Convergys Delivers Strong Revenue and Earnings Growth in First Quarter.CINCINNATI -- Convergys 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) ), 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 2007. HIGHLIGHTS * Revenue of $719.9 million in the first quarter, up 7 percent * Earnings of $0.31 per diluted share, up 19 percent * Free cash flow of $41.2 million, up 22 percent * Customer Care revenue up 8 percent with 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. up 22 percent * Employee Care revenue up 24 percent with operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. reduced 23 percent Convergys first quarter revenues of $719.9 million were up 7 percent compared to the first quarter of 2006 reflecting growth from the Customer Care and Employee Care segments. Operating income in the first quarter increased 5 percent to $65.2 million compared with $62.0 million in the prior year. Significant improvement in operating results at Customer Care and Employee Care were partially offset by anticipated declines in Information Management due to the Cingular migration. First quarter net income increased 19 percent to $43.6 million, or $0.31 per diluted share, versus $36.7 million or $0.26 per diluted share in the prior year. "I am pleased with our solid operating performance in the first quarter of 2007. Our markets are attractive, growing, and largely under-penetrated, and we have significant opportunities for future growth," said Dave Dougherty, who was elected 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 by the Board of Directors on April 17. "I am proud to be leading such a talented team of experienced and capable employees. As a leadership team, we're focused on driving revenue and earnings growth, and we're committed to delivering record results this year." Operating Performance by Segment Customer Care Customer Care revenues of $469.0 million were up 8 percent compared to the same period last year. Strong growth from several existing clients in the Communication, Technology, and 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. verticals contributed to the revenue growth. Customer Care operating income and operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: were $56.3 million and 12.0 percent, respectively, compared with $46.2 million and 10.6 percent in the prior year. The impact of revenue growth more than offset the negative impact of a weakened U.S. dollar. Information Management Information Management revenues of $185.9 million were down 2 percent compared to the same period last year. Strong growth in international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. largely offset the decline in revenue from Cingular. Information Management operating income and operating margin were $25.3 million and 13.6 percent, respectively, compared with $31.5 million and 16.7 percent in the prior year. Operating income improvements from international growth and tight cost controls largely offset the negative impact from Cingular. A significant portion of the net decline in operating income reflects the impact of severance costs incurred to further streamline the business. Employee Care Employee Care revenues of $65.0 million were up 24 percent compared to $52.5 million in the same period last year. Revenue increased as a result of recent client implementations. Employee Care operating loss improved 23 percent to $7.4 million compared to an operating loss of $9.6 million in the prior year. Improvements resulted from cost reductions and operating efficiencies. Other Items * Cash flow from operating activities was $65.2 million in the first quarter. Free cash flow was $41.2 million compared to $33.7 million for the same period in the prior year. * Net expenses related to other non-operating items were $0.6 million compared to $4.0 million for the same period in the prior year, primarily due to a reduction in net interest expense. * During the quarter, Convergys repurchased 638,200 shares at a cost of $16.3 million for an average price of $25.60 per share. Financial Guidance * Convergys continues to expect record revenue and earnings in 2007 and confirms annual 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. guidance of more than $1.20 per share. 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. DISCLOSURE AND "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: This news release contains forward-looking statements that reflect Convergys' expectations as of April 26, 2007. Actual results of Convergys could differ materially from those discussed herein. Potential risk factors that could cause or contribute to actual results being materially different from those in the forward-looking statements 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, continued consolidation in the markets we serve, terrorist activities and responses of 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. and other nations to such activities, 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, 2006, 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. NON-GAAP FINANCIAL MEASURES: This news release contains non-GAAP financial measures as defined by the Securities and Exchange Commission Regulation G. Pursuant to the requirements of this regulation, reconciliations of these non-GAAP measures to their comparable GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). measures are included in the attached financial tables. Convergys provides non-GAAP free cash flow and revenues excluding AT&T. Convergys' management believes that these non-GAAP financial measures provide management and investors with (1) a more comprehensive understanding of the company's underlying performance, (2) a useful comparison of current results with past and future results, and (3) an enhanced understanding of the company's prospects for the future. However, Convergys recognizes that there are limitations associated with the use of these non-GAAP financial measures as they do not reflect all of the amounts associated with our results as determined in accordance with GAAP. These non-GAAP measures should be considered supplemental in nature and should not be considered in isolation or be construed as being more important than comparable GAAP measures. The non-GAAP financial information that we provide may be different from that provided by our competitors or other companies. As described above, Convergys uses the following non-GAAP measures: Free cash flow -- Management uses free cash flow to assess the financial performance of the company. Convergys' management believes that free cash flow is useful to investors because it relates the operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. of the company to the capital that is spent to continue and improve business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets , such as investment in the company's existing businesses. Further, free cash flow facilitates management's ability to strengthen the company's balance sheet, to repurchase the company's stock and to repay the company's debt obligations. Limitations associated with the use of free cash flow include that it does not represent the residual cash flow available for discretionary expenditures as it does not incorporate certain cash payments including payments made on capital lease obligations or cash payments for business acquisitions. Management compensates for these limitations by using both the non-GAAP measure, free cash flow, and the GAAP measure, cash from operating activities, in its evaluation of performance. There are no material purposes for which we use this non-GAAP measure beyond the purposes described above. Revenues excluding AT&T - In December 2006, Cingular became a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of AT&T. The company uses revenues excluding AT&T to assess the revenue growth of the business excluding the impact of Cingular's migration of subscribers off billing systems that Convergys supported for a predecessor company. Beginning in 2005, the company assisted Cingular with migrating subscribers off the AT&T Wireless billing systems onto Cingular's in-house systems, one of which Convergys continues to support in a managed services An umbrella term for third-party monitoring and maintaining of computers, networks and software. The actual equipment may be inhouse or at the third-party's facilities, but the "managed" implies an ongoing effort; for example, making sure the equipment is running at a certain quality environment. While AT&T continues to be the company's largest client, as a result of the Cingular migration, the company is not expecting 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 from AT&T after the first quarter of 2007. Limitations associated with the use of this non-GAAP measure include that this measure does not include all of the amounts associated with our results as determined in accordance with GAAP. Management compensates for these limitations by using both the non-GAAP measure, revenues excluding AT&T, and the GAAP measure, revenues, in its evaluation of performance. There are no material purposes for which we use this non-GAAP measure beyond the purposes described above. CONFERENCE CALL NOTE: Convergys will host a conference call on Thursday, 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 Chairman Jim Orr introducing newly-elected President and CEO Dave Dougherty, 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. A link to the conference call is available at www.convergys.com ABOUT CONVERGYS Convergys Corporation (NYSE: CVG) is a global leader in providing customer care, human resources, and billing services. Convergys combines specialized knowledge and expertise with solid execution to deliver outsourced solutions, consulting services, and software support. Clients in more than 70 countries speaking nearly 35 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, technology, and consumer products. Convergys is a member of the S&P 500 and a Fortune Most Admired 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 approximately 74,000 employees in 76 customer contact centers, three data centers, and other facilities in the United States, 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 To receive Convergys news releases by email, click on http://www.convergys.com/news_email.html (Convergys and the Convergys logo are registered trademarks of Convergys Corporation.) [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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