DENVER, Jul 25, 2002 /PRNewswire-FirstCall via COMTEX/ --
Year Over Year Revenue Grows Nearly 13 Percent; Generates $28 Million of Free Cash Flow in the Quarter
TeleTech Holdings,
Inc. (Nasdaq: TTEC), a leading global provider of customer management solutions,
today announced second quarter 2002 results in line with original company
guidance.
Revenue for the second quarter 2002 was $253.7 million, comparable to revenue of
$254.0 million in the first quarter 2002, and up $28.5 million, or 12.6 percent,
from $225.2 million in the year ago quarter.
The company reported second quarter 2002 net income of $7.1 million and earnings
per diluted share of 9 cents, in line with the company's original guidance of 9
cents to 10 cents. This compares to net income of $6.8 million or 9 cents per
diluted share in the first quarter 2002, and net income of $6.9 million or 9
cents per diluted share in the year ago quarter. The effects of non-recurring
items are excluded from these comparisons.
During the second quarter 2002, TeleTech recorded $5.2 million of non-recurring
charges related primarily to certain facility closures and workforce reductions
worldwide. Including non-recurring items, TeleTech reported second quarter net
income of $3.9 million and earnings per diluted share of 5 cents.
"TeleTech has demonstrated that even in difficult economic times, its scale and
geographic diversity enables it to remain profitable while generating
significant free cash flows," said Kenneth Tuchman, TeleTech's Chairman and
Chief Executive Officer. "Despite ongoing economic uncertainty, we made solid
progress in strengthening new business prospects in North America and Europe and
in fine tuning our global operations to realize greater operating efficiencies."
"The sales pipeline remains strong as companies look for ways to dramatically
lower cost while improving brand loyalty," continued Tuchman. "Nevertheless, in
this ambiguous environment the sales cycle continues to be long, and it remains
difficult to determine when potential opportunities might close. As we enter the
last half of the year, our strategy remains the same: focus on closing new
business, growing our existing client base, and maintaining tight fiscal
controls."
Selling, general and administrative (SG&A) costs were $48.2 million or 19.0
percent of revenues in the second quarter 2002, unchanged sequentially from 19.0
percent in the first quarter 2002, and down from 22.0 percent in the year ago
quarter.
Operating margin was 5.1 percent for the second quarter 2002, down sequentially
from 6.0 percent in the first quarter 2002 and from 6.8 percent in the second
quarter 2001. The effects of non-recurring items are excluded from these
comparisons.
The decline in operating margin in the second quarter 2002 was primarily
attributable to a shift in revenue mix in the North America region. During the
second quarter 2002, several seasonal and campaign projects ramped down
resulting in lower capacity utilization in North America. The revenue was offset
by higher volumes in the Nextel program, which is in the launch phase.
Additionally, Percepta's results were sequentially lower in the second quarter
2002, due primarily to lower volume.
TeleTech's cash and short-term investments were $102.1 million for the second
quarter 2002, a sequential increase of $28.8 million from $73.3 million at the
end of the first quarter 2002, and up from $47.4 million in the second quarter
2001. The sequential increase was primarily attributable to proactively managing
collections of accounts receivable.
Capital expenditures for the second quarter 2002 were $7.9 million, down $1.1
million sequentially from $9.0 million in the first quarter 2002, and down
nearly 50 percent from $15.2 million in capital expenditures from the year ago
quarter. As a result of stringent spending controls, and fewer capital projects
than originally anticipated, capital expenditures for 2002 are now estimated to
be in the range of $45 million to $55 million, down from the company's original
estimate of $70 million to $75 million.
During the second quarter 2002, TeleTech generated $28.3 million in free cash
flow, and believes it will continue to generate positive free cash flow for the
remainder of 2002.
"Our near term priorities remain filling existing capacity in our global
operations to improve operating margins," said Margot O'Dell, TeleTech's Chief
Financial Officer. "As we navigate the challenging economic climate, we have
maintained a solid balance sheet and are well positioned to leverage our
infrastructure when the economy rebounds. We continue to believe TeleTech has
tremendous opportunities to drive long-term profitable growth and will remain at
the forefront of our industry."
BUSINESS OUTLOOK
The following statements are based on current expectations regarding TeleTech's
outlook for its future financial results.
As a result of continued economic weakness, which has resulted in a prolonged
sales cycle and softness in existing client programs, TeleTech believes 2002
revenues will approximate $1 billion, increasing by nearly 10% from 2001, while
diluted earnings per share are expected to range between 32 cents and 36 cents.
TeleTech believes third quarter 2002 revenue will range between $245 million and
$250 million and earnings per diluted share will range between 7 cents and 9
cents per share.
CONFERENCE CALL
TeleTech executive management will host a conference call to discuss second
quarter 2002 financial results today at 5:00 p.m. ET. To participate, please
dial 712-271-0561 (passcode: TeleTech). Replay of the conference call will be
available by dialing 402-998-1229 (no passcode required), starting at
approximately 8:00 p.m. ET and will play until Thursday, August 8, 2002. The
conference call will also be simulcast live on the Internet via TeleTech's web
site at www.teletech.com . Replay will be available at this location for 14
days.
TELETECH PROFILE
For twenty years, TeleTech has managed the customer experience for some of the
world's largest enterprises. TeleTech's innovative customer care services help
companies acquire, serve, grow, and retain customers throughout the entire
relationship lifecycle. TeleTech offers solutions to a variety of industries
including financial services, transportation, communications, government,
healthcare, and travel. With a presence that spans North America, Asia-Pacific,
Europe, and Latin America, TeleTech provides comprehensive customer care
services to global organizations. Additional information on TeleTech can be
found at www.teletech.com .
FORWARD LOOKING STATEMENTS
All statements not based on historical fact are forward-looking statements that
involve substantial risks and uncertainties. In accordance with the Private
Securities Litigation Reform Act of 1995, following are important factors that
could cause TeleTech's actual results to differ materially from those expressed
or implied by such forward-looking statements, including: TeleTech's ability to
predict future revenue and associated costs; lower than anticipated customer
interaction center capacity utilization; the loss or delay in implementation of
a customer management program; TeleTech's ability to build-out facilities in a
timely and economic manner; greater than anticipated competition from new
entrants into the customer care market, causing increased price competition or
loss of clients; the loss of one or more significant clients; higher than
anticipated start-up costs associated with new business opportunities and
ventures; the potential volume or profitability of any future technology or
consulting sales; TeleTech's agreements with clients may be canceled on
relatively short notice; and TeleTech's ability to generate a specific level of
revenue is dependent upon customer interest in and use of the products and
services of TeleTech's clients. Readers are encouraged to review TeleTech's 2001
Form 10-K, first quarter 2002 Form 10-Q, and other publicly filed documents,
which describe other important factors that may impact TeleTech's business,
results of operations, and financial condition. TeleTech undertakes no
obligation to update its forward-looking statements after the date of this
release.
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three months ended Six months ended
June 30, June 30,
2002 2001 2002 2001
Revenues $253,685 $225,211 $507,716 $463,091
Operating expenses:
Costs of services 178,894 145,832 354,439 296,144
Selling, general &
administrative 48,249 49,586 96,496 106,649
Depreciation and
amortization 13,687 14,469 28,626 29,388
Non-recurring items 5,201(1) 7,000(2) 5,201(1) 27,251(4)
Total operating
expenses 246,031 216,887 484,762 459,432
Operating Income 7,654 8,324 22,954 3,659
Other income (expense) (1,468) (2,671) (5,512) (3,867)
Non-recurring items 0 (16,500)(3) 0 (16,500)(3)
Income (Loss) Before
Income Taxes 6,186 (10,847) 17,442 (16,708)
Income tax expense
(benefit) 2,443 (4,009) 6,887 (6,325)
Income (Loss) before
Minority Interest and
Cumulative Effect of
Change in Accounting
Principle 3,743 (6,838) 10,555 (10,383)
Minority Interest 170 (530) 120 (851)
Income (Loss) before
Cumulative Effect of
Change in Accounting
Principle 3,913 (7,368) 10,675 (11,234)
Cumulative Effect of
Change in Accounting
Principle 0 0 (7,502)(5) 0
Net Income (Loss) $3,913 $(7,368) $3,173 $(11,234)
Basic Earnings Per
Share before
Cumulative Effect of
Change in Accounting
Principle $0.14
Diluted Earnings Per
Share before
Cumulative Effect of
Change in Accounting
Principle $0.14
Basic Earnings (Loss)
Per Share $0.05 $(0.10) $0.04 $(0.15)
Diluted Earnings (Loss)
Per Share $0.05 $(0.10) $0.04 $(0.15)
Operating Margin 3.0% 3.7% 4.5% 0.8%
Net Income (Loss) Margin 1.5% -3.3% 0.6% -2.4%
Effective Tax Rate 39.5% 37.0% 39.5% 37.9%
Weighted Average Shares
Basic 77,335 75,522 77,045 75,138
Diluted 78,948 75,522 78,897 75,138
Excluding Non-recurring
items and Cumulative
Effect of Change in
Accounting Principle:
Operating Income $12,855 $15,324 $28,155 $30,910
Operating Margin 5.1% 6.8% 5.5% 6.7%
Net Income $7,059 $6,854 $13,821 $15,240
Basic Earnings Per Share $0.09 $0.09 $0.18 $0.20
Diluted Earnings Per Share $0.09 $0.09 $0.18 $0.20
Diluted shares
outstanding 78,948 76,328 78,897 76,250
Effective Tax Rate 39.5% 41.7% 39.5% 40.5%
Notes:
1. Represents $5.2 mm of non-recurring, pre-tax charges related to a
workforce reduction, the closure of customer interaction centers,
and the impairment of a property lease.
2. Represents a $7.0 mm non-recurring, pre-tax charge related to the
write down of the carrying value of the company's formerly planned
headquarters building.
3. Represents a $16.5 mm non-recurring, pre-tax charge related to the
asset impairment of the company's investment in enhansiv.
4. Represents the $7.0 mm non-recurring, pre-tax charge described in
Note 2 above, in addition to $20.3 mm of non-recurring, pre-tax
charges recorded in the first quarter of 2001 related to a
workforce reduction and the closure of a customer interaction
center.
5. Represents the adoption of SFAS No. 142 "Accounting for Goodwill and
Other Intangibles".
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, December 31,
2002 2001
ASSETS
Current assets:
Cash and cash equivalents $96,433 $95,430
Investment in available-for-sale securities 704 2,281
Short-term investments 4,936 6,460
Accounts receivable, net 181,351 162,344
Other current assets 56,394 41,911
Total current assets 339,818 308,426
Property and Equipment, net 163,694 177,959
Other assets 92,889 87,554
Total assets $596,401 $573,939
LIABILITIES AND STOCKHOLDERS' EQUITY
Total current liabilities $143,321 $123,221
Total noncurrent liabilities 87,322 88,449
Minority interest 14,199 14,319
Total stockholders' equity 351,559 347,950
Total liabilities and stockholders' equity $596,401 $573,939
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED CASH FLOW INFORMATION
(In thousands)
Six months ended Three months ended
June 30, June 30,
2002 2001 2002 2001
Cash flow from operating activities:
Net income (loss) $3,173 $(11,234) $3,913 $(7,368)
Adjustments to reconcile net
income (loss) to net cash
(used in) provided by operating
activities:
Cumulative Effect of Change
in Accounting Principle 7,502 - - -
Depreciation and
amortization 28,626 29,388 13,687 14,469
Other (21,051) 17,806 18,530 22,142
Net cash provided by operating
activities $18,250 $35,960 $36,130 $29,243
Total Capital Expenditures - Note 1 $16,832 $39,151 $7,858 $15,171
Notes:
1. This capital expenditure value in 2001 excludes any investments in
real estate held for sale, which related to the Company's former
planned headquarters building.
SOURCE TeleTech Holdings, Inc.
CONTACT: Karen Breen, +1-303-397-8592, karen.breen@teletech.com, or Dan
Campbell, +1-303-397-8634, dan.campbell@teletech.com, both of Investor
Relations of TeleTech Holdings, Inc.
