Convergys Corporation Reports Record First Quarter 2000 Financial Results
CINCINNATI--(BUSINESS WIRE)--April 19, 2000--Convergys Corporation (NYSE:CVG - news)
?Revenues increased 28 percent and net income increased 37 percent?Operating income up 41 percent?Diluted earnings per share increased 33 percent to $0.28?Cash earnings per share of $0.33
Convergys Corporation (NYSE:CVG - news), the global leader in providing outsourced, integrated, billing and customer care, announced today its financial results for its first quarter that ended March 31, 2000.
During the first quarter 2000, the company reported revenues of $513.6 million which represents an increase of 28 percent over $399.8 million reported in the first quarter of 1999. Operating income increased 41 percent to $74.7 million, up from $52.8 million. Operating margin increased to 14.5 percent from 13.2 percent. Net income increased 37 percent to $44.4 million or $0.28 per share (diluted), up from net income of $32.4 million or $0.21 per share (diluted). Strong performance in the company's core operations offset lower results from the cellular partnership. The cellular partnership produced equity income of $5.8 million, or $0.02 per share compared to $7.6 million, or $0.03 per share, last year. Cash earnings per share, excluding goodwill amortization, increased 37 percent to $0.33 from $0.24 in the first quarter of 1999.
Commenting on the company's first quarter results, Jim Orr, president and CEO of Convergys said, ``We are very pleased with both our financial and operating performance as the momentum experienced throughout 1999 has continued into the first quarter of 2000. During this past quarter, all of our key financial metrics grew in the presence of a strong market environment led by increasing subscriber growth and greater outsourcing needs. Last year, we accelerated our strategy to invest prudently in our technology, specifically Internet protocol, global wireless, and eCRM, and we are only beginning to reap the benefits of those investments. We have received a positive reception from the marketplace for these efforts in North America, Europe, and Latin America and we anticipate this will provide continued growth moving forward.''
First Quarter 2000 Highlights
During the first quarter of 2000, Convergys made several important announcements, enhancing its industry leading position both domestically and internationally that included:
?Signing a six-year contract with Telesp Celular, S.A., the largest cellular operator in Brazil, to provide a unique and comprehensive billing service, utilizing Convergys' Atlys(SM) billing and customer care product.?Entering into a strategic, global alliance with Level 3 Communications, LLC, to develop and market jointly an end-to-end solution for a broad range of IP service providers, simplifying access to IP networks with turnkey implementation of IP services on a scale never before achieved.?Signing a Web-based customer care contract with Hewlett-Packard's new hpshopping.com and a customer care contract with Triton PCS Inc. to supplement Triton's expanding service offerings.?Forming a strategic alliance with NARUS, a leading provider of Internet business infrastructure solutions to deliver highly scalable, value-based billing and customer care services.?Appointing corporate senior VPs to lead more aggressive sales and marketing initiatives.?Hiring of an experienced executive to become president of the Internet Protocol Business Unit, reflecting the significant opportunity this market represents.?Hiring of an experienced executive to become president of Convergys Europe.
April 2000 Highlights to Date
?Announced a global alliance with XACCT Technologies, Inc., a leading provider of intelligent business infrastructure solutions for IP networks, under which Convergys will integrate advanced mediation capabilities into Convergys' Catalys(SM) billing and customer care solution. This will enable the Convergys IP solution to offer additional carrier-class, usage-based billing and customer relationship management (CRM) services to a broad range of IP service providers worldwide.?Entered into an alliance with Neuromedia, a leader in automated natural-language sales and customer service solutions for the Web. Convergys will incorporate Neuromedia's virtual sales and customer service representative (vRep(TM)) software into their customer management solutions for clients worldwide.
Orr continued, ``A key Convergys focus has been on expanding our core billing capabilities to penetrate further the global wireless market. Through our recently launched Atlys product, we see great potential to reach new international mobile markets as this product scales to more than 20 million wireless subscribers in a single relational database, and supports all major wireless protocols, including GSM. Atlys achieved this unparalleled scalability in a real-time environment allowing our clients to offer both postpaid and prepaid services more effectively. Our six-year contract with Telesp Celular is a strong indication of the type of international opportunities we are pursuing.''
Information Management Group Revenues Increased 17 Percent;
Operating Income Up 18 Percent
Excluding intercompany sales, first quarter 2000 Information Management Group (IMG) revenues increased 17 percent to $173.6 million, from $148.1 million in the same period last year. Data processing revenues increased 20 percent to $112.9 million from $94.3 million, primarily as a result of subscriber growth at our key wireless clients. Professional and consulting revenues decreased 10 percent to $33.9 million reflecting fewer subscriber conversions under a large cable billing contract. License and other revenues more than doubled to $13.9 million from $6.3 million due to higher license fees and hardware sales to some cable clients. International revenues increased approximately $3 million or 29 percent to $12.9 million, primarily reflecting a full quarter of revenues from Wiztec Solutions, which was acquired in March 1999.
Operating income for IMG increased 18 percent to $35.9 million from $30.3 million reported in the first quarter 1999. Operating margin in the first quarter was 20.7 percent compared to 20.5 percent in the first quarter last year. IMG's results reflect profit flow-through from increased revenues partially offset by increased spending on IP development.
Customer Management Group Revenues Increased 35 Percent;
Operating Income Up 72 Percent
Customer Management Group (CMG) revenues were $340.0 million, up 35 percent compared to $251.7 million in the first quarter of 1999, fueled by strong demand for services from AT&T and DirecTV as well as strong increases in technical support services and web-based customer relationship management services. Revenues from Internet-based services grew to $25.4 million, up 570 percent versus the previous year and 32 percent from the fourth quarter of 1999.
Operating income for CMG increased 72 percent to $40.7 million, up from $23.7 million in the same period last year. Operating margin improved to 12.0 percent in the first quarter 2000 versus 9.4 percent reported in the comparable year-ago period, marking the seventh consecutive quarter of improvement since the 6.3 percent margin in the second quarter of 1998. This stems from the flow-through from higher revenues and the ongoing benefits of continuous process improvements.
Orr concluded, ``Moving forward, we have outlined a well-defined strategy aimed at delivering value to our customers and enhancing shareholder value. The Internet protocol and international GSM markets and recent advances in our Web-based customer care, as well as continued wireless and cable/video subscriber growth, should fuel both top-line growth and margin expansion. We believe the initiatives we have undertaken over the past year have positioned us well for the balance of 2000 and beyond.''
ABOUT CONVERGYS
Convergys Corporation is the global leader in providing outsourced, integrated, customer care and billing services, bringing together world-class resources and expertise to help clients transform customer relationships into a competitive advantage.
Convergys software produces more than one million bills each day, and Convergys call centers handle more than one million calls each day.
Convergys(SM) provides customer care, billing and employee care services to the top companies in a wide range of industries, including communications, Internet, cable and broadband, technology, consumer products, financial services, utilities, healthcare and hospitality.
Headquartered in Cincinnati, Ohio, Convergys employs over 42,500 people in its 38 call centers and in its data centers and other offices in the United States, Canada, and Europe. Convergys is on the Internet at www.convergys.com(Convergys is pronounced ``kun VER jis.'' Convergys, Atlys, and the Convergys logo are service marks of Convergys Corporation.)
NOTE:
Information included in this news release contains forward-looking statements that involve potential risks for Convergys Corporation. The future results of Convergys could differ materially from those discussed herein. Factors that could cause or contribute to such differences include, but are not limited to, the loss of a significant client, difficulties in completing or integrating acquisitions, and other factors disclosed in the Form 10-K for the year ended December 31, 1999, filed with the SEC by Convergys Corporation. |
