BOSTON, MA -November 2, 2011- 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 and nine months ended September 30,
2011. On November 2, 2011 Stream also filed its Quarterly
Report on Form 10-Q with the Securities and Exchange Commission for
the quarter ended September 30, 2011.
CEO Commentary
Kathryn Marinello, Chairman and Chief Executive Officer of
Stream, said, "We are pleased to report our fourth consecutive
quarter of increased revenue and Adjusted EBITDA when compared to
the same quarter in the prior year. We continue to see strong
demand for our services as demonstrated by the 6% growth in
year-over-year revenue for the quarter. As a result of our belief
in continued customer demand for our services, this quarter we
invested approximately $17 million to build out our facilities and
enhance our infrastructure. Our efforts to improve our operational
performance by optimizing our cost structure and motivating and
rewarding our employees are again yielding results as this quarter
we realized positive Income From Operations versus Losses from
Operations in prior periods."
Third Quarter 2011 Financial
Highlights
• Revenue for the quarter
ended September 30, 2011 was $208 million, an increase of $11
million, or 6%, from the same period last year. The growth in
revenue was due to a combination of new clients won in 2010 and
2011, expansion with existing clients and approximately $5 million
due to fluctuations in currency exchange rates. During the first
nine months of 2011, Stream has signed an estimated $136 million,
on an annualized basis once fully ramped, of revenue with both new
and existing clients.
• Gross profit increased
approximately $2 million, or 2%, over the prior year third quarter.
The Gross Profit percentage was 41% for 2011 and 42% for 2010 as a
result of incurring approximately $4 million more than the prior
period in unpaid training costs related to the launch of new
programs. We also incurred approximately $1 million for an agent
bonus program in the third quarter 2011, which was not in effect
the third quarter 2010.
• Income From Operations
Excluding Severance, restructuring and other charges, net for the
quarter ended September 30, 2011 was $3 million versus $1
million for the same period in 2010. The improvement reflects
higher gross profit earned on the increased revenue and a relative
decline in Selling, General and Administrative expenses from 33.5%
of revenue for the third quarter 2010 to 31.8% of revenue for the
third quarter of 2011. This improvement is largely the result of
our profit improvement programs in 2011. For the first nine-months
of 2011, Income (Loss) From Operations Excluding Severance,
restructuring and other charges was income of $10 million, an
increase of $17 million from the comparable loss of $7 million in
the prior year period.
• Net loss was $10 million
and $28 million for the three and nine months ended
September 30, 2011 versus a net loss of $13 million and $45
million for the same periods in 2010.
• Cash flow from operating
activities for the third quarter 2011 was $5 million, a decrease of
$5 million from the prior year period largely due to severance
payments of $4 million made in the quarter. Days Sales Outstanding
improved from 78 days at September 30, 2010 to 69 days at
September 30, 2011.
• Free Cash Flow (operating
cash flow less additions to equipment and fixtures and new capital
lease financing) for the third quarter was outflows of $12 million
and for the nine months ended September 30, 2011was inflows of
$12 million. The third quarter's Free Cash Flow reflects an
increase in capital expenditures to expand capacity and payment of
severance costs.
• Adjusted Earnings before
Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA")
was $20 million for the third quarter of 2011, an increase of $1
million from the third quarter of 2010 ($19 million.) On a
year-over-year constant currency basis, our Adjusted EBITDA would
have been higher by approximately $1 million had there been no
change in global currency rates.
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 $149
million and $449 million for the three and nine months ended
September 30, 2011 ($146 million and $425 million for the same
periods in the prior year, respectively).
Gross profit generated by the Americas region was $64
million and $196 million for the three and nine months ended
September 30, 2011 ($63 million and $182 million for the same
periods in prior year). The gross margin percentage for the three
and nine months ended September 30, 2011 was 43% and 44% (43%
for the both periods in the prior year).
EMEA Region
Revenue generated from our EMEA region, which includes
Europe, the Middle East and Africa, for the three and nine months
ended September 30, 2011 was $59 million and $178 million,
respectively ($51 million and $152 million for the same periods in
the prior year).
Gross profit generated by the EMEA region for the three
and nine months ended September 30, 2011 was $21 million and
$62 million, with a gross margin of 36% and 35%, respectively ($21
million and $58 million with a gross margin percentage of 40% and
38%, respectively, for the same periods in the prior
year).
Selling, General and Administrative
Expense
Selling, general and administrative expenses, which
includes non-agent service center costs, was $66 million (31.8% of
revenue) during the three months ended September 30, 2011 and
$66 million (33.5% of revenue ) during the same period in 2010.
This percentage decrease is a result of management focus on cost
controls, including the impact of reductions in our workforce
earlier in 2011.
Liquidity and Capital
Resources
At September 30, 2011, cash and cash equivalents,
excluding restricted cash, was $21 million, up from $18 million at
December 31, 2010. The balance on the revolving line of credit
was $28 million at September 30, 2011 versus $25 million at
December 31, 2010. At September 30, 2011, the Company had
in excess of $46 million of availability which could be drawn at
any time under its revolving line of credit.
Stream will hold a conference call for investors on
November 3, 2011 at 9:00 AM EDT. Investors can participate by
calling 800-288-8961 or 612-332-0345 (for callers outside the
US).
Contact Information:
Heidi Ulin
Executive Assistant
Heidi.Ulin@stream.com
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 30,000 employees
capable of supporting over 35 languages across 50 locations in 23
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 regarding our business expectations and objectives.
These statements are neither promises nor guarantees, but involve
risks and uncertainties that could cause actual results to differ
materially from those set forth in the forward-looking statements,
including, without limitation, risks relating to the Company's
ability to maintain and win additional client business, continue to
maintain its operating performance and margin expansion, continue
to have sufficient capital to grow and maintain its business,
retain the Company's management team and effectively operate a
global franchise across multiple jurisdictions 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, 2010.
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.
|