STREAM GLOBAL SERVICES
ANNOUNCES
FINANCIAL RESULTS FOR
FIRST QUARTER ENDED MARCH 31, 2012
BOSTON, MA - April 24, 2012 - Stream Global Services,
Inc., (NYSE AMEX: SGS), a leading global business process outsource
(BPO) service provider specializing in customer relationship
management including technical support and sales programs for
Fortune 1000 companies, today announced consolidated financial
results for the three months ended March 31, 2012.
CEO Commentary
Kathryn Marinello, Chairman and Chief Executive Officer of
Stream, said, "We are very pleased to report a 13% year-over-year
increase in Adjusted EBITDA for the first quarter of 2012. Our
strategy of improving our core operating metrics and investing in
our people has resulted in double-digit growth over the same period
in 2011. We remain committed to our strategy to significantly
invest in our business - our people and our infrastructure - while
delivering returns for our investors."
First Quarter 2012 Financial
Highlights
• Revenue
for the quarter ended March 31, 2012 was $216 million, an
increase of $3 million, or 1%, from the same period in 2011. The
increase is principally due to volume and program expansion with
existing customers as well as ramping of new customers added in
2011. The company has successfully grown revenue while eliminating
programs that did not meet internal targets for profitability.
Additionally, the change in foreign exchange rates from the first
quarter of 2011 to the first quarter of 2012 lowered revenue by
approximately $2 million.
• Gross profit
increased approximately $1 million, or 1%, over the prior year
first quarter. The Gross Profit percentage was 42% for the first
quarter of 2012 versus 43% for the first quarter of 2011 primarily
due to agent training for North American business.
• Income From
Operations Excluding Severance, Restructuring and Other Charges,
net for the quarter ended March 31, 2012 was $11 million
versus $7 million for the same period in 2011. This increase
reflects higher gross profit earned on the increased revenue and a
relative decline in Selling, General and Administrative expenses
from 32% of revenue for the first quarter 2011 to 31% of revenue
for the first quarter of 2012. This improvement is largely the
result of our cost efficiency improvement programs implemented
during 2011.
• Adjusted
Earnings before Interest, Taxes, Depreciation and Amortization
("Adjusted EBITDA") was $26 million for the first quarter of 2012,
an increase of $3 million, or 13%, from the first quarter of 2011.
Changes in currency rates did not have a material impact on the
quarter's Adjusted EBITDA.
• Net loss was
$1 million for the three months ended March 31, 2012 compared
to a net loss of $2 million for the three months ended
March 31, 2011.
• Cash flow
from operating activities for the first quarter 2012 was $21
million, a decrease of $6 million from the prior year first quarter
largely due to working capital improvements in 2011 that were
non-recurring. Days Sales Outstanding improved from 71 days at
March 31, 2011 to 68 days at March 31, 2012.
• Free Cash
Flow (operating cash flow less additions to equipment and fixtures
and new capital lease financing) for the first quarter of 2012 was
inflows of $14 million and for the quarter ended March 31,
2011 was inflows of $21 million. The decrease in free cash flow
during the quarter was primarily a result of the non-recurring
effect of working capital improvements in 2011 and higher
performance-based incentive compensation payments in
2012.
• The
company made capital expenditures of approximately $7 million
during the three months ended March 31, 2012, composed of
approximately $4 million for site expansion to accommodate growth
and $3 million to invest in the company's technology
infrastructure.
Americas Region
Revenue generated from our Americas region, which includes
the United States, Canada, the Philippines, India, Costa Rica,
Nicaragua, the Dominican Republic, El Salvador and China, was $159
million for the three months ended March 31, 2012 compared to
$154 million for the same period in 2011.
Gross profit generated by the Americas region was $70
million for both the three months ended March 31, 2012 and
March 31, 2011. The gross margin percentage was 44.2% for the
three months ended March 31, 2012 and was 45.5% for the same
period in 2011.
EMEA Region
Revenue generated from our EMEA region, which includes
Europe, the Middle East and Africa, for the three months ended
March 31, 2012 was $57 million compared to $58 million for the
same period in 2011.
Gross profit generated by the EMEA region for the three
months ended March 31, 2012 was $21 million, with a gross
margin of 37.4% compared to $20 million with a gross margin
percentage of 34.5% for the same period in 2011.
Selling, General and Administrative
Expense
Selling, general and administrative expenses, which
includes non-agent service center costs, were $66 million or 31% of
revenue during the three months ended March 31, 2012 and $69
million or 32% of revenue during the same period in 2011. This
percentage decrease is primarily a result of management focus on
cost efficiency, including the impact of reductions in our
workforce in 2011.
Liquidity and Capital Resources
At March 31, 2012, cash and cash equivalents was $18
million, down from $25 million at December 31, 2011. The
balance on the revolving line of credit was $25 million at
March 31, 2012 and $45 million at December 31, 2011. At
March 31, 2012, the company had in excess of $70 million of
availability which could be drawn under its revolving line of
credit.
Stream will hold a conference call for investors on
April 24, 2012 at 5:30 PM EDT. Investors can participate by
calling 1-800-230-1096 or 1-612-332-0107 (for callers outside the
US).
Contact Information:
Heidi Ulin
Executive Assistant
Heidi.Ulin@stream.com
1-952-698-1057
About Stream Global Services:
Stream Global Services is a leading global business
process outsource (BPO) service provider specializing in customer
relationship management services including sales, customer care and
technical support for Fortune 1000 companies. Stream is a trusted
partner to some of the world's leading technology, computing,
telecommunications, retail, entertainment/media, and financial
services companies. Stream's service programs are delivered through
a set of standardized best practices and sophisticated technologies
by a highly skilled multilingual workforce of over 31,000 employees
capable of supporting over 35 languages across 49 locations in 22
countries. Stream strives to expand its global presence and service
offerings to increase revenue, improve operational efficiencies and
drive brand loyalty for its clients. To learn more about the
company and its complete service offering, please visit
www.stream.com.
Safe Harbor
This press release contains forward-looking statements
made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995, including forward-looking
statements concerning expectations regarding future operating
performance and economic and market conditions. The forward looking
statements made are neither promises nor guarantees, and are
subject to risk and uncertainties that could cause our actual
results to differ materially from those anticipated or indicated,
including, without limitation, risks and uncertainties relating to
our current operation in, as well as entry into, new markets;
changes in general economic and business conditions; fluctuations
in foreign currency rates; fluctuations in sales volume, timing and
sales cycles; our ability to retain our employees in light of
competition for agents; our ability to make payments required under
our outstanding indebtedness; delays in obtaining new clients or
sales from existing clients; delays or interruptions of service as
a result of power loss, fire, natural disasters, security breaches,
civil unrest or political upheaval, and other similar events;
litigation; intense competition in the marketplace from
competitors; future acquisitions, joint ventures or other strategic
investments; and our ability to obtain necessary financing in the
future plus other risks detailed in the Company's filings with the
U.S. Securities and Exchange Commission ("SEC"), including those
discussed in the Company's Annual Report on Form 10-K for the year
ended December 31, 2011.
Stream does not intend, and disclaims any obligation, to
update any forward-looking information contained in this release,
even if its estimates change.
The required reconciliations and other disclosures for all
non-GAAP measures used by the Company are set forth in a schedule
attached to this press release and in the Current Report on Form
8-K furnished to the SEC on the date hereof.
Non-GAAP Financial Information
This release contains non-GAAP financial measures. These
non-GAAP financial measures, which are used as measures of Stream's
performance or liquidity, should be considered in addition to, not
as a substitute for, measures of Stream's financial performance or
liquidity prepared in accordance with GAAP. Non-GAAP financial
measures may be defined differently from time to time and may be
defined differently than similar terms used by other companies, and
accordingly, care should be exercised in understanding how Stream
defines non-GAAP financial measures in this release.
Stream's management uses the non-GAAP financial measures
in the accompanying schedules to gain an understanding of Stream's
comparative operating performance (when comparing such results with
previous periods) and future prospects and excludes certain items
from its internal financial statements for purposes of its internal
budgets and financial goals. These non-GAAP financial measures are
used by Stream's management in their financial and operating
decision-making because management believes they reflect Stream's
ongoing business in a manner that allows meaningful
period-to-period comparisons. Stream's management believes that
these non-GAAP financial measures provide useful information to
investors and others in (a) understanding and evaluating
Stream's current operating performance and future prospects in the
same manner as management does, if they so choose, and (b) in
comparing in a consistent manner Stream's current financial results
with its past financial results.
All of the foregoing non-GAAP financial measures have
limitations. Specifically, the non-GAAP financial measures that
exclude certain items do not include all items of income and
expense that affect Stream's operations. Further, these non-GAAP
financial measures are not prepared in accordance with GAAP, may
not be comparable to non-GAAP financial measures used by other
companies and do not reflect any benefit that such items may confer
on Stream. Management compensates for these limitations by also
considering Stream's financial results in accordance with
GAAP.
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