TTEC Announces Third Quarter 2019 Financial Results
DENVER, Nov. 5, 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 third quarter ended September 30, 2019.
"We continued to overperform against our key financial objectives in the third quarter, and 2019 is setting up to be a record year for revenue and profitability," commented Ken Tuchman, chairman and chief executive officer of TTEC. "We are making significant progress executing upon our vision to continuously deliver exceptional customer experience and engagement, especially in today's disruptive digital world. The strategic interplay between our Digital and Engage solutions is a marketplace differentiator that creates a virtuous cycle with the power to further enhance our organic revenue growth and margin expansion. We are also fortifying our integrated offering through a strong pipeline of accretive strategic acquisitions and meaningful new digital channel partnerships to deliver a truly differentiated customer experience for our clients."
THIRD QUARTER 2019 FINANCIAL HIGHLIGHTS
Revenue
-- Third quarter 2019 GAAP revenue increased 8.4 percent to $395.5 million
compared to $364.9 million in the prior year period.
-- Foreign exchange had a $2.2 million positive impact on revenue in the
third quarter 2019.
Income from Operations
-- Third quarter 2019 GAAP income from operations was $26.0 million, or 6.6
percent of revenue, compared to $14.7 million, or 4.0 percent of revenue
in the prior year period.
-- Non-GAAP income from operations, excluding $0.2 million in restructuring
and impairment charges, was $26.2 million or 6.6 percent of revenue
versus 4.8 percent for the prior year period.
-- Foreign exchange had a $2.1 million positive impact on income from
operations in the third quarter 2019.
Adjusted EBITDA
-- Third quarter 2019 Non-GAAP Adjusted EBITDA was $46.2 million, or 11.7
percent of revenue, compared to $38.2 million, or 10.5 percent of
revenue in the prior year period.
Earnings Per Share
-- Third quarter 2019 GAAP fully diluted earnings per share was $0.43
compared to $0.15 for the same period last year.
-- Non-GAAP fully diluted earnings per share was $0.40 compared to $0.22 in
the prior year period.
Bookings
-- During the third quarter 2019, TTEC signed an estimated $114 million in
annualized contract value. Third quarter bookings mix was diversified
across segments, verticals, and geographies.
STRONG BALANCE SHEET AND CASH FLOWS CONTINUE TO FUND INVESTMENTS AND DIVIDENDS
-- As of September 30, 2019, TTEC had cash and cash equivalents of $85.5
million and debt of $218.9 million, resulting in a net debt position of
$133.4 million. This compares to a net debt position of $202.3 million
for the same period 2018.
-- As of September 30, 2019, TTEC had approximately $575 million of
additional borrowing capacity available under its revolving credit
facility compared to $405 million for the same period 2018.
-- Cash flow from operations in the third quarter 2019 was $63.1 million
compared to $61.4 million for the third quarter 2018.
-- Capital expenditures in the third quarter 2019 were $16.0 million
compared to $15.0 million for the third quarter 2018.
-- Paid a 32 cent per share, or $14.9 million, semi-annual dividend on
October 17, 2019, an approximate 14.3 percent increase over the dividend
paid in October 2018 and a 6.7 percent increase over the April 2019
dividend.
SEGMENT REPORTING & COMMENTARY
Effective June 30, 2019, TTEC reports financial results for the following two business segments:
1. TTEC Digital (Digital) - Previously TTEC's Customer Strategy Services and
Customer Technology Services segments.
2. TTEC Engage (Engage) - Previously TTEC's Customer Growth Services and
Customer Management Services segments.
Financial highlights for the two segments are provided below.
TTEC Digital - Design, build and operate tech-enabled, insight-driven CX solutions
-- Third quarter 2019 GAAP revenue for TTEC Digital increased 17.9 percent
to $78.6 million from $66.7 million for the year ago period. Income from
operations was $11.7 million or 14.9 percent of revenue compared to
operating income of $8.5 million or 12.7 percent of revenue for the
prior year period.
-- Non-GAAP income from operations was $11.8 million, or 15.0 percent of
revenue compared to operating income of $8.6 million or 12.8 percent of
revenue in the prior year period.
TTEC Engage - Digitally-enabled customer care, acquisition, and fraud prevention services
-- Third quarter 2019 GAAP revenue for TTEC Engage increased 6.2 percent to
$316.9 million from $298.3 million for the year ago period. Income from
operations was $14.3 million or 4.5 percent of revenue compared to
operating income of $6.2 million or 2.1 percent of revenue for the prior
year period.
-- Non-GAAP income from operations was $14.4 million, or 4.5 percent of
revenue compared to operating income of $8.8 million or 3.0 percent of
revenue in the prior year period.
-- Foreign exchange had a $2.4 million positive impact on revenue and $2.1
million positive 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.
-- Non-GAAP - As reflected in the attached reconciliation table, the
definition of Non-GAAP may exclude from operating income, EBITDA, net
income and earnings per share restructuring and impairment charges,
among other items.
BUSINESS OUTLOOK
"We are executing against our strategic priorities in both our TTEC Digital and TTEC Engage segments," commented Regina Paolillo, chief financial and administrative officer. "Year-to-date, we significantly increased our revenue, profitability and cash flow generation, grew the number of concurrent licensed users on our CX subscription-based cloud platform, expanded our geographic and vertical market share, and more recently completed a strategic acquisition and entered into new and expanded channel partner arrangements."
Paolillo continued, "We expect these positive developments alongside the size and diversity of our revenue backlog and sales pipeline to enable top line growth and margin expansion in 2020, similar to that of 2019."
We estimate full-year 2019 guidance, which includes PRG Middle East and our recent acquisition of FCR, but excludes restructuring and impairment charges, as follows:
Revenue between $1.622 and $1.630 billion.
-- With approximately 18.5 percent for TTEC Digital and 81.5 percent for
TTEC Engage
Operating Income margins between 7.8 and 8.0 percent.
-- Margins of approximately 13.7 percent for TTEC Digital and 6.7 percent
for TTEC Engage
Adjusted EBITDA margins between 12.8 and 13.0 percent.
-- Margins of approximately 18.0 percent for TTEC Digital and 11.8 percent
for TTEC Engage
Capital expenditures are estimated to between 3.8 and 4.0 percent of revenue.
Effective tax rate for the full year is estimated between 25 and 27 percent.
About TTEC
TTEC Holdings, Inc. (NASDAQ: TTEC) is a leading 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 48,500 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
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. Risk Factors that could cause TTEC's results to differ materially from those described in the forward-looking statements can be found in TTEC's Quarterly Report on Form 10-Q for the quarter ended on September 30, 2019 and 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
Nick Cerise
9197 South Peoria Street
ttec.com
+1.303.397.8641
+1.303.397.8331
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 Nine months ended
September 30, September 30,
2019 2018 2019 2018
Revenue $395,507 $364,936 $1,182,378 $1,090,038
Operating Expenses:
Cost of services 304,622 286,925 897,193 844,555
Selling, general and administrative 48,062 43,321 148,646 134,611
Depreciation and amortization 16,659 17,317 50,452 52,052
Restructuring and integration
charges, net 183 2,716 1,572 4,599
Impairment losses 3,569 1,120
Total operating expenses 369,526 350,279 1,101,432 1,036,937
Income From Operations 25,981 14,657 80,946 53,101
Other income (expense), net (806) (6,020) (6,870) (29,480)
Income Before Income Taxes 25,175 8,637 74,076 23,621
Provision for income taxes (5,196) (1,893) (20,007) (4,648)
Net Income 19,979 6,744 54,069 18,973
Net income attributable to
noncontrolling interest (1,878) (1,369) (5,168) (3,489)
Net Income Attributable to TTEC
Stockholders $18,101 $5,375 $48,901 $15,484
Net Income Per Share
Basic $0.43 $0.15 $1.17 $0.41
Diluted $0.43 $0.15 $1.16 $0.41
Net Income Per Share Attributable to TTEC Stockholders
Basic $0.39 $0.12 $1.06 $0.34
Diluted $0.39 $0.12 $1.05 $0.33
Income From Operations Margin 6.6% 4.0% 6.8% 4.9%
Net Income Margin 5.1% 1.8% 4.6% 1.7%
Net Income Attributable to TTEC
Stockholders Margin 4.6% 1.5% 4.1% 1.4%
Effective Tax Rate 20.6% 21.9% 27.0% 19.7%
Weighted Average Shares Outstanding
Basic 46,481 46,172 46,335 46,021
Diluted 46,768 46,316 46,693 46,390
TTEC HOLDINGS, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(In thousands)
(unaudited)
Three months ended Nine months ended
September 30, September 30,
---
2019 2018 2019 2018
---
Revenue:
TTEC Digital $78,620 $66,679 $222,992 $169,247
TTEC Engage 316,887 298,257 959,386 920,791
Total $395,507 $364,936 $1,182,378 $1,090,038
===
Income From Operations:
TTEC Digital $11,704 $8,469 $27,172 $20,579
TTEC Engage 14,277 6,188 53,774 32,522
Total $25,981 $14,657 $80,946 $53,101
TTEC HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(unaudited)
September 30, December 31,
2019 2018
ASSETS
Current assets:
Cash
and
cash
equivalents $85,480 $78,237
Accounts
receivable,
net 312,128 350,962
Other
current
assets 118,002 97,278
Total
current
assets 515,610 526,477
Property
and
equipment,
net 164,972 161,523
Other
assets 501,284 366,508
Total
assets $1,181,866 $1,054,508
===
LIABILITIES AND EQUITY
Total
current
liabilities $358,306 $235,418
Other
long-
term
liabilities 436,417 466,241
Total
equity 387,143 352,849
Total
liabilities
and
equity $1,181,866 $1,054,508
===
TTEC 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,
2019 2018 2019 2018
Revenue $395,507 $364,936 $1,182,378 $1,090,038
Reconciliation of Adjusted
EBITDA:
Net Income $19,979 $6,744 $54,069 $18,973
Interest income (522) (1,401) (1,291) (3,940)
Interest expense 4,041 8,410 13,537 22,634
Provision for income taxes 5,196 1,893 20,007 4,648
Depreciation and amortization 16,659 17,317 50,452 52,052
Asset impairment, restructuring
and integration charges 183 2,716 5,141 5,719
Impairment of equity investment 15,632
Gain on sale of business units (391) (588) (1,141) (1,653)
Gain on sale of trademarks (700) (700)
Gain on recovery of receivables
in connection with division in
winddown (1,416) (1,416)
Changes in acquisition
contingent consideration (2,424)
Loss on asset held for sale
reclassified to asset held and
used 2,000
Gain on bargain purchase of
acquisition (685)
Equity-based compensation
expenses 3,129 3,109 9,663 9,292
Adjusted EBITDA $46,158 $38,200 $145,897 $124,672
Reconciliation of Free Cash
Flow:
Cash Flow From Operating
Activities:
Net income $19,979 $6,744 $54,069 $18,973
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 16,659 17,317 50,452 52,052
Other 26,493 37,342 79,876 95,084
Net cash provided by operating
activities 63,131 61,403 184,397 166,109
Less -Total Cash Capital
Expenditures 16,010 14,958 44,438 31,841
Free Cash Flow $47,121 $46,445 $139,959 $134,268
Reconciliation of Non-GAAP
Income from Operations:
Income from Operations $25,981 $14,657 $80,946 $53,101
Restructuring charges, net 183 2,716 1,572 4,599
Impairment losses 3,569 1,120
Non-GAAP Income from Operations $26,164 $17,373 $86,087 $58,820
Non-GAAP Income from Operations
Margin 6.6% 4.8% 7.3% 5.4%
Reconciliation of Non-GAAP EPS:
Net Income $19,979 $6,744 $54,069 $18,973
Add: Asset restructuring and
impairment charges 183 2,716 5,141 5,719
Add: Loss on asset held for
sale reclassified to asset held
and used 2,000
Add: Interest charge related to
future purchase of remaining
30% for Motif acquisition 757 3,002 2,533 7,989
Add: Impairment of equity
investment 15,632
Less: Changes in acquisition
contingent consideration (2,424)
Less: Gain on sale of business
units (391) (588) (1,141) (1,653)
Less: Gain on sale of
trademarks (700) (700)
Less: Gain on recovery of
receivable in connection with
division in winddown (1,416) (1,416)
Less: Gain on bargain purchase
of acquisition (685)
Add: Changes in valuation
allowance, return to provision
adjustments and other, and tax
effects of items separately
disclosed above 212 (1,800) 2,046 (8,146)
Non-GAAP Net Income $18,624 $10,074 $58,108 $39,829
Diluted shares outstanding 46,768 46,316 46,693 46,390
Non-GAAP EPS $0.40 $0.22 $1.24 $0.86
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SOURCE TTEC Holdings, Inc.
