TeleTech Announces Second Quarter 2017 Financial Results
DENVER, Aug. 7, 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 second quarter ended June 30, 2017.
"We are pleased to report another strong quarter and solid close to the first half of 2017. For the first six months of 2017, over the same period last year, we increased revenue, operating income, net income, earnings-per-share, and cash flow from operations," commented Ken Tuchman, chairman and chief executive officer of TeleTech. "Our improved performance is the result of three primary factors. First, the profit optimization improvements we began executing in the second half of 2016 are yielding favorable results. Second, our end-to-end, outcome-based customer engagement platform continues to increase in relevance in a growing market. Third, the refinement of our sales, account management, and marketing organizations are starting to generate early wins."
Tuchman continued, "The service experience has become the most important point of differentiation for many companies and the bar continues to rise. When customers experience great service from one company across one channel, they expect and feel entitled to it from every company, across every channel. Through our Humanify(TM) Customer Engagement as a Service offering, we are helping our clients stay ahead of the complex challenge. With our integrated platform, we are providing the strategy, insights, technology and operational excellence our clients need to orchestrate and deliver captivating experiences across every channel and interaction in the customer journey. Our integrated approach of people, process, analytics and technologies is enabling personalized experiences at scale that delight customers, drive profitable growth for our clients, and increase equity value for our shareholders."
SECOND QUARTER 2017 FINANCIAL HIGHLIGHTS
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
-- Second quarter 2017 GAAP revenue increased 15.8 percent to $353.4
million compared to $305.1 million in the prior year period. Inorganic
revenue growth was 13.3 percent.
-- Non-GAAP AHFS/WD revenue increased 17.3 percent to $347.4 million over
the prior year period. Inorganic revenue growth was 13.7 percent.
Income from Operations
-- Second quarter 2017 GAAP income from operations was $21.6 million, or
6.1 percent of revenue, compared to $16.2 million, or 5.3 percent of
revenue in the second quarter 2016.
-- Non-GAAP AHFS/WD income from operations was $25.4 million or 7.3 percent
of adjusted revenue versus 6.0 percent in the prior year.
Earnings Per Share
-- Second 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 compared to 28 cents in the same period last
year.
Bookings
-- During the second quarter 2017, TeleTech signed an estimated $107
million in annualized contract value revenue from new and existing
client relationships. The second quarter bookings mix was diversified
across all verticals with 80 percent from existing clients and 11
percent from outside of the United States.
STRONG BALANCE SHEET CONTINUES TO FUND OPERATIONS, SHARE REPURCHASES, DIVIDENDS, AND INVESTMENTS
-- As of June 30, 2017, TeleTech had cash and cash equivalents of $77.9
million and $273.3 million of total debt, resulting in a net debt
position of $195.4 million.
-- As of June 30, 2017, TeleTech had approximately $385 million of
additional borrowing capacity available under its revolving credit
facility.
-- Cash flow from operations in the second quarter 2017 was $50.5 million
compared to $43.5 million in the second quarter 2016.
-- Capital expenditures in the second quarter 2017 were $17.6 million
compared to $12.8 million in the second quarter 2016.
-- On April 14, 2017, TeleTech paid a $0.22 per share semi-annual dividend,
totaling $10.1 million, to TeleTech shareholders of record on March 31,
2017. This dividend represents an 18.9 percent increase over the
distribution in April 2016.
-- During the second quarter 2017, TeleTech repurchased approximately 223
thousand shares of common stock for a total cost of $6.7 million. As of
June 30, 2017, $26.6 million was authorized for future share
repurchases.
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 second quarter 2017 revenue increased 26.4 percent to $269.1 million
compared to $212.8 million in the year ago quarter. Inorganic revenue
grew 19.1 percent year-over-year. Income from operations was $14.1
million or 5.2 percent of revenue compared to $8.3 million or 3.9
percent of revenue in the prior year.
-- Non-GAAP income from operations was $17.7 million or 6.6 percent of
revenue. This compares to $8.4 million or 3.9 percent of revenue in the
prior year.
Customer Growth Services (CGS) - Digitally-Enabled Revenue Growth Solutions
-- CGS second quarter 2017 revenue declined 12.2 percent to $32.4 million
compared to $36.9 million in the year ago quarter. Income from
operations was $2.3 million or 7.2 percent of revenue compared to $3.5
million or 9.4 percent of revenue in the prior year.
-- Non-GAAP AHFS/WD revenue declined 11.9 percent over the year ago period
and income from operations was $2.4 million or 7.6 percent of adjusted
revenue. This compares to $4.1 million or 11.4 percent of adjusted
revenue in the prior year.
Customer Technology Services (CTS) - Hosted and Managed Technology Solutions
-- CTS second quarter 2017 revenue declined 6.8 percent to $34.8 million
compared to $37.4 million in the year ago quarter. Income from
operations was $3.8 million or 11.0 percent of revenue compared to $3.4
million or 9.0 percent of revenue in the prior year.
-- Non-GAAP AHFS/WD revenue declined 0.7 percent over the year ago period
and income from operations was $3.7 million or 11.6 percent of adjusted
revenue. This compares to $3.8 million or 11.8 percent of adjusted
revenue in the prior year.
Customer Strategy Services (CSS) - Customer Experience Strategy and Data Analytics Solutions
-- CSS second quarter 2017 revenue declined 4.9 percent to $17.2 million
from $18.1 million in the year ago quarter. Income from operations was
$1.4 million or 8.0 percent of revenue compared to $1.0 million or 5.7
percent of revenue in the prior year.
-- Non-GAAP AHFS/WD revenue declined 3.6 percent over the year ago period
and income from operations was $1.7 million or 11.3 percent of adjusted
revenue. This compares to operating income of $1.4 million or 9.3
percent of revenue in the prior year.
BUSINESS OUTLOOK
"I want to highlight the strong performance of the business. In the first half of 2017, we executed on many fronts. We grew the top-line organically and inorganically, improved our profitability and cash flow generation, increased our vertical and geographic market share, and expanded our capabilities into more integrated, outcome-based solutions," commented Regina Paolillo, chief financial and administrative officer. "The overperformance at the half year provides improved visibility and confidence in our ability to execute our full-year 2017 revenue and operating income guidance. In comparison to our first half, we anticipate a significant increase in our revenue and operating income in the second half. We estimate our seasonal peak fourth quarter revenue and operating income, which includes acquired volumes from Connextions, to significantly exceed historical levels."
Reaffirmed 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 $1.400 and $1.410 billion.
Operating Income Margin - Operating income margin in the range of 8.3 and 8.5 percent before impairment, restructuring and integration charges.
Capital Expenditures - Capital expenditures of 4.6 percent of revenue.
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 48,000 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 Six months ended
June 30, June 30,
-------- --------
2017 2016 2017 2016
---- ---- ---- ----
Revenue $353,429 $305,105 $691,706 $617,515
Operating Expenses:
Cost of services 268,004 226,768 521,902 458,108
Selling, general and
administrative 43,985 44,774 87,205 90,274
Depreciation and amortization 16,258 17,221 30,758 34,950
Restructuring charges, net 3,593 114 3,762 202
Total operating expenses 331,840 288,877 643,627 583,534
-------
Income From Operations 21,589 16,228 48,079 33,981
Other income (expense) (4,198) (734) (5,130) (2,054)
-------
Income Before Income Taxes 17,391 15,494 42,949 31,927
Benefit (Provision) for income
taxes (1,597) (2,952) (6,988) (7,480)
-------
Net Income 15,794 12,542 35,961 24,447
Net income attributable to
noncontrolling interest (1,100) (926) (2,022) (1,606)
-------
Net Income Attributable to
TeleTech Stockholders $14,694 $11,616 $33,939 $22,841
======= ======= ======= =======
Net Income Per Share Attributable to TeleTech Stockholders
Basic $0.32 $0.24 $0.74 $0.47
=====
Diluted $0.32 $0.24 $0.73 $0.47
=======
Income From Operations Margin 6.1% 5.3% 7.0% 5.5%
Net Income Attributable to
TeleTech Stockholders Margin 4.2% 3.8% 4.9% 3.7%
Effective Tax Rate 9.2% 19.1% 16.3% 23.4%
Weighted Average Shares Outstanding
Basic 45,662 47,873 45,805 48,120
Diluted 46,150 48,221 46,224 48,483
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(In thousands)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
-------- --------
2017 2016 2017 2016
---- ---- ---- ----
Revenue:
Customer
Management
Services $269,056 $212,807 $521,135 $440,728
Customer Growth
Services 32,403 36,893 66,061 70,412
Customer
Technology
Services 34,798 37,350 70,491 72,618
Customer Strategy
Services 17,172 18,055 34,019 33,757
Total $353,429 $305,105 $691,706 $617,515
======== ======== ======== ========
Income From Operations:
Customer
Management
Services $14,075 $8,339 $34,671 $23,934
Customer Growth
Services 2,321 3,482 4,731 3,977
Customer
Technology
Services 3,819 3,376 6,876 6,156
Customer Strategy
Services 1,374 1,031 1,801 (86)
Total $21,589 $16,228 $48,079 $33,981
======= ======= ======= =======
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
June 30, December 31,
2017 2016
---- ----
ASSETS
Current assets:
Cash and
cash
equivalents $77,910 $55,264
Accounts
receivable,
net 288,041 300,808
Other
current
assets 74,783 66,940
Assets
held for
sale 8,969 10,715
----- ------
Total
current
assets 449,703 433,727
Property
and
equipment,
net 160,321 151,037
Other
assets 320,099 261,540
------- -------
Total
assets $930,123 $846,304
======== ========
LIABILITIES AND EQUITY
Total
current
liabilities $197,352 $178,672
Liabilities
held for
sale 1,908 1,357
Other
long-
term
liabilities 335,605 304,380
Total
equity 395,258 361,895
------- -------
Total
liabilities
and
equity $930,123 $846,304
======== ========
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION
(In thousands, except per share data)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
-------- --------
2017 2016 2017 2016
---- ---- ---- ----
Revenue $353,429 $305,105 $691,706 $617,515
Reconciliation of EBIT & EBITDA:
Net Income Attributable to
TeleTech stockholders $14,694 $11,616 $33,939 $22,841
Interest income (695) (263) (1,121) (429)
Interest expense 2,912 1,753 5,230 3,717
Provision for income taxes 1,597 2,952 6,988 7,480
----- ----- ----- -----
EBIT $18,508 $16,058 $45,036 $33,609
Depreciation and amortization 16,258 17,221 30,758 34,950
------ ------ ------ ------
EBITDA $34,766 $33,279 $75,794 $68,559
Reconciliation of Free Cash Flow:
Cash Flow From Operating
Activities:
Net income $15,794 $12,542 $35,961 $24,447
Adjustments to reconcile net
income to net cash
provided by operating activities:
Depreciation and amortization 16,258 17,221 30,758 34,950
Other 18,471 13,744 58,736 (4,352)
------ ------ ------ ------
Net cash provided by operating
activities 50,523 43,507 125,455 55,045
Less - Total Capital Expenditures 17,554 12,794 29,589 27,743
------ ------ ------ ------
Free Cash Flow $32,969 $30,713 $95,866 $27,302
Reconciliation of Non-GAAP
Income from Operations:
Income from Operations $21,589 $16,228 $48,079 $33,981
Restructuring charges, net 3,593 114 3,762 202
Impairment losses - - - -
--- --- --- ---
Non-GAAP Income from Operations $25,182 $16,342 $51,841 $34,183
Non-GAAP Income from Operations
Margin 7.1% 5.4% 7.5% 5.5%
Reconciliation of Non-GAAP EPS:
Net Income Attributable to
TeleTech stockholders $14,694 $11,616 $33,939 $22,841
Add: Asset impairment and
restructuring charges, net of
related taxes 2,165 93 2,282 148
Add: Estimated loss on assets
held for sale, net of related
taxes 1,907 - 1,907 -
Less: Estimated gain on sale of
business unit (18) - (18) -
Add: Changes in valuation
allowance and returns to
provision adjustments (1,363) 1,558 (1,399) 2,436
------ ----- ------ -----
Non-GAAP Net Income Attributable
to TeleTech stockholders $17,385 $13,267 $36,711 $25,425
Diluted shares outstanding 46,150 48,221 46,224 48,483
Non-GAAP EPS Attributable to
TeleTech stockholders $0.38 $0.28 $0.79 $0.52
Reconciliation of Non-GAAP
EBITDA:
Net Income Attributable to
TeleTech stockholders $14,694 $11,616 $33,939 $22,841
Interest income (695) (263) (1,121) (429)
Interest expense 2,912 1,753 5,230 3,717
Provision for income taxes 1,597 2,952 6,988 7,480
Depreciation and amortization 16,258 17,221 30,758 34,950
Asset impairment and
restructuring charges 3,593 114 3,762 202
Gain on sale of business unit (30) - (30) -
Estimated loss of assets held for
sale 3,178 - 3,178 -
Equity-based compensation
expenses 2,795 1,825 4,836 4,584
----- ----- ----- -----
Non-GAAP EBITDA $44,302 $35,218 $87,540 $73,345
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
SECOND QUARTER
(three months end, June 30, 2017)
--------------------------------
Revenue Operating Income
GAAP Revenue Non-GAAP Revenue Contribution Non-GAAP Revenue (excluding AHFS/WD) GAAP Operating Income Non-GAAP Operating Income Non-GAAP Operating Income Non-GAAP Operating Income Contribution Non-GAAP Operating Income (excluding AHFS/
from AHFS/WD Adjustments from AHFS/WD WD)
------------ ------------ ------------------------------------ --------------------- ------------------------- ------------------------- ------------ ------------------------------------------
CMS $269,056 $ - $269,056 CMS $14,075 $3,579 $17,654 $ - $17,654
YoY Growth Rate: 26.4% 26.4% Operating Margin: 5.2% 6.6% 6.6%
---------------- ---- ---- ----------------- --- --- ---
CGS $32,403 $1,110 $31,293 CGS $2,321 $ - $2,321 $(43) $2,364
YoY Growth Rate: -12.2% -11.9% Operating Margin: 7.2% 7.2% 7.6%
------ ----
CTS $34,798 $2,799 $31,999 CTS $3,819 $14 $3,833 $117 $3,716
YoY Growth Rate: -6.8% -0.7% Operating Margin: 11.0% 11.0% 11.6%
----- -----
CSS $17,172 $2,110 $15,062 CSS $1,374 $ - $1,374 $(321) $1,695
YoY Growth Rate: -4.9% -3.6% Operating Margin: 8.0% 8.0% 11.3%
---------------- ---- ---- ----------------- --- --- ----
Company (Consolidated) $353,429 $6,019 $347,410 Company $21,589 $3,593 $25,182 $(247) $25,429
YoY Growth Rate: 15.8% 17.3% Operating Margin: 6.1% 7.1% 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 and integration 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
SECOND QUARTER (YEAR-TO-DATE)
(six months end, June 30, 2017)
------------------------------
Revenue Operating Income
GAAP Revenue Non-GAAP Revenue Contribution Non-GAAP Revenue (excluding AHFS/WD) GAAP Operating Income Non-GAAP Operating Income Non-GAAP Operating Income Non-GAAP Operating Income Contribution Non-GAAP Operating Income (excluding AHFS/
from AHFS/WD Adjustments from AHFS/WD WD)
------------ ------------ ------------------------------------ --------------------- ------------------------- ------------------------- ------------ ------------------------------------------
CMS $521,135 $ - $521,135 CMS $34,671 $3,585 $38,256 $ - $38,256
YoY Growth Rate: 18.2% 18.2% Operating Margin: 6.7% 7.3% 7.3%
---------------- ---- ---- ----------------- --- --- ---
CGS $66,061 $2,279 $63,782 CGS $4,731 $ - $4,731 $(261) $4,992
YoY Growth Rate: -6.2% -5.5% Operating Margin: 7.2% 7.2% 7.8%
----- ----
CTS $70,491 $6,780 $63,711 CTS $6,876 $177 $7,053 $489 $6,564
YoY Growth Rate: -2.9% 1.5% Operating Margin: 9.8% 10.0% 10.3%
----- ----
CSS $34,019 $4,487 $29,532 CSS $1,801 $ - $1,801 $(653) $2,454
YoY Growth Rate: 0.8% 0.4% Operating Margin: 5.3% 5.3% 8.3%
---------------- --- --- ----------------- --- --- ---
Company (Consolidated) $691,706 $13,546 $678,160 Company $48,079 $3,762 $51,841 $(425) $52,266
YoY Growth Rate: 12.0% 13.0% Operating Margin: 7.0% 7.5% 7.7%
---------------- ---- ---- ----------------- --- --- ---
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 and integration charges.
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SOURCE TeleTech Holdings, Inc.
