STREAM GLOBAL SERVICES
ANNOUNCES
FINANCIAL RESULTS FOR SECOND
QUARTER ENDED JUNE 30, 2011
BOSTON, MA -August 3, 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 and six months ended June 30, 2011. On August 3,
2011 Stream also filed its Quarterly Report on Form 10-Q with the
Securities and Exchange Commission for the quarter ended
June 30, 2011.
CEO Commentary
Kathryn Marinello, Chairman and Chief Executive Officer of
Stream, said, "We are pleased to report our third 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 12% growth in
year-over-year revenue for the quarter. Our focused efforts on
improving our operational performance by optimizing our cost
structure and motivating and rewarding our employees again yielded
results as demonstrated by our 33% improvement in year-over-year
Adjusted EBITDA."
Second Quarter 2011 Financial Highlights
• Revenue for the quarter ended
June 30, 2011 was $206 million, an increase of $22 million, or
12%, from the same period last year. The growth in revenue was due
to a combination of new clients won in 2010, expansion with
existing clients and approximately $7 million due to fluctuations
in currency exchange rates. During the first six-months of 2011,
Stream has signed an estimated $80 million, on an annualized basis
once fully ramped, of revenue with both new and existing
clients.
• Gross profit increased
approximately $8 million, or 11%, over the prior year second
quarter. Although the Gross Profit percentage was 40% for both 2011
and 2010, for the second quarter of 2011 Stream incurred
significant unpaid training costs primarily related to the launch
of new programs. We also incurred approximately $1 million for an
agent bonus program in the second quarter 2011, which was not in
effect the second quarter 2010.
• Income (Loss) From Operations
Excluding Severance, restructuring and other charges, net for the
quarter ended June 30, 2011 was a loss of $0.4 million versus
a loss of $7 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 35% of revenue for the second quarter 2010 to 33% of revenue
for the second quarter of 2011. Stream incurred $3 million of
unpaid training costs during the second quarter of 2011 versus $2
million the prior year quarter and $1 million for the first quarter
of 2011.
For the first six-months of 2011, Income (Loss) From Operations
Excluding Severance, restructuring and other charges, net was
income of $7 million, an increase of $15 million from a loss of $8
million in the prior year period. Net loss was $16 million and $18
million for the three and six months ended June 30, 2011
versus a net loss of $22 million and $32 million for the same
periods in 2010.
• Cash flow from operating
activities for the second quarter 2011 was $16 million, an increase
of $28 million from the prior year period. Days Sales Outstanding
declined from 80 days at June 30, 2010 to 70 days at
June 30, 2011.
• Free Cash Flow (operating cash
flow less additions to equipment and fixtures and capital lease
financing) for the quarter and six months ended June 30, 2011
was $3 million and $23 million, respectively, an increase of $21
million and $28 million over the prior year periods.
• Adjusted Earnings before
Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA")
was $15 million for the second quarter of 2011, an increase of $4
million from the second quarter of 2010 ($11 million.) On a
year-over-year constant currency basis, our Adjusted EBITDA would
have been higher by approximately $0.7 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 $146 million
and $300 million for the three and six months ended June 30,
2011 ($136 million and $279 million for the same periods in the
prior year, respectively).
Gross profit generated by the Americas region was $62 million
and $132 million for the three and six months ended June 30,
2011 ($56 million and $120 million for the same periods in prior
year). The gross margin percentage for the three and six months
ended June 30, 2011 was 43% and 44% (41% and 43% for the same
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 six months ended
June 30, 2011 was $60 million and $118 million ($48 million
and $101 million for the same periods in the prior year).
Gross profit generated by the EMEA region for the three and six
months ended June 30, 2011 was $20 million and $41 million,
with a gross margin of 33% and 35%, respectively ($17 million and
$38 million with a gross margin percentage of 35% 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 $67 million (33% of revenue)
during the three months ended June 30, 2011 and $64 million
(35% of revenue ) during the same period in 2010. This percentage
decrease is a result of management focus on cost controls,
including the impact of a reduction in our workforce during second
quarter.
Liquidity and Capital Resources
At June 30, 2011, cash and cash equivalents, excluding
restricted cash, was $24 million, up from $18 million at year-end.
During the quarter ended June 30, 2011 we repurchased
3.7 million shares of our Common Stock for an aggregate
purchase price of $12 million. The balance on the revolving line of
credit after the repurchase was $19 million at June 30, 2011
versus $25 million at December 31, 2010. At June 30,
2011, the Company had in excess of $50 million of availability
under its revolving line of credit.
Stream will hold a conference call for investors on
August 4, 2011 at 9:00 AM EDT. Investors can participate by
calling 888-516-2435 or 719-457-2652 (for callers outside the US)
and reference pass code 9657274.
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 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.
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