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West Corporation Reports Record Fourth Quarter and Full Year 2005 Results3 February 2006
West Corporation (Nasdaq: WSTC), a leading provider of outsourced communication solutions, today announced record fourth quarter and full year revenues, operating income, operating margin and net income.
Financial Summary (unaudited)
(In millions, except per share amounts and percentages)
Three Months Ended Twelve Months Ended
December 31, December 31,
Percent Percent
2005 2004 Change 2005 2004 Change
Revenue $404.8 $336.7 20.2% $1,523.9 $1,217.4 25.2%
Operating income $72.8 $52.5 38.8% $266.7 $187.9 41.9%
Net income $41.5 $30.5 36.2% $150.3 $113.2 32.9%
Earnings per
share (basic) $0.60 $0.45 $2.18 $1.67
Earnings per
share (diluted) $0.58 $0.43 $2.11 $1.63
"We are pleased to report a strong close to our 2005 fiscal year," said Thomas B. Barker, Chief Executive Officer of West Corporation. "Solid organic growth and the performance of recent acquisitions improved our operating leverage and enabled us to produce record revenues of over $1.5 billion and expand operating margins to 17.5% in 2005. Additionally, our most profitable segments remain our fastest growing."
Consolidated Operating Results
For the fourth quarter ended December 31, 2005, revenues were $404.8 million compared to $336.7 million for the same quarter last year, an increase of 20.2%. Revenue from acquired entities(1) accounted for $33.6 million of this increase. Operating income for the fourth quarter was $72.8 million, an increase of 38.8% versus $52.5 million in the fourth quarter of 2004. Net income was $41.5 million, up 36.2% compared to $30.5 million in the same quarter last year. Diluted earnings per share were $0.58 versus $0.43 in the same period of 2004.
For the fiscal year 2005, revenues were $1,523.9 million compared to $1,217.4 million last year, an increase of 25.2%. Revenue from acquired entities(2) accounted for $195.5 million of this increase. Operating income was $266.7 million, an increase of 41.9% versus $187.9 million in 2004. Net income was $150.3 million, up 32.9% compared to $113.2 million last year. Diluted earnings per share were $2.11 versus $1.63 in 2004.
Margins
The company reported consolidated operating margin of 18.0% in the fourth quarter of 2005, up from 15.6% in the comparable quarter last year. The improvement for the quarter is the result of increased revenues in the higher margin Conferencing Services and Receivables Management segments and a short- term Communications Services engagement, completed in the fourth quarter, that contributed $8.6 million of revenue and utilized existing infrastructure.
For 2005, consolidated operating margin was 17.5%, compared to 15.4% in 2004. The improvement for the year is the result of increased revenues in the higher margin Conferencing Services and Receivables Management segments. Additionally, improved infrastructure utilization as a result of the integration of several acquisitions helped reduce SG&A expense as a percentage of revenues.
Balance Sheet
At December 31, 2005, West Corporation had cash and cash equivalents totaling $30.8 million and a current ratio of 1.5 to 1. Net cash flows from operating activities were $92.9 million for the fourth quarter and $279.2 million for the year. As of December 31, 2005, the company had $180 million of capacity available on its bank line of credit.
"During the year, we continued to invest in our business, spending approximately five percent of revenues on capital expenditures to upgrade equipment and infrastructure, as well as expanding facilities in the U.S. and internationally," commented Paul Mendlik, Chief Financial Officer of West Corporation. "During 2005, we added 2,400 workstations, bringing our year-end capacity to approximately 18,200 workstations. In addition, our At Home Agent business continues to gain traction with clients and, as announced last week, we have over 10,000 active contracted agents, which is nearly double our 2004 year-end total of 5,500."
Conference Call
The company will hold a conference call to discuss earnings on Thursday, February 2nd at 11:00 AM Eastern Time (10:00 AM Central Time). Investors may access the call by visiting the Investor section of the West Corporation website at http://www.west.com and clicking on the Webcast link. A replay of the call will also be available on the website.
About West Corporation
West Corporation is a leading provider of outsourced communication solutions to many of the world's largest companies. The company helps its clients communicate effectively, maximize the value of their customer relationships and drive greater revenue from each transaction. West's integrated suite of customized solutions includes customer acquisition, customer care and retention services, interactive voice response services, and conferencing and accounts receivable management services.
Founded in 1986 and headquartered in Omaha, Nebraska, West has a team of approximately 28,000 employees based in North America, Europe and Asia.
For more information, please visit http://www.west.com .
This press release contains forward-looking statements within the meaning of the federal securities laws relating to West Corporation. West intends these forward-looking statements to be covered by the safe harbor provisions of the federal securities laws. 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. In particular, any projections or estimates regarding West's future revenues, operating margins, expenses, net income, cash flows, capital expenditures, effective tax rates and client behavior, as well as the assumptions underlying or relating to such expectations, are forward-looking statements. These statements reflect only West's current expectations and are not guarantees of future performance or results. These statements involve risks, uncertainties and assumptions that could cause actual results or performance to differ materially from those contained in the forward-looking statements. These risks, uncertainties and assumptions include general economic conditions, the timing, integration and results of the recently announced Intrado transaction, West's ability to integrate or achieve the objectives of recent and future acquisitions, West's ability to complete future acquisitions, West's highly competitive industries, the extensive regulatory environment, West's ability to recover on its charged-off consumer receivables, the 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 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 any 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 Commissions including West's annual report on Form 10-K for the year ended December 31, 2004 and subsequently filed quarterly reports on Form 10-Q and the prospectus supplement related to West's secondary offering dated October 6, 2005. 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.
(1) Acquired entities include Sprint Corporation's conferencing assets
(acquired in June 2005) and ECI Conference Call Services LLC
(acquired in December 2004) in the Conferencing segment.
(2) Acquired entities include Sprint Corporation's conferencing assets
(acquired in June 2005) and ECI Conference Call Services LLC
(acquired in December 2004) in the Conferencing segment and Worldwide
Asset Management, Inc. and its related entities (acquired in August
2004) in the Receivables Management segment.
WEST CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited, in thousands except per share and selected operating data)
Three Months Ended December 31,
2005 2004 % Change
Revenue $404,764 $336,718 20.2%
Cost of services 181,908 154,637 17.6%
Selling, general and administrative
expenses 150,027 129,623 15.7%
Operating income 72,829 52,458 38.8%
Other expense, net 3,848 1,772 117.2%
Income before tax 68,981 50,686 36.1%
Income tax expense 24,080 17,618 36.7%
Minority Interest 3,375 2,590 30.3%
Net income $41,526 $30,478 36.2%
Earnings per share:
Basic $0.60 $0.45 33.3%
Diluted $0.58 $0.43 34.9%
Weighted average common shares
outstanding:
Basic 69,594 68,075
Diluted 71,737 70,249
SELECTED OPERATING DATA:
Revenue:
Communication Services $229,973 $219,085 5.0%
Conferencing 123,421 75,027 64.5%
Receivables Management 52,778 44,023 19.9%
Inter segment eliminations (1,408) (1,417) -0.6%
Total $404,764 $336,718 20.2%
Operating Income:
Communication Services $33,527 $31,642 6.0%
Conferencing 30,211 13,767 119.4%
Receivables Management 9,091 7,049 29.0%
Total $72,829 $52,458 38.8%
Operating Margin:
Communication Services 14.6% 14.4% 1.4%
Conferencing 24.5% 18.3% 33.9%
Receivables Management 17.2% 16.0% 7.5%
Total 18.0% 15.6% 15.4%
Number of workstations
(end of period) 18,225 15,776 15.5%
Number of Communication Services
ports (end of period) 124,993 137,176 -8.9%
Twelve Months Ended December 31,
2005 2004 % Change
Revenue $1,523,923 $1,217,383 25.2%
Cost of services 687,381 541,979 26.8%
Selling, general and administrative
expenses 569,865 487,513 16.9%
Operating income 266,677 187,891 41.9%
Other expense, net 13,181 6,368 107.0%
Income before tax 253,496 181,523 39.6%
Income tax expense 87,736 65,762 33.4%
Minority Interest 15,411 2,590 495.0%
Net income $150,349 $113,171 32.9%
Earnings per share:
Basic $2.18 $1.67 30.5%
Diluted $2.11 $1.63 29.4%
Weighted average common shares
outstanding:
Basic 68,945 67,643
Diluted 71,310 69,469
SELECTED OPERATING DATA:
Revenue:
Communication Services $873,975 $817,718 6.9%
Conferencing 438,613 302,469 45.0%
Receivables Management 216,191 99,411 117.5%
Inter segment eliminations (4,856) (2,215) 119.2%
Total $1,523,923 $1,217,383 25.2%
Operating Income:
Communication Services $122,076 $105,638 15.6%
Conferencing 105,793 67,264 57.3%
Receivables Management 38,808 14,989 158.9%
Total $266,677 $187,891 41.9%
Operating Margin:
Communication Services 14.0% 12.9% 8.5%
Conferencing 24.1% 22.2% 8.6%
Receivables Management 18.0% 15.1% 19.2%
Total 17.5% 15.4% 13.6%
Condensed Balance Sheet
December 31, December 31, %
2005 2004 Change
Current assets:
Cash and cash equivalents $30,835 $28,330 8.8%
Trust cash 3,727 4,242 -12.1%
Accounts and notes receivable, net 217,806 195,598 11.4%
Portfolio receivables, current 35,407 26,646 32.9%
Other current assets 28,567 27,244 4.9%
Total current assets 316,342 282,060 12.2%
Net property and equipment 234,871 223,110 5.3%
Portfolio receivables, net 59,043 56,897 3.8%
Goodwill 717,624 573,885 25.0%
Other assets 170,782 135,254 26.3%
Total assets $1,498,662 $1,271,206 17.9%
Current liabilities $206,295 $157,294 31.2%
Long Term Obligations 233,245 238,354 -2.1%
Other liabilities & minority interest 87,254 86,103 1.3%
Stockholders' equity 971,868 789,455 23.1%
Total liabilities and stockholders
equity $1,498,662 $1,271,206 17.9%
Source: prnewswire
All trademarks and copyrighted information contained herein are the property of their respective owners.
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