![]() Convergys Acquires Stream Global Services January 6, 2014 Exhibit 99.1 |
![]() Forward Looking Statements Statements about the expected timing, completion and effects of the proposed transaction and all other statements in this report and the exhibits furnished or filed herewith, other than historical facts, constitute “forward-looking statements” as defined under U.S. federal securities laws. In some cases, one can identify forward looking statements by terminology such as “will,” “expect,” “estimate,” “think,” “forecast,” “guidance, “outlook,” “plan,” “lead,” “project” or other comparable terminology. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or projections. These risks include, but are not limited to: (i) the ability of the parties to satisfy the conditions precedent and consummate the proposed transaction; (ii) the timing of consummation of the proposed transaction; (iii) the ability of the parties to secure regulatory approvals in a timely manner or on the terms desired or anticipated; (iv) the ability of Convergys to integrate the acquired operations, implement the anticipated business plans of the combined company following closing and achieve anticipated benefits and cost savings, (v) risks related to disruption of management’s attention from ongoing business operations due to the pending transaction; (vi) the effect of the announcement of the proposed transaction on either party’s relationships with its respective customers, vendors, lenders, operating results and businesses generally; and (vii) those factors contained in our periodic reports filed with the SEC, including in the “Risk Factors” section of our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q. The forward-looking information in this document is given as of the date of the particular statement and we assume no duty to update this information. Our filings and other important information are also available on the investor relations page of our web site at www.convergys.com. 2 |
![]() Transaction Summary 3 • Convergys to acquire Stream for $820M in cash Transaction • Combination creates $3 billion market leader Combined Company • $400M in cash (including $150M held offshore) • $420M in fully committed financing Financing • Expect ~$0.35 incremental non-GAAP EPS first 12 months • Expect $25M/yr cost synergies: 50% 1 st year, 100% year 2 • $40M net cash tax benefit from NOLs and other attributes Financial Benefits • Expect to close by end of first quarter 2014 • Conditional on customary regulatory filings Conditions/ Timing |
![]() Stream: Premier Global Services Provider • Global service provider – 40,000 employees, 56 contact centers, 35 languages, 22 countries – Americas, EMEA, Asia-Pacific, CALA • Serving marquee client base – leading companies in the Fortune 1000 • Across wide breadth of industries – technology, computing, telecom, retail, entertainment/media, financial services • Diverse service capabilities – technical support, customer care, sales Margin * Pro forma includes contribution from LBM Overview $865 $915 $943 2010 2011 2012 $75 $95 $111 9% 10% 12% 2010 2011 2012 Historical Adjusted Revenue and EBITDA* |
![]() Stream Meets Disciplined Selection Criteria Revenue trajectory Organic growth Organic growth Complementary clients Fortune 1000 marquee clients Fortune 1000 marquee clients EMEA/CALA expansion EMEA/CALA expansion Technical support leader Technical support leader Senior talent to join Convergys Senior talent to join Convergys Multiple in line with precedents Multiple in line with precedents Selection Criteria Stream Presence in desired geographies Capabilities clients value Strong management team Valuation |
![]() Strategic and Financial Benefits of the Acquisition 6 Financial Benefits Expands US and global presence Combination creates #2 global service provider by revenue Cost synergy potential Cost efficiencies from IT/IS infrastructure, operations/support, executive and finance Compatible business models, similar structures and cultures ease integration Strategic Benefits More balanced revenue profile More diversified client base, geographic footprint and service capabilities Enhances prospects for future revenue and EPS growth Preserves financial flexibility Strong cash flow generation Ample liquidity after close Adds multi-shore delivery capacity Provides new in-country language skills in EMEA/CALA to serve multinational clients Enhances geographic reach, breadth of languages and service capabilities Diversifies client portfolio Highly accretive transaction Reduces client concentration Allows Convergys to apply its successful business model across increased client base Strengthens offering to technology clients Leverages strong balance sheet Tax efficient use of cash held offshore Strong technical support expertise, lead-generation solution offerings |
![]() Today 7 RATIONALE #1: Diversifies Base With Complementary Clients Combined (Pro Forma) Reduces client concentration Convergys Client Base Revenue Breakdown Additional Stream clients Top 3 clients 47% Top 3 clients 33% Rest of clients Rest of clients |
![]() RATIONALE #2: Strengthens Services for Technology Industry Technology Client Share of Convergys Revenue 9% 2X Combined Revenue by Vertical (Pro Forma) 59% Communications 6% Financial 18% Technology 17% Other Creates more balanced mix across industries 18% Today Combined |
![]() RATIONALE #3: Enhances Geographic Reach, Languages and Services • Adds European in-country language support • Gain technical support services expertise • LBM provides lead generation services 9 Breadth of Languages and Service Capabilities Combined Revenue by Delivery Region (Pro Forma) 47% North America 20% Rest of World (EMEA/CALA) 34% Asia 3X increase in EMEA/CALA share of revenue |
![]() All Cash Transaction, Ample Liquidity Post Close 10 100% Cash Funded $820M Purchase Price US Cash $250 Offshore Cash $150 Fully committed debt facilities $420 * Balance Sheet and Liquidity* (Pro Forma $M) Cash ~$200 Total debt/EBITDA ratio 1.6x Debt ~$600 > $550 Available liquidity Debt includes capital leases; available liquidity includes undrawn revolver and A/R securitization facilities, cash and short-term investments as of transaction close. |
![]() Complementary Businesses Create Synergies 11 • Planning to facilitate smooth integration into Convergys structure post close significant diligence performed to identify synergies combine all operations under global operating model streamline IT/operations systems and tools eliminate overlap job functions, standardize processes Stream management augments operations and sales teams * Expect to realize 50% first year, 100% within 24 months post close. $25M IT/IS infrastructure Operations/ support Executive Finance Expected scale efficiencies* |
![]() Capital Structure Principles Remain Intact Maintain Strong Balance Sheet 12 Invest in Strategic Growth Return Capital to Investors • Preserve strong balance sheet, liquidity and credit rating – maintain flexibility to invest in organic and strategic growth – leverage range within +/- 2x debt/EBITDA • Continue to return capital to investors – dividend – opportunistic share repurchase • Investment in organic growth – quality delivery, solutions and clients Consider strategic tuck-in M&A – clients, capabilities and countries |
![]() Convergys 2013 Business Outlook – Reaffirmed 13 Not included in this guidance is the impact of the Stream acquisition or share repurchase activities. Also not included in this guidance are results classified within discontinued operations related to the sale of Convergys’ Information Management business as well as other impacts from corporate simplification actions initiated in prior years such as non-cash pension settlement charges. ($Million) Reaffirmed 2013 Guidance Revenue ~2,045 Adjusted EBITDA >248 Adjusted EPS ~ $1.10 |
![]() Summary • Combines two strong and well- performing companies • Expands and diversifies client base • Adds global reach and service capabilities • Highly accretive transaction • Leverages strong balance sheet • Enhances revenue, margin improvement and EPS growth 14 Key Takeaways A Powerful Combination |