding5 85.7 million
New York, March 7, 2000 - TMP Worldwide Inc. (NASDAQ: TMPW; ASX: TMP), the leading provider of career services and solutions, including the dominant Internet career portal, Monster.com, and the world's largest Yellow Pages advertising agency, today announced a record-breaking fourth quarter ended December 31, 1999 with total commissions and fees of $204.3 million compared to $160.6 million for the same period a year ago, an increase of 27.2%.
Internet commissions and fees were $50.6 million for the fourth quarter ended December 31, 1999; higher than total commissions and fees for the entire year of 1998 of $50.2 million. Internet commissions and fees for the fourth quarter of 1999 were also up 189.6% compared to $17.5 million for the fourth quarter ended December 31, 1998 and up 38.1% from the third quarter ended September 30, 1999. TMP's Internet Operations also reported an operating profit of $7.7 million for the fourth quarter ended December 31, 1999.
Adjusted net income increased 219.9%, to $12.5 million in the fourth quarter ended December 31, 1999 compared to $3.9 million for the fourth quarter ended December 31, 1998. Diluted adjusted earnings per share increased 200.0% to $0.15 for the fourth quarter of 1999 compared to adjusted earnings per share of $0.05 for the fourth quarter of 1998. Earnings were $0.03 or 25% greater than First Call analysts' earnings estimates after adjusting for the effects of a 2-for-1 stock split effective February 29, 2000.
Growth in Internet and Search & Selection commissions and fees, together with higher operating margins in Internet and Yellow Pages, contributed to a 119.7% increase in adjusted operating profit to $20.8 million and an 82.1% increase in adjusted EBITDA to $30.0 million. Adjusted operating profit as a percentage of total commissions and fees was 10.2% for the fourth quarter ended December 31, 1999, compared to 5.9% for the fourth quarter ended December 31, 1998.
Search & Selection commissions and fees increased 24.7% to $76.5 million for the fourth quarter ended December 31, 1999 compared to $61.3 million for the prior year period, reflecting strong demand for permanent professional employees worldwide, particularly in mid-level management positions (annual salaries ranging from $75,000 to $150,000). However, as a result of this trend, and partially offsetting it, Temporary Contracting commissions and fees decreased 12.1% to $12.3 million for the fourth quarter of 1999 versus $14.0 million for the same period last year. Australia, in particular, saw a shift in demand to permanent employees from temporary staffing. In addition, there were some negative effects of client Y2K policies, resulting in the deferral of fourth quarter 1999 IT development projects to the following year.
Recruitment Advertising commissions and fees decreased 1.6% to $43.2 million for the fourth quarter ended December 31, 1999 versus $43.9 million for the fourth quarter of 1998, primarily resulting from reduced billings due to lower volume of help-wanted advertisements placed in newspapers. Yellow Page Advertising billings increased 4.2% to $118.6 million for the fourth quarter ended December 31, 1999, however, commissions and fees decreased 9.0% to $21.8 million for the fourth quarter of 1999 compared to $23.9 million for the prior year period, reflecting substantially reduced commissions and year-end incentives paid by publishers and the effects of higher discounts for certain clients.
Total commissions and fees as a percent of related billings for the fourth quarter ended December 31, 1999 were 44.2% as compared to 38.8% for the prior year period. The higher percentage primarily reflects increased Internet sales volume, where the Company retains greater portions of the amounts billed.
The adjusted net income, EPS, EBITDA and operating profit amounts discussed above reflect adjustments to exclude merger and integration costs and restructuring charges incurred in connection with companies acquired using the pooling of interests method of accounting (please see the Endnotes).
Merger and integration costs for the fourth quarter ended December 31, 1999 were $16.8 million versus $12.8 million for the fourth quarter of 1998. Such costs include transaction costs for the mergers completed in the respective fourth quarters and the amortization of employee stay bonuses. In addition, for 1999, these costs also include separation pay and office and management integration costs, which include the elimination of redundant management, closing of excess leasehold facilities, and the write-off of fixed assets, which will not be used in the future. The fourth quarter 1999 costs are chiefly related to the integration of Highland Search Group LLC and LAI, and were anticipated and factored into the prices paid for these companies which were acquired using the pooling of interests method of accounting.
Andrew J. McKelvey, chairman and CEO of TMP Worldwide stated: “This quarter's outstanding results prove once again that TMP's commitment to being the premier global career resource to our clients and job seekers is exemplary. Our Monster.com, Search & Selection and Recruitment Advertising businesses are all executing our “Intern-to-CEO” strategy as we had planned and, most importantly, we are supporting our clients and job seekers with exceptional products and services through every step of the recruitment process.”
“As demonstrated by our fourth quarter, synergies across all our business units are now producing meaningful results, ” said Jim Treacy, COO of TMP Worldwide. “Our Search and Selection, Recruitment Advertising and Yellow Pages operations are all providing Monster.com with cross-selling opportunities, as all of these business lines are responding to their customers' increasing demands for Internet products and services. It's a truly dramatic phenomenon to see the effect that this is having on TMP's revenue and profitability growth,” continued Mr. Treacy.
TMP's Interactive operations, anchored by Monster.com, have built the dominant career destination portal worldwide. Monster.com surpasses its closest competitor in Web traffic by at least 130% in every reach category. According to the most recent monthly independent research released by Media Metrix, January 2000, 5.3% of the 68.0 million U.S. Internet users visited the site, which amounted to 3.6 million unique visitors, each spending an average of 20.5 minutes and looking at an average of 29.8 pages.
Monster.com continues to expand globally and currently has 9 local language and content services existing in the United States, the United Kingdom, Canada (in French and English), Australia, New Zealand, the Netherlands (in Dutch and English), Belgium (in French and Flemish), France and Singapore. The Company has plans to have a total of 20 international sites operational by the end of 2000.
"Our growth and success this year underscores our position as the dominant career portal and one of a handful of premier sites on the Web," said Jeff Taylor, CEO of Monster.com. “Monster.com is clearly the number one destination for job seekers and solidly entrenched as one of the top 100 sites overall on the ‘Net,” he continued.
Monster.com recently introduced its newest release, Monster 2000. In addition to a new contemporary look and feel, Monster 2000 has industry revolutionizing features, including tiered resume privacy technology, options to store multiple resume versions, and enriched personalization features, including dynamic content delivery.
“We are poised to continue exceeding customer and market needs in 2000. Our new national advertising campaign which launched during Super Bowl XXXIV in January 2000 was designed to deliver this message, and it did, resulting in a 159% increase in traffic during the 24-hour period after the game compared to the 24-hour period two weeks prior. In fact, while many Super Bowl advertisers' site traffic started to taper off by Tuesday, following Super Bowl Sunday, Monster.com's traffic growth actually continued to accelerate,” said Jeff Taylor, CEO of Monster.com. “This unprecedented growth in site traffic is testimony to the quality of our brand and to the value that our site demonstrates in advocating for our job seekers and helping them realize their career potential,” continued Mr. Taylor.
On December 2, 1999, Monster.com and America Online announced a four-year, exclusive $100-million relationship to bring Monster.com's career management resources directly to cyberspace's largest consumer audience across seven AOL brands in North America (the AOL Service, with 20.3 million members, as well as AOL Canada, AOL.com, CompuServce, ICQ, Netscape Netcenter and Digital City). "Our relationship with America Online will bring our career expertise to the largest 'Net audience. Millions more career opportunists and recruiters will now be given access to the information and tools to find dream jobs and dream candidates,” said Jeff Taylor.
Continuing this strategy, on February 28, 2000, TMP also entered into an exclusive agreement with the dominant Australian Internet portal, ninemsn, a joint venture owned equally between ecorp and Microsoft. The partnership agreement will make Monster.com the exclusive job search and career content channel on ninemsn. Plans were also announced for a similar joint venture in Asia with ecorp. “This relationship with ninemsn will add tremendous momentum to our existing Australian and Asia Pacific efforts and extend our career expertise even faster and stronger throughout the region,” said Jeff Taylor.
TMP's Interactive Division, along with Monster, garnered a number of awards in 1999 including best-in-category rankings in 1999 PC Magazine's 'The Top 100 Web Sites'; U.S. News & World Report's 'News You Can Use; Personal Tech--The Best of the Web Gets Better'; Newsweek's 'Money, News, Occupation'; Boston Magazine's 'Best Places to Work'; and Yahoo! Internet Life's '100 Best Sites for 2000'.
Forbes magazine's February 28, 2000 issue also provided further testimony to Monster.com's leadership position, by recognizing it as the best “job hunting” site on the Web from among more than 3,000 sites devoted to careers. Forbes' ‘Best of the Web' award is based on five criteria including design, navigation, content, speed and customization, and judges said of Monster, “every function, from storing your resume to researching jobs is simple and intuitive.”
TMP Worldwide's Interactive dominance also gained increasing acclaim, being ranked in Adweek as the 6th largest Interactive agency (www.adweek.com/iqinteractive.iq7.asp ). TMP Worldwide was also named to Fortune magazine's “e-50 Index,” which selects 50 of the best performing companies on the Internet, as well as Inter@ctive Week's “Internet 500” list of companies that are playing a critical role in shaping the future of the Internet economy.
Andy McKelvey, Chairman and CEO of TMP Worldwide commented, “We're excited for our shareholders and employees about ending 1999 with such tremendous success. We're also pleased to report that we've successfully started 2000 by completing a follow-on equity offering, selling 4 million shares at a price of $154 5/8 and raising approximately $595 million in net proceeds. In addition to paying down most of our debt, we will use these funds to pursue our goals of aggressive global expansion and increasing our market share and leadership position in all business lines.”
Twelve Month Performance
The financial information below includes the retroactively restated effects of the results of operations for companies acquired using the pooling of interests method of accounting. Included in this retroactively restated information are the results of LAI, which merged with the Company on August 26, 1999 and incurred an adjusted net loss of $15.1 million or $0.18 per diluted TMP share for the six months ended June 30, 1999.
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 19991
Total Commissions and Fees Up 16.5% to $765.8 million
-- Interactive Division Commissions and Fees Up 166.2% to $133.5 millionAdjusted Earnings before Interest, Taxes, Depreciation Up 6.1% to $107.6 million and Amortization (EBITDA)2 Adjusted Net Income3 $39.0 million compared to prior year at $39.3 million
Adjusted Fully Diluted EPS4 $0.47 compared to prior year at $0.50
Fully Diluted Weighted Average Shares Outstanding5 83.6 million
TMP reported total commissions and fees of $765.8 million for the twelve months ended December 31, 1999, compared to $657.5 million for the year-earlier period, an increase of 16.5%. Internet commissions and fees increased 166.2% to $133.5 million for the twelve months ended December 31, 1999, from $50.2 million for the twelve months ended December 31, 1998.
Search & Selection commissions and fees increased 7.1% to $295.7 million for the twelve months ended December 31, 1999 compared to $276.1 million for the prior year period, reflecting strong demand for permanent professional employees worldwide, particularly in mid-level management positions (annual salaries of $75,000 to $150,000). In addition, Temporary Contracting commissions and fees increased 21.6% to $57.1 million for the twelve months ended December 1999 versus $47.0 million for the prior year, resulting from internal growth in operations in Australia and New Zealand and strong demand for temporary and project related workers in these countries throughout most of 1999.
Recruitment Advertising commissions and fees of $178.1 million for the twelve months ended December 31, 1999 were virtually flat compared to $177.8 million for the prior year period, reflecting reduced billings due to lower volume of help-wanted advertisements placed in newspapers, offset by substantial reductions in client discounts. Yellow Page Advertising commissions and fees decreased 4.8% to $101.3 million for the twelve months ended December 31, 1999 versus $106.5 million for the prior year period, again reflecting substantially reduced commissions and year-end incentives paid by publishers and the effects of higher discounts for certain clients.
Excluding merger and integration costs incurred in connection with companies acquired using the pooling of interests method of accounting of $63.1 million in 1999 and $22.4 million in 1998, and restructuring charges at LAI of $2.8 million in 1999 and $3.5 million in 1998, the Company reported adjusted operating income of $73.7 million for the twelve months ended December 31, 1999 compared to $73.2 million for the prior year period. The flat adjusted operating profit is due primarily to $25.4 million in operating losses at LAI for the six months ended June 30, 1999, which preceded the merger with TMP.
Adjusted EBITDA for the twelve months ended December 31, 1999 was $107.6 million versus $101.4 million for the prior year; an increase of 6.1%. The 1999 adjusted EBITDA amount also includes a negative EBITDA amount of $23.6 at LAI for the six months ended June 30, 1999, which preceded the merger with TMP.
Adjusted net income was $39.0 million for the twelve months ended December 31, 1999 compared to $39.3 million for the prior year period. Diluted adjusted earnings per share were $0.47 for the twelve months ended December 31, 1999 versus $0.50 for the prior year. The decreases in adjusted net income and adjusted diluted earnings per share are, again, due primarily to $15.1 million in adjusted net losses (or $0.18 per diluted TMP share) at LAI for the six months ended June 30, 1999, which preceded the merger with TMP.
TMP Acquisitions in 1999 -- An Aggressive Year
1999 was an exceptional acquisition year for TMP in all five-business units, with a total of 37 acquisitions being completed; including fourteen transactions accounted for as poolings of interests.
Adding to its worldwide “Intern-to CEO” network and demonstrating the Company's commitment to maintaining its leadership position as the ultimate provider of global recruitment solutions, the TMP Search and Selection division acquired 17 businesses, six of which were accounted for as poolings of interest's transactions. The two largest acquisitions within this division were Morgan & Banks Ltd. and LAI Worldwide Inc., which closed in January 1999 and August 1999, respectively. Morgan & Banks is the leading executive resourcing and temporary contracting provider in Australia, and LAI is one of the largest providers of executive search services in the United States. In addition, in December 1999, the Highland Search Group, a premier U.S.-based executive search firm specializing in the financial services industry, also became part of the TMP network.
The Temporary Contracting division, a business line that TMP entered with the acquisition of Morgan & Banks, also acquired 3 businesses, each of which had strong synergies with our existing Selection businesses in Australia, New Zealand and the U.K. All three transactions were accounted for as poolings of interests.
TMP's Recruitment Advertising unit acquired 10 businesses worldwide, thereby expanding its agency network in North America and continental Europe. One of these transactions was accounted for as a poolings of interests.
Within the Yellow Page Advertising division, TMP acquired 6 businesses, one of which, in2, is an online marketing agency and technology company. Four of these transactions were accounted for as poolings of interests.
TMP's Interactive division acquired Paris-based JobSesame, a graduate-focused careers website, with services encompassing school-specific targeting for graduate recruitment and internship, which has been integrated into Monster Campus as a means of enhancing online graduate recruiting efforts throughout Europe.
“Our principal goal for acquisitions is to continue the growth of our on-line product offerings while enhancing our offline business services, and 1999 was a very successful year in accomplishing those goals,” said Mr. McKelvey. “As we take on the challenges of 2000 and beyond, we will continue to focus both on domestic growth and international expansion. We are making great progress in all our business lines and are confident that the exceptional managers and employees of TMP will continue this success and move us closer to our goal of being the definitive career services portal to both job seekers and employers worldwide.”
About TMP Worldwide
Founded in 1967, TMP Worldwide, now with more than 7,200 employees in 25 countries, is the on-line recruitment leader, the world's largest recruitment advertising agency network, and one of the world's largest search and selection agencies. TMP Worldwide, headquartered in New York, is also the world's largest Yellow Pages advertising agency and a provider of direct marketing services. The Company's clients include more than 90 of the Fortune 100 and more than 480 of the Fortune 500 companies.
Monster.com (www.monster.com) , the flagship product of the Interactive Division of TMP Worldwide, is the leading global career portal on the Web with a 5.3% reach among all World Wide Web users according to the January 2000 Media Metrix report. Monster.com connects the most progressive companies with the most qualified career-minded individuals, offering innovative technology and superior services that give them more control over the recruiting process. The Monster.com global network consists of local language and content sites in the United States, United Kingdom, Australia, Canada, the Netherlands, Belgium, New Zealand, Singapore and France. More information about Monster.com is available at www.monster.com  or by calling 1-800-MONSTER.
Condensed consolidated statements of operations for the three months and twelve months ending December 31, 1999 and 1998 for TMP Worldwide Inc. and subsidiaries follow. For an investment kit, please contact James J. Treacy at (212) 527-8604 or visit www.tmpw.com .
Special Note: The above statements include forward-looking statements based on current
management expectations. Factors that could cause future results to differ from these
expectations include the following: risks associated with acquisitions, competition and
seasonality. Additional factors are described in the company's reports filed with the
Securities and Exchange Commission.
1 Prior periods' results have been retroactively restated to reflect the effects of acquisitions accounted for as poolings of interests and which were completed prior to December 31, 1999.
2 EBITDA is adjusted to exclude the effects of merger and integration costs and restructuring charges incurred of $16.8 million and $65.8 million for the quarter and the year ended December 31, 1999, respectively.
3 Net income is adjusted to exclude the effects of merger and integration costs and restructuring charges incurred and the tax benefits thereon of $15.0 million and $46.4 million for the quarter and the year ended December 31, 1999, respectively.
5 Share amounts are adjusted to give effect to the 2-for-1 stock split effective February 29, 2000.
Contact: Lavine Surtani