Revenue of $244 Million, Net Loss of $0.01 Per Share OMAHA, Neb.,
Nov. 9 /PRNewswire-FirstCall/ -- SITEL Corporation (NYSE:SWW), a
leading global provider of outsourced customer support services,
announced today its financial results for the third quarter and
nine months ended September 30, 2005. The company also filed its
Quarterly Report on Form 10-Q with the Securities and Exchange
Commission for the quarter. Third quarter of 2005 revenue of $244.0
million and a net loss of $0.01 per share are in line with the
Company's previously announced outlook. The third quarter 2005
earnings include restructuring charges in Northern Europe of $4.6
million and a benefit of $5.8 million for the reversal of a
valuation allowance related to a deferred tax asset in Spain
resulting from profitability trends and the prospects of continued
improvement. Summary of results: * Revenue of $244 million in Q3 05
increased 6.3 % over Q3 04 * Q3 05 operating loss of $0.6 million
compares to operating income of $1.0 million in Q3 04 * Q3 05
adjusted (see attached table) operating income of $4.0 million,
which excludes $4.6 million of restructuring charges in Northern
Europe, is up from Q3 04 operating income of $1.0 million * Q3 05
loss per share of $0.01 compares to a loss per share of $0.02 in Q3
04 Commenting on the third quarter results, Jim Lynch, Chairman and
CEO of SITEL Corporation, said, "Our third quarter 2005 was the
sixteenth consecutive quarter that revenue was higher than the
prior year's quarterly revenue. We continue to be encouraged by our
upward sales momentum. Our strength continues to be our delivery
model of selling and operating locally, while leveraging our
worldwide connectivity, knowledge, and expertise to provide our
clients with the highest service levels in the industry." Lynch
further commented, "It is extremely exciting and rewarding to see
the Company perform for its clients at such industry leading levels
around the world. With our clients facing stronger competition
across their markets, service to their customers is a major
differentiator. We are building the right relationships with our
clients to help them with their challenges. Our dedication to
service is paying off and will continue to pay off. I am confident
our client centric approach to business will be the foundation for
continued profitable growth." Third quarter 2005 financial results
Revenue in the third quarter of 2005 increased $14.5 million or
6.3% compared to the third quarter of 2004. An operating loss of
$0.6 million, net loss of $1.1 million, or a loss of $0.01 per
share, in the third quarter of 2005 compares to an operating income
of $1.0 million, a net loss of $1.7 million, or a loss of $0.02 per
share, in the third quarter of 2004. Revenue was higher in the
technology, financial services, telecom/ISP and insurance business
units in North America and in Spain, Germany, The Netherlands,
Portugal, Brazil, Panama, Australia, Singapore, and Nordic.
Offshore facilities in the Philippines and Jamaica recorded
substantial revenue growth in the third quarter of 2005 as compared
to the prior year quarter as new programs were implemented in both
locations. When excluding the Northern Europe restructuring charges
of $4.6 million (see table below), third quarter adjusted operating
income was $4.0 million, an improvement of $3.0 million over the
prior year's third quarter operating income of $1.0 million. The
improvement in adjusted operating income was driven by stronger
performance from: five out of six vertical North America business
units, with one unit experiencing ramp up cost associated with a
new client win, increased operating income at offshore facilities
in Jamaica and Philippines, improvements in all business units in
Latin America and Asia Pacific, and improvements from most of the
business units across Europe. These improvements, which are related
to continued growth and restructuring benefits, were partially
offset by weaker results primarily from three business units in
Central Europe and the North America risk management business unit.
During the third quarter of 2005 the Company generated cash flow
from operations of $5.9 million and recorded capital expenditures,
including capital leases, of $7.1 million. The Company ended the
quarter with $36.8 million in cash. As previously announced, the
Company completed a refinancing package and redeemed its 9 1/4%
notes during the third quarter. Nine months 2005 financial results
For the first nine months of 2005: * Revenue of $747.0 million
increased 4.7% from revenue of $713.6 million in the same period
last year. * Operating income of $12.6 million, or $14.6 million as
adjusted (see table below) when excluding net charges of $2.0
million in the first nine months of 2005, compares to operating
income of $18.4 million for the same period of 2004. * Net income
of $3.6 million, or $0.05 per diluted share, in the first nine
months of 2005 compares to $5.6 million, or $0.08 per diluted
share, in the same period of 2004. Cash flow from operations for
the first nine months of 2005 was $9.9 million and capital
expenditures were $22.2 million, including capital leases.
Highlights for the third quarter of 2005 During the third quarter
of 2005 the Company generated new business wins and growth from new
programs with existing clients. Compared to the third quarter of
2004, revenue in the third quarter of 2005 increased $11 million
from new wins and a net $4 million from existing clients. Announced
wins during the quarter included new business in Europe and
Australia, and expansion in Latin America to provide capacity for
several new contracts: * In Belgium, the company was awarded a
multi-year contract with Telenet, a leading Belgian cable
television, high speed internet and telephony provider, to manage a
substantial portion of their customer contacts from the Brussels
contact center. * In Australia, the Company was awarded a contract
from Acreis, an Australian financial services company, to manage
inbound sales and customer service calls as well as back-office
support, including application processing, correspondence, email
and fulfillment, from the Devonport, Tasmania center. Also in
Australia, the company was awarded business from a client to
deliver a long-term 40-seat inbound customer service program from
the Burnie, Australia center. * In Latin America, as the result of
increased business from primarily new clients, facilities were
opened in Colombia and Brazil increasing the number of contact
centers to five in Colombia and five in Brazil. The Company also
started operating in Argentina in a client facility in Buenos
Aires. Other activity during the quarter included the ramping up of
four new programs in the Philippines, which increased utilization
to near capacity, increasing business in Jamaica, continued ramping
up of a new government client in North America, commencing work in
France, Morocco, and the Netherlands for a technology company SITEL
has been serving in Germany, and adding four new programs in the
technology, financial services, and insurance industries throughout
North America and Europe. Outlook For the fourth quarter of 2005,
the Company expects revenue to be within a range of $280 million to
$290 million and earnings to be within a range of $0.08 to $0.12
per share. In the fourth quarter, we expect capital expenditures to
be in the range of $8 million to $12 million for total 2005 capex
spending between $30 million and $34 million. The above comments
are based on current expectations, exclude any non-recurring items,
and supersede any prior outlook provided by the Company. Conference
Call SITEL executive management will host a conference call to
discuss third quarter 2005 financial results tomorrow, November 10,
2005 at 8:30 a.m. ET. To participate, for domestic callers, please
dial 1-877-209-0397 and for international callers, please dial
1-612-332-0932. Replay of the conference call will be available in
the U.S. by dialing (800) 475-6701 and International by dialing
(320) 365-3844 (Access Code) 800488, starting at 12:00 p.m. ET on
November 10, 2005 and will play for seven days. The conference call
will be simulcast live on the Internet via SITEL's web site at
http://www.sitel.com/. Replay will be available for seven days.
About SITEL SITEL is a leading global provider of outsourced
customer support services. On behalf of many of the world's leading
organizations, SITEL designs and improves customer contact models
across its clients' customer acquisition, retention and development
cycles. SITEL manages approximately two million customer
interactions per day via the telephone, e-mail, Internet and
traditional mail. SITEL has over 32,000 employees in 90 global
contact centers, utilizing more than 25 languages and dialects to
serve customers in 55 countries. Please visit SITEL's website at
http://www.sitel.com/ for further information. This news release
contains forward-looking statements within the meaning of Section
27A of the Securities Act and Section 21E of the Exchange Act. The
words "expects," "will," and similar expressions in this news
release identify forward-looking statements, which speak only as of
the date the statement is made. SITEL assumes no obligation to
update any such forward-looking statement. Although SITEL believes
that the expectations reflected in such forward-looking statements
are reasonable, there can be no assurance that such expectations
will prove to be correct. Because forward-looking statements
involve risks and uncertainties, future events and actual results
could differ materially from those set forth in, contemplated by or
underlying the forward-looking statements. Important factors that
could cause actual results to differ materially from SITEL's
expectations may include, but are not limited to the following,
many of which are outside SITEL's control: client budgets and
plans, effectiveness of cost control initiatives, effectiveness of
revenue enhancement initiatives, delays in approving new contact
center initiatives or in moving forward with previously approved
initiatives, terms of final contracts to be completed with clients,
ability to negotiate contracts on acceptable terms, contract
termination provisions, delays in ramp up of services, customer
demand for client products and services, the demand for off-shore
services, delays in securing necessary regulatory approvals,
licenses, leases, personnel, services and equipment for new
facilities, competitive pressures in SITEL's and its clients'
industries and in local markets, reliance on major clients,
subcontractors and strategic partners, mergers and restructurings
involving clients or prospective clients, industry regulation,
reliance on telecommunications and computer technology,
unanticipated labor, contract or technical difficulties, general
and local economic trends and conditions, the effects of leverage,
currency translation, uncertainties of litigation, risks associated
with operating a global business, and dependence on credit
availability and credit market conditions. SITEL's Form 10-K, 10-Q
and 8-K reports filed with the Securities and Exchange Commission
describe other important factors that may impact SITEL's business,
results of operation and financial condition and cause actual
results to differ materially from those set forth in, contemplated
by or underlying the forward-looking statements. SITEL CORPORATION
AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED) (in thousands, except per share data) Three Months
Ended Nine Months Ended September 30, September 30, 2005 2004 2005
2004 Revenue $243,988 $229,454 $746,966 $713,577 Operating
expenses: Direct labor and telecommunications expenses 147,417
138,230 453,530 425,390 Subcontracted and other services expenses
12,034 12,401 37,808 38,238 Operating, selling and administrative
expenses 80,502 77,785 241,059 231,547 Asset impairment and
restructuring expenses 4,616 -- 2,007 -- Total operating expenses
244,569 228,416 734,404 695,175 Operating income (loss) (581) 1,038
12,562 18,402 Other income (expense): Interest expense (3,403)
(3,055) (9,199) (9,387) Interest income 144 152 404 394 Equity in
earnings (loss) of affiliates 27 298 315 368 Other income
(expense), net 53 (70) 22 (462) Total other expense, net (3,179)
(2,675) (8,458) (9,087) Income (loss) before income taxes and
minority interest (3,760) (1,637) 4,104 9,315 Income tax expense
(benefit) (3,522) 67 (991) 3,250 Minority interest 877 32 1,544 456
Net income (loss) $(1,115) $(1,736) $3,551 $5,609 Weighted average
common shares outstanding: Basic 74,448 73,710 73,986 73,671
Diluted 74,448 73,710 74,290 74,089 Earnings per share: Basic
$(0.01) $(0.02) $0.05 $0.08 Diluted $(0.01) $(0.02) $0.05 $0.08
SITEL CORPORATION AND SUBSIDIARIES Reconciliation of Operating
Results as Adjusted (In thousands) Three Months Nine Months
Operating Operating Income (Loss) Income (Loss) Third Quarter 2005:
Results as reported under U.S. GAAP $(581) $12,562 Less:
Reconciling items (a) (4,616) (2,007) Results as adjusted (a
non-GAAP measure) $4,035 $14,569 Third Quarter 2004 Results as
reported under U.S. GAAP $1,038 $18,402 Less: Reconciling items --
-- Results as adjusted (a non-GAAP measure) $1,038 $18,402 The
schedule above provides a reconciliation of the Company's results
of operations, as reported under U.S. Generally Accepted Accounting
Principles (U.S. GAAP), to the results of operations, as adjusted
(non-U.S. GAAP). (a) Reflects the restructuring charge of $4.6
million and $2.0 million for the three months and nine months ended
September 30, 2005, respectively. This non-GAAP financial measure
should not be construed as being more important than comparable
GAAP measures. This is presented because SITEL management uses this
information when evaluating the company's results of operations and
believes that this information provides the users of the financial
statements with an additional and useful comparison of the
company's current results of operations with past and future
periods. SITEL Corporation Preliminary Balance Sheet Data - Third
Quarter 2005 Earnings Release (in millions) (Unaudited) 9/30/04
12/31/04 3/31/05 6/30/05 9/30/05 Cash $42.1 $28.9 $35.0 $29.5 $36.8
Accounts Receivable $175.9 $191.4 $194.0 $190.3 $195.0 Total
Current Assets $237.2 $237.5 $247.1 $236.0 $250.0 Total Assets
$407.6 $397.5 $399.2 $385.0 $408.7 Total Current Liabilities $136.4
$154.7 $246.7 $238.5 $144.5 Long-Term Debt and Capital Leases, net
$108.6 $98.4 $7.8 $7.0 $123.3 Total Debt - Short-Term and Long-Term
$132.6 $120.4 $138.4 $126.7 $144.6 Total Liabilities $247.8 $262.2
$265.6 $253.8 $276.6 Total Equity $157.3 $132.7 $130.6 $128.3
$128.2 Revenue Statistics - Third Quarter 2005 Earnings Release
(Unaudited) % of Total Revenue Q304 Q404 2004 Q105 Q205 Q305
Customer Acquisition 19.2% 20.8% 20.3% 17.4% 16.1% 15.1% Customer
Care 56.0% 54.4% 54.7% 57.1% 60.5% 61.7% Technical Support 16.1%
17.9% 16.4% 18.0% 17.6% 17.0% Risk Management 6.5% 5.3% 6.6% 6.3%
5.5% 5.3% Other 2.3% 1.6% 2.1% 1.3% 0.4% 0.9% Total 100.0% 100.0%
100.0% 100.0% 100.0% 100.0% Geographic Mix % of Total Revenue Q304
Q404 2004 Q105 Q205 Q305 North America 51.2% 48.8% 51.1% 48.9%
47.7% 49.4% Europe 40.5% 43.3% 41.4% 42.9% 42.2% 39.1% Asia Pacific
5.0% 5.0% 4.5% 4.9% 5.7% 6.1% Latin America 3.3% 2.9% 3.0% 3.2%
4.4% 5.4% Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Industry
Mix % of Total Revenue Q304 Q404 2004 Q105 Q205 Q305 Insurance 6.7%
6.4% 6.6% 6.1% 5.9% 5.9% Financial Services 17.0% 16.8% 16.6% 17.2%
17.1% 17.8% Consumer Products 20.2% 19.5% 21.7% 19.7% 21.4% 21.1%
Technology 27.4% 29.0% 26.9% 26.3% 25.8% 24.1% Energy and Utilities
7.6% 7.7% 7.7% 7.5% 7.5% 7.6% Telecommunications, ISP, and Cable
15.9% 15.6% 15.1% 18.6% 19.9% 20.1% Other 5.2% 5.0% 5.5% 4.6% 2.3%
3.4% Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% DATASOURCE:
SITEL Corporation CONTACT: Bill Sims, Investor Relations, SITEL
Corporation, +1-402-963-6810 Web site: http://www.sitel.com/
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