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posted on May 22, 2014 by NelsonHall Analyst
Convergys closed the acquisition of Stream on March 3, 2014. Its Q1 2014 reported results include contributions from Stream for the month of March.
- Revenue wsas $606m, up 23% y/y. Excluding the four week contribution of ~$86m from Stream, revenue was u- 5% y/y
- EBIT was $22m, an EBIT margin of 3.6%, down 376 bps y/y
End of Q1 2014, combined footprint of contact center employees:
- Philippines 46%
- North America 26%
- India, Southeast Asia and China 12%
- EMEA 10%
- Latin America 6%
Its contract with the U.S. Postal Service was completed in Q1, 2014. It expects to see headwinds from this client loss.
Convergys has revised its revenue guidance for ful year 2014 to at least $2.9b, a growth of ~40%. This outlook includes an increase in program churn during the first year of combined business operations. Given the prorated contributions from Stream, Convergys anticipates recognizing ~55% of full year revenue in H2 this year.
This business outlook does not include Stream-related acquisition impacts such as fair value write-up depreciation, intangible amortization, integration costs or transaction costs. Also not included in the guidance are the impacts of any noncash pension settlement charges or future share repurchase activities.
Convergys has completed its contract with long-time client USPS who a few years ago decided to begin moving its CMS work back in-house.
On a positive note, during the quarter Convergys:
- Signed new business worth $75m of 2014 revenue. Stream clients contributed ~$20m. These bookings include business in the telecoms, technology, retail and health care industry sectors
- Achieved revenues growth in the Philippines
- Saw y/y growth with 15 of its top 20 clients.