Axiom Management Inc. (AXMA) Rated Speculative Buy, Target Price 3.48 by Beacon Equity Research
New report issued on rapidly growing staffing company which is targeting the $87 Billion U.S. temporary staffing market.
Axiom Management Inc. Rated ‘Speculative Buy,’ Target Price $3.48 by Beacon Equity Research
In the report, the analyst writes, “Axiom Management, Inc. (AXMA) is a full-service staff recruitment, fulfillment, and human resources management company. Through its wholly-owned subsidiary, Coastal Employment, the Company provides services to clerical and technical companies, logistics providers, warehouses and light manufacturing businesses. In addition to staffing, Axiom offers risk management services to address rising workers compensation costs and related expenses through its recently established subsidiary, Strategic Insurance Group (SIG).”
“The Company is a recognized authority on safety/risk management and workplace compliance (OSHA) requirements, a key differentiator and competitive advantage in the staffing market. Axiom is also set apart by its ability to market its staffing and risk management services either independently or bundled together.”
Temporary staffing is an $87 billion US market
The American Staffing Association indicates that temporary staffing industry revenues grew from $64 billion in 2003 to $82 billion in 2005 and $87 billion in 2007. Staffing services are expected to produce one of the highest industry growth rates over the next 25 years. Unlike other businesses, staffing services is relatively immune to economic cycles. A sustained economic recovery stimulates demand for temporary workers while an economic slowdown typically leads to more companies using temporary employees to avoid the high costs associated with providing benefits to full-time workers. The staffing industry is highly fragmented, consisting of a few large players and thousands of small companies generating between $5 million to $20 million in annualized revenues. The fragmented nature of the industry creates favorable acquisition opportunities for consolidators such as Axiom.
Value-added through risk management services
Axiom offers a wide range of client services, including human resource services, risk management solutions and safety services. It caters to both seasonal and long-term client needs and has a scaleable pay and billing system that covers employee payroll, benefits, and workers' compensation insurance. Axiom differs from other temporary agencies because of its value-added capabilities and services directed at loss prevention and overall cost reductions for its clients. In addition, the Company’s risk management business unit provides a hedge to help offset the seasonal effects traditionally experienced by temporary staffing companies.
Strong revenue growth since inception
Axiom generated $9.9 million in revenues, was profitable during its first year of operations and produced $12 million of revenues and positive EBITDA in its second year. While revenues declined to a $9 million range in 2006, the Company remained EBITDA positive. Management is targeting 2007 revenues (excluding acquisitions) in an $18 million range.
Acquisitions fuel additional growth and cross-selling opportunities
Axiom has identified several acquisition candidates that together represent over $67.5 million in annualized revenues. The Company has already signed Letters of Intent to acquire a multi-location staffing company in upstate New York that generated 2006 revenues of approximately $17 million, and staffing companies in Long Island, New York and St. Petersburg, Florida together generating $34 million in annualized revenues. By making strategic acquisitions, the Company will be able to quickly expand its market penetration, geographic coverage and customer base, realize economies of scale and capitalize on cross-selling opportunities associated with marketing risk management services to its newly acquired customers.
Experienced management team
The Company is led by an experienced team of staffing industry professionals. Axiom’s President Peter Morales is considered a leading expert in the risk management, safety, human resources and staffing fields. During his tenure as COO of a regional staffing company, he helped that business grow from $11 million to over $55 million in revenues in three years. CEO James Clapp has 24 years experience in the warehouse, transportation and logistics industries and formerly served as COO of a major national logistics company. Vice-President Gani Gjonbalaj has 17 years business development and logistics industry experience and formerly served as Vice President of Operations /Operations Manager for a leading logistics and distribution firm.