ICT GROUP Reports Second Quarter 2009 Results

~ Core Business Revenue Increases 7% Year-Over-Year on Constant Currency Basis ~

~ Core Production Volume up 13% Year-Over-Year and 1.4% Sequentially ~

~ Cost Control Measures and Strategic Realignment Yield Improved Profitability ~

~ Strong Free Cash Flow of $6.3 Million ~
NEWTOWN, Pa.--(Business Wire)--
ICT GROUP, INC. (NASDAQ:ICTG) today reported results for the second quarter
ended June 30, 2009.

Second Quarter 2009 Financial Performance

Total revenue for the 2009 second quarter was $98.4 million, compared to $109.6
million reported for last year`s second quarter. Core business revenue,
comprised primarily of North American customer care, BPO, technology and
international operations, increased almost 1% to $94.4 million during the
period, and accounted for 96% of total revenue. For the 2008 second quarter,
core business revenue was $93.7 million and represented 86% of total revenue. On
a constant currency basis, (using the same foreign exchange rates in both
periods), core business revenue was up 7% year-over-year. Core business
production volume was 4.7 million hours, up 13% year-over-year and 1.4%
sequentially.

Gross margin was 40.3%, in line with the Company`s stated goal for 2009 and well
ahead of last year`s 37.8%. The Company reported a net loss of $603,000 or $0.04
per share for the 2009 second quarter as compared to a net loss of $355,000 or
$0.02 per share incurred in the comparable year-ago period. Adjusted net income,
which excludes a restructuring charge of $1.3 million in this year`s second
quarter related to facility closings, was $953,000 or $0.06 per share.

"The significant improvement in our operating profitability this quarter
reflects our success in continuing to effectively manage expenses as well as to
benefit from our strategic realignment," commented John J. Brennan, Chairman and
Chief Executive Officer of ICT GROUP. "Our facilities and related costs declined
in the quarter due to previously implemented cost reduction initiatives which
resulted in lower SG&A expenses both on a year-over-year comparison as well as
sequentially. With a 2% sequential increase in revenue, our effective cost
management allowed us to significantly improve our pre-tax operating income
before restructuring charges, demonstrating the operating profit potential of
our business as revenue continues to increase."

Free cash flow for the second quarter was $6.3 million. At June 30, 2009, cash
and cash equivalents were $42.3 million, up from $37.6 million at the end of the
first quarter. The Company had no outstanding debt at June 30, 2009.

Second Quarter 2009 Operating Performance

The table below shows core business revenue and total revenue for the key
vertical markets served by ICT GROUP:

Core Revenue Total Revenue
(millions) (millions)
2Q2009 2Q2008 2Q2009 2Q2008
Financial Services $40.0 $40.2 $44.0 $54.7
Telco/Tech 36.1 33.1 36.1 33.6
Health Care 10.9 12.2 10.9 12.3
Other 7.4 8.2 7.4 9.0
Total $94.4 $93.7 $98.4 $109.6

Core financial services sector revenue totaled $40.0 million for the 2009 second
quarter, relatively flat with the 2008 second quarter, but up 4% year-over-year
when measured on a constant currency basis. Core production hours increased 14%
driven largely by customer care, lock box, collections and technical services
such as IVR to new and existing financial services clients. Core business
represented 91% of total financial services revenue compared to 73% last year.

Core telco/technology sector revenue continues to grow rapidly, reaching $36.1
million in the period, representing a 9% increase over the 2008 second quarter
and a 23% increase when measured on a constant currency basis. Core production
hours increased 25%, reflecting additional on-shore and offshore work for
clients in the U.S., Canada, Australia, Argentina and the U.K. as global demand
within this vertical remained robust.

Core health care revenue in the second quarter was $10.9 million representing a
decline from both the second quarter of 2008 and the first quarter of 2009. Core
production hours declined 18% from last year`s second quarter reflecting the net
effect of a fall off in health insurance and prescription assistance work,
partially offset by growth in patient assistance programs for pharmaceutical
clients and patient access management services for a hospital.

"We had a strong quarter in terms of new business wins and have seen a modest
improvement in the sales cycle," continued Mr. Brennan. "Annualized new business
totaled almost $30 million in the quarter with the majority of work coming from
new and existing financial services and telco/technology clients. The pipeline
remains strong, and we have some excellent opportunities to expand programs with
several key clients in the second half of the year. Capacity utilization was 79%
in this year`s second quarter, remaining flat at 79% in the first quarter of
2009, but up from 73% in last year`s second quarter."

Summary and Outlook

"Our business, while subject to macroeconomic conditions, appears to have
stabilized as core business volume and revenue continues to grow, and we are
benefiting from our greatly reduced exposure to non-core services as well as the
more severely impacted market in the U.K. Clients are expanding existing
programs and adding new services for both on-shore and offshore delivery. As a
result, we are increasingly optimistic about the second half of the year in
terms of revenue growth, profitability improvement and cash flow projections as
we continue to add new business and keep SG&A and capital expenditures under
control," added Mr. Brennan.

In the second quarter, ICT GROUP benefited from its strategic realignment as
well as the cost reduction efforts taken in prior quarters and began to see
significantly improved profitability, on an adjusted basis. The Company believes
that this will continue into the third quarter and expects incremental growth in
the range of 6% to 8% for core business revenue measured in constant currency as
compared to the third quarter of 2008 driven by an expected increase of 10% to
12% in core production volume. As a result, ICT GROUP anticipates continued
sequential improvement in financial performance for the upcoming quarter. For
the third quarter, the Company now expects total revenue to be in the range of
$98 to $102 million and pre-tax earnings to be modestly above second quarter
adjusted results.

The Company reiterates its guidance of positive year-over-year growth in core
business revenue throughout 2009 and expects to continue to achieve operating
leverage through increased productivity, greater workstation utilization and
lower SG&A expenses as a percentage of revenue. The Company does not anticipate
taking any additional restructuring charges in the second half of 2009.

"We are encouraged by the improved outlook for our business and believe we are
on target to reach mid-single digit operating margins within the next 12 to 18
months based on continued growth in our core business, consistent program
execution, maintenance of strong expense controls and slowly improving macro
economic conditions," concluded Mr. Brennan.

Conference Call:

The Company will hold a conference call today, Thursday, July 30, 2009, at 11:00
a.m. EDT. Investors may access the call by visiting the ICT GROUP website at
www.ictgroup.com. If you are unable to participate during the live webcast, a
replay of the call will be available on the website through August 6, 2009.

About ICT GROUP:

ICT GROUP, headquartered in Newtown, Pa., is a leading global provider of
customer management and business process outsourcing solutions. The Company
provides a comprehensive mix of customer care/retention,
up-selling/cross-selling, technical support and database marketing as well as
e-mail management, data entry, collections, claims processing and document
management services, using its global network of onshore, near-shore and
offshore operations. ICT GROUP also provides interactive voice response (IVR)
and advanced speech recognition solutions as well as hosted Customer
Relationship Management (CRM) technologies, available for use by clients at
their own in-house facility or on a co-sourced basis in conjunction with the
Company`s fully integrated contact center operations. To learn more about ICT
GROUP, visit the Company`s website at www.ictgroup.com.

Important Cautionary Information Regarding Forward-Looking Statements:

This press release contains certain forward-looking statements relating to
matters such as projected revenue, operating profitability, production volume
and productivity.The forward-looking statements involve assumptions and are
subject to substantial risks and uncertainties. Whenever possible,
forward-looking statements are preceded by, followed by or include the words
"believes," "expects," "anticipates" or similar expressions, which speak only as
of the date the statement is made. ICT GROUP assumes no obligation to update any
such forward-looking statements. For such statements, ICT GROUP claims the
protection of the safe harbor for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995.

Actual events or results of operations, cash flows and financial condition of
ICT GROUP may differ materially from those discussed in the forward-looking
statements as a result of various factors, including without limitation, those
discussed in ICT GROUP`s annual report on Form 10-K for the year ended December
31, 2008, and other documents, such as current reports on Form 8-K and quarterly
reports on Form 10-Q filed by ICT GROUP with the Securities and Exchange
Commission. Although ICT GROUP believes that the expectations reflected in such
forward-looking statements are reasonable, there can be no assurance that such
expectations will prove to be correct and we undertake no obligation to update
such expectations.

Important factors that could cause actual results to differ materially from ICT
GROUP`s expectations, or that could materially and adversely affect ICT GROUP`s
financial condition, may include, but are not limited to, the following, many of
which are outside ICT GROUP`s control: global economic conditions, customer
demand for a client's product or service, the client's budgets and plans and
political, economic and other conditions affecting the client's industry,
interest and foreign currency exchange rates (including the effectiveness of
strategies to manage fluctuations in these rates), a client invoking
cancellation or similar provisions of the client contract, demand for labor and
the resulting impact on labor rates paid by ICT GROUP, unanticipated labor
difficulties, unanticipated contract or technical difficulties, identifying and
opening planned contact centers within timeframes necessary to meet client
demands, reliance on strategic partners, industry and government regulation
affecting ICT GROUP or its clients, reliance on telecommunications and computer
technology, competitive pressures in ICT GROUP`s industry, the cost to
prosecute, defend or settle litigation by or against ICT GROUP, judgments,
orders, rulings and other developments in or affecting litigation by or against
ICT GROUP, ICT GROUP`s capital and financing needs, changes in tax laws and
regulation, ICT GROUP`s ability to integrate acquired businesses, terrorist
attacks and the impact of war. These factors, as well as others, such as
conditions in the securities markets and actual or perceived results or
developments affecting companies in our industry, could affect the trading price
of our common stock.

ICT Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations (Unaudited)
(In thousands, except per share data)

Three Months Ended Six Months Ended
June 30, June 30,
2009 2008 2009 2008

REVENUE $ 98,350 $ 109,569 $ 194,408 $ 218,269

OPERATING EXPENSES:
Cost of services 58,714 68,113 115,563 137,765
Selling, general and administrative 38,627 42,210 77,795 83,038
Restructuring charges 1,319 - 1,234 -
98,660 110,323 194,592 220,803
Operating loss (310 ) (754 ) (184 ) (2,534 )

Interest income (expense), net (18 ) 67 (43 ) 189
Loss before income taxes (328 ) (687 ) (227 ) (2,345 )
Income tax provision (benefit) 275 (332 ) 380 (977 )
Net loss $ (603 ) $ (355 ) $ (607 ) $ (1,368 )

Diluted loss per share $ (0.04 ) $ (0.02 ) $ (0.04 ) $ (0.09 )

Shares used in computing diluted loss per share 16,051 15,887 16,010 15,865

Reconciliation of Loss Before Income Taxes to Adjusted Net Income (Loss) to Eliminate the
Effect of Charges Related to Restructuring and a Government Grant (Unaudited)
(In thousands, except per share data)

Three Months Ended Six Months Ended
June 30, June 30,
2009 2008 2009 2008

Adjusted Results of Operations:
Loss before income taxes $ (328 ) $ (687 ) $ (227 ) $ (2,345 )
Restructuring charges 1,319 - 1,234 -
Government grant adjustment - (248 ) - (554 )
Adjusted income (loss) before income taxes 991 (935 ) 1,007 (2,899 )
Adjusted income tax provision (benefit) 38 (414 ) 143 (1,161 )
Adjusted net income (loss) $ 953 $ (521 ) $ 864 $ (1,738 )

Adjusted earnings (loss) per share $ 0.06 $ (0.03 ) $ 0.05 $ (0.11 )

Shares used in computing adjusted earnings (loss) per share 16,194 15,887 16,023 15,865

Reconciliation of Free Cash Flow (Unaudited)
(In thousands)

Three Months Ended Six Months Ended
June 30, June 30,
2009 2008 2009 2008

Cash Flow from Operating Activities:
Net Loss $ (603 ) $ (355 ) $ (607 ) $ (1,368 )
Depreciation and Amortization 5,765 6,725 11,700 13,430
Other Non-cash Charges 1,095 572 1,859 1,197
Changes in Assets and Liabilities 2,569 (15,958 ) 3,185 (16,242 )
Net Cash Provided By (Used In) Operating Activities 8,826 (9,016 ) 16,137 (2,983 )
Less Purchases of Property and Equipment (2,507 ) (5,718 ) (5,072 ) (12,116 )
Free Cash Flow $ 6,319 $ (14,734 ) $ 11,065 $ (15,099 )

ICT Group, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands)

June 30, December 31,
2009 2008

ASSETS

CURRENT ASSETS
Cash and cash equivalents $ 42,310 $ 31,283
Accounts receivable, net 66,904 65,156
Other current assets 12,372 12,448
Total current assets 121,586 108,887

PROPERTY AND EQUIPMENT, net 51,061 57,841

OTHER ASSETS 11,019 10,833
$ 183,666 $ 177,561

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable and other current liabilities $ 52,389 $ 47,505

OTHER LIABILITIES 9,655 10,555

TOTAL SHAREHOLDERS' EQUITY 121,622 119,501
$ 183,666 $ 177,561

WORKSTATIONS AT PERIOD END 12,400 12,509

ICT Group, Inc.
Core / Non-Core Revenue
(Unaudited)

Actuals as Reported On a Constant Currency Basis
$ in millions Total Core Non-core Total Core Non-core
Revenue Revenue Revenue Revenue Revenue Revenue

2Q09 2Q09 2Q09 2Q09 2Q09 2Q09

Financial $ 44.0 $ 40.0 $ 4.0 $ 44.0 $ 40.0 $ 4.0
Telco/Tech 36.1 36.1 - 36.1 36.1 -
Healthcare 10.9 10.9 - 10.9 10.9 -
Other 7.4 7.4 - 7.4 7.4 -
Total $ 98.4 $ 94.4 $ 4.0 $ 98.4 $ 94.4 $ 4.0

$ in millions

2Q08 2Q08 2Q08 2Q08 2Q08 2Q08

Financial $ 54.7 $ 40.2 $ 14.5 $ 52.4 $ 38.5 $ 13.9
Telco/Tech 33.6 33.1 0.5 29.8 29.3 0.5
Healthcare 12.3 12.2 0.1 12.3 12.2 0.1
Other 9.0 8.2 0.8 8.8 8.0 0.8
Total $ 109.6 $ 93.7 $ 15.9 $ 103.3 $ 88.0 $ 15.3

% Variances

Financial -20 % 0 % -72 % -16 % 4 % -71 %
Telco/Tech 7 % 9 % -100 % 21 % 23 % -100 %
Healthcare -11 % -11 % NA -11 % -11 % NA
Other -18 % -10 % NA -16 % -8 % NA
Total -10 % 1 % -75 % -5 % 7 % -74 %

ICT GROUP MEDIA CONTACT:
BERNS COMMUNICATIONS GROUP, LLC
Michael McMullan
212-994-4660
or
ICT GROUP INVESTOR CONTACT:
MBS VALUE PARTNERS, LLC
Betsy Brod/Lynn Morgen
212-750-5800

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