Offshoring, Cross-Selling Help Ciber Notch Most Profitable Quarter Since 2010

Application modernization, cross-selling and offshoring have paid off for Ciber as the company logged its most profitable quarter in four years.

The Greenwood Village, Colo.-based company saw earnings for the quarter ending Dec. 31, excluding amortization and restructuring costs, increase from $3 million last year, or 4 cents per share, to $5.6 million this year, or 7 cents per share. Analysts were predicting earnings of 6 cents per share.

Year-over-year revenue grew 3 percent after factoring in foreign currency exchange rates to $219.6 million, beating analysts' estimates of $213.4 million.

[RELATED: Ciber To Lay Off 4 Percent Of Workforce As Sales, Earnings Fall Again]

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"Fourth-quarter results mark an important milestone for Ciber," President and CEO Michael Boustridge said during the company's earnings call. "We are on the right track, although it will take time."

Investors appeared ecstatic about the results, which were released before the market opened Tuesday, sending Ciber's stock up 10.2 percent to $3.67. The company is No. 38 on the CRN Solution Provider 500.

Offshoring has been one of Boustridge's top priorities since taking the reins as CEO in June. In that time, Ciber has increased its offshore and Indian operations by 16 percent, hiring 170 people abroad to handle the increased workload.

The United States has been more receptive to an offshore model as of late, Boustridge said, and Ciber has been working hard to ensure its capabilities overseas are built up to support the increased workforce. Ciber expects to continue growing its offshore operations, Boustridge said.

Prior to Boustridge's arrival, he said Ciber wasn't doing a good job of cross-selling or upselling products to existing customers despite that being much less expensive than trying to acquire new customers. The company has put a lot more time in recent months into cross-selling products, Boustridge said.

Both of Ciber's geographies enjoyed success in the fourth quarter, with North American revenues climbing 3 percent to $107.7 million and international revenues jumping 2 percent on a constant currency basis to $112.1 million.

The success in North America was driven by improvements in Ciber's independent software vendor (ISV) practice, with a strong performance from the company's Oracle portfolio and improvements in the SAP portfolio.

Ciber also is enjoying success in North America with its app modernization tool that modernizes legacy applications to work in a cloud-type model, enabling customers to increase or decrease their application activity without affecting capital expenditures.

NEXT: Germany Leading The Way

Across the pond, Germany has been leading the way with Ciber gaining traction in managed services and key verticals. Germany has not seen the economic and political turmoil common in other parts of Europe, Boustridge said, and, therefore, continues to see growth in its IT services sector.

The company has begun to turn around its operations in the Netherlands, Boustridge said, with utilization issues abating. Ciber expects to see profits from the country by the second half of the year.

Ciber also has broken out the Nordics as a separate region for the first time and is looking to expand its "utility-in-a-box" and e-commerce offerings in the region.

The company is in the midst of a $27 million restructuring announced in July, which includes 280 layoffs and is focused around high-value core offerings and institutionalizing a go-to-market strategy.

Christian Metzger, Ciber's chief financial officer, said during the earnings call that the company's restructuring is progressing according to plan and that it has incurred $24 million of the associated cost over the last two quarters.

The costs are virtually all cash, with $20 million related to severance payments and $7 million related to office closures. Financial benefits from the restructuring are expected to be felt in the second half of 2015, Metzger said.

"While the trajectory is upward, we can't promise it's going to be a linear path," Metzger said.

Yet, already Ciber is getting relief with the company's selling, general and administrative expenses falling 5 percent in the most recent quarter to $49 million.

PUBLISHED FEB. 3, 2015