Earnings Call Excerpt
TNS, Inc. (TNS)
Q2 2008 Earnings Call
August 4, 2008 5:00 pm ET
Executives
Jim McLaughlin - Corporate Secretary
Henry Graham - Chief Executive Officer
Dennis Randolph – Executive Vice President and Chief Financial Officer
Ray Low – President
Analysts
Tien-Tsin Huang – JP Morgan Chase
Andrew Jeffrey – Suntrust Robinson Humphrey Capital Market
Wayne Johnson III - Raymond James & Associates
Gary Prestopino - Barrington Research Associates, Inc.
Franco Turrinelli - William Blair & Company
Presentation
Operator
Welcome to the second quarter 2008 TNS Inc earnings conference call. (Operator Instructions) I would now like to turn the presentation to your host for today's conference, Jim McLaughlin, Corporate Secretary.
Jim McLaughlin
This conference call and webcast are accompanied by a brief slide presentation that we invite you to access on TNS's website at www.TNSI.com. Leading today's call from TNS are Henry Graham, our CEO, and Dennis Randolph, our Executive Vice President and CFO.
Before turning the call over to Henry, I will read the Safe Harbor Statement. The matters that we will be discussing today, other than historical information, consist of forward-looking statements. These statements relate to future events or future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our results, levels of activity, performance or achievements to differ materially from those expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We caution you not to place undue reliance on forward-looking statements, which reflect our analysis only, and speak only as of today's date. We undertake no obligation to publicly update forward-looking statements reflect subsequent events or circumstances.
Finally, I refer you to our form 10-K filed with the Securities and Exchange Commission on March 17, 2008, which is available on our website, for additional information concerning factors that could cause actual results to differ materially from these forward-looking statements.
With that, I turn the call over to Henry. Henry Graham, TNS's CEO.
Henry Graham
I will begin today's call with an overview of the quarter's results and accomplishments, and give you an update on our plan for the second half of 2008. Then Dennis Randolph, our CFO, will take you through the results and our financial outlook. After Denny's remarks, he and I will be available to answer your questions in the time remaining. As we go through the discussion, we invite to you follow along on the slides we will be presenting on our website.
TNS's second quarter topped off a strong first half with the combination of solid performances in our ISD, FSD, and TSD divisions and continued gross margin expansion, putting our adjusted earnings slightly above our expectations. Revenues in the quarter grew 13.6% to $90.1 million and adjusted earnings excluding non-recurring items last year grew 46.5% to $10.8 million. These results produced higher year to date cash flow from operations achieved through our more productive business model. This was a very good first half, putting us in an excellent position to achieve our revised full year growth objectives.
We will start with the quarter review. Our webcast slide number 2. Let us talk about our divisional performance. Our international services division, TNS's largest division, recorded year over year sales growth of 31.6% in the second quarter, and accounted for 47.3% of total revenue. On a constant dollar basis, excluding the effect of foreign exchange, ISD grew 24.7%. ISD margins continued to be strong in the second quarter.
Looking at ISD by geography, in Europe, strong planned for our international POS and financial services continued to drive transaction volumes, and we gained additional share of growing markets.
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