Sykes Enterprises, Incorporated Reports Unaudited Consolidated Earnings Results for the Second Quarter and Six Months Ended June 30, 2015; Revises Earnings Outlook for the Year Ending December 31, 2015; Provides Earnings Outlook for the Third Quarter Ending September 30, 2015
Aug 3 15
Sykes Enterprises, Incorporated reported unaudited consolidated earnings results for the second quarter and six months ended June 30, 2015. For the quarter, the company reported revenues of $307,453,000 compared to $320,498,000 a year ago. Income from operations was $18,217,000 compared to $10,427,000 a year ago. Income before income taxes was $17,591,000 compared to $9,713,000 a year ago. Net income was $12,912,000 or $0.31 per basic and diluted common share compared to $8,337,000 or $0.19 per diluted common share a year ago. Net cash provided by operating activities was $28,462,000 compared to $23,186,000 a year ago. Capital expenditures were $8,607,000 compared to $12,530,000 a year ago. Non-GAAP income from operations was $21,954,000 compared to $15,021,000 a year ago. Non-GAAP net income, per diluted share was $0.36 compared to $0.27 a year ago. Second quarter 2015 revenues decreased $13.0 million, or 4.1%, driven chiefly by unfavorable foreign exchange rates as the functional currencies of the Company’s 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.
For the six months, the company reported revenues of $631,138,000 compared to $644,927,000 a year ago. Income from operations was $40,758,000 compared to $24,905,000 a year ago. Income before income taxes was $39,030,000 compared to $24,586,000 a year ago. Net income was $28,551,000 or $0.67 per diluted common share compared to $18,650,000 or $0.44 per basic and diluted common share a year ago. Net cash provided by operating activities was $57,104,000 compared to $39,342,000 a year ago. Capital expenditures were $19,476,000 compared to $24,236,000 a year ago. Non-GAAP income from operations was $48,240,000 compared to $33,601,000 a year ago. Non-GAAP net income, per diluted share was $0.79 compared to $0.58 a year ago.
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 Non-GAAP diluted earnings per share ranges to between $1.57 and $1.63 from between $1.54 and $1.62 previously. 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 Company’s implied operating margin expectations for full-year 2015 remains unchanged. With the incremental seat additions, 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 Company’s revenues and earnings per share assumptions for the third quarter and full year 2015 are based on foreign exchange rates as of July 2015. The Company anticipates a slightly higher effective tax rate for full-year 2015 relative to the business outlook provided in May 2015, driven chiefly by a shift in the geographic mix of earnings to higher tax rate jurisdictions. The company expects effective tax rate of approximately 27.0%; on a non-GAAP basis, an effective tax rate of approximately 28.0%, diluted earnings per share of approximately $1.35 to $1.41, and capital expenditures in the range of $60.0 million to $65.0 million.
Considering the above factors, the Company anticipates the following financial results for the third quarter ending September 30, 2015. The company expects 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%; 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.
Sykes Enterprises, Incorporated Enters into New Revolving Credit Agreement
May 13 15
On May 12, 2015, Sykes Enterprises, Incorporated (Sykes) entered into a Credit Agreement with a group of lenders and KeyBank National Association, as lead arranger, Sole Book Runner, administrative agent, Swing Line Lender and issuing lender. The Credit Agreement provides for a $440 million revolving credit facility. The $440 million revolving credit facility provided under the Credit Agreement replaces Sykes' previous $245 million senior revolving credit facility provided under the Credit Agreement among Sykes, the lenders named therein and KeyBank, as lead arranger, sole book runner and administrative agent, dated May 3, 2012, as amended. The revolving facility will mature on May 12, 2020. The revolving facility includes a $200.0 million alternate-currency sub-facility, a $10 million swing line sub-facility and a $35 million letter of credit sub-facility. Borrowings under the $440 million facility will bear interest at either LIBOR or the base rate plus, in each case, an applicable margin based on Sykes' leverage ratio. The applicable interest rate will be determined quarterly based on Sykes' leverage ratio at such time. The base rate is a rate per annum equal to the great of the rate of interest established by Key, from time to time, as its prime rate; the Federal Funds effective rate in effect from time to time, plus 1/2 of 1% per annum; and the then-applicable LIBOR rate for one month interest periods, plus 1.00%. Swing Line Loans will bear interest only at the base rate plus the base rate loan margin. For base rate borrowings, the interest payments are due quarterly. For LIBOR borrowings, the interest payments are due at the end of each LIBOR interest period, but in no case more than three months. Sykes is required to pay certain customary fees, including a commitment fee which is due quarterly in arrears and calculated as a percentage of the daily unused amount of the revolving facility. The commitment fee percentage will be determined quarterly based on Sykes' leverage ratio at such time. The $440 million facility is guaranteed by all of Sykes' existing and future direct and indirect material U.S. subsidiaries and secured by a pledge of 100% of the non-voting and 65% of the voting capital stock of all the direct foreign subsidiaries of Sykes and the guarantors.