Revenue of $251.8 Million and EPS of $0.04
OMAHA, Neb., Aug. 9 /PRNewswire-FirstCall/ -- SITEL Corporation
(NYSE: SWW), a leading global provider of outsourced customer support
services, announced today its financial results for the second quarter and six
months ended June 30, 2005. The company also filed its Quarterly Report on
Form 10-Q with the Securities and Exchange Commission for the quarter.
Second quarter of 2005 revenue of $251.8 million and earnings per share of
$0.04, which includes net restructuring credits of $2.6 million, are in line
with the Company's previously announced outlook of revenue in a range between
$250 million and $255 million and EPS in a range from $0.00 to $0.03.
Summary of results for the second quarter of 2005:
* Revenue of $251.8 million in Q2 05 increased 5 % over Q2 04.
* Operating income of $7.3 million for Q2 05 was up from an operating
income of $7.1 million in Q2 04.
* Net income of $3.2 million, or $0.04 per diluted share, in Q2 05 was
up from $2.5 million, or a profit of $0.03 per diluted share in Q2 04.
* The Q2 05 operating income included a net gain of $2.6 million
primarily from the reversal of a restructuring liability for the
opening of a previously closed leased facility to accommodate new
business in North America.
Commenting on the second quarter results, Jim Lynch, Chairman and CEO of
SITEL Corporation, said, "Revenue growth combined with our profit improvement
initiatives are on track to help us reach our profitability goals. In July,
we announced additional cost improvement plans with facility consolidations
and headcount reductions in Northern Europe. These actions will help us
improve underperforming business units by reducing cost and increasing
workstation utilization, therefore enhancing their profitability. Since our
restructuring efforts began in the fourth quarter 2004, and including the
recently announced Northern Europe restructuring, the annualized savings from
these efforts will be approximately $18 million to $22 million. Going
forward, a primary ingredient of our profitability goals is continued revenue
growth. We expect a lower revenue quarter in the third quarter with
seasonally lower volumes in Europe, but fourth quarter is expected to increase
substantially to a record high to help us achieve our profitability goals. We
are experiencing growth across a majority of our business units."
Second quarter 2005 financial results
SITEL's second quarter of 2005 revenue was $251.8 million as compared to
revenue of $240.1 million in the second quarter of 2004. In the second
quarter of 2005, operating income was $7.3 million and net income was
$3.2 million, or a profit of $0.04 per diluted share. This compares to an
operating income of $7.1 million and net income of $2.5 million, or $0.03 per
diluted share in the second quarter of 2004. In the second quarter of 2005,
to accommodate new business, the Company opened a previously closed leased
facility. By doing so, restructuring liabilities of $3.2 million associated
with the closure of the facility were reversed. This was partially offset by
severance charges associated with other continuing restructuring initiatives.
Revenue in the second quarter of 2005 was up 5% compared to the second
quarter of 2004. Activity improved from increased volumes and expanded
programs with existing clients across most North American business units, in
particular the financial services, consumer and technology sectors. Business
units, including those in Germany, Spain, Netherlands, Australia, Portugal,
Singapore, Brazil, and Panama, experienced double-digit growth through both
expanded existing business and new wins. The revenue growth of 5% was despite
lower activity from the previously announced loss of an account last year,
reduced pricing on a major client contract in 2004, and lower revenue in the
risk management business unit in North America.
During the second quarter of 2005 the Company generated cash from
operations of $12.3 million and recorded capital expenditures, including
capital leases, of $7.8 million. The Company ended the quarter with
$29.5 million in cash and $40.7 million available under our credit facility.
Subsequent to the end of the second quarter of 2005, the Company bought
back $6.2 million of its 9-1/4% senior subordinated notes, reducing total
outstanding notes from $90 million to $83.8 million.
Six-month 2005 financial results
For the six months ended June 30, 2005, revenue was $503.0 million, up 4%
from revenue of $484.1 million in the first six months of 2004. The Company
recorded net income of $4.7 million for the first six months of 2005, or a
profit of $0.06 per share, compared to a net income of $7.3 million, or a
profit of $0.10 per share, in the same period of 2004.
Highlights for the second quarter of 2005
During the second quarter of 2005 new business wins has been particularly
strong. The Company was awarded new business from several new and existing
clients. In Asia Pacific an airline company, an online payments firm, and new
insurance client were added. In Latin America a major fixed line telecom
client was added. In Europe a major utility company awarded the Company their
business. In North America the Insurance, Technology, Financial Services and
Consumer business units have added new and prospective business from over
10 major new logos between them. New multi-national programs for a consumer
electronics firm and wireless telecom company were also confirmed. In total
these wins are expected to fill over 1,000 workstations of new business. In
addition, the Company commented that its current pipeline is very strong with
many major prospective wins from its decentralized network of 32 business
units around the world.
In the United States, SITEL announced it was selected to team with Pearson
Government Solutions to provide customer services to support inquiries arising
from changes in Medicare and Medicaid programs. Operations, which are
expected to last three to six months, involve over 1,500 SITEL customer
service professionals (CSP) working from contact centers located in Texas,
Nevada, Wisconsin, Georgia, and Tennessee.
In July, the Company announced additional cost reduction initiatives under
its ongoing profit improvement plan with the consolidation of facilities in
Northern Europe. The consolidation of facilities and transition of clients is
expected to improve profitability in Northern Europe commencing primarily in
the first quarter of 2006.
Outlook
In line with the normal cyclical third quarter downturn, the Company
expects third quarter of 2005 revenue to be within a range of $242 million to
$247 million and earnings per share of approximately breakeven, excluding ramp
up cost associated with the North American win. Including the ramp up cost
for the North American win, the Company would expect earnings per share to be
in the range of a loss of $0.02 to a loss of $0.05. However, the Company
expects a record fourth quarter in revenue and earnings per share. The
Company anticipates fourth quarter revenue to be in a range of $275 million to
$290 million and earnings per share in a range of $0.11 to $0.15. Revenue and
earnings per share in the third quarter may be lower than forecast yet offset
by higher earnings per share in the fourth quarter pending finalization of
contract terms and the appropriate revenue recognition methodology of the
North American win.
The above comments are based on current expectations, exclude the
previously announced charges related to the Northern Europe restructuring of
$7 million to $9 million and any other non-recurring items, and supersede any
prior outlook provided by the Company.
Conference Call
SITEL executive management will host a conference call to discuss second
quarter 2005 financial results tomorrow, August 10, 2005 at 8:30 a.m. ET. To
participate, for domestic callers, please dial 1-(877) 209-0397 and for
international callers, please dial 1-(612) 332-0636. Replay of the conference
call will be available in the U.S. by dialing (800) 475-6701 and International
by dialing (320) 365-3844 (Access Code) 789755, starting at 12:00 p.m. ET on
August 10, 2005 and will play for seven days. The conference call will be
simulcast live on the Internet via SITEL's web site at http://www.sitel.com.
Replay will be available for seven days.
About SITEL
SITEL is a leading global provider of outsourced customer support
services. On behalf of many of the world's leading organizations, SITEL
designs and improves customer contact models across its clients' customer
acquisition, retention and development cycles. SITEL manages approximately
two million customer interactions per day via the telephone, e-mail, Internet
and traditional mail. SITEL has over 34,000 employees in 90 global contact
centers, utilizing more than 25 languages and dialects to serve customers in
55 countries SITEL is a leader in the contact center industry. Please visit
SITEL's website at http://www.sitel.com for further information.
This news release contains forward-looking statements within the meaning
of Section 27A of the Securities Act and Section 21E of the Exchange Act. The
words "expects," "will," and similar expressions in this news release identify
forward-looking statements, which speak only as of the date the statement is
made. SITEL assumes no obligation to update any such forward-looking
statement. Although SITEL believes that the expectations reflected in such
forward-looking statements are reasonable, there can be no assurance that such
expectations will prove to be correct. Because forward-looking statements
involve risks and uncertainties, future events and actual results could differ
materially from those set forth in, contemplated by or underlying the
forward-looking statements. Important factors that could cause actual results
to differ materially from SITEL's expectations may include, but are not
limited to the following, many of which are outside SITEL's control: client
budgets and plans, effectiveness of cost control initiatives, effectiveness of
revenue enhancement initiatives, delays in approving new contact center
initiatives or in moving forward with previously approved initiatives, terms
of final contracts to be completed with clients, ability to negotiate
contracts on acceptable terms, contract termination provisions, delays in ramp
up of services, customer demand for client products and services, the demand
for off-shore services, delays in securing necessary regulatory approvals,
licenses, leases, personnel, services and equipment for new facilities,
competitive pressures in SITEL's and its clients' industries and in local
markets, reliance on major clients, subcontractors and strategic partners,
mergers and restructurings involving clients or prospective clients, industry
regulation, reliance on telecommunications and computer technology,
unanticipated labor, contract or technical difficulties, general and local
economic trends and conditions, the effects of leverage, currency translation,
uncertainties of litigation, risks associated with operating a global
business, and dependence on credit availability and credit market conditions.
SITEL's Form 10-K, 10-Q and 8-K reports filed with the Securities and Exchange
Commission describe other important factors that may impact SITEL's business,
results of operation and financial condition and cause actual results to
differ materially from those set forth in, contemplated by or underlying the
forward-looking statements.
SITEL CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
Revenue $251,809 $240,055 $502,978 $484,123
Operating expenses:
Direct labor and
telecommunications expenses 153,636 143,032 306,112 287,160
Subcontracted and other
services expenses 12,886 13,022 25,774 25,837
Operating, selling and
administrative expenses 80,555 76,922 160,558 153,762
Asset impairment and
restructuring expenses, net (2,609) -- (2,609) --
Total operating expenses 244,468 232,976 489,835 466,759
Operating income 7,341 7,079 13,143 17,364
Other income (expense):
Interest expense (2,939) (3,099) (5,796) (6,332)
Interest income 140 121 260 242
Equity in earnings (loss) of
affiliates 395 77 288 70
Other income (expense), net (21) (118) (31) (392)
Total other expense, net (2,425) (3,019) (5,279) (6,412)
Income before income taxes and
minority interest 4,916 4,060 7,864 10,952
Income tax expense 1,392 1,331 2,531 3,183
Minority interest 307 210 667 424
Net income $3,217 $2,519 $4,666 $7,345
Weighted average common shares
outstanding:
Basic 73,764 73,670 73,750 73,652
Diluted 73,843 74,174 74,090 74,077
Earnings per share:
Basic $0.04 $0.03 $0.06 $0.10
Diluted $0.04 $0.03 $0.06 $0.10
SITEL Corporation
Preliminary Balance Sheet Data - Second Quarter 2005 Earnings Release
(in millions)
(Unaudited)
6/30/04 9/30/04 12/31/04 3/31/05 6/30/05
Cash $49.5 $42.1 $28.9 $35.0 $29.5
Accounts Receivable $172.1 $175.9 $191.4 $194.0 $190.3
Total Current Assets $240.2 $237.2 $237.5 $247.1 $236.0
Total Assets $412.8 $407.6 $397.5 $399.2 $385.0
Total Current Liabilities $143.9 $136.4 $154.7 $246.7 $238.5
Long-Term Debt and
Capital Leases, net $108.4 $108.6 $98.4 $7.8 $7.0
Total Debt -- Short-Term
and Long-Term $135.6 $132.6 $120.4 $138.4 $126.7
Total Liabilities $254.6 $247.8 $262.2 $265.6 $253.8
Total Equity $155.9 $157.3 $132.7 $130.6 $128.3
Revenue Statistics - Second Quarter 2005 Earnings Release
(Unaudited)
Service Mix
% of Total
Revenue Q204 Q304 Q404 2004 Q105 Q205 2005
Customer
Acquisition 20.0% 19.2% 20.8% 20.3% 17.4% 16.1% 16.7%
Customer
Care 55.8% 56.0% 54.4% 54.7% 57.1% 60.5% 58.8%
Technical
Support 15.3% 16.1% 17.9% 16.4% 18.0% 17.6% 17.8%
Risk
Management 6.8% 6.5% 5.3% 6.6% 6.3% 5.5% 5.9%
Other 2.1% 2.3% 1.6% 2.1% 1.3% 0.3% 0.8%
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Geographic Mix
% of Total
Revenue Q204 Q304 Q404 2004 Q105 Q205 2005
North
America 51.5% 51.2% 48.8% 51.1% 48.9% 47.7% 48.3%
Europe 41.4% 40.5% 43.3% 41.4% 42.9% 42.2% 42.5%
Asia
Pacific 4.1% 5.0% 5.0% 4.5% 4.9% 5.7% 5.3%
Latin
America 3.0% 3.3% 2.9% 3.0% 3.2% 4.4% 3.9%
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Industry Mix
% of Total
Revenue Q204 Q304 Q404 2004 Q105 Q205 2005
Insurance 6.7% 6.7% 6.4% 6.6% 6.1% 5.9% 6.0%
Financial
Services 15.9% 17.0% 16.8% 16.6% 17.2% 17.1% 17.2%
Consumer
Products 22.6% 20.2% 19.5% 21.7% 19.7% 21.4% 20.6%
Technology 26.2% 27.4% 29.0% 26.9% 26.3% 25.8% 26.0%
Energy and
Utilities 7.5% 7.6% 7.7% 7.7% 7.5% 7.5% 7.5%
Telecom-
munications,
ISP, and
Cable 14.7% 15.9% 15.6% 15.1% 18.6% 19.9% 19.3%
Other 6.4% 5.2% 5.0% 5.5% 4.6% 2.4% 3.4%
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
SOURCE SITEL Corporation
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Related links:
http://www.sitel.com
CONTACT:
Bill Sims, Investor Relations of SITEL
Corporation, +1-402-963-6810
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