Florida | 0-28274 | 56-1383460 | ||
(State or other jurisdiction | (Commission File Number) | (IRS Employer Identification | ||
of incorporation | No. | |||
400 N. Ashley Drive, Suite 2800, Tampa, Florida | 33602 | |
(Address of principal executive offices) | (Zip Code) |
Item 2.02. Results of Operations and Financial Condition | ||||||||
Item 9.01. Financial Statements and Exhibits | ||||||||
SIGNATURES | ||||||||
EXHIBIT INDEX | ||||||||
EX-99.1 |
(c) | The following exhibit is included with this Report: |
-2-
SYKES ENTERPRISES INCORPORATED |
||||
By: | /s/ W. Michael Kipphut | |||
Executive Vice President and
Chief Financial Officer |
||||
-3-
FOR IMMEDIATE RELEASE | MAY 2, 2011 |
|
First quarter 2011 revenues of $310.2 million increased $43.6 million, or
16.3%, from $266.6 million in the comparable quarter last year; the ICT
acquisition contributed $100.3 million to first quarter 2011 revenues compared
to $63.7 million in the same period last year
|
||
| Excluding the ICT acquisition and on a constant currency basis, first
quarter 2011 revenues increased 2.6% comparably driven principally by growth
within the financial services and technology verticals |
||
| First quarter 2011 operating margin was 5.0% versus a negative 1.9% in the
same period last year; on an adjusted basis, a non-GAAP measure (see
explanation on Page 6 and see Exhibit 3 for reconciliation), first quarter 2011
operating margin was 6.3% versus 6.8% in the same period last year
|
||
| Excluding the ICT acquisition, first quarter 2011 operating margins declined
330 basis points (4.4% vs. 7.7%) comparably due to a weaker U.S. dollar
relative to certain offshore currencies driving direct and indirect costs,
anticipated end-of-life of certain customer contact management programs and an
increase in personnel costs
|
||
| First quarter 2011 diluted earnings per share from continuing operations
were $0.28 versus a loss from continuing operations of $0.18 in the comparable
quarter last year and versus the Companys February 2011 business outlook
diluted earnings per share range of $0.20 to $0.23; relative to the business
outlook per share range, the increase in first quarter 2011 diluted earnings
per share was due principally to higher-than-anticipated revenues and a lower
tax rate driven largely by a $2.6 million discrete adjustment related to a
favorable resolution of a tax audit
|
1
|
On an adjusted basis, first quarter 2011 diluted earnings per share were
$0.35 compared to an adjusted first quarter 2010 diluted earnings per share of
$0.21; relative to the Companys February 2011 business outlook range of $0.25
to $0.28, the increase in first quarter 2011 adjusted diluted earnings per
share was due principally to the above mentioned factors; assuming a tax rate
of 25%, which was the midpoint of the forecasted tax rate range of 24% to 26%
projected in the Companys February 2011 business outlook, adjusted diluted
earnings per share in the first quarter of 2011 would have been $0.29 |
||
| First quarter 2010 loss per share from discontinued operations, net of
taxes, was $0.03 due principally to a loss in the Companys Argentina
operations, the disposal of which was completed in December 2010 |
2
3
| The Company is increasing its full-year revenue and diluted earnings per
share outlook to reflect the better-than-expected performance in the first quarter of 2011
and sustained improvement in demand trends, more-than-offsetting the anticipated impact of
end-of-life of certain customer contact management programs within both the Americas and
EMEA regions and the associated severance expenses which are expected to disproportionately
impact the second quarter. The Company expects little change in the overall drivers of
demand among them the financial services, technology and healthcare verticals as
discussed in its February 2011 business outlook;
|
||
| The Companys revenues and adjusted earnings per share assumptions are based on foreign
exchange rates as of April 2011. 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 second quarter and full-year;
|
||
| The Company remains on track to add the previously announced 1,800 seats on a gross
basis for the full-year, split roughly evenly over the first and second half of the year.
Similarly, the ramp costs associated with the seats additions are expected to be split
roughly evenly between the first and second half of the year. The Company expects to add
approximately
550 seats on a gross basis in the second quarter, in addition to the 350 seats that were
added in the first quarter; |
||
| The Company received a GST (Goods and Services Tax) refund from the Canadian government
for $1.2 million in April, which is expected to favorably impact diluted earnings per share
by approximately $0.02 on a tax-adjusted basis for the second quarter and full year 2011; |
||
| The Company anticipates interest and other expense of approximately $0.2 million for the
second quarter and $2.4 million for the full year 2011, which reflects the $1.6 million in
interest and other expense incurred in the first quarter and the $0.2 million per quarter
of net interest expense related to commitment fees and deferred financing costs associated
with its credit facility, which are partially offset by lower interest income resulting
from lower interest rates on cash balances. The aforementioned amounts exclude the
potential impact of any future foreign exchange gains or losses in other expense; and |
||
| Relative to its February 2011 business outlook, the Company anticipates a lower
effective tax rate for the second-quarter and full-year 2011 due to a combination of the
first quarter discrete adjustment and a shift in the geographic mix of earnings to lower
tax rate jurisdictions. |
4
| Revenues in the range of $305.0 million to $310.0 million | |
| Tax rate of approximately 18%; on an adjusted basis, a tax rate of approximately 19% | |
| Fully diluted share count of approximately 46.4 million | |
| *Diluted earnings per share of approximately $0.26 to $0.29 | |
| Adjusted diluted earnings per share in the range of $0.31 to $0.34 | |
| Capital expenditures in the range of $12.0 million to $14.0 million |
| Revenues in the range of $1,225.0 million to $1,240.0 million | |
| Tax rate of approximately 19%; on an adjusted basis, a tax rate of approximately 20% | |
| Fully diluted share count of approximately 46.5 million | |
| *Diluted earnings per share of approximately $1.21 to $1.31 | |
| Adjusted diluted earnings per share in the range of $1.43 to $1.53 | |
| Capital expenditures in the range of $38.0 million to $42.0 million |
5
6
Three Months | ||||||||
SYKES + ICT | SYKES + ICT* | |||||||
March 31, | March 31, | |||||||
2011 | 2010 | |||||||
Revenues |
$ | 310,156 | $ | 266,582 | ||||
Direct salaries and related costs |
(203,689 | ) | (171,650 | ) | ||||
General and administrative |
(90,375 | ) | (100,023 | ) | ||||
Impairment of long-lived assets |
(726 | ) | - | |||||
Income (loss) from continuing operations |
15,366 | (5,091 | ) | |||||
Other income (expense), net |
(1,615 | ) | (3,543 | ) | ||||
Income (loss) from continuing operations before taxes |
13,751 | (8,634 | ) | |||||
Income taxes |
(573 | ) | 467 | |||||
Income (loss) from continuing operations, net of taxes |
13,178 | (8,167 | ) | |||||
Loss from discontinued operations |
- | (1,346 | ) | |||||
Net Income (loss) |
$ | 13,178 | $ | (9,513 | ) | |||
Net Income (loss) per share: |
||||||||
Basic: |
||||||||
Continuing operations |
$ | 0.28 | $ | (0.18 | ) | |||
Discontinued operations |
0.00 | (0.03 | ) | |||||
Net Income (loss) per share |
$ | 0.28 | $ | (0.21 | ) | |||
Diluted: |
||||||||
Continuing operations |
$ | 0.28 | $ | (0.18 | ) | |||
Discontinued operations |
0.00 | (0.03 | ) | |||||
Net Income (loss) per share |
$ | 0.28 | $ | (0.21 | ) | |||
Weighted average shares: |
||||||||
Basic |
46,409 | 44,590 | ||||||
Diluted |
46,577 | 44,766 | ||||||
* | Three month of SYKES financial data and only two-months of ICT financial data in first quarter 2010 due to the February 2nd, 2010 closing of the ICT acquisition. |
7
Three Months | ||||||||
SYKES + ICT | SYKES + ICT* | |||||||
March 31, | March 31, | |||||||
2011 | 2010 | |||||||
Revenues: |
||||||||
Americas |
$ | 246,535 | $ | 206,902 | ||||
EMEA |
63,621 | 59,680 | ||||||
Total |
$ | 310,156 | $ | 266,582 | ||||
Operating Income (loss): |
||||||||
Americas |
$ | 27,753 | $ | 27,311 | ||||
EMEA |
519 | (705 | ) | |||||
Corporate G&A expenses |
(12,180 | ) | (31,697 | ) | ||||
Impairment of long-lived assets |
(726 | ) | - | |||||
Income (loss) from continuing operations |
15,366 | (5,091 | ) | |||||
Other income (expense), net |
(1,615 | ) | (3,543 | ) | ||||
(Provision) benefit for income taxes |
(573 | ) | 467 | |||||
Income (loss) from continuing operations, net of taxes |
$ | 13,178 | $ | (8,167 | ) | |||
* | Three months of SYKES financial data and only two-months of ICT financial data in first quarter 2010 due to the February 2nd, 2010 closing of the ICT acquisition. |
8
Three Months Ended | ||||||||||||||||||||||||
March 31, 2011 | ||||||||||||||||||||||||
Acquisition related Costs | ||||||||||||||||||||||||
ICT | ||||||||||||||||||||||||
ICT | Depreciation and | ICT | ||||||||||||||||||||||
Severance | Amortization of | Merger | ||||||||||||||||||||||
SYKES + ICT | & Consulting | Property & Equipment and | & Integration | SYKES + ICT | ||||||||||||||||||||
Reported | Engagement | Intangibles Write-Ups | Costs | Other | Adjusted | |||||||||||||||||||
Revenues |
$ | 310,156 | $ | 310,156 | ||||||||||||||||||||
Direct salaries and related costs |
(203,689 | ) | (203,689 | ) | ||||||||||||||||||||
General and administrative |
(90,375 | ) | 346 | 3,058 | 13 | (86,958 | ) | |||||||||||||||||
Impairment of long-lived assets |
(726 | ) | 726 | | ||||||||||||||||||||
Income from operations |
15,366 | 346 | 3,058 | 739 | 19,509 | |||||||||||||||||||
Other (expense), net |
(1,615 | ) | (1,615 | ) | ||||||||||||||||||||
Income from continuing operations before taxes |
13,751 | 346 | 3,058 | 739 | 17,894 | |||||||||||||||||||
(Provision) for income taxes |
(573 | ) | (85 | ) | (752 | ) | (182 | ) | (1,592 | ) | ||||||||||||||
Income from continuing operations, net of taxes |
13,178 | 261 | 2,306 | 557 | | $ | 16,302 | |||||||||||||||||
Income from continuing operations, net of taxes per basic share |
$ | 0.28 | $ | 0.01 | $ | 0.05 | $ | 0.01 | $ | | $ | 0.35 | ||||||||||||
Shares outstanding, basic |
46,409 | 46,409 | 46,409 | 46,409 | 46,409 | 46,409 | ||||||||||||||||||
Income from continuing operations, net of taxes per diluted share |
$ | 0.28 | $ | 0.01 | $ | 0.05 | $ | 0.01 | $ | | $ | 0.35 | ||||||||||||
Shares outstanding, diluted |
46,577 | 46,577 | 46,577 | 46,577 | 46,577 | 46,577 |
Acquisition related Costs | ||||||||||||||||||||||||
ICT | ||||||||||||||||||||||||
ICT | Depreciation and | ICT | ||||||||||||||||||||||
Severance | Amortization of | Merger | ||||||||||||||||||||||
SYKES + ICT | & Consulting | Property & Equipment and | & Integration | SYKES + ICT | ||||||||||||||||||||
Reported | Engagement | Intangibles Write-Ups | Costs | Other | Adjusted | |||||||||||||||||||
Revenues: |
||||||||||||||||||||||||
Americas |
$ | 246,535 | $ | 246,535 | ||||||||||||||||||||
EMEA |
63,621 | 63,621 | ||||||||||||||||||||||
Total |
$ | 310,156 | $ | | $ | | $ | | $ | 310,156 | ||||||||||||||
Operating Income: |
||||||||||||||||||||||||
Americas |
$ | 27,027 | 220 | 3,058 | 726 | $ | 31,031 | |||||||||||||||||
EMEA |
519 | 519 | ||||||||||||||||||||||
Corporate G&A expenses |
(12,180 | ) | 126 | 13 | (12,041 | ) | ||||||||||||||||||
Income from continuing operations |
15,366 | 346 | 3,058 | 739 | 19,509 | |||||||||||||||||||
Other (expense), net |
(1,615 | ) | (1,615 | ) | ||||||||||||||||||||
(Provision) for income taxes |
(573 | ) | (85 | ) | (752 | ) | (182 | ) | | (1,592 | ) | |||||||||||||
Income from continuing operations, net of taxes |
$ | 13,178 | $ | 261 | $ | 2,306 | $ | 557 | $ | | $ | 16,302 | ||||||||||||
9
Three Months Ended | ||||||||
SYKES + ICT | SYKES + ICT | |||||||
Adjusted | Adjusted | |||||||
March 31, | December 31, | |||||||
2011 | 2010 | |||||||
Revenues |
$ | 310,156 | $ | 309,146 | ||||
Direct salaries and related costs |
(203,689 | ) | (200,149 | ) | ||||
General and administrative |
(86,958 | ) | (86,193 | ) | ||||
Income from continuing operations |
19,509 | 22,804 | ||||||
Other (expense), net |
(1,615 | ) | (355 | ) | ||||
Income from continuing operations before taxes |
17,894 | 22,449 | ||||||
(Provision) for income taxes |
(1,592 | ) | (8,078 | ) | ||||
Income from continuing operations, net of taxes |
$ | 16,302 | $ | 14,371 | ||||
Income from continuing operations, net of taxes per basic share |
$ | 0.35 | $ | 0.31 | ||||
Shares outstanding, basic |
46,409 | 46,451 | ||||||
Income from continuing operations, net of taxes per diluted share |
$ | 0.35 | $ | 0.31 | ||||
Shares outstanding, diluted |
46,577 | 46,563 | ||||||
Three Months Ended | ||||||||
SYKES + ICT | SYKES + ICT | |||||||
Adjusted | Adjusted | |||||||
March 31, | December 31, | |||||||
2011 | 2010 | |||||||
Revenues: |
||||||||
Americas |
$ | 246,535 | $ | 250,759 | ||||
EMEA |
63,621 | 58,387 | ||||||
Total |
$ | 310,156 | $ | 309,146 | ||||
Operating Income: |
||||||||
Americas |
$ | 31,031 | $ | 35,589 | ||||
EMEA |
519 | (2,567 | ) | |||||
Corporate G&A expenses |
(12,041 | ) | (10,218 | ) | ||||
Income from continuing operations |
19,509 | 22,804 | ||||||
Other (expense), net |
(1,615 | ) | (355 | ) | ||||
(Provision) for income taxes |
(1,592 | ) | (8,078 | ) | ||||
Income from continuing operations, net of taxes |
$ | 16,302 | $ | 14,371 | ||||
10
March 31, | December 31, | |||||||
2011 | 2010 | |||||||
Assets: |
||||||||
Current assets |
$ | 494,441 | $ | 472,288 | ||||
Property and equipment, net |
106,386 | 113,703 | ||||||
Goodwill & Intangibles, net |
175,351 | 175,055 | ||||||
Other noncurrent assets |
35,506 | 33,554 | ||||||
Total assets |
$ | 811,684 | $ | 794,600 | ||||
Liabilities & Shareholders Equity: |
||||||||
Current liabilities |
$ | 163,523 | $ | 158,730 | ||||
Noncurrent liabilities |
50,698 | 52,675 | ||||||
Shareholders equity |
597,463 | 583,195 | ||||||
Total liabilities and shareholders equity |
$ | 811,684 | $ | 794,600 | ||||
Q1 2011 | Q1 2010* | |||||||
Geographic Mix (% of Total Revenues): |
||||||||
Americas (1) |
79.5 | % | 77.6 | % | ||||
Europe, Middle East & Africa (EMEA) |
20.5 | % | 22.4 | % | ||||
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. |
Q1 2011 | Q1 2010* | |||||||
Vertical Industry Mix (% of Total Revenues): |
||||||||
Communications |
32 | % | 35 | % | ||||
Financial Services |
27 | % | 21 | % | ||||
Technology / Consumer |
20 | % | 23 | % | ||||
Transportation & Leisure |
6 | % | 8 | % | ||||
Healthcare |
6 | % | 7 | % | ||||
Other |
9 | % | 6 | % | ||||
Total: |
100 | % | 100 | % |
* | Three months of SYKES financial data and only two-months of ICT financial data in first quarter 2010 due to the February 2nd, 2010 closing of the ICT acquisition. |
11
Three Months Ended | ||||||||
March 31, | March 31,* | |||||||
2011 | 2010 | |||||||
Cash Flow From Operating Activities: |
||||||||
Net income (loss) |
$ | 13,178 | $ | (9,513 | ) | |||
Depreciation and amortization |
$ | 14,232 | $ | 12,763 | ||||
Changes in assets and liabilities and other |
(7,381 | ) | (20,050 | ) | ||||
Net cash provided by (used for) operating activities |
$ | 20,029 | $ | (16,800 | ) | |||
Capital expenditures |
$ | 6,175 | $ | 6,128 | ||||
Cash interest paid |
$ | 261 | $ | 1,092 | ||||
Cash taxes paid |
$ | 6,821 | $ | 6,745 |
* | Three months of SYKES financial data and only two-months of ICT financial data in first quarter 2010 due to the February 2nd, 2010 closing of the ICT acquisition. |
12
Business Outlook | ||||
Second Quarter | ||||
2011 | ||||
Adjusted Diluted Earnings Per Share |
$0.31 - $0.34 | |||
Severance & Consulting Engagement Costs |
- | |||
Merger and Integration Costs, including Impairment |
- | |||
Depreciation & Amortization of Property & Equipment and Intangibles Write-Ups |
($0.05) | |||
Earnings (loss) Per Share |
$0.26 - $0.29 |
Business Outlook | ||||
Full Year | ||||
2011 | ||||
Adjusted Diluted Earnings Per Share |
$1.43 - $1.53 | |||
Severance & Consulting Engagement Costs |
($0.01) | |||
Merger and Integration Costs |
($0.01) | |||
Depreciation & Amortization of Property & Equipment and Intangibles Write-Ups |
($0.20) | |||
Diluted Earnings Per Share |
$1.21 - $1.31 |
13
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