Delicious
Digg
Facebook
LinkedIn
Twitter
OMAHA, Neb., Oct 23, 2001 -- West Corporation (Nasdaq: WSTC) (or "West"), a leading provider of innovative full service customer relationship management solutions utilizing the latest in voice and Internet technology, today announced results for the third quarter ended September 30, 2001 and the conclusion of its relationship with Synchrony Communications.
Financial Summary (unaudited)
(In thousands, except per share amounts and percentages)
Three Months Ended Nine Months Ended
Sep 30 Sep 30 Percent Percent
2001 2000 Change 2001 2000 Change
Total Revenue $180,968 $189,513 -4.5% $577,015 $531,109 8.6%
Operating Income 25,519 28,600 -10.8% 89,839 79,109 13.6%
Other Income
(Expenses)
includes write
down of
investment (3,000) - (3,000) -
Net Income 14,741 18,356 -19.7% 56,063 51,104 9.7%
Pro Forma Net
Income per
diluted share 0.26* - 0.86* -
Net Income per
diluted share 0.22 0.27 0.82 0.75
*Excludes one-time charge of $0.04 per share, related to investment in Synchrony Communications
"The downturn in the overall economy and the events of September 11th impacted many U.S. companies during the quarter and West was no exception," commented Thomas B. Barker, President and Chief Executive Officer. "We are pleased with our operational performance this quarter, with pro forma earnings of $0.26 per share, which was due to our ability to maintain solid margins and strictly control costs during these unusual circumstances. Our performance during the first nine months of 2001 proves that West's business model remains intact and that we can be trusted to successfully manage our clients needs in a tough economic environment."
Operating Results
For the quarter ended September 30, 2001, revenues were $181.0 million compared to $189.5 million in the third quarter 2000, a 4.5% decrease. Third quarter operating income fell by 10.8% to $25.5 million, compared to $28.6 million in the same period last year. EBITDA (earnings before interest, taxes, depreciation and amortization) decreased 10.5% to $35.8 million from $40.0 million in the third quarter of 2000. Net income for the third quarter stood at $14.7 million versus $18.4 million in third quarter 2000, a decline of 19.7%. Fully diluted earnings per share were 22 cents, versus 27 cents in the comparable period of 2000. Excluding one-time charges, fully diluted earnings per share were 26 cents, in line with internal expectations.
Other Income (expenses)
Based on its assessment of the current valuation of its investment in Synchrony Communications, West recorded a one-time charge of $3 million, or $0.04 per share during the third quarter. The board of Synchrony Communications decided it would be in the best interests of the company to accept the acquisition offer made by divine inc., which was announced on October 23, 2001. In return for its original investment announced in August 2000, West Corporation expects to receive restricted stock of divine inc. The company believes it is prudent to write down its entire original investment of $3 million, as management believes the value of the investment is permanently impaired.
Nine-Month Operating Results
For the nine-month period ended September 30, 2001, revenues rose 8.6% to $577.0 million from $531.1 million for the same period last year. Operating income increased 13.6% to $89.8 million from $79.1 million in last year's nine-month period. Net Income grew 9.7% to $56.1 million from $51.1 million in the nine month 2000 period. EBITDA increased by 11.0% to $125.2 million from $112.7 million the first nine months of 2000.
"The impact of the September 11th tragedy was lessened by our ability to control variable costs," explained Michael Micek, Chief Financial Officer of West. "We continued to control our fixed costs on a year-to-date basis and SG&A expense, as a percentage of revenues, decreased 0.2% to 33.3% for the first nine months of 2001."
Margins
For the reasons mentioned above, operating margins declined slightly during the quarter to 14.1%. For the nine months ended September 30, 2001, operating margins were 15.6% of revenue, exceeding our annual target of 15% and compares favorably to 14.9% for the first nine months of 2000.
Balance Sheet
West continues to maintain a strong and liquid balance sheet. At the end of the third quarter, the company had cash and short-term investments totaling $163.2 million. At quarter end, the company had no outstanding borrowings under its lines of credit and maintained a healthy current ratio of 3.2 - 1. During the first nine months of 2001 the company invested $40.6 million in capital expenditures, primarily for contact center upgrades and expansion. So far during 2001, the company has opened and begun processing calls in three new contact centers bringing the total number of workstations to 11,221.
Outlook
"Despite the difficult economic conditions encountered this quarter, we are confident in our ability to continue to successfully strengthen our company and report profitable results. We are comfortable with the guidance issued in our September 26 release and expect fourth quarter revenues to be between $190 and $200 million with EPS of $0.28 to $0.30," Barker explained.
Conference Call
The company will hold a conference call to discuss earnings on October 24th at 10:00 AM Central Time. Investors may access the call by visiting the Investor Relations section of the West Corporation website at www.west.com and clicking on the Live Webcast icon. If you are unable to participate during the live webcast, a replay of the call will also be available on the website.
About West Corporation
West Corporation is a leading provider of innovative, full-service customer care solutions that help Fortune 500 companies acquire, retain and grow profitable customer relationships. West's customer relationship management solutions incorporate agent and automated services using the latest in voice and Internet technology.
Founded in 1986 and headquartered in Omaha, Nebraska, West has a team of approximately 25,000 employees, including an IT staff of approximately 780, occupying 31 state-of-the-art contact centers and seven interactive automated voice and data processing centers across North America and India.
Statements which are not historical facts contained in this release are forward-looking statements that involve risks and uncertainties. Such risks and uncertainties include, but are not limited to: planned expansion of operating facilities; labor market conditions; mergers, acquisitions, or joint ventures, including their execution; customer concentrations; technological innovation; and general economic conditions. Further information regarding the factors that could cause actual results to differ from expected or projected results can be found in documents filed by the Company with the United States Securities and Exchange Commission (the "SEC").
WEST CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
Unaudited
($ in thousands except per share amounts and selected operating data)
Three Months Ended Nine Months
30-Sep 30-Sep
2001 2000 % change 2001 2000 % change
Total revenue $180,968 $189,513 -4.5% $577,015 $531,109 8.6%
Cost of services 93,713 98,593 -4.9% 295,178 274,014 7.7%
Selling, general
and administrative
expense 61,736 62,320 -0.9% 191,998 177,986 7.9%
Operating Income 25,519 28,600 -10.8% 89,839 79,109 13.6%
Other Income
(expense) (2,063) 460 -548.5% (415) 1,793 -123.1%
Income before tax 23,456 29,060 -19.3% 89,424 80,902 10.5%
Income tax expense 8,691 10,704 -18.8% 33,055 29,798 10.9%
Minority Interest 24 - 306 -
Net income $14,741 $18,356 -19.7% $56,063 $51,104 9.7%
Earnings per common
share
Basic $0.23 $0.29 $0.86 $0.80
Diluted $0.22 $0.27 $0.82 $0.75
Weighted average number
of shares outstanding:
Basic common
shares 64,956 64,304 64,876 63,943
Diluted common
shares 67,844 67,861 68,139 67,704
Selected operating data:
Operating margin 14.10% 15.09% 15.57% 14.90%
Number of
workstations
(end of period) 11,221 9,912 11,221 9,912
Number of Cash and
short-term
investments $163,158 $108,113 50.9%
Trade accounts
receivable,
net 107,826 129,695 -16.9%
Other current
assets 42,214 45,857 -7.9%
Total current
assets 313,198 283,665 10.4%
Net property and
equipment 202,367 197,178 2.6%
Goodwill 42,363 43,627 -2.9%
Other assets 20,426 29,437 -30.6%
Total assets $578,354 $553,907 4.4%
Current
liabilities 98,984 132,659 -25.4%
Other liabilities
& Minority
Interest 37,225 43,123 -13.7%
Stockholders'
equity 442,145 378,125 16.9%
Total liabilities
and stockholders
equity $578,354 $553,907 4.4%
Yahoo! Buzz