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OMAHA, Neb., Jul 21, 2010 (BUSINESS WIRE) -- West Corporation, a leading provider of technology-driven, voice-oriented solutions, today announced its second quarter 2010 results.
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Financial Summary (unaudited) |
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| (Dollars in millions) | |||||||||||||||||||
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| Three Months Ended | Six Months Ended | ||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||
| 2010 | 2009 | Percent | 2010 | 2009 | Percent | ||||||||||||||
| Change | Change | ||||||||||||||||||
| Revenue | $596.5 | $606.9 | -1.7% | $1,196.4 | $1,213.9 | -1.4% | |||||||||||||
|
Adjusted |
$164.1 | $166.6 | -1.5% | $330.9 | $330.2 | 0.2% | |||||||||||||
|
Adjusted |
27.5% | 27.5% | 27.7% | 27.2% | |||||||||||||||
|
Cash Flow from |
$71.7 | $52.1 | 37.6% | $187.2 | $101.0 | 85.3% | |||||||||||||
| Net Income | $36.3 | $26.4 | 37.5% | $72.3 | $57.1 | 26.6% | |||||||||||||
Consolidated Operating Results
For the second quarter of
2010, revenue was $596.5 million compared to $606.9 million for the same
quarter last year, a decrease of 1.7 percent. The net increase in
revenue from entities acquired or sold2 was $2.8 million
during the second quarter of 2010.
Foreign currency exchange rates negatively impacted revenue and Adjusted EBITDA in the second quarter by $7.3 million and $3.8 million, respectively, compared to the rates used for 2010 guidance. Year-to-date, revenue and Adjusted EBITDA are lower by $10.2 million and $5.3 million, respectively, due to foreign currency exchange rates. The two most significant exchange rates used for 2010 guidance provided in February were as follows: British Pound Sterling 1.63 and Euro 1.46.
"Despite a difficult operating environment, we continue to produce solid results. The Company effectively managed expenses, especially in the Communication Services segment, which contributed to repeat records in operating income of $118.5 million and operating margin of 19.9 percent," said CFO, Paul Mendlik. "We also had strong cash flows from operations of $71.7 million in the second quarter."
Adjusted EBITDA for the second quarter of 2010 was $164.1 million, or 27.5 percent of revenue, compared to $166.6 million, or 27.5 percent of revenue, for the second quarter of 2009. A reconciliation of Adjusted EBITDA to cash flows from operating activities is presented below.
Balance Sheet and Liquidity
At June 30, 2010, West
Corporation had cash and cash equivalents totaling $66.2 million and
working capital of $174.0 million.
During the second quarter of 2010, the Company invested $26.0 million in capital expenditures primarily for software and computer equipment.
Acquisition
As previously announced, during the second
quarter the Company acquired Holly Connects, a premium provider of
carrier-grade voice platforms. Results from Holly Connects will be
included in the Communications Services segment and are not expected to
have a material impact on the Company's 2010 results.
Conference Call
The Company will hold a conference call to
discuss these topics on Thursday, July 22, 2010 at 11:00 AM Eastern Time
(10:00 AM Central Time). Investors may access the call by visiting the
Financials section of the West Corporation website at www.west.com
and clicking on the Webcast link. A replay of the call will be available
on the Company's website at www.west.com.
About West Corporation
West Corporation is a leading
provider of technology-driven, voice-oriented solutions. West offers its
clients a broad range of communications and infrastructure management
solutions that help them manage or support critical communications.
West's customer contact solutions and conferencing services are designed
to improve its clients' cost structure and provide reliable,
high-quality services. West also provides mission-critical services,
such as public safety and emergency communications.
Founded in 1986 and headquartered in Omaha, Nebraska, West serves Fortune 1000 companies and other clients in a variety of industries, including telecommunications, banking, retail, financial, technology and healthcare. West has sales and operations in the United States, Canada, Europe, the Middle East, Asia Pacific and Latin America. For more information on West Corporation, please call 1-800-841-9000 or visit www.west.com.
Forward-Looking Statements
This press release contains
forward-looking statements. Forward-looking statements can be identified
by the use of words such as "may," "should," "expects," "plans,"
"anticipates," "believes," "estimates," "predicts," "intends,"
"continue" or similar terminology. These statements reflect only West's
current expectations and are not guarantees of future performance or
results. These statements are subject to risks and uncertainties that
could cause actual results to differ materially from those contained in
the forward-looking statements. These risks and uncertainties include,
but are not limited to, the effects of global economic trends on the
businesses of West's clients; competition in West's highly competitive
industries; West's ability to keep pace with its clients' needs for
rapid technological change and systems availability; the loss, financial
difficulties or bankruptcy of any key clients; the non-exclusive nature
of West's client contracts and the absence of revenue commitments;
increases in the cost of voice and data services or significant
interruptions in these services; the cost of pending and future
litigation; extensive regulation affecting many of West's businesses;
security and privacy breaches of the systems West uses to protect
personal data; West's ability to protect its proprietary information or
technology; the cost of defending West against intellectual property
infringement claims; service interruptions to West's data and operation
centers; West's ability to retain key personnel and attract a sufficient
number of qualified employees; increases in labor costs and turnover
rates; the political, economic and other conditions in the countries
where West operates; changes in foreign exchange rates; West's ability
to complete future acquisitions and integrate or achieve the objectives
of its recent and future acquisitions; and West's ability to recover
charged-off consumer receivables and decreases in collections in its
receivables management business. In addition, West is subject to risks
related to its level of indebtedness. Such risks include West's ability
to generate sufficient cash to service its indebtedness and fund its
other liquidity needs; West's ability to comply with covenants contained
in its debt instruments; the incurrence of significant additional
indebtedness by West and its subsidiaries and the ability of West's
lenders to fulfill their lending commitments. West is also subject to
other risk factors described in documents filed by the company with the
United States Securities and Exchange Commission.
These forward-looking statements speak only as of the date on which the statements were made. West undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by applicable law.
| WEST CORPORATION | |||||||||||||||||||||
| CONDENSED STATEMENTS OF OPERATIONS | |||||||||||||||||||||
| (Unaudited, in thousands except selected operating data) | |||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||
| 2010 | 2009 | % Change | 2010 | 2009 | % Change | ||||||||||||||||
| Revenue | $ | 596,549 | $ | 606,907 | -1.7% | $ | 1,196,370 |
$ |
1,213,866 | -1.4% | |||||||||||
| Cost of services | 263,433 | 269,268 | -2.2% | 524,256 | 538,318 | -2.6% | |||||||||||||||
| Selling, general and administrative expenses | 214,639 | 229,893 | -6.6% | 436,392 | 459,347 | -5.0% | |||||||||||||||
| Operating income | 118,477 | 107,746 | 10.0% | 235,722 | 216,201 | 9.0% | |||||||||||||||
| Interest expense | 59,882 | 63,616 | -5.9% | 118,931 | 127,484 | -6.7% | |||||||||||||||
| Other expense (income), net | 58 | 802 | -92.8% | 185 | (5,493 | ) | -103.4% | ||||||||||||||
| Income before tax | 58,537 | 43,328 | 35.1% | 116,606 | 94,210 | 23.8% | |||||||||||||||
| Income tax expense | 22,244 | 16,202 | 37.3% | 44,310 | 34,971 | 26.7% | |||||||||||||||
| Net income | 36,293 | 27,126 | 33.8% | 72,296 | 59,239 | 22.0% | |||||||||||||||
| Less net income - Noncontrolling interest | - | 691 |
NM |
- | 2,180 |
NM |
|||||||||||||||
| Net income - West Corporation | $ | 36,293 | $ | 26,435 | 37.3% | $ | 72,296 | $ | 57,059 | 26.7% | |||||||||||
| SELECTED SEGMENT DATA: | |||||||||||||||||||||
| Revenue: | |||||||||||||||||||||
| Unified Communications | $ | 309,053 | $ | 288,748 | 7.0% | $ | 608,245 | $ | 567,043 | 7.3% | |||||||||||
| Communication Services | 288,985 | 319,454 | -9.5% | 590,814 | 649,642 | -9.1% | |||||||||||||||
| Intersegment eliminations | (1,489 | ) | (1,295 | ) | -15.0% | (2,689 | ) | (2,819 | ) | 4.6% | |||||||||||
| Total | $ | 596,549 | $ | 606,907 | -1.7% | $ | 1,196,370 | $ | 1,213,866 | -1.4% | |||||||||||
| Depreciation & Amortization: | |||||||||||||||||||||
| Unified Communications | $ | 22,343 | $ | 23,222 | -3.8% | $ | 46,309 | $ | 45,257 | 2.3% | |||||||||||
| Communication Services | 20,401 | 25,851 | -21.1% | 40,008 | 51,415 | -22.2% | |||||||||||||||
| Total | $ | 42,744 | $ | 49,073 | -12.9% | $ | 86,317 | $ | 96,672 | -10.7% | |||||||||||
| Operating Income: | |||||||||||||||||||||
| Unified Communications | $ | 83,366 | $ | 78,135 | 6.7% | $ | 160,848 | $ | 157,307 | 2.3% | |||||||||||
| Communication Services | 35,111 | 29,611 | 18.6% | 74,874 | 58,894 | 27.1% | |||||||||||||||
| Total | $ | 118,477 | $ | 107,746 | 10.0% | $ | 235,722 | $ | 216,201 | 9.0% | |||||||||||
| Operating Margin: | |||||||||||||||||||||
| Unified Communications | 27.0 | % | 27.1 | % | -0.4% | 26.4 | % | 27.7 | % | -4.7% | |||||||||||
| Communication Services | 12.1 | % | 9.3 | % | 30.1% | 12.7 | % | 9.1 | % | 39.6% | |||||||||||
| Total | 19.9 | % | 17.8 | % | 11.8% | 19.7 | % | 17.8 | % | 10.7% | |||||||||||
| SELECTED OPERATING DATA ($M): | |||||||||||||||||||||
| Cash flow from operations | 71.7 | 52.1 | 187.2 | 101.0 | |||||||||||||||||
| Term loan facility | 2,434.9 | 2,472.8 | |||||||||||||||||||
| Revolving credit facilities | - | 263.8 | |||||||||||||||||||
| Senior and senior subordinated notes | 1,100.0 | 1,100.0 | |||||||||||||||||||
|
Revenue from automated services ($M)3 |
407.0 | 387.9 | 4.9% | 808.4 | 760.0 | 6.4% | |||||||||||||||
| Revenue from agent-based services ($M) | 189.5 | 219.0 | -13.5% | 387.9 | 453.9 | -14.5% | |||||||||||||||
| Condensed Balance Sheets | |||||||||||||||||||||
| June 30, | December 31, | % | |||||||||||||||||||
| 2010 | 2009 | Change | |||||||||||||||||||
| Current assets: | |||||||||||||||||||||
| Cash and cash equivalents | $ | 66,182 | $ | 59,068 | 12.0% | ||||||||||||||||
| Trust and restricted cash | 16,565 | 14,750 | 12.3% | ||||||||||||||||||
| Accounts receivable, net | 385,464 | 353,622 | 9.0% | ||||||||||||||||||
| Deferred income taxes receivable | 18,027 | 35,356 | -49.0% | ||||||||||||||||||
| Prepaid assets | 40,122 | 34,063 | 17.8% | ||||||||||||||||||
| Other current assets | 37,477 | 46,757 | -19.8% | ||||||||||||||||||
| Total current assets | 563,837 | 543,616 | 3.7% | ||||||||||||||||||
| Net property and equipment | 336,231 | 333,267 | 0.9% | ||||||||||||||||||
| Goodwill | 1,647,560 | 1,665,569 | -1.1% | ||||||||||||||||||
| Other assets | 461,134 | 502,810 | -8.3% | ||||||||||||||||||
| Total assets | $ | 3,008,762 | $ | 3,045,262 | -1.2% | ||||||||||||||||
| Current liabilities | $ | 389,788 | $ | 368,609 | 5.7% | ||||||||||||||||
| Long-term obligations | 3,522,223 | 3,607,873 | -2.4% | ||||||||||||||||||
| Other liabilities | 156,903 | 161,524 | -2.9% | ||||||||||||||||||
| Total liabilities | 4,068,914 | 4,138,006 | -1.7% | ||||||||||||||||||
| Class L common stock | 1,413,958 | 1,332,721 | 6.1% | ||||||||||||||||||
| Stockholders' deficit | (2,474,110 | ) | (2,425,465 | ) | -2.0% | ||||||||||||||||
| Total liabilities and stockholders' deficit | $ | 3,008,762 | $ | 3,045,262 | -1.2% | ||||||||||||||||
| NM: Not Meaningful | |||||||||||||||||||||
Reconciliation of Financial Measures
The common definition
of EBITDA is "Earnings Before Interest Expense, Taxes, Depreciation and
Amortization." In evaluating liquidity, we use earnings before interest
expense, share based compensation, taxes, depreciation and amortization,
minority interest, non-recurring litigation settlement costs, other
non-cash reserves, transaction costs and after acquisition synergies and
excluding unrestricted subsidiaries, or "Adjusted EBITDA." EBITDA and
Adjusted EBITDA are not measures of financial performance or liquidity
under generally accepted accounting principles ("GAAP"). EBITDA and
Adjusted EBITDA should not be considered in isolation or as a substitute
for net income, cash flows from operations or other income or cash flows
data prepared in accordance with GAAP. Adjusted EBITDA, as presented,
may not be comparable to similarly titled measures of other companies.
Adjusted EBITDA is presented as we understand certain investors use it
as one measure of our historical ability to service debt. Adjusted
EBITDA is also used in our debt covenants, although the precise
adjustments used to calculate Adjusted EBITDA included in our credit
facility and indentures vary in certain respects among such agreements
and from those presented below. Set forth below is a reconciliation of
EBITDA and Adjusted EBITDA to cash flows from operations.
| Amounts in thousands | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||||
| Cash flow from operating activities | $ | 71,714 | $ | 52,139 | $ | 187,195 | $ | 100,994 | ||||||||||
| Income tax expense | 22,244 | 16,202 | 44,310 | 34,971 | ||||||||||||||
| Deferred income tax expense | (1,000 | ) | (533 | ) | (17,824 | ) | (9,022 | ) | ||||||||||
| Interest expense | 59,952 | 63,616 | 119,075 | 127,679 | ||||||||||||||
| Provision for share based compensation | (846 | ) | (380 | ) | (1,728 | ) | (715 | ) | ||||||||||
| Amortization of loan origination costs | (3,999 | ) | (4,178 | ) | (8,009 | ) | (8,289 | ) | ||||||||||
| Other | 2 | 1,072 | (8 | ) | 2,202 | |||||||||||||
|
Changes in operating assets and liabilities, net of business acquisitions |
13,166 | 28,078 |
|
(1,013 | ) | 70,740 | ||||||||||||
| EBITDA | 161,233 | 156,016 | 321,998 | 318,560 | ||||||||||||||
| Provision for share based compensation | 846 | 380 | 1,728 | 715 | ||||||||||||||
| Acquisition synergies and transaction costs | 702 | 4,586 | 2,921 | 9,869 | ||||||||||||||
| Site closures and other impairments | 1,371 | 2,678 | 3,053 | 2,967 | ||||||||||||||
| Non-cash foreign currency loss (gain) | (38 | ) | 2,518 | 1,193 | (4,593 | ) | ||||||||||||
| Non-recurring litigation settlement costs | - | 450 | 10 | 2,669 | ||||||||||||||
| Adjusted EBITDA | $ | 164,114 | $ | 166,628 | $ | 330,903 | $ | 330,187 | ||||||||||
The following table summarizes the Company's cash flows by category for the periods presented.
| Amounts in thousands | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||||
| Cash flows from operating activities | $ | 71,714 | $ | 52,139 | $ | 187,195 | $ | 100,994 | ||||||||||
| Cash flows used in investing activities | $ | (40,682 | ) | $ | (16,368 | ) | $ | (74,463 | ) | $ | (39,662 | ) | ||||||
| Cash flows used in financing activities | $ | (19,308 | ) | $ | (22,606 | ) | $ | (100,339 | ) | $ | (40,587 | ) | ||||||
1 See Reconciliation of Financial Measures.
2 Net revenue from entities acquired or sold includes the acquisitions of Stream57 and SKT BCS in the Unified Communications segment and the acquisition of Holly Connects and the sale of the Positron CAD business in the Communications Services segment.
3 Automated services includes Unified Communications, Intrado and West Interactive
SOURCE: West Corporation
West Corporation
David Pleiss, 402-963-1500
Investor Relations
dmpleiss@west.com
Copyright Business Wire 2010
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