ICT On the Rebound With Increased Earnings

On the rebound after diluted earnings discouraged investors last year, ICT Group Inc., Langhorne, PA, an international provider of integrated call center teleservices, reports a 32 percent revenue increase for the three months ended March 31, with $27 million, up from $20.5 million for first quarter last year.

Net income rose 41 percent to $666,000 from $473,000 in 1997 and operating income increased 65 percent to $1.1 million for the first quarter of 1998, from $637,000 in the same period in 1997. Diluted earnings per share for the quarter ended March 31increased 50 percent to $.06 per share, up from $.04 per share in the first quarter 1997.

“Stock is going to have to come back a long way before investors can get their profits,” said Mitchell Krassan, partner, EquiMark Limited, Philadelphia, a venture capital firm, in referring to the drop in valuation that occurred following ICT’s initial public offering of $16 per share, June 14, 1996. “Its valuation is still significantly below its IPO price.

“Increase in revenue should increase stock price but that is the investors’ call,” he added.

Clients have the power in a growth industry such as teleservices, according to Krassan. They can quickly bring about a change in revenue for a company.

“Just because you have a large contract for x amount of seats, it is not a guaranteed work contract,” Krassan said. “A two-week postponement can radically throw off a company’s earnings, comparable to, say, a hotel that has booked thousands of rooms for a conference and is told with minimal notice that the conference will be postponed two weeks. There is no way to recoup that money. It is lost forever. What was looking positive all of a sudden becomes negative.”

Strong revenue growth for ICT came from financial services, telecommunications and health care clients with inbound operations reaching a record high of $8.2 million in the quarter, up 48 percent from the first quarter of 1997, and accounting for 30 percent of total revenues vs. 27 percent in the previous year. Customer service business captured during the quarter included multiyear, multimillion dollar contracts with a telecommunications billing service company and a major publishing company in the United States and with a large, multinational insurance carrier to support its international expansion in Canada and the United Kingdom.

Other increases in revenues came from Domestic Teleservices operations, which showed a 38 percent increase to $18 million in the first quarter 1998. International Teleservices for the quarter were 2.8 million with 50 percent growth in Europe offset by reduced revenues from ICT Canada and ICT Spantel due to timing differences on certain telecommunications projects. Marketing Services division revenues were up 35 percent, reaching 4.1million in the quarter as each of its business units, Financial Marketing Services, Medical Marketing Services and Research Services, achieved double-digit growth rates. Strongest growth was achieved in the Management Services division, where revenues increased 53 percent to 2.3 million, reflecting the addition and expansion of several customer service contracts.

At first quarter ended March 31, the company reported 16.5 million in cash as well as the completion of a three-year, $45 million credit agreement with BankBoston, N.A., Boston, and Summit Bank, Oakland, CA.

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