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.
Sykes Enterprises, Incorporated Reports Unaudited Consolidated Earnings Results for the First Quarter Ended March 31, 2015; Provides Earnings Guidance for the Second Quarter and Full Year of 2015
May 4 15
Sykes Enterprises, Incorporated reported unaudited consolidated earnings results for the first quarter ended March 31, 2015. For the quarter, the company reported revenues of $323.7 million decreased $0.7 million, or 0.2%, from $324.4 million in the comparable quarter last year, 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, first quarter 2015 revenues increased 4.7% comparably, with increased demand from clients within the technology, telecom, healthcare and transportation and leisure verticals First quarter 2015 diluted earnings per share were $0.37 versus $0.24 in the comparable quarter last year, with the 53.1% increase due largely to the above-mentioned factors. On a non-GAAP basis, first quarter 2015 diluted earnings per share increased to $0.43 from $0.30 in the same period last year with the comparable 42.5% increase driven largely by the previously-mentioned factors. First quarter 2015 diluted earnings per share were also higher relative to the company’s February 2015 business outlook range of $0.33 to $0.36 also driven largely by the aforementioned factors. Income from operations was $22,541,000 compared to $14,478,000 a year ago. Income before income taxes was $21,439,000 compared to $14,873,000 a year ago. Net income was $15,639,000 compared to $10,313,000 a year ago. Net cash provided by operating activities was $28,642,000 compared to $16,156,000 a year ago. Capital expenditures were $10,869,000 compared to $11,706,000 a year ago.
The company provided earnings guidance for the second quarter and full year of 2015. The assumptions driving the business outlook for the second quarter and full-year 2015 are as the company is updating its full-year 2015 business outlook. Although full year operating margins are expected to remain relatively unchanged compared to those provided initially in February 2015, the company is fine tuning its 2015 diluted earnings per share and revenues outlook due to on-going foreign exchange volatility and somewhat lower demand forecasted from a handful of existing clients within the communications vertical. Since the initial full-year 2015 business outlook, which was outlined in February 2015, the functional currencies of the Company’s various international operations have weakened further relative to the U.S. dollar, which is expected to impact 2015 revenues by an incremental $17 million, above the initial $50 million in foreign exchange impact forecasted in February 2015. In addition to the foreign exchange impact, a handful of clients have forecasted lower volumes for the remainder of the year due in large part to more muted competitive dynamics expected in the industry, which is also impacting revenues to the tune of approximately $20 million. As such, the combined effects of both are anticipated to result in full-year revenues of between $1,270.0 million and $1,285.0 million versus the initial revenue outlook range of between $1,300.0 million and $1,320.0 million. Similarly, diluted earnings per share are now expected to range between $1.54 and $1.62 from a range of $1.56 to $1.68 previously; the company’s revenues and earnings per share assumptions for the second quarter and full year 2015 are based on foreign exchange rates as of April 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 second quarter and full-year; the company still plans to add approximately 1,700 seats on a gross basis in 2015 to support certain client program expansions. In the first quarter, the company added roughly 400 seats on a gross basis out of the planned 1,700. More than three-quarters of the gross seat additions is expected to occur in or around the first half of 2015. On a net basis, however, the company still anticipates the 2015 seat count to remain unchanged relative to 2014 as it plans to rationalize roughly 1,700 seats; the company anticipates net interest expense of approximately $0.8 million for the second quarter and $3.4 million for the full year 2015. These amounts exclude the potential impact of any future foreign exchange gains or losses in other expense; and the company anticipates a slightly lower effective tax rate for full-year 2015 relative to initial expectations, driven chiefly by a shift in the geographic mix of earnings to lower tax rate jurisdictions. For the twelve months ending December 31, 2015, the company anticipates effective tax rate of approximately 26.0%; on a non-GAAP basis, an effective tax rate of approximately 27.0%; fully diluted share count of approximately 42.8 million; diluted earnings per share of approximately $1.32 to $1.40; and capital expenditures in the range of $50.0 million to $55.0 million.
Considering the factors, the company anticipates the following financial results for the three months ending June 30, 2015 as revenues in the range of $300.0 million to $305.0 million; effective tax rate of approximately 27.0%; on a non-GAAP basis, an effective tax rate of approximately 30.0%; fully diluted share count of approximately 42.4 million; diluted earnings per share of approximately $0.18 to $0.21; non-GAAP diluted earnings per share in the range of $0.24 to $0.27; and capital expenditures in the range of $17.0 million to $20.0 million.