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Sykes Enterprises, Incorporated Reports Fourth-Quarter And Full-Year 2012 Financial Results

Business Outlook

  • Although the macro-economic environment is still somewhat mixed, the Company is encouraged by the upward demand trajectory going into 2013. This demand is driven by growth from both existing and new client programs that span the communications, financial services, technology and travel verticals across the Americas and EMEA regions. Concurrent with the demand, the anticipated reduction in end-of-life programs year-over-year is also providing further support to the Company's 2013 revenue outlook. As in prior years, with the combination of seasonality and the timing of ramps related to program wins, the Company expects consolidated second-half 2013 revenues to be slightly greater than the first-half. Because of the effects of seasonality coupled with merit wage increases, the cold winter in Canada (roadside program), capacity build out expenses, facility transfers and training for program ramps, operating margins in the first half and somewhat through the third quarter of 2013 are expected to disproportionately impacted;  
  • First quarter and full year 2013 business outlook reflects the unfavorable impact of foreign exchange rates, particularly a stronger Philippines Peso and Costa Rica Colon relative to the U.S. dollar;  
  • The combination of unfavorable foreign exchange rates, a higher effective tax rate and the higher interest and other expense is expected to unfavorably impact first quarter and full-year 2013 diluted earnings per share relative to first quarter and full-year 2012 actual results by approximately $0.07 and $0.28, respectively;  
  • The Company's revenues and earnings per share assumptions for the first quarter and full year 2013 are based on foreign exchange rates as of February 2013. 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 further impact, positive or negative, on revenues and both GAAP and non-GAAP earnings per share relative to the business outlook for the first quarter and full-year;  
  • The Company remains on track to completing the operational integration of Alpine Access by the second-half of 2013. The integration process is expected to result in long-term operating efficiencies;  
  • The Company plans to add approximately 6,000 seats on a gross basis in 2013. Approximately 75% of the seat count is expected to be added in the first half of 2013, with the remainder in the second half. A number of these seat additions are related to previously discussed facility transfers. Total seat count on a net basis for the full year, however, is expected to increase by approximately 1,000 seats;  
  • The Company anticipates interest and other expense of approximately $1.0 million for the first quarter and $4.0 million for the full year 2013. Included in the aforementioned amounts is net interest expense of $0.4 million and $1.6 million for the first quarter and full year 2013, respectively, related to the debt associated with the acquisition of Alpine Access. The increase in other expense relative to 2012 is driven primarily by forecasted foreign currency transaction losses due to a weakening U.S. dollar relative to certain functional currencies. These amounts exclude the potential impact of any future foreign exchange gains or losses in other expense; and  
  • The Company anticipates a higher effective tax rate for the first-quarter and full-year 2013 versus the same periods last year due principally to a discrete adjustment related to The American Taxpayer Relief Act of 2012 passed on January 2, 2013, which resulted in the Company incurring withholding taxes on its offshore cash movements.

Considering the above factors, the Company anticipates the following financial results for the three months ended March 31, 2013: 
  • Revenues in the range of $298.0 million to $302.0 million
  • Effective tax rate of approximately 41%; on a non-GAAP basis, an effective tax rate of approximately 37%
  • Fully diluted share count of approximately 43.1 million
  • Diluted earnings per share of approximately $0.10 to $0.12
  • *Non-GAAP diluted earnings per share in the range of $0.18 to $0.20
  • Capital expenditures in the range of $10.0 million to $15.0 million    

For the twelve months ended December 31, 2013, the Company anticipates the following financial results: 
  • Revenues in the range of $1,220.0 million to $1,235.0 million
  • Effective tax rate of approximately 25%; on a non-GAAP basis, an effective tax rate of approximately 27%
  • Fully diluted share count of approximately 43.1 million
  • Diluted earnings per share of approximately $0.87 to $0.97
  • *Non-GAAP diluted earnings per share in the range of $1.15 to $1.25
  • Capital expenditures in the range of $55.0 million to $65.0 million    

*See "Business Outlook Reconciliation" (Exhibit 10) for First Quarter and Full-Year 2013 non-GAAP diluted earnings per share reconciliation.

Conference Call

The Company will conduct a conference call regarding the content of this release tomorrow, February 26, 2013, 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 . A replay will be available at this location for two weeks. This press release is also posted on the SYKES website at

Non-GAAP Financial Measures

Non-GAAP income from continuing operations, non-GAAP operating margins, non-GAAP tax rate, non-GAAP income from continuing operations, net of taxes, per diluted share and non-GAAP income from continuing operations by segment are important indicators of performance as these non-GAAP financial measures assist readers in further understanding the Company's results from operations and how management evaluates and measures such performance. These non-GAAP indicators of performance are not measures of financial performance under U.S. Generally Accepted Accounting Principles ("GAAP") and should not be considered a substitute for measures determined in accordance with GAAP. Refer to the exhibits in the release for detailed reconciliations.

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