Achieves $302 Million in Second Quarter Revenue and 25 Cents in Fully Diluted Earnings per Share; Gross Profit Margin of 29.3 Percent Delivers Operating Income of $23.0 Million or 7.6 Percent of Revenue; Solid Operational Performance Drives 185 Percent Increase in Free Cash Flow to $34 Million
ENGLEWOOD, CO, Jul 29, 2009 (MARKETWIRE via COMTEX) -- TeleTech Holdings, Inc. (NASDAQ: TTEC), one of the largest and most
geographically diverse global providers of business process
outsourcing ("BPO") solutions, today announced financial results for
the second quarter 2009. The Company also filed its Quarterly Report
on Form 10-Q with the Securities and Exchange Commission for the
quarter ended June 30, 2009.
SECOND QUARTER 2009 FINANCIAL RESULTS
TeleTech reported second quarter 2009 revenue of $301.5 million
compared to $357.4 million in the second quarter 2008 and $304.0
million in the first quarter 2009. On a constant currency basis,
revenue declined 8.0 percent or $28.6 million from the second quarter
2008. These declines were primarily attributable to the increased
migration of client programs to offshore locations and lower client
volumes resulting from the weak economic environment.
TeleTech's second quarter 2009 gross margin improved 370 basis points
to 29.3 percent from 25.6 percent in the year-ago quarter. This
improvement was primarily due to increased intra-quarter workstation
utilization driven in part by a short-term program in the government
vertical, a favorable shift to higher margin business, including
professional services and technology-based offerings, and lower
workforce attrition.
TeleTech's second quarter 2009 income from operations was $23.0
million or 7.6 percent of revenue, compared to $29.7 million or 8.3
percent of revenue in the year-ago quarter. Income from operations
for the quarter included $6.8 million of unusual charges, primarily
related to restructuring and impairment charges.
Excluding the $6.8 million of unusual charges mentioned above,
TeleTech's second quarter 2009 non-GAAP income from operations was
$29.9 million, or 9.9 percent of revenue, as compared to 9.4 percent,
excluding unusual charges, in the year-ago quarter. This increase in
operating margin is due to the improvement in gross margin as
outlined above, along with proactive management of the Company's
operating and workforce-related expenses.
Second quarter 2009 fully diluted earnings per share were 25 cents on
net income attributable to TeleTech shareholders of $16.1 million.
Excluding the $6.8 million of unusual pre-tax charges discussed above,
second quarter 2009 non-GAAP earnings per share were 32 cents.
SECOND QUARTER 2009 BUSINESS HIGHLIGHTS
Strong Balance Sheet Continues to Fund Operations
- As of June 30, 2009, TeleTech had cash and cash equivalents of $84.0
million and total debt of $33.3 million, resulting in a net positive cash
position of $50.7 million.
- Second quarter 2009 cash flow from operations grew $6.7 million or 20
percent to $39.8 million from $33.1 million in the second quarter 2008.
- Free cash flow for the second quarter 2009 was $34.0 million,
representing a 185 percent increase from $11.9 million in the year-ago
quarter.
- Capital expenditures in the second quarter 2009 were $5.8 million,
down from $21.2 million in the year-ago quarter.
- Return on invested capital was 28 percent as of June 30, 2009, up from
27 percent in the year-ago quarter.
New Business
-
During the second quarter 2009, TeleTech signed an estimated $80
million in new revenue predominantly from expanded existing client
relationships. This includes $21 million of revenue recognized in the
second quarter 2009 related to services performed for a short-term program
in the government vertical and approximately $24 million of recurring,
seasonal revenue that will be recognized over the next several quarters
primarily related to the healthcare vertical.
Share Repurchases
-
TeleTech's strong balance sheet has given the Company the flexibility
to fund organic growth while also repurchasing common stock. During the
second quarter 2009, the Company repurchased 1.9 million shares of common
stock for $24.1 million leaving more than $9 million available for future
share repurchases as of June 30, 2009.
EXECUTIVE COMMENTARY ON TELETECH'S FINANCIAL RESULTS
"We are very pleased with our ability to deliver strong profitability
and free cash flow in light of lower revenue when compared to the year
ago quarter," said Kenneth Tuchman, chairman and chief executive
officer. "Our second quarter results demonstrate our ability to
align our cost structure with the current business conditions as well
as our favorable shift of business to higher margin offerings.
Although the pace of new business wins continues to be slower than it
has been historically, we are encouraged by the number of potential
clients that are actively discussing outsourcing opportunities with
TeleTech. In addition, we remain committed to technological
innovation as we firmly believe this will continue to be a key
differentiator for TeleTech."
BUSINESS OUTLOOK
In light of the challenging global economic climate, TeleTech
currently believes its 2009 revenue will be adversely impacted by the
following:
- The stronger U.S. dollar in 2009 relative to currencies of certain
foreign subsidiaries is currently expected to adversely impact TeleTech's
2009 revenue between $60 and $80 million when compared to 2008.
- The continued migration to offshore locations of certain domestic work
currently performed in Asia Pacific, Europe and North America is estimated
to reduce 2009 revenue between $60 and $70 million when compared to 2008.
- While TeleTech continues to sign and ramp new business, the organic
revenue growth from these programs is expected to be more than offset by
lower volumes with certain existing clients due to reduced demand for their
products or services. This is expected to result in an estimated 'net'
revenue reduction in 2009 of between $80 and $90 million when compared to
2008.
TeleTech currently expects 2009 operating margin, excluding unusual
items, will range between 7.5 percent and 8.5 percent, an increase
from its previous expectation of between 7 percent and 8 percent.
Despite the economic climate, TeleTech continues to believe that as
the economy improves, certain existing client volumes will return to
more normalized levels. Furthermore, TeleTech continues to reduce its
client concentration along with strengthening its balance sheet via
ongoing free cash flow generation and proactive working capital
management. In addition, the Company plans to continue repurchasing
its stock under the current program authorization.
CONFERENCE CALL
A conference call and webcast with management will be held on
Thursday, July 30, 2009 at 8:30 a.m. Eastern Time. You are invited to
join the 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 through Thursday, August 13,
2009.
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 Income from Operations,
Non-GAAP EBITDA and Non-GAAP EPS. 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. The
presentation of 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.
ABOUT TELETECH
TeleTech is one of the largest and most geographically diverse global
providers of business process outsourcing solutions. TeleTech and its
subsidiaries have a 27-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. TeleTech and its subsidiaries have developed
deep domain expertise and support more than 250 business process
outsourcing programs serving approximately 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 approximately 48,000
employees utilizing 37,000 workstations across 77 delivery centers in
17 countries. For additional information, visit www.teletech.com.
FORWARD-LOOKING STATEMENTS
Statements in this press release that relate to future results and
events (including statements about future financial and operating
performance) are forward-looking statements based on TeleTech's
current expectations. Actual results and events in future periods
could differ materially from those projected in these forward-looking
statements because of a number of risks and uncertainties including:
achieving estimated revenue from new, renewed and expanded client
business as volumes may not materialize as forecasted, especially due
to the global economic slowdown; achieving profit improvement in our
International BPO operations; 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; our
ability to execute our growth plans, including sales of new products;
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 services market, 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 find cost effective
locations, obtain favorable lease terms and build or retrofit
facilities in a timely and economic manner; risks associated with
business interruption due to weather, fires, pandemic, or
terrorist-related events; risks associated with attracting and
retaining cost-effective labor at our delivery centers; the
possibility of asset impairments and restructuring charges; risks
associated with changes in foreign currency exchange rates; economic
or political changes affecting the countries in which we operate;
changes in accounting policies and practices promulgated by standard
setting bodies; and new legislation or government regulation that
adversely impacts our tax obligations, health care costs or the BPO
and customer management industry. A detailed discussion of these and
other risk factors that could affect our results is included in
TeleTech's SEC filings, including our Annual Report on Form 10-K for
the year ended December 31, 2008. The Company's filings with the
Securities and Exchange Commission are available in the "Investors"
section of TeleTech's website, which is located at www.teletech.com.
All information in this release is as of July 29, 2009. The Company
undertakes no duty to update any forward-looking statement to conform
the statement to actual results or changes in the Company's
expectations.
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
Three months ended Six months ended
June 30, June 30,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
Revenue $ 301,512 $ 357,416 $ 605,542 $ 725,052
Operating Expenses:
Cost of services 213,049 265,833 431,891 535,933
Selling, general and
administrative 44,981 45,858 93,496 97,230
Depreciation and amortization 13,808 15,624 27,870 30,784
Restructuring charges, net 4,008 440 4,311 2,642
Impairment losses 2,620 - 4,587 -
--------- --------- --------- ---------
Total operating expenses 278,466 327,755 562,155 666,589
--------- --------- --------- ---------
Income From Operations 23,046 29,661 43,387 58,463
Other income (expense) 399 (543) 1,125 (1,591)
--------- --------- --------- ---------
Income Before Income Taxes 23,445 29,118 44,512 56,872
Provision for income taxes (6,328) (7,536) (11,508) (15,329)
--------- --------- --------- ---------
Net Income 17,117 21,582 33,004 41,543
Net income attributable to
noncontrolling interest (987) (1,220) (1,811) (2,056)
--------- --------- --------- ---------
Net Income Attributable to
TeleTech Shareholders $ 16,130 $ 20,362 $ 31,193 $ 39,487
========= ========= ========= =========
Net Income Per Share
Attributable to TeleTech
Shareholders
Basic $ 0.26 $ 0.29 $ 0.49 $ 0.56
========= ========= ========= =========
Diluted $ 0.25 $ 0.28 $ 0.49 $ 0.55
========= ========= ========= =========
Income From Operations Margin 7.6% 8.3% 7.2% 8.1%
Net Income Attributable to
TeleTech Shareholders Margin 5.3% 5.7% 5.2% 5.4%
Effective Tax Rate 27.0% 25.9% 25.9% 27.0%
Weighted Average Shares
Outstanding
Basic 63,098 69,977 63,502 69,957
Diluted 64,175 71,729 64,167 71,649
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(In thousands)
(unaudited)
Three months ended Six months ended
June 30, June 30,
-------------------- --------------------
2009 2008 2009 2008
--------- ---------- --------- ---------
Revenue:
North American BPO $ 229,992 $ 257,109 $ 458,878 $ 530,911
International BPO 71,520 100,307 146,664 194,141
Database Marketing and
Consulting - - - -
--------- ---------- --------- ---------
Total $ 301,512 $ 357,416 $ 605,542 $ 725,052
========= ========== ========= =========
Income (Loss) From Operations:
North American BPO $ 28,314 $ 27,948 $ 53,741 $ 60,869
International BPO (5,268) 1,703 (10,354) (2,047)
Database Marketing and
Consulting - 10 - (359)
--------- ---------- --------- ---------
Total $ 23,046 $ 29,661 $ 43,387 $ 58,463
========= ========== ========= =========
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, December 31,
2009 2008
------------ ------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 83,963 $ 87,942
Accounts receivable, net 225,720 236,997
Other current assets 80,194 79,949
------------ ------------
Total current assets 389,877 404,888
Property and equipment, net 141,719 157,747
Other assets 100,957 106,307
------------ ------------
Total assets $ 632,553 $ 668,942
============ ============
LIABILITIES AND EQUITY
Total current liabilities $ 173,093 $ 180,099
Other long-term liabilities 63,688 127,949
Total equity 395,772 360,894
------------ ------------
Total liabilities and equity $ 632,553 $ 668,942
============ ============
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION
(In thousands, except per share data)
(unaudited)
Three months ended Six months ended
June 30, June 30,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
Reconciliation of Gross Margin:
Revenue $ 301,512 $ 357,416 $ 605,542 $ 725,052
Cost of services 213,049 265,833 431,891 535,933
--------- --------- --------- ---------
Gross margin $ 88,463 $ 91,583 $ 173,651 $ 189,119
--------- --------- --------- ---------
Gross margin percentage 29.3% 25.6% 28.7% 26.1%
Reconciliation of EBIT &
EBITDA:
Net Income attributable to
TeleTech shareholders $ 16,130 $ 20,362 $ 31,193 $ 39,487
Interest income (705) (1,388) (1,512) (2,474)
Interest expense 1,320 1,489 2,163 3,054
Provision for income taxes 6,328 7,536 11,508 15,329
--------- --------- --------- ---------
EBIT $ 23,073 $ 27,999 $ 43,352 $ 55,396
Depreciation and amortization 13,808 15,624 27,870 30,784
--------- --------- --------- ---------
EBITDA $ 36,881 $ 43,623 $ 71,222 $ 86,180
Reconciliation of Free Cash
Flow:
Cash Flow From Operating
Activities:
Net income $ 17,117 $ 21,582 $ 33,004 $ 41,543
Adjustments to reconcile net
income to net cash
provided by operating
activities:
Depreciation and
amortization 13,808 15,624 27,870 30,784
Other 8,902 (4,076) 32,964 (13,022)
--------- --------- --------- ---------
Net cash provided by
operating activities 39,827 33,130 93,838 59,305
Less: Total Capital
Expenditures 5,846 21,223 14,301 36,408
--------- --------- --------- ---------
Free Cash Flow $ 33,981 $ 11,907 $ 79,537 $ 22,897
Reconciliation of Non-GAAP
Income from Operations:
Income from Operations $ 23,046 $ 29,661 $ 43,387 $ 58,463
Restructuring charges, net 4,008 440 4,311 2,642
Impairment losses 2,620 - 4,587 -
Equity-based comp review and
restatement expenses 209 3,386 485 8,354
--------- --------- --------- ---------
Non-GAAP Income from Operations $ 29,883 $ 33,487 $ 52,770 $ 69,459
Reconciliation of Non-GAAP EPS:
Net Income attributable to
TeleTech shareholders $ 16,130 $ 20,362 $ 31,193 $ 39,487
Add: Asset impairment and
restructuring charges, net
of related taxes 4,388 286 5,944 1,836
Add: Equity-based comp review
and restatement exp, net of
related taxes 138 2,201 324 5,806
--------- --------- --------- ---------
Non-GAAP Net Income
attributable to TeleTech
shareholders $ 20,656 $ 22,849 $ 37,460 $ 47,129
Diluted shares outstanding 64,175 71,729 64,167 71,649
Non-GAAP EPS attributable to
TeleTech shareholders $ 0.32 $ 0.32 $ 0.58 $ 0.66
Reconciliation of Non-GAAP
EBITDA:
Net Income attributable to
TeleTech shareholders $ 16,130 $ 20,362 $ 31,193 $ 39,487
Interest income (705) (1,388) (1,512) (2,474)
Interest expense 1,320 1,489 2,163 3,054
Provision for income taxes 6,328 7,536 11,508 15,329
Depreciation and
amortization 13,808 15,624 27,870 30,784
Asset impairment and
restructuring charges 6,628 440 8,898 2,642
Equity-based comp review and
restatement expenses 209 3,386 485 8,354
Equity-based compensation
expenses 2,465 2,011 6,079 4,734
--------- --------- --------- ---------
Non-GAAP EBITDA $ 46,183 $ 49,460 $ 86,684 $ 101,910
Investor Contact:
Karen Breen
303-397-8592
SOURCE: TeleTech
