West Corp. sets dividend, lists earnings after IPO

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Posted: Friday, April 26, 2013 12:00 am

West Corp., in its first quarterly report as a publicly traded company Friday, said it plans to pay a 23-cent-per-share dividend, and said first-quarter net income was little changed from a year earlier.

The Omaha-based provider of conference calls, cloud computing services and 911 emergency switchboard software said adjusted net income was $44.5 million, down from $45.8 million, a year earlier. Revenue rose 3 percent to $660 million, the company said. Adjusted net income excludes one-time costs related to last month's initial public offering.

The dividend comes in the company's first weeks as a publicly traded company. Largest shareholder Thomas H. Lee, a Boston-based investment partnership, stands to collect $8.3million from the dividend, on ownership of about 36.3 million shares. THL took West private in a $4 billion deal in 2006, and sponsored the March IPO.

“Due to the strength of our underlying businesses, West generates significant free cash flow,” said Chief Financial Officer Paul Mendlik. “We expect to generate $180 million to $220 million in free cash flow this year. Our expectation is to return some portion of our free cash flow to shareholders each year through a regular quarterly dividend.”

THL and partner Quadrangle Investments collected a $25 million combined fee from the company during the first quarter, West said Friday. The expense was listed as IPO-related and was to terminate the management agreement that was part of their 2006 buyout that took West private after it had sold shares to the public for the first time in 1996.

The employer of 3,700 people in the metro area and 37,500 worldwide again sold shares to the public last month at $20 each, down from earlier IPO projections of $22 to $25 a share. The sale raised about $400million and was used to help pay off $450 million of debt. Shares of West were little changed Friday and closed at $20.75.

First-quarter net income, which includes the effect of the one-time items, was $3.1 million, or 5 cents a share, down 90 percent from $34 million, or 54 cents a share, a year earlier. The largest of the one-time items that lowered net income was the $25 million termination fee paid to THK and Quadrangle. Other costs were for the early retirement of debt and amortization.

West was formed in 1986 by Omahan Mary West, who was joined a year later by husband Gary West, to make telemarketing calls. Both were veterans of Omaha's First Data Resources. The Wests, now living in California, gained about $1.5 billion from the 2006 go-private deal, and still own about 9 percent of West shares, which they agreed to not sell for six months after the IPO.

On a conference call with analysts and investors Friday, Chief Executive Thomas Barker said the company remains on the lookout for acquisitions in the fields of teleconferencing, public safety communications and automated alerts delivered via telephone.

“But there have not been any we have been excited about in a while,” Barker said.

Contact the writer:

402-444-3133, russell.hubbard@owh.com

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