TTEC Announces Fourth Quarter and Full Year 2019 Financial Results

DENVER, March 4, 2020 /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 fourth quarter and full year ended December 31, 2019.

"We delivered record revenue and profit in 2019 and overperformed against many of our internal targets," commented Ken Tuchman, chairman and chief executive officer of TTEC. "Our journey over the past decade has included significant investments to grow our overall portfolio of technology-rich CX solutions, culminating in a set of integrated capabilities that today allows TTEC to deliver everything from management consulting to recurring technology services and outcome based operational execution. This has optimized our access to the highest growing areas within the customer experience ecosystem. The current CX market tailwinds, combined with our reputation of excellence, history of innovation, and unrivaled CX technology and services, position us to advance our revenue growth and margin expansion in 2020 and beyond."

FULL YEAR 2019 FINANCIAL HIGHLIGHTS

Revenue

    --  Full year 2019 GAAP revenue increased 8.9 percent to $1.644 billion
        compared to $1.509 billion in the prior year.
    --  Foreign exchange had a $0.8 million positive impact on revenue for full
        year 2019.

Income from Operations

    --  Full year 2019 GAAP income from operations was $123.7 million, or 7.5
        percent of revenue, compared to $92.1 million, or 6.1 percent of revenue
        in the prior year.
    --  Non-GAAP income from operations, excluding $5.5 million in restructuring
        and impairment charges, was $129.2 million or 7.9 percent of revenue
        versus 6.9 percent for the prior year.
    --  Foreign exchange had a $7.0 million positive impact on income from
        operations for full year 2019.

Adjusted EBITDA

    --  Full year 2019 Non-GAAP Adjusted EBITDA was $209.1 million, or 12.7
        percent of revenue, compared to $188.7 million, or 12.5 percent of
        revenue in the prior year.

Earnings Per Share

    --  Full year 2019 GAAP fully diluted earnings per share was $1.65 compared
        to $0.77 for the same period last year.
    --  Non-GAAP fully diluted earnings per share was $1.89 compared to $1.49 in
        the prior year.

Bookings

    --  During full year 2019, TTEC signed an estimated $488 million in
        annualized contract value. Full year bookings mix was diversified across
        segments, verticals, and geographies.

FOURTH QUARTER 2019 FINANCIAL HIGHLIGHTS

Revenue

    --  Fourth quarter 2019 GAAP revenue increased 10.1 percent to $461.3
        million compared to $419.1 million in the prior year period.
    --  Foreign exchange had a $4.0 million positive impact on revenue in the
        fourth quarter 2019.

Income from Operations

    --  Fourth quarter 2019 GAAP income from operations was $42.8 million, or
        9.3 percent of revenue, compared to $39.0 million, or 9.3 percent of
        revenue in the prior year period.
    --  Non-GAAP income from operations, excluding $0.3 million in restructuring
        and impairment charges, was $43.1 million or 9.3 percent of revenue
        versus 11.0 percent for the prior year period.
    --  Foreign exchange had a $2.5 million positive impact on income from
        operations in the fourth quarter 2019.

Adjusted EBITDA

    --  Fourth quarter 2019 Non-GAAP Adjusted EBITDA was $63.2 million, or 13.7
        percent of revenue, compared to $64.0 million, or 15.3 percent of
        revenue in the prior year period.

Earnings Per Share

    --  Fourth quarter 2019 GAAP fully diluted earnings per share was $0.60
        compared to $0.44 for the same period last year.
    --  Non-GAAP fully diluted earnings per share was $0.65 compared to $0.63 in
        the prior year period.

Bookings

    --  During the fourth quarter 2019, TTEC signed an estimated $120 million in
        annualized contract value. Fourth quarter bookings mix was diversified
        across segments, verticals, and geographies.

STRONG CASH FLOW AND BALANCE SHEET FUND INVESTMENTS AND DIVIDENDS

    --  Cash flow from operations in the fourth quarter 2019 was $53.6 million
        compared to $2.2 million for the fourth quarter 2018. For the full year
        2019, cash flow from operations was $238.0 million compared to $168.3
        million for the same period 2018.
    --  Capital expenditures in the fourth quarter 2019 were $16.3 million
        compared to $11.6 million for the fourth quarter 2018. For the full year
        2019, capital expenditures were $60.8 million compared to $43.5 million
        for the same period 2018.
    --  As of December 31, 2019, TTEC had cash and cash equivalents of $82.4
        million and debt of $307.5 million, resulting in a net debt position of
        $225.1 million. This compares to a net debt position of $226.3 million
        for the same period 2018.
    --  As of December 31, 2019, TTEC had approximately $530 million of
        additional borrowing capacity available under its revolving credit
        facility compared to $360 million for the same period 2018.
    --  Paid a $0.32 per share, or $14.9 million, semi-annual dividend on
        October 17, 2019. On February 27, 2020, the Board declared the next
        semi-annual dividend of $0.34 per share, payable on April 16, 2020 to
        shareholders of record as of April 1, 2020. This dividend represents a
        6.3 percent increase over the October 2019 dividend and 13.3 percent
        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

    --  Fourth quarter 2019 GAAP revenue for TTEC Digital increased 18.4 percent
        to $82.4 million from $69.6 million for the year ago period. Income from
        operations was $11.8 million or 14.3 percent of revenue compared to
        operating income of $12.5 million or 17.9 percent of revenue for the
        prior year period.
    --  Non-GAAP income from operations was $11.9 million, or 14.4 percent of
        revenue compared to operating income of $12.7 million or 18.3 percent of
        revenue in the prior year period.

TTEC Engage - Digitally-enabled customer care, acquisition, and fraud prevention services

    --  Fourth quarter 2019 GAAP revenue for TTEC Engage increased 8.4 percent
        to $379.0 million from $349.6 million for the year ago period. Income
        from operations was $31.0 million or 8.2 percent of revenue compared to
        operating income of $26.5 million or 7.6 percent of revenue for the
        prior year period.
    --  Non-GAAP income from operations was $31.2 million, or 8.2 percent of
        revenue compared to operating income of $33.2 million or 9.5 percent of
        revenue in the prior year period.
    --  Foreign exchange had a $4.1 million positive impact on revenue and $2.5
        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

"2019 was a milestone year for us, exceeding many of our key goals," commented Regina Paolillo, chief financial and administrative officer. "We achieved record financial results, completed a strategic acquisition, entered into new and expanded technology channel partnerships, significantly grew our CX cloud market share, and added a meaningful number of new hypergrowth and Global 1000 clients across our expanded global footprint. We expect these positive developments alongside the size and diversity of our bookings, revenue backlog and sales pipeline to enable revenue growth and profit margin expansion in 2020."

Paolillo continued, "With regard to any impact from the coronavirus, we have reflected our initial assumptions in our guidance. Given the diversity of our industry coverage and client delivery footprint, alongside our virtual Digital and Engage services capabilities, we currently do not expect a material impact to our 2020 financial and business results."

Our full-year 2020 outlook, which excludes restructuring and impairment charges, is as follows:

Revenue between $1.757 and $1.773 billion, an increase of 6.9 and 7.9 percent over the prior year.

Operating Income margins between 8.2 and 8.4 percent.

    --  Margins of approximately 12.9 percent for TTEC Digital and 7.3 percent
        for TTEC Engage

Adjusted EBITDA margins between 13.3 and 13.5 percent.

    --  Margins of approximately 18.4 percent for TTEC Digital and 12.4 percent
        for TTEC Engage

Earnings Per Share between 2.03 and 2.10 cents.

Capital expenditures are estimated to between 3.6 and 3.8 percent of revenue, of which approximately 65 percent is growth oriented.

Effective tax rate for the full year is estimated between 25 and 27 percent.

Diluted share count for the full year is estimated between 46.9 and 47.1 million.

We estimate the first half - second half 2020 mix as follows:

    --  Revenue: 48 percent first half, 52 percent second half
    --  Operating Income: 45 percent first half, 55 percent second half
    --  Adjusted EBITDA: 47 percent first half, 53 percent second half
    --  Earnings Per Share: 45 percent first half, 55 percent second half

We estimate the Digital - Engage 2020 mix as follows:

    --  Revenue: 17 percent Digital, 83 percent Engage, of which 51 percent of
        Digital and 48 percent of Engage in the first half, respectively.
    --  Operating Income: 26 percent Digital, 74 percent Engage, of which 56
        percent of Digital and 41 percent of Engage in the first half,
        respectively.
    --  Adjusted EBITDA: 23 percent Digital 77 percent Engage, of which 54
        percent of Digital and 44 percent of Engage in the first half,
        respectively.

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 49,500 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 Annual Report on Form 10-K for the year ended December 31, 2019, 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)






                                                                                                                               Three months ended                          Twelve months ended


                                                                                                                                December 31,                           December 31,



                                                                                                                    2019                  2018                  2019                                      2018





            Revenue                                                                                             $461,326              $419,133            $1,643,704                                $1,509,171





     
         Operating Expenses:


                                                                     
       Cost of services                          345,694               313,372             1,242,887                                 1,157,927


                                                                         Selling, general and administrative        53,894                47,817               202,540                                   182,428


                                                                         Depreciation and amortization              18,634                17,127                69,086                                    69,179


                                                                         Restructuring and integration
                                                                          charges, net                                 175                 1,532                 1,747                                     6,131


                                                                     
       Impairment losses                             166                   332                 3,735                                     1,452


        Total operating expenses                                                                                 418,563               380,180             1,519,995                                 1,417,117

                                                                                                                                                                                                        ---



            Income From Operations                                                                                42,763                38,953               123,709                                    92,054




                                                                         Other income (expense), net               (6,428)              (6,336)             (13,298)                                 (35,816)





            Income Before Income Taxes                                                                            36,335                32,617               110,411                                    56,238




                                                                         Provision for income taxes                (5,670)             (11,835)             (25,677)                                 (16,483)





            Net Income                                                                                            30,665                20,782                84,734                                    39,755




                                                                         Net income attributable to
                                                                          noncontrolling interest                  (2,402)                (449)              (7,570)                                  (3,938)





            Net Income Attributable to
             TTEC Stockholders                                                                       $28,263               $20,333                $77,164                                   $35,817








     
         Net Income Per Share




                                                                     
       
                Basic                          $0.66                 $0.45                 $1.83                                     $0.86





                                                                     
       
                Diluted                        $0.65                 $0.45                 $1.81                                     $0.86





            Net Income Per Share Attributable to TTEC Stockholders




                                                                     
       
                Basic                          $0.61                 $0.44                 $1.66                                     $0.78





                                                                     
       
                Diluted                        $0.60                 $0.44                 $1.65                                     $0.77







            Income From Operations Margin                                                                           9.3%                 9.3%                 7.5%                                     6.1%


            Net Income Margin                                                                                       6.6%                 5.0%                 5.2%                                     2.6%


            Net Income Attributable to
             TTEC Stockholders Margin                                                                               6.1%                 4.9%                 4.7%                                     2.4%


            Effective Tax Rate                                                                                     15.6%                36.3%                23.3%                                    29.3%







     
         Weighted Average Shares Outstanding


              Basic                                                                                               46,487                46,193                46,373                                    46,064


              Diluted                                                                                             46,830                46,390                46,758                                    46,385


                                              
              
            TTEC HOLDINGS, INC. AND SUBSIDIARIES


                                                      
           
               SEGMENT INFORMATION


                                                         
          
                (In thousands)






                                           Three months ended                                Twelve months ended


                                               December 31,                                      December 31,



                                                         2019                                                2018       2019       2018





                   Revenue:



     TTEC Digital                                    $82,354                                             $69,552   $305,346   $238,799



     TTEC Engage                                     378,972                                             349,581  1,338,358  1,270,372


           
              Total                          $461,326                                            $419,133 $1,643,704 $1,509,171





                   Income From Operations:



     TTEC Digital                                    $11,754                                             $12,475    $38,927    $33,054



     TTEC Engage                                      31,009                                              26,478     84,782     59,000


           
              Total                           $42,763                                             $38,953   $123,709    $92,054


                           
         
         TTEC HOLDINGS, INC. AND SUBSIDIARIES


                               
       
           CONSOLIDATED BALANCE SHEETS


                                 
       
                (In thousands)




                                                     December 31,           December 31,


                                                             2019                    2018







                  ASSETS


                  Current
                   assets:


        Cash and cash
         equivalents                                      $82,407                 $78,237


        Accounts
         receivable,
         net                                              331,096                 350,962


        Other current
         assets                                           136,322                  97,278



           Total current
            assets                                        549,825                 526,477




     Property and
      equipment,
      net                                                 176,633                 161,523


     Other assets                                         650,330                 366,508





                  Total assets                         $1,376,788              $1,054,508





                  LIABILITIES
                   AND EQUITY


     Total current
      liabilities                                        $363,289                $235,418


     Other long-
      term
      liabilities                                         532,846                 466,241


     Redeemable
      noncontrolling
      interest                                             48,923


     Total equity                                         431,730                 352,849





                  Total
                   liabilities
                   and equity                          $1,376,788              $1,054,508


                                                           
              
           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,



                                                                 2019                                                   2018       2019       2018






     
                Revenue                                   $461,326                                               $419,133 $1,643,704 $1,509,171




                   Reconciliation of Adjusted
                    EBITDA:




                   Net Income                                 $30,665                                                $20,782    $84,734    $39,755



        Interest income                                        (622)                                                 (536)   (1,913)   (4,476)



        Interest expense                                       5,576                                                  6,040     19,113     28,674


         Provision for income taxes                             5,670                                                 11,835     25,677     16,483


         Depreciation and amortization                         18,634                                                 17,127     69,086     69,179


         Asset impairment, restructuring
          and integration charges                                 341                                                  1,864      5,482      7,583


         Impairment of equity investment                                                                                                 15,632


         Gain on sale of business units                         (225)                                                 (320)   (1,366)   (1,973)


         Gain on sale of trademarks                                                                                             (700)


         Gain on recovery of receivables
          in connection with division in
          winddown                                                                                                            (1,416)


         Changes in acquisition
          contingent consideration                                                                                    (331)   (2,424)     (331)


         Loss on asset held for sale
          reclassified to asset held and
          used                                                                                                        (384)               1,616


         Gain on bargain purchase of
          acquisition                                                                                                                     (685)


         Allowance for doubtful accounts
          receivable from customer in
          bankruptcy                                                                                                  2,706                2,706


         Writeoff of contract acquisition
          costs                                                                                                       1,436                1,436


         Writeoff of value added tax due
          to change in foreign tax law                                                                                  966                  966


         Equity-based compensation
          expenses                                              3,151                                                  2,853     12,814     12,145





                    Adjusted EBITDA                           $63,190                                                $64,038   $209,087   $188,710






                   Reconciliation of Free Cash
                    Flow:




                   Cash Flow From Operating
                    Activities:



        Net income                                           $30,665                                                $20,782    $84,734    $39,755


         Adjustments to reconcile net
          income to net cash
          provided by operating
          activities:


                Depreciation and amortization                  18,634                                                 17,127     69,086     69,179



               Other                                           4,293                                               (35,673)    84,169     59,411



         Net cash provided by operating
          activities                                           53,592                                                  2,236    237,989    168,345




      Less -Total Cash Capital
       Expenditures                                            16,338                                                 11,609     60,776     43,450





                   Free Cash Flow                             $37,254                                               $(9,373)  $177,213   $124,895






                   Reconciliation of Non-GAAP
                    Income from Operations:




                   Income from Operations                     $42,763                                                $38,953   $123,709    $92,054


      Restructuring charges, net                                  175                                                  1,532      1,747      6,131



     Impairment losses                                           166                                                    332      3,735      1,452





                   Non-GAAP Income from Operations            $43,104                                                $40,817   $129,191    $99,637




                   Non-GAAP Income from Operations
                    Margin                                       9.3%                                                  9.7%      7.9%      6.6%




         Allowance for doubtful accounts
          receivable from customer in
          bankruptcy                                                                                                  2,706                2,706


         Writeoff of contract acquisition
          costs                                                                                                       1,436                1,436


         Writeoff of value added tax due
          to change in foreign tax law                                                                                  966                  966





                   Adjusted Non-GAAP Income from
                    Operations                                $43,104                                                $45,925   $129,191   $104,745




                   Adjusted Non-GAAP Income from
                    Operations Margin                            9.3%                                                 11.0%      7.9%      6.9%




                   Reconciliation of Non-GAAP EPS:




                   Net Income                                 $30,665                                                $20,782    $84,734    $39,755


      Add:  Asset restructuring and
       impairment charges                                         341                                                  1,864      5,482      7,583


      Add:  Loss on asset held for
       sale reclassified to asset held
       and used                                                                                                       (384)               1,616


      Add:  Interest charge related to
       future purchase of remaining
       30% for Motif acquisition                                2,124                                                  1,939      4,657      9,928


      Add:  Impairment of equity
       investment                                                                                                                        15,632


      Less:  Changes in acquisition
       contingent consideration                                                                                       (331)   (2,424)     (331)


      Less:  Gain on sale of business
       units                                                    (225)                                                 (320)   (1,366)   (1,973)


      Less:  Gain on sale of
       trademarks                                                                                                               (700)


      Less:  Gain on recovery of
       receivable in connection with
       division in winddown                                                                                                   (1,416)


      Less:  Gain on bargain purchase
       of acquisition                                                                                                                     (685)


      Add:  Allowance for doubtful
       accounts receivable from
       customer in bankruptcy                                                                                         2,706                2,706


         Add:  Writeoff of contract
          acquisition costs                                                                                           1,436                1,436


         Add:  Writeoff of value added
          tax due to change in foreign
          tax law                                                                                                       966                  966


      Add:  Changes in valuation
       allowance, return to provision
       adjustments and other, and tax
       effects of items separately
       disclosed above                                        (2,626)                                                   791      (580)   (7,355)






      Non-GAAP Net Income                                    $30,279                                                $29,449    $88,387    $69,278




          Diluted shares outstanding                           46,830                                                 46,390     46,758     46,385




                    Non-GAAP EPS                                $0.65                                                  $0.63      $1.89      $1.49

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SOURCE TTEC Holdings, Inc.