Go BackICT GROUP reports first quarter 2008 results
ICT GROUP INC reported results for the first quarter ended March 31, 2008.
Revenue for the first quarter was $108.7 million compared to $115.2 million reported in the first quarter of 2007. The net loss for the 2008 first quarter was $1.0 million, or $0.06 per diluted share. In last year's first quarter, the Company reported net income of $410,000, or $0.03 per diluted share.
"First quarter performance was basically in line with Company expectations," said John J. Brennan, Chairman and Chief Executive Officer. "More challenging economic conditions have caused clients to reduce the scope of certain programs, especially for marketing and telesales. We were able to offset some of the decline in call volumes by new business wins from existing and new customers, and were encouraged by the continued strength of our international business units," Mr. Brennan said. "As anticipated, expenses for the period were impacted by a combination of seasonal factors, training and other start-up costs."
In the 2008 first quarter, 60% of work for U.S. clients was produced at ICT GROUP's lower-priced, offshore facilities compared to 40% in last year's first quarter and 58% in the fourth quarter of 2007. The significant increase in the percentage of offshore production, principally in the Philippines, has increased the Company's exposure to the effects of foreign currency fluctuations. Had the foreign currency exchange rates for the first quarter of 2007 remained in effect in 2008, pre-tax income would have increased by approximately $1.5 million.
Domestic revenue of $68.9 million in the first quarter declined from the comparable year-ago period 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 and cutbacks in market research programs. International revenue increased from first quarter 2007 levels to $39.8 million, which reflected strong growth in Canada, Mexico, and Australia.
Services revenue totaled $83.0 million, 5% below last year's levels and accounted for 76% of total revenue for the 2008 first quarter. Two-thirds of services revenue was derived from domestic clients with the remaining one-third coming from international clients. Included in Services, revenue from the Company's higher-margin Marketing, Technology and BPO services totaled $12.3 million, up 22% on a year-over-year basis and accounted for 11% of total revenue for the quarter. Sales revenue, which totaled $25.7 million, declined 7% from last year's first quarter and represented 24% of first quarter 2008 total revenue. Domestic clients and international clients each accounted for about half of sales revenue.
"Within the financial services sector, our revenue declined 9% on a year-over-year basis, but stabilized on a sequential basis with fourth quarter 2007 levels," said Mr. Brennan. "We were able to offset much of the decline in financial telesales programs through additional customer service and back-office processing work for domestic financial clients, as well as new business from international financial firms. We continued to experience revenue growth in the quarter from telecommunications clients, as we added new programs in the U.S. and Canada.
"In addition, we have been actively working to reduce our own infrastructure costs, to resemble those of our offshore business model, so that we can more effectively leverage incremental revenue. We have undertaken a number of initiatives as part of this effort, which include implementing new technologies to help with agent recruitment and retention, workforce scheduling and automated sales verification as well as moving certain functions to our lower-cost, offshore operating units," continued Mr. Brennan.
Outlook:
"We believe that ICT GROUP is now solidly positioned in the marketplace, with recognized industry expertise and the ability to meet client requirements with an optimal balance of onshore and offshore capacity. We expect to see the benefits from the new business captured in the second half of 2007 to positively impact our financial performance over the next several quarters. However, the ramp-up of certain of these programs is being extended over a longer period than previously expected, resulting in a reduction in our revenue and earnings projections for the balance of 2008. While recognizing uncertainties in the current business environment, we expect that new business wins in 2008 will offset any further potential declines in existing programs, and still anticipate that second half 2008 revenue and earnings performance will materially outpace first half results. We now expect earnings per diluted share for the second quarter of 2008 to be in the range of $0.02 to $0.05 on revenue of $110 million to $113 million and full year 2008 earnings per diluted share to be in the range of $0.35 to $0.45 on revenue of $455 million to $465 million," noted Mr. Brennan.
Conference Call:
The Company will hold a conference call today, Thursday, May 1, 2008, at 9:00 a.m. EDT. 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 May 8, 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 - 02/05/2008
