Sykes Enterprises (SYKE) Q1 2019 Earnings Call Transcript

Sykes Enterprises (SYKE)
Q1 2019 Earnings Call
May. 07, 2019, 10:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, and welcome to the Sykes Enterprises first-quarter 2019 earnings call and webcast. [Operator instructions] Please note this event is being recorded. I would now like to turn the conference over to John Chapman, CFO. Please go ahead.

John Chapman -- Chief Financial Officer

Thank you, Claudia. Good morning, everyone, and thank you for joining us today to discuss Sykes Enterprises first-quarter 2019 financial results. With me today on the call are Chuck Sykes, our CEO; and Subhaash Kumar, our head of investor relations. On today's call, I'll provide an operational update followed by a review of the financial results of the quarter, after which both Chuck and I will take questions.

From an operational standpoint, we made a -- we made solid progress on two of the three key performance indicators for the business. Our operating margins came in better than expected relative to implied guidance on the comparable period. We drove similar success and the comparable increase in our facility utilization rate during the quarter. Both of these gains were tied directly to action plans we set in motion as we exited 2017.

We are close to wrapping up the rationalization, which is consistent with what we -- which -- with what we guided to as we exited the final quarter of 2018. At the same time, we continue to simplify and refine our operating model in the U.S in part to improve agent attrition and absenteeism while executing on revenue growth worldwide. Having successfully delivered on capacity rationalization, we have better line of sight on pursuing the next phase of improvements. I would now like to make some observations about growth opportunities.

Specific to revenue growth, we are seeing three things that are validating our market differentiation and operational readiness: first, the business we have closed for 2019 is ramping faster than we expected. Although this will impact our second and third-quarter operating margins, it is a strong sign of the underlying demand in the business and our state of readiness; second, the mix of demand from a vertical, geographical and line of business perspective is equally encouraging. We are seeing wide ranging opportunities. We are catering consumer and enterprise-focused opportunities with new economic clients and the home automation: fintech, logistics and social media segments in addition to winning opportunities and our traditional Global 2000 client segment.

We're also winning opportunities with new logos, new lines of business and taking share within technology, financial services, healthcare, travel and retail. Incidentally, the exposure to verticals outside of communications, which now represents 23% of revenues versus 27%, has already increased 400 basis points over a 12-month period on a comparable basis. The communication -- communication is a vertical, but is still expected to remain a meaningful source of opportunities given its broad ecosystem of business lines, which has led to some recent big wins; and third, our positioning in the marketplace has been given greater validation. We were recently recognized by HFS Research, an industry analyst firm, as the No.

1 company for vision and go-to-market strategy out of 25 leading contenders across the customer engagement services value chain. HFS called out a significant automation capability as a result of Symphony together with other strategic acquisition as their rationale for the accolade. More importantly though, thanks to our strong customer engagement reputation augmented by the solid platform of acquired capabilities around RPA and self-service, we are now being invited to respond to transformational RFPs where these acquired capabilities play a pivotal role. We are being selective instituting these transformation engagements so as not to lose focus on our sweet spot in the market, but with clients trying to find the optimal balance between creating a coherent customer journey while driving a superior customer experience and optimizing costs, we believe, we are uniquely positioned with a differentiated platform to be a go-to partner for clients.

Now let me turn to first-quarter 2019 financial results. Let's start with revenues. In the quarter, we reported revenues of $402.9 million versus our first-quarter outlook of $403 million to $408 million. This is at the low end of our business outlook range of $403 million to $408 million geologically to our largest clients in the communications vertical.

Looking at revenues on a year-over-year comparable basis, we were down 2.8% on a reported basis, but roughly flattish on a constant-currency basis. By vertical market and on a constant-currency basis, transportation and leisure was up around 23%; healthcare up around 19%; Other, which includes retail, was up roughly 10%; technology up 3%; and financial services was flat, all of which were partially offset by the communications vertical down 16%. It is worth noting that excluding the drive from previously disclosed strategic decision to discontinue our program, the financial services vertical would have swung to roughly 6% growth on a constant-currency basis. first-quarter 2019 operating margin increased to 4.2% from 3.4% for the comparable period last year.

On a non-GAAP basis, which excludes the impact of acquisition-related intangibles and fixed asset write-ups, restructuring charges and acquisition merge and integration costs, first-quarter 2019 operating margin was 6.7% versus 5.8% in same period last year. The increase in the comparable operating margin was due primarily to actions related to capacity rationalization coupled with an improvement in the mix of business in U.S, partly related to these actions. In addition, the first-quarter 2019 operating margin reflected a $1.2 million negative impact or 30 basis points associated with a mark-to-market adjustment of the stock-based deferred comp programs funded through Rabbi Trust investments, which were impacted by the recent increase in global financial markets. first-quarter 2019 diluted earnings per share were $0.28 versus $0.26 in the same period last year with the increase due principally to success and actions related to capacities rationalization.

On a non-GAAP basis, first-quarter 2019 diluted earnings per share were $0.45 versus $0.43 on a comparable basis. The increase in diluted earnings per share on a comparable basis was due to the aforementioned factors. The company's first-quarter 2019 diluted earnings per share, when adjusted for interest and other expense as well tax rate consistent with the business outlook campaign, -- came in at the top end of the revenue -- sorry, the guidance range of $0.42 to $0.45. Coming to our client mix for a moment.

On a consolidated basis, our top 10 clients represented 42% of total revenues during the first quarter down from 46% from the year-ago period due principally to decline in one of our largest clients. We have new 10% client in the quarter versus one at 10.1% from year-ago period driven mostly by lower demand by clients in the communications vertical. Now let me turn to slide cash flow and balance sheet items. During quarter, capital expenditures were down to 1.4% of revenues from 3.2% of revenues in the year-ago period.

The reduction in capital intensity is largely timing-related coupled with a focus on driving utilization of existing capacity in assets. Trade DSOs on a consolidated basis for the first quarter was 76 days, up three days on a comparable basis. The DSO was split 75 days for the Americas and 82 days for EMEA. We collected roughly nine days worth of DSO within the first few days after quarter end.

Our balance sheet at 31st March 2019 remains strong with cash and cash equivalents of $148.2 million, of which approximately 88.5% or $131.2 million was held in international operations. During the quarter, we paid down $9 million of debt with $93 million of borrowings outstanding -- available -- $93 million of borrowings outstanding from our $500 million credit facility. We continue to hedge some of our foreign exchange exposure for the second quarter and full-year 2019, we have hedged approximately 53% and 40% -- and 39% at weighted average rates of PHP 53.84 and PHP 53.70 to the U.S. dollar respectively.

In addition, our Costa Rica colón exposure for the second quarter and full year of 2019 are hedged approximately 79% and 65% at weighted average rates of roughly CRC 593.19 and CRC 593.96 to the U.S. dollar. Now let's review some seat count and capacity utilization metrics. On a consolidated basis, we ended first quarter with approximately 47,900 seats, down approximately 5,700 seats comparably.

On a gross basis, the company rationalized a total of roughly 7,000 brick-and-mortar seats, of which 5,000 were in North America on a year-over-year basis. The total amount of seats rationalized was partially offset by seat additions of 1,300 worldwide for demand. The first-quarter seat count can be further broken down to 40,200 in the Americas and 7,700 in EMEA. Capacity utilization rates at the end of the first quarter were 71% for the Americas and 73% for EMEA versus 66% for Americas and 79% for EMEA in the year-ago quarter.

The increase in Americas' utilization was driven mostly by the capacity rationalization program. Further deduction -- reduction in EMEA was due to expansion and utilization of our own platform as a complement to our brick-and-mortar facilities. The capacity utilization rate on a combined basis is 72% versus 68% in a year-ago period with the increase mainly due to a combination of previously stated factors. Now let's turn to the business outlook.

We are tweaking our full-year 2019 business outlook slightly. While we are keeping the bottom end of our revenue range intact relative to the outlook provided in February, we are trimming the top end, but only to reflect the first quarter's reported revenues at the lower end of the range. We are adjusting both GAAP and non-GAAP diluted earnings per share ranges to reflect heavier, front-end loaded costs in the second and to some extent in the third quarter associated with an accelerated ramp schedule of higher-than-forecast new business wins. At the same time, we anticipate demand stabilization in our largest client and the communications vertical to occur close to the end of the year as opposed to at the start of the second half of the year.

The revenue reduction from which is being offset by the ramp of new business wins, but the cost of which is expected to impact margins and earnings per share as discussed above. Our revenues and earnings per share assumption for the second quarter and full year based on foreign exchange rates as of April 2019, therefore a continued volatility in foreign exchange rates between U.S. dollar and the functional currencies of the markets we serve could have a further impact both positive or negative on revenues in both GAAP and non-GAAP earnings per share relative to the business outlook for the second quarter and full year as discussed above. We anticipate total other interest income expense net of approximately $1.2 million for the second quarter and $4 million for the full year.

The amount in other interest expense, however, exclude any potential impact of future foreign exchange gains and losses. And we expect full-year 2019 effective tax rate to remain relatively unchanged compared to the initial February 2019 outlook. Considering the above factors, we anticipate the following financial results for the three months ended June 30: revenues in the range of $393 million to $398 million; an effective tax rate of approximately 26%; 25% on a non-GAAP rate; fully diluted share count of approximately 42.3 million; diluted earnings per share of approximately $0.13 to $0.16; non-GAAP diluted earnings per share in the range of $0.28 to $0.31; capital expenditures in the range of $13 million to $18 million. For the 12 months ending December 31, we anticipate the following financial results: revenues in range of $1.656 billion to $1.672 billion; an effective tax rate of approximately 25%; fully diluted share count of approximately 42.3 million; diluted earnings per share of approximately $1.56 to $1.66; non-GAAP diluted earnings per share in the range of $2.10 to $2.20; and capital expenditures in the range of $45 million to $50 million.

With that, I'd like to open the call up for questions. Claudia?

Questions & Answers:

Operator

Before I turn the call over to Q&A, management has asked me to relate to you that certain statements made during the course of this call as they relate to the company's future business and financial performance are forward looking. Such statements contain information that are based on the beliefs of management as well as assumptions made by an information currently available to management. Phrases such as our goal, we anticipate, we expect and similar expressions as they relate to the company are intended to identify forward-looking statements. It is important to note that the company's actual results could differ materially from those projected in such forward-looking statements.

Factors that could cause actual results to differ materially from those in the forward-looking statements were identified in yesterday's press release and the company's Form 10-K and other filings with the SEC from time to time. And we will now begin the question and answer session. [Operator instructions] Our first question is from Josh Vogel with Sidoti & Co.

Josh Vogel -- Sidoti and Company -- Analyst

I guess first, can you may be quantify for us the revenue headwinds you're seeing for 2019 with regard to your largest client? And I know, it's been a fairly steady decline in volume and revenue since basically mid-2017 and I'm just -- what gives you confidence that they will actually stabilize or bottom later this year versus potentially trending down even further in 2020, maybe similar to what we saw happened with Convergys?

John Chapman -- Chief Financial Officer

Yes. I mean, In general, as you pointed you, we're seeing weakness in the vertical, but more specifically in our largest client for -- you're right, it's close to two years now. The main customers we support for that client is actually in the wireless space and we do sales and service business and there's been, as we've spoken about in the market, general weakness by the general market factors and we do -- we do see that all of our clients in that space and our largest client be no exception have had self-service strategies and that has impacted volumes. What we saw in Q1 was not an acceleration as such, but we see in Q1 volumes got delivered the -- the volumes were lower than the client had given us expectations on in Q1 and when you don't get the volumes you deliver and you've got agents there, that's a real drag on your profitability and all partners struggle with getting less than the committed volumes.

What we're really calling out for the second half of the year is not so much continued weakness in that overall volume but because less volumes are getting delivered to the network, the client's made a decision to reduce the number of sites it's using in that wireless space. And so unfortunately, that's the event that we didn't see in Q1 that we now see in Q2. This is impacting our second half revenues more than the general weakness in overall volumes. We have been impacted by that decision to kind of repurpose four sites they're going to deliver from and so we see that impacting our revenues overall.

The good news is that our probably rightsizes in terms of the capacity the client's got for the volumes it has and we should see a utilization improve in those sites that remain, but it is obviously giving us a bit of an issue and that we're kind of get weakness in our Q2 revenues as we ramp that down. In terms of overall, the weakness, if you look overall, we expect the largest client to impact our overall growth by around 2.5% to 3% in 2019 and that's about -- I guess that's probably close to 1.5 points higher than what we saw at last time, but that's the scale. So we are hopeful that we are seeing and we will see the volumes stabilize and we like the fact that the client is rightsizing the network for the volumes is there. Yes, we are probably losing out a bit and we've been impacted by that by that decision, but we actually think it's the right one for the long term because we do want all of our sites to utilized because there's no point in having committed volume doesn't come in.

We'd like to get that space freed up so that we could use that for the growth that we're seeing elsewhere.

Josh Vogel -- Sidoti and Company -- Analyst

All right. That's very helpful. And I guess on the other side of it, is there anything different structurally that is driving the strong pipeline of new business we're seeing, both from your old economy and new economy clients?

John Chapman -- Chief Financial Officer

No, nothing specific. We've got a good name in the marketplace. In the main, we've been delivering excellent service for our clients. We spoke about we received accolades for some of our strategic moves.

And what we have done is we've restructured, we've rescaled and refocused our marketing efforts, our sales efforts to build the pipeline under message and we've managed to adjust our vertical mix focus. So there's no one reason, no one silver bullet, but it's all the case of the adjustments we've made and we spoke about how we really don't want to get over index in any one client, in any one geography, for any one vertical. And that realignment is together with the asset portfolio we have is making a difference. But I don't see and look at the successes we're having and say that there is one factor that you could call out is being the silver bullet that is making the difference, Josh, but we are seeing new names.

And although, new names don't really move the needle initially, new names are the root of growth in the future. And so -- whereas, we definitely had success with large clients in the past and our existing client base is still the lion's share of the growth that we see and we are encouraged by the new wins. And some of that is in the new economy, some of it is in existing and -- the old kind of style Russell 2000 list that we look up. But it is widespread, multi-vertical and multi-shore.

So yes, we're -- we're feeling good about it.

Josh Vogel -- Sidoti and Company -- Analyst

OK. Great. And with regards to your capital allocation strategy outside of debt repayment, could you maybe just talk about the acquisition landscape. Is there any what you redeem as white spaces on the technology front in terms of products and services that you still want to or looking to get into?

John Chapman -- Chief Financial Officer

No, I mean, we're always looking at deals that can fill white space. We don't have many white spaces geographically. I think we've always spoken about and we're still looking at, is in the health vertical, I mean, clearly, and it has been doing really well in health and that's why, sequentially you see the revenues from Q4 to Q1 go down. But I would say that's still a focus of ours is to find out those -- something in there that can improve our health footprint relative in terms of the market share or in terms of the vertical market share that we have in terms of business.

But there is nothing -- I mean, we always look and we are very disciplined in what we're looking for, but there's nothing changed there. It's I think, I would say, health is where we are still focused.

Josh Vogel -- Sidoti and Company -- Analyst

OK. Great. Just lastly, as I'm not sure you guys can tell or not, my allergies or beat me up right now. And I am just curious that, Chuck, how is your voice doing and how you're feeling?

Chuck Sykes -- Chief Executive Officer

It's still kind of messed up as you can tell. I have adductor spasmodic dysphonia. So I'll start voice therapy May 15 and it's just going to be a long progress back. But the doctor says I'll be able to get it back.

So it's the craziest thing, Josh, I have ever dealt with. That's all I can say, so --

John Chapman -- Chief Financial Officer

The crazy thing, Josh, right, is Chuck is running, right? He can talk perfectly well because the pathway to the voice box is obviously different. So we did threaten him to throw him on a treadmill for the call.

Josh Vogel -- Sidoti and Company -- Analyst

Well, I'm sorry you're going through that and I hope you feel better and a speedy recovery on that front, Chuck.

Chuck Sykes -- Chief Executive Officer

I appreciate it. I feel great. It's just my voice makes me sound horrible, but anyway, this is why you're getting good team meetings with Chapman, yes, thanks Josh.

Operator

Our next question is from Bill Warmington with Wells Fargo.

Bill Warmington -- Wells Fargo Securities -- Analyst

Chuck, just please don't say anything. Rest your voice, I feel bad -- I feel really bad if you actually had to one of my question.

Chuck Sykes -- Chief Executive Officer

You'll see when I laugh, I could talk better, so if you keep me laughing. No, I thought, after I answered John's questions, I just took care of all the last questions I'm going to get.

Bill Warmington -- Wells Fargo Securities -- Analyst

All right. So a follow-up question on AT&T. The -- it looks like basically -- if you -- if maybe -- no, if you look at revenue being down 25% to 30% this quarter from AT&T versus down 33% comp in the first quarter of '18, I mean, it looks like on a run-rate basis, you've probably gone from around $250 million in 2016 to about a $150 million currently, and -- which is pretty big reduction and the question I have is where is that AT&T revenue going? I mean, is it going to competitors? Are they bringing it in-house? Is it simply disappearing because they're withdrawing the services? Are they keeping lower service levels? What is happening with that revenue?

John Chapman -- Chief Financial Officer

Well, there is -- we are seeing -- when we have got visibility into the volumes and we do see the volumes coming down, so we can see that we are not singled out in terms of what's happening to the volumes. And I'm seeing the volumes being impacted there across the board. What I would say is we operate a lot in the wireless segment and AT&T has got -- sorry, our largest client has got -- they have got multiple lines of business and what I would say is that where we play is there has been, I would say, more volume reductions than elsewhere. We are -- we're working and trying to rebalance how -- our kind of portfolio mix even within the client.

But we do see ourselves sharing in the volume reductions. And exactly, fly -- I mean, there is less movement in the marketplace. We are seeing it's similar in other telcos. Obviously, our largest client was the most significant to us.

We do -- we do have a view of it reducing and as I said, I mean we really thought that when we got to the middle of this year, we're -- it's going to stabilize. But in actual fact, from the look at the decision that the client made to adjust the footprint, it's the right thing and it's the right thing for the long-term profitability of our business. The last thing we want is half utilize people or facility. So while it's a real pain and we prefer it has not happened, the fact that we -- it's happened now at a time where we've got some really nice growth and that growth is happening.

Unlike in 2015 where we really had -- really it was telco-focused, U.S. domestic-focused growth. We're seeing growth that's top away for us, more -- more focused on the offshore and it's focused in areas where we've got capacity. So we feel -- we feel good about where we're going to be by the time we get to Q4.

But we don't see it as our largest client going away. We do see that it will start to -- the scale of reduction will really start to scale back. We just need to get through this adjustment that we've made to the forecast. But the good news is, and again, we don't share the components of our forecast, but what I would say is once we get through the ramp-up that we're going -- that the ramp costs are impacting Q2 together with the AT&T site adjustment that we're speaking about, our Q4, we expect to be in a stronger position than what we've guided in February.

So that's the good news story. Obviously, in our business, it's all about execution on ramps and so, yes, when you got that scale of ramps, it does introduce a factor in your forecast that makes it riskier if you like, but we are absolutely committed and we've got a track record of delivering one execution of ramps. So while it's more risky than normal, I would guess, we are not in any way phased by that and we're enthused by, when we get through this, we have a business and will be in Q4.

Bill Warmington -- Wells Fargo Securities -- Analyst

OK. A housekeeping question for you. Is if -- I wanted if I could get constant currency organic revenue growth for total company for Americas and then for EMEA and by that I mean backing out the contract loss and acquisitions and FX.

John Chapman -- Chief Financial Officer

So in terms of Q1, EMEA was constant currency about 7% organic growth. And if you look at the guidance overall, I think if you look at implied numbers, about -- the mid-point of guidance is about 2.5%, FX is a 1% headwind, so you're really looking at 3.6% constant currency. In terms of the acquisition, you would take out just over 2% and so constant currency organic, you are looking about 1.5%. If you then look at -- OK, what about the largest --

Bill Warmington -- Wells Fargo Securities -- Analyst

Hold on. Hold on. That's 1.5% constant currency organic revenue growth for the first quarter?

John Chapman -- Chief Financial Officer

No. No. For the year.

Bill Warmington -- Wells Fargo Securities -- Analyst

For the year. Got it.

John Chapman -- Chief Financial Officer

And If you look at for the year, we've kind of got two factors we've called out before: one is our largest client and the impact of that is 2.5% to 3%; one is the financial services program, the impact of that 1%. So again, I know it's a bit weird, but if you exclude the largest client, you exclude that, then we're looking at between 5% to 5.5% constant currency organic growth excluding those discrete items there.

Bill Warmington -- Wells Fargo Securities -- Analyst

Got it. OK. And then for the first quarter that you just reported, just to triangulate on that. So EMEA was, you said, about 7% constant currency organic.

John Chapman -- Chief Financial Officer

EMEA was around 7%. I'm looking at supplies for Americas, because I don't have that number in my head.

Bill Warmington -- Wells Fargo Securities -- Analyst

America's total company --

Chuck Sykes -- Chief Executive Officer

I think it was 0% to flattish.

John Chapman -- Chief Financial Officer

Yes, it's flat -- constant currency organic was flattish, yes.

Bill Warmington -- Wells Fargo Securities -- Analyst

Flattish, OK. All right. We can back into the rest.

John Chapman -- Chief Financial Officer

You can back into the Americas number then, yes.

Bill Warmington -- Wells Fargo Securities -- Analyst

I wanted to trust me with that kind of maths. So I want to ask about Clearlink and how that was doing? And specifically, whether you're able to get some traction outside as the traditional buyers of the digital marketing service? How broadly are you able to sell that within the client base?

John Chapman -- Chief Financial Officer

I would say we've had some, but I think the success of Clearlink, because, again, we've been speaking about how it's been growing double-digit for a while. That success is being pretty much in that digital marketing space rather than being a combined call set on digital marketing success as such. That's where I think I would describe as where we have been successful. Again, we don't want its continuous [Inaudible] Clearlink.

We do speak about how the revenues have been growing double-digit. That certainly at some point become more difficult obviously. It still will trend above our 4% to 6% target that we've got. It's -- again, the comps are getting tougher as I said and we don't want to share the margins, but again we've always -- we shared with you guys when we did the acquisition and our margin expectations in the business at this point is unchanged.

I would say in terms of some of our strategic moves, weirdly, I would say, we've pulled out more joint pitches already with Symphony as appose to joint pitches with Clearlink at this point, which is exciting. But that's just a call out that we're seeing that.

Bill Warmington -- Wells Fargo Securities -- Analyst

Got it. All right. I think that does it for me and Chuck, just hope you feel better and just think of it as a brief pause in your karaoke career.

John Chapman -- Chief Financial Officer

No, he can sing OK, Bill. So with either joke on --

Chuck Sykes -- Chief Executive Officer

I appreciate it. Thanks, Bill.

Operator

Our next question is from Vincent Colicchio with Barrington.

Vincent Colicchio -- Barrington Research -- Analyst

So given the strength in EMEA, just, John, hoping -- looking for an update in terms of the trends and attrition and wage inflation and where things are now and kind of if there's been a change from what you're thinking was last quarter?

John Chapman -- Chief Financial Officer

All right. I mean, in terms of ramps and the plan, we've got ramps for most regions, but I would say, in Q2, it's mainly offshore-focused, it's not EMEA-focused, it's really offshore-focused. Wage rates are stable, overall. Ramp offshore is material, but outside, kind of, let's call it, recruitment costs when you're ramping like this, it can be lumpy in terms of impact on margins.

Wage rates in those offshore arenas that we're growing in Q2 are not materially higher. Although, obviously, when you win new business, the beauty is the rates charge the price on the labor market of today, but even say, not, our offshore labor rates have been relatively stable for a few years now. In terms of attrition, offshore actually, I think, 2018 was one of the lowest offshore attrition rates we have ever had and we have not really seen a material movement in that in 2019. Clearly when you start to grow, you do get impacts on attrition because that's just the natural way the business works.

In terms of attrition in the market that we've always been calling out as our challenge, which is the U.S, it was always most acute in the telco vertical and a little -- if you look at the headline attrition number in the U.S., it has reduced, but I would say that it has much to do with the portfolio adjustment that we've seen where telecom is less of our dominant vertical rather than overall reductions in those component vertical pieces. So yes, so Q2, a lot of offshore, we love that. We have capacity. We will see the benefit of that coming through in Q3 and Q4.

But overall, no significant wage pressure in the U.S. I would say, and wage pressure, it's probably moderated and our attrition overall, headline-wise, is down, we still are challenged in the telco vertical.

Vincent Colicchio -- Barrington Research -- Analyst

OK. And on Symphony, you've mentioned a little bit here. Just curious, if it's performing? Sounds like it's performing well. Is it, in fact, performing better than expected and -- in general and on the cross-selling side as well?

John Chapman -- Chief Financial Officer

Yes. I mean, as we mentioned in our prepared remarks and as we mentioned when we closed the transaction, we've been seeing more and more RFPs. We're focused not just on our human capital skills and experience, but RFPs looking for a partner with skills to help them reengineer the processes partly through traditional human capital strategy, but also looking to augment that with automation. And at the moment although we have -- we do have internal efficiency programs that Symphony is helping us with, so It's great to have that knowledge in-house.

And we do have some, what I would describe as, client-specific projects at the front end of the business looking at existing lines of business. Symphony have continued to build the reputation in the pure-play automation projects. I mean we are excited by the stand-alone growth that they're committing on, I mean, it's not over and above what we expected, but it's where we expected. But as I think we also touched on is, more importantly, Symphony are playing an important part in new RFPs where digital transformation together with human capital changes are the driving forces of these proposals.

So as I called out there we are seeing that gain traction very, very quickly and that's exciting for us.

Vincent Colicchio -- Barrington Research -- Analyst

And then what utilization rate do you expect to exit the year at overall?

John Chapman -- Chief Financial Officer

We expect to get close to 80%.

Vincent Colicchio -- Barrington Research -- Analyst

And then one last question. With your new delivery mix, what's a normalized level or run rate for G&A going forward?

John Chapman -- Chief Financial Officer

Again in terms of offshore, onshore mix, obviously, what happens is GP percentages go up, G&A should probably go up. And overall, we don't like to really even trying guide you guys on that. Directionally, that's the right answer, but we are much more focused on the operating margin side, but and saying that because of the growth offshore, you will see GP percent increase in -- as you go through the quarters. But the beauty is, although the G&A dollars will increase, actually, we still expect and because our utilization is going to improve significantly between now and the end of the year, although the G&A dollars will go up, the G&A efficiency will also improve.

So we should see that also improve. So although model-wise, you're absolutely right, as we've got capacity set that could be used. You should see a G&A and efficiency improve as we move through to quarter 4.

Operator

Our next question is from Dave Koning with Baird.

Dave Koning -- Baird -- Analyst

Yes. And sorry Chuck, about everything. Well -- so first of all, just to clean up, just to make sure I get it on the model, what was the dollar contribution from each WhistleOut and Symphony?

John Chapman -- Chief Financial Officer

Yes. WhistleOut was about 3.5% and Symphony was about 5%., yes, something like that, of revenue.

Dave Koning -- Baird -- Analyst

OK. That's nice. Of revenue, yes. OK.

That's good. And then AT&T, you said, under 10% this quarter contribution. Did you give an actual -- often you'll give like -- I think you said 10.1% I think in the year ago or whatever, but did you give an exact number for Q1 '19?

John Chapman -- Chief Financial Officer

Yes. 7.6%.

Dave Koning -- Baird -- Analyst

7.6%, OK. Got you. And then the other thing I have noticed, so you have rationalized the seats and you guys shared really good yield like revenue per seat has been up pretty significantly the last four quarters, it was up 9% year over year this quarter. Are you expecting seats to stay pretty stable the rest of the year and yield continue to grow? Is that kind of the formula?

John Chapman -- Chief Financial Officer

Yes. In terms of seat count, we do expect that we're going to add probably close to a 1,000 between -- on a gross basis, but we expect we'll probably take out about the same. So we don't see seat count moving much. And as we've said, we'll see utilization moving toward 80% and that's what we will see between now and at the end of the year.

In terms of seat numbers, slight change, but as we've said, the bulk of the reductions that we target and as part of the U.S. is done and we see ourselves and the demand growing into the utilization in offshore. So yes, I mean, clearly the revenue per seat can change as that mix changes.

Dave Koning -- Baird -- Analyst

Yes. OK. And then I guess the last thing just looking back, the last four years, every year the first half EPS was about 42% to 45% of the full year and then the back half obviously the rest. This year you're guiding to about 35% of EPS in the first half and 65% in the back half.

So a much bigger reliance on the back half and just I guess I'm just wondering how realistic or how much insight you have into that just given it's quite a bit different than the normal pattern?

John Chapman -- Chief Financial Officer

Yes. You're absolutely right, David. It's different. I mean it's not usual for us to have ramps like this in Q2, but that's what we see this year.

We always use what we see and we use for our clients and our projecting. There's no -- there's no change here to our approach. Yes, so definitely, we would normally see ramps in Q3 that come through Q4, but we're really seeing ramps in Q2 and Q3. And yes, we have seen I think -- in 2014 I think we saw 500 bps of improvement and up margin between Q3 and Q4, but as you rightly called out, we've never had this level of ramps.

But the good news is we've had this capacity set and ready waiting to take these ramps and, as we have called out, it's distributed pretty widely across our global footprint. So unlike going back to 2015 where it was really domestic-based and very focused in terms of number of clients. We are seeing and are confident that the numbers we're showing as -- where our forecast is and where our clients are projecting and they want the volumes, so yes, you're absolutely right, it's abnormal, but it's based on the real forecast that we have that we put together, our approach and methodology is unchanged from prior years. And I think it is just indicating that some of the success we're having with existing new clients that were left with us.

I mean, we could never do that if we didn't have the spare capacity because literally that becomes the factor that impacts you unless you can grow at home. But the fact that we have got capacity set in -- both in the U.S and offshore, it allows us to react to these new ends and basically to something to ride. It's unusual in terms of that whole first half, second half EPS.

Dave Koning -- Baird -- Analyst

Got you. Yes, that's -- that makes sense and that was a great memory on 2014, because that year does look a lot like what this year looks like. And I guess the last question. Just the -- is the first half -- you're still obviously impacted by AT&T and everything, the back half you're growing revs 5% organic constant currency, is that kind of the normal rate like you look at the second half and say, OK, going forward, that feels much more normal.

I mean, is that how we should almost think of future years? I can't help myself.

John Chapman -- Chief Financial Officer

Just don't get ahead of yourself. We are -- we are absolutely committed to a 46% constant currency organic revenue growth. And so yes, we have done -- we've pretty much delivered on a lot of that for the last few years, obviously, the last 18 months have been a challenge. Principally, according to the telco vertical.

We don't want to stop talking about 2020, but what I would say is, we are still committed to 46%, we are, again, and I want to emphasize this, we do -- we are impacted in Q2, I mean, specifically by the largest client issues. That is impacting our EPS guidance for the year, but when we successfully execute on these ramps, we'll be in a better position in Q4 than we expected to be in February. So even what the year EPS number looks like, I know you guys don't see the component pieces of the numbers, but we're excited about what it would mean for us in Q4. So that would leave us in a great place going into 2020.

And we are -- again, we are still focused on our 46% constant currency organic revenue growth.

Dave Koning -- Baird -- Analyst

All right. Great. Good luck Chuck.

Chuck Sykes -- Chief Executive Officer

Thank you.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to the management for any closing remarks.

John Chapman -- Chief Financial Officer

Thank you, everybody. Thanks for your continued support. And we'll speak to you guys next quarter. Thank you.

Operator

[Operator signoff]

Duration: 48 minutes

Call participants:

John Chapman -- Chief Financial Officer

Josh Vogel -- Sidoti and Company -- Analyst

Chuck Sykes -- Chief Executive Officer

Bill Warmington -- Wells Fargo Securities -- Analyst

Vincent Colicchio -- Barrington Research -- Analyst

Dave Koning -- Baird -- Analyst

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