Denver, Colo., August 4, 2004 – TeleTech Holdings, Inc. (Nasdaq:
TTEC), a leading global provider of customer management and business process
outsourcing solutions, today announced second quarter 2004 financial
results. The company also filed its
Quarterly Report on Form 10-Q with the Securities and Exchange Commission for
the quarter ended June 30, 2004.
|
|
Second Quarter
2004
|
Second Quarter 2003
|
|
Revenue
|
$264.7M
|
$240.0M
|
|
Operating income (loss)
|
$ 14.5M
|
$(13.9)M
|
|
Operating margin
|
5.5%
|
(5.8)%
|
|
|
|
|
|
GAAP EPS
|
$0.03
|
$(0.59)
|
|
Non-GAAP EPS *
|
$0.09
|
$(0.59)
|
*See
reconciliation below
Second quarter highlights include:
·
Income from operations was $14.5 million
for the second quarter 2004, up $28.4 million from a negative $(13.9) million
for the year ago quarter and up $9.6 million from operating income of $4.9
million in the first quarter 2004. This
improvement is primarily a result of the company's ongoing initiatives to grow
new and existing client relationships, improve profitability on certain client
programs, focus on performance-based pricing, and achieve global cost reduction
goals. Additional information regarding comparability to the year ago quarter
is included in the company's second quarter 2004 Form 10-Q.
·
The company successfully completed its
previously announced plans to reduce lender indebtedness by approximately $50
million and entered into a new $100 million revolving credit facility. As previously announced, this resulted in a
one-time, $7.6 million debt restructuring charge in the second quarter 2004 and
is expected to result in future annualized net, pre-tax interest expense
savings of approximately $5 million per year.
·
Ending the quarter with cash and cash
equivalents of $80.4 million, placing TeleTech in a net positive cash position
of $7.8 million, calculated as cash and cash equivalents less total debt.
·
Continuing the company's investment in
its sales and solutions infrastructure.
TeleTech recently completed the alignment of its North American business
units to focus on the commercial, communications, financial services,
government, and healthcare industries and hired several key executives to lead
these business efforts.
EXECUTIVE COMMENTARY
Kenneth Tuchman,
chairman and chief executive officer, said, “The solid second quarter results
reflect our ongoing efforts to drive profitable growth, and the global efforts
of our employees and their commitment to our profit improvement plan. I believe a majority of the operational and
organizational blocking and tackling are behind us, and while there are still
initiatives underway to improve future financial performance, we can now focus
more energy on revenue growth and diversification along with continued
investment in our sales and solutions efforts.
With the alignment of our industry business leaders recently completed,
our primary focus is pursuing new client opportunities, developing and
launching new offerings, and achieving the second phase of our cost reduction
initiatives.”
Commenting on the
company's results, Dennis Lacey, chief financial officer, said, “We are pleased
to see our previously announced plans to improve profitability take hold in the
second quarter. Those efforts have been
underway for the last twelve months and include ‘get well' plans for
under-performing client programs, a multi-phase cost reduction initiative,
reducing long-term debt by nearly $50 million, and the modification of global
incentive plans to focus on pay for performance metrics. Today, we are announcing that the second
phase of our cost reduction plan is expected to result in $20 million of
annualized savings to be fully realized in 2005. We believe the majority of this target will be achieved by the
end of 2004. One element of this plan
is the $5 million reduction in future annualized net interest expense from our
recently completed debt reduction plan. Other aspects of the plan include our
continued focus on improving results on a program-by-program basis, enhancing
productivity in our customer management centers, and achieving further
reductions in other operating costs.”
NON-GAAP FINANCIAL
MEASURE
Pursuant to Regulation G as promulgated by the Securities and Exchange
Commission, the schedule below provides a reconciliation of TeleTech's second
quarter 2004 earnings per share, as reported under U.S. Generally Accepted
Accounting Principles (GAAP), to earnings per share excluding special items
(Non-GAAP).
|
|
Second Quarter 2004
|
|
GAAP net income
|
$2.1M
|
|
Plus: one-time, pre-tax debt restructuring
charge
|
$7.6M
|
|
Less: income tax benefit from one-time debt
restructuring charge
|
$(2.9)M
|
|
Non-GAAP net income
|
$6.8M
|
|
Diluted shares outstanding
|
75,260,000
|
|
Non-GAAP earnings per diluted share
|
$0.09
|
These Non-GAAP financial
measures should be used in addition to, but not as a substitute for, the
company's comparable GAAP measures. They are presented because TeleTech's
management uses this information when evaluating current results of operations,
and believes this information provides the users of the financial statements
with a useful comparison of TeleTech's current results of operations with past
and future periods.
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
TeleTech
executive management will hold a conference call to discuss second quarter 2004
financial results on Thursday, August 5, 2004, at 9:00 a.m. Eastern Time. You are invited to join a live webcast of the 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 of
the call will be available on the TeleTech website through Thursday, August 19,
2004.
ABOUT TELETECH
TeleTech is a global leader of
integrated customer solutions and business process outsourcing designed to help
clients acquire, grow, and retain profitable relationships with their
customers. TeleTech strengthens
customer relationships for its clients by providing a combination of
technologies, processes, and professional services. Headquartered in Denver, Colo., TeleTech's worldwide capabilities
are supported by more than 33,000 professionals in North America, Latin
America, Asia-Pacific, and Europe. For
additional information, visit www.TeleTech.com.
FORWARD-LOOKING
STATEMENTS
This press release may
contain certain forward-looking statements relating to future results. The
Private Securities Litigation Reform Act of 1995 provides a safe harbor for
forward-looking statements. These forward-looking statements are subject to
risks and uncertainties that may cause TeleTech's and its subsidiaries' actual
results to differ materially from those expressed or implied by such
forward-looking statements, including but not limited to the following: under
U.S. generally accepted accounting principles, the revenues, expenses, and
profits associated with the launch of new client agreements may be expensed up
front or deferred over the life of the client contract, and, accordingly, the
profitability of these agreements may be disproportionately skewed toward later
periods; the possibility of the company's Database Marketing and Consulting
segment not returning to historic levels of profitability; greater than
anticipated competition in the customer care market, causing adverse pricing
and more stringent contractual terms; risks associated with losing or not
renewing significant client relationships, or early termination of a client
agreement; the company's ability to close new business in 2004 and fill excess
capacity; consumers' concerns or adverse publicity regarding the products of
the company's clients; higher than anticipated start-up costs or lead times
associated with new ventures or business in new markets; execution risks
associated with performance-based pricing metrics in certain client agreements;
execution risks associated with achieving targeted annualized cost reductions;
the company's ability to find cost effective locations, obtain favorable lease
terms, and build or retrofit facilities in a timely and economic manner; risks
associated with attracting and retaining cost-effective labor at the company's
customer management centers; the possibility of additional asset impairments
and restructuring charges; risks associated with changes in foreign currency exchange
rates; economic or political changes affecting the countries in which the
company operates; changes in accounting policies and practices promulgated by
standard setting bodies; and, new legislation or government regulation that
impacts the customer care industry.
Please refer to the
company's filings with the Securities and Exchange Commission, including the
company's Annual Report on Form 10-K for the year ended 2003 and other more
recent SEC filings, for a detailed discussion of factors discussed above and
other important factors that may impact the company's business, results of
operations, financial condition, and cash flows. The company assumes no
obligation to update its forward-looking statements to reflect actual results
or changes in factors affecting such forward-looking statements.
# # #
