Go BackICT GROUP reports fourth quarter and full year 2007 results
ICT GROUP INC reported results for the fourth quarter and year ended December 31st 2007.
Fourth Quarter 2007 Results:
Revenue for the fourth quarter was $112.5 million compared to $117.2 million for the fourth quarter of 2006. The net loss for the 2007 fourth quarter was $3.0 million, or $0.19 per diluted share, which included restructuring charges of $3.0 million and other charges of $1.0 million. Other charges included amounts to settle a client claim, previously disclosed in the Company's quarterly report for the 2007 third quarter, the writeoff of M&A advisory costs, and additional exit costs. Excluding the impact of these items, ICT GROUP would have reported net income of $922,000 or $0.06 per diluted share for the quarter. For the fourth quarter of 2006, the Company reported net income of $5.1 million, or $0.32 per diluted share.
Domestic revenue of $73.2 million in the fourth quarter of 2007 declined 18% from the comparable year-ago period primarily as a result of the shift of U.S. production to lower-priced, offshore facilities and a reduction in telesales call volumes for certain financial services clients. In the fourth quarter of 2007, 58% of domestic call volume was handled offshore compared to 52% in the third quarter of 2007 and 41% in the fourth quarter of 2006. International revenue of $39.3 million was up 43% from fourth quarter 2006 levels, which reflected increased customer demand and stronger foreign currencies.
Services revenue totaled $84.3 million, 2% below last year's fourth quarter level and accounted for 75% of total revenue for the 2007 fourth quarter. Included in Services, revenue from the Company's higher-margin Marketing, Technology and BPO services totaled $14.5 million, up 29% on a year-over-year basis and accounted for 13% of total revenue for the quarter. Sales revenue declined 8% to $28.2 million and represented 25% of fourth quarter 2007 total revenue. Both Sales and Services revenue were negatively impacted by the shift to lower-priced, offshore facilities.
"As anticipated, the accelerated expansion of ICT GROUP's offshore capacity and restructuring charges to close or downsize under-utilized locations negatively affected fourth quarter 2007 revenue and earnings performance," noted John J. Brennan, Chairman and Chief Executive Officer. "Consistent with the expectations contained in the Company's third quarter 2007 earnings release, adjusted fourth quarter 2007 diluted earnings per share were similar to prior quarter levels, and revenue was comparable on a sequential basis."
"Importantly," Mr. Brennan added, "we made significant progress in the three areas outlined in our third quarter 2007 earnings release, namely:
The accelerated transition of U.S. programs to more cost-effective, offshore locations was largely completed by year end;
International revenue increased and accounted for 35% of total revenue in the fourth quarter of 2007;
Value-added services revenue grew at a double-digit rate and continued to gain traction with customers."
"As noted during our third quarter earnings call, we saw a decline in credit card related programs from certain of our domestic financial services clients in the fourth quarter, which will be partially offset by new programs from financial services clients who are outsourcing increased volumes of collections, customer service and BPO applications. We expect to begin implementing these new programs beginning in the second quarter of 2008. In addition, we are experiencing strong demand from existing and new domestic and international telecommunications clients who are increasingly outsourcing many of their sales- and service-based programs. As a result, we expect that revenue from financial services clients will decline slightly as a percent of total Company revenue in 2008, but will be offset by the share of Company revenue represented by clients in the telecommunications sector," Mr. Brennan said.
Outlook:
"The pipeline for new business remains strong for our service offerings across our targeted verticals in the domestic and international markets we serve. We secured another $40 million of new business wins in the fourth quarter of 2007, comparable in value to the wins we secured in the third quarter. Approximately 60% of the value of the fourth quarter wins was from companies in the financial services sector, with most of the balance coming from companies in the telecommunications sector. ICT GROUP's domestic and international onshore and offshore facilities will be used to implement these programs."
For the first quarter of 2008, the Company expects revenue to be slightly below fourth quarter 2007 levels. As indicated during the Company's third quarter earnings call, first quarter expenses will be higher than normal due to seasonal factors, as well as for training and other start-up costs associated with a large contract won in the third quarter and the completion of the accelerated ramp-up of ICT GROUP's offshore facilities. Consequently, first quarter 2008 diluted earnings per share are expected to result in a loss of $0.03 to $0.07 per diluted share.
Beginning in the second quarter of 2008, the Company expects to see the benefits of the investments it made and the actions it took in 2007, as well as the substantial new business wins it captured in the third and fourth quarters. As a result, it expects to post sequential growth in both revenue and profitability throughout 2008. Based on current market conditions, full year 2008 revenue is expected to be between $465 million and $475 million and earnings per diluted share between $0.52 and $0.62.
Conference Call:
The Company will hold a conference call today, Wednesday, February 27, 2008, at 9:00 a.m. EST. Investors may access the call by visiting the ICT GROUP website at www.ictgroup.com. If you are unable to participate during the live webcast, a replay of the call will be available on the website through March 5, 2008.
ICT GROUP, headquartered in Newtown, Pa., is a leading global provider of customer management and business process outsourcing (BPO) solutions. The Company provides a comprehensive mix of customer care/retention, acquisition, up-selling/cross-selling, technical support, market research and database marketing as well as e-mail management, data entry/collections, claims processing and document management services, using its global network of onshore, near-shore and offshore operations. ICT GROUP also provides interactive voice response (IVR) and advanced speech recognition solutions as well as hosted Customer Relationship Management (CRM) technologies, available for use by clients at their own in-house facility or on a co-sourced basis in conjunction with the Company's fully integrated contact center operations. To learn more about ICT GROUP, visit the Company's website at www.ictgroup.com.
Date - 28/02/2008
