Here're my notes from the conference call for the 3rd Q 98:
APAC had EBITDA of $20 million (during the previous call they said they'd
exceed $20 million, so they were close).
They lost a couple of ITI outbound accounts but were still able to hit the
guidance numbers that they gave in the previous conf call.
The merger with ITI has increased their client diversification. In the 9/30/98
quarter no client accounted for more than 15% of revenues.
Their tax rate has increased because about 75% of the amortization costs
for the ITI merger are not tax deductible.
Capital expenditures for the quarter were $2.9 million, for maintaining their
existing facilities and integrating their technology with that of ITI.
Long term debt was reduced to $154 million, an improvement of about $12
million over the previous quarter. The cash position improved to $13 million
from $3.8 million last quarter.
During the quarter APAC closed about 500 seats from 3 outbound centers,
and downsized two other facilities.
At the end of the quarter APAC had repurchased 1.6 million shares. They're
still authorized to repurchase 900 thousand shares.
The cost savings associated with their restructuring and the merger with ITI
allowed them to still hit their operating and net income numbers in spite
of missing their revenue number of $125 million. Their operating margin was
9.7%, excluding amortization costs of $2.1 million.
APAC is focusing more on adding inbound business rather than outbound.
Their sales reps produced business that represents about 800 seats. These
new accounts will ramp in early 1999, and have the possibility grow.
Q & A:
Q: You did a very good job hitting the operating and net income numbers
with revenue that was below guidance of $125 million. Which clients did you
lose on the ITI side? Do you have new estimates for the 12/31/98 quarter?
Can you give us a breakdown of seats for inbound vs. outbound for the
quarter?
A: One account that we lost was NTC, which stopped doing business altogether.
There have been declines with Cendant. There's been some reshuffling with
the credit card companies, and a couple of those accounts have decreased.
APAC was able to make up for the loss of revenue by speeding up the
integration of ITI, credit is especially due to their technology group. The cost
savings allowed them to make the operating and net numbers. The loss of
outbound revenue will continue into the 4th quarter, but they're growing with
some other clients to make up for it. Their new accounts are in the media,
pharmaceutical, insurance, and healthcare financing. There were 6,688
workstations for outbound (I couldn't hear the number for inbound). APAC
now expects 4th quarter revenues in the low to mid $120 million range, and
they expect to hit $.09/share.
Q: Can you comment on pricing for the 9/30/98 quarter versus a year ago?
A: We've seen a slight increase in revenue/hour compared to a year ago. We
believe that the pricing pressure, which may have had its biggest impact
late in 1997, has bottomed out, and we've started to tick back up on that.
So we feel that the pricing environment is somewhat stronger than it has been
for the outbound side. Pricing has not been a significant issue on the inbound
side.
Q: Can you comment on what happened with the US Postal Service contract?
A: The winning bid (TTEC?) was substantially lower than APAC's. They wouldn't
have wanted the business at that price. The USPS will be doing more out-
sourcing, and wants APAC to stay in the bidding process. The Postal Service
will be making their next decision in March of '99, and they're going to limit
the number of call centers awarded to one vendor.
Phil |
