UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant
to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 3, 2015
Sykes Enterprises, Incorporated
(Exact name of registrant as specified in its charter)
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Florida |
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0-28274 |
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56-1383460 |
(State or other jurisdiction
of incorporation) |
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(Commission
File Number) |
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(IRS Employer
Identification No.) |
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400 N. Ashley Drive, Suite 2800, Tampa,
Florida |
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33602 |
(Address of principal executive offices) |
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(Zip Code) |
Registrants telephone number, including area code: (813) 274-1000
(Former name or former address if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any
of the following provisions:
¨ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. |
Results of Operations and Financial Condition. |
On August 3, 2015, Sykes
Enterprises, Incorporated issued a press release announcing its financial results for the three and six months ended June 30, 2015. The press release is attached as Exhibit 99.1.
Item 9.01. |
Financial Statements and Exhibits. |
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(d) |
The following exhibit is included with this Report: |
Exhibit 99.1 Press release, dated August 3, 2015, announcing the financial results for the three and six months ended
June 30, 2015.
(Remainder of page intentionally left blank.)
-2-
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
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SYKES ENTERPRISES, INCORPORATED |
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By: |
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/s/ John Chapman |
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John Chapman |
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Executive Vice President and Chief Financial Officer |
Date: August 3, 2015
-3-
EXHIBIT INDEX
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Exhibit No. |
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Description |
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99.1 |
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Press release dated August 3, 2015, announcing the financial results for the three and six months ended June 30, 2015. |
-4-
Exhibit 99.1
news release
FOR IMMEDIATE
RELEASE
AUGUST 3, 2015
SYKES ENTERPRISES, INCORPORATED REPORTS
SECOND-QUARTER 2015 FINANCIAL RESULTS
Continued agent productivity gains drive second quarter 2015 financial
results above previously provided business outlook ranges
Updating full-year 2015 business outlook
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TAMPA, FL August 3, 2015 - Sykes Enterprises, Incorporated (SYKES or
the Company) (NASDAQ: SYKE), a global leader in providing comprehensive outsourced customer contact management solutions and services in the business process outsourcing (BPO) arena, announced today its financial results for the
second-quarter ended June 30, 2015.
Second Quarter 2015 Financial Highlights |
SYKES Enterprises, Incorporated
Corporate Headquarters:
400 North Ashley Drive
Tampa, FL USA 33602
1 - 800 - TO - SYKES
http://www.sykes.com
EMEA Operations:
599 Calder Road
Edinburgh EH11 4GA
Scotland
+44 (0) 131 458-6500
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Second quarter 2015 revenues of $307.5 million decreased $13.0
million, or 4.1%, from $320.5 million in the comparable quarter last year, driven chiefly by unfavorable foreign exchange rates as the functional currencies of the Companys various international operations weakened relative to the U.S. dollar
on a comparable basis; on a constant currency basis, second quarter 2015 revenues increased 1.1% comparably, with the increased demand led by the technology vertical
Second quarter 2015 operating margin was 5.9% versus 3.3% in the
same period last year; on a non-GAAP basis (see section titled Non-GAAP Financial Measures for an explanation and see Exhibit 6 for reconciliation), second quarter 2015 operating margin increased to 7.1% versus 4.7% in the same period
last year, with the comparable margin increase primarily driven largely by higher agent productivity gains and sustained improvement in capacity utilization, coupled with a favorable foreign exchange impact (approximately 80 basis points); the
year-ago periods margin, however, was somewhat constrained by costs related to demand, which materialized later than anticipated, as well as the cost impact of a financial services program ramp down due partly to regulatory changes in a
clients industry
Second quarter 2015 diluted earnings per share were $0.31 versus
$0.19 in the comparable quarter last year, with the 63.2% increase due largely to the above-mentioned factors
On a non-GAAP basis, second quarter 2015 diluted earnings per
share increased to $0.36 from $0.27 in the same period last year (see Exhibit 6 for reconciliation), with the comparable 33.3% increase driven largely by the previously-mentioned factors. Second quarter 2015 diluted earnings per share were also
higher relative to the Companys May 2015 business outlook range of $0.24 to $0.27, also driven largely by the previously-mentioned factors coupled with a lower effective tax rate relative to the May 2015 business outlook |
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Consolidated capacity utilization rate
increased slightly to 80% in the second quarter of 2015 from 79% in the comparable period last year, due to a reduction in capacity
Americas Region Revenues from the Companys Americas
region, including operations in North America and offshore (Latin America, South Asia and the Asia Pacific region), decreased 2.7% to $249.7 million, or 81.2% of total revenues, for the second quarter of 2015 compared to $256.7 million, or 80.1% of
total revenues, in the same prior year period. On a constant currency basis, second quarter 2015 Americas revenues decreased 1.1% comparably, moderated by certain clients within the communications as discussed in the Companys May 2015 business
outlook, as well as clients within the financial services and transportation and leisure verticals.
Sequentially, revenues generated from the Americas region decreased 5.5% to $249.7 million from $264.2 million, or 81.6% of total revenues, in the first
quarter of 2015. On a constant currency basis, second quarter 2015 Americas revenues decreased 5.6% over first quarter due to seasonality and demand moderation with certain clients as discussed in the May 2015 business outlook.
The Americas income for the second quarter of 2015 increased 35.7% to
$28.7 million, with an operating margin of 11.5% versus 8.2% in the comparable quarter last year. On a non-GAAP basis, the Americas operating margin increased to 13.0% from 9.8% in the comparable quarter last year, driven by agent productivity gains
and improved capacity utilization, coupled with favorable foreign exchange impact (approximately 110 basis points) (see Exhibit 7 for reconciliation).
Sequentially, the Americas income for the second quarter of 2015 decreased 11.9% to $28.7 million, with an operating margin of 11.5% versus 12.3% in the
first quarter of 2015. On a non-GAAP basis, the Americas operating margin was 13.0% versus 13.7% in the first quarter of 2015, with the decrease driven by a combination of seasonality and demand moderation with certain clients as discussed in our
May 2015 business outlook. (see Exhibit 7 for reconciliation). EMEA
Region Revenues from the Companys Europe, Middle East and Africa (EMEA) region decreased 9.5% to $57.8 million, representing 18.8% of total
revenues, for the second quarter of 2015, compared to $63.8 million, or 19.9% of total revenues, in the same prior year period. On a constant currency basis, EMEA revenues increased 10.0% on a comparable basis driven by the communications,
technology and transportation and leisure verticals. Sequentially,
revenues from the Companys EMEA region decreased 2.9% to $57.8 million, or 18.8% of total revenues, versus $59.5 million, or 18.4% of total revenues, in the first quarter of 2015. On a constant currency basis, EMEA revenues decreased 2.2%
sequentially due to fewer work days in the second quarter compared to the first quarter.
The EMEA regions income for the second quarter of 2015 was $3.0 million, with an operating margin of 5.1% versus 2.4% in the comparable quarter
last year. On a non-GAAP basis, the operating margin was 5.1% versus 2.2% in the same period last year, with the margin increase driven by a combination of higher demand and productivity improvements (see Exhibit 7 for reconciliation).
Sequentially, the EMEA regions income for the second quarter of
2015 was $3.0 million, or 5.1% of EMEA revenues, versus $3.8 million, or 6.4% of revenues, in the first quarter of 2015. On a non-GAAP basis, the EMEA operating margin was 5.1% versus 6.4% in the first quarter of 2015 due to fewer workdays and
higher employee costs in the form of overtime pay for public holidays in certain countries (see Exhibit 7 for reconciliation). |
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Other G&A Expenses Other G&A
expenses, which includes corporate and other costs, increased to $13.4 million, or 4.4% of total revenues, in the second quarter of 2015, compared to $12.3 million, or 3.8% of total revenues in the prior year period. On a non-GAAP basis, other
G&A expenses increased to 4.4% of total revenues from 3.6% in the prior year period due to a combination of expenses related to increased incentive compensation, as well as higher travel and consulting costs (see Exhibit 7 for
reconciliation). Sequentially, other G&A expenses decreased to
$13.4 million from $13.8 million in the first quarter of 2015, however, as a percent of total revenues increased slightly to 4.4% of revenues in the second quarter of 2015 from 4.3% in the first quarter of 2015 on both a GAAP and non-GAAP basis (see
Exhibit 7 for reconciliation). Other Income (Expense) and Taxes
Total other income (expense), net for the second quarter of 2015 was roughly flat, totaling $0.6 million compared to $0.7 million for the same period in
the prior year. The Company recorded an effective tax rate of
26.6% for the second quarter of 2015 versus 14.2% in the same period last year and slightly below the estimated 27% provided in the Companys May 2015 business outlook. The effective tax rate differential on a comparable basis was primarily due
to a shift in the geographic mix of earnings to higher tax rate jurisdictions.
On a non-GAAP basis, the second quarter 2015 effective tax rate was 28.1% compared to 20.7% in the same period last year and below the estimated 30%
provided in the Companys May 2015 business outlook (see Exhibit 11 for reconciliation). The effective tax rate differential on a comparable basis was due to the aforementioned factor.
Liquidity and Capital Resources
The Companys balance sheet at June 30, 2015 remained strong with cash and cash equivalents of $222.4 million, of which approximately 90.8%, or
$201.9 million, was held in international operations and is deemed to be indefinitely reinvested offshore. In the second quarter of 2015, net cash provided by operating activities was up 22.8% to $28.5 million, driven mostly by higher net income and
changes in operating assets and liabilities. At quarter end, the Company had $65.0 million in borrowings outstanding, with $375.0 million available under its new $440.0 million credit facility dated May 12, 2015.
Business Outlook
The assumptions driving the business outlook for the third quarter and full-year
2015 are as follows:
The Company is updating its full-year 2015 business outlook.
Given the better-than-expected financial results for the second quarter, the Company is increasing the bottom end of its revenue range for 2015 (to between $1,275.0 million and $1,285.0 million from between $1,270.0 million and $1,285.0 million
previously). In addition, the Company is also raising both the bottom and top-end of its full-year diluted earnings per share ranges (to between $1.57 and $1.63 from between $1.54 and $1.62 previously) even as it absorbs the cost of investments for
an incremental 1,700 gross seats, doubling the initial 1,700 gross seat additions planned for 2015 and bringing the total gross seat additions for 2015 at 3,400. The incremental seat addition is being driven by higher demand mainly from certain
financial services clients. The investments associated with the incremental capacity additions and the related ramps are expected to impact diluted earnings per share by approximately $0.09 for the second half of 2015. Yet despite these incremental
investments, the Companys implied operating margin expectations for full-year 2015 remains unchanged; |
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The Company added roughly 400 seats on a
gross basis in the second quarter, in addition to the 400 already added in first quarter of 2015. The net seat count, however, is down by approximately 800 for the first six months of 2015. With the incremental seat additions as discussed above, on
top of those slated previously, the Company now expects to end 2015 with a net increase in seats of 1,700 relative to year-end 2014 versus initial plans of a flat seat count;
The Companys revenues and earnings per share assumptions
for the third quarter and full year 2015 are based on foreign exchange rates as of July 2015. Therefore, the continued volatility in foreign exchange rates between the U.S. dollar and the functional currencies of the markets the Company serves could
have a further impact, positive or negative, on revenues and both GAAP and non-GAAP earnings per share relative to the business outlook for the third quarter and full-year as discussed above;
The Company anticipates total other interest income (expense),
net of approximately $0.8 million for the third quarter and $3.2 million for the full year 2015. These amounts exclude the potential impact of any future foreign exchange gains or losses in other income (expense); and
The Company anticipates a slightly higher effective tax rate for
full-year 2015 relative to the business outlook provided in May, driven chiefly by a shift in the geographic mix of earnings to higher tax rate jurisdictions.
Considering the above factors, the Company anticipates the following financial results for the three months ending September 30, 2015:
Revenues in the range of $315.0 million to $320.0 million
Effective tax rate of approximately 29.0%; **on a non-GAAP
basis, an effective tax rate of approximately
30.0% Fully diluted share count of approximately
42.2 million Diluted earnings per share of
approximately $0.29 to $0.32 **Non-GAAP diluted earnings per
share in the range of $0.34 to $0.37 Capital expenditures in
the range of $25.0 million to $28.0 million For the twelve months ending
December 31, 2015, the Company anticipates the following financial results:
Revenues in the range of $1,275.0 million to $1,285.0
million Effective tax rate of approximately 27.0%; **on a
non-GAAP basis, an effective tax rate of approximately
28.0% Fully diluted share count of approximately
42.6 million Diluted earnings per share of
approximately $1.35 to $1.41 **Non-GAAP diluted earnings per
share in the range of $1.57 to $1.63 Capital expenditures in
the range of $60.0 million to $65.0 million ** See exhibits
10 & 11 for third quarter and full-year 2015 non-GAAP diluted earnings per share and tax rate reconciliations.
Strategic Acquisition of Qelp In the third quarter, the
Company acquired Netherlands-based Qelp to further broaden and strengthen its service portfolio around digital customer support & extend its reach into adjacent, but complementary, markets. The initial purchase price of this all-cash
acquisition is EUR 8.9 million, exclusive of the contingent consideration. Qelp generated revenues of EUR 4.1 million, or U.S. $5.4 million, in 2014 and is growing in excess of 25% annually in functional currency terms. |
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Conference Call The Company will conduct
a conference call regarding the content of this release tomorrow, August 4, 2015, at 10:00 a.m. Eastern Daylight Time. The conference call will be carried live on the Internet. Instructions for listening to the call over the Internet are
available on the Investors page of SYKES website at www.sykes.com. A replay will be available at this location for two weeks. This press release is also posted on the SYKES website at
http://investor.sykes.com/investor-relations/Investor-Resources/Investor-Relations-Home/default.aspx.
Non-GAAP Financial Measures Non-GAAP income, non-GAAP
operating margins, non-GAAP tax rate, non-GAAP income, net of taxes, per diluted share and non-GAAP income by segment are important indicators of performance as these non-GAAP financial measures assist readers in further understanding the
Companys results from operations and how management evaluates and measures such performance. These non-GAAP indicators of performance are not measures of financial performance under U.S. Generally Accepted Accounting Principles
(GAAP) and should not be considered a substitute for measures determined in accordance with GAAP. Refer to the exhibits in the release for detailed reconciliations.
About Sykes Enterprises, Incorporated
SYKES is a global leader in providing comprehensive customer contact management solutions and services in the business process outsourcing (BPO) arena.
SYKES provides an array of sophisticated customer contact management solutions to Fortune 1000 companies around the world, primarily in the communications, financial services, healthcare, technology and transportation and leisure industries. SYKES
specializes in providing flexible, high quality customer support outsourcing solutions with an emphasis on inbound technical support and customer service. Headquartered in Tampa, Florida, with customer contact management centers throughout the
world, SYKES provides its services through multiple communication channels encompassing phone, e-mail, web, chat and social media. Utilizing its integrated onshore/offshore and virtual at-home agent delivery models, SYKES serves its clients through
two geographic operating segments: the Americas (United States, Canada, Latin America, India and the Asia Pacific region) and EMEA (Europe, Middle East and Africa). SYKES also provides various enterprise support services in the Americas and
fulfillment services in EMEA, which include order processing, inventory control, product delivery and product returns handling. For additional information please visit www.sykes.com.
Forward-Looking Statements
This press release may contain forward-looking statements, including SYKES estimates of future business outlook, prospects or financial
results, statements regarding SYKES objectives, expectations, intentions, beliefs or strategies, or statements containing words such as believe, estimate, project, expect, intend,
may, anticipate, plans, seeks, implies, or similar expressions. It is important to note that SYKES actual results could differ materially from those in such forward-looking
statements, and undue reliance should not be placed on such statements. Among the important factors that could cause such actual results to differ materially are (i) the impact of economic recessions in the U.S. and other parts of the world,
(ii) fluctuations in global business conditions and the global economy, ability of maintaining margins offshore (iii) SYKES ability to continue the growth of its support service revenues through additional technical and customer
contact centers, (iv) currency fluctuations, (v) the timing of significant orders for SYKES products and services, (vi) loss or addition of significant clients, (vii) the early termination of contracts by clients,
(viii) SYKES ability to recognize deferred revenue through delivery of products or satisfactory performance of services, (ix) construction delays of new or expansion of existing customer support centers, (x) difficulties or
delays in implementing SYKES bundled service |
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offerings, (xi) failure to achieve sales, marketing and other objectives, (xii) variations in the terms and the elements
of services offered under SYKES standardized contract including those for future bundled service offerings, (xiii) changes in applicable accounting principles or interpretations of such principles, (xiv) delays in the Companys
ability to develop new products and services and market acceptance of new products and services, (xv) rapid technological change, (xvi) political and country-specific risks inherent in conducting business abroad, (xvii) SYKES
ability to attract and retain key management personnel, (xviii) SYKES ability to further penetrate into vertically integrated markets, (xix) SYKES ability to expand its global presence through strategic alliances and selective
acquisitions, (xx) SYKES ability to continue to establish a competitive advantage through sophisticated technological capabilities, (xxi) the ultimate outcome of any lawsuits or penalties (regulatory or otherwise),
(xxii) SYKES dependence on trends toward outsourcing, (xxiii) risk of interruption of technical and customer contact management center operations due to such factors as fire, earthquakes, inclement weather and other disasters, power
failures, telecommunications failures, unauthorized intrusions, computer viruses and other emergencies, (xxiv) the existence of substantial competition, (xxv) the ability to obtain and maintain grants and other incentives, including tax
holidays or otherwise, (xxvi) risks related to the integration of the businesses of SYKES and Alpine Access and (xxvii) other risk factors listed from time to time in SYKES registration statements and reports as filed with the
Securities and Exchange Commission. All forward-looking statements included in this press release are made as of the date hereof, and SYKES undertakes no obligation to update any such forward-looking statements, whether as a result of new
information, future events, or otherwise. For additional information
contact: Subhaash Kumar Sykes Enterprises, Incorporated
(813) 233-7143 |
6
Sykes Enterprises, Incorporated
Consolidated Statements of Operations
(in
thousands, except per share data)
(Unaudited)
Exhibit 1
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Three Months Ended |
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June 30, 2015 |
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June 30, 2014 |
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March 31, 2015 |
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Revenues |
|
$ |
307,453 |
|
|
$ |
320,498 |
|
|
$ |
323,685 |
|
Direct salaries and related costs |
|
|
(202,143 |
) |
|
|
(221,085 |
) |
|
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(213,927 |
) |
General and administrative |
|
|
(72,651 |
) |
|
|
(74,005 |
) |
|
|
(72,727 |
) |
Depreciation, net |
|
|
(11,007 |
) |
|
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(11,322 |
) |
|
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(11,059 |
) |
Amortization of intangibles |
|
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(3,435 |
) |
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(3,659 |
) |
|
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(3,431 |
) |
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Income from operations |
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18,217 |
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10,427 |
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22,541 |
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Total other income (expense), net |
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(626 |
) |
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(714 |
) |
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(1,102 |
) |
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Income before income taxes |
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17,591 |
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9,713 |
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21,439 |
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Income taxes |
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(4,679 |
) |
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(1,376 |
) |
|
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(5,800 |
) |
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Net income |
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$ |
12,912 |
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$ |
8,337 |
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$ |
15,639 |
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Net income per common share: |
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Basic |
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$ |
0.31 |
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$ |
0.20 |
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$ |
0.37 |
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Diluted |
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$ |
0.31 |
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$ |
0.19 |
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$ |
0.37 |
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Weighted average common shares outstanding: |
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Basic |
|
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42,008 |
|
|
|
42,711 |
|
|
|
42,181 |
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Diluted |
|
|
42,216 |
|
|
|
42,810 |
|
|
|
42,440 |
|
7
Sykes Enterprises, Incorporated
Consolidated Statements of Operations
(in
thousands, except per share data)
(Unaudited)
Exhibit 2
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Six Months Ended |
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June 30, 2015 |
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June 30, 2014 |
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Revenues |
|
$ |
631,138 |
|
|
$ |
644,927 |
|
Direct salaries and related costs |
|
|
(416,070 |
) |
|
|
(442,710 |
) |
General and administrative |
|
|
(145,378 |
) |
|
|
(147,382 |
) |
Depreciation, net |
|
|
(22,066 |
) |
|
|
(22,620 |
) |
Amortization of intangibles |
|
|
(6,866 |
) |
|
|
(7,310 |
) |
|
|
|
|
|
|
|
|
|
Income from operations |
|
|
40,758 |
|
|
|
24,905 |
|
Total other income (expense), net |
|
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(1,728 |
) |
|
|
(319 |
) |
|
|
|
|
|
|
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Income before income taxes |
|
|
39,030 |
|
|
|
24,586 |
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Income taxes |
|
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(10,479 |
) |
|
|
(5,936 |
) |
|
|
|
|
|
|
|
|
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Net income |
|
$ |
28,551 |
|
|
$ |
18,650 |
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|
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|
|
|
|
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|
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Net income per common share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.68 |
|
|
$ |
0.44 |
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|
|
|
|
|
|
|
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Diluted |
|
$ |
0.67 |
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|
$ |
0.44 |
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|
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|
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|
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Weighted average common shares outstanding: |
|
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|
|
|
|
|
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Basic |
|
|
42,095 |
|
|
|
42,726 |
|
Diluted |
|
|
42,328 |
|
|
|
42,845 |
|
8
Sykes Enterprises, Incorporated
Segment Results
(in thousands, except per
share data)
(Unaudited)
Exhibit 3
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Three Months Ended |
|
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June 30, 2015 |
|
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June 30, 2014 |
|
|
March 31, 2015 |
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Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
|
$ |
249,682 |
|
|
$ |
256,663 |
|
|
$ |
264,173 |
|
EMEA |
|
|
57,752 |
|
|
$ |
63,835 |
|
|
|
59,495 |
|
Other |
|
|
19 |
|
|
|
- |
|
|
|
17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
307,453 |
|
|
$ |
320,498 |
|
|
$ |
323,685 |
|
|
|
|
|
|
|
|
|
|
|
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|
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Operating Income: |
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
|
$ |
28,669 |
|
|
$ |
21,135 |
|
|
$ |
32,541 |
|
EMEA |
|
|
2,969 |
|
|
|
1,561 |
|
|
|
3,788 |
|
Other |
|
|
(13,421 |
) |
|
|
(12,269 |
) |
|
|
(13,788 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations |
|
|
18,217 |
|
|
|
10,427 |
|
|
|
22,541 |
|
|
|
|
|
Total other income (expense), net |
|
|
(626 |
) |
|
|
(714 |
) |
|
|
(1,102 |
) |
Income taxes |
|
|
(4,679 |
) |
|
|
(1,376 |
) |
|
|
(5,800 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
12,912 |
|
|
$ |
8,337 |
|
|
$ |
15,639 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
June 30, 2015 |
|
|
June 30, 2014 |
|
Revenues: |
|
|
|
|
|
|
|
|
Americas |
|
$ |
513,855 |
|
|
$ |
517,909 |
|
EMEA |
|
|
117,247 |
|
|
|
127,018 |
|
Other |
|
|
36 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
631,138 |
|
|
$ |
644,927 |
|
|
|
|
|
|
|
|
|
|
Operating Income: |
|
|
|
|
|
|
|
|
Americas |
|
$ |
61,210 |
|
|
$ |
43,782 |
|
EMEA |
|
|
6,757 |
|
|
|
4,445 |
|
Other |
|
|
(27,209 |
) |
|
|
(23,322 |
) |
|
|
|
|
|
|
|
|
|
Income from operations |
|
|
40,758 |
|
|
|
24,905 |
|
|
|
|
Total other income (expense), net |
|
|
(1,728 |
) |
|
|
(319 |
) |
Income taxes |
|
|
(10,479 |
) |
|
|
(5,936 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
28,551 |
|
|
$ |
18,650 |
|
|
|
|
|
|
|
|
|
|
9
Sykes Enterprises, Incorporated
Consolidated Balance Sheets
(in thousands,
except seat data)
(Unaudited)
Exhibit 4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2015 |
|
|
December 31, 2014 |
|
|
|
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
$ |
552,452 |
|
|
$ |
550,086 |
|
|
|
|
|
Property and equipment, net |
|
|
104,219 |
|
|
|
109,880 |
|
|
|
|
|
Goodwill & intangibles, net |
|
|
243,961 |
|
|
|
254,451 |
|
|
|
|
|
Other noncurrent assets |
|
|
27,937 |
|
|
|
30,083 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
928,569 |
|
|
$ |
944,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities & Shareholders Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
$ |
157,684 |
|
|
$ |
167,862 |
|
|
|
|
|
Noncurrent liabilities |
|
|
110,115 |
|
|
|
118,420 |
|
|
|
|
|
Shareholders equity |
|
|
660,770 |
|
|
|
658,218 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders equity |
|
$ |
928,569 |
|
|
$ |
944,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sykes Enterprises, Incorporated
Supplementary Data |
|
|
|
Q2 2015 |
|
|
Q2 2014 |
|
|
|
|
Geographic Mix (% of Total Revenues): |
|
|
|
|
|
|
|
|
|
|
|
|
Americas (1) |
|
|
81% |
|
|
|
80% |
|
|
|
|
|
Europe, Middle East & Africa (EMEA) |
|
|
19% |
|
|
|
20% |
|
|
|
|
|
Other |
|
|
0% |
|
|
|
0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
100% |
|
|
|
100% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes the United States, Canada, Latin America, South Asia and the Asia Pacific (APAC) Region. Latin America, South Asia and APAC are included in the Americas
due to the nature of the business and client profile, which is primarily made up of U.S. based clients. |
|
|
|
|
|
|
|
Q2 2015 |
|
|
Q2 2014 |
|
|
|
|
Vertical Industry Mix (% of Total Revenues): |
|
|
|
|
|
|
|
|
|
|
|
|
Communications |
|
|
35% |
|
|
|
38% |
|
|
|
|
|
Financial Services |
|
|
24% |
|
|
|
25% |
|
|
|
|
|
Technology / Consumer |
|
|
19% |
|
|
|
17% |
|
|
|
|
|
Transportation & Leisure |
|
|
8% |
|
|
|
9% |
|
|
|
|
|
Healthcare |
|
|
5% |
|
|
|
5% |
|
|
|
|
|
Other |
|
|
8% |
|
|
|
6% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
100% |
|
|
|
100% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Seat Capacity (2) |
|
|
|
Q2 2015 |
|
|
Q2 2014 |
|
|
Q1 2015 |
|
Americas |
|
|
33,500 |
|
|
|
34,800 |
|
|
|
33,200 |
|
EMEA |
|
|
6,700 |
|
|
|
6,300 |
|
|
|
6,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
40,200 |
|
|
|
41,100 |
|
|
|
39,900 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capacity Utilization |
|
|
|
Q2 2015 |
|
|
Q2 2014 |
|
|
Q1 2015 |
|
Americas |
|
|
79% |
|
|
|
77% |
|
|
|
78% |
|
EMEA |
|
|
86% |
|
|
|
89% |
|
|
|
88% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
80% |
|
|
|
79% |
|
|
|
80% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) The seat capacity and capacity utilization data are related to the
Companys brick-and-mortar call centers. At the end of the second quarter 2015, the Company had approximately 2,600 agent FTEs working virtually from home both in the U.S. and Canada.
10
Sykes Enterprises, Incorporated
Cash Flow from Operations
(in thousands)
(Unaudited)
Exhibit 5
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2015 |
|
|
2014 |
|
Cash Flow From Operating Activities: |
|
|
|
|
|
|
|
|
Net income |
|
$ |
12,912 |
|
|
$ |
8,337 |
|
Depreciation |
|
|
11,203 |
|
|
|
11,551 |
|
Amortization of intangibles |
|
|
3,435 |
|
|
|
3,659 |
|
Amortization of deferred grants |
|
|
(242 |
) |
|
|
(240 |
) |
Changes in assets and liabilities and other |
|
|
1,154 |
|
|
|
(121 |
) |
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
$ |
28,462 |
|
|
$ |
23,186 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
$ |
8,607 |
|
|
$ |
12,530 |
|
Cash paid during period for interest |
|
$ |
367 |
|
|
$ |
459 |
|
Cash paid during period for income taxes |
|
$ |
8,625 |
|
|
$ |
5,545 |
|
|
|
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2015 |
|
|
2014 |
|
Cash Flow From Operating Activities: |
|
|
|
|
|
|
|
|
Net income |
|
$ |
28,551 |
|
|
$ |
18,650 |
|
Depreciation |
|
|
22,458 |
|
|
|
23,090 |
|
Amortization of intangibles |
|
|
6,866 |
|
|
|
7,310 |
|
Amortization of deferred grants |
|
|
(441 |
) |
|
|
(829 |
) |
Changes in assets and liabilities and other |
|
|
(330 |
) |
|
|
(8,879 |
) |
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
$ |
57,104 |
|
|
$ |
39,342 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
$ |
19,476 |
|
|
$ |
24,236 |
|
Cash paid during period for interest |
|
$ |
735 |
|
|
$ |
904 |
|
Cash paid during period for income taxes |
|
$ |
14,231 |
|
|
$ |
9,341 |
|
11
Sykes Enterprises, Incorporated
Reconciliation of Non-GAAP Financial Information
(in thousands, except per share data)
(Unaudited)
Exhibit 6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
March 31, |
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
GAAP income from operations |
|
$ |
18,217 |
|
|
$ |
10,427 |
|
|
$ |
22,541 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related severance & consulting engagement costs |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Acquisition-related depreciation & amortization of property & equipment and intangible write-ups |
|
|
3,737 |
|
|
|
4,095 |
|
|
|
3,745 |
|
Merger & integration costs |
|
|
- |
|
|
|
- |
|
|
|
- |
|
EMEA restructuring |
|
|
- |
|
|
|
(182 |
) |
|
|
- |
|
Other |
|
|
- |
|
|
|
681 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP income from operations |
|
$ |
21,954 |
|
|
$ |
15,021 |
|
|
$ |
26,286 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
March 31, |
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
GAAP net income, per diluted share |
|
$ |
0.31 |
|
|
$ |
0.19 |
|
|
$ |
0.37 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related severance & consulting engagement costs |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Acquisition-related depreciation & amortization of property & equipment and intangible write-ups |
|
|
0.05 |
|
|
|
0.06 |
|
|
|
0.06 |
|
Merger & integration costs |
|
|
- |
|
|
|
- |
|
|
|
- |
|
EMEA restructuring |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Other |
|
|
- |
|
|
|
0.02 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income, per diluted share |
|
$ |
0.36 |
|
|
$ |
0.27 |
|
|
$ |
0.43 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12
Sykes Enterprises, Incorporated
Reconciliation of Non-GAAP Financial Information By Segment
(in thousands)
(Unaudited)
Exhibit 7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
|
|
EMEA |
|
|
Other (1) |
|
|
|
Three Months Ended |
|
|
Three Months Ended |
|
|
Three Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
GAAP income (loss) from operations |
|
$ |
28,669 |
|
|
$ |
21,135 |
|
|
$ |
2,969 |
|
|
$ |
1,561 |
|
|
$ |
(13,421 |
) |
|
$ |
(12,269 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related severance & consulting engagement costs |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Acquisition-related depreciation & amortization of property & equipment and intangible write-ups |
|
|
3,737 |
|
|
|
4,095 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Merger & integration costs |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
EMEA restructuring |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(182 |
) |
|
|
- |
|
|
|
- |
|
Other |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
681 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP income (loss) from operations |
|
$ |
32,406 |
|
|
$ |
25,230 |
|
|
$ |
2,969 |
|
|
$ |
1,379 |
|
|
$ |
(13,421 |
) |
|
$ |
(11,588 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
|
|
EMEA |
|
|
Other (1) |
|
|
|
Three Months Ended |
|
|
Three Months Ended |
|
|
Three Months Ended |
|
|
|
June 30, |
|
|
March 31, |
|
|
June 30, |
|
|
March 31, |
|
|
June 30, |
|
|
March 31, |
|
|
|
2015 |
|
|
2015 |
|
|
2015 |
|
|
2015 |
|
|
2015 |
|
|
2015 |
|
GAAP income (loss) from operations |
|
$ |
28,669 |
|
|
$ |
32,541 |
|
|
$ |
2,969 |
|
|
$ |
3,788 |
|
|
$ |
(13,421 |
) |
|
$ |
(13,788 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related severance & consulting engagement costs |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Acquisition-related depreciation & amortization of property & equipment and intangible write-ups |
|
|
3,737 |
|
|
|
3,745 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Merger & integration costs |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
EMEA restructuring |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Other |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP income (loss) from operations |
|
$ |
32,406 |
|
|
$ |
36,286 |
|
|
$ |
2,969 |
|
|
$ |
3,788 |
|
|
$ |
(13,421 |
) |
|
$ |
(13,788 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Other includes corporate and other costs.
13
Sykes Enterprises, Incorporated
Reconciliation of Non-GAAP Financial Information
(in thousands, except per share data)
(Unaudited)
Exhibit 8
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
June 30, 2015 |
|
|
June 30, 2014 |
|
GAAP income from operations |
|
$ |
40,758 |
|
|
$ |
24,905 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Acquisition-related severance & consulting engagement costs |
|
|
- |
|
|
|
- |
|
Acquisition-related depreciation & amortization of property & equipment and intangible write-ups |
|
|
7,482 |
|
|
|
8,197 |
|
Merger & integration costs |
|
|
- |
|
|
|
- |
|
EMEA restructuring |
|
|
- |
|
|
|
(182 |
) |
Other |
|
|
- |
|
|
|
681 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP income from operations |
|
$ |
48,240 |
|
|
$ |
33,601 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
June 30, 2015 |
|
|
June 30, 2014 |
|
GAAP net income, per diluted share |
|
$ |
0.67 |
|
|
$ |
0.44 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Acquisition-related severance & consulting engagement costs |
|
|
- |
|
|
|
- |
|
Acquisition-related depreciation & amortization of property & equipment and intangible write-ups |
|
|
0.12 |
|
|
|
0.12 |
|
Merger & integration costs |
|
|
- |
|
|
|
- |
|
EMEA restructuring |
|
|
- |
|
|
|
- |
|
Other |
|
|
- |
|
|
|
0.02 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income, per diluted share |
|
$ |
0.79 |
|
|
$ |
0.58 |
|
|
|
|
|
|
|
|
|
|
14
Sykes Enterprises, Incorporated
Reconciliation of Non-GAAP Financial Information By Segment
(in thousands)
(Unaudited)
Exhibit 9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
|
|
EMEA |
|
|
Other (1) |
|
|
|
Six Months Ended |
|
|
Six Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
GAAP income (loss) from operations |
|
$ |
61,210 |
|
|
$ |
43,782 |
|
|
$ |
6,757 |
|
|
$ |
4,445 |
|
|
($ |
27,209 |
) |
|
($ |
23,322 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related severance & consulting engagement costs |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Acquisition-related depreciation & amortization of property & equipment and intangible write-ups |
|
|
7,482 |
|
|
|
8,197 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Merger & integration costs |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
EMEA restructuring |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(182 |
) |
|
|
- |
|
|
|
- |
|
Other |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
681 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP income (loss) from operations |
|
$ |
68,692 |
|
|
$ |
51,979 |
|
|
$ |
6,757 |
|
|
$ |
4,263 |
|
|
($ |
27,209 |
) |
|
($ |
22,641 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Other includes corporate and other costs.
15
Sykes Enterprises, Incorporated
Reconciliation of Non-GAAP Financial Information
(Unaudited)
Exhibit 10
|
|
|
|
|
|
|
Business Outlook Third Quarter 2015 |
|
|
|
GAAP net income, per diluted share |
|
|
$0.29 - $0.32 |
|
Adjustments: |
|
|
|
|
Acquisition-related severance & consulting engagement costs |
|
|
- |
|
Acquisition-related depreciation & amortization of property & equipment and intangible write-ups |
|
|
0.05 |
|
Merger & integration costs |
|
|
- |
|
EMEA restructuring |
|
|
- |
|
Other |
|
|
- |
|
|
|
|
|
|
Non-GAAP net income, per diluted share |
|
|
$0.34 - $0.37 |
|
|
|
|
|
|
|
|
|
|
Business Outlook Full Year 2015 |
|
|
|
GAAP net income, per diluted share |
|
|
$1.35 - $1.41 |
|
Adjustments: |
|
|
|
|
Acquisition-related severance & consulting engagement costs |
|
|
- |
|
Acquisition-related depreciation & amortization of property & equipment and intangible write-ups |
|
|
0.22 |
|
Merger & integration costs |
|
|
- |
|
EMEA restructuring |
|
|
- |
|
Other |
|
|
- |
|
|
|
|
|
|
Non-GAAP net income, per diluted share |
|
|
$1.57 - $1.63 |
|
|
|
|
|
|
16
Sykes Enterprises, Incorporated
Reconciliation of Non-GAAP Financial Information
(Unaudited)
Exhibit 11
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
June 30, 2015 |
|
June 30, 2014 |
|
March 31, 2015 |
GAAP tax rate |
|
27% |
|
14% |
|
27% |
Adjustments: |
|
|
|
|
|
|
Acquisition-related severance & consulting engagement costs |
|
- |
|
- |
|
- |
Acquisition-related depreciation & amortization of property & equipment and intangible write-ups |
|
1% |
|
6% |
|
1% |
Merger & integration costs |
|
- |
|
- |
|
- |
EMEA restructuring |
|
- |
|
- |
|
- |
Other |
|
- |
|
1% |
|
- |
|
|
|
|
|
|
|
Non-GAAP tax rate |
|
28% |
|
21% |
|
28% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Year Ended |
|
|
|
|
September 30, 2015 |
|
December 31, 2015 |
|
|
GAAP tax rate |
|
29% |
|
27% |
|
|
Adjustments: |
|
|
|
|
|
|
Acquisition-related severance & consulting engagement costs |
|
- |
|
- |
|
|
Acquisition-related depreciation & amortization of property & equipment and intangible write-ups |
|
1% |
|
1% |
|
|
Merger & integration costs |
|
- |
|
- |
|
|
EMEA restructuring |
|
- |
|
- |
|
|
Other |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
Non-GAAP tax rate |
|
30% |
|
28% |
|
|
|
|
|
|
|
|
|
17
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