Stream Global Services Announces Financial Results for Fourth Quarter and Year-End 2010
BOSTON, MA - March 2, 2011- Stream Global Services, Inc., (NYSE
AMEX: SGS), a leading global business process outsourcing (BPO)
service provider specializing in customer relationship management
and business process outsourcing services for many Fortune 1000
companies, today announced consolidated financial results for the
three months and year ended December 31, 2010. Today Stream
filed its Annual Report on Form 10-K for the fiscal year ended
December 31, 2010 with the Securities and Exchange Commission.
CEO Commentary
Kathryn Marinello, Chairman and Chief Executive Officer of
Stream said, "We are delighted with our top line results for the
fourth quarter. We continue to see strong demand for our
services as demonstrated by our 10.4% growth in year-over-year
revenue for the fourth quarter. Internally, we are very focused on
improving our operational performance by motivating and rewarding
our employees to deliver strong results for our clients, and our
stakeholders alike."
Fourth Quarter 2010 Financial Highlights
- Revenue for the quarter ended December 31, 2010 was a record
$223 million, an increase of $21 million, or 10.4%, from the same
period last year. Revenue for the fourth quarter increased
over the third quarter of 2010 by approximately $26 million.
The growth in revenue was due to a combination of new clients and
expansion of services provided to existing clients.
- Gross Profit for the quarter ended December 31, 2010 increased
$5 million, or 6.0%, over the same period in 2009. The fourth
quarter also absorbed the full year expense for the agent bonus
program for the year of approximately $3 million, as an agent plan
was not enacted until the fourth quarter and, accordingly, the
gross profit percentage for the fourth quarter reflects this
expense for the full year.
- Income From Operations for the quarter ended December 31, 2010
was $2 million compared to a loss of $12 million for the same
period in 2009. The improvement in operating income primarily
reflects approximately $8 million less in severance, restructuring
and other charges in the fourth quarter, as well as the impact of
increased revenue in 2010, and cost synergies realized from the
acquisition of eTelecare on October 1, 2009.
- Net loss was $9 million for the quarter ended December 31,
2010, compared to a net loss of $21 million for the same period in
2009.
- Adjusted Pro Forma Earnings before Interest, Taxes,
Depreciation and Amortization (Adjusted EBITDA) of $23 million for
the fourth quarter of 2010 increased from both the fourth quarter
of 2009 ($17 million) and the third quarter of 2010 ($22
million).
Full Year 2010 Financial Highlights
- Revenue for the full year ended December 31, 2010 was $800
million, an increase of $215 million, or 36.8%, compared to
2009. The growth in revenue was primarily due to the
acquisition of eTelecare that closed on October 1, 2009. Gross
profit percentage for the full year 2010 was 41.1% compared to
41.5% for 2009.
- Operating income percentage for 2010 was (1.8%) compared to
(0.9%) for 2009. The decrease was primarily due to increased
amortization of intangibles related to the acquisition of
eTelecare.
- Net loss was $53 million for the full-year ended December 31,
2010, compared to net loss of $29 million in 2009.
- Adjusted EBITDA was approximately the same as the prior year,
$72 million in 2010 and $73 million in 2009.
Americas Region
Revenue generated from our Americas region, which includes the
United States, Canada, the Philippines, India, Costa Rica,
Nicaragua, Dominican Republic and El Salvador, was $163 million for
the fourth quarter of 2010 compared to $144 million for the fourth
quarter of 2009 and $588 million for the full year ended December
31, 2010 compared to $372 million for the prior year.
Gross profit generated by the Americas region for the fourth
quarter of 2010 was $67 million ($60 million for the fourth quarter
of 2009), with a gross margin of 41.1% (41.7% for the fourth
quarter of 2009), and for the full year ended December 31, 2010,
$248 million ($156 million for the prior year), with a gross margin
of 42.2% (41.9% for the prior year).
EMEA Region
Revenue generated from our EMEA region, which includes Europe,
the Middle East and Africa, for the fourth quarter of 2010 was $60
million ($57 million for the fourth quarter of 2009), and for the
full year ended December 31, 2010 was $212 million ($213 million
for the prior year). On a constant currency basis, EMEA would
have reported higher revenue of $4.5 million for the fourth quarter
of 2010 and $8.1 million for the full year ended December 31, 2010,
respectively.
Gross profit generated by the EMEA region for the fourth quarter
of 2010 was $22 million with a gross margin of 36.7% million ($24
million and 42.1%, respectively, for the fourth quarter of 2009),
and for the full year ended December 31, 2010 was $80 million with
a gross margin of 37.8% ($87 million and 40.9%, respectively, for
the prior year). The decrease in the gross profit percentage
from the prior year was primarily due to a decline in the financial
performance of our service center in South Africa and, accordingly,
during the fourth quarter an impairment charge of $1.8 million was
recorded relative to this facility.
Selling, General and Administrative Expense
Selling, general and administrative expenses, which includes
non-agent service center costs, was $67 million (30.0% of revenue)
during the three months ended December 31, 2010 and $70
million (34.7% of revenue) during the same period in 2009.
This decrease was primarily due to cost synergies realized from our
integration of eTelecare.
Other Income and Expense
Other Income and Expense, consisting primarily of gains/losses
on foreign currency and interest expense, for the three months
ended December 31, 2010 was $7 million, a decrease of $3 million,
or 30%, from the same period in 2009. The decrease was due to
the acceleration of deferred loan costs in 2009 as part of the
acquisition of eTelecare. Interest expense for the three
months ended December 31, 2010 was $8 million. Net realized
and unrealized foreign exchange gains and losses were a gain of
approximately $0.7 million for the three months ended December 31,
2010 versus $0.3 for the prior year period.
Liquidity and Capital Resources
At December 31, 2010, cash and cash equivalents, excluding
restricted cash was $18 million. Accounts receivable at
December 31, 2010 was $180 million as compared to $176 million at
December 31, 2009. Days sales outstanding were 73 days at
December 31, 2010 versus 79 days at December 31, 2009. Total
debt outstanding at December 31, 2010 was $237 million, which
included $25 million drawn on the revolving line of credit and $193
million in 11.25% Senior Secured Notes, net of discount, and
capital leases of $19 million. At December 31, 2010, we had
approximately $69 million of availability under our revolving line
of credit. For the quarter ended December 31, 2010 our cash
in-flow from operating activities was $8 million versus a cash
out-flow of $28 million for the same period in 2009.
Stream will hold a conference call for investors on March 3,
2011 at 9:00 AM ET. Investors can participate by calling
1-877-874-1567 and referencing passcode #2555713.
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 our 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 expressly 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.
|