TeleTech Announces Third Quarter 2015 Financial Results

Third Quarter 2015 Results

Revenue was $309.2 Million ($329.6 Million Non-GAAP Constant Currency);

Operating Income was $15.6 Million, 5.1 Percent of Revenue (7.1 Percent Non-GAAP Constant Currency);

Fully Diluted EPS was 23 Cents (29 Cents Non-GAAP)

Signed $133 Million in New Business

Nov 09, 2015, 17:18 ET from TeleTech Holdings, Inc.

DENVER, Nov. 9, 2015 /PRNewswire/ -- TeleTech Holdings, Inc. (NASDAQ: TTEC), a leading global provider of customer experience, engagement and growth solutions, today announced financial results for the third quarter ended September 30, 2015. The Company also filed its Quarterly Report on Form 10-Q with the U.S. Securities and Exchange Commission for the quarter ended September 30, 2015.

"We had a productive third quarter and continue to make measurable strides with our market penetration and growth strategy. Year-to-date, constant currency revenue, operating income, and EBITDA have increased significantly," commented Ken Tuchman, chairman and chief executive officer of TeleTech. "Customer expectations are moving at warp speed as new technologies and disruptive business models raise the bar on customer experience excellence. With our managed services platform that combines consulting, technology, analytics and execution, we are excited to be sitting in the center of this revolution. We continue to gain traction as a strategic transformation partner for clients navigating this rapidly changing business environment."

THIRD QUARTER 2015 FINANCIAL HIGHLIGHTS

Revenue        

  • Third quarter 2015 GAAP revenue increased 1.1 percent to $309.2 million compared to $305.9 million in the year ago quarter.   
  • Constant currency revenue increased 7.8 percent to $329.6 million over the year ago period.

Income from Operations

  • Third quarter 2015 GAAP income from operations was $15.6 million or 5.1 percent of revenue compared to $21.3 million or 7.0 percent of revenue in the third quarter 2014.
  • Non-GAAP income from operations, adjusted for $0.6 million in restructuring charges and $3.1 million in impairment charges, was $19.3 million or 6.2 percent of revenue. The margin was 7.1 percent on a constant currency basis versus 7.2 percent of revenue in the year ago quarter.
  • The $3.1 million impairment charge relates to a non-recurring reduction in goodwill related to the Company's digital marketing agency acquisition.

Earnings Per Share

  • Third quarter 2015 GAAP fully diluted earnings per share attributable to TeleTech shareholders was 23 cents compared to 27 cents in the same period last year.
  • Non-GAAP fully diluted earnings per share was 29 cents compared to 31 cents in the prior year.

Bookings

  • During the third quarter 2015, TeleTech signed an estimated $133 million in annualized contract value revenue from new and expanded client relationships. The bookings mix was diversified across all verticals with 90 percent from existing clients, 48 percent from emerging businesses, and 10 percent from clients based outside of the United States.

STRONG BALANCE SHEET CONTINUES TO FUND OPERATIONS, SHARE REPURCHASES, DIVIDENDS, AND INVESTMENTS

  • As of September 30, 2015, TeleTech had cash and cash equivalents of $86.2 million and $122.9 million of total debt, resulting in a net debt position of $36.7 million.
  • As of September 30, 2015, TeleTech had approximately $385 million of additional borrowing capacity available under its revolving credit facility.
  • Cash flow from operations in the third quarter 2015 was $30.7 million compared to $30.3 million in the third quarter 2014.
  • Capital expenditures in the third quarter 2015 were $19.7 million compared to $17.8 million in the third quarter 2014.
  • TeleTech repurchased 161.6 thousand shares of common stock during the third quarter 2015 for a total cost of $4.3 million. As of September 30, 2015, $20.2 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

  • In the third quarter 2015, the CMS segment revenue was $212.7 million, down 6.2 percent compared to $226.8 million in the year ago quarter. Income from operations was $8.9 million or 4.2 percent compared to $18.6 million or 8.2 percent in the prior year.
  • Non-GAAP constant currency revenue increased 1.3 percent over the year ago period and income from operations, adjusted for $0.5 million in restructuring charges, was $12.7 million or 5.5 percent of adjusted revenue. This compares to $19.0 million or 8.4 percent of revenue the prior year.

Customer Growth Services (CGS) – Digitally-Enabled Revenue Growth Solutions

  • CGS third quarter 2015 revenue grew 17.7 percent to $33.9 million compared to $28.8 million in the year ago quarter. Income from operations was a negative $0.3 million compared to $1.8 million or 6.3 percent of revenue in the prior year.
  • Non-GAAP constant currency revenue increased 24.2 percent over the year ago period and income from operations, adjusted for $3.1 million in impairment charges, was $3.5 million or 9.7 percent. This compares to $1.8 million or 6.3 percent of revenue the prior year.

Customer Technology Services (CTS) – Hosted and Managed Technology Solutions

  • CTS third quarter 2015 revenue grew 19.7 percent to $42.1 million compared to $35.2 million in the year ago quarter.  Income from operations was $3.8 million or 9.0 percent compared to a loss of $0.3 million in the prior year.
  • Non-GAAP constant currency revenue increased 20.3 percent over the year ago period and income from operations, adjusted for thirteen thousand in restructuring charges, was $3.8 million or 8.9 percent compared to a loss of fifty-one thousand in the prior year.

Customer Strategy Services (CSS) – Customer Experience Strategy and Data Analytics Solutions

  • CSS third quarter 2015 revenue increased 35.6 percent to $20.5 million from $15.1 million in the year ago quarter. Income from operations was $3.2 million or 15.5 percent, an increase from 7.8 percent in the prior year.
  • Non-GAAP constant currency revenue increased 43.8 percent over the year ago period and income from operations, adjusted for ninety thousand dollars in restructuring charges, was $3.5 million or 15.9 percent of revenue. This compares to $1.2 million or 7.8 percent of revenue the prior year.

BUSINESS OUTLOOK

"We are executing on many fronts and realizing tangible results from our strategy and investments," commented Regina Paolillo, chief financial and administrative officer of TeleTech. "Excluding the significant impact of foreign exchange, our revenue and operating income growth are exceeding expectations. Additionally, we are pleased with the accelerated revenue growth and margin expansion in our emerging CGS, CTS and CSS businesses.  Regarding guidance, we estimate full-year revenue volumes in line with our original guidance and a foreign exchange impact higher than originally estimated given the continued strengthening of the U.S. Dollar through the second half of 2015."

TeleTech Full Year 2015 guidance as follows:

Revenue – We continue to estimate business volumes in line with our original guidance. Given the continued strengthening of the U.S Dollar through the second half of the year, we now estimate a 5.5 percent foreign exchange impact versus our original guidance of 4 percent. As a result, we estimate full year revenue on a GAAP basis between $1.295 and $1.305 billion. Adjusted for constant currency, we estimate revenue between $1.370 and $1.380 billion, a year-over-year increase of 10 - 11 percent.

Operating Margin – Operating margin estimated at 8.25 percent (before asset impairment, restructuring and acquisition-related charges), but including an incremental $10 million investment in sales and research and development.

Capital Expenditures – Reduced to $65 - $70 million from $70 - $80 million.

SEC FILINGS

The company's filings with the Securities and Exchange Commission are available in the "Investors" section of TeleTech's website, which can be found at www.teletech.com.

CONFERENCE CALL

A conference call and webcast with management will be held on November 10th, 2015 at 8:30 a.m. Eastern Time. You are invited to join a live webcast of the conference call by visiting the "Investors" section of the TeleTech website at www.teletech.com. If you are unable to participate during the live webcast, a replay will be available on the TeleTech website.

NON-GAAP FINANCIAL MEASURES

To supplement the Company's consolidated financial statements presented in accordance with generally accepted accounting principles (GAAP) in the United States, the Company uses the following Non-GAAP financial measures: Free Cash Flow, Non-GAAP Revenue, Non-GAAP Income from Operations, Non-GAAP EBITDA and Non-GAAP EPS. Additionally our discussion of revenue and income from operations contain references to constant currency amounts. Constant currency measures are calculated by translating the current year reported amounts using the prior year foreign exchange rates for each underlying currency. TeleTech believes that providing these Non-GAAP financial measures provides investors with greater transparency to the information used by TeleTech's management in its financial and operational decision making and allows investors to see TeleTech's results "through the eyes" of management. TeleTech also believes that providing this information better enables TeleTech's investors to understand its operating performance and information used by management to evaluate and measure such performance. These financial measures are not intended to be used in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. A reconciliation of these Non-GAAP financial measures is available in the financial tables attached to this press release. We also encourage all investors to read TeleTech's most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q.

ABOUT TELETECH

TeleTech (NASDAQ: TTEC) is a leading global provider of customer experience, engagement and growth solutions. 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. Servicing over 80 countries, TeleTech's 41,000 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, continuation of client relationships, 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

Elizabeth Grice

303.397.8641

303.397.8507

 

 

TELETECH 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,

2015

2014

2015

2014

Revenue

$ 309,195

$ 305,900

$   944,939

$   903,611

Operating Expenses:

Cost of services

225,978

220,244

682,579

646,346

Selling, general and administrative

48,418

49,847

146,031

148,016

Depreciation and amortization

15,486

13,893

46,529

41,152

Restructuring charges, net

622

593

1,629

1,750

Impairment losses

3,066

-

3,066

-

         Total operating expenses

293,570

284,577

879,834

837,264

Income From Operations

15,625

21,323

65,105

66,347

Other income (expense)

(1,995)

(856)

(3,701)

1,846

Income Before Income Taxes

13,630

20,467

61,404

68,193

Provision for income taxes

(1,192)

(5,778)

(13,438)

(14,071)

Net Income

12,438

14,689

47,966

54,122

Net income attributable to noncontrolling interest

(1,243)

(1,442)

(3,303)

(3,795)

Net Income Attributable to TeleTech Stockholders

$   11,195

$   13,247

$    44,663

$     50,327

Net Income Per Share Attributable to TeleTech Stockholders

Basic

$      0.23

$      0.27

$        0.92

$         1.02

Diluted

$      0.23

$      0.27

$        0.91

$         1.00

Income From Operations Margin

5.1%

7.0%

6.9%

7.3%

Net Income Attributable to TeleTech Stockholders Margin

3.6%

4.3%

4.7%

5.6%

Effective Tax Rate

8.7%

28.2%

21.9%

20.6%

Weighted Average Shares Outstanding

  Basic

48,345

49,093

48,346

49,493

  Diluted

48,936

49,940

49,052

50,338

 

TELETECH HOLDINGS, INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(In thousands)

(Unaudited)

Three months ended

Nine months ended

 September 30,

 September 30,

2015

2014

2015

2014

Revenue:

Customer Management Services

$     212,690

$     226,814

$    675,015

$     673,421

Customer Growth Services

33,853

28,765

90,379

86,545

Customer Technology Services

42,134

35,194

115,935

103,707

Customer Strategy Services

20,518

15,127

63,610

39,938

Total

$     309,195

$     305,900

$    944,939

$     903,611

Income From Operations:

Customer Management Services

$        8,930

$       18,625

$      43,956

$       55,941

Customer Growth Services

(257)

1,800

1,891

5,401

Customer Technology Services

3,774

(286)

9,033

1,641

Customer Strategy Services

3,178

1,184

10,225

3,364

Total

$      15,625

$       21,323

$      65,105

$       66,347

 

TELETECH HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 September 30,

 December 31,

2015

2014

ASSETS

Current assets:

   Cash and cash equivalents

$            86,170

$          77,316

   Accounts receivable, net

258,231

276,432

   Other current assets

105,988

91,735

      Total current assets

450,389

445,483

Property and equipment, net

165,795

150,212

Other assets

242,031

256,780

Total assets

$          858,215

$       852,475

LIABILITIES AND EQUITY

Total current liabilities

$          224,041

$       198,631

Other long-term liabilities

208,385

187,780

Mandatorily redeemable noncontrolling interest

3,920

2,814

Total equity

421,869

463,250

Total liabilities and equity

$          858,215

$       852,475

 

TELETECH 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,

2015

2014

2015

2014

Reconciliation of Revenue:

Revenue

$  309,195

$  305,900

$   944,939

$    903,611

   Changes due to foreign currency fluctuations  1

20,414

48,577

Non-GAAP Revenue

$  329,609

$  305,900

$   993,516

$    903,611

Reconciliation of EBIT & EBITDA:

Net Income Attributable to TeleTech stockholders

$    11,195

$    13,247

$     44,663

$     50,327

Interest income

(196)

(542)

(877)

(1,545)

Interest expense

2,337

1,646

5,711

5,197

Provision for income taxes

1,192

5,778

13,438

14,071

EBIT

$    14,528

$    20,129

$     62,935

$     68,050

Depreciation and amortization

15,486

13,893

46,529

41,152

EBITDA

$    30,014

$    34,022

$   109,464

$    109,202

Reconciliation of Free Cash Flow:

Cash Flow From Operating Activities:

   Net income

$    12,438

$    14,689

$     47,966

$     54,122

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

          Depreciation and amortization

15,486

13,893

46,529

41,152

          Other

2,727

1,695

21,669

(33,367)

   Net cash provided by operating activities

30,651

30,277

116,164

61,907

Less - Total Capital Expenditures

19,679

17,751

49,184

52,234

Free Cash Flow

$    10,972

$    12,526

$     66,980

$       9,673

Reconciliation of Non-GAAP Income from Operations:

Income from Operations

$    15,625

$    21,323

$     65,105

$     66,347

Restructuring charges, net

622

593

1,629

1,750

Impairment losses

3,066

-

3,066

-

Non-GAAP Income from Operations

$    19,313

$    21,916

$     69,800

$     68,097

Non-GAAP Income from Operations Margin

6.2%

7.2%

7.4%

7.5%

Reconciliation of Non-GAAP EPS:

Net Income Attributable to TeleTech stockholders

$    11,195

$    13,247

$     44,663

$     50,327

Add:  Asset impairment and restructuring charges, net of related taxes

2,161

367

2,801

1,111

Add:  Changes in acquisition contingent consideration, net of related taxes

557

561

102

(1,855)

Add:  Changes in valuation allowance and returns to provision adjustments

172

1,379

1,758

(398)

 Non-GAAP Net Income Attributable to TeleTech stockholders

$    14,085

$    15,554

$     49,324

$     49,185

    Diluted shares outstanding

48,936

49,940

49,052

50,338

 Non-GAAP EPS Attributable to TeleTech stockholders

$0.29

$0.31

$1.01

$0.98

Reconciliation of Non-GAAP EBITDA:

Net Income Attributable to TeleTech stockholders

$    11,195

$    13,247

$     44,663

$     50,327

   Interest income

(196)

(542)

(877)

(1,545)

   Interest expense

2,337

1,646

5,711

5,197

   Provision for income taxes

1,192

5,778

13,438

14,071

   Depreciation and amortization

15,486

13,893

46,529

41,152

   Asset impairment and restructuring charges

3,688

593

4,695

1,750

   Changes in acquisition contingent consideration

784

51

281

(3,910)

   Equity-based compensation expenses

3,291

3,150

8,569

9,031

 Non-GAAP EBITDA

$    37,777

$    37,816

$   123,009

$    116,073

1 - 

Foreign currency fluctuations are calculated on a constant currency basis by translating the current year reported amounts using the prior year foreign exchange rates for each underlying currency. 

 

TELETECH HOLDINGS, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION

(In thousands)

(Unaudited)

THIRD QUARTER 

(three months end, September 30, 2015)

Revenue

GAAP Revenue

Foreign Exchange Impact

Constant Currency Revenue

CMS

$            212,690

$              17,074

$            229,764

YoY Growth Rate:

-6.2%

1.3%

CGS

$              33,853

$                1,879

$              35,732

YoY Growth Rate:

17.7%

24.2%

CTS

$              42,134

$                   220

$              42,354

YoY Growth Rate:

19.7%

20.3%

CSS

$              20,518

$                1,241

$              21,759

YoY Growth Rate:

35.6%

43.8%

Emerging Businesses

$              96,505

$                3,340

$              99,845

YoY Growth Rate:

22.0%

26.2%

Company (Consolidated)

$            309,195

$              20,414

$            329,609

YoY Growth Rate:

1.1%

7.8%

Operating Income

Non-GAAP Operating Income

Foreign Exchange Impact

Constant Currency Operating Income

CMS

$                9,446

$                3,249

$              12,695

Operating Margin:

4.4%

5.5%

CGS

$                2,809

$                   661

$                3,470

Operating Margin:

8.3%

9.7%

CTS

$                3,788

$                   (23)

$                3,765

Operating Margin:

9.0%

8.9%

CSS

$                3,270

$                   190

$                3,460

Operating Margin:

15.9%

15.9%

Emerging Businesses

$                9,867

$                   828

$              10,695

Operating Margin:

10.2%

10.7%

Company (Consolidated)

$              19,313

$                4,077

$              23,390

Operating Margin:

6.2%

7.1%

Segments Defined:

CMS (Customer Management Services), CGS (Customer Growth Services), 

CTS (Customer Technology Services), CSS (Customer Strategy Services)

Emerging Businesses: CGS, CTS, and CSS

Methodology: 

Foreign exchange fluctuations are calculated on a constant currency basis by translating the current year reported amounts using the prior year foreign exchange rate for each underlying currency

Non-GAAP Operating Income:

Adjusted for restructuring and impairment costs

 

TELETECH HOLDINGS, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION

(In thousands)

(Unaudited)

YEAR-TO-DATE

(nine- months end, September 30, 2015)

Revenue

GAAP Revenue

Foreign Exchange Impact

Constant Currency Revenue

CMS

$            675,015

$              41,030

$            716,045

YoY Growth Rate:

0.2%

6.3%

CGS

$              90,379

$                4,030

$              94,409

YoY Growth Rate:

4.4%

9.1%

CTS

$            115,935

$                   455

$            116,390

YoY Growth Rate:

11.8%

12.2%

CSS

$              63,610

$                3,062

$              66,672

YoY Growth Rate:

59.3%

66.9%

Emerging Businesses

$            269,924

$                7,547

$            277,471

YoY Growth Rate:

17.3%

20.5%

Company (Consolidated)

$            944,939

$              48,577

$            993,516

YoY Growth Rate:

4.6%

9.9%

Operating Income

Non-GAAP Operating Income

Foreign Exchange Impact

Constant Currency Operating Income

CMS

$              45,307

$              12,278

$              57,585

Operating Margin:

6.7%

8.0%

CGS

$                4,957

$                1,376

$                6,333

Operating Margin:

5.5%

6.7%

CTS

$                9,047

$                  (223)

$                8,824

Operating Margin:

7.8%

7.6%

CSS

$              10,489

$                   393

$              10,882

Operating Margin:

16.5%

16.3%

Emerging Businesses

$              24,493

$                1,546

$              26,039

Operating Margin:

9.1%

9.4%

Company (Consolidated)

$              69,800

$              13,824

$              83,624

Operating Margin:

7.4%

8.4%

Segments Defined:

CMS (Customer Management Services), CGS (Customer Growth Services), 

CTS (Customer Technology Services), CSS (Customer Strategy Services)

Emerging Businesses: CGS, CTS, and CSS

Methodology: 

Foreign exchange fluctuations are calculated on a constant currency basis by translating the current year reported amounts using the prior year foreign exchange rate for each underlying currency

Non-GAAP Operating Income:

Adjusted for restructuring and impairment costs

 

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SOURCE TeleTech Holdings, Inc.



RELATED LINKS

http://www.teletech.com