Convergys Corporation Reports Record Quarterly Financial Results
CINCINNATI, Oct 24, 2000 (BUSINESS WIRE) -- Convergys Corporation (NYSE: CVG chart, msgs)
IN THE THIRD QUARTER:
-- Revenues increased 21 percent to $544.5 million and operating
income increased 34 percent
-- Net income increased 27 percent and diluted earnings per share
increased 23 percent to $0.32
-- Cash earnings per share increased 20 percent to $0.36
-- CMG revenues up 22 percent and IMG revenues up 18 percent
-- Significant technology enhancements such as IP revenue
assurance positioned the Company to be a global leader in
"Next Generation" billing and customer care solutions
-- Revenue, net income, operating income, EBITDA, and EPS were
all at record high levels for the quarter
Convergys Corporation (NYSE: CVG chart, msgs), the global leader in providing outsourced, integrated, billing and customer care, announced today its financial results for the third quarter and nine months ended September 30, 2000.
During the third quarter 2000, total revenues increased 21 percent to $544.5 million compared to $450.2 million reported in the third quarter of 1999. Operating income increased 34 percent to $83.2 million, up from $62.1 million. Operating margin increased to 15.3 percent from 13.8 percent. Net income increased 27 percent to $50.4 million or $0.32 per share (diluted), an increase over net income of $39.7 million or $0.26 per share (diluted) last year. Cash earnings per share, excluding goodwill amortization, increased 20 percent to $0.36 from $0.30 in the third quarter of 1999.
During the first nine months of 2000, total revenues increased 24 percent to nearly $1.6 billion compared to nearly $1.3 billion reported in the 1999 nine-month period. Operating income increased 38 percent to $235.5 million, up from $171.0 million, excluding a special item recorded in the second quarter of 1999. Operating margin increased to 14.9 percent from 13.4 percent. Net income increased 31 percent to $140.5 million or $0.89 per share (diluted), an increase over net income of $106.9 million or $0.69 per share (diluted) last year, excluding the 1999 special item.
Commenting on the company's financial performance, Jim Orr, chairman, president, & CEO of Convergys said, "We are pleased to report such strong third quarter and nine month financial results. Our results reflect continuing subscriber growth and demand for the Company's innovative billing and customer care services. Of note was our 150-basis point operating margin improvement, which was achieved through ongoing cost productivity programs in CMG as well as operating leverage associated with the IMG business model."
Third Quarter 2000 Highlights
During the third quarter of 2000, Convergys:
-- Signed a five-year contract for billing and customer care
systems with Verizon Wireless, the largest wireless
communications provider in the U.S. with more than 25 million
wireless voice and data customers.
-- Signed a two-year contract renewal with Microsoft WebTV
Networks, Inc. Convergys has been providing customer care for
WebTV's thousands of subscribers through its internal customer
service system since 1998.
-- Signed an agreement to enhance customer care for iBasis'
VoCore Unified Communications solution through Catalys (SM),
Convergys' carrier class Internet protocol (IP) subscriber
billing, collection, and customer care application. Key
features of the joint solution include e-commerce support,
real-time processing capabilities, and pre- and post-pay
support for iBasis' subscriber base, estimated to grow to 2
million over the next five years.
-- Signed a three-year agreement to provide cable and broadband
billing services to Cablemas, Mexico's second-largest cable
provider as measured by number of subscribers (250,000).
Convergys will upgrade Cablemas to its state-of-the-art
Integrated Communications Operations Management System (ICOMS
(TM)).
Mr. Orr continued, "Exemplifying our strong customer relationships are the recent customer care contract renewals and expansions signed with Verizon Wireless and Microsoft WebTV. In addition, our new agreement with iBasis is further evidence of Convergys' distinct competitive advantage of being the sole provider of end-to-end, comprehensive billing and customer care solutions."
To extend its technology leadership position in delivering next-generation billing and customer care capabilities to its clients, Convergys:
-- Demonstrated, through a landmark test conducted in conjunction
with its strategic partner NARUS, the capability to ensure
that every billable usage event in a service provider network
is accounted for and that any lost revenue is identified as a
part of a Revenue Assurance infrastructure for IP services.
The testing by Convergys and NARUS involved more than 105
million billing events generated over a 24-hour period.
To expand the Company's service offerings with associated technology in the areas of integrated contact centers and eCRM, Convergys:
-- Acquired Taima Corporation, a privately held company that
operates world-class, integrated, technical help desk support
services for Internet Service Providers (ISPs) and other
Internet-based clients. Taima's client list includes Road
Runner, PSINet, Net Zero, Nortel Networks, AltaVista, and
Comcast Corporation.
Fourth Quarter 2000 Highlight
-- Atlys (SM) 6.0: New release of Convergys' Atlys software
features substantially enhanced functionality to enable global
wireless carriers to offer a wide new array of data services
and customer care capabilities, and will support emerging
m-commerce services over 3G broadband wireless networks.
Mr. Orr continued, "Enhancing Convergys' position as the premier provider of outsourced, next generation capabilities in the communications industry has been a top priority in 2000. Specifically, the scalability and revenue assurance features of the Convergys/NARUS solution for IP services will be critical in helping telecommunications companies get over the hurdle of transitioning their businesses from circuit to packet switch transmissions, and will also support young companies looking to develop emerging businesses and technologies. Furthermore, our new Atlys 6.0 release now supports the explosive GPRS and IP billing markets, and is our latest step in providing support for third generation applications."
Operating Performance by Segment
Information Management Group (IMG)
Excluding intercompany sales, third quarter 2000 IMG revenues increased 18 percent to $201.8 million, from $170.3 million in the same period last year. Data processing revenues increased 14 percent to $125.3 million from $110.3 million, primarily as a result of subscriber growth at the company's key wireless clients. Professional and consulting revenues increased 27 percent to $44.4 million reflecting increased enhancement requests from wireless carriers including Sprint PCS and Verizon. License and other increased to $12.8 million from $10.4 million due to growth in cable support fees. International revenues increased nearly $5 million or 31 percent to $19.3 million, primarily reflecting fees associated with wireless billing contracts.
Operating income for IMG increased 25 percent to $43.0 million from $34.3 million. Operating margin for IMG in the third quarter was 21.3 percent compared to 20.1 percent in the third quarter last year. IMG's results reflect higher revenues partially offset by increased investment in marketing and sales efforts, higher spending on research and development and higher depreciation from data center upgrades.
Customer Management Group (CMG)
CMG revenues were $342.7 million, up 22 percent compared to $279.9 million in the third quarter of 1999, fueled by increases from AT&T, DirecTV, and technical support clients. These revenue increases were partially offset by decreases in traditional, program-based services and international revenues.
Operating income for CMG increased 42 percent to $42.1 million, up from $29.6 million in the same period last year. Operating margin improved to 12.3 percent in the third quarter 2000 versus 10.6 percent reported in the comparable year-ago period. This continued margin improvement stems from profit flow-through from higher revenues and the ongoing benefits of cost reduction programs.
Mr. Orr concluded, "As we look to the remainder of 2000, we will continue to develop unique billing and customer care services and seek out strategic acquisitions or partnerships, in an effort to enhance further our integrated suite of end-to-end solutions. In a short amount of time we have significantly ramped-up our eCRM capabilities and we will continue to improve upon our ever-evolving world-class billing and customer care technology that has served our clients since the first wireless phone call was placed in 1983."
About Convergys
Convergys Corporation (NYSE: CVG chart, msgs), a member of the S&P 500, is the global leader in providing outsourced, integrated, billing and customer care 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 contact centers handle more than one million customer interactions each day.
Convergys (SM) provides billing, customer care, and employee care services to the top companies in a wide range of industries, including telecommunications, Internet, cable and broadband services, technology, and financial services.
Headquartered in Cincinnati, Ohio, Convergys employs over 45,000 people in its 46 customer contact centers and in its data centers and other offices in the United States, Canada, Latin America, Israel, and Europe. Convergys is on the Internet at www.convergys.com
(Convergys is pronounced:kun VER jis. Convergys, Catalys, Atlys, and the Convergys logo are service marks and ICOMS is a trademark of Convergys Corporation.)
NOTE:
Convergys Corporation will host a conference call on Tuesday, October 24 at 10:00 A.M. Eastern Daylight Time, to discuss the company's third quarter earnings results. The one-hour conference call will feature Jim Orr, chairman, president, & CEO, and Steve Rolls, CFO. This call will be carried live on the Internet via www.streetevents.com and www.streetfusion.com. Internet replays of this conference call will be available from these sources through November 11, 2000.
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. |
