Stream Global Services Announces Financial Results for Fourth Quarter and Year Ended December 31, 2009
BOSTON, Feb. 26 /PRNewswire-FirstCall/ -- Stream Global Services, Inc., (NYSE Amex: SGS), a premium business process outsourcing (BPO) service provider specializing in customer relationship management and business process outsourcing services for many of the leading Fortune 1000 companies, today announced consolidated financial results for its 2009 fourth quarter and year ended December 31, 2009.
These results include the financial results for Stream's combination with eTelecare Global Solutions, Inc. and related financings that were completed on October 1, 2009. Pro forma combined adjusted EBITDA is defined as earnings before interest, taxes, depreciation, amortization, transaction related expenses and non-cash stock compensation. Pro forma combined adjusted EBITDA is a non-GAAP measure, however, Stream believes it provides useful operating information on the business. Pro forma consolidated information presents the two companies as if they were combined as of the beginning of the respective fiscal period.
GAAP Consolidated Results
On a GAAP basis our results only include eTelecare for the period from the combination on October 1, 2009 to December 31, 2009. Our GAAP based revenues for the three months and year ended December 31, 2009 were $201.6 million and $584.8 million, respectively, as compared to $129.8 million and $211.4 million in the three months and year ended December 31, 2008, respectively.
GAAP net loss was $20.9 million and $28.6 million for the three months and year ended December 31, 2009, as compared to GAAP net loss was $0.1 million and net income of $0.8 million for the three months and year ended December 31, 2008, respectively, primarily because of combination related charges (including transaction expenses, amortization of intangibles, non-cash stock based compensation expense, restructuring and severance expense) as well as debt related interest expense for the three months and year ended December 31, 2009, respectively.
Pro Forma Combined Results
On a pro forma basis, reflecting the combination of Stream and eTelecare's historical financial statements for a full year, with no adjustments, as if the combination with eTelecare had been completed as of January 1 Stream would have posted revenues for the three months and year ended December 31, 2009 of $201.6 million and $797.0 million as compared to $204.1 million and $823.2 million in the three months and year ended December 31, 2008, respectively. Revenue for the year ended December 31, 2009 included approximately $23 million from customers that were lost prior to the acquisition of Stream Holdings Corporation on July 31, 2008.
Gross margin increased to 42% and 43% in the three months and year ended December 31, 2009, respectively, compared to 42% and 40% in the three months and year ended December 31, 2008, respectively.
For the three months and year ended December 31, 2009, adjusted pro EBITDA was $17.2 million and $73.1 million compared to $16.7 million and $64.9 million in the three months and year ended December 31, 2008, respectively.
During the 2009 fiscal year, Stream achieved a number of milestone events, including the following:
- Combination of Stream and eTelecare on October 1, 2009
- Completion of a senior debt offering in a principal amount of $200 million on October 1, 2009
- Completion of a $100 million Asset Based Revolving Line of Credit on October 1, 2009
- Assembly of an experienced management team – many of whom were former employees returning to Stream
- Successful launch of a number of new clients clients in the technology, telecommunication and broadband, and software sectors totaling over $120 million in expected annualized revenues once fully ramped by the end of 2010;
- Opening of new service centers in the Philippines, Denmark, Tunis and Egypt;
- Repurchase of approximately 20 million of our public warrants for approximately $7 million in cash;
- Converted 7.5 million warrants in exchange for the issuance of 1 million shares of common stock; and
- Conversion of all of our preferred stock into common stock.
Scott Murray, Chairman and Chief Executive Officer of Stream said; "We are very pleased with the progress we have made on the integration of eTelecare over the last few months. We have been able to strengthen our client value propositions, combine our management teams and personnel, integrate our systems and processes and broaden our service offerings." Murray went on to say, "We are also pleased that our integration cost saving activities are expected to generate annualized savings of over $20 million as planned. Over the past several months we have substantially completed the integration of Stream and eTelecare and expect to complete the final phase of administrative function consolidation in the first quarter of 2010."
Stream will hold a conference call for investors on February 26 at 8:30 AM EST. Investors can participate by calling 1-877-852-6578 and referencing passcode #9653894.
Contact Information: |
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Sally Comollo |
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Director of Marketing Communications |
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781-304-1847 |
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About Stream Global Services:
Stream Global Services is a premium business process outsourcing (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. 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 locations 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.
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 our ability to maintain and win additional client business, continue to maintain our operating performance and margin expansion, continue to have sufficient capital to grow and maintain our business, retain our management team and effectively operate a global franchise across multiple jurisdictions plus other risks detailed in our filings with the SEC, including those discussed in the Company's Annual report filed with the SEC on Form 10-K for the year ended December 31, 2008 and our Form 10-Q for the nine months ended September 30, 2009.
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.
STREAM GLOBAL SERVICES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended Year Ended
December 31, December 31,
--------------- ---------------
2009 2008 2009 2008
---- ---- ---- ----
Revenue $201,610 $129,836 $584,769 $211,373
Direct cost of revenue 117,606 77,749 342,193 128,278
------- ------ ------- -------
Gross profit 84,004 52,087 242,576 83,095
------ ------ ------- ------
Operating expenses:
Selling, general and
administrative expenses 71,626 40,690 199,454 66,884
Transaction related
expenses 9,253 - 12,245 -
Depreciation expense 11,616 4,453 25,595 7,201
Amortization expense 3,965 2,532 10,827 3,781
----- ----- ------ -----
Income (loss) from
operations (12,456) 4,412 (5,545) 5,229
Interest expense
(income) and other
financial costs 10,406 2,026 18,646 (926)
------ ----- ------ ----
Income (loss) before
provision for income
taxes (22,862) 2,386 (24,191) 6,155
Provision for income taxes (1,932) 2,532 4,382 5,359
------ ----- ----- -----
Net income (loss) $(20,930) $(146) $(28,573) $796
Preferred stock
beneficial
conversion feature,
accretion and dividends 57,794 1,359 64,415 51,958
------ ----- ------ ------
Net income (loss) available
to common shareholders: (78,724) (1,505) (92,988) (51,162)
======= ====== ======= =======
Basic and Diluted
income (loss)
per share $(0.99) $(0.16) $(3.46) $(2.20)
====== ====== ====== ======
Shares used in
computing per
share data:
Basic and Diluted shares 79,387 9,462 26,887 23,258
Note: Prior to July 31, 2008 Stream was a development stage company and
had no operations.
STREAM GLOBAL SERVICES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(unaudited)
(in thousands)
December 31, December 31,
2009 2008
------------ ------------
Assets
Current assets:
Cash and cash equivalents $14,928 $10,660
Accounts receivable, net 175,557 109,385
Other current assets 36,901 26,811
------ ------
Total current assets 227,386 146,856
Equipment and fixtures, net 96,816 41,634
Goodwill, intangible assets, and other
long-term assets 356,621 141,455
------- -------
Total assets $680,823 $329,945
======== ========
Liabilities and Stockholders’ Equity
Current liabilities $115,337 $79,392
Long-term debt 206,880 63,624
Capital lease obligations 11,279 5,484
Deferred income taxes 21,050 17,396
Other long-term liabilities 22,866 16,387
------ ------
Total liabilities 377,412 182,283
Stockholders' equity and preferred stock 303,411 147,662
------- -------
Total liabilities and stockholders’ equity $680,823 $329,945
======== ========
STREAM GLOBAL SERVICES, INC.
PRO FORMA COMBINED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands)
Three Months Ended Year Ended
December 31, December 31,
------------------ ----------------
2009 2008 2009 2008
---- ---- ---- ----
(Non-GAAP Pro forma)
Revenue $201,610 $204,132 $797,004 $823,239
Direct costs of revenue 117,480 119,348 454,117 492,459
------- ------- ------- -------
Gross profit 84,130 84,784 342,887 330,780
------ ------ ------- -------
Gross profit as a
percentage of revenue 42% 42% 43% 40%
Operating expenses:
Selling, general and
administrative
expenses 70,863 68,091 278,019 265,889
Stock-based compensation
expense 711 7,032 1,242 10,864
Transaction related
expenses 9,253 5,480 18,267 9,507
Depreciation and
amortization
expense 15,581 13,124 59,255 47,383
------ ------ ------ ------
96,408 93,727 356,783 333,643
------ ------ ------- -------
Income (loss) from
operations (12,278) (8,943) (13,896) (2,863)
Interest expense
(income) and other
financial costs 10,584 1,321 30,750 6,853
------ ----- ------ -----
Income (loss) before
provision for income
taxes (22,862) (10,264) (44,646) (9,716)
Provision for income
taxes (1,932) 3,093 5,115 11,121
------ ----- ----- ------
Net income (loss) $(20,930) $(13,357) $(49,761) $(20,837)
======= ======= ======= =======
Adjusted EBITDA
Income (loss) from
operations $(12,278) $(8,943) $(13,896) $(2,863)
Depreciation and
amortization expense 15,581 13,124 59,255 47,383
Transaction and
severance related
expenses 13,148 5,480 26,466 9,507
Stock-based compensation
expense 711 7,032 1,242 10,864
------- ------- ------- ------
Adjusted EBITDA $17,162 $16,693 $73,067 $64,891
======= ======= ======= =======
Note: The results above for 2009 represent Stream and eTelecare as a
combined company with no historical purchase adjustments and the results
for 2008 represent Stream pro forma as if the transaction with Stream and
Global BPO occurred on January 1, 2008 combined with eTelecare results
with no historical purchase adjustments.
STREAM GLOBAL SERVICES, INC.
RECONCILIATION OF GAAP TO NON-GAAP PRO FORMA INFORMATION
(unaudited)
(in thousands)
Three Months Ended Year ended
December 31, December 31,
--------------- --------------
2009 2008 2009 2008
---- ---- ---- ----
Net Income (loss) $(20,930) $(146) $(28,573) $796
Add (deduct) items to
reconcile to non-GAAP adjusted
EBITDA:
Provision for income taxes (1,932) 2,532 4,382 5,359
Pro forma depreciation and
amortization 15,581 13,124 59,255 47,383
Interest expense (income) and
financial costs 10,406 2,026 18,646 (926)
Realized foreign exchange gains 178 - 1,825 -
Transaction and severance
related expenses 13,148 5,480 26,466 9,507
Stock-based compensation
expenses 711 7,032 1,242 10,864
Operating income (loss) from
eTelecare for the period
prior to the acquisition
on October 1, 2009 (13,355) (10,176) (8,853)
Operating income (loss) from
SHC for the period prior to
the acquisition on July 31,
2008, excluding depreciation
and amortization - - - 761
--- --- --- ---
Adjusted EBITDA $17,162 $16,693 $73,067 $64,891
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SOURCE Stream Global Services, Inc.
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