TELETECH HOLDINGS, INC. DENVER, Nov. 8, 2017 /PRNewswire/ -- TeleTech Holdings, Inc. (NASDAQ: TTEC), a leading global provider of customer experience, engagement, and growth solutions delivered through its proprietary end-to-end Humanify(TM) Customer Engagement as a Service offering, today announced financial results for the third quarter ended September 30, 2017.
"We are pleased to report another productive quarter with strong bookings, revenue, and operating income in line with our expectations," commented Ken Tuchman, chairman and chief executive officer of TeleTech. "Highlights include this month's completion of the strategic acquisition of trust and safety, community moderation company, Motif, Inc., and record third quarter bookings in our Customer Technology Services segment, including significant demand for cloud-based solutions. In addition, we completed the majority of the Connextions integration and made the necessary investments to prepare for a strong seasonal fourth quarter. Excluding the financial impact of the seasonal ramp initiatives, our third quarter operating income continued to expand and set the stage for a record high fourth quarter and our improved full year outlook."
Tuchman continued, "Through our digitally-enabled Humanify(TM) Customer Engagement as a Service offering, we are helping clients design and deliver captivating customer experiences at scale within or across any channel at the highest total value delivered. As services become an increasingly important differentiator for customers, our ability to weave strategy, insights, technology and operations together to deliver seamless, frictionless and personalized experiences continues to drive our growth and unique position in the market."
THIRD QUARTER 2017 FINANCIAL HIGHLIGHTS
GAAP - In accordance with Generally Accepted Accounting Principles.
Non-GAAP AHFS/WD (Excluding Assets Held for Sale and Wind-down) - As discussed below and shown in the attached reconciliation table, the definition of Non-GAAP AHFS/WD excludes from revenue and operating income i) assets held for sale and wind-down, and ii) impairment, restructuring and integration charges.
Revenue
-- Third quarter 2017 GAAP revenue increased 14.8 percent to $359 million
compared to $312.8 million in the prior year period. Inorganic revenue
growth was 13.9 percent.
-- Non-GAAP AHFS/WD revenue increased 16.9 percent to $356 million over the
prior year period. Inorganic revenue growth was 14.3 percent.
Income from Operations
-- Third quarter 2017 GAAP income from operations was $15.8 million, or 4.4
percent of revenue, compared to $12.5 million, or 4.0 percent of revenue
in the third quarter 2016.
-- Non-GAAP AHFS/WD income from operations was $22.8 million or 6.4 percent
of adjusted revenue versus $22.7 million or 7.5 percent in the prior
year.
Earnings Per Share
-- Third quarter 2017 GAAP fully diluted earnings per share attributable to
TeleTech shareholders was 32 cents compared to 24 cents in the same
period last year.
-- Non-GAAP fully diluted earnings per share attributable to TeleTech
shareholders was 38 cents versus 39 cents in the prior year.
Bookings
-- During the third quarter 2017, TeleTech signed an estimated $114 million
in annualized contract value revenue from new and existing client
relationships. The third quarter bookings mix was diversified across all
verticals with 91 percent from existing clients and 17 percent from
outside of the United States.
STRONG BALANCE SHEET CONTINUES TO FUND OPERATIONS, DIVIDENDS, AND INVESTMENTS
-- As of September 30, 2017, TeleTech had cash and cash equivalents of $79
million and $271 million of total debt, resulting in a net debt position
of $192 million.
-- As of September 30, 2017, TeleTech had approximately $390 million of
additional borrowing capacity available under its revolving credit
facility.
-- Cash flow from operations in the third quarter 2017 was $24.2 million
compared to $55.8 million in the third quarter 2016.
-- Capital expenditures in the third quarter 2017 were $14.3 million
compared to $11.1 million in the third quarter 2016.
-- Declared a 25-cent dividend per share, or $11.5 million, on September
21, 2017, which was paid on October 17, 2017 to shareholders of record
on October 5, 2017. The dividend represented a 25 percent increase over
the distribution paid in October 2016.
SEGMENT REPORTING & COMMENTARY
TeleTech reports financial results for the following four business segments: Customer Management Services (CMS), Customer Growth Services (CGS), Customer Technology Services (CTS) and Customer Strategy Services (CSS). Financial highlights for the segments are provided below.
Customer Management Services (CMS) - Customer Experience Delivery Solutions
-- CMS third quarter 2017 revenue increased 24.0 percent to $277.4 million
compared to $223.7 million in the year ago quarter. Inorganic revenue
growth was 19.5 percent. Income from operations was $9.1 million or 3.3
percent of revenue compared to $12.3 million or 5.5 percent of revenue
in the prior year.
-- Non-GAAP income from operations was $15.1 million or 5.4 percent of
revenue. This compares to $15.8 million or 7.1 percent of revenue in the
prior year.
Customer Growth Services (CGS) - Digitally-Enabled Revenue Growth Solutions
-- CGS third quarter 2017 revenue declined 12.7 percent to $30.8 million
compared to $35.3 million in the year ago quarter. Income from
operations was $1.6 million or 5.1 percent of revenue compared to $0.2
million or 0.5 percent of revenue in the prior year.
-- Non-GAAP AHFS/WD revenue declined 12.4 percent over the year ago period
and income from operations was $1.7 million or 5.9 percent of adjusted
revenue. This compares to $0.8 million or 2.5 percent of adjusted
revenue in the prior year.
Customer Technology Services (CTS) - Hosted and Managed Technology Solutions
-- CTS third quarter 2017 revenue declined 5.5 percent to $34.6 million
compared to $36.6 million in the year ago quarter. Income from
operations was $4.2 million or 12.0 percent of revenue compared to $3.8
million or 10.3 percent of revenue in the prior year.
-- Non-GAAP AHFS/WD revenue increased 10.7 percent over the year ago period
and income from operations was $4.2 million or 12.1 percent of adjusted
revenue. This compares to $4.4 million or 14.1 percent of adjusted
revenue in the prior year.
Customer Strategy Services (CSS) - Customer Experience Strategy and Data Analytics Solutions
-- CSS third quarter 2017 revenue declined 5.7 percent to $16.3 million
from $17.3 million in the year ago quarter. Income from operations was
$0.9 million or 5.8 percent of revenue compared to an operating loss of
$3.7 million or negative 21.3 percent of revenue in the prior year.
-- Non-GAAP AHFS/WD revenue declined 8.1 percent over the year ago period
and income from operations was $1.8 million or 12.4 percent of adjusted
revenue. This compares to operating income of $1.7 million or 10.6
percent of revenue in the prior year.
BUSINESS OUTLOOK
"We delivered on many fronts in the third quarter," commented Regina Paolillo, chief financial and administrative officer of TeleTech. "Our commitment to narrow our focus and improve our profitability is transforming our financial performance. In the third quarter, our bookings and revenue volumes increased as did our operating margin after excluding the ramp costs associated with increased fourth quarter seasonal volumes. Based on the additional seasonal volume, we now expect our full year 2017 revenue to grow approximately 15.1 percent and our operating income to grow 26.5 percent. Additionally, we expect the acquisitions we have completed and the organic investments we have made to provide us the client base, solution portfolio, channels and geographic footprint to continue this top line growth and profitability into 2018."
Increased full year 2017 estimated revenue and operating income guidance for TeleTech which excludes i) assets held for sale and wind-down, and ii) impairment, restructuring and integration charges as follows:
Revenue - Revenue between $1.425 and $1.435 billion, up from $1.400 and $1.410 billion.
Operating Income Margin - Operating income margin remains unchanged in the range of 8.3 and 8.5 percent.
Capital Expenditures - Capital expenditures of 4.4 percent of revenue, down from 4.6 percent.
ABOUT TELETECH
TeleTech (NASDAQ: TTEC) is a leading global provider of customer experience, engagement and growth solutions delivered through its proprietary end-to-end Humanify(TM) Customer Engagement as a Service offering. Founded in 1982, the Company helps its clients acquire, retain, and grow profitable customer relationships. Using customer-centric strategy, technology, processes and operations, TeleTech partners with business leadership across marketing, sales and customer care to design and deliver a simple, more human customer experience across every interaction channel. TeleTech's 49,500 employees live by a set of customer-focused values that guide relationships with clients, their customers, and each other. To learn more about how TeleTech is bringing humanity to the customer experience, visit TeleTech.com.
FORWARD-LOOKING STATEMENTS
Statements in this press release contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995, relating to our operations, expected financial position, results of operation, and other business matters that are based on our current expectations, assumptions, and projections with respect to the future, and are not a guarantee of performance. We use words such as "may," "believe," "plan," "will," "anticipate," "estimate," "expect," "intend," "project," "would," "could," "target," or similar expressions, or when we discuss our strategy, plans, goals, initiatives, or objectives, we are making forward-looking statements.
We caution you not to rely unduly on any forward-looking statements. Actual results may differ materially from what is expressed in the forward-looking statements, and you should review and consider carefully the risks, uncertainties and other factors that affect our business and may cause such differences as outlined but are not limited to factors discussed in the sections entitled "Risk Factors" included in TeleTech's filings with the US Securities and Exchange Commission (the "SEC"), including our most recent Annual Report on Form 10-K and subsequent quarterly financial reports on Form 10-Q. TeleTech's filings with the SEC are available in the "Investors" section of TeleTech's website, www.teletech.com and at the SEC's public website at www.sec.gov. Our forward-looking statements speak only as of the date of the press release and we undertake no obligation to update them, except as may be required by applicable laws.
Investor Contact Media Contact
Paul Miller Olivia Griner
303.397.8641 303.397.8999
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
------------- -------------
2017 2016 2017 2016
---- ---- ---- ----
Revenue $359,036 $312,796 $1,050,742 $930,311
Operating Expenses:
Cost of services 275,548 233,541 797,450 691,649
Selling, general and administrative 45,167 40,628 132,372 130,902
Depreciation and amortization 16,515 16,811 47,273 51,761
Restructuring and integration
charges, net 6,006 3,688 9,768 3,890
Impairment losses - 5,602 - 5,602
Total operating expenses 343,236 300,270 986,863 883,804
------- ------- ------- -------
Income From Operations 15,800 12,526 63,879 46,507
Other income (expense) 1,846 (690) (3,284) (2,744)
-----
Income Before Income Taxes 17,646 11,836 60,595 43,763
(Provision) Benefit for income
taxes (2,071) 813 (9,059) (6,667)
-------
Net Income 15,575 12,649 51,536 37,096
Net income attributable to
noncontrolling interest (806) (1,198) (2,828) (2,804)
-----
Net Income Attributable to
TeleTech Stockholders $14,769 $11,451 $48,708 $34,292
======= ======= ======= =======
Net Income Per Share Attributable to TeleTech Stockholders
Basic $0.32 $0.24 $1.06 $0.72
=====
Diluted $0.32 $0.24 $1.05 $0.71
=======
Income From Operations Margin 4.4% 4.0% 6.1% 5.0%
Net Income Attributable to
TeleTech Stockholders Margin 4.1% 3.7% 4.6% 3.7%
Effective Tax Rate 11.7% (6.9)% 15.0% 15.2%
Weighted Average Shares Outstanding
Basic 45,838 47,081 45,816 47,771
Diluted 46,367 47,315 46,348 48,089
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(In thousands)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
------------- -------------
2017 2016 2017 2016
---- ---- ---- ----
Revenue:
Customer Management
Services $277,373 $223,664 $798,508 $664,392
Customer Growth Services 30,829 35,301 96,890 105,713
Customer Technology
Services 34,563 36,580 105,054 109,198
Customer Strategy Services 16,271 17,251 50,290 51,008
Total $359,036 $312,796 $1,050,742 $930,311
======== ======== ========== ========
Income From Operations:
Customer Management
Services $9,133 $12,255 $43,804 $36,189
Customer Growth Services 1,564 161 6,295 4,138
Customer Technology
Services 4,158 3,776 11,034 9,932
Customer Strategy Services 945 (3,666) 2,746 (3,752)
Total $15,800 $12,526 $63,879 $46,507
======= ======= ======= =======
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
September 30, December 31,
2017 2016
---- ----
ASSETS
Current assets:
Cash and cash
equivalents $78,842 $55,264
Accounts
receivable, net 304,493 300,808
Other current
assets 75,594 66,940
Assets held for
sale 9,279 10,715
----- ------
Total current
assets 468,208 433,727
Property and
equipment, net 162,361 151,037
Other assets 318,949 261,540
------- -------
Total assets $949,518 $846,304
======== ========
LIABILITIES AND
EQUITY
Total current
liabilities $217,487 $178,672
Liabilities held
for sale 2,491 1,357
Other long-term
liabilities 329,746 304,380
Total equity 399,794 361,895
------- -------
Total liabilities
and equity $949,518 $846,304
======== ========
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION
(In thousands, except per share data)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
------------- -------------
2017 2016 2017 2016
---- ---- ---- ----
Revenue $359,036 $312,796 $1,050,742 $930,311
Reconciliation of EBIT & EBITDA:
Net Income Attributable to
TeleTech stockholders $14,769 $11,451 $48,708 $34,292
Interest income (899) (397) (2,020) (826)
Interest expense 3,469 2,041 8,699 5,758
Provision (benefit) for income
taxes 2,071 (813) 9,059 6,667
----- ---- ----- -----
EBIT $19,410 $12,282 $64,446 $45,891
Depreciation and amortization 16,515 16,811 47,273 51,761
------ ------ ------ ------
EBITDA $35,925 $29,093 $111,719 $97,652
Reconciliation of Free Cash Flow:
Cash Flow From Operating
Activities:
Net income $15,575 $12,649 $51,536 $37,096
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 16,515 16,811 47,273 51,761
Other (7,902) 26,333 50,834 21,981
------ ------ ------ ------
Net cash provided by operating
activities 24,188 55,793 149,643 110,838
Less - Total Capital Expenditures 14,343 11,120 43,932 38,863
------ ------ ------ ------
Free Cash Flow $9,845 $44,673 $105,711 $71,975
Reconciliation of Non-GAAP
Income from Operations:
Income from Operations $15,800 $12,526 $63,879 $46,507
Restructuring and integration
charges, net 6,006 3,688 9,768 3,890
Impairment losses - 5,602 - 5,602
--- ----- --- -----
Non-GAAP Income from Operations $21,806 $21,816 $73,647 $55,999
Non-GAAP Income from Operations
Margin 6.1% 7.0% 7.0% 6.0%
Reconciliation of Non-GAAP EPS:
Net Income Attributable to
TeleTech stockholders $14,769 $11,451 $48,708 $34,292
Add: Asset impairment,
restructuring and integration
charges, net of related taxes 3,620 7,563 5,903 7,711
Add: Estimated loss on assets
held for sale, net of related
taxes - 4,208 1,907 4,208
Add: Changes in acquisition
contingent consideration, net of
related taxes - (4,435) - (4,435)
Less: Estimated gain on sale of
business unit (85) - (103) -
Add: Changes in valuation
allowance and returns to
provision adjustments (801) (530) (2,200) 1,903
---- ---- ------ -----
Non-GAAP Net Income Attributable
to TeleTech stockholders $17,503 $18,257 $54,215 $43,679
Diluted shares outstanding 46,367 47,315 46,348 48,089
Non-GAAP EPS Attributable to
TeleTech stockholders $0.38 $0.39 $1.17 $0.91
Reconciliation of Non-GAAP
EBITDA:
Net Income Attributable to
TeleTech stockholders $14,769 $11,451 $48,708 $34,292
Interest income (899) (397) (2,020) (826)
Interest expense 3,469 2,041 8,699 5,758
Provision (benefit) for income
taxes 2,071 (813) 9,059 6,667
Depreciation and amortization 16,515 16,811 47,273 51,761
Asset impairment, restructuring
and integration charges 6,006 9,290 9,768 9,492
Gain on dissolution of a foreign
subsidiary (3,160) - (3,160) -
Gain on sale of business unit (141) - (171) -
Changes in acquisition contingent
consideration - (4,567) - (4,567)
Estimated loss of assets held for
sale - 5,300 3,178 5,300
Equity-based compensation
expenses 3,522 2,694 8,358 7,278
----- ----- ----- -----
Non-GAAP EBITDA $42,152 $41,810 $129,692 $115,155
TELETECH HOLDINGS, INC.
Non-GAAP AHFS/WD Reconciliation (Excluding Assets Held For Sale and Wind-down) & Year-over-Year (YoY) Growth Rate Comparison
U.S. Dollars in Thousands
THIRD QUARTER
(three months end, September 30, 2017)
-------------------------------------
Revenue Operating Income
GAAP Non-GAAP Non-GAAP GAAP Non-GAAP Non- Non-GAAP Non-GAAP
Revenue Revenue Revenue Operating Operating GAAP Operating Operating
Contribution (excluding Income Income Operating Income Income
from AHFS/WD) Adjustments Income Contribution (excluding
AHFS/WD from AHFS/WD AHFS/WD)
------- ------------ --------
CMS $277,373 $ - $277,373 CMS $9,133 $5,972 $15,105 $ - $15,105
YoY Growth Rate: 24.0% 24.0% Operating Margin: 3.3% 5.4% 5.4%
---------------- ---- ---- ----------------- --- --- ---
CGS $30,829 $1,236 $29,593 CGS $1,564 $ - $1,564 $(181) $1,745
YoY Growth Rate: -12.7% -12.4% Operating Margin: 5.1% 5.1% 5.9%
------ ----
CTS $34,563 $ - $34,563 CTS $4,158 $ - $4,158 $(34) $4,192
YoY Growth Rate: -5.5% 10.7% Operating Margin: 12.0% 12.0% 12.1%
----- -----
CSS $16,271 $1,830 $14,441 CSS $945 $34 $979 $(807) $1,786
YoY Growth Rate: -5.7% -8.1% Operating Margin: 5.8% 6.0% 12.4%
---------------- ---- ---- ----------------- --- --- ----
Company (Consolidated) $359,036 $3,066 $355,970 Company
(Consolidated) $15,800 $6,006 $21,806 $(1,022) $22,828
YoY Growth Rate: 14.8% 16.9% Operating Margin: 4.4% 6.1% 6.4%
---------------- ---- ---- ----------------- --- --- ---
Segments Defined: CMS (Customer Management Services), CGS (Customer Growth Services),
CTS (Customer Technology Services), CSS (Customer Strategy Services)
Non-GAAP AHFS/WD Defined: Excludes from revenue and operating income i) assets held for sale and wind-down, and ii) restructuring
charges.
TELETECH HOLDINGS, INC.
Non-GAAP AHFS/WD Reconciliation (Excluding Assets Held For Sale and Wind-down) & Year-over-Year (YoY) Growth Rate Comparison
U.S. Dollars in Thousands
THIRD QUARTER
(nine months end, September 30, 2017)
------------------------------------
Revenue Operating Income
GAAP Non-GAAP Non-GAAP GAAP Non-GAAP Non- Non-GAAP Non-GAAP
Revenue Revenue Revenue Operating Operating GAAP Operating Operating
Contribution (excluding Income Income Operating Income Income
from AHFS/WD) Adjustments Income Contribution (excluding
AHFS/WD from AHFS/WD AHFS/WD)
------- ------------ --------
CMS $798,508 $ - $798,508 CMS $43,804 $9,557 $53,361 $ - $53,361
YoY Growth Rate: 20.2% 20.2% Operating Margin: 5.5% 6.7% 6.7%
---------------- ---- ---- ----------------- --- --- ---
CGS $96,890 $3,515 $93,375 CGS $6,295 $ - $6,295 $(442) $6,737
YoY Growth Rate: -8.3% -7.8% Operating Margin: 6.5% 6.5% 7.2%
----- ----
CTS $105,054 $6,780 $98,274 CTS $11,034 $177 $11,211 $528 $10,683
YoY Growth Rate: -3.8% 4.6% Operating Margin: 10.5% 10.7% 10.9%
----- -----
CSS $50,290 $6,317 $43,973 CSS $2,746 $34 $2,780 $(1,460) $4,240
YoY Growth Rate: -1.4% -2.6% Operating Margin: 5.5% 5.5% 9.6%
---------------- ---- ---- ----------------- --- --- ---
Company (Consolidated) $1,050,742 $16,612 $1,034,130 Company
(Consolidated) $63,879 $9,768 $73,647 $(1,374) $75,021
YoY Growth Rate: 12.9% 14.3% Operating Margin: 6.1% 7.0% 7.3%
---------------- ---- ---- ----------------- --- --- ---
Segments Defined: CMS (Customer Management Services), CGS (Customer Growth Services),
CTS (Customer Technology Services), CSS (Customer Strategy Services)
Non-GAAP AHFS/WD Defined: Excludes from revenue and operating income i) assets held for sale and wind-down, and ii) restructuring
charges.
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SOURCE TeleTech Holdings, Inc.
