SOURCE: West Corporation

July 18, 2007 16:21 ET

West Corporation Reports Second Quarter 2007 Results

OMAHA, NE--(Marketwire - July 18, 2007) - West Corporation, a leading provider of outsourced communication solutions, today announced its second quarter 2007 results.

Financial Summary (unaudited)
(Dollars in millions)

                      Three Months Ended          Six Months Ended
                           June  30,                  June 30,
                ---------------------------   ----------------------------
                                    Percent                       Percent
                   2007      2006   Change      2007      2006    Change
                --------  --------  --------  --------  --------  --------

Revenue         $  520.2  $  461.7      12.7% $1,028.8  $  886.4      16.1%
                --------  --------  --------  --------  --------  --------
Adjusted
 EBITDA(1)      $  146.9  $  125.8      16.8% $  292.3  $  233.0      25.4%
                --------  --------  --------  --------  --------  --------
Adjusted EBITDA
 Margin             28.2%     27.2%              28.4%     26.3%
                --------  --------  --------  --------  --------  --------
Cash Flow from
 Operations     $   45.3  $   97.2     -53.4% $  127.2  $  155.3     -18.1%
                --------  --------  --------  --------  --------  --------

(1) See Reconciliation of Financial Measures below.

"We are pleased with this quarter's results and the closing of the Omnium acquisition on May 4," said Thomas B. Barker, Chief Executive Officer of West Corporation.

Consolidated Operating Results

For the second quarter ended June 30, 2007, revenues were $520.2 million compared to $461.7 million for the same quarter last year, an increase of 12.7 percent. Revenue from acquired entities(2) accounted for $28.7 million of the $58.5 million increase during the second quarter and $100.9 million of the $142.4 million year-to-date increase.

Balance Sheet and Liquidity

At June 30, 2007, West Corporation had cash and cash equivalents totaling $281.3 million and working capital of $189.3 million. Second quarter depreciation expense was $25.8 million and amortization expense was $19.0 million. Cash flow from operating activities was $45.3 million and was impacted by interest expense of $83.5 million. Adjusted EBITDA for the second quarter was $146.9 million, or 28.2 percent of revenue. A reconciliation of adjusted EBITDA to cash flow from operating activities is presented in the Reconciliation of Financial Measures below.

"During the quarter, we invested $25.7 million in capital expenditures primarily for telecom and computer network equipment," stated Paul Mendlik, Chief Financial Officer of West Corporation. "The Company also expanded its term credit facility by $135 million to fund the Omnium acquisition."

Conference Call

The Company will hold a conference call to discuss these topics on Thursday, July 19, 2007 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 also be available on the website.

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 helps its clients communicate effectively, maximize the value of their customer relationships and drive greater profitability from every interaction. The Company's integrated suite of customized solutions includes customer acquisition, customer care, automated voice services, emergency communications, conferencing and accounts receivable management services.

Founded in 1986 and headquartered in Omaha, Nebraska, West has a team of 28,000 employees based in North America, Europe and Asia. For more information, please 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 including Omnium, 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 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, 2006 and quarterly report on Form 10-Q for the quarter ended March 31, 2007. 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 June 30,     Six Months Ended June 30,
                                        %                              %
                   2007      2006     Change     2007       2006     Change
                ---------  ---------  -----  -----------  ---------  -----
Revenue         $ 520,186  $ 461,678   12.7% $ 1,028,819  $ 886,416   16.1%
Cost of
 services         224,306    200,123   12.1%     443,291    397,414   11.5%
Selling,
 general and
 administrative
 expenses         206,305    185,052   11.5%     399,368    341,110   17.1%
                ---------  ---------  -----  -----------  ---------  -----
Operating
 income            89,575     76,503   17.1%     186,160    147,892   25.9%
Interest
 expense           83,465     12,205  583.9%     163,655     16,426  896.3%
Other expense
 (income), net     (4,178)    (1,421) 194.0%      (8,108)    (1,977) 310.1%
                ---------  ---------  -----  -----------  ---------  -----
Income before
 tax               10,288     65,719  -84.3%      30,613    133,443  -77.1%
Income tax
 expense            3,519     23,921  -85.3%      10,927     48,005  -77.2%
Minority
 Interest           4,257      4,048    5.2%       8,155      6,624   23.1%
                ---------  ---------  -----  -----------  ---------  -----
Net income      $   2,512  $  37,750  -93.3% $    11,531  $  78,814  -85.4%
                =========  =========  =====  ===========  =========  =====


SELECTED
 SEGMENT
 DATA:
Revenue:
  Communication
   Services     $ 264,303  $ 248,298    6.4% $   536,970  $ 477,727   12.4%
  Conferencing    183,651    155,853   17.8%     359,817    292,717   22.9%
  Receivables
   Management      73,658     59,020   24.8%     134,781    119,176   13.1%
  Inter segment
   eliminations    (1,426)    (1,493)  -4.5%      (2,749)    (3,204) -14.2%
                ---------  ---------  -----  -----------  ---------  -----
  Total         $ 520,186  $ 461,678   12.7% $ 1,028,819  $ 886,416   16.1%
                =========  =========  =====  ===========  =========  =====

Operating
 Income:
  Communication
   Services     $  29,002  $  27,048    7.2% $    65,300  $  56,172   16.3%
  Conferencing     46,896     39,491   18.8%      93,594     70,531   32.7%
  Receivables
   Management      13,677      9,964   37.3%      27,266     21,189   28.7%
                ---------  ---------  -----  -----------  ---------  -----
  Total         $  89,575  $  76,503   17.1% $   186,160  $ 147,892   25.9%
                =========  =========  =====  ===========  =========  =====

Operating
 Margin:
  Communication
   Services          11.0%      10.9%   0.9%        12.2%      11.8%   3.4%
  Conferencing       25.5%      25.3%   0.8%        26.0%      24.1%   7.9%
  Receivables
   Management        18.6%      16.9%  10.1%        20.2%      17.8%  13.5%
                ---------  ---------  -----  -----------  ---------  -----
  Total              17.2%      16.6%   3.6%        18.1%      16.7%   8.4%
                =========  =========  =====  ===========  =========  =====


SELECTED
 OPERATING
 DATA ($M):
Share-based
 Compensation
 expense
 recognized           0.3        3.7
Cash flow from
 operations          45.3       97.2
Revolving Line
 of Credit ending
 balance                -      690.0
Term loan
 facility         2,388.4          -
Senior notes        650.0          -
Senior
 subordinated
 notes              450.0          -


                         CONDENSED BALANCE SHEETS

                                      June 30,   December 31,   %
                                        2007         2006     Change
                                    -----------  -----------  -------
Current assets:
  Cash and cash equivalents         $   281,286  $   214,932     30.9%
  Trust cash                             20,669        7,104    190.9%
Accounts receivable, net                308,839      285,087      8.3%
  Portfolio receivables, current         56,664       64,651    -12.4%
  Other current assets                   51,406       54,382     -5.5%
                                    -----------  -----------  -------
     Total current assets               718,864      626,156     14.8%
Net property and equipment              297,083      294,707      0.8%
Portfolio receivables, net              120,321       85,006     41.5%
Goodwill                              1,284,862    1,186,375      8.3%
Other assets                            541,114      343,612     57.5%
                                    -----------  -----------  -------
     Total assets                   $ 2,962,244  $ 2,535,856     16.8%
                                    ===========  ===========  =======
Current liabilities                 $   529,566  $   497,586      6.4%
Long Term Obligations                 3,529,884    3,206,590     10.1%
Other liabilities                        87,015       45,279     92.2%
                                    -----------  -----------  -------
      Total liabilities               4,146,465    3,749,455     10.6%

Minority interest                        10,988       10,299      6.7%
Class L common stock                    969,285      903,656      7.3%

Stockholders' deficit                (2,164,494)  (2,127,554)     1.7%
                                    -----------  -----------  -------
   Total liabilities and
    stockholders' deficit           $ 2,962,244  $ 2,535,856     16.8%
                                    ===========  ===========  =======

Reconciliation of Financial Measures

The common definition of EBITDA is "Earnings Before Interest Expense, Taxes, Depreciation and Amortization." In evaluating liquidity, we use Adjusted EBITDA, which we define as earnings before interest expense, taxes, depreciation and amortization, share based compensation, minority interest, recapitalization transaction costs, after acquisition synergies and excluding unrestricted subsidiaries. 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 substitution 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. Set forth below is a reconciliation of EBITDA and adjusted EBITDA to cash flow from operations.

                                 Three Months Ended     Six Months Ended
Amounts in thousands                  June 30,              June 30,
                                  2007       2006       2007       2006
                                ---------  ---------  ---------  ---------
Cash flow from operating
 activities                     $  45,255  $  97,153  $ 127,183  $ 155,344
Income tax expense                  3,519     23,921     10,927     48,005
Deferred income tax (expense)
 benefit                            4,008    (21,114)    (2,682)   (17,480)
Interest expense                   83,465     12,205    163,655     16,426
Minority interest in earnings,
 net of distributions                (969)       579       (689)     3,138
Provision for share based
 compensation                        (319)    (3,663)      (629)    (7,287)
Debt amortization                  (3,657)      (218)    (7,408)      (433)
Other                                  (5)      (102)       432       (136)
Changes in operating assets and
 liabilities, net of business
 acquisitions                       2,963        884    (22,081)     9,665
                                ---------  ---------  ---------  ---------
EBITDA                            134,260    109,645    268,708    207,242
Minority interest                   4,257      4,048      8,155      6,624
Provision for share based
 compensation                         319      3,663        629      7,287
Recapitalization costs              4,443      3,000      8,575      5,000
Synthetic lease interest                -        483          -        896
Acquisition synergies               2,475      3,900      4,237      3,900
Vertical Alliance Adjustment        1,113      1,057      1,948      2,057
                                ---------  ---------  ---------  ---------
Adjusted EBITDA                 $ 146,867  $ 125,796  $ 292,252  $ 233,006
                                =========  =========  =========  =========

(2) Acquired entities include InPulse (acquired in October 2006), CenterPost (acquired in February 2007) and TeleVox (acquired in March 2007) in the Communications Services segment and Omnium (acquired May 2007) in the Receivables Management segment.

Contact Information

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

    West Corporation
    11808 Miracle Hills Drive
    Omaha, NE 68154