TTEC Announces First Quarter 2019 Financial Results
DENVER, May 7, 2019 /PRNewswire/ -- TTEC Holdings, Inc. (NASDAQ: TTEC), a leading digital global customer experience technology and services company focused on the design, implementation and delivery of transformative solutions for many of the world's most iconic and disruptive brands, today announced financial results for the first quarter ended March 31, 2019.
"We had a strong start to 2019 with our first quarter financial results exceeding our plan. Key financial metrics materially increased year-over-year, including bookings, revenue, operating income, and cash flow from operations," commented Ken Tuchman, chairman and chief executive officer of TTEC. "We are well positioned to deliver organic revenue growth and operating margin expansion in line with our full-year guidance. Our momentum is the result of our continued sales velocity, differentiated solutions portfolio, and delivery of exceptional customer experience outcomes."
Tuchman continued, "Digital disruption is causing a seismic shift in the service economy as consumer demand for integrated, frictionless customer experience accelerates, enabled by cloud, AI, ML, RPA and omnichannel technology. Companies around the world are increasingly realizing the importance of delivering next generation exceptional customer service for their brands and are investing heavily in their digital transformation. Our proven expertise and differentiated solutions portfolio are allowing us to capitalize on these market dynamics as evidenced by the current scale and composition of our bookings and revenue."
FIRST QUARTER 2019 FINANCIAL HIGHLIGHTS
Revenue
-- First quarter 2019 GAAP revenue increased 5.1 percent to $394.4 million
compared to $375.2 million in the prior year period. On a constant
currency basis and excluding one-time ASC 606 adjustments in 2018,
revenue increased 10.4 percent.
-- Foreign exchange had a $4.4 million negative impact on revenue in first
quarter 2019.
Income from Operations
-- First quarter 2019 GAAP income from operations was $32.1 million, or 8.1
percent of revenue, compared to $24.9 million, or 6.6 percent of revenue
in the prior year period.
-- Non-GAAP income from operations, excluding $2.5 million in restructuring
and impairments charges, was $34.6 million or 8.8 percent of revenue
versus 7.2 percent for the prior year period. Adjusted for ASC 606 and
on a constant currency basis, operating income increased 73.4 percent
over the prior year quarter.
-- Foreign exchange had a $1.2 million positive impact on income from
operations in first quarter 2019.
Adjusted EBITDA
-- First quarter 2019 Non-GAAP Adjusted EBITDA was $55.0 million, or 13.9
percent of revenue, compared to $51.1 million, or 13.6 percent of
revenue in the prior year period.
Earnings Per Share
-- First quarter 2019 GAAP fully diluted earnings per share attributable to
TTEC shareholders was $0.41 compared to $0.10 for the same period last
year.
-- Non-GAAP fully diluted earnings per share was $0.51 compared to $0.42 in
the prior year period.
-- Foreign exchange had a $0.02 positive impact on earnings per share in
first quarter 2019.
Bookings
-- During the first quarter 2019, TTEC signed an estimated $132 million in
annualized contract value. First quarter bookings mix was diversified
across segments, verticals, and geographies.
STRONG BALANCE SHEET CONTINUES TO FUND OPERATIONS, DIVIDENDS, AND INVESTMENTS
-- As of March 31, 2019, TTEC had cash and cash equivalents of $89.0
million and debt of $262.7 million, resulting in a net debt position of
$173.7 million. This compares to a net debt position of $240.5 million
for the same period 2018.
-- As of March 31, 2019, TTEC had approximately $465 million of additional
borrowing capacity available under its revolving credit facility
compared to $425 million for the same period 2018.
-- Cash flow from operations in the first quarter 2019 was $80.0 million
compared to $67.4 million for the first quarter 2018.
-- Capital expenditures in the first quarter 2019 were $13.2 million
compared to $7.5 million for the first quarter 2018.
-- Paid a 30 cent per share, or $13.9 million, semi-annual dividend on
April 18, 2019, a 7 percent increase over the distribution paid in
October 2018 and an 11 percent increase over the distribution paid in
April 2018.
SEGMENT REPORTING & COMMENTARY
TTEC reports financial results for the following four business segments: Customer Strategy Services (CSS), Customer Technology Services (CTS), Customer Growth Services (CGS), and Customer Management Services (CMS). Financial highlights for the segments are provided below.
Customer Strategy Services (CSS) - Customer Experience Digital Strategy and Data Analytics
-- CSS first quarter 2019 GAAP revenue decreased 9.6 percent to $13.4
million from $14.9 million for the year ago quarter. Loss from
operations was ($1.2) million or negative 9.1 percent of revenue
compared to operating income of $0.5 million or 3.4 percent of revenue
for the prior year period.
-- Non-GAAP loss from operations was ($0.9) million, or negative 6.6
percent of revenue compared to operating income of $0.6 million or 3.7
percent of revenue in the prior year period.
Customer Technology Services (CTS) - Cloud and Managed Technology
-- CTS first quarter 2019 GAAP revenue increased 48.9 percent to $52.4
million compared to $35.2 million for the year ago quarter. Income from
operations was $9.0 million or 17.1 percent of revenue compared to $4.8
million or 13.8 percent of revenue in the prior year period.
-- Non-GAAP measures are not materially different from the GAAP measures
for the segment.
Customer Growth Services (CGS) - Digitally-Enabled Revenue Growth
-- CGS first quarter 2019 GAAP revenue increased 19.6 percent to $38.9
million compared to $32.5 million for the year ago quarter. Income from
operations was $4.3 million or 10.9 percent of revenue compared to $1.4
million or 4.2 percent of revenue in the prior year period.
-- Non-GAAP income from operations was $4.3 million or 10.9 percent of
revenue. This compares to $2.0 million or 6.2 percent of revenue in the
prior year period.
Customer Management Services (CMS) - Customer Experience Delivery
-- CMS first quarter 2019 GAAP revenue decreased 1.0 percent to $289.6
million compared to $292.6 million for the year ago quarter. On a
constant currency basis and excluding one-time ASC 606 adjustments in
2018, revenue increased 5.2 percent. Income from operations was $20.1
million or 6.9 percent of revenue compared to $18.2 million or 6.2
percent of revenue in the prior year period.
-- Non-GAAP income from operations was $22.2 million or 7.7 percent of
revenue. This compares to $19.5 million or 6.7 percent of revenue in the
prior year period. Adjusted for ASC 606 and on a constant currency
basis, operating income increased 78.5 percent over the prior year
quarter.
-- Foreign exchange had a negative $3.5 million impact on revenue and
positive $1.2 million impact on income from operations.
NON-GAAP FINANCIAL MEASURES
This press release contains a discussion of certain non-GAAP financial measures that the Company includes to allow investors and analysts to measure, analyze and compare its financial condition and results of operations in a meaningful and consistent manner. A reconciliation of these non-GAAP financial measures can be found in the tables accompanying this press release.
-- GAAP metrics are presented in accordance with Generally Accepted
Accounting Principles, including the impact from TTEC's January 1, 2018
adoption of Accounting Standards Codification (ASC) 606 "Revenue from
Contracts with Customers" using the modified retrospective method.
-- Non-GAAP - As reflected in the attached reconciliation table, the
definition of Non-GAAP excludes from operating income restructuring and
impairment charges.
-- Non-GAAP Adjusted EBITDA (Earnings Before Interest, Tax, Depreciation
and Amortization) - As reflected in the attached reconciliation table.
BUSINESS OUTLOOK
"We are pleased with the momentum and overperformance in the business and are confident in our ability to deliver on our 2019 outlook," commented Regina Paolillo, chief financial and administrative officer. "We are executing on numerous fronts and realizing tangible results from our strategy, differentiated solutions, and improved go-to-market platform. The transformation of our business is improving our value proposition, especially in today's highly disruptive, digital era and changing the trajectory of our financial performance. We are delivering at scale the essential expertise and integrated technology and service capabilities to advance our clients' customer experience outcomes."
Paolillo continued, "Effective in the second quarter 2019, we will change our financial reporting to align with our go-to-market platform and operational structure. We will reduce our segment reporting from four to two, combining our CSS and CTS businesses into one segment and our CMS and CGS businesses into a second segment. We believe this change will assist investors in understanding the distinct nature, financial profile and value of each of these businesses."
We maintain full year 2019 guidance, excluding restructuring and impairments charges, as follows:
-- Revenue - Revenue between $1.614 and $1.630 billion, an increase of 7.5
to 8.6 percent over the prior year.
-- Operating Income Margin - Operating income margin between 7.4 and 7.6
percent.
-- Adjusted EBITDA Margin - Non-GAAP adjusted EBITDA margin between 12.6
and 12.8 percent.
-- Capital Expenditures - Capital expenditures between 3.8 and 4.0 percent
of revenue, of which approximately 65 percent is growth oriented.
About TTEC
TTEC Holdings, Inc. (NASDAQ: TTEC) is a leading digital global customer experience technology and services company focused 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, fraud prevention and detection, and content moderation services. Founded in 1982, the Company's 49,300 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.
NON-GAAP FINANCIAL MEASURES
This press release contains a discussion of certain non-GAAP financial measures that the Company includes to allow investors and analysts to measure, analyze and compare its financial condition and results of operations in a meaningful and consistent manner. A reconciliation of these non-GAAP financial measures can be found in the tables accompanying this press release.
FORWARD-LOOKING STATEMENTS
This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the current beliefs and expectations of TTEC Holding, Inc.'s management and are subject to significant risks and uncertainties. Specifically, we would like for you to focus on risks related to our strategy execution, our ability to innovate and introduce technologies that are sufficiently disruptive to allow us to maintain and grow our market share, cybersecurity risk and risks inherent to our equity structure. Actual results may differ from what is expressed in the forward-looking statements. Factors that could cause TTEC's results to differ materially from those described in the forward-looking statements can be found in TTEC's Annual Report on Form 10-K for the year ended December 31, 2018, which has been filed with the U.S. Securities and Exchange Commission (the "SEC") and is available on TTEC's website www.ttec.com, and on the SEC's public website at www.sec.gov. TTEC Holdings, Inc. does not undertake to update any forward-looking statements.
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)
(unaudited)
Three months ended
March 31,
2019 2018
Revenue $394,356 $375,249
Operating Expenses:
Cost of services 293,334 283,370
Selling, general and administrative 49,720 47,045
Depreciation and amortization 16,743 17,924
Restructuring and integration
charges, net 961 849
Impairment losses 1,506 1,120
Total operating expenses 362,264 350,308
Income From Operations 32,092 24,941
Other income (expense), net (4,150) (16,907)
Income Before Income Taxes 27,942 8,034
Provision for income taxes (7,466) (2,102)
Net Income 20,476 5,932
Net income attributable to
noncontrolling interest (1,474) (1,341)
Net Income Attributable to TTEC
Stockholders $19,002 $4,591
Net Income Per Share Attributable to
TTEC Stockholders
Basic $0.41 $0.10
Diluted $0.41 $0.10
Income From Operations Margin 8.1% 6.6%
Net Income Attributable to TTEC
Stockholders Margin 4.8% 1.2%
Effective Tax Rate 26.7% 26.2%
Weighted Average Shares Outstanding
Basic 46,203 45,871
Diluted 46,590 46,452
TTEC HOLDINGS, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(In thousands)
(unaudited)
Three months ended
March 31,
2019 2018
Revenue:
Customer
Strategy
Services $13,430 $14,860
Customer
Technology
Services 52,423 35,208
Customer
Growth
Services 38,934 32,540
Customer
Management
Services 289,569 292,641
Total $394,356 $375,249
Income
(Loss) From
Operations:
Customer
Strategy
Services $(1,228) $502
Customer
Technology
Services 8,987 4,844
Customer
Growth
Services 4,250 1,380
Customer
Management
Services 20,083 18,215
Total $32,092 $24,941
TTEC HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(unaudited)
March 31, December 31,
2019 2018
ASSETS
Current
assets:
Cash and
cash
equivalents $89,046 $78,237
Accounts
receivable,
net 332,867 350,962
Other
current
assets 100,738 97,278
Total
current
assets 522,651 526,477
Property
and
equipment,
net 165,367 161,523
Other
assets 500,624 366,508
Total
assets $1,188,642 $1,054,508
LIABILITIES
AND EQUITY
Total
current
liabilities $304,902 $235,418
Other long-
term
liabilities 518,466 466,241
Total
equity 365,274 352,849
Total
liabilities
and equity $1,188,642 $1,054,508
TTEC HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION
(In thousands, except per share data)
(unaudited)
Three months ended
March 31,
2019 2018
Revenue $394,356 $375,249
Reconciliation of Adjusted
EBITDA:
Net Income (Loss) $20,476 $5,932
Interest income (340) (1,068)
Interest expense 5,288 6,459
Provision for income taxes 7,466 2,102
Depreciation and amortization 16,743 17,924
Asset impairment, restructuring
and integration charges 2,467 1,969
Impairment of equity investment 15,632
Gain on sale of business unit (308) (794)
Gain on bargain purchase of
acquisition (685)
Equity-based compensation
expenses 3,168 3,609
Adjusted EBITDA $54,960 $51,080
Reconciliation of Free Cash
Flow:
Cash Flow From Operating
Activities:
Net income (loss) $20,476 $5,932
Adjustments to reconcile net
income to net cash
provided by operating
activities:
Depreciation and amortization 16,743 17,924
Other 42,744 43,531
Net cash provided by operating
activities 79,963 67,387
Less -Total Cash Capital
Expenditures 13,200 7,508
Free Cash Flow $66,763 $59,879
Reconciliation of Non-GAAP
Income from Operations:
Income from Operations $32,092 $24,941
Restructuring and integration
charges, net 961 849
Impairment losses 1,506 1,120
Non-GAAP Income from Operations $34,559 $26,910
Non-GAAP Income from Operations
Margin 8.8% 7.2%
Reconciliation of Non-GAAP EPS:
Net Income (Loss) $20,476 $5,932
Add: Asset impairment,
restructuring and integration
charges, net of related taxes 1,799 1,359
Add: Interest charge related to
future purchase of remaining
30% for Motif acquisition 1,307 1,925
Add: Impairment of equity
investment, net of related
taxes 11,411
Less: Gain on sale of business
unit (225) (580)
Less: Gain on bargain purchase
of acquisition (500)
Add: Changes in valuation
allowance, returns to provision
adjustments and other 285 (77)
Non-GAAP Net Income $23,642 $19,470
Diluted shares outstanding 46,590 46,452
Non-GAAP EPS $0.51 $0.42
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SOURCE TTEC Holdings, Inc.
