Fourth Quarter Revenue Reaches a Record $373 Million; Ninth Consecutive Quarter of Double-Digit Revenue Growth; Full Year BPO Segment Revenue Up 16 Percent; Record 7,700 Workstations Added During 2007 to Support Significant New Business Wins; Reaffirms 2008 Financial Goals and Establishes Initial 2009 GoalsENGLEWOOD, CO, Feb 26, 2008 (MARKET WIRE via COMTEX News Network) -- TeleTech Holdings, Inc. (NASDAQ: TTEC), one of the largest and most
geographically diverse global providers of business process
outsourcing ("BPO") solutions, today announced business highlights
for the fourth quarter and fiscal year ended December 31, 2007.
TeleTech reported record fourth quarter 2007 revenue of $373 million
achieving its goal of reaching an annualized revenue run rate of $1.5
billion by year-end 2007. The fourth quarter was the ninth
consecutive quarter of double-digit revenue growth and represented the
highest sequential quarterly revenue increase in the Company's history
at $37 million. Full year revenue was $1.37 billion, a 13.2 percent
increase over 2006. Full year revenue in the BPO segment was $1.35
billion, a 16 percent increase over 2006.
Fourth quarter 2007 revenue from services performed for clients in
offshore locations grew approximately 28 percent to $153 million and
represented 41 percent of total revenue. Full year revenue from
services performed for clients in offshore locations grew 37 percent
to $549 million and represented approximately 40 percent of total
revenue. TeleTech currently provides offshore services from seven
countries including Argentina, Canada, Costa Rica, Malaysia, Mexico,
the Philippines and recently began providing services from South
Africa. TeleTech believes it has one of the largest and most
geographically diverse offshore footprints of any global BPO provider
with 24,000 offshore workstations representing more than 60 percent
of its total delivery capacity. TeleTech believes its offshore
revenue in 2008 will grow to approximately 50 percent of total
revenue and represent more than 70 percent of its total delivery
capacity.
Due to significant new business wins throughout 2007, TeleTech added
a record 7,700 workstations in primarily offshore locations during
2007 bringing the total workstations in its global delivery network to
38,400 as of year-end. The Company's capacity utilization across its
shared client workstations as of December 31, 2007 was 79 percent, an
increase from 69 percent capacity utilization at the end of the 2007
third quarter.
On December 18, 2007, TeleTech, through its indirect subsidiary,
TeleTech Europe B.V., completed the sale of its 60 percent interest in
TeleTech Services ("India") Ltd., for $8.7 million, plus $450,000 in
satisfaction of intercompany payables, resulting in total cash
proceeds of $9.2 million. The sale of this business resulted in a
pre-tax gain during the fourth quarter of $6.9 million, which will be
reflected in "Other income (expense)."
EXECUTIVE COMMENTARY ON TELETECH'S FOURTH QUARTER BUSINESS HIGHLIGHTS
"I am pleased that we have achieved record fourth quarter revenue of
$373 million representing our ninth consecutive quarter of
double-digit revenue growth," said Kenneth Tuchman, chairman and
chief executive officer. "Our centralized global delivery model,
expansive offshore footprint and ability to provide innovative,
high-quality solutions have enabled us to win an estimated $200
million in incremental annualized business over the last six months
of 2007. This unprecedented level of new business wins, coupled with
our operational excellence, gives us confidence in our ability to
achieve our 2008 and 2009 financial goals."
REVIEW OF EQUITY-BASED COMPENSATION PRACTICES AND RESTATEMENT OF
PREVIOUSLY ISSUED FINANCIAL STATEMENTS
On February 20, 2008, TeleTech announced that its Audit Committee had
completed its review of the Company's historical equity-based
compensation practices and the accounting related thereto (the
"Review"). The Review, which covered the period from the Company's
Initial Public Offering in 1996 through August 2007, is described in
more detail in a Current Report on Form 8-K filed on that date with
the Securities and Exchange Commission ("SEC").
Based on the Review and management's own additional review, the
Company has concluded that incorrect measurement dates for certain
equity grants were used at various times during the accounting
periods covered by the Review. As a result, the Company has
determined that it will be necessary to restate its financial
statements for the fiscal years 2005 and 2006 and the first two
quarters of 2007. The Company is working with its auditors to
finalize the quantification of the restatement adjustment and the
periods impacted. The Company intends to complete this restatement
concurrently with the filing of its third quarter 2007 Quarterly
Report on Form 10-Q and its 2007 Annual Report on Form 10-K.
Restatement adjustments for periods prior to 2005 will be reflected
as adjustments to the beginning balances of stockholders' equity in
2005. Given that the restatement adjustments are expected to largely
impact periods prior to 2002, additional information on all pre-2005
restatement adjustments will be set forth in the notes to the
restated financial statements.
PRELIMINARY FOURTH QUARTER 2007 BUSINESS HIGHLIGHTS
Preliminary Balance Sheet Continues to Fund Organic Growth
- As of December 31, 2007, TeleTech had cash and cash equivalents of
more than $90 million and total debt of $72 million.
- Capital expenditures were approximately $17 million in the fourth
quarter and totaled nearly $62 million for the full year. Approximately 80
percent of capital expenditures in 2007 were for growth related needs,
which included the deployment of a record 7,700 new workstations during the
year, with the balance for improving TeleTech's embedded infrastructure.
Share Repurchase
- TeleTech's strong balance sheet has given the Company the flexibility
to fund organic growth while also repurchasing common stock. In 2007, the
Company repurchased nearly $47 million of common stock. However, the
Company has suspended repurchases under its stock repurchase program
pending completion of the restatement of its historic financial statements
and becoming current on its SEC filings. The Company expects that once it
is current with all SEC filings, it will promptly review the resumption of
its stock repurchase program.
New Business
- During the third and fourth quarters of 2007, TeleTech signed an
estimated $200 million in incremental annualized long-term revenue from new
or expanded client relationships.
- In response to the significant new business wins, TeleTech continued
its rapid workstation expansion. During the fourth quarter, the Company
deployed 2,400 workstations, bringing the total workstations added during
2007 to 7,700.
Business Outlook
- Consistent with previous disclosures, TeleTech expects 2008 revenue
will grow between 12 and 15 percent and operating margin will
improve by approximately 200 basis points over 2007, before unusual
charges, if any.
- TeleTech expects 2008 capital expenditures will approximate $70
million with the addition of an estimated 7,000 workstations to
meet continued strong demand.
- TeleTech believes its offshore revenue by the end of 2008 will
approximate 50 percent of total revenue and its offshore delivery
capacity will approximate 70 percent of its total capacity.
- For 2009, TeleTech expects that revenue will grow between 12 and 15
percent and operating margin will improve by at least 100 basis points
over 2008, before unusual charges, if any.
PRELIMINARY BUSINESS HIGHLIGHTS SUBJECT TO CHANGE
Due to the forthcoming restatement, as discussed above, all business
highlights described in this press release should be considered
preliminary and are subject to change to reflect any necessary
corrections or adjustments, or changes in accounting estimates that
are identified as a result of the Review. In addition, business
highlights for the fourth quarter and fiscal 2007, as well as
comparable periods of earlier reported years, could be affected by
any restatement of prior period financial statements.
CONFERENCE CALL
TeleTech executive management will hold a conference call to discuss
fourth quarter 2007 business highlights on Tuesday, February 26, 2008,
at 8:30 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 Tuesday, March 11, 2008.
ABOUT TELETECH
TeleTech is one of the largest and most geographically diverse global
providers of business process outsourcing solutions. We have a
26-year history of designing, implementing, and managing critical
business processes for Global 1000 companies to help them improve
their customers' experience, expand their strategic capabilities, and
increase their operating efficiencies. By delivering a high-quality
customer experience through the effective integration of
customer-facing front-office processes with internal back-office
processes, we enable our clients to better serve, grow, and retain
their customer base. We use Six Sigma-based quality methods
continually to design, implement, and enhance the business processes
we deliver to our clients and we also apply this methodology to our
own internal operations. We have developed deep domain expertise and
support approximately 300 business process outsourcing programs
serving more than 100 global clients in the automotive, communications
and media, financial services, government, healthcare, retail,
technology and travel and leisure industries. Our integrated global
solutions are provided by 59,000 employees utilizing 38,400
workstations across 88 Delivery Centers in 18 countries.
FORWARD-LOOKING STATEMENTS This press release may contain certain
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, which can be identified by
words such as "may," "will," "expect," "anticipate" or comparable
words. These forward-looking statements involve known and unknown
risks, uncertainties and other factors that may cause our actual
results, performance, or achievements to be materially different from
any future results, performance, or achievements expressed or implied
by the forward-looking statements. All statements not based on
historical fact are forward-looking statements that involve
substantial risks and uncertainties. Important factors that could
cause our actual results to differ materially from those expressed or
implied by such forward-looking statements, include but are not
limited to the following: all reported results are presented without
taking into account any adjustments that may be required in
connection with the ongoing review of TeleTech's accounting for
equity-based compensation plans and should be considered preliminary
until TeleTech files its Form 10-K for the fiscal year ended December
31, 2007; the effect of TeleTech's failure to timely file all of its
required reports under the Securities and Exchange Act of 1934,
including the potential of a default under its credit facility; our
ability to meet the requirements of the NASDAQ Stock Market for
continued listing of our shares; any future decisions by the NASDAQ
Stock Market regarding continued listing of TeleTech's common shares;
potential claims and proceedings relating to such matters, including
shareholder litigation and action by the SEC and/or other
governmental agencies; negative tax or other implications for TeleTech
resulting from any accounting adjustments or other factors; our
belief that we are continuing to see strong demand for our services;
the ability to close and ramp new business opportunities that are
currently being pursued or that are in the final stages with existing
and/or potential clients in order to achieve our Business Outlook;
estimated revenue from new, renewed, and expanded client business as
volumes may not materialize as forecasted or be sufficient to achieve
our Business Outlook; the possibility of lower revenue or price
pressure from our clients experiencing a business downturn or merger
in their business; greater than anticipated competition in the BPO
and customer management markets, causing adverse pricing and more
stringent contractual terms; risks associated with losing or not
renewing client relationships, particularly large client agreements,
or early termination of a client agreement; the risk of losing
clients due to consolidation in the industries we serve; consumers'
concerns or adverse publicity regarding our clients' products; our
ability to execute our growth plans, including sales of new services;
our ability to achieve our year-end 2008 and 2009 financial goals,
including those set forth in our Business Outlook; risks associated
with attracting and retaining cost-effective labor at our delivery
centers; the possibility of additional asset impairments and
restructuring charges; risks associated with changes in foreign
currency exchange rates; our ability to find cost effective delivery
locations, obtain favorable lease terms, and build or retrofit
facilities in a timely and economic manner; risks associated with
business interruption due to weather, pandemic or terrorist-related
events; economic or political changes affecting the countries in
which we operate; achieving continued profit improvement in our
International BPO operations; changes in accounting policies and
practices promulgated by standard setting bodies; and new legislation
or government regulation that impacts the BPO and customer management
industry.
Investor Contact:
Karen Breen
303-397-8592
Jennifer Martin
303-397-8634
Media Contact:
Maggie Pisacane
212-687-8080
Email Contact
Paul Kranhold
415-568-9570
Email Contact
SOURCE: TeleTech Holdings, Inc.
