Resolve Business Outsourcing Income Fund
TSX : RBO.UN

Resolve Business Outsourcing Income Fund

May 05, 2009 16:30 ET

Resolve Announces First Quarter Results

TORONTO, ONTARIO--(Marketwire - May 5, 2009) -

Attention Business and Financial Editors:

Resolve Business Outsourcing Income Fund (the "Fund") (TSX:RBO.UN) announced today its operational results for the first quarter. While revenue declined by 5.6%, gross margins improved from 29.5% of revenue to 34.6%. EBITDA increased to $11.7 million in 2009 from $8.7 million in 2008. The improvement in gross margin percentage is due to a focus on operational efficiency and cost reductions.

The Fund announced a net loss due to a $5.2 million restructuring accrual. The Fund had announced in January that it would take a restructuring charge of $4.3 million in Q1. However the final restructuring costs were larger than forecast leading to increased cost reductions. The Fund has now reduced annual costs by greater than $11 million through this restructuring.

The lower revenues in the first quarter as compared to 2008 were primarily in the Student Loan, Search & Registration and Contact Centre lines of business. The decrease in Student Loan revenues was due to the new contract with the Canadian Government. This contract replaced the previous Edulinx contract and commenced in April 2008 at lower pricing than the previous contract. Revenue in Search & Registration was down owing to a lower volume of registrations due to general economic conditions. While revenue in Contact Centre was down due to the loss of some customers profitability improved. These reductions were offset by an increase in revenue in the Supply Chain line of business including a one-time $1.5 million revenue gain from the settlement of a claim.

Gross margins improved due to a focus on operational efficiency. Margins improved in most lines of business as the Fund was focused on improving efficiency, eliminating redundant costs and rationalizing unprofitable customers.

Quarterly revenues for the remainder of 2009 are expected to be lower than Q1. Effective April 1, 2009, and based on the 2008 contract, the base billings under the student loan program for the Government of Canada will reduce by approximately $5 million per quarter. This reduction will be partially offset by other revenue opportunities and programs with the Government of Canada. This reduction will impact revenues, gross margins and EBITDA as the price decrease will impact all of the aforementioned. The restructuring plan will offset some of this revenue reduction and management continues to focus on ongoing opportunities to reduce costs.

About Resolve

Resolve works with businesses as an outsourced resource taking on critical processes and managing them better, faster and more cost-effectively. We have over 35 years experience managing processes for Fortune 500 clients in the financial services, retail, government, consumer goods and communications industries. Headquartered in Toronto, Canada, Resolve employs more than 4,700 people in 28 locations and is listed on the Toronto Stock Exchange as Resolve Business Outsourcing Income Fund, symbol RBO.UN. For more information, visit www.resolve.com.

CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION

This press release may include certain statements that constitute forward-looking information within the meaning of applicable securities laws ("forward-looking statements"). Such forward-looking information may involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Resolve, or industry results, to be materially different from any future results, performance, achievements or opportunities expressed or implied by such forward-looking information. This forward-looking information includes estimates, forecasts and statements as to management's and others' expectations with respect to, among other things, growth strategies and the outlook for Resolve and the business process outsourcing industry and may use words such as "may", "will", "estimate", "expect", "anticipate", "believe", "intend", "plan", "could", "continue" and other similar terminology. This information reflects current expectations regarding future events and operating performance and speaks only as of the date of this press release. Forward-looking information involves significant risks and uncertainties and should not be read as a guarantee of future performance or results and will not necessarily be an accurate indication of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking information, including, but not limited to, loss of key customer contracts or reduction of services purchased by key customers, foreign exchange rates, increases in costs to Resolve that cannot be passed on to customers, disputes with key customers, competition, the ability of Resolve to manage operations and execute growth strategies, stability of internal and government information systems and technology, technological changes, the ability to maintain software licenses, changes in privacy laws, and risks inherent in bidding on government contracts. Although the forward-looking information contained in this press release is based upon what management believes are reasonable assumptions, Resolve cannot assure that actual results will be consistent with this forward-looking information. This forward-looking information is made as of the date of this press release, and Resolve assumes no obligation to update or revise it to reflect new events or circumstances.

Contact Information

  • Resolve Corporation
    Gerry McDonald
    Chief Financial Officer
    905-306-2196
    www.resolve.com