- Stronger-than-expected revenue and earnings
per share growth relative to business outlook
- Operating performance in EMEA improves sequentially
- The Company exits third-quarter 2010 with no debt
- Raising 2010 business outlook and acquisition synergy target
TAMPA, Fla., Nov. 1, 2010 (GLOBE NEWSWIRE) -- Sykes Enterprises, Incorporated ("SYKES" or the "Company") (Nasdaq:SYKE), a global leader in providing outsourced customer contact management solutions and services in the business process outsourcing (BPO) arena, announced today third-quarter 2010 financial results.
Third quarter 2010 Highlights
- Third quarter 2010 revenues of $307.0 million increased $93.5 million,
or 43.8%, over the comparable quarter last year; third quarter 2010
revenues included $101.2 million in contribution from the ICT
acquisition.
- Third quarter 2010 operating margin was 4.3% versus 9.7% on a comparable
basis; on an adjusted basis, a non-GAAP measure, which includes the ICT
acquisition but excludes ICT acquisition-related costs (see Exhibit 4
for reconciliation) such as those associated with capacity
rationalization and facilities consolidation, third quarter 2010
operating margin was 7.6% versus 10.3%, due to previously-discussed
program expirations in both the Americas and EMEA regions beginning in
the second-half of 2009, duplicative costs related to migration of
demand to near-shore locations in Egypt, Romania and Germany, coupled
with unfavorable translation of certain non-dollar denominated expenses
and wage increases in certain geographies.
- Excluding the ICT acquisition and on a constant currency basis, third
quarter 2010 revenues decreased 3.9% comparably due to tougher year-ago
comparisons driven principally by previously-discussed program
expirations, migration of demand to near-shore locations as well as
softness in the technology and communications verticals, which more than
offset increased demand from the financial services and transportation
verticals.
- Excluding the ICT acquisition, third quarter 2010 operating margins
declined 330 basis points (7.0% vs. 10.3%) comparably due principally to
previously-discussed client program expirations, unfavorable translation
of certain non-dollar denominated expenses, migration costs and wage
increases in certain geographies.
- Third quarter 2010 diluted earnings per share was $0.29 versus $0.46 in
the comparable quarter last year and above the Company's third quarter
2010 business outlook earnings per share range of $0.18 to $0.22. The
decrease in the Company's third quarter 2010 diluted earnings per share
on a comparable basis was due to unfavorable translation of certain
non-dollar denominated expenses, an operating loss in the EMEA region
due to factors noted above and higher interest expense. Relative to the
business outlook, the increase in earnings per share was due to a
combination of stronger-than-expected demand, reduced operating losses
in EMEA, reduction in compensation expenses and tax benefits.
- On an adjusted basis, third quarter 2010 diluted earnings per share was
$0.43 versus $0.48 per share in the comparable quarter last year and
versus an adjusted diluted earnings per share range of $0.24 to $0.26
provided in the Company's third quarter 2010 business outlook. The
decrease on a comparable basis was due to an operating loss in the EMEA
region and higher interest expense. Relative to the business outlook,
the increase in earnings per share was largely due to aforementioned
factors. Assuming a forecasted tax rate of 20% as projected in the
Company's third quarter 2010 business outlook and assuming projected net
interest expense of approximately $1.3 million for the third quarter of
2010, adjusted diluted earnings per share would have been $0.38.
Americas Region
Revenues generated from the Company's Americas segment, including operations in North America and offshore (Latin America, South Asia and the Asia Pacific region), increased 66% to $253.9 million, or 82.7% of total revenues, for the third quarter of 2010. Revenues for the prior year period totaled $152.9 million, or 71.6% of total revenues. The ICT acquisition contributed approximately $100.8 million to the Americas third quarter 2010 revenues. Excluding the ICT acquisition and on a constant currency basis, third quarter 2010 Americas revenues decreased 2.9% comparably due principally to expiration of previously-discussed client programs within the communications and technology verticals, which more than offset increased demand from the financial services and transportation verticals.
During the quarter, approximately 50% of the Americas third quarter 2010 revenues was generated from services provided offshore. Excluding the ICT acquisition, approximately 58% of the Americas third quarter 2010 revenues was generated from services provided offshore compared to approximately 60.0% in the prior year quarter, with the percentage decrease due primarily to an increased revenue contribution from the U.S.
Sequentially, revenues generated from the Americas segment increased 3.2% to $253.9 million, or 82.7% of total revenues, in the third quarter of 2010. Second quarter 2010 revenues were $246.0 million, or 82.2% of total revenues. On a constant currency basis, third quarter 2010 Americas revenues increased 3.4% sequentially, driven by the communications, financial services and transportation verticals.
The Americas income from operations for the third quarter of 2010 decreased 10.1% to $25.0 million, with an operating margin of 9.9% versus 18.2% in the comparable quarter last year. On an adjusted basis, which includes the ICT acquisition but excludes ICT acquisition-related costs (see Exhibit 4 for reconciliation) such as those associated with capacity rationalization and facilities consolidation, the Americas operating margin was 13.6% versus 18.4% in the comparable quarter last year. Excluding the ICT acquisition, the Americas operating margin decreased 180 basis points (16.6% vs. 18.4%) comparably due to expiration of certain previously-discussed client programs, facilities related costs, unfavorable translation of certain non-dollar denominated expenses and wage increases.
Sequentially, the Americas income from operations for the third quarter of 2010 increased 1.7% to $25.0 million, with an operating margin of 9.9% versus 10.0% in the second quarter of 2010. On an adjusted basis, which includes the ICT acquisition but excludes ICT acquisition-related costs (see Exhibit 6) such as those associated with capacity rationalization and facilities consolidation, the Americas operating margins were 13.6% versus 11.5% sequentially due largely to stronger-than-expected revenue growth and the associated operating leverage.
EMEA Region
Revenues from the Company's Europe, Middle East and Africa (EMEA) region decreased 12.3% to $53.1 million, representing 17.3% of SYKES' total revenues for the third quarter of 2010 compared to $60.6 million, or 28.4% of revenues, in the prior year's third quarter. The ICT acquisition contributed approximately $0.4 million in revenues to EMEA in the third quarter of 2010. Excluding the ICT acquisition and on a constant currency basis, EMEA revenues decreased 6.4% due largely to previously-discussed client program expirations, near-shore migration and softness within the technology and communications verticals, which more than offset increased demand from the transportation and financial services verticals.
Sequentially, revenues from the Company's EMEA region decreased 0.2% to $53.1 million, representing 17.3% of SYKES' total revenues for the third quarter of 2010 compared to $53.2 million, or 17.8% of SYKES' total revenues in the second quarter of 2010. On a constant currency basis, EMEA revenues decreased 2.6% sequentially due principally to softness in the technology vertical, which more-than-offset renewed demand from the communications vertical, and a continued increase in the financial services and transportation verticals.
The EMEA loss from operations for the third quarter of 2010 was $2.5 million versus an income of $3.9 million in the comparable quarter last year, with an operating margin of negative 4.8% versus a positive 6.4% in the comparable quarter last year. On an adjusted basis, which includes the ICT acquisition but excludes ICT acquisition-related costs (see Exhibit 4 for reconciliation) such as those associated with capacity rationalization and facilities consolidation, the comparable operating margin was a negative 4.1% versus a positive 6.4% in the comparable quarter last year. Excluding the ICT acquisition, the EMEA operating margin was a negative 4.0% versus a positive 6.4% due to soft client demand related to economic weakness, severance costs related to workforce reductions, migration of demand to near-shore locations and the corresponding duplicative labor and facilities ramp costs.
Sequentially, the EMEA loss from operations for the third quarter of 2010 was $2.5 million versus a loss of $3.9 million in the second quarter of 2010, with an operating margin of negative 4.8% versus a negative 7.3% in the second quarter of 2010. On an adjusted basis, which includes the ICT acquisition but excludes ICT acquisition-related costs (see Exhibit 6) such as those associated with capacity rationalization and facilities consolidation, the EMEA operating margin was a negative 4.1% versus a negative 7.3% in the second quarter of 2010. The sequential improvement in the EMEA operating margin was due principally to labor efficiencies and on-going client ramps.
Corporate G&A Expenses
Corporate costs decreased to $9.4 million, or 3.1% of revenues, in the third quarter of 2010, compared to $11.0 million, or 5.2% of revenues, in the comparable quarter last year. On an adjusted basis, which includes the ICT acquisition but excludes ICT acquisition-related costs (see Exhibit 4 for reconciliation), corporate costs decreased 9.6% to $9.0 million, or 2.9% of revenues, from $10.0 million, or 4.7% of revenues, in comparable period last year. Excluding the ICT acquisition, corporate costs declined to $8.8 million, or 4.3% of third quarter 2010 revenues from $10.0 million, or 4.7% of revenues, in the same period last year due principally to lower compensation expenses, including incentive compensation.
Sequentially, corporate costs decreased to $9.4 million, or 3.1% of revenues, in the third quarter of 2010, from $12.0 million, or 4.0% of revenues, in the second quarter of 2010. On an adjusted basis, which includes the ICT acquisition but excludes ICT acquisition-related costs (see Exhibit 6), corporate costs declined to $9.0 million, or 2.9% of revenues, from $9.7 million, or 3.2% of revenues, in the second quarter of 2010 due principally to lower compensation expenses, including incentive compensation.
Interest & Other Expense and Taxes
Interest and other expense for the third quarter of 2010 totaled approximately $1.7 million compared to other income of $0.5 million for the same period in the prior year. Of the $2.2 million negative swing in interest and other expense, approximately $1.5 million was due to a combination of higher interest expense and related underwriting fees associated with the ICT acquisition-related term loan as well as lower interest income from lower average interest rates on lower cash balances, with the balance attributable to realized and unrealized foreign currency transaction losses which resulted primarily from U.S. dollar denominated assets and liabilities held by the Company's international subsidiaries.
During the quarter, the Company had a tax benefit of 19.9% versus a tax rate of 11.3% in the same period last year and below the estimated 16% to 18% tax rate range provided in the Company's third quarter 2010 business outlook. Third quarter 2010 tax benefit was due to a combination of a favorable adjustment of the tax impact related to a deemed change of assertion in 2009, a tax benefit related to the ICT legal entity integration and the release of a reserve related to an expired statute of limitations. On an adjusted basis, which includes the ICT acquisition but excludes ICT acquisition-related costs such as those associated with capacity rationalization and facilities consolidation, third quarter 2010 tax rate was 8.0% versus 11.9% in the same period last year and below the estimated 19% to 21% tax rate range provided in the Company's third quarter 2010 business outlook. The lower-than-expected tax rate on an adjusted basis both relative to last year and the business outlook was due largely to the above-mentioned factors.
Liquidity and Capital Resources
The Company's balance sheet at September 30, 2010 remained strong with cash and cash equivalents of $202.8 million (excluding restricted cash of $0.6 million). Approximately $191.2 million of the Company's September 30th cash balance was held in international operations and would be subject to additional taxes if repatriated back to the U.S. During the quarter, the Company paid down the remaining $52.5 million left on its three-year term loan related to the ICT acquisition. At September 30, 2010, the Company had no debt and $75 million of undrawn borrowing capacity available under its revolving credit facility. Cash flow from operations for the third quarter of 2010 was up 13% to $29.8 million versus $26.3 million in same period last year.
Business Outlook
The assumptions driving the business outlook are as follows:
- The Company is raising its implied fourth-quarter 2010 revenue range
based on stronger-than-expected demand in the third quarter of 2010.
This, in turn, is driving upward its previously-announced full-year 2010
revenue range. The upward revision in implied revenues for fourth
quarter 2010 is driven largely by demand within the Americas region and,
to some extent, favorable foreign exchange rates, most notably a
stronger Euro. Although it is still early to determine the
sustainability of the up-tick in underlying demand within the Americas
region, recent indications are encouraging. Meanwhile, the EMEA region,
where demand remains soft, could be in the process of bottoming as
revenue growth rate declines appear to be moderating. This is being
aided largely by the Company's strategic decision to broaden its
near-shore delivery offering for the EMEA market, which continues to
gain traction among clients;
- The Company remains on track to achieving its implied fourth-quarter
2010 synergy target of approximately $9 million and its
previously-announced full-year 2010 synergy target of approximately $25
million. It is raising its long-term projected synergy target further to
a range of $34 million to $36 million from a range of $28 million to $30
million. This upward revision is driven by the capacity rationalization
and facilities consolidation announced on October 25th, 2010, related to
the ICT acquisition, which is expected to continue through the first
half of 2011 and could further impact earnings per share relative to the
business outlook for the fourth-quarter and full-year 2010;
- The Company's revenues and adjusted earnings per share assumptions are
based on foreign exchange rates as of October 2010. Therefore, the
continued volatility in foreign exchange rates between the U.S. dollar
and the functional currencies of the markets the Company serves could
have a significant impact, positive or negative, on revenues and
adjusted earnings per share relative to the business outlook for the
fourth quarter and full-year;
- The Company anticipates net interest income in the fourth quarter to be
negligible as lower interest income resulting from lower interest rates
is largely offset by the amortization of deferred loan fees related to
the credit facility, though other income or expense excludes the impact
of additional foreign exchange gains or losses; and
- The Company anticipates a higher tax rate in the fourth quarter of 2010
compared to the actual tax rate in the third quarter of 2010 as there
were discrete adjustments that drove the third quarter 2010 tax rates.
Considering the above factors, the Company anticipates the following financial results for the three months ended December 31, 2010:
- Revenues in the range of $307.0 million to $310.0 million
- Tax rate of approximately 18% to 20%, on an adjusted basis, a tax rate
of approximately 25% to 27%%
- Fully diluted share count of approximately 46.4 million
- *Diluted earnings per share of approximately $0.22 to $0.25
- Adjusted diluted earnings per share in the range of $0.30 to $0.33
- Capital expenditures in the range of $7.0 million to $10.0 million
For the twelve months ended December 31, 2010, the Company anticipates the following financial results:
- Revenues in the range of $1,188 million to $1,191 million
- Tax rate of approximately 4% to 6%, on adjusted basis, a tax rate of 23%
to 25%
- Fully diluted share count of approximately 46.2 million
- *Diluted earnings per share in the range of $0.37 to $0.40
- Adjusted diluted earnings per share in the range of $1.05 to $1.08
- Capital expenditures in the range of $29.0 million to $32.0 million
*See "Business Outlook Reconciliation" for Fourth Quarter and Full-Year 2010 earnings per share.
Conference Call
The Company will conduct a conference call regarding the content of this release tomorrow, November 2nd, 2010 at 10:00 a.m. Eastern Time. The conference call will be carried live on the Internet. Instructions for listening to the call over the Internet are available on the Investors page of SYKES' website at www.sykes.com. A replay will be available at this location for two weeks. This press release is also posted on the SYKES website at http://investor.sykes.com/phoenix.zhtml?c=119541&p=irol-news&nyo=0.
Non-GAAP Financial Measure
Adjusted earnings per diluted share and adjusted operating margins are important indicators of performance as these non-GAAP financial measures assist readers in further understanding the Company's results of operations and trends from period-to-period exclusive of certain acquisition-related items. Adjusted earnings per diluted share and adjusted operating margins, however, are supplemental measures of performance that are not required by, or presented in accordance with, U.S. Generally Accepted Accounting Principles (GAAP). Refer to the tables in the release for a detailed reconciliation.
About Sykes Enterprises, Incorporated
SYKES is a global leader in providing customer contact management solutions and services in the business process outsourcing (BPO) arena. SYKES provides an array of sophisticated customer contact management solutions to Fortune 1000 companies around the world, primarily in the communications, financial services, healthcare, technology and transportation and leisure industries. SYKES specializes in providing flexible, high quality customer support outsourcing solutions with an emphasis on inbound technical support and customer service. Headquartered in Tampa, Florida, with customer contact management centers throughout the world, SYKES provides its services through multiple communication channels encompassing phone, e-mail, web and chat. Utilizing its integrated onshore/offshore global delivery model, SYKES serves its clients through two geographic operating segments: the Americas (United States, Canada, Latin America, India and the Asia Pacific region) and EMEA (Europe, Middle East and Africa). SYKES also provides various enterprise support services in the Americas and fulfillment services in EMEA, which include multi-lingual sales order processing, payment processing, inventory control, product delivery and product returns handling. For additional information please visit www.sykes.com.
Forward-Looking Statements
This press release may contain "forward-looking statements," including SYKES' estimates of future business outlook, prospects or financial results, statements regarding SYKES' objectives, expectations, intentions, beliefs or strategies, or statements containing words such as "believe," "estimate," "project," "expect," "intend," "may," "anticipate," "plans," "seeks," "implies," or similar expressions. It is important to note that SYKES' actual results could differ materially from those in such forward-looking statements, and undue reliance should not be placed on such statements. Among the important factors that could cause such actual results to differ materially are (i) the impact of economic recessions in the U.S. and other parts of the world, (ii) fluctuations in global business conditions and the global economy, (iii) SYKES' ability to continue the growth of its support service revenues through additional technical and customer contact centers, (iv) currency fluctuations, (v) the timing of significant orders for SYKES' products and services, (vi) loss or addition of significant clients, (vii) the early termination of contracts by clients, (viii) SYKES' ability to recognize deferred revenue through delivery of products or satisfactory performance of services, (ix) construction delays of new or expansion of existing customer support centers, (x) difficulties or delays in implementing SYKES' bundled service offerings, (xi) failure to achieve sales, marketing and other objectives, (xii) variations in the terms and the elements of services offered under SYKES' standardized contract including those for future bundled service offerings, (xiii) changes in applicable accounting principles or interpretations of such principles, (xiv) delays in the Company's ability to develop new products and services and market acceptance of new products and services, (xv) rapid technological change, (xvi) political and country-specific risks inherent in conducting business abroad, (xvii) SYKES' ability to attract and retain key management personnel, (xviii) SYKES' ability to further penetrate into vertically integrated markets, (xix) SYKES' ability to expand its global presence through strategic alliances and selective acquisitions, (xx) SYKES' ability to continue to establish a competitive advantage through sophisticated technological capabilities, (xxi) the ultimate outcome of any lawsuits or penalties (regulatory or otherwise), (xxii) SYKES' dependence on trends toward outsourcing, (xxiii) risk of interruption of technical and customer contact management center operations due to such factors as fire, earthquakes, inclement weather and other disasters, power failures, telecommunications failures, unauthorized intrusions, computer viruses and other emergencies, (xxiv) the existence of substantial competition, (xxv) the ability to obtain and maintain grants and other incentives, including tax holidays or otherwise, (xxvi) the potential of cost savings/synergies associated with the ICTG acquisition not being realized, or not being realized within the anticipated time period, (xxvii) the potential loss of key clients related to the ICTG acquisition, (xxviii) risks related to the integration of the businesses of SYKES and ICTG and (xxix) other risk factors listed from time to time in SYKES' registration statements and reports as filed with the Securities and Exchange Commission. All forward-looking statements included in this press release are made as of the date hereof, and SYKES undertakes no obligation to update any such forward-looking statements, whether as a result of new information, future events, or otherwise.
Sykes Enterprises, Incorporated
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
Exhibit 1
Three Months Ended
SYKES +
ICT SYKES
September September
30, 30,
2010 2009
---------- ----------
Revenues $ 306,950 $ 213,494
Direct salaries and related costs (199,889) (134,429)
General and administrative (89,984) (58,047)
Impairment of goodwill and
intangibles (362) (324)
Impairment of long-lived assets (3,642) --
---------- ----------
Income from operations 13,073 20,694
Other income (expense), net (1,694) 476
---------- ----------
Income before benefit (provision)
for income taxes 11,379 21,170
Benefit (provision) for income
taxes 2,267 (2,388)
---------- ----------
Net income $ 13,646 $ 18,782
---------- ----------
Net income per basic share $ 0.29 $ 0.46
Shares outstanding, basic 46,468 40,743
Net income per diluted share $ 0.29 $ 0.46
Shares outstanding, diluted 46,559 41,097
Sykes Enterprises, Incorporated
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
Exhibit 2
Nine Months Ended
SYKES +
ICT SYKES
September September
30, 30,
2010 2009
---------- ----------
Revenues $ 881,344 $ 625,574
Direct salaries and related costs (575,653) (398,409)
General and administrative (286,124) (170,011)
Impairment of goodwill and
intangibles (362) (1,908)
Impairment of long-lived assets (3,642) --
---------- ----------
Income from operations 15,563 55,246
Other income (expense), net (10,652) 2,675
Impairment loss on investment in
SHPS -- (2,089)
---------- ----------
Income before benefit (provision)
for income taxes 4,911 55,832
Benefit (provision) for income
taxes 1,768 (7,932)
---------- ----------
Net income $ 6,679 $ 47,900
---------- ----------
Net income per basic share $ 0.15 $ 1.18
Shares outstanding, basic 45,889 40,662
Net income per diluted share $ 0.15 $ 1.17
Shares outstanding, diluted 45,989 41,011
Sykes Enterprises, Incorporated
Segment Results
(in thousands)
(Unaudited)
Exhibit 3
Three Months Ended
SYKES +
ICT SYKES
September September
30, 30,
2010 2009
---------- ----------
Revenues:
Americas $ 253,848 $ 152,940
EMEA 53,102 60,554
---------- ----------
Total $ 306,950 $ 213,494
========== ==========
Operating
Income:
Americas $ 25,017 $ 27,830
EMEA (2,547) 3,899
Corporate G&A
expenses (9,397) (11,035)
---------- ----------
Income from
operations 13,073 20,694
Other income
(expense), net (1,694) 476
Benefit
(provision)
for income
taxes 2,267 (2,388)
---------- ----------
Net Income $ 13,646 $ 18,782
========== ==========
Nine Months Ended
SYKES +
ICT SYKES
September September
30, 30,
2010 2009
---------- ----------
Revenues:
Americas $ 715,343 $ 444,682
EMEA 166,001 180,892
---------- ----------
Total $ 881,344 $ 625,574
========== ==========
Operating
Income:
Americas $ 75,867 $ 76,207
EMEA (7,161) 10,310
Corporate G&A
expenses (53,143) (31,271)
---------- ----------
Income from
operations 15,563 55,246
Impairment loss
on investment
in SHPS -- (2,089)
Other income
(expense), net (10,652) 2,675
Benefit
(provision)
for income
taxes 1,768 (7,932)
---------- ----------
Net income $ 6,679 $ 47,900
========== ==========
Sykes Enterprises, Incorporated
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
Exhibit 4
Three Months Ended
September 30, 2010
--------------------------------------
Acquisition related Costs
--------------------------------------
ICT
Depreciation
and
Amortization
of
ICT Property &
Severance Equipment ICT Merger
SYKES + & and & SYKES +
ICT Consulting Intangibles Integration ICT
Reported Engagement Write-Ups Costs Adjusted
---------- ----------- ------------ ----------- ----------
Revenues $ 306,950 $ 306,950
Direct salaries and related
costs (199,889) (199,889)
General and administrative (89,984) 2,748 3,245 350 (83,641)
Impairment of goodwill and
intangibles (362) 362 --
Impairment of long-lived
assets (3,642) 3,642 --
---------- ----------- ------------ ----------- ----------
Income from operations 13,073 2,748 3,245 4,354 23,420
Other (expense), net (1,694) (1,694)
---------- ----------- ------------ ----------- ----------
Income before benefit
(provision) for income
taxes 11,379 2,748 3,245 4,354 21,726
Benefit (provision) for
income taxes 2,267 (1,297) (1,136) (1,571) (1,737)
---------- ----------- ------------ ----------- ----------
Net income $ 13,646 $ 1,451 $ 2,109 $ 2,783 $ 19,989
---------- ----------- ------------ ----------- ----------
Net income per basic share $ 0.29 $ 0.03 $ 0.05 $ 0.06 $ 0.43
Shares outstanding, basic 46,468 46,468 46,468 46,468 46,468
Net income per diluted
share $ 0.29 $ 0.03 $ 0.05 $ 0.06 $ 0.43
Shares outstanding,
diluted 46,559 46,559 46,559 46,559 46,559
--------------------------------------
Acquisition related Costs
--------------------------------------
ICT
Depreciation
and
Amortization
of
ICT Property & ICT
Severance Equipment Merger
SYKES + & and & SYKES +
ICT Consulting Intangibles Integration ICT
Reported Engagement Write-Ups Costs Adjusted
---------- ----------- ------------ ----------- ----------
Revenues:
Americas $ 253,848 $ 253,848
EMEA 53,102 53,102
---------- ----------- ------------ ----------- ----------
Total $ 306,950 $ -- $ -- $ -- $ 306,950
========== =========== ============ =========== ==========
Operating Income:
Americas $ 25,017 2,748 3,236 3,642 $ 34,643
EMEA (2,547) 9 362 (2,176)
Corporate G&A expenses (9,397) 350 (9,047)
---------- ----------- ------------ ----------- ----------
Income from operations 13,073 2,748 3,245 4,354 23,420
Other (expense), net (1,694) (1,694)
Benefit (provision) for
income taxes 2,267 (1,297) (1,136) (1,571) (1,737)
---------- ----------- ------------ ----------- ----------
Net Income $ 13,646 $ 1,451 $ 2,109 $ 2,783 $ 19,989
========== =========== ============ =========== ==========
Sykes Enterprises, Incorporated
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
Exhibit 5
Nine Months Ended
September 30, 2010
--------------------------------------
Acquisition related Costs
--------------------------------------
ICT
Depreciation
and
Amortization
of
ICT Property & ICT
Severance Equipment Merger &
SYKES + & and Integration SYKES +
ICT Consulting Intangibles ICT
Reported Engagement Write-Ups Costs Adjusted
---------- ----------- ------------ ----------- ----------
Revenues $ 881,344 $ 881,344
Direct salaries and related
costs (575,653) 34 (575,619)
General and administrative (286,124) 17,919 8,626 9,026 (250,553)
Impairment of goodwill and
intangibles (362) 362 --
Impairment of long-lived
assets (3,642) 3,642 --
---------- ----------- ------------ ----------- ----------
Income from operations 15,563 17,953 8,626 13,030 55,172
Other (expense), net (10,652) (10,652)
---------- ----------- ------------ ----------- ----------
Income (loss) before
benefit (provision) for
income taxes 4,911 17,953 8,626 13,030 44,520
Benefit (provision) for
income taxes 1,768 (5,353) (2,571) (3,885) (10,041)
---------- ----------- ------------ ----------- ----------
Net income $ 6,679 $ 12,600 $ 6,055 $ 9,145 34,479
---------- ----------- ------------ ----------- ----------
Net income per basic share $ 0.15 $ 0.27 $ 0.13 $ 0.20 $ 0.75
Shares outstanding, basic 45,889 45,889 45,889 45,889 45,889
Net income per diluted
share $ 0.15 $ 0.27 $ 0.13 $ 0.20 $ 0.75
Shares outstanding,
diluted 45,989 45,989 45,989 45,989 45,989
--------------------------------------
Acquisition related Costs
--------------------------------------
ICT
Depreciation
and
Amortization
of
ICT Property &
Severance Equipment ICT
SYKES + & and Merger & SYKES +
ICT Consulting Intangibles Integration ICT
Reported Engagement Write-Ups Costs Adjusted
---------- ----------- ------------ ----------- ----------
Revenues:
Americas $ 715,343 $ 715,343
EMEA 166,001 166,001
---------- ----------- ------------ ----------- ----------
Total $ 881,344 $ -- $ -- $ -- $ 881,344
========== =========== ============ =========== ==========
Operating Income:
Americas $ 75,867 4,008 $ 8,602 $ 3,642 $ 92,119
EMEA (7,161) 24 362 (6,775)
Corporate G&A expenses (53,143) 13,945 9,026 (30,172)
---------- ----------- ------------ ----------- ----------
Income from operations 15,563 17,953 8,626 13,030 55,172
Other (expense), net (10,652) (10,652)
Benefit (provision) for
income taxes 1,768 (5,353) (2,571) (3,885) (10,041)
---------- ----------- ------------ ----------- ----------
Net income $ 6,679 $ 12,600 $ 6,055 $ 9,145 $ 34,479
========== =========== ============ =========== ==========
Sykes Enterprises, Incorporated
Segment Results
(in thousands)
(Unaudited)
Exhibit 6
Three Months Ended
SYKES +
ICT SYKES +
Adjusted ICT
September Adjusted
30, June 30,
2010 2010
---------- ----------
Revenues $ 306,950 $ 299,177
Direct salaries and
related costs (199,889) (197,225)
General and
administrative (83,641) (87,304)
---------- ----------
Income from operations 23,420 14,648
Other (expense), net (1,694) (5,135)
---------- ----------
Income before provision
for income taxes 21,726 9,513
(Provision) for income
taxes (1,737) (2,888)
---------- ----------
Net income $ 19,989 $ 6,625
---------- ----------
Net income per basic
share $ 0.43 $ 0.14
Shares outstanding,
basic 46,468 46,601
Net income per diluted
share $ 0.43 $ 0.14
Shares outstanding,
diluted 46,559 46,648
Three Months Ended
SYKES +
ICT SYKES +
Adjusted ICT
September Adjusted
30, June 30,
2010 2010
---------- ----------
Revenues:
Americas $ 253,848 $ 245,957
EMEA 53,102 53,220
---------- ----------
Total $ 306,950 $ 299,177
========== ==========
Operating Income:
Americas $ 34,643 $ 28,245
EMEA (2,176) (3,900)
Corporate G&A expenses (9,047) (9,697)
---------- ----------
Income from operations 23,420 14,648
Other (expense), net (1,694) (5,135)
Provision for income
taxes (1,737) (2,888)
---------- ----------
Net income $ 19,989 $ 6,625
========== ==========
Sykes Enterprises, Incorporated
Condensed Consolidated Balance Sheets
(in thousands)
Exhibit 7
September December
30, 31,
2010 2009
---------- ----------
Assets:
Current assets $ 483,103 $ 547,854
Property and equipment, net 120,416 80,264
Goodwill & Intangibles, net 170,630 23,300
Other noncurrent assets 42,298 21,053
---------- ----------
Total assets $ 816,447 $ 672,471
========== ==========
Liabilities & Shareholders'
Equity:
Current liabilities $ 173,576 $ 200,418
Noncurrent liabilities 49,744 21,379
Shareholders' equity 593,127 450,674
---------- ----------
Total liabilities and
shareholders' equity $ 816,447 $ 672,471
========== ==========
Sykes Enterprises, Incorporated
Supplementary Data
Q3 2010 Q3 2009
---------- ----------
Geographic Mix (% of Total
Revenues):
Americas (1) 82.7% 71.6%
Europe, Middle East &
Africa (EMEA) 17.3% 28.4%
---------- ----------
Total: 100.0% 100.0%
(1) Includes the United States, Canada, Latin
America, South Asia and the Asia Pacific (APAC)
Region.
Latin America, South Asia and APAC are included in
the Americas due to the nature of the business and
client profile,
which is primarily made up of U.S. based clients.
Q3 2010 Q3 2009
---------- ----------
Vertical Industry Mix (% of Total
Revenues):
Communications 35% 38%
Financial Services 25% 15%
Technology / Consumer 19% 28%
Transportation & Leisure 7% 9%
Healthcare 6% 6%
Other 8% 4%
---------- ----------
Total: 100% 100%
Sykes Enterprises, Incorporated
Cash Flow from Operations
(in thousands)
(Unaudited)
Exhibit 8
Three Months Ended
September September
30, 30,
2010 2009
--------- ---------
Cash Flow From Operating
Activities:
Net income $ 13,646 $ 18,782
Depreciation and amortization 15,221 6,979
Changes in assets and
liabilities and other 970 584
--------- ---------
Net cash provided by
operating activities $ 29,837 $ 26,345
========= =========
Capital expenditures $ 8,031 $ 4,899
Cash interest paid $ 463 $ 122
Cash taxes paid $ 3,704 $ 5,248
Nine Months Ended
September September
30, 30,
2010 2009
--------- ---------
Cash Flow From Operating
Activities:
Net income (loss) $ 6,679 $ 47,900
Depreciation and amortization 43,236 20,917
Changes in assets and
liabilities and other (9,758) (8,983)
--------- ---------
Net cash provided by
operating activities $ 40,157 $ 59,834
========= =========
Capital expenditures $ 21,501 $ 23,207
Cash interest paid $ 2,431 $ 752
Cash taxes paid $ 16,811 $ 11,522
Sykes Enterprises, Incorporated
Business Outlook Reconciliation*
Exhibit 9
Business
Outlook
Fourth Quarter
2010
---------------
Adjusted Diluted Earnings Per Share $0.30 -- $0.33
Severance & Consulting Engagement Costs ($0.04)
Merger and Integration Costs, including
Impairment $0.00
Depreciation & Amortization of Property
& Equipment and Intangibles Write-Ups ($0.04)
---------------
Earnings (loss) Per Share $0.22 -- $0.25
Business
Outlook
Full Year
2010
---------------
Adjusted Diluted Earnings Per Share $1.05 -- $1.08
Severance & Consulting Engagement Costs ($0.31)
Merger and Integration Costs ($0.20)
Depreciation & Amortization of Property
& Equipment and Intangibles Write-Ups ($0.17)
---------------
Diluted Earnings Per Share $0.37 -- $0.40
This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: Sykes Enterprises, Inc.
CONTACT: Sykes Enterprises, Incorporated
Subhaash Kumar
(813) 233-7143