PRG-Schultz Announces First Quarter 2009 Financial Results

PRG-Schultz International, Inc. (Nasdaq: PRGX), the world's largest recovery audit firm, today announced its unaudited financial results for the first quarter of 2009.

Highlights of Financial Results

• Net earnings for the 2009 first quarter were $1.9 million, or $0.08 per basic and diluted share, compared to net earnings of $3.6 million, or $0.17 per basic share and $0.16 per diluted share for the same period in 2008. The first quarter 2009 net earnings included $0.6 million of foreign currency losses on intercompany balances and a negligible net charge for stock-based compensation. The inter-company balances result primarily from transfer pricing charges to the Company’s foreign subsidiaries. The first quarter 2008 net earnings included a $3.0 million charge for stock-based compensation and $0.6 million of foreign currency gains on intercompany balances.
• Adjusted EBITDA for the 2009 first quarter was $5.0 million compared to $9.0 million of adjusted EBITDA for the same period in 2008. The 2009 first quarter adjusted EBITDA is earnings before interest, taxes, depreciation and amortization (EBITDA) excluding stock-based compensation and the $0.6 million of foreign currency losses on intercompany balances. The comparable adjusted EBITDA amount for the first quarter of 2008 excludes from EBITDA for such period the charge of $3.0 million related to stock-based compensation and the $0.6 million of foreign currency gains on intercompany balances. (Schedule 3 attached to this press release provides a reconciliation of net earnings to each of EBITDA and adjusted EBITDA).
• Consolidated revenue for the first quarter of 2009 was $39.3 million, a decrease of $9.0 million, or 18.7%, compared to $48.3 million for the same period in 2008. On a constant Dollar basis adjusted for changes in foreign currency exchange rates, 2009 first quarter revenue declined slightly less than 10% compared to the same period in 2008.

Liquidity

At March 31, 2009 the Company had cash and cash equivalents of $24.5 million and had no borrowings against its revolving credit facility. Total debt outstanding at quarter-end was $18.3 million, which included a $17.8 million outstanding balance on a variable rate term loan due 2011 and a $0.5 million capital lease obligation. During the first quarter of 2009 the Company repurchased 78,754 shares of its common stock at an average per share price of $3.13.

"Our first quarter revenues reflect the adverse impact of the downturn in the economy, particularly in the U.S." said Romil Bahl, president and chief executive officer. "Our clients’ purchases in certain segments of the U.S. retail industry continue to decline and many of our clients’ vendor partners are experiencing their own financial issues. The combination of these factors makes it more difficult for our clients to offset valid claims against other purchases from their vendors. We believe that this is partially a timing issue and many of these claims will turn into future recoveries for our clients.”

First Quarter Earnings Call

As previously announced, management will hold a conference call tomorrow morning at 8:30 AM (Eastern Time) to discuss the Company’s first quarter 2009 financial results. To access the conference call, listeners in the U.S. and Canada should dial 866-510-0704 at least 5 minutes prior to the start of the conference. Listeners outside the U.S. and Canada should dial 617-597-5362. To be admitted to the call, listeners should use passcode 82978495. A replay of the call will be available approximately one hour after the conclusion of the live call, extending through May 28, 2009. To directly access the replay, dial 888-286-8010 (U.S. and Canada) or 617-801-6888 (outside the U.S. and Canada). The passcode for the replay is 43212487.

This teleconference will also be audiocast on the Internet at www.prgx.com (click on "Events” under "Investor Relations”). A replay of the audiocast will be available at the same location on www.prgx.com beginning approximately one hour after the conclusion of the live audiocast, extending through May 28, 2009. 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/windows/mediaplayer.

About PRG-Schultz International, Inc.

Headquartered in Atlanta, PRG-Schultz International, Inc. is the world's leading recovery audit firm, providing clients throughout the world with insightful value to optimize and expertly manage their business transactions. Using proprietary software and expert audit methodologies, PRG industry specialists review client purchases and payment information to identify and recover overpayments.

Non-GAAP Financial Measures

EBITDA and adjusted EBITDA are both "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 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, 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 EBITDA and adjusted EBITDA, you should be aware that, as described above, the adjustments may vary from period to period and 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. Schedule 3 to this press release provides a reconciliation of net earnings to each of EBITDA and adjusted EBITDA.

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 financial condition, its outlook on the economic environment, the impact of the current economic environment on the Company’s clients and their vendors, and the likelihood that identified claims will result in future recoveries for clients. 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 revenues that do not meet expectations or justify costs incurred, the Company’s ability to develop material sources of new revenue in addition to revenues from its core accounts payable services, changes in the market for the Company’s services, the Company’s ability to retain existing personnel, potential legislative and regulatory changes applicable to the Medicare recovery audit contractor program, uncertainty in the credit markets, 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, including its Form 10-K filed on March 16, 2009. The Company disclaims any obligation or duty to update or modify these forward-looking statements.