Tuesday, relationship management solutions provider Convergys Corp. (CVG) recorded a profit for the fourth quarter compared to a loss last year, despite a decline in revenue. Looking forward, the company provided guidance for the fiscal 2010.
Convergys' fourth-quarter net profit was $41.6 million or $0.33 per share, compared to a net loss of $29.3 million or $0.24 per share, in the same period last year.
Adjusted net income for the quarter declined to $43 million or $0.34 per share from $45.1 million or $0.36 per share in the year-ago period.
On an average, fourteen analysts polled by Thomson Reuters expected the company to earn $0.31 per share. Analysts' estimates typically exclude one-time items.
Total revenue declined to $684.4 million from $704.7 million in the same period last year, yet was ahead of Street estimates of $663.70 million for the quarter. Revenue for the recent quarter includes $16 million of accelerated recognition of implementation revenue from resolution of the large HR management contract.
During the fourth quarter of 2009, Convergys restructured the second of its two large global HR Management contracts to eliminate future implementation obligations and liability for services not yet operational.
On a segmental basis, customer management revenue was down at $484 million compared to $527 million in the same quarter last year. Information management segment revenue posted a decline to $112 million from $114 million while HR management segment saw an increase in revenue of $88 million from $64 million in the same period last year.
Operating income was $9.8 million, compared with a loss of $35.6 million in the comparable quarter last year, including HR management-related, restructuring and other charges of $33 million for the recent quarter and $81 million for the last year quarter.
The Cincinnati, Ohio-based company received income tax benefit of $36.8 million for the fourth quarter compared to income tax expense of $0.9 million in the same period last year. The $37 million tax benefit in the fourth quarter of 2009 was due to an adjustment to the full year tax rate to reflect a favorable mix of income by geography, and the impact of prior-period HR management-related charges.
For the full year, the company reported a narrower net loss of $77 million, or $0.63 per share, compared to net loss of $93 million, or $0.75 per share in the prior year. Revenue for the full year increased to $2.827 billion, including $122 million of HR management contract restructure-related accelerated revenue recognition, from $2.786 billion last year. Analysts expected earnings of $1.14 per share on revenue of $2.80 billion.
Looking ahead to the fiscal 2010, Convergys expects earnings before interest, taxes, depreciation, and amortization of $330 million to $360 million and earnings per share of $1.05 to $1.20. The company projects revenue to be about $2.6 billion for the full year.
Analysts expect the company to earn $1.17 per share on revenue of $2.72 billion for the full year 2010.
The company expects 2010 customer management revenue to about $2 billion, information management revenue of about $350 million and HR management revenue of about $250 million.
CVG is currently trading at $11.15, up $0.10 or 0.90% on a volume of 0.39 million shares on the NYSE.
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