Stream Global Svcs (AMEX:OOO)
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Revenues of $136 million and Gross Profit of 43%
BOSTON, May 7 /PRNewswire-FirstCall/ -- Stream Global Services, Inc (AMEX: OOO), a leading provider of customer relationship management and other business process outsourcing services ("Stream"), today reported consolidated financial results for its 2009 first quarter.
GAAP Consolidated Results
On July 31, 2008, Stream (formerly known as Global BPO Services Corp.), a development stage company completed its acquisition of Stream Holdings Corporation ("SHC")(1).
On a GAAP basis, revenue for the three months ended March 31, 2009 was $135.6 million as compared to zero in the three months ended March 31, 2008.
GAAP net income was $1.7 million for the three months ended March 31, 2009 as compared $1.2 million for the three months ended March 31, 2008.
Pro Forma Combined Consolidated Results
On a pro forma combined consolidated basis, the Company posted revenue for the three months ended March 31, 2009 of $135.6 million compared to $140.4 million in the three months ended March 31, 2008. Revenue for the three months ended March 31, 2008 included approximately $15 million from customers that were lost prior to the acquisition of SHC.
Stream's gross profit as a percentage of revenue increased to 43% in the three months ended March 31, 2009 compared to 35% in the three months ended March 31, 2008.
For the three months ended March 31, 2009, adjusted pro forma earnings before interest taxes depreciation and amortization ("EBITDA") increased 105% to $15.9 million compared to $7.7 million in the year-earlier period. Adjusted EBITDA as a percentage of revenue in Q1 2009 was 11.7% as compared to 5.5% in Q1 2008.
2009 Accomplishments
Scott Murray, Chairman and Chief Executive Officer of Stream said; "We are very pleased with our performance during the first quarter of 2009. Our team has made a great deal of progress in building a strong and sustainable services organization. We have been successful in closing new logo business with top tier communications, computing and software clients that we expect will position the company for long-term growth. We expect much of this new business to ramp during the second quarter of 2009, which we expect will result in higher training costs and lower productivity rates during the second quarter of 2009, hence lower gross profit margins and EBITDA than the first quarter. Typically our second quarter revenues are also seasonally lower than the first quarter."
Murray concluded, "During the remainder of the 2009 year, we expect to open new service centers in the Philippines, Egypt, Brazil and Tunisia in order to provide a comprehensive global service provider forum for our global clients where ever they need us to be for their customers and to expand our service offering into even broader BPO services to meet the needs for our global clients."
For further information please contact: Stephen Farrell, Executive Vice President & Chief Financial Officer at 781-304-1800 or
About Stream Global Services, Inc. Stream Global Services, Inc. is a leading provider of integrated business process outsourcing services such as technical support, customer retention and recovery services, warranty support, customer care, sales services, credit and collections, subscription management and other professional services for Fortune 1,000 clients in the technology software sectors. Stream has more than 17,000 technical and customer care professionals and other employees across 35 service solution centers in 18 countries.
Safe Harbor. This press release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including forward-looking statements regarding our business expectations and objectives. These statements are neither promises nor guarantees, but involve risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements, including, without limitation, risks relating to our ability to maintain and win additional client business, continue to maintain our operating performance and margin expansion, continue to have sufficient capital to grow and maintain our business, retain our management team and effectively operate a global franchise across multiple jurisdictions plus other risks detailed in our filings with the SEC, including those discussed in the Company's Annual report filed with the SEC on Form 10-K for the year ended December 31, 2008.
Stream does not intend, and disclaims any obligation, to update any forward-looking information contained in this release, even if its estimates change.
The required reconciliations and other disclosures for all non-GAAP measures used by the Company are set forth in a schedule attached to this press release and in the Current Report on Form 8-K furnished to the SEC on the date hereof.
References to the financial information included in this news release reflect rounded numbers and should be considered approximate values.
Non-GAAP Financial Information. This release contains non-GAAP financial measures. These non-GAAP financial measures, which are used as measures of Stream's performance or liquidity, should be considered in addition to, not as a substitute for, measures of Stream's financial performance or liquidity prepared in accordance with GAAP. Non-GAAP financial measures may be defined differently from time to time and may be defined differently than similar terms used by other companies, and accordingly, care should be exercised in understanding how SGSI defines non-GAAP financial measures in this release.
Where specified in the accompanying schedules for various periods entitled "Reconciliation of GAAP to Non-GAAP Information," certain items noted on each such specific schedule are excluded from the non-GAAP financial measures.
Stream's management uses the non-GAAP financial measures in the accompanying schedules to gain an understanding of Stream's comparative operating performance (when comparing such results with previous periods or forecasts) and future prospects and excludes certain items from its internal financial statements for purposes of its internal budgets and financial goals. These non-GAAP financial measures are used by Stream's management in their financial and operating decision-making because management believes they reflect Stream's ongoing business in a manner that allows meaningful period-to-period comparisons. Stream's management believes that these non-GAAP financial measures provide useful information to investors and others in (a) understanding and evaluating Stream's current operating performance and future prospects in the same manner as management does, if they so choose, and (b) in comparing in a consistent manner Stream's current financial results with its past financial results.
All of the foregoing non-GAAP financial measures have limitations. Specifically, the non-GAAP financial measures that exclude certain items do not include all items of income and expense that affect Stream's operations. Further, these non-GAAP financial measures are not prepared in accordance with GAAP, may not be comparable to non-GAAP financial measures used by other companies and do not reflect any benefit that such items may confer on Stream. Management compensates for these limitations by also considering Stream's financial results in accordance with GAAP.
(1) On July 31, 2008, Stream Global Services, Inc. ("SGSI") (formerly known as Global BPO Services Corp.) completed its acquisition of Stream Holdings Corporation ("SHC"). These financial results also include non-GAAP pro forma combined results of operations for SGSI and SHC as if they had been combined since January 1, 2008. The pro forma combined consolidated condensed statements of operations are presented because management believes they reflect Stream's ongoing business in a manner that allows meaningful period-to-period comparisons. Prior to July 31, 2008, SGSI was a blank check company formed for the purpose of seeking to acquire an operating company. Accordingly, we had no revenues prior to July 31, 2008 because we were in the development stage.
STREAM GLOBAL SERVICES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended March 31,
----------------------------
2009 2008
---- ----
Revenue $135,614 $-
Direct cost of revenue 78,613 -
------ --
Gross profit 57,001 -
------ --
Operating expenses:
Selling, general and administrative expenses 43,502 263
Depreciation expense 2,479 4
Amortization expense 4,186 -
----- --
Income (loss) from operations 6,834 (267)
Interest expense (income) and
other financial costs 2,050 (2,139)
----- -------
Income (loss) before provision
for income taxes 4,784 1,872
Provision for income taxes 3,086 670
----- ---
Net income (loss) $1,698 $1,202
Preferred stock beneficial conversion
feature, accretion and dividends 1,518 30
----- --
Net income (loss) available to common
shareholders: 180 1,172
=== =====
Basic and Diluted income (loss) per share $0.02 $0.04
===== =====
Shares used in computing per share data:
Basic and Diluted shares 9,456 29,688
Note: Prior to July 31, 2008 SGS was a development stage company and
had no operations.
STREAM GLOBAL SERVICES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(unaudited)
(in thousands)
March 31, December 31,
2009 2008
Assets
Current assets:
Cash and cash equivalents $13,373 $10,660
Accounts receivable, net 109,736 109,385
Other current assets 29,950 26,811
------ ------
Total current assets 153,059 146,856
Equipment and fixtures, net 40,503 41,634
Goodwill, intangible assets, and
other long-term assets 142,891 141,455
------- -------
Total assets $336,453 $329,945
======== ========
Liabilities and
Stockholders' Equity
Current liabilities $78,383 $79,392
Long-term debt 71,260 63,624
Capital lease obligations 4,968 5,484
Deferred income taxes 19,475 17,396
Other long-term liabilities 15,757 16,387
------ ------
Total liabilities 189,843 182,283
Stockholders equity and
preferred stock * 146,610 147,662
------- -------
Total liabilities and
stockholders' equity $336,453 $329,945
======== ========
* March 31, 2009 and December 31, 2008 includes $703 and $145,911 of
redeemable convertible preferred stock, respectively.
STREAM GLOBAL SERVICES, INC.
PRO FORMA COMBINED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands)
Three Months Ended March 31,
----------------------------
2009 2008
---- ----
(Non-GAAP Proforma)
----------------------
Revenue $135,614 $140,372
Direct costs of revenue 77,423 90,687
------ ------
Gross profit 58,191 49,685
------ ------
Gross profit as a percentage of revenue 43% 35%
Operating expenses:
Selling, general and administrative expenses 42,822 41,955
Stock-based compensation expense 204 145
Depreciation expense 2,479 1,438
Amortization expense 4,186 4,095
----- -----
49,691 47,633
------ ------
Income (loss) from operations 8,500 2,052
Interest expense (income) and other
financial costs 3,716 1,847
----- -----
Income (loss) before provision for
income taxes 4,784 205
Provision for income taxes 3,086 2,933
----- -----
Net income (loss) $1,698 $(2,728)
===== ======
Adjusted EBITDA
Income (loss) from operations $8,500 $2,052
Depreciation and amortization expense 6,665 5,533
Restructuring severance expense 487 -
Stock-based compensation expense 204 145
------- ------
Adjusted EBITDA $15,856 $7,730
======= ======
EBITDA as a percentage of revenue 11.7% 5.5%
------- ------
STREAM GLOBAL SERVICES, INC.
RECONCILIATION OF GAAP TO NON-GAAP PRO FORMA INFORMATION
(unaudited)
(in thousands)
Three Months Ended March 31,
----------------------------
2009 2008
---- ----
Net Income (loss) $1,698 $1,202
Add (deduct) items to reconcile to
non-GAAP adjusted EBITDA:
Provision for income taxes 3,086 670
Pro forma depreciation and amortization 6,665 5,533
Interest expense (income) and financial
costs 2,050 (2,139)
Realized foreign exchange gains 1,666 314
Restructuring severance 487 -
Stock-based compensation expenses 204 145
Operating income (loss) from SHC for the
period prior to the acquisition of
July 31, 2008, excluding depreciation
and amortization - 2,005
-- -----
Pro Forma EBITDA $15,856 $7,730
======= ======
Direct cost of revenue $78,613 $90,911
Add (deduct) items to reconcile to
non-GAAP adjusted EBITDA:
Foreign exchange gains (1,190) (224)
----- ---
Adjusted direct cost of revenue $77,423 $90,687
======= =======
Gross profit $57,001 $49,461
Add (deduct) items to reconcile
to non-GAAP adjusted EBITDA:
Foreign exchange gains 1,190 224
----- ---
Adjusted gross profit $58,191 $49,685
======= =======
Selling, general and administrative
expenses $43,502 $42,190
Add (deduct) items to reconcile to
non-GAAP adjusted EBITDA:
Stock-based compensation (204) (145)
Foreign exchange gains (476) (90)
--- --
Selling, general and administrative
expenses $42,822 $41,955
======= =======
Income (loss) from operations $6,834 $1,738
Add (deduct) items to reconcile to
non-GAAP adjusted EBITDA:
Foreign exchange gains 1,666 314
----- ---
Income (loss) from operations $8,500 $2,052
====== ======
Interest expense (income) and
other financial costs $2,050 $1,533
Add (deduct) items to reconcile to
non-GAAP adjusted EBITDA:
Foreign exchange gains 1,666 314
----- ---
Interest expense (income) and
other financial costs $3,716 $1,847
====== ======
STREAM GLOBAL SERVICES, INC.
STATEMENT OF OUTSTANDING COMMON STOCK EQUIVALENTS AND WARRANTS
AS OF MARCH 31, 2009
(unaudited)
(in thousands)
Shares or warrants Percentage
outstanding
-------------------- ----------
Common share equivalents
outstanding:
Common shares held by founding
stockholders subject to resale
restrictions 7,813 22.41%
Common shares held by employees
subject to resale restriction 81 0.23%
Common shares held by institutional
Investor 1,250 3.59%
Common shares held by other public
investors 308 0.88%
----- -----
Common shares outstanding 9,452 27.11%
Common share equivalents from
conversion of 150,001 preferred
shares held by Ares at $6.00 per
share conversion price 25,415 72.89%
------ -----
Total common share equivalents
outstanding 34,867 100.00%
Warrants and employee stock
options outstanding:
Publicly held warrants outstanding,
exercisable at $6.00 per warrant into
common shares expiring in 2011 31,250
Ares held warrants outstanding,
exercisable at $6.00 per warrant into
common shares expiring in 2018 7,500
Employee stock options, exercisable at
$6.00 per share and not yet vested 3,368
DATASOURCE: Stream Global Services, Inc.
CONTACT: Stephen Farrell, Executive Vice President & Chief Financial
Officer of Stream Global Services, Inc., +1-781-304-1800,
Web Site: http://www.stream.com/