Convergys Corporation Revenues Up 11 Percent On Growth Across Both Customer Management And Information Management Groups.CINCINNATI Cincinnati (sĭnsənăt`ē, –năt`ə), city (1990 pop. 364,040), seat of Hamilton co., extreme SW Ohio, on the Ohio River opposite Newport and Covington, Ky.; inc. as a city 1819. -- Convergys Convergys (NYSE: CVG) is a multi-national corporation that provides management consulting services, outsourced billing, customer care and employee care, and transaction management software. Corporation (NYSE NYSE See: New York Stock Exchange :CVG CVG Convergys Corp CVG Corporación Venezolana de Guayana CVG Clear Vertical Grain (woodworking) CVG Carrier Group CVG Corporacion Venezolana de Guyana CVG Comprehensive Video Group (South Hackensack, NJ, USA) ) E[acute accent acute accent n. A mark (´) indicating: a. that a vowel is close or tense, as é in French été. b. that a vowel or syllable has a high or rising pitch, as in Chinese or Ancient Greek. c. ]IN THE FIRST QUARTER: E[acute accent]--Customer Management Group grew revenues at a double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. rate for the fourth consecutive quarter. E[acute accent]--Information Management Group grew revenues and improved operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: . E[acute accent]--Earnings per share were at the high end of the guidance range. E[acute accent]--Free cash flow improved substantially from the prior year. E[acute accent]Convergys Corporation (NYSE:CVG), a global leader in providing customer care, human resources The fancy word for "people." The human resources department within an organization, years ago known as the "personnel department," manages the administrative aspects of the employees. , and billing services, announced today its financial results for the first quarter of 2005. E[acute accent]Total revenues increased 11 percent to $637.3 million compared to $573.9 million reported in the first quarter of 2004 reflecting growth from both the Customer Management and Information Management Groups. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. of $51.9 million was down 5 percent from $54.9 million in the prior year. A solid improvement in Convergys IMG's operating margin was offset by the impact of the U.S. versus Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. exchange rate on Customer Care operations as well as continued investment in capacity and increased costs with the company's growing Employee Care operations. Net income was $31.2 million or $0.22 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share compared with $32.5 million or $0.22 in the first quarter of 2004. E[acute accent]"I am pleased that each of our businesses delivered top-line growth in the first quarter," said Jim Orr Orr , Robert Gordon Called "Bobby." Born 1948. Canadian-born hockey player. He led the National Hockey League in scoring in 1970 and 1975 and was the first defenseman to score more than 100 points in a season. Noun 1. , Chairman, President, and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Convergys. "The results this quarter demonstrate significant improvement in IMG's operating margin, and we are working aggressively to also deliver improvement in CMG's operating margins in the second half of the year. In addition, we recently launched an important initiative to build and better articulate articulate /ar·tic·u·late/ (ahr-tik´u-lat) 1. to pronounce clearly and distinctly. 2. to make speech sounds by manipulation of the vocal organs. 3. to express in coherent verbal form. 4. the Convergys brand. Our brand initiative - Outthinking. Outdoing - will enable us to build on our reputation for thought leadership and operational excellence and help others understand more fully the knowledge we have and value we provide." E[acute accent]Highlights Since Last Quarterly Report E[acute accent]--During the first quarter Convergys signed a 10-year human resources outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. agreement with a technology company that employs over 50,000 people in more than 20 countries. Convergys will provide the client with recruiting, staffing, training, and compensation administrative services. E[acute accent]--Convergys signed a multi-year agreement with ESPN ESPN Entertainment and Sports Programming Network . Convergys will provide its Infinys(TM) Rating and Billing software as well as professional and consulting services Noun 1. consulting service - service provided by a professional advisor (e.g., a lawyer or doctor or CPA etc.) service - work done by one person or group that benefits another; "budget separately for goods and services" to rate and bill for ESPN Mobile, which will be structured as a mobile virtual network operator A Mobile Virtual Network Operator (MVNO) is a company that provides mobile (sometimes called wireless or cellular) telephone service but does not have its own allocation of the radio frequency spectrum nor all of the infrastructure required to provide mobile telephone service. (MVNO (Mobile Virtual Network Operator) A reseller of wireless services. MVNOs do not own licensed spectrum and typically do not have any of their own wireless network infrastructure. ). E[acute accent]--Convergys announced three successful Infinys implementations during the quarter, including one with Verizon that deployed Infinys to support its rapidly growing data services. E[acute accent]Operating Performance by Segment E[acute accent]Customer Management Group (CMG CMG Coastal & Marine Geology (USGS) CMG Chipotle Mexican Grill, Inc. (stock symbol) CMG Companion (of the Order Of) St Michael and St George CMG Computer Measurement Group ) - Customer Care and Employee Care E[acute accent]Convergys CMG's revenues were $447.5 million, a 14 percent increase from the first quarter of 2004. Approximately one half of the increase reflects growing revenues from CMG's existing client base including increased volume from DIRECTV DirecTV (trademarked as "DIRECTV") is a direct broadcast satellite (DBS) service based in El Segundo, California, USA, that transmits digital satellite television and audio to households in the United States, the Caribbean and Latin America except for Mexico. and Sprint-IBM. The remaining increase is attributable to the 2004 acquisitions of Encore Receivable Management, DigitalThink, and Finali. These items were partially offset by lower spending by several other communications clients. E[acute accent]Convergys CMG's first quarter 2005 operating income and operating margin were $21.5 million and 4.8 percent, respectively. This compares to prior year operating income and operating margin of $31.5 million and 8.1 percent. The decrease in operating margin is largely the result of higher operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. caused by the impact of a weakened weak·en tr. & intr.v. weak·ened, weak·en·ing, weak·ens To make or become weak or weaker. weak  en·er n. U.S. versus Canadian dollar Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin"loonie dollar - the basic monetary unit in many countries; equal to 100 cents . In addition, it reflects continued investment in capacity and increased costs incurred in connection with our growing Employee Care operations. E[acute accent]Information Management Group (IMG IMG International medical graduate, see there ) E[acute accent]Convergys IMG's revenues increased 4 percent to $189.8 million in the first quarter of 2005 from $183.0 million in the same period last year. Professional and consulting revenues of $61.0 million increased 34 percent compared to the prior year. The increase was broad based among many IMG clients including increased activity with Cingular. License and other revenues of $38.8 million were in line with the prior year. Data processing data processing or information processing, operations (e.g., handling, merging, sorting, and computing) performed upon data in accordance with strictly defined procedures, such as recording and summarizing the financial transactions of a revenues of $90.0 million decreased 9 percent from the prior year. This decrease is due to the changing dynamics of the billing relationship with Cingular as it migrates subscribers from outsourced to managed service environments. It also reflects the impact of lower average subscriber prices across IMG's client base. E[acute accent]IMG's operating income increased 36 percent from the first quarter of 2004 to $33.4 million. Operating margin increased to 17.6 percent versus 13.4 percent in the prior year. The significant improvement in operating margin reflects both top-line growth for IMG and savings realized through the previously announced restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). initiatives. E[acute accent]Other Items E[acute accent]--Convergys incurred approximately $4 million in non-cash stock compensation expense during the quarter. E[acute accent]--The cellular partnerships contributed pre-tax equity earnings of $3.8 million. This compares to a pre-tax loss of $0.1 million from the prior year. E[acute accent]--Interest expense was $4.8 million versus $1.7 million in the prior year resulting from a higher debt balance and higher interest rates. E[acute accent]--Cash flow from operations for the first quarter of 2005 was $10.9 million. Free cash flow of $37.5 million increased substantially from the prior year. E[acute accent]--Days sales outstanding (DSO See CSO. ) were 71 days at March 31, 2005. This represents an improvement from the 75 days outstanding at December 31, 2004. E[acute accent]Business Outlook E[acute accent]The following forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. reflect Convergys' expectations as of April 26, 2005. Given the various risk factors discussed below, actual results may differ materially. The company intends to continue its practice of not updating forward-looking statements until its next quarterly results announcement, other than in publicly available statements. E[acute accent]Financial Guidance E[acute accent]For 2005, Convergys expects revenue to grow approximately 8 percent to 10 percent. Convergys remains comfortable with previous guidance for 2005 diluted EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. of approximately $1.00. E[acute accent]For the second quarter 2005, we expect CMG and IMG revenues and operating margins to be roughly comparable to the first quarter of 2005. E[acute accent]As a result of the impact of long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. incentive plan expense, additional severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when costs, the corporate branding Corporate branding is the practice of using a company's name as a product brand name. It is an attempt to leverage corporate brand equity to create product brand recognition. It is a type of family branding or umbrella brand. campaign, and non-operating items, for the second quarter 2005, EPS is expected to be $0.17 to $0.19. E[acute accent]ABOUT CONVERGYS E[acute accent]Convergys Corporation (NYSE:CVG) is a global leader in providing customer care, human resources, and billing services. Convergys combines specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. knowledge and expertise with solid execution to deliver outsourced solutions, consulting services, and software support. Clients in more than 60 countries speaking nearly 30 languages depend on Convergys to manage the increasing complexity and cost of caring for customers and employees. Convergys serves the world's leading companies in many industries including communications, financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. , technology, and consumer products. E[acute accent]Convergys is a member of the S&P 500 and a Fortune Most Admired ad·mire v. ad·mired, ad·mir·ing, ad·mires v.tr. 1. To regard with pleasure, wonder, and approval. 2. To have a high opinion of; esteem or respect. 3. Company. Headquartered in Cincinnati, Ohio “Cincinnati” redirects here. For other uses, see Cincinnati (disambiguation). Cincinnati is a city in the U.S. state of Ohio and the county seat of Hamilton County. , Convergys has more than 66,000 employees in 66 customer contact centers, three data centers, and other facilities in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , Canada, Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. , Europe, the Middle East, and Asia. For more information visit www.convergys.com E[acute accent](Infinys is a trademark and Convergys and the Convergys logo are registered trademarks of Convergys Corporation.) E[acute accent]NON-GAAP MEASURES: E[acute accent]This news release contains non-GAAP financial measures, including free cash flow that are not prepared in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). . A reconciliation of these non-GAAP measures to the comparable GAAP measures is included in the attached financial tables. E[acute accent]These non-GAAP financial measures should not be construed as being more important than comparable GAAP measures. They are presented because Convergys' management uses this information when evaluating current results of operations and cash flow, and we believe that this information provides the users of the financial statements with an additional and useful comparison of Convergys' current results of operations and cash flows with past and future periods. E[acute accent]CONFERENCE CALL NOTE: E[acute accent]Convergys will host a one-hour conference call on Tuesday, April 26, at 10:00 AM, EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT , to discuss the company's first quarter results. It will feature Jim Orr, Chairman, President, and CEO, and Earl Shanks
The shanks and tattlers are wading bird species in a number of genera characterised by a medium length bill and long, often brightly coloured legs. , CFO See Chief Financial Officer. . This call will be carried live (with scheduled repeats) on the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the . A link to the conference call is available at www.convergys.com E[acute accent]"SAFE HARBOR Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " NOTE: E[acute accent]Information included in this news release may contain forward-looking statements that involve potential risks for Convergys Corporation. The future results of Convergys could differ materially from those discussed herein. Factors that could cause or contribute to such differences include, but are not limited to, the loss of a significant client or significant business from a client, difficulties in completing a contract or implementing its provisions, difficulties in completing or implementing an acquisition, potential terrorist activities and the United States' response thereto there·to adv. 1. To that, this, or it. 2. Archaic In addition to that; furthermore. thereto Adverb Formal 1. to that or it 2. , changes in the legal and regulatory environment in which Convergys and its clients operate, and competitive and other factors disclosed in the Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2004, and subsequent filings with the SEC by Convergys Corporation. The company has no current intention of updating any forward-looking statements that may be included herein, other than in publicly available statements.
CONVERGYS CORPORATION
Revenues, Net Income and Earnings Per Common Share
In Millions Except Per Share Amounts
(Unaudited)
First Quarter
Change
2005 2004 Amount %
Revenues:
- Customer Mgmt. Group $ 447.5 $ 390.9 $ 56.6 14
- Information Mgmt. Grp. 189.8 183.0 6.8 4
--------- --------- ------- ---
--Total $ 637.3 $ 573.9 $ 63.4 11
Operating Income (Loss):
- Customer Mgmt. Group $ 21.5 $ 31.5 $(10.0) (32)
- Information Mgmt. Grp. 33.4 24.5 8.9 36
- Corporate & Other (3.0) (1.1) (1.9) -
--------- --------- ------- ---
--Total $ 51.9 $ 54.9 $ (3.0) (5)
Net Income $ 31.2 $ 32.5 $ (1.3) (4)
Earnings Per Common Share
- Basic $0.22 $0.23 $(0.01) (4)
- Diluted $0.22 $0.22 - -
Weighted Average Common Shares Outstanding
- Basic 141.3 142.1 (0.8) (1)
- Diluted 143.8 145.3 (1.5) (1)
The above amounts reflect the Company's results of operations, as
reported under U.S. Generally Accepted Accounting Principles (U.S.
GAAP), that will be presented in the Convergys 10-Q for the quarterly
period ended March 31, 2005.
Convergys Corporation
Consolidated Statements of Income
In Millions Except Per Share Amounts
(Unaudited)
For the Three Mo.s
Ended Mar. 31, %
2005 2004 Chg.
Revenues:
Customer Management Grp.
Communications $231.6 $233.1 (1)
Technology 39.0 39.2 (1)
Financial Services 68.1 36.3 88
Other 108.8 82.3 32
------ ------ --
Total CMG Revenues 447.5 390.9 14
Information Mgmt. Grp.
Data Processing 90.0 99.0 (9)
Prof. & Consulting 61.0 45.5 34
License & Other 38.8 38.5 1
------ ------ --
Total IMG Revenues 189.8 183.0 4
------ ------ --
Total Revenues 637.3 573.9 11
Costs & Expenses:
Cost of Providing
Services & Products 397.3 351.4 13
Selling, General & Admin. 133.3 117.0 14
Research & Development 17.6 18.5 (5)
Depreciation 31.3 27.5 14
Amortization 5.9 4.6 28
------ ------ --
Total Costs & Expenses 585.4 519.0 13
Operating Income 51.9 54.9 (5)
Equity in Earnings (Losses)
of Cellular Partnerships 3.8 (0.1) -
Other Expense, Net (1.4) (1.7) (18)
Interest Expense (4.8) (1.7) -
------ ------ --
Income Before Tax 49.5 51.4 (4)
Income Taxes 18.3 18.9 (3)
------ ------ --
Net Income $ 31.2 $ 32.5 (4)
====== ====== ==
Earnings Per Common Share
-Basic $ 0.22 $ 0.23 (4)
-Diluted $ 0.22 $ 0.22 -
Weighted Average Common Shares Outstanding
-Basic 141.3 142.1
-Diluted 143.8 145.3
Other Data
-Operating Margin 8.1% 9.6%
Market Price Per Share
High $15.76 $19.96
Low $13.68 $14.73
Close $14.93 $15.20
The above amounts reflect the Company's results of operations, as
reported under U.S. Generally Accepted Accounting Principles (U.S.
GAAP), that will be presented in the Convergys 10-Q for the
quarterly period ended March 31, 2005.
Convergys Corporation
Consolidated Balance Sheets
In Millions
(Unaudited)
Mar. 31, Dec. 31,
2005 2004
Assets
Cash and Cash Equivalents $ 37.2 $ 58.4
Receivables - Net 455.7 447.3
Other Current Assets 96.1 87.1
Property & Equipment - Net 408.9 416.6
Other Assets 1,195.3 1,198.7
--------- ---------
Total Assets $ 2,193.2 $ 2,208.1
Liabilities and Shareholders' Equity
Debt Maturing in One Year $ 43.1 $ 49.5
Other Current Liabilities 490.3 527.9
Other Liabilities 48.1 43.2
Long-Term Debt 294.6 302.2
Common Shareholders' Equity 1,317.1 1,285.3
--------- ---------
Total Liabilities
& Shareholders' Equity $ 2,193.2 $ 2,208.1
Convergys Corporation
Summarized Statement of Cash Flows
In Millions
(Unaudited)
For the Three Mo.s
Ended Mar. 31,
2005 2004
Cash provided by operating activities $ 10.9 $ 58.4
Cash used in investing activities (24.4)(a) (33.0)(a)
Cash used in financing activities (7.7) (22.3)
------ ------
Net increase (decrease) in cash $(21.2) $ 3.1
(a) Includes $23.4 and $36.3 of capital expenditures for the
quarterly period ended March 31, 2005 and 2004, respectively.
Convergys Corporation
Customer Management Group
Operating Segment Data
In Millions
(Unaudited)
For the Three Mo.s
Ended Mar. 31, %
2005 2004 Chg.
Revenues:
Communications $231.6 $233.1 (1)
Technology 39.0 39.2 (1)
Financial Services 68.1 36.3 88
Other 108.8 82.3 32
------ ------ --
Total CMG Revenues 447.5 390.9 14
Costs & Expenses:
Cost of Providing
Services & Products 298.3 256.1 16
Selling, General & Admin. 102.6 81.6 26
Research & Development 1.7 2.1 (19)
Depreciation 20.2 17.4 16
Amortization 3.2 2.2 45
------ ------ --
Total Costs & Expenses 426.0 359.4 19
------ ------ --
Operating Income $ 21.5 $ 31.5 (32)
====== ======
The operating segment data for the Customer Management Group (CMG)
shown above reflects the detailed revenue and expense data for CMG,
as reported under U.S. GAAP, that will be presented in the Convergys
10-Q for the quarterly period ended March 31, 2005.
Convergys Corporation
Information Management Group
Operating Segment Data
In Millions
(Unaudited)
For the Three Mo.s
Ended Mar. 31, %
2005 2004 Chg.
Revenues:
Data Processing $ 90.0 $ 99.0 (9)
Prof. & Consulting 61.0 45.5 34
License & Other 38.8 38.5 1
------ ------ --
Total IMG Revenues 189.8 183.0 4
Costs & Expenses:
Cost of Providing
Services & Products 99.0 95.4 4
Selling, General & Admin. 30.9 36.6 (16)
Research & Development 15.9 16.4 (3)
Depreciation 7.9 7.7 3
Amortization 2.7 2.4 13
------ ------ --
Total Costs & Expenses 156.4 158.5 (1)
------ ------ --
Operating Income $ 33.4 $ 24.5 36
====== ======
The operating segment data for the Information Management Group
(IMG) shown above reflects the detailed revenue and expense data
for IMG, as reported under U.S. GAAP, that will be presented in
the Convergys 10-Q for the quarterly period ended March 31, 2005.
Additionally, total international revenues consisted of $37.4 and
$37.8 for the quarters ended March 31, 2005 and March 31, 2004,
respectively.
Convergys Corporation
Reconciliation of Cash Provided by Operating
Activities to Free Cash Flow
(In Millions)
For the Three Mo.s
Ended Mar. 31,
2005 2004
Cash provided by operating activities $ 10.9 $ 58.4
Accounts receivable securitization 50.0 -
Capital expenditures (23.4) (36.3)
------- -------
Free cash flows $ 37.5 $ 22.1
The schedule above provides a reconciliation of the Company's
cash flow from operations as reported under U.S. Generally
Accepted Accounting Principles (U.S. GAAP), to free cash flow,
which is a non-GAAP measure. Free cash flow is defined as cash
flow from operations less the change in the balance of the
accounts receivable securitization and capital expenditures.
Free cash flows are presented as an alternative measure of the
Company's ability to generate cash flows.
|
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion