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Convergys reports Q4 2009 and full year results amidst reports of job cuts |
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Relationship management company Convergys announced its financial results for the fourth quarter of 2009. Revenue was reported at $684 million, earnings per diluted share at $0.33, and cash flow included $58 million free cash flow plus an additional $10 million cash distribution from the Cell Partnerships in the fourth quarter of 2009. Operating income for Q4 2009 was $10 million, compared with a loss of $36 million in the same period last year. Fourth-quarter operating income in 2009 and 2008 include HR Management-related, restructuring and other charges of $33 million and $81 million, respectively. Convergys reported fourth-quarter 2009 income tax benefit at $37 million compared with income tax expense of $1 million in the same period last year, mainly due to an adjustment to the full year tax rate to reflect a favorable mix of income by geography, and the impact of prior-period HR Management-related charges. Net Income was $42 million, or $0.33 per diluted share, compared with a net loss of $29 million, or $0.24 per diluted share, in the same period last year. The company's fourth-quarter 2009 cash flow from operating activities and free cash flow were $73 million and $58 million, respectively, compared with $124 million and $95 million in the same period last year. Convergys retired $70 million of Convergys senior notes, while cash balance as at December 31, 2009, was $332 million. For the full year of 2009, Convergys reported revenues of $2,827 million, including $122 million of HR Management contract restructure-related accelerated revenue recognition, compared with $2,786 million in 2008. Net loss was reduced to $77 million, or $0.63 per diluted share, compared with a net loss of $93 million, or $0.75 per diluted share, in 2008. Full year 2009 cash flow from operating activities and free cash flow increased to $265 million and $190 million, respectively, compared with $192 million and $100 million in 2008. In 2009, the Cellular Partnerships provided $40 million in cash distributions, not included in free cash flow. The company also successfully restructured the second of two two large global HR Management contracts during Q4, the first having been restructured in Q3 of 2009. Convergys said this would eliminate future implementation obligations and liability for services not yet operational. David Dougherty, President and CEO of Convergys said, “We are taking difficult but necessary actions to further streamline costs and pursue operating improvements. This should result in Customer Management margin expansion, double-digit margins in Information Management, and HR Management profitability this year. We remain focused on what we can control in the current environment, and the actions we are taking should position us for growth.” For 2010, Convergys expects revenue to approximate $2.6 billion, EBITDA of $330 million to $360 million, earnings per diluted share of $1.05 to $1.20, and continued strong cash flow, including free cash flow to exceed $150 million plus an additional cash distribution from the Cellular Partnerships to approximate $40 million. Separately, reports said Convergys was shedding some jobs as part of a 'fine tuning' of operations. Reports quoted a statement by company spokesman John Pratt as saying that the “global restructuring actions” were being undertaken with a view to “more closely align its costs with revenue” and were already underway, without providing details about where these job cuts were taking place. |
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