BOSTON, MA - August 8, 2012 - Stream Global Services,
Inc., 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 and
six months ended June 30, 2012.
CEO Commentary
Kathryn Marinello, Chairman and Chief Executive Officer of
Stream, said, "We are reporting an 8% year-over-year increase in
Adjusted EBITDA for the six month period ended June 30, 2012.
Our strategy of improving our core operating metrics has resulted
in continued Adjusted EBITDA growth over 2011. We remain committed
to our strategy to significantly invest in our business - our
people and our infrastructure - while delivering returns for our
investors."
Second Quarter 2012 Financial
Highlights
• Revenue for
the quarter ended June 30, 2012 was $198 million, a decrease
of $8 million, or 4%, from the same period in 2011. The decrease is
principally due to fluctuations in currency exchange rates
(primarily the Euro) of approximately $5 million, an investment in
future growth with a key client and lower volumes on certain key
accounts in North America partially offset by increased revenue in
offshore locations.
• Gross profit
decreased approximately $3 million, or 4% from the second quarter
of 2011. The gross profit percentage was 40% for both the second
quarter of 2012 and 2011.
• Income from
operations excluding severance, restructuring and other charges,
net for the quarter ended June 30, 2012 was income of $0.4
million versus a loss of $0.4 million for the same period in 2011.
This improvement is largely the result of the realization of
operational changes and cost efficiencies that took place in 2011
and the strengthening of the U.S. Dollar. For the first six-months
of 2012, income from operations excluding severance, restructuring
and other charges was income of $11 million, an increase of $4
million from income of $7 million in the comparable period in
2011.
• Adjusted
earnings before interest, taxes, depreciation and amortization
("Adjusted EBITDA") were $15 million for the second quarter of 2012
and the second quarter of 2011. Changes in currency rates did not
have a material impact on Adjusted EBITDA in the second quarter of
2012.
• Net loss
was $14 million and $15 million for the three and six months ended
June 30, 2012 compared to a net loss of $16 million and $18
million for the same periods in 2011. Excluding the effect of costs
related to our April 2012 transaction and our investment in a key
client, net loss would have improved by approximately $6 million
which represents the recurring operating performance of the
business.
• Cash
flow from operating activities for the second quarter 2012 was $15
million, a decrease of $1 million from the second quarter of 2011
largely due to increased bonus related payments in 2012 compared to
2011. Days sales outstanding improved from 70 days at June 30,
2011 to 65 days at June 30, 2012 reflecting enhanced billing
and collections and the mix of our contractual payment
terms.
• Free
cash flow (operating cash flow less additions to equipment and
fixtures and new capital lease financing) for the three and six
months ended June 30, 2012 was inflows of $3 million and $17
million, respectively, a decrease of $0.2 million and $6 million
over the prior year periods.
Adjusted EBITDA is a non-GAAP financial measure. For more
information, please see the disclosure below under the heading
"Non-GAAP Financial Information" and the reconciliation tables at
the end of this press release.
Americas Region
Revenue generated from our Americas region, which includes
the United States, Canada, the Philippines, India, Nicaragua, the
Dominican Republic, El Salvador and China, was $147 million and
$305 million for the three and six months ended June 30, 2012
compared to $146 million and $300 million for the same periods in
2011.
Gross profit generated by the Americas region was $63
million and $133 million for the three and six months ended
June 30, 2012 compared to $62 million and $132 million for the
same periods in 2011. The gross margin percentage was 42.8% and
43.5% for the three and six months ended June 30, 2012 and was
42.5% and 43.9% for the same periods in 2011.
EMEA Region
Revenue generated from our EMEA region, which includes
Europe, the Middle East and Africa, for the three and six months
ended June 30, 2012 was $51 million and $108 million compared
to $60 million and $118 million for the same periods in
2011.
Gross profit generated by the EMEA region was $16 million
and $38 million for the three and six months ended June 30,
2012 compared to $20 million and $41 million for the same periods
in 2011. The gross margin percentage was 32.0% and 34.9% for the
three and six months ended June 30, 2012 and was 34.0% and
34.5% for the same periods in 2011. The decrease in gross profit is
primarily due to the strengthening of the U.S. Dollar relative to
the Euro and lower call volumes resulting from the unstable
economic environment in the region.
Selling, General and Administrative
Expense
Selling, general and administrative expenses, which
includes non-agent service center costs, were $65 million or 33% of
revenue during the three months ended June 30, 2012 compared
to $67 million or 33% of revenue during the same period in 2011. As
a result of the termination of the 2008 Stock Incentive Plan in
April 2012, additional selling, general and administrative expense
was incurred. Excluding this expense, selling, general and
administrative expense as a percentage of revenue would have been
lower for the three months ended June 30, 2012 than the same
period in 2011.
Liquidity and Capital Resources
At June 30, 2012, cash and cash equivalents was $11
million, down from $25 million at December 31, 2011. The
balance on the revolving line of credit was $18 million and $45
million at June 30, 2012 and December 31, 2011,
respectively. At June 30, 2012, the company had in excess of
$76 million of availability which could be drawn under its
revolving line of credit.
Stream will hold a conference call for investors on
August 14, 2012 at 5:30 PM EDT. Investors can participate by
calling 1-800-230-1074 or 1-612-234-9960 (for callers outside the
US).
Contact Information:
Heidi Ulin
Executive Assistant
Heidi.Ulin@stream.com
1-952-698-1057
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