1 November 8, 2005 SUNTRUST ROBINSON HUMPHREY BUSINESS SERVICES CONFERENCE ICT GROUP, INC. NASDAQ: ICTG November 8, 2005 November 8, 2005 John Brennan, Chairman & CEO John Brennan, Chairman & CEO Exhibit 99.1 |
2 November 8, 2005 Company Statements Company Statements This presentation contains certain forward-looking statements that are subject to risks and uncertainties. Forward-looking statements include without limitation certain information relating to the effect of competition in the telemarketing industry, ICT Group’ s ability to execute its business strategy, the development of alliances upon terms acceptable to ICT Group and the achievement of the anticipated benefits of such alliances, as well as statements that are preceded by, followed by or include the words “believes,” “expects,” “estimates,” “anticipates,” “plans,” “should,” or similar expressions. For such statements, ICT Group claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Actual events or results may differ materially from those discussed in the forward-looking statements as a result of various factors, including without limitation, those discussed in ICT Group’ s annual report on Form 10-K for the year ended December 31, 2004 and other documents filed by ICT Group with the Securities and Exchange Commission. ICT Group makes no undertaking and disclaims any obligation to update such forward- looking statements. This presentation shows net income for 1996, 2002, 2003, 2004 and 2005 exclusive of special charges. In 1996 the Company reported a pre-tax, nonrecurring, non-cash charge of $12.7M which was primarily associated with the granting of options, concurrent with the Company’ s IPO, to replace certain previously granted expiring options. In 2002 the Company incurred special charges of $12.6M, pre-tax. This included charges of $8.9M, pre-tax, associated with the closing and scaling back of facilities and staff in the U.S. and Europe. It also included $3.7M, pre-tax, of additional charges, including a $1.4M charge for a client claim, a $1.7M charge for the costs associated with the defense of a class action litigation and a $0.6M charge for costs associated with a postponed underwritten public offering. In 2003, the Company incurred special charges of $4.0M, pre-tax associated with a class action litigation which were partially offset by a $0.7M partial reversal of the 2002 restructuring charge. In 2004, the Company incurred special charges of $10.3M, pre-tax associated with costs incurred to defend and the settlement of a class action litigation. In 2005, the Company received a $4.1M insurance recovery and incurred special charges of $0.6M, pre-tax associated with the class action litigation. |
3 November 8, 2005 Company Overview Company Overview • • Leading global provider of outsourced customer Leading global provider of outsourced customer management and related marketing/BPO solutions management and related marketing/BPO solutions • • Focus on mid-sized opportunities within Focus on mid-sized opportunities within Fortune 500 Fortune 500 • • Target select group of high-growth vertical industries Target select group of high-growth vertical industries • • Extensive offshore operations supported from U.S. data Extensive offshore operations supported from U.S. data centers centers • • 43 service centers in U.S. and 7 foreign countries 43 service centers in U.S. and 7 foreign countries • • 14,500 employees - 14,500 employees - 800 full-time 800 full-time • • LTM Revenues: $383M LTM Revenues: $383M |
4 November 8, 2005 U.S. Customer Interaction Services ($B) U.S. Customer Interaction Services ($B) $0.0 $10.0 $20.0 $30.0 $40.0 2004 2005 2006 2007 2008 2009 Customer Service Sales Marketing Technical Support/Help Desk $20.4 $23.1 $26.3 $30.0 $38.7 CAGR 13.7% $34.3 Source: IDC |
5 November 8, 2005 Why Invest in ICT Now? Why Invest in ICT Now? • • Focused on accelerated revenue and earnings growth Focused on accelerated revenue and earnings growth • • Developed broader base of BPO services, higher margin Developed broader base of BPO services, higher margin marketing/technology services and lower-cost offshore operations marketing/technology services and lower-cost offshore operations • • Leveraged existing strength in financial services and health care Leveraged existing strength in financial services and health care markets and expanded into new verticals markets and expanded into new verticals • • Captured 29 Captured 29 customer service wins over last 21 months customer service wins over last 21 months • • Strong pipeline of new opportunities across multiple verticals Strong pipeline of new opportunities across multiple verticals • • Expect EPS to more than double in 2005 on improved margins and Expect EPS to more than double in 2005 on improved margins and expected 20%+ revenue growth expected 20%+ revenue growth • • Expect EPS to grow 35% to 40% in 2006 on further revenue Expect EPS to grow 35% to 40% in 2006 on further revenue growth of 8% - growth of 8% - 10% 10% |
6 November 8, 2005 $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 $0 $5 $10 $15 $20 $25 $30 $35 $40 $45 Revenue EBITDA Excluding special charges [see Slide 2] Excluding special charges [see Slide 2] Return to Return to Historical Financial Performance Historical Financial Performance |
7 November 8, 2005 Growth Drivers Growth Drivers • • Shift to more consistent services business while Shift to more consistent services business while improving operating performance of sales business improving operating performance of sales business • • Focus on select verticals with diverse customer base Focus on select verticals with diverse customer base • • Continued success of offshore strategy Continued success of offshore strategy — — Increased call volumes Increased call volumes — — Greater utilization Greater utilization — — Higher profitability Higher profitability • • Growth of higher margin marketing and technology Growth of higher margin marketing and technology services services |
8 November 8, 2005 Rapid Growth of Services Revenue Rapid Growth of Services Revenue - - 32% Per Annum Since 2001 - 32% Per Annum Since 2001 - $239M $394M - $397M $298M 62% 32% 41% 52% 31% 58% 2001 2003 2005 6% Sales Sales Customer Service Customer Service Other Services Other Services 7% 11% |
9 November 8, 2005 Focusing Resources on Focusing Resources on Select Markets Select Markets • • ICT differentiates itself through its vertical marketing ICT differentiates itself through its vertical marketing expertise and application knowledge base expertise and application knowledge base • • This has improved our sales close rate and enabled This has improved our sales close rate and enabled cross-selling of additional services to existing clients cross-selling of additional services to existing clients • • We have become an industry leader in financial services We have become an industry leader in financial services and health care sectors: account for 64% of revenue and health care sectors: account for 64% of revenue • • Now applying vertical expertise strategy to expand into Now applying vertical expertise strategy to expand into new markets: government, technology and energy new markets: government, technology and energy |
10 November 8, 2005 Key Clients in Major Verticals Key Clients in Major Verticals |
11 November 8, 2005 0% 20% 40% 60% 80% 100% 2001 2003 2005 All Other Second 5 Top 5 Diversification of Client Base Diversification of Client Base $239M $298M $394M – $397 (E) |
12 November 8, 2005 Global Capabilities Global Capabilities • • Based on proven international expertise Based on proven international expertise • • Initially supported local country markets Initially supported local country markets • • Expanded to provide low cost near-shore and Expanded to provide low cost near-shore and offshore solutions offshore solutions • • Launched home shoring alternative in 2H05 Launched home shoring alternative in 2H05 • • Use consistent technology platform worldwide Use consistent technology platform worldwide • • Evaluating additional expansion for 2006 Evaluating additional expansion for 2006 |
Spain Spain Global Strategy: Markets & Operations Global Strategy: Global Strategy: Markets & Operations Markets & Operations Canada Canada U.S. U.S. U.K. U.K. Ireland Ireland Australia Australia Caribbean Caribbean Mexico Mexico Philippines Philippines India India Served Market Served Market with External Production External Production Under Evaluation Argentina Argentina Under Evaluation |
14 November 8, 2005 Consistent Technology Platform Consistent Technology Platform Worldwide Worldwide • • Best-in-class technology platform: Best-in-class technology platform: — — Centralized architecture for reliability/flexibility Centralized architecture for reliability/flexibility — — VoIP telephony to reduce costs VoIP telephony to reduce costs — — Redundant private network for voice & data Redundant private network for voice & data communications communications • • Intense focus on quality Intense focus on quality — — All centers are ISO 9001:2000 certified All centers are ISO 9001:2000 certified |
15 November 8, 2005 Philippines Operations Philippines Operations • • Preferred location for voice support Preferred location for voice support • • Fewer language barriers; more Americanized culture Fewer language barriers; more Americanized culture • • 1,560 seats in 2 centers by year-end 2005 1,560 seats in 2 centers by year-end 2005 • • 16% of ICT production YTD 2005 vs. 8% YTD 2004 16% of ICT production YTD 2005 vs. 8% YTD 2004 • • Layering additional services to leverage infrastructure Layering additional services to leverage infrastructure • • Third facility planned for 1H06 Third facility planned for 1H06 |
16 November 8, 2005 Leveraging Offshore Operations to Leveraging Offshore Operations to Target New BPO Opportunities Target New BPO Opportunities • • Use offshore operations during off-peak hours to support Use offshore operations during off-peak hours to support other BPO services for new and existing clients other BPO services for new and existing clients • • Amortize infrastructure over expanded business base Amortize infrastructure over expanded business base • • Raise utilization rates resulting in higher revenue and Raise utilization rates resulting in higher revenue and margin per workstation and higher ROIC margin per workstation and higher ROIC • • Add services through internal expansion, strategic Add services through internal expansion, strategic relationships and acquisitions relationships and acquisitions |
17 November 8, 2005 Margin Enhancement from Margin Enhancement from CRM Technology Services CRM Technology Services • • Expanded service offerings now include: Expanded service offerings now include: — — Hosted CRM, e-mail and knowledge-base software Hosted CRM, e-mail and knowledge-base software — — Hosted ACD, IVR and message alert services Hosted ACD, IVR and message alert services • • Small but growing part of business achieving Small but growing part of business achieving operating margins in excess of 25% operating margins in excess of 25% • • Awarded 10 new projects in 3Q05 which are Awarded 10 new projects in 3Q05 which are expected to generate $2.5M to $3.0M of high- expected to generate $2.5M to $3.0M of high- margin revenue over next 12 months margin revenue over next 12 months |
18 November 8, 2005 BPO Existing Business Geography Marketing Services Verticals Insurance Telecom Healthcare Technology Government Energy Banking Data Analytics Tech. Hosting IVR Data Capture U.S. Ireland Canada U.K. Australia Mexico Philippines Active Alerts CRM Solutions Argentina India Voice Mining Business Intelligence Market Research Application Processing Claims Processing Technology New Services Outbound Sales Inbound Customer Service Inbound Sales Email/ Web Knowledge Base Contact Center Services Home Agent ICT Expansion Strategy ICT Expansion Strategy Existing New |
19 November 8, 2005 Financial Financial Summary Summary |
20 November 8, 2005 3Q05 vs. 3Q04 Performance 3Q05 vs. 3Q04 Performance • • Total revenue up 24% year-over-year Total revenue up 24% year-over-year — — Customer service revenue was up 31% Customer service revenue was up 31% — — Sales revenue increased 11% Sales revenue increased 11% • • Operating income increased 111% to $3.7M Operating income increased 111% to $3.7M • • Net income increased 162% to $2.3 million Net income increased 162% to $2.3 million • • EPS increased 159% to $0.18 per share EPS increased 159% to $0.18 per share • • Effective tax rate decreased to 25% Effective tax rate decreased to 25% • • Net debt was reduced to $28 million Net debt was reduced to $28 million |
21 November 8, 2005 LTM Performance Through 3Q05 LTM Performance Through 3Q05 • • Total revenue up 23% year-over-year Total revenue up 23% year-over-year — — Customer service revenue was up 29% Customer service revenue was up 29% — — Sales revenue increased 12% Sales revenue increased 12% • • Operating income rose 134% to $12.8M Operating income rose 134% to $12.8M • • Net income increased 138% to $7.4 million Net income increased 138% to $7.4 million • • EPS increased 138% to $0.57 per share EPS increased 138% to $0.57 per share |
22 November 8, 2005 Revenue and Earnings Growth Revenue and Earnings Growth Excluding special charges [see Slide 2] Excluding special charges [see Slide 2] $0.00 $0.05 $0.10 $0.15 $0.20 $0.25 $0.30 Diluted EPS $50 $60 $70 $80 $90 $100 $110 Revenue (millions) |
23 November 8, 2005 Balance Sheet and Cash Flow Balance Sheet and Cash Flow September 30, 2005 September 30, 2005 • • $10 million of Cash and Cash Equivalents $10 million of Cash and Cash Equivalents • • $55 million of Working Capital $55 million of Working Capital – – 2.1 current ratio 2.1 current ratio • • Expanded bank credit facility to $125 million Expanded bank credit facility to $125 million – – $87 million available borrowing capacity, $87 million available borrowing capacity, – – Plus $50 million accordion feature Plus $50 million accordion feature • • $76 million in Shareholders’ $76 million in Shareholders’ Equity Equity |
24 November 8, 2005 Summary Summary |
25 November 8, 2005 Positive Outlook Positive Outlook • • Solid top-line growth and improved profitability Solid top-line growth and improved profitability • • Three year (2006 – Three year (2006 – 2008) internal growth targets of: 2008) internal growth targets of: — — Revenue of 10-15% per annum Revenue of 10-15% per annum — — Operating margins to reach 7-8% Operating margins to reach 7-8% • • 16 new and extended contracts in 2004: 13 YTD in 2005 16 new and extended contracts in 2004: 13 YTD in 2005 • • Expanded near-shore and offshore operations Expanded near-shore and offshore operations • • Broader technology, marketing and BPO service offerings Broader technology, marketing and BPO service offerings • • Strong financial position to invest in future internal growth Strong financial position to invest in future internal growth and pursue strategic acquisitions to accelerate revenue, and pursue strategic acquisitions to accelerate revenue, margin and earnings growth margin and earnings growth |
26 November 8, 2005 NASDAQ: ICTG NASDAQ: ICTG |