TTEC Announces Fourth Quarter and Full Year 2017 Financial Results
TTEC Announces Fourth Quarter and Full Year 2017 Financial Results
Fourth Quarter 2017
Completes Rebranding to TTEC
Increases Semi-annual Dividend
Signs $119 Million in New Business
Acquires Digital Customer Experience Trust & Safety Company, Motif, Inc.
Revenue was a Record $426.6 Million ($423.2 Million Non-GAAP AHFS/WD)
Operating Income of $36.6 Million or 8.6 Percent of Revenue ($47.5 Million or 11.2 Percent Non-GAAP AHFS/WD)
Including a One-time Mandatory Deemed Repatriation Tax from The 2017 U.S. Tax Act, Fully Diluted Loss Per Share of 89 Cents (Positive EPS of 67 Cents Non-GAAP)
Provides Outlook for Full Year 2018 Revenue and Operating Income
DENVER, March 12, 2018 /PRNewswire/ -- TTEC (NASDAQ: TTEC), a leading global technology and services provider focused exclusively on the design, implementation and delivery of transformative customer experience for many of the world's most iconic and disruptive brands, today announced financial results for the fourth quarter and full year ended December 31, 2017.
"2017 was a strong year for us. We exceeded our financial goals with record revenue and adjusted operating income, completed two strategic acquisitions, added many marquee names to our client portfolio, launched our insight-driven, technology-enabled Humanify Customer Engagement as a Service offering, strengthened our leadership team and continued to lead the industry in client satisfaction," commented Ken Tuchman, TTEC chairman and chief executive officer.
"With these accomplishments, combined with the underlying momentum across the business, we also took the step to rename the company to TTEC to reflect our successful transformation to an integrated end-to-end omnichannel customer experience services partner and leader in digitizing the customer experience. The name change was a strategic business decision representing the culmination of hundreds of millions of dollars of investment in strategic acquisitions, R&D including over 100 patents, and our diversified capabilities, alongside the successful adoption of our end-to-end platform by clients across the globe," Tuchman explained.
"With the proliferation of channels in combination with relevant and dynamic customer insights, every touchpoint is a unique opportunity to form a lasting customer relationship. Service experience is the new brand differentiator and captivating omnichannel experiences is the modern day currency for retention and growth. Across the globe, we are being chosen as a strategic partner for customer experience transformation combining strategy, analytics, AI and technology with human talent to drive growth, increase profitability and deepen customer loyalty," concluded Tuchman.
FULL YEAR 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
-- Full year 2017 GAAP revenue increased 15.8 percent to $1.477 billion
compared to $1.275 billion in 2016.
-- On a non-GAAP AHFS/WD basis, 2017 revenue grew 17.3 percent over the
prior year to $1.457 billion. Organic revenue growth was 4.3 percent.
Income from Operations
-- Full year 2017 GAAP income from operations was $100.5 million or 6.8
percent of revenue compared to $52.8 million or 4.1 percent of revenue
in 2016.
-- 2017 income from operations on a non-GAAP AHFS/WD basis, excluding $20.0
million in restructuring and integration charges, and asset impairments,
was $122.5 million, representing 8.4 percent of adjusted revenue versus
8.6 percent the prior year.
Earnings Per Share
-- Full year 2017 GAAP fully diluted earnings per share attributable to
TTEC shareholders, including a one-time mandatory deemed repatriation
tax of $62.4 million (or $1.34 per share) related to new U.S. tax reform
legislation, was $0.16 compared to $0.71 in 2016.
-- Non-GAAP fully diluted earnings per share was $1.80 compared to $1.32 in
the prior year.
Bookings
During the full year 2017, TTEC signed an estimated $442 million in annualized contract value revenue from new and expanded client relationships, a 4.7 percent increase over the prior year. The bookings mix was diversified across verticals with approximately 77 percent from existing clients and 13 percent outside of the United States.
FOURTH QUARTER 2017 FINANCIAL HIGHLIGHTS
Revenue
-- Fourth quarter 2017 GAAP revenue increased 23.7 percent to $426.6
million compared to $344.9 million in the prior year period.
-- Non-GAAP AHFS/WD revenue increased 25.4 percent to $423.2 million over
the prior year period. Organic revenue growth was 7.5 percent.
Income from Operations
-- Fourth quarter 2017 GAAP income from operations was $36.6 million, or
8.6 percent of revenue, compared to $6.2 million, or 1.8 percent of
revenue in the fourth quarter 2016.
-- Non-GAAP AHFS/WD income from operations, excluding $10.2 million in
restructuring and integration charges, and asset impairments, was $47.5
million or 11.2 percent of adjusted revenue versus 10.1 percent the
prior year.
Earnings Per Share
-- Fourth quarter 2017 GAAP fully diluted loss per share attributable to
TTEC shareholders, including a one-time mandatory deemed repatriation
tax of $62.4 million (or $1.34 per share) related to new U.S. tax reform
legislation, was $0.89 compared to a loss of $0.01 in the same period
last year.
-- Non-GAAP fully diluted earnings per share was $0.67 compared to $0.42 in
the prior year.
Bookings
-- During the fourth quarter 2017, TTEC signed an estimated $119 million in
annualized contract value revenue from new and expanded client
relationships. The fourth quarter bookings mix was diversified across
verticals with 72 percent from existing clients and 10 percent from
outside of the United States.
STRONG BALANCE SHEET CONTINUES TO FUND OPERATIONS, SHARE REPURCHASES, DIVIDENDS, AND INVESTMENTS
-- As of December 31, 2017, TTEC had cash and cash equivalents of $74.4
million and debt of $361.3 million, resulting in a net debt position of
$286.9 million.
-- As of December 31, 2017, TTEC had approximately $350 million of
additional borrowing capacity available under its revolving credit
facility.
-- Cash flow from operations in the fourth quarter 2017 was a negative
$36.5 million compared to $1.0 million in the fourth quarter 2016. For
the full year, cash flow from operations was a positive $113.2 million
compared to $111.8 million in 2016.
-- Capital expenditures in the fourth quarter 2017 were $8.0 million
compared to $12.0 million in the fourth quarter 2016. For the full
year, capital expenditures were $52.0 million compared to $50.8 million
in 2016.
-- Declared a 25-cent dividend per share, or $11.5 million, 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.
-- No shares of common stock were repurchased in the fourth quarter 2017.
For the full year 2017, approximately 609 thousand shares of common
stock were repurchased for a cost of $18.3 million. As of December 31,
2017, $26.6 million was authorized for future share repurchases.
SEGMENT REPORTING & COMMENTARY
TTEC 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 fourth quarter 2017 GAAP revenue increased 32.1 percent to $343.3
million compared to $259.9 million in the year ago quarter. Organic
revenue growth was 8.8 percent. Income from operations was $34.4 million
or 10.0 percent of revenue compared to $14.4 million or 5.5 percent of
revenue in the prior year.
-- Non-GAAP income from operations was $39.2 million or 11.4 percent of
revenue. This compares to $27.0 million or 10.4 percent of revenue in
the prior year.
Customer Growth Services (CGS) - Digitally-Enabled Revenue Growth Solutions
-- CGS fourth quarter 2017 GAAP revenue declined 9.9 percent to $31.8
million compared to $35.3 million in the year ago quarter. Income from
operations was $1.5 million or 4.7 percent of revenue compared to $2.8
million or 8.0 percent of revenue in the prior year.
-- Non-GAAP AHFS/WD revenue declined 9.0 percent to $30.9 million over the
year ago period and income from operations was $2.1 million or 6.9
percent of adjusted revenue. This compares to $2.9 million or 8.5
percent of adjusted revenue in the prior year.
Customer Technology Services (CTS) - Hosted and Managed Technology Solutions
-- CTS fourth quarter 2017 GAAP revenue grew 4.6 percent to $33.5 million
compared to $32.1 million in the year ago quarter. Income from
operations was $1.0 million or 3.0 percent of revenue compared to an
operating loss of $9.0 million or negative 28.1 percent of revenue in
the prior year.
-- Non-GAAP AHFS/WD revenue increased 21.6 percent to $33.5 million over
the year ago period and income from operations was $4.4 million or 13.0
percent of adjusted revenue. This compares to $2.2 million or 7.9
percent of adjusted revenue in the prior year.
Customer Strategy Services (CSS) - Customer Experience Strategy and Data Analytics Solutions
-- CSS fourth quarter 2017 GAAP revenue grew 2.1 percent to $18.0 million
from $17.7 million in the year ago quarter. Loss from operations was
$0.3 million or a negative 1.7 percent of revenue compared to an
operating loss of $1.9 million or negative 11.0 percent of revenue in
the prior year.
-- Non-GAAP AHFS/WD revenue declined 2.7 percent to $15.5 million over the
year ago period and income from operations was $1.8 million or 11.5
percent of adjusted revenue. This compares to operating income of $2.0
million or 12.7 percent of revenue in the prior year.
BUSINESS OUTLOOK
"We are pleased with our 2017 performance, which exceeded our expectations and guidance," commented Regina Paolillo, chief financial and administrative officer at TTEC. "In addition to our unwavering strategic focus to differentiate our solution portfolio and improve our go-to-market platforms, it is clear that the sales execution and profit optimization initiatives that we executed in 2016 was a noteworthy catalyst to our record 2017 performance."
Paolillo continued, "We enter 2018 with a strong backlog supporting our continued progress in growing our top line and expanding our profit margins. Our revenue backlog is a premium to prior years, our cost structure is streamlined, and our sales and operations teams are aligned to increasingly deliver our full suite of unified capabilities across TTEC Digital and TTEC Engage. Last, our Board remains committed to maximizing shareholder value by utilizing our balance sheet and cash flow to invest in acquisitions and other strategic investments as well as distribute capital to our shareholders."
We anticipate full year 2018 guidance, excluding non-GAAP AHFS/WD (Assets Held for Sale and Wind-down), which represents approximately $8 million of revenue and breakeven operating income, as follows:
-- Revenue - GAAP revenue estimated to increase 3.3 to 4.7 percent between
$1.505 and $ 1.525 billion.
-- EBITDA Margin - Non-GAAP EBITDA margin estimated between 13.0 and 13.3
percent.
-- Operating Income Margin - GAAP operating income margin estimated between
8.7 and 8.9 percent.
-- Capital Expenditures - Capital expenditures estimated at 3.8 percent of
revenue, of which approximately 70 percent is growth oriented.
SEC FILINGS
The Company's filings with the Securities and Exchange Commission are available in the "Investors" section of TTEC's website, which can be found at www.ttec.com.
About TTEC (pronounced T-tec):
TTEC (NASDAQ: TTEC) is a leading global technology and services provider focused exclusively on the design, implementation and delivery of transformative customer experience for many of the world's most iconic and disruptive brands. The Company delivers outcome-based customer engagement solutions through TTEC Digital, its digital consultancy that designs and builds human centric, tech-enabled, insight-driven customer experience solutions for clients and TTEC Engage, its delivery center of excellence, that operates customer acquisition, care, growth and digital trust and safety services. Founded in 1982, the Company's 56,000 employees operate on six continents across the globe and live by a set of customer-focused values that guide relationships with clients, their customers, and each other. To learn more about how TTEC is bringing humanity to the customer experience, visit www.ttec.com.
Investor Relations
Contact Public Relations Contact Address Contact
Paul Miller Olivia Griner 9197 South Peoria Street ttec.com
+1.303.397.8641 +1.303.397.8999 Englewood, CO 80112 +1.800.835.3832
TTEC HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three months ended Twelve months ended
December 31, December 31,
------------ ------------
2017 2016 2017 2016
---- ---- ---- ----
Revenue $426,623 $344,947 $1,477,365 $1,275,258
Operating Expenses:
Cost of services 312,618 249,943 1,110,068 941,592
Selling, general and administrative 49,942 44,895 182,314 175,797
Depreciation and amortization 17,234 16,914 64,507 68,675
Restructuring and integration
charges, net 4,897 502 14,665 4,392
Impairment losses 5,322 26,448 5,322 32,050
Total operating expenses 390,013 338,702 1,376,876 1,222,506
------- ------- --------- ---------
Income From Operations 36,610 6,245 100,489 52,752
Other income (expense) (8,318) 290 (11,602) (2,454)
-------
Income Before Income Taxes 28,292 6,535 88,887 50,298
Provision for income taxes (69,016) (6,196) (78,075) (12,863)
--------
Net Income (40,724) 339 10,812 37,435
Net income attributable to
noncontrolling interest (728) (953) (3,556) (3,757)
-----
Net Income Attributable to
TTEC Stockholders $(41,452) $(614) $7,256 $33,678
======== ===== ====== =======
Net Income Per Share Attributable to TTEC Stockholders
Basic $(0.90) $(0.01) $0.16 $0.71
=====
Diluted $(0.89) $(0.01) $0.16 $0.71
=======
Income From Operations Margin 8.6% 1.8% 6.8% 4.1%
Net Income Attributable to
TTEC Stockholders Margin (9.7)% (0.2)% 0.5% 2.6%
Effective Tax Rate 243.9% 94.8% 87.8% 25.6%
Weighted Average Shares Outstanding
Basic 45,856 46,386 45,826 47,423
Diluted 46,461 46,677 46,382 47,736
TTEC HOLDINGS, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(In thousands)
Three months ended Twelve months ended
December 31, December 31,
------------ ------------
2017 2016 2017 2016
---- ---- ---- ----
Revenue:
Customer Management
Services $343,252 $259,933 $1,141,760 $924,325
Customer Growth Services 31,808 35,292 128,698 141,005
Customer Technology
Services 33,527 32,056 138,581 141,254
Customer Strategy Services 18,036 17,666 68,326 68,674
Total $426,623 $344,947 $1,477,365 $1,275,258
======== ======== ========== ==========
Income From Operations:
Customer Management
Services $34,402 $14,352 $78,206 $50,541
Customer Growth Services 1,508 2,831 7,803 6,969
Customer Technology
Services 1,013 (8,999) 12,047 933
Customer Strategy Services (313) (1,939) 2,433 (5,691)
Total $36,610 $6,245 $100,489 $52,752
======= ====== ======== =======
TTEC HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, December 31,
2017 2016
---- ----
ASSETS
Current assets:
Cash and cash
equivalents $74,437 $55,264
Accounts receivable,
net 385,751 300,808
Other current assets 74,767 66,940
Assets held for sale 7,835 10,715
----- ------
Total current assets 542,790 433,727
Property and
equipment, net 163,297 151,037
Other assets 372,649 261,540
------- -------
Total assets $1,078,736 $846,304
========== ========
LIABILITIES AND
EQUITY
Total current
liabilities $200,456 $178,672
Liabilities held for
sale 1,322 1,357
Other long-term
liabilities 514,113 304,380
Total equity 362,845 361,895
------- -------
Total liabilities and
equity $1,078,736 $846,304
========== ========
TTEC HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION
(In thousands, except per share data)
Three months ended Twelve months ended
December 31, December 31,
------------ ------------
2017 2016 2017 2016
---- ---- ---- ----
Revenue $426,623 $344,947 $1,477,365 $1,275,258
Reconciliation of EBIT & EBITDA:
Net Income (Loss) Attributable to
TTEC stockholders $(41,452) $(614) $7,256 $33,678
Interest income (821) (408) (2,841) (1,234)
Interest expense 5,035 2,185 13,734 7,943
Provision for income taxes 69,016 6,196 78,075 12,863
------ ----- ------ ------
EBIT $31,778 $7,359 $96,224 $53,250
Depreciation and amortization 17,234 16,914 64,507 68,675
------ ------ ------ ------
EBITDA $49,012 $24,273 $160,731 $121,925
Reconciliation of Free Cash Flow:
Cash Flow From Operating
Activities:
Net income $(40,724) $339 $10,812 $37,435
Adjustments to reconcile net
income to net cash
provided by operating activities:
Depreciation and amortization 17,234 16,914 64,507 68,675
Other (13,001) (16,261) 37,833 5,720
------- ------- ------ -----
Net cash provided by operating
activities (36,491) 992 113,152 111,830
Less - Total Capital Expenditures 8,026 11,969 51,958 50,832
----- ------ ------ ------
Free Cash Flow $(44,517) $(10,977) $61,194 $60,998
Reconciliation of Non-GAAP Income
from Operations:
Income from Operations $36,610 $6,245 $100,489 $52,752
Restructuring and integration
charges, net 4,897 502 14,665 4,392
Impairment losses 5,322 26,448 5,322 32,050
----- ------ ----- ------
Non-GAAP Income from Operations $46,829 $33,195 $120,476 $89,194
Non-GAAP Income from Operations
Margin 11.0% 9.6% 8.2% 7.0%
Reconciliation of Non-GAAP EPS:
Net Income Attributable to TTEC
stockholders $(41,452) $(614) $7,256 $33,678
Add: Asset impairment,
restructuring and integration
charges, net of related taxes 6,401 18,479 12,304 26,190
Add: Estimated (gain) loss on
assets held for sale, net of
related taxes (360) - 1,547 4,208
Add: Changes in acquisition
contingent consideration /
transition services agreement,
net of related taxes 3,150 (118) 3,150 (4,553)
Add: Interest charge related to
future purchase of remaining 30%
for Motif acquisition 1,210 - 1,210 -
Less: Gain on dissolution of
foreign subsidiary, net of
related taxes - - (1,891) -
Less: Gain on sale of business
unit (155) - (258) -
Add: US 2017 Tax Act 62,372 - 62,372 -
Add: Changes in valuation
allowance and returns to
provision adjustments 25 1,720 (2,175) 3,623
--- ----- ------ -----
Non-GAAP Net Income Attributable
to TTEC stockholders $31,191 $19,467 $83,515 $63,146
Diluted shares outstanding 46,461 46,677 46,382 47,736
Non-GAAP EPS Attributable to TTEC
stockholders $0.67 $0.42 $1.80 $1.32
Reconciliation of Non-GAAP EBITDA:
Net Income Attributable to TTEC
stockholders $(41,452) $(614) $7,256 $33,678
Interest income (821) (408) (2,841) (1,234)
Interest expense 5,035 2,185 13,734 7,943
Provision for income taxes 69,016 6,196 78,075 12,863
Depreciation and amortization 17,234 16,914 64,507 68,675
Asset impairment, restructuring
and integration charges 10,219 26,950 19,987 36,442
Gain on dissolution of a foreign
subsidiary - - (3,160) -
Gain on sale of business unit (259) - (430) -
Changes in acquisition contingent
consideration /transition
service agreement 5,250 (199) 5,250 (4,766)
Estimated (gain) loss of assets
held for sale (600) - 2,578 5,300
Equity-based compensation
expenses 3,494 2,495 11,852 9,773
----- ----- ------ -----
Non-GAAP EBITDA $67,116 $53,519 $196,808 $168,674
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
FOURTH QUARTER
(three months end, December 31, 2017)
------------------------------------
Revenue Operating Income
GAAP Revenue Non-GAAP Non-GAAP GAAP Non-GAAP Non-GAAP Non-GAAP Non-GAAP
Revenue Revenue Operating Operating Operating Operating Operating
Contribution (excluding Income Income Income Income Income
from AHFS/WD) Adjustments Contribution (excluding
AHFS/WD from AHFS/WD AHFS/WD)
------- ------------ --------
CMS $343,252 $ - $343,252 CMS $34,402 $4,791 $39,193 $ - $39,193
YoY Growth Rate: 32.1% 32.1% Operating Margin: 10.0% 11.4% 11.4%
---------------- ---- ---- ----------------- ---- ---- ----
CGS $31,808 $915 $30,893 CGS $1,508 $ - $1,508 $(619) $2,127
YoY Growth Rate: -9.9% -9.0% Operating Margin: 4.7% 4.7% 6.9%
----- ----
CTS $33,527 $ - $33,527 CTS $1,013 $3,300 $4,313 $(56) $4,369
YoY Growth Rate: 4.6% 21.6% Operating Margin: 3.0% 12.9% 13.0%
---- ----
CSS $18,036 $2,542 $15,494 CSS $(313) $2,128 $1,815 $25 $1,790
YoY Growth Rate: 2.1% -2.7% Operating Margin: -1.7% 10.1% 11.5%
---------------- --- ---- ----------------- ---- ---- ----
Company (Consolidated) $426,623 $3,457 $423,166 Company $36,610 $10,219 $46,829 $(650) $47,479
YoY Growth Rate: 23.7% 25.4% Operating Margin: 8.6% 11.0% 11.2%
---------------- ---- ---- ----------------- --- ---- ----
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.
<hr/>
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
FOURTH QUARTER
(twelve months end, December 31, 2017)
-------------------------------------
Revenue Operating Income
GAAP Revenue Non-GAAP Non-GAAP GAAP Non-GAAP Non-GAAP Non-GAAP Non-GAAP
Revenue Revenue Operating Operating Operating Operating Operating
Contribution (excluding Income Income Income Income Income
from AHFS/WD) Adjustments Contribution (excluding
AHFS/WD from AHFS/WD AHFS/WD)
------- ------------ --------
CMS $1,141,760 $ - $1,141,760 CMS $78,206 $14,348 $92,554 $ - $92,554
YoY Growth Rate: 23.5% 23.5% Operating Margin: 6.8% 8.1% 8.1%
---------------- ---- ---- ----------------- --- --- ---
CGS $128,698 $4,430 $124,268 CGS $7,803 $ - $7,803 $(1,061) $8,864
YoY Growth Rate: -8.7% -8.1% Operating Margin: 6.1% 6.1% 7.1%
----- ----
CTS $138,581 $6,780 $131,801 CTS $12,047 $3,477 $15,524 $472 $15,052
YoY Growth Rate: -1.9% 8.5% Operating Margin: 8.7% 11.2% 11.4%
----- ----
CSS $68,326 $8,858 $59,468 CSS $2,434 $2,162 $4,596 $(1,435) $6,031
YoY Growth Rate: -0.5% -2.6% Operating Margin: 3.6% 6.7% 10.1%
---------------- ---- ---- ----------------- --- --- ----
Company (Consolidated) $1,477,365 $20,068 $1,457,297 Company $100,489 $19,987 $120,477 $(2,024) $122,501
YoY Growth Rate: 15.8% 17.3% Operating Margin: 6.8% 8.2% 8.4%
---------------- ---- ---- ----------------- --- --- ---
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.
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SOURCE TTEC Holdings, Inc.
