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Stream Global Services Announces Financial Results For Fourth Quarter And Year Ended December 31, 2012

Stocks in this article: SGS

Stream Global Services, Inc., a leading global business process outsource (BPO) service provider specializing in customer relationship management, including technical support, customer care and sales programs for Fortune 1000 companies, today announced consolidated financial results for the three months and year ended December 31, 2012.

CEO Commentary

Kathryn Marinello, Chairman and Chief Executive Officer of Stream, said, “We are very pleased to report a 14% increase in Adjusted EBITDA for the year ended December 31, 2012 over the comparable period in 2011. We are thrilled to have achieved over $100 million in Adjusted EBITDA in 2012 with improving growth rates in revenue and our operating metrics.”

Fourth Quarter 2012 Financial Highlights

  • Revenue for the quarter ended December 31, 2012 was $236 million, an increase of $16 million, or 7%, from the same period in 2011. The increase is the result of additional volume from existing clients in offshore locations partially offset by fluctuations in currency exchange rates (primarily the Euro) of approximately $1 million.
  • Gross profit increased approximately $4 million, or 4%, from the fourth quarter of 2011. The gross profit percentage was 41.9% and 43.0% for the fourth quarter of 2012 and 2011, respectively. The change was driven by increased agent training to support the growth in revenue.
  • Income from operations excluding severance, restructuring and other charges, net was $16 million for both of the quarters ended December 31, 2012 and 2011.
  • Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) were $34 million for the fourth quarter of 2012 and $31 million for the fourth quarter of 2011. This is the eighth straight quarter of year over year growth in adjusted EBITDA.
  • Net income was $4 million for both of the three months ended December 31, 2012 and 2011.
  • Days sales outstanding improved 5 days from 68 days at December 31, 2011 to 63 days at December 31, 2012 driven primarily by an improved ability to bill timely and collect funds.
  • Cash flow provided by operating activities for the fourth quarter 2012 was $19 million, an increase of $16 million from cash flow provided by operating activities in the fourth quarter of 2011, reflecting our improved operating results. Free cash flow (operating cash flow less additions to equipment and fixtures and new capital lease financing) for the fourth quarter of 2012 was an inflow of $5 million, an increase of $17 million from the outflow of $12 million for the quarter ended December 31, 2011. Spending on capital equipment decreased $2 million in the three months ended December 31, 2012 compared to the same period in 2011 as the result of the completion of the first portion of our data center consolidation.

Full Year 2012 Financial Highlights

  • Revenue for the year ended December 31, 2012 was $860 million, an increase of $13 million, or 2%, from the same period in 2011. The increase is principally due to increased volume in offshore locations, partially offset by fluctuations in currency exchange rates (primarily the Euro) of approximately $14 million. On a foreign exchange neutral basis, revenue increased by 4%.
  • Gross profit increased approximately $6 million, or 2%, in 2012 compared to 2011. The gross profit percentage was 41.6% for both of the years ended December 31, 2012 and 2011.
  • Income from operations excluding severance, restructuring and other charges, net was $38 million for the year ended December 31, 2012, an increase of $12 million from the comparable $26 million in the year ended December 31, 2011. This improvement was driven by revenue growth and operational improvements that continue to improve the results of the business.
  • Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) were $101 million for the year ended December 31, 2012, an increase of $12 million, or 14%, from $89 million for the year ended December 31, 2011.
  • Net loss was $13 million for the year ended December 31, 2012 compared to a net loss of $24 million for the year ended December 31, 2011.
  • Cash flow provided by operating activities for the year ended December 31, 2012 was $52 million, an increase of $2 million from the prior year period. Free cash flow (operating cash flow less additions to equipment and fixtures and new capital lease financing) for the year ended December 31, 2012 was an outflow of $3 million, a decrease of $2 million from the year ended December 31, 2011. Spending on capital equipment increased $4 million for the year ended December 31, 2012 compared to the same period in 2011, primarily driven by the consolidation of our North American data centers.

Adjusted EBITDA is a non-GAAP financial measure. For more information, please see the disclosure below under the heading “Non-GAAP Financial Information” and the reconciliation tables at the end of this press release.

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