Convergys CEO Discusses Q3 2010 Results - Earnings Call Transcript
Convergys Corporation (
)
Q3 2010 Earnings Call
November 9, 2010 8:30 am ET
Executives
David Stein - VP of IR
Jeff Fox - President and CEO
Earl Shanks - CFO
Analysts
Kevin McVeigh - Macquarie
Timothy Wojs - Baird.
T.C. Robillard -Signal Hill Capital Group
Matt McCormack - BGB Securities
Shlomo Rosenbaum - Stifel, Nicolaus
Ashwin Shirvaikar - Citigroup
Gary Krishnan - Credit Suisse
Presentation
Operator
Compare to:
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Convergys Corporation Q2 2010 Earnings Call Transcript
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Convergys Corporation Q1 2010 Earnings Call Transcript
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Convergys Corporation Q3 2009 Earnings Call Transcript
Welcome to the Convergys Third Quarter 2010 Earnings Teleconference. At this time, all participants are in a listen-only mode. (Operator Instructions). Today’s conference is being recorded, if you have any objections, you may disconnect at this time.
Now, I would like to turn the call over to Mr. David Stein, Vice President of Investor Relations. You may begin, Sir.
David Stein
Thank you, Cathy and good morning. Welcome to Convergys’ third quarter 2010 earnings call and webcast presentation. This call is the property of Convergys.
Please note that slides accompanying today’s prepared remarks are available on the Convergys Investor Relations website under events and webcasts.
Today’s call contains forward-looking statements that address our expected future performance and that by their nature address matters that are uncertain.
Uncertainties that could adversely or positively affect our future results include the behavior of financial markets, the impact of regulation and regulatory, investigative and legal actions, strategic actions including acquisitions and dispositions, future integration of acquired businesses, future financial performance of major industries we serve, loss of a significant client or significant business from a client, difficulties in completing a contract or implementing its provisions, and other matters of national, regional and global scale.
These uncertainties may cause our actual future results to be materially different from those expressed in our forward-looking statements. Please refer to Convergys’ most recent filings with the SEC for additional information including risk factors.
We do not undertake to update our forward-looking statements as a result of new information or future events or developments.
Also, during the call, we’ll discuss non-GAAP financial measures including free cash flow and results from continuing operations, adjusted for impacts related to the sale of the HR Management business and charges related to restructuring the business and a transition of President and CEO.
Non-GAAP measures should not be construed as being more important than comparable GAAP measures.
Convergys’ management believes free cash flow and results from continuing operations adjusted for HR Management-related impacts and charges related to restructuring the business, and the transition of President and CEO provides the users of the financial statements with a more comprehensive understanding of the company’s underlying performance. A reconciliation of these non-GAAP measures is available in the news release and on the Convergys Investor Relations website
With me on the call today are Jeff Fox, our President and Chief Executive Officer and Earl Shanks, our Chief Financial Officer. Jeff will provide a summary of our operating results, Earl will cover our financial performance and business outlook then we’ll open the call to your questions.
Now, I’ll turn the call over to Jeff.
Jeff Fox
Good morning, everyone. Last time we spoke, I told you we were pushing hard to make sure our performance improved in the third quarter. I am very pleased to report that operationally we made solid progress executing our plan.
Sequentially volumes improved modestly which drove slightly higher revenue EBITDA improved to $76 million and on a non-GAAP basis EPS from continuing operations improved to $0.29 per share.
Our businesses continued to generate strong cash flow producing $34 million and we ended the quarter with net debt of approximately $37 million.
During the quarter we bought 2.4 million shares of our stock. We purchased the shares at an average price of $10.15 per share for a total cost of $25 million in the quarter. There are about 4.6 million shares that remain authorized for repurchase.
Overall, we continue to focus on our course strategies, simplify our operations and execute improvement plans across all of our businesses.
We have a terrific base of clients that entrust us everyday with our most variable asset, their customers. We are proud to served these market leaders in their industries and appreciate the investment they make in us. We are investing in capabilities of each of our businesses because we see opportunities to provide more value to our clients across all of these platforms.
In the quarter, we had several solid contract wins with new and existing clients. On the upside, we saw revenue stabilization in our Information Management and Customer Management businesses in the third quarter and we are working hard to sell our way through the still challenging economic environment.
We also continue to simplify our business in the quarter. We continued the process of streamlining our business and reducing G&A by moving functional responsibility into our Information Management and Customer Management business operations. Continuing to simplify our business will require taking additional costs actions in the fourth quarter.
In aggregate, the entire Convergys team is working hard to deliver more value to our clients, which we believe will yield further revenue and margin improvements overtime. Specifically, we expect to see continued margin improvement in the fourth quarter as Earl will discuss in a moment. I’ll now discuss in more detail third quarter results for each of the business segments.
As expected, Customer Management volumes stabilized in the third quarter. The sequential improvement in revenue reflects anticipated seasonality where several of our communications clients combined with the ramp of new programs in the quarter.
We also did complete certain projects during the quarter including the large short-term government project we mentioned on our last call. Customer Management profit improved sequentially in the quarter. This reflects the better revenue pattern compared to our second quarter and as always excellent work by our Customer Management team.
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