BOSTON, MA -May 4, 2011- Stream Global Services, Inc., (NYSE
AMEX: SGS), a leading global business process outsource (BPO)
service provider specializing in customer relationship management
and business process outsourcing services for Fortune 1000
companies, today announced consolidated financial results for the
three months ended March 31, 2011. On May 4, 2011 Stream also
filed its Quarterly Report on Form 10-Q with the Securities and
Exchange Commission for the quarter ended March 31, 2011.
CEO Commentary
Kathryn Marinello, Chairman and Chief Executive Officer of
Stream, said, "Like last quarter, we are delighted with our top
line results. We continue to see strong demand for our
services as demonstrated by the 8% growth in year-over-year revenue
for the quarter. Internally, our focused efforts on improving our
operational performance by motivating and rewarding our employees
is yielding results as demonstrated by our 35% improvement in
year-over-year Adjusted EBITDA."
First Quarter 2011 Financial Highlights
- Revenue for the quarter ended March 31, 2011 was $213 million,
an increase of $16 million, or 8%, from the same period last
year. The growth in revenue was a combination of new clients
won in 2010 and expansion with existing clients. Through
April 30, 2011 of this year, Stream has signed an estimated $38
million, on an annualized basis once fully ramped, of revenue with
both new and existing clients.
- Gross profit increased approximately $7 million, or 8%, over
the prior year first quarter. The Gross Profit percentage for
the first quarter was 43% for both 2011 and 2010.
- Income From Operations for the quarter ended March 31, 2011 was
$7 million versus a loss of $3 million for the same period in 2010.
The improvement in operating income reflects higher gross profit
earned on the increased revenue, improvement in Selling, General
and Administrative expenses from 35% of revenue in first quarter
2010 to 32% of revenue in first quarter 2011, and lower net
Severance, Restructuring and Other Charges.
- Net loss was $2 million for the first quarter ended March 31,
2011 versus a net loss of $10 million for the same period in
2010.
- Adjusted Earnings before Interest, Taxes, Depreciation and
Amortization ("Adjusted EBITDA") was $23 million for the first
quarter of 2011, an increase of $6 million from the first quarter
of 2010 ($17 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 and El Salvador, was $154 million
for the first quarter ended March 31, 2011 ($143 million for the
prior year first quarter).
Gross profit generated by the Americas region for the first
quarter 2011 was $70 million ($64 million for the prior year first
quarter) and gross margin for the first quarter of 2011 was 45.5%
(44.8% the prior year first quarter).
EMEA Region
Revenue generated from our EMEA region, which includes Europe,
the Middle East and Africa, for the first quarter of 2011 was $58
million ($53 million for the prior year first quarter).
Gross profit generated by the EMEA region for the first quarter
of 2011 was $20 million with a gross margin of 34.5% ($20 million
and 37.7%, respectively, for the prior year first quarter). The
decrease in the gross profit percentage from the prior year is
primarily due to a decline in the financial performance of our
service centers in Cairo and Tunis resulting from civil unrest in
those geographies. As a result of this civil unrest, the
contribution to Adjusted EBITDA for this region declined by
approximately $1 million from the prior year first quarter and the
fourth quarter of 2010.
Selling, General and Administrative Expense
Selling, general and administrative expenses, which includes
non-agent service center costs, was $69 million (32.3% of revenue)
during the three months ended March 31, 2011 and $69 million (34.9%
of revenue ) during the same period in 2010. This percentage
decrease is attributed to management focus on cost controls,
including cost synergies realized from our integration of eTelecare
Global Solutions, Inc.
Other Income and Expense, Including Income
Taxes
Net realized and unrealized foreign exchange gains and losses
were a loss of approximately $1 million for the three months ended
March 31, 2011 versus a gain of approximately $2 million for the
prior year first quarter. The change in net realized and
unrealized foreign exchange gains and losses was primarily a result
of unrealized gains in first quarter 2010 from the effect of
changes in the value of the Philippine Peso relative to the US
Dollar on forward currency contracts that we acquired with the
acquisition of eTelecare in 2009 that were not treated as effective
hedges for financial reporting purposes and, accordingly, were
marked-to-market in income on a quarterly basis. These prior
ineffective hedges have now expired.
Provision for income taxes decreased from $2 million in first
quarter 2010 to $1 million in first quarter 2011. The
decrease was the result of a favorable outcome recorded in first
quarter 2011 on an uncertain tax position.
Liquidity and Capital Resources
At March 31, 2011, cash and cash equivalents, excluding
restricted cash, was $25 million, up from $18 million at
year-end. Days sales outstanding were 71 days at March 31,
2011 versus 73 days at March 31, 2010. The balance on the revolving
line of credit was $10 million at March 31, 2011 versus $25 million
at December 31, 2010. At March 31, 2011, the Company had
approximately $84 million of availability under its revolving line
of credit. For the quarter ended March 31, 2011, our cash
flow from operating activities was $27 million, an increase of $10
million from the same period in 2010.
Stream will hold a conference call for investors on May 5, 2011
at 9:00 AM EDT. Investors can participate by calling
1-888-430-8685 and referencing passcode #6813222.
Contact Information:
Hannah Byrne
Marketing Communications
hannah.byrne@stream.com
781-304-1859
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 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
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.
Contact Information:
Nancy Finn
Global Marketing Communications
nancy.finn@stream.com
781-304-1846 About Stream Global Services
Stream Global Services is a premium business process outsource (BPO) service provider specializing
in customer relationship management 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. Our service programs
are delivered through a set of standardized best practices and sophisticated technologies by a highly
skilled workforce of approximately 30,000 employees based out of 50 solution centers in 22 countries
supporting more than 35 languages. Stream continues 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.
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