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/
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