SOURCE: West Corporation
West Corporation Reports Third Quarter 2008 Results
OMAHA, NE--(Marketwire - October 21, 2008) - West Corporation, a leading provider of outsourced communication solutions, today announced its third quarter 2008 results.
Financial Summary (unaudited)
(Dollars in millions)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ --------------------------
Percent Percent
2008 2007 Change 2008 2007 Change
------- ------- ------ -------- -------- ------
Revenue $ 598.5 $ 531.1 12.7% $1,675.7 $1,559.9 7.4%
------- ------- ------ -------- -------- ------
Adjusted EBITDA(1) $ 169.7 $ 149.3 13.7% $ 456.0 $ 441.6 3.3%
------- ------- ------ -------- -------- ------
Adjusted EBITDA
Margin 28.4% 28.1% 27.2% 28.3%
------- ------- ------ -------- -------- ------
Adjusted EBITDA Excl.
Interest Income(1) $ 169.4 $ 145.9 16.1% $ 453.8 $ 431.3 5.2%
------- ------- ------ -------- -------- ------
Cash Flow from
Operations $ 84.4 $ 55.3 52.6% $ 155.1 $ 182.5 -15.0%
------- ------- ------ -------- -------- ------
(1) See Reconciliation of Financial Measures below.
Consolidated Operating Results
For the third quarter ended September 30, 2008, revenues were $598.5 million compared to $531.1 million for the same quarter last year, an increase of 12.7 percent. Revenue from acquired entities(2) was $59.5 million during the third quarter, including $58.3 million from Genesys.
Adjusted EBITDA for the third quarter was $169.7 million, or 28.4 percent of revenue. A reconciliation of Adjusted EBITDA to cash flow from operating activities is presented below.
Balance Sheet and Liquidity
At September 30, 2008, West Corporation had cash and cash equivalents totaling $254.9 million and working capital of $283.8 million.
At September 30, 2008, the Company had $204.0 million outstanding on its $250.0 million revolving credit facility. An additional $20.0 million was borrowed by the Company subsequent to September 30, 2008. Funding requests made to Lehman Commercial Paper Inc. of $26.0 million were not advanced to the Company. "The borrowings on the revolving credit facility were made to ensure near term liquidity," said Paul Mendlik, Chief Financial Officer of West Corporation. The Company believes that it has sufficient liquidity to conduct its normal operations and does not believe that the potential reduction in available capacity under this revolving credit facility will have a material impact on its short-term or long-term liquidity.
During the quarter, the Company invested $21.6 million in capital expenditures primarily for software, equipment and information technology systems.
Conference Call
The Company will hold a conference call to discuss these topics on Wednesday, October 22, 2008 at 11:00 AM Eastern Time (10:00 AM Central Time). Investors may access the call by visiting the Financials section of the West Corporation website at www.west.com and clicking on the Webcast link. A replay of the call will be available on the Company's website at www.west.com.
About West Corporation
West Corporation is a leading provider of outsourced communication solutions to many of the world's largest companies, organizations and government agencies. West helps its clients communicate effectively, maximize the value of their customer relationships and drive greater profitability from every interaction. The Company's integrated suite of customized solutions includes customer acquisition, customer care, automated voice services, emergency communications, conferencing and accounts receivable management services.
Founded in 1986 and headquartered in Omaha, Nebraska, West has a team of 41,000 employees based in North America, Europe and Asia. For more information, please visit www.west.com.
Forward-Looking Statements
This press release contains forward-looking statements. Forward-looking statements can be identified by the use of words such as "may," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "intends," "continue" or similar terminology. These statements reflect only West's current expectations and are not guarantees of future performance or results. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. These risks and uncertainties include the ability to integrate or achieve the objectives of our recent acquisitions, West's ability to complete future acquisitions, competition in West's highly competitive industries, extensive regulation in many of West's markets, West's ability to recover on its charged-off consumer receivables, capacity utilization of West's contact centers, the cost and reliability of voice and data services, availability of key personnel and employees, the cost of labor and turnover rates, the political, economic and other conditions in countries where West operates, the loss of any key clients, West's ability to purchase, and finance the acquisition of, charged-off receivable portfolios on acceptable terms and in sufficient amounts, the nature of West's forward flow contracts, the non-exclusive nature of West's client contracts and the absence of revenue commitments, the possibility of an emergency interruption to West's data and contact centers, acts of terrorism or war, security or privacy breaches of West's systems and databases, West's ability to protect proprietary information or technology, West's ability to continue to keep pace with technological developments, the cost of pending and future litigation and other risk factors described in documents filed by the company with the United States Securities and Exchange Commission including West's annual report on Form 10-K for the year ended December 31, 2007 and quarterly report on Form 10-Q for the quarter ended June 30, 2008. These forward-looking statements speak only as of the date on which the statements were made. West undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
WEST CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited, in thousands except selected operating data)
Three Months Ended Sept. 30, Nine Months Ended Sept. 30,
2008 2007 % Change 2008 2007 % Change
-------- -------- ------ ---------- ---------- ------
Revenue $598,528 $531,098 12.7% $1,675,716 $1,559,917 7.4%
Cost of services 254,486 228,309 11.5% 756,189 671,600 12.6%
Selling, general
and
administrative
expenses 232,736 217,213 7.1% 657,954 616,581 6.7%
-------- -------- ------ ---------- ---------- ------
Operating income 111,306 85,576 30.1% 261,573 271,736 -3.7%
Interest expense 73,561 88,135 -16.5% 217,924 251,790 -13.5%
Other expense
(income), net 1,215 (4,820) 125.2% 298 (12,928) 102.3%
-------- -------- ------ ---------- ---------- ------
Income before
tax 36,530 2,261 1515.7% 43,351 32,874 31.9%
Income tax
expense 13,343 (3,780) 453.0% 17,341 7,147 142.6%
Minority
Interest 1,447 4,120 -64.9% (2,255) 12,275 -118.4%
-------- -------- ------ ---------- ---------- ------
Net income $ 21,740 $ 1,921 1031.7% $ 28,265 $ 13,452 110.1%
======== ======== ====== ========== ========== ======
SELECTED SEGMENT
DATA:
Revenue:
Communication
Services $272,395 $273,945 -0.6% $ 825,170 $ 810,915 1.8%
Conferencing 260,855 182,420 43.0% 686,568 542,237 26.6%
Receivables
Management 66,861 76,453 -12.5% 168,314 211,234 -20.3%
Inter segment
eliminations (1,583) (1,720) 8.0% (4,336) (4,469) 3.0%
-------- -------- ------ ---------- ---------- ------
Total $598,528 $531,098 12.7% $1,675,716 $1,559,917 7.4%
======== ======== ====== ========== ========== ======
Depreciation &
Amortization:
Communication
Services $ 18,296 $ 31,187 -41.3% $ 55,533 $ 74,108 -25.1%
Conferencing 27,303 16,067 69.9% 62,454 47,707 30.9%
Receivables
Management 4,815 7,002 -31.2% 17,215 15,035 14.5%
-------- -------- ------ ---------- ---------- ------
Total $ 50,414 $ 54,256 -7.1% $ 135,202 $ 136,850 -1.2%
======== ======== ====== ========== ========== ======
Operating Income:
Communication
Services $ 38,894 $ 26,556 46.5% $ 102,269 $ 91,856 11.3%
Conferencing 63,154 45,402 39.1% 172,712 138,996 24.3%
Receivables
Management 9,258 13,618 -32.0% (13,408) 40,884 -132.8%
-------- -------- ------ ---------- ---------- ------
Total $111,306 $ 85,576 30.1% $ 261,573 $ 271,736 -3.7%
======== ======== ====== ========== ========== ======
Operating Margin:
Communication
Services 14.3% 9.7% 47.4% 12.4% 11.3% 9.7%
Conferencing 24.2% 24.9% -2.8% 25.2% 25.6% -1.6%
Receivables
Management 13.8% 17.8% -22.5% -8.0% 19.4% -141.2%
-------- -------- ------ ---------- ---------- ------
Total 18.6% 16.1% 15.5% 15.6% 17.4% -10.3%
======== ======== ====== ========== ========== ======
SELECTED OPERATING DATA ($M):
Cash flow from
operations 84.4 55.3
Term loan
facility 2,491.8 2,376.4
Revolving line
of credit 204.0 -
Multi-currency
revolving credit
facility 60.5 -
Senior notes 650.0 650.0
Senior
subordinated
notes 450.0 450.0
Condensed Balance Sheets
Sept. 30, Dec. 31, %
2008 2007 Change
----------- ----------- -----------
Current assets:
Cash and cash equivalents $ 254,851 $ 141,947 79.5%
Trust cash 13,908 10,358 34.3%
Accounts receivable, net 353,115 289,480 22.0%
Portfolio receivables, current 52,790 77,909 -32.2%
Deferred income taxes receivable 19,417 33,718 -42.4%
Other current assets 53,818 44,463 21.0%
----------- ----------- -----------
Total current assets 747,899 597,875 25.1%
Net property and equipment 315,382 298,645 5.6%
Portfolio receivables, net 113,385 132,233 -14.3%
Goodwill 1,543,846 1,329,978 16.1%
Other assets 550,259 487,759 12.8%
----------- ----------- -----------
Total assets $ 3,270,771 $ 2,846,490 14.9%
=========== =========== ===========
Current liabilities $ 464,100 $ 410,080 13.2%
Long Term Obligations 3,845,597 3,495,529 10.0%
Other liabilities 143,216 138,297 3.6%
----------- ----------- -----------
Total liabilities 4,452,913 4,043,906 10.1%
Minority interest 4,991 12,937 -61.4%
Class L common stock 1,125,908 1,029,782 9.3%
Stockholders' deficit (2,313,041) (2,240,135) 3.3%
----------- ----------- -----------
Total liabilities and
stockholders' deficit $ 3,270,771 $ 2,846,490 14.9%
=========== =========== ===========
Reconciliation of Financial Measures
The common definition of EBITDA is "Earnings Before Interest Expense, Taxes, Depreciation and Amortization." In evaluating liquidity, we use earnings before interest expense, share based compensation, taxes, depreciation and amortization, minority interest, non-recurring litigation settlement costs, other non-cash reserves, transaction costs and after acquisition synergies and excluding unrestricted subsidiaries, or "Adjusted EBITDA." We also use "Adjusted EBITDA Excluding Interest Income," which we define as earnings before interest expense and non-recurring interest income, share based compensation, taxes, depreciation and amortization, minority interest, non-recurring litigation settlement costs, other non-cash reserves, transaction costs and after acquisition synergies and excluding unrestricted subsidiaries. EBITDA, Adjusted EBITDA and Adjusted EBITDA Excluding Interest Income are not measures of financial performance or liquidity under generally accepted accounting principles ("GAAP"). EBITDA, Adjusted EBITDA and Adjusted EBITDA Excluding Interest Income should not be considered in isolation or as a substitute for net income, cash flow from operations or other income or cash flow data prepared in accordance with GAAP. Adjusted EBITDA and Adjusted EBITDA Excluding Interest Income, as presented, may not be comparable to similarly titled measures of other companies. Adjusted EBITDA and Adjusted EBITDA Excluding Interest Income are presented as we understand certain investors use them as one measure of our historical ability to service debt. Adjusted EBITDA is also used in our debt covenants, although the precise adjustments used to calculate Adjusted EBITDA included in our credit facility and indentures vary in certain respects among such agreements and from those presented below. Set forth below is a reconciliation of EBITDA, Adjusted EBITDA and Adjusted EBITDA Excluding Interest Income to cash flow from operations.
Three Months Ended Nine Months Ended
Amounts in thousands Sept. 30, Sept. 30,
2008 2007 2008 2007
--------- --------- --------- ---------
Cash flow from operating
activities $ 84,402 $ 55,314 $ 155,057 $ 182,497
Income tax expense (benefit) 13,343 (3,781) 17,341 7,147
Deferred income tax (expense)
benefit (11,791) 3,752 (8,094) 1,069
Interest expense 73,561 88,135 217,923 251,790
Allowance for impairment of
purchased accounts receivable - - (44,076) -
Minority interest in earnings,
net of distributions 174 (1,010) 7,819 (1,295)
Provision for share based
compensation (357) (322) (1,026) (952)
Debt amortization (4,096) (3,637) (11,657) (11,045)
Other (88) (95) (59) 336
Changes in operating assets and
liabilities, net of business
acquisitions 3,908 2,176 65,503 (20,309)
--------- --------- --------- ---------
EBITDA 159,056 140,532 398,731 409,238
Minority interest 1,448 4,120 (2,255) 12,275
Provision for share based
compensation 357 322 1,026 952
Recapitalization costs 1,000 2,517 3,113 11,092
Acquisition synergies 7,921 810 10,897 5,047
Site closures (41) - (313) -
Non-cash portfolio impairment - - 44,076 -
Asset impairment - - 739 -
Acquisition costs - - (26) -
Vertical Alliance Adjustment - 1,009 - 2,958
--------- --------- --------- ---------
Adjusted EBITDA $ 169,741 $ 149,310 $ 455,988 $ 441,562
========= ========= ========= =========
Interest income 378 3,384 2,169 10,216
--------- --------- --------- ---------
Adjusted EBITDA Excluding
Interest Income $ 169,363 $ 145,926 $ 453,819 $ 431,346
========= ========= ========= =========
(2) Acquired entities include HBF Communications (acquired in April 2008) in the Communications Services segment and Genesys (acquired in May 2008) in the Conferencing Services segment.
11808 Miracle Hills Drive
Omaha, NE 68154
AT THE COMPANY:
David Pleiss
Investor Relations
(402) 963-1500
Email Contact