SOURCE: West Corporation

West Corporation

February 03, 2009 17:05 ET

West Corporation Reports Fourth Quarter and Full Year 2008 Results and Provides 2009 Guidance

OMAHA, NE--(Marketwire - February 3, 2009) - West Corporation, a leading provider of outsourced communication solutions, today announced its fourth quarter and full year 2008 results.

Financial Summary (unaudited)
-----------------------------
(Dollars in millions)

                      Three Months Ended               Year Ended
                         December 31,                  December 31,
                ---------------------------  -----------------------------
                  2008      2007    Percent    2008       2007     Percent
                                    Change                         Change
                --------  --------  -------  ---------  ---------  -------
   Revenue      $  571.7  $  539.6    6.0%   $ 2,247.4  $ 2,099.5    7.0%
                --------  --------  -------  ---------  ---------  -------
   Adjusted
   EBITDA(1)    $  177.6  $  142.6   24.5%   $   633.6  $   584.1    8.5%
                --------  --------  -------  ---------  ---------  -------
   Adjusted
 EBITDA Margin    31.1%     26.4%               28.2%      27.8%
                --------  --------  -------  ---------  ---------  -------
Cash Flow from
  Operations    $  125.2  $   68.2   83.6%   $   280.3  $   250.7   11.8%
                --------  --------  -------  ---------  ---------  -------

(1) See Reconciliation of Financial Measures below.

Consolidated Operating Results

For the fourth quarter ended December 31, 2008, revenues were $571.7 million compared to $539.6 million for the same quarter last year, an increase of 6.0 percent. Revenue from acquired entities(2) was $69.0 million during the fourth quarter, including $58.7 million from Genesys.

During the quarter, as a result of weaker economic conditions, the Company recorded a $32.3 million reduction in revenue in its Receivables Management segment from an allowance for impairment of purchased accounts receivables. Minority interest expense was reduced by $2.3 million to account for the minority owner's share of this impairment.

Excluding the $32.3 million revenue impairment charge, consolidated revenue would have been $604.0 million. Organic revenue before the impairment charge decreased by 0.9 percent for the quarter.

For the year ended December 31, 2008, revenues were $2,247.4 million compared to $2,099.5 million for 2007, an increase of 7.0 percent. Revenue from acquired entities(2) accounted for $190.3 million of the increase. Organic revenue growth for 2008, excluding impairment charges, was 1.6 percent.

Cash flow from operations was $125.2 million for the fourth quarter of 2008, an increase of 83.6 percent over the same period in 2007. For the year, cash flow from operations was $280.3 million, 11.8 percent higher than 2007.

Adjusted EBITDA for the fourth quarter was $177.6 million, or 31.1 percent of revenue. For the year, Adjusted EBITDA was $633.6 million, or 28.2 percent of revenue. A reconciliation of Adjusted EBITDA to cash flow from operating activities is presented below.

Balance Sheet and Liquidity

At December 31, 2008, West Corporation had cash and cash equivalents totaling $168.3 million and working capital of $211.4 million.

During the quarter, the Company invested $27.4 million in capital expenditures primarily for software, equipment and information technology systems.

2009 Guidance

For 2009, the Company expects the following results. This guidance assumes no acquisitions or additional changes in the current operating environment or exchange rates.

In millions                  2008 Actual    2009 Guidance
                             -----------    -------------
Revenue                        $2,247.4    $2,400 - $2,500
Adjusted EBITDA                 $633.6       $625 - $675
Cash Flow from Operations       $280.3       $230 - $275
Capital Expenditures            $108.8       $115 - $130

Conference Call

The Company will hold a conference call to discuss these topics on Wednesday, February 4, 2009 at 11:00 AM Eastern Time (10:00 AM Central Time). Investors may access the call by visiting the Financials section of the West Corporation website at www.west.com and clicking on the Webcast link. A replay of the call will be available on the Company's website at www.west.com.

About West Corporation

West Corporation is a leading provider of outsourced communication solutions to many of the world's largest companies, organizations and government agencies. West combines telephony, technology and human capital to help its clients communicate effectively, maximize the value of their customer relationships and drive greater profitability from customer related transactions. The company's integrated suite of customized solutions includes worldwide conferencing, emergency communications, customer care, customer acquisition, customer retention, business-to-business sales, account management and accounts receivable management services.

Founded in 1986 and headquartered in Omaha, Nebraska, West has a team of 47,000 employees based in North America, Europe and Asia. For more information on West Corporation, please call 1-800-841-9000 or visit www.west.com.

Forward Looking Statements

This press release contains forward looking statements. Forward-looking statements can be identified by the use of words such as "may," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "intends," "continue" or similar terminology. These statements reflect only West's current expectations and are not guarantees of future performance or results. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. These risks and uncertainties include the ability to integrate or achieve the objectives of our recent acquisitions, West's expectations of future liquidity requirements, West's ability to complete future acquisitions, competition in West's highly competitive industries, extensive regulation in many of West's markets, West's ability to recover on its charged-off consumer receivables, capacity utilization of West's contact centers, the cost and reliability of voice and data services, availability of key personnel and employees, the cost of labor and turnover rates, the political, economic and other conditions in countries where West operates, the loss of any key clients, West's ability to purchase, and finance the acquisition of, charged-off receivable portfolios on acceptable terms and in sufficient amounts, the nature of West's forward flow contracts, the non-exclusive nature of West's client contracts and the absence of revenue commitments, the possibility of an emergency interruption to West's data and contact centers, acts of terrorism or war, security or privacy breaches of West's systems and databases, West's ability to protect proprietary information or technology, West's ability to continue to keep pace with technological developments, the cost of pending and future litigation and other risk factors described in documents filed by the company with the United States Securities and Exchange Commission including West's annual report on Form 10-K for the year ended December 31, 2007 and quarterly report on Form 10-Q for the quarter ended September 30, 2008. These forward-looking statements speak only as of the date on which the statements were made. West undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

                             WEST CORPORATION
                    CONDENSED STATEMENTS OF OPERATIONS
         (Unaudited, in thousands except selected operating data)


               Three Months Ended                 Year Ended
                  December 31,        %          December 31,         %
                 2008      2007     Change     2008        2007     Change
               --------  --------   ------  ----------  ----------  ------
Revenue        $571,718  $539,575      6.0% $2,247,434  $2,099,492     7.0%
Cost of
 services       258,839   240,789      7.5%  1,015,028     912,389    11.2%
Selling,
 general and
 administrative
 expenses       223,632   223,951    - 0.1%    881,586     840,532     4.9%
               --------  --------   ------  ----------  ----------  ------
Operating
 income          89,247    74,835     19.3%    350,820     346,571     1.2%
Interest
 expense         95,095    80,582     18.0%    313,019     332,372    -5.8%
Other expense
 (income), net    8,323      (468)  1878.4%      8,621     (13,396)  164.4%
               --------  --------   ------  ----------  ----------  ------
Income before
 tax            (14,171)   (5,279)  -168.4%     29,180      27,595     5.7%
Income tax
 expense
 (benefit)       (5,610)     (333) -1584.7%     11,731       6,814    72.2%
Minority
 Interest           197     3,124    -93.7%     (2,058)     15,399  -113.4%
               --------  --------   ------  ----------  ----------  ------
Net income
 (loss)        $ (8,758) $ (8,070)    -8.5% $   19,507  $    5,382   262.4%
               ========  ========   ======  ==========  ==========  ======


SELECTED
 SEGMENT DATA:
Revenue:
  Communication
   Services    $290,917  $283,431      2.6% $1,116,087  $1,094,346     2.0%
  Conferencing  250,733   185,594     35.1%    937,301     727,831    28.8%
  Receivables
   Management    31,715    72,212    -56.1%    200,029     283,446   -29.4%
  Inter segment
   eliminations  (1,647)   (1,662)     0.9%     (5,983)     (6,131)    2.4%
               --------  --------   ------  ----------  ----------  ------
  Total        $571,718  $539,575      6.0% $2,247,434  $2,099,492     7.0%
               ========  ========   ======  ==========  ==========  ======

Depreciation &
 Amortization:
  Communication
   Services    $ 21,885  $ 22,702     -3.6% $   77,418  $   96,810   -20.0%
  Conferencing   21,667    16,770     29.2%     84,121      64,477    30.5%
  Receivables
   Management     4,734     6,498    -27.1%     21,949      21,533     1.9%
               --------  --------   ------  ----------  ----------  ------
  Total        $ 48,286  $ 45,970      5.0% $  183,488  $  182,820     0.4%
               ========  ========   ======  ==========  ==========  ======

Operating
 Income:
  Communication
   Services    $ 40,455  $ 22,898     76.7% $  142,724  $  114,754    24.4%
  Conferencing   74,009    42,677     73.4%    246,721     181,673    35.8%
  Receivables
   Management   (25,217)    9,260   -372.3%    (38,625)     50,144  -177.0%
               --------  --------   ------  ----------  ----------  ------
  Total        $ 89,247  $ 74,835     19.3% $  350,820  $  346,571     1.2%
               ========  ========   ======  ==========  ==========  ======

Operating
 Margin:
  Communication
   Services        13.9%      8.1%    71.6%       12.8%       10.5%   21.9%
  Conferencing     29.5%     23.0%    28.3%       26.3%       25.0%    5.2%
  Receivables
   Management     -79.5%     12.8%  -721.1%      -19.3%       17.7% -209.0%
               --------  --------   ------  ----------  ----------  ------
  Total            15.6%     13.9%    12.2%       15.6%       16.5%   -5.5%
               ========  ========   ======  ==========  ==========  ======


SELECTED OPERATING DATA ($M):
Cash flow from
 operations       125.2      68.2
Term loan
 facility       2,485.4   2,376.4
Revolving lines
 of credit        272.2         -
Senior and
 senior
 subordinated
 notes          1,100.0   1,100.0


                                     Condensed Balance Sheets
                                     December 31, December 31,      %
                                         2008         2007        Change
                                     -----------  -----------  -----------
Current assets:
   Cash and cash equivalents         $   168,340  $   141,947         18.6%
   Trust cash                              9,130       10,358        -11.9%
Accounts receivable, net                 359,021      289,480         24.0%
   Portfolio receivables, current         64,204       77,909        -17.6%
   Deferred income taxes receivable       52,647       33,718         56.1%
   Other current assets                   85,706       44,463         92.8%
                                     -----------  -----------  -----------
     Total current assets                739,048      597,875         23.6%
Net property and equipment               320,152      298,645          7.2%
Portfolio receivables, net                68,542      132,233        -48.2%
Goodwill                               1,642,857    1,329,978         23.5%
Other assets                             544,190      487,759         11.6%
                                     -----------  -----------  -----------
     Total assets                    $ 3,314,789  $ 2,846,490         16.5%
                                     ===========  ===========  ===========
Current liabilities                  $   527,638  $   410,080         28.7%
Long Term Obligations                  3,843,536    3,495,529         10.0%
Other liabilities                        146,203      138,297          5.7%
                                     -----------  -----------  -----------
      Total liabilities                4,517,377    4,043,906         11.7%

Minority interest                          3,632       12,937        -71.9%
Class L common stock                   1,158,159    1,029,782         12.5%

Stockholders' deficit                 (2,364,379)  (2,240,135)         5.5%
                                     -----------  -----------  -----------
   Total liabilities and
    stockholders' deficit            $ 3,314,789  $ 2,846,490         16.5%
                                     ===========  ===========  ===========

Reconciliation of Financial Measures

The common definition of EBITDA is "Earnings Before Interest Expense, Taxes, Depreciation and Amortization." In evaluating liquidity, we use earnings before interest expense, share based compensation, taxes, depreciation and amortization, minority interest, non-recurring litigation settlement costs, other non-cash reserves, transaction costs and after acquisition synergies and excluding unrestricted subsidiaries, or "Adjusted EBITDA." EBITDA and Adjusted EBITDA are not measures of financial performance or liquidity under generally accepted accounting principles ("GAAP"). EBITDA and Adjusted EBITDA should not be considered in isolation or as a substitute for net income, cash flow from operations or other income or cash flow data prepared in accordance with GAAP. Adjusted EBITDA, as presented, may not be comparable to similarly titled measures of other companies. Adjusted EBITDA is presented as we understand certain investors use it as one measure of our historical ability to service debt. Adjusted EBITDA is also used in our debt covenants, although the precise adjustments used to calculate Adjusted EBITDA included in our credit facility and indentures vary in certain respects among such agreements and from those presented below. Set forth below is a reconciliation of EBITDA and Adjusted EBITDA to cash flow from operations.

                                  Three Months Ended       Year Ended
Amounts in thousands                   Dec. 31,              Dec. 31,
                                   2008       2007       2008       2007
                                ---------  ---------  ---------  ---------
Cash flow from operating
 activities                     $ 125,204  $  68,235  $ 280,261  $ 250,732
Income tax expense (benefit)       (5,610)      (333)    11,731      6,814
Deferred income tax (expense)
 benefit                           34,540      7,847     26,446      8,917
Interest expense                   95,096     80,582    313,019    332,372
Allowance for impairment of
 purchased accounts receivable    (32,329)         -    (76,405)         -
Non-cash loss on hedge
 agreement                        (17,679)         -    (17,679)         -
Unrealized loss on foreign
 denominated debt                  (5,558)         -     (5,558)         -
Minority interest in earnings,
 net of distributions               1,359       (939)     9,178     (2,234)
Provision for share based
 compensation                        (378)      (325)    (1,404)    (1,276)
Debt amortization                  (4,145)    (3,626)   (15,802)   (14,671)
Other                                 (48)      (141)      (107)       195
Changes in operating assets and
 liabilities, net of business
 acquisitions                     (61,439)   (33,151)     4,064    (53,461)
                                ---------  ---------  ---------  ---------
EBITDA                            129,013    118,149    527,744    527,388
Minority interest                     197      3,124     (2,058)    15,399
Provision for share based
 compensation                         378        325      1,404      1,276
Acquisition synergies &
 transaction costs                  7,001      2,909     20,985     22,006
Site closures & asset impairments   2,218      1,309      2,644      1,309
Non-cash portfolio impairment      32,329      1,004     76,405      1,004
Non-cash foreign currency losses    6,427          -      6,427          -
Litigation settlement costs             -     15,741          -     15,741
                                ---------  ---------  ---------  ---------
Adjusted EBITDA                 $ 177,563  $ 142,561  $ 633,551  $ 584,123
                                =========  =========  =========  =========

(2) Acquired entities include HBF Communications (acquired in April 2008) and Positron (acquired in November 2008) in the Communications Services segment and Genesys (acquired in May 2008) in the Conferencing Services segment.

Contact Information

  • AT THE COMPANY:
    David Pleiss
    Investor Relations
    (402) 963-1500
    Email Contact

    West Corporation
    11808 Miracle Hills Drive
    Omaha, NE 68154