RMH Teleservices, Inc.

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RMH Teleservices, Inc.

40 Morris Avenue
Bryn Mawr, Pennsylvania 19010
U.S.A.
Telephone: (610) 520-5300
Toll Free: (800) 367-5733
Fax: (610) 520-5352
Web site: http://www.rmhteleservices.com

Public Company
Incorporated: 1983
Employees: 5,489
Sales: $132.1 million (2000)
Stock Exchanges: NASDAQ
Ticker Symbol: RMHT
NAIC: 561422 Telemarketing Bureaus

RMH Teleservices, Inc. is a telemarketing and customer service company with 21 call centers in the United States and Canada. Its client list includes Fortune 500 firms and smaller businesses in many industries but primarily in telecommunications, financial services, and insurance. RMH is a leader in telemarketing and was one of the first firms in the industry to become a publicly traded company. RMH offers inbound, outbound, e-commerce, and technology processing for its clients.

Founding of RMH: Early 1980s

RMH Teleservices, Inc. was founded in 1983 by Raymond J. and MarySue Lucci Hansell. The husband-and-wife team used their collective experience to form the new venture. MarySue Lucci Hansell had the industry background with experience in marketing, training, and customer service for Colonial Penn Insurance Co. Her husband, Raymond, had sales and management experience with his former position in the computer industry. Together, they dispelled myths about couples working together and grew the company into a national corporation.

The real spark behind the company’s founding was MarySue Lucci Hansell, who embraced the telemarketing industry when she experienced a telephone sales job while in college. It was Raymond, however, who became the company’s CEO, with MarySue filling the COO duties. The couple aggressively grew the company in its home base of the Bryn Mawr suburb of Philadelphia, Pennsylvania. As they expanded, the Hansells selected New Jersey as the next state to target and successfully extended call centers in both states.

Growth Leading to Public Offering in the 1990s

In the 1990s, Raymond and MarySue Hansell focused on further growing their company. They soon found, however, that more capital and a partner would be the tools it would take to bring the company to the next level. In May 1996, the RMH founders sold 8.5 million shares to Advanta Partners, a venture capital subsidiary of Advanta Corporation. In exchange for the shares, the Hansells received $16 million in cash and $8.6 million in other compensation. Part of the agreement with Advanta, as it was now part-owner in RMH, was to take the company public. The Hansells were offered a bonus to do so within six months.

In September 1996, the Hansells kept their part of the agreement, and RMH Teleservices made its initial public offering (IPO). In that same year, two other Philadelphia-area telemarketers became public companies as well. The IPOs were part of a larger trend in telemarketing that was identified as industry maturity by investors. Whereas once telemarketing companies were not prime investment picks, the mid-1990s saw a rise in interest. Another key factor in the increasing appeal of the industry was that telemarketing was one function that a company could easily outsource, and outsourcing in the 1990s was a growing trend.

RMH Teleservices’ public offering on the NASDAQ involved 2.8 million shares at $12.50 per share. The stock actually closed at $15 per share, constituting a 20 percent gain on the first day of trading. The company announced plans to use the earnings to pay off bank loans and employ as working capital. After the IPO, the Hansells owned 23 percent of the company and Advanta Partners owned 32 percent, with the remainder publicly held. At the time of the IPO, RMH operated eight call centers in Pennsylvania and New Jersey.

Once RMH Teleservices became publicly owned, the company wasted no time in moving forward with expansion plans. One month after the IPO, RMH opened its ninth call center, which was planned for a staff of 80 telemarketers, in Harrisburg, Pennsylvania. “The fundamentals of the Company and the industry dynamics remain strong and we continue to be optimistic with regard to the future,” said CEO Raymond Hansell about the call center opening.

Call center openings in York, Pennsylvania, and Delran, New Jersey, followed in 1997 and helped make RMH the 16th largest outbound telemarketing firm in the nation. Aside from the growth in actual centers, RMH also was experiencing growth due to new technology tools. Database management, combined with sophisticated dialing equipment, helped put more information in front of telemarketers.

That increase in information, according to CEO Raymond Hansell, helped create more successful calling programs and resulted in growth for the company. “Because of the higher degree of accuracy, there are more campaigns launched, but they’re more focused,” he stated in an article in the Philadelphia Business Journal in 1997. “So much is automated now. You can know who buys what, where they are and who is most likely to buy what you’re selling.”

Later in 1997, the founding couple repurchased 20,000 shares of stock on the open market; the stock price, at $5.25 per share, had fallen considerably since its $12.50 opening in 1996. In 1998, as both Raymond and MarySue Lucci Hansell stepped down from active duties, the board elected John A. Fellows as the company’s new CEO.

RMH and its partial owner Advanta Partners collaborated in 1999 to form a new joint venture, 365biz.com, to help provide Internet services to small and medium-sized businesses with a web presence. For a low price, the company was designed to develop and host e-commerce web sites and market them to Internet search engines.

2000: Change of Ownership for RMH Teleservices

In 2000, RMH Teleservices experienced another changing of the guard. Although the CEO duties were now held by John A. Fellows, the Hansells, along with Advanta Partners, still owned much of the company. That changed in March when R-T Investors LC purchased 49 percent of the shares of the company—1.41 million shares from the Hansells and 2.6 million shares from Advanta Partners, LP.

R-T Investors, a company owned by the Jensen family of Hurst, Texas, was now the majority stockholder of RMH, and its president, Jeff Jensen, joined RMH’s board of directors as part of the purchase agreement. “RT’s 49 percent investment in RMH Teleservices speaks clearly of the significant growth potential we see for the Company, and reflects our confidence in the abilities of the management team to capitalize on that potential,” said Jensen. “Our family has known John Fellows, CEO of RMH Teleservices, for several years, both professionally and personally, and has the deepest respect for his business acumen and integrity. We also share with John and his team their vision that there are vast opportunities emerging in e-commerce customer service which RMH Teleservices is now targeting.”

At the time of the R-T stock purchase, RMH operated 20 facilities in the United States and Canada. RMH CEO John Fellows, who purchased 101,315 shares of stock at the same time, said, “We are very pleased that RT has become a major investor in the Company. Its action demonstrates confidence in RMH Teleservices’ future growth and profitability. We anticipate that RT’s commitment will be a catalyst for increasing shareholder values.”

One of the key strategies for RMH in 2000 was to utilize new technology in the business. One way the company responded to new opportunities was to begin to equip its workstations so that employees could interact with callers on the phone or on the Web. Approximately 500 of the 3,450 workstations were equipped to allow for dual contact in early 2000. The company also continued its investment in 365biz.com, and furthered its presence in the Canadian market.

The company’s ownership change and aggressive use of new technology resulted in record-setting third quarter 2000 results. Revenues for the period increased 77 percent and net income increased 104 percent. “Our business continues to achieve record results,” said CEO John Fellows. “The strong revenue increase for the quarter was generated from new customers as well as from existing blue-chip customers. We anticipate even greater levels of business in the next few quarters and plan to add a significant amount of capacity in the months ahead. RMH is rapidly gaining scale in the customer relationship management industry.”

RMH continued its inclusion of new technology by announcing in 2000 that it would partner with Commerce.TV, a company on the leading edge in the television commerce industry. Commerce.TV, as part of the arrangement, agreed to use RMH exclusively for its inbound customer registration and support of its products.

Company Perspectives:

While providing outstanding customer support is a goal of many businesses, at RMH Teleservices, it’s our only business. Since 1983, RMH Teleservices has been distinguishing itself as the nation’s premier provider of outsourced company relationship management programs. Our program partners not only include industry leaders but also some of the largest multinational corporations. These firms have entrusted us with their names as well as their most important assets, their customers. Through these unique relationships we have developed methodologies which enable us to deliver lower costs, increased operational efficiency, improved customer experience, greater return on investment and significant quality improvements by providing the highest quality outsourced customer relationship management in the teleservices industry .

Growth continued on all fronts for the company in 2000. RMH signed a multiyear agreement with AT&T Corp. and Microsoft Corporation in 2000 to provide inbound customer management for the two companies. The Canadian offices continued to grow with the opening of the company’s eighth Canadian location on Vancouver Island. “The fourth quarter capped an exciting fiscal 2000 for RMH Teleservices, Inc.,” said CEO John Fellows at the end of the year. “We generated record revenues and posted strong earnings performance in the fourth quarter and in the fiscal year. We continued to diversify our revenue base as we experienced growth from clients in all of our principal industry verticals—telecommunications, financial services, and insurance.”

New Challenges Ahead in 2001 and Beyond

In April 2001, R-T Investors increased their holdings in RMH Teleservices by purchasing 1.8 million shares of common stock and increasing their ownership to 60 percent. At the time of the purchase, the stock price was $5.50 per share. The company announced that it would use the funds to continue its expansion and develop operations infrastructure. Despite the profit warnings and one-time charges announced in January, the first quarter of 2001 showed a revenue increase of 37 percent.

The company also focused on diversification, adding more technology customers to its client list, which had focused heavily on insurance and telecommunications. RMH Teleservices had evolved from its founding in 1983 to a more sophisticated, public company focused on expanding markets and developing technology.

Principal Subsidiaries

Teleservices Management Co.; Teleservices Technology Co.

Principal Competitors

Convergys Corporation; Sitel Corp.; TeleTech Holdings; West Corporation.

Key Dates:

1983:: Raymond J. and MarySue Lucci Hansell found RMH Teleservices.
1996:: Founders sell 8.5 million shares in company to Advanta Partners, a venture capital subsidiary of Advanta Corporation; company makes initial public offering on NASDAQ exchange.
1998:: RMH names John Fellows as CEO.
1999:: Company helps create 365biz.com.
2000:: Advanta and the Hansells sell their shares, collectively 49 percent of the company, to R-T Investors LC.
2001:: R-T Investors increases its RMH stake to 60 percent.