eLoyalty Announces Preliminary First Quarter Results

Apr 24, 2001, 01:00 ET from eLoyalty Corporation

    LAKE FOREST, Ill., April 24 /PRNewswire Interactive News Release/ --
 eLoyalty Corporation (Nasdaq:   ELOY), today announced that preliminary
 financial results for the first quarter of 2001 are currently expected to be
 approximately $46 million in revenues and a loss of $0.14 in cash earnings per
 share on a diluted basis(1), before special charges.  On a GAAP basis, EPS is
 expected to be a loss of $0.17 on a diluted basis, before special charges.
     eLoyalty also expects a first quarter pre-tax charge of approximately
 $10.5 million ($5.8 million after-tax), or $0.11 a share on a diluted basis,
 as a result of first quarter cost reduction actions, primarily related to
 severance charges.
     In response to the continued uncertain business conditions, additional
 cost reduction actions are being implemented during April 2001, including the
 continued rationalization of our non-client facing field positions and the
 closure of three regional offices. These April 2001 actions are expected to
 result in an estimated pre-tax charge in the second quarter of approximately
 $5.5 million ($3.0 million after-tax), or $0.06 a share on a diluted basis.
     After giving effect to these cost reduction initiatives, eLoyalty believes
 that it has a quarterly capacity and operating model that balances the impact
 of weak economic conditions with our desire to maintain the capability to
 manage for the long-term.  In the current economic and demand environment,
 eLoyalty does not expect to operate at the revenue and utilization levels
 contemplated by the model.  eLoyalty believes it is appropriate for the
 capacity and operating model to include the following:
     --Revenue capacity of $50 million to $52 million, which assumes
       utilization ranging from 70% to 75% of our engageable personnel
     --Gross margin targets in the 53% to 57% range, based on the above levels
       of revenue and utilization
     --SG&A expense (exclusive of goodwill amortization) of $21 million to $23
       million
     --R&D expense of $2 million to $2.5 million
 
     In addition, over the next six months, eLoyalty expects to further
 streamline its operations and cost structure based on the following actions:
     --Tighter integration of our R&D capability and proficiencies
       (methodologies) into customer facing technology architecture and
       delivery activities
     --Centralizing practice area support functions, so as to further reduce
       duplication and inefficiencies
     --Implementing tight controls on investment spending
     --Further reviewing administrative expense levels
 
     eLoyalty believes that these actions will improve the company's operating
 performance.
     "The business environment continues to be challenging," commented Kelly D.
 Conway, President and CEO of eLoyalty.  "I am confident that we are taking the
 appropriate actions.  Our goals during this difficult period are clear:
     --Focus on client service
     --Maintain our valuable selling and delivery capacity
     --Manage costs as to operate near a breakeven while streamlining our
       operations, so that when demand returns to normal levels, we are
       positioned to rapidly accelerate our profitability."
 
     "As a result of macro-economic conditions and an uncertain demand
 environment, we have been required to make a number of difficult business
 decisions in order to bring our cost base in line with the pace of the
 business," continued Conway.  "We have not changed our long-term outlook on
 the business.  We continue to be optimistic about the future based on the
 strategic nature of CRM initiatives and the quality of our current and
 prospective customers.  Customer Relationship Management is a strategic
 imperative for leadership companies and we are confident that the depth of our
 expertise in this field, combined with our excellent track record of delivery,
 positions us at the fore-front of this market."
     eLoyalty will review these expected preliminary results and summarize
 recent actions in a conference call today, April 24, 2001 beginning at 06:00
 p.m. (EDT) / 05:00 p.m. (CDT) that will be broadcast live on the Internet.
     Financial results for the first quarter 2001, as well as comments
 regarding our second quarter outlook, will be released after the market close
 on Tuesday, May 1, 2001.
     For webcast registration information for today's call, please go to the
 Investor Relations section of eLoyalty's website at http://www.eloyalty.com.
 It is advisable to register at least 15 minutes before the call to download
 and install any necessary audio software. A re-broadcast of today's call will
 be available from 9:00 p.m. (EDT) today through April 30, 2001 at 11:59 p.m.
 (EDT) by dialing (800) 839-6713 (within the U.S.) or (402) 220-2306 (outside
 the U.S.) and entering pass code 4152101 when prompted.
 
     About eLoyalty
     eLoyalty is a leading management consulting and systems integration
 company focused exclusively on building customer loyalty. With professionals
 in offices throughout North America, Europe and Australia, eLoyalty's broad
 range of enterprise Customer Relationship Management (CRM) related services
 and solutions include creating business strategies, defining technical
 architectures, selecting, implementing and integrating best-of-breed eCRM
 software applications, and providing on-going support for multi-vendor
 systems. The combination of eLoyalty's methodologies and technical expertise
 enables eLoyalty to deliver the tangible economic benefits of customer loyalty
 for our Fortune 1000 clients. For more information, please go to the Company's
 web site at www.eloyalty.com or call 877-2-ELOYAL.
 
     ASSUMPTIONS UNDERLYING FORWARD-LOOKING STATEMENTS AND FACTORS THAT MAY
 AFFECT FUTURE RESULTS
     This news release contains forward-looking statements, including
 references to plans, strategies, objectives and anticipated future performance
 and other statements not strictly historical in nature, that are based on
 current management expectations, forecasts and assumptions. These forward-
 looking statements are subject to risks and uncertainties that could cause
 actual events or results to differ materially from the events or results
 expressed or implied by the forward-looking statements. Such risks,
 uncertainties and associated factors include, among others: the ability to
 attract new clients and continuation of existing and new business from
 existing clients; reliance on major clients and suppliers and maintenance of
 good relations with key business partners; management of the risks associated
 with increasingly complex client projects and new services offerings,
 including risks involving the variability and predictability of the number,
 size, scope, cost and duration of, and revenues from, client engagements,
 unanticipated cancellations or deferrals, collection of billed amounts, shifts
 from time and materials to alternative or value-based pricing and variable
 employee utilization rates, project personnel costs and project requirements;
 management of growth and expansion of business with new services offerings and
 into new markets; implementation of appropriate infrastructure in a timely and
 cost-effective manner; the ability to attract and retain highly skilled
 employees in a competitive information technology labor market; continuing
 intense competition in the information technology services industry generally
 and particularly in the provision of CRM services and software; the rapid pace
 of technological innovation in the information technology services industry
 and the ongoing challenge of creating innovative solutions that meet client
 expectations; risks associated with eLoyalty's global operations; future
 legislative, regulatory or legal actions affecting the information technology
 services industry or the protection of eLoyalty's intellectual property
 rights; continued access to capital resources to meet eLoyalty's operating and
 financial needs; and demand for CRM services and software generally; the
 continued impact of the slowdown in the economy on eLoyalty's financial
 results; as well as other general business, capital market and economic
 conditions and volatility. For further information about
 these and other risks, see eLoyalty's recent SEC filings, including its most
 recent annual report on Form 10-K.
 
     (1)Cash earnings per share is calculated as the sum of after tax earnings
 plus goodwill amortization divided by the diluted share count.  In the event
 of a loss, the basic share count is utilized in lieu of the diluted share
 count.
 
      Contact:
      Timothy Cunningham
      eLoyalty Corporation
      (847) 582 7000
      ir@eloyalty.com
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X24463142
 
 

SOURCE eLoyalty Corporation
    LAKE FOREST, Ill., April 24 /PRNewswire Interactive News Release/ --
 eLoyalty Corporation (Nasdaq:   ELOY), today announced that preliminary
 financial results for the first quarter of 2001 are currently expected to be
 approximately $46 million in revenues and a loss of $0.14 in cash earnings per
 share on a diluted basis(1), before special charges.  On a GAAP basis, EPS is
 expected to be a loss of $0.17 on a diluted basis, before special charges.
     eLoyalty also expects a first quarter pre-tax charge of approximately
 $10.5 million ($5.8 million after-tax), or $0.11 a share on a diluted basis,
 as a result of first quarter cost reduction actions, primarily related to
 severance charges.
     In response to the continued uncertain business conditions, additional
 cost reduction actions are being implemented during April 2001, including the
 continued rationalization of our non-client facing field positions and the
 closure of three regional offices. These April 2001 actions are expected to
 result in an estimated pre-tax charge in the second quarter of approximately
 $5.5 million ($3.0 million after-tax), or $0.06 a share on a diluted basis.
     After giving effect to these cost reduction initiatives, eLoyalty believes
 that it has a quarterly capacity and operating model that balances the impact
 of weak economic conditions with our desire to maintain the capability to
 manage for the long-term.  In the current economic and demand environment,
 eLoyalty does not expect to operate at the revenue and utilization levels
 contemplated by the model.  eLoyalty believes it is appropriate for the
 capacity and operating model to include the following:
     --Revenue capacity of $50 million to $52 million, which assumes
       utilization ranging from 70% to 75% of our engageable personnel
     --Gross margin targets in the 53% to 57% range, based on the above levels
       of revenue and utilization
     --SG&A expense (exclusive of goodwill amortization) of $21 million to $23
       million
     --R&D expense of $2 million to $2.5 million
 
     In addition, over the next six months, eLoyalty expects to further
 streamline its operations and cost structure based on the following actions:
     --Tighter integration of our R&D capability and proficiencies
       (methodologies) into customer facing technology architecture and
       delivery activities
     --Centralizing practice area support functions, so as to further reduce
       duplication and inefficiencies
     --Implementing tight controls on investment spending
     --Further reviewing administrative expense levels
 
     eLoyalty believes that these actions will improve the company's operating
 performance.
     "The business environment continues to be challenging," commented Kelly D.
 Conway, President and CEO of eLoyalty.  "I am confident that we are taking the
 appropriate actions.  Our goals during this difficult period are clear:
     --Focus on client service
     --Maintain our valuable selling and delivery capacity
     --Manage costs as to operate near a breakeven while streamlining our
       operations, so that when demand returns to normal levels, we are
       positioned to rapidly accelerate our profitability."
 
     "As a result of macro-economic conditions and an uncertain demand
 environment, we have been required to make a number of difficult business
 decisions in order to bring our cost base in line with the pace of the
 business," continued Conway.  "We have not changed our long-term outlook on
 the business.  We continue to be optimistic about the future based on the
 strategic nature of CRM initiatives and the quality of our current and
 prospective customers.  Customer Relationship Management is a strategic
 imperative for leadership companies and we are confident that the depth of our
 expertise in this field, combined with our excellent track record of delivery,
 positions us at the fore-front of this market."
     eLoyalty will review these expected preliminary results and summarize
 recent actions in a conference call today, April 24, 2001 beginning at 06:00
 p.m. (EDT) / 05:00 p.m. (CDT) that will be broadcast live on the Internet.
     Financial results for the first quarter 2001, as well as comments
 regarding our second quarter outlook, will be released after the market close
 on Tuesday, May 1, 2001.
     For webcast registration information for today's call, please go to the
 Investor Relations section of eLoyalty's website at http://www.eloyalty.com.
 It is advisable to register at least 15 minutes before the call to download
 and install any necessary audio software. A re-broadcast of today's call will
 be available from 9:00 p.m. (EDT) today through April 30, 2001 at 11:59 p.m.
 (EDT) by dialing (800) 839-6713 (within the U.S.) or (402) 220-2306 (outside
 the U.S.) and entering pass code 4152101 when prompted.
 
     About eLoyalty
     eLoyalty is a leading management consulting and systems integration
 company focused exclusively on building customer loyalty. With professionals
 in offices throughout North America, Europe and Australia, eLoyalty's broad
 range of enterprise Customer Relationship Management (CRM) related services
 and solutions include creating business strategies, defining technical
 architectures, selecting, implementing and integrating best-of-breed eCRM
 software applications, and providing on-going support for multi-vendor
 systems. The combination of eLoyalty's methodologies and technical expertise
 enables eLoyalty to deliver the tangible economic benefits of customer loyalty
 for our Fortune 1000 clients. For more information, please go to the Company's
 web site at www.eloyalty.com or call 877-2-ELOYAL.
 
     ASSUMPTIONS UNDERLYING FORWARD-LOOKING STATEMENTS AND FACTORS THAT MAY
 AFFECT FUTURE RESULTS
     This news release contains forward-looking statements, including
 references to plans, strategies, objectives and anticipated future performance
 and other statements not strictly historical in nature, that are based on
 current management expectations, forecasts and assumptions. These forward-
 looking statements are subject to risks and uncertainties that could cause
 actual events or results to differ materially from the events or results
 expressed or implied by the forward-looking statements. Such risks,
 uncertainties and associated factors include, among others: the ability to
 attract new clients and continuation of existing and new business from
 existing clients; reliance on major clients and suppliers and maintenance of
 good relations with key business partners; management of the risks associated
 with increasingly complex client projects and new services offerings,
 including risks involving the variability and predictability of the number,
 size, scope, cost and duration of, and revenues from, client engagements,
 unanticipated cancellations or deferrals, collection of billed amounts, shifts
 from time and materials to alternative or value-based pricing and variable
 employee utilization rates, project personnel costs and project requirements;
 management of growth and expansion of business with new services offerings and
 into new markets; implementation of appropriate infrastructure in a timely and
 cost-effective manner; the ability to attract and retain highly skilled
 employees in a competitive information technology labor market; continuing
 intense competition in the information technology services industry generally
 and particularly in the provision of CRM services and software; the rapid pace
 of technological innovation in the information technology services industry
 and the ongoing challenge of creating innovative solutions that meet client
 expectations; risks associated with eLoyalty's global operations; future
 legislative, regulatory or legal actions affecting the information technology
 services industry or the protection of eLoyalty's intellectual property
 rights; continued access to capital resources to meet eLoyalty's operating and
 financial needs; and demand for CRM services and software generally; the
 continued impact of the slowdown in the economy on eLoyalty's financial
 results; as well as other general business, capital market and economic
 conditions and volatility. For further information about
 these and other risks, see eLoyalty's recent SEC filings, including its most
 recent annual report on Form 10-K.
 
     (1)Cash earnings per share is calculated as the sum of after tax earnings
 plus goodwill amortization divided by the diluted share count.  In the event
 of a loss, the basic share count is utilized in lieu of the diluted share
 count.
 
      Contact:
      Timothy Cunningham
      eLoyalty Corporation
      (847) 582 7000
      ir@eloyalty.com
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X24463142
 
 SOURCE  eLoyalty Corporation