DENVER, Feb 13, 2002 /PRNewswire-FirstCall via COMTEX/ --
Revenues of $230 Million, Higher than Guidance due to Strong Seasonal Lift Earnings Per Diluted Share of 9 Cents Beats Consensus Estimates
TeleTech Holdings,
Inc. (Nasdaq: TTEC), a leading global provider of customer relationship
management (CRM) solutions, today announced fourth quarter 2001 results and its
initial business outlook for 2002.
FOURTH QUARTER 2001 FINANCIAL RESULTS
Revenues for the fourth quarter 2001 were $230.2 million and higher than the
previously announced range of $215 million to $225 million due primarily to a
stronger than expected seasonal lift from clients in TeleTech's transportation,
communications and government sectors. Fourth quarter 2001 revenues were up 3.3
percent sequentially from $222.8 million in the third quarter 2001, and down
$13.6 million or 5.6 percent from $243.8 million in the year ago quarter. The
year over year revenue decrease was primarily attributable to declines in
certain client programs as a result of the difficult economic climate.
The company reported fourth quarter 2001 net income of $7.2 million and earnings
per diluted share of 9 cents, in line with the previously announced range of 8
cents to 9 cents. This compares to net income of $6.2 million or 8 cents per
diluted share in the third quarter of 2001 and net income of $16.3 million or 21
cents per diluted share in the year ago quarter. The effects of nonrecurring
items in the fourth quarter 2000 and the third quarter 2001 are excluded from
these results.
Kenneth Tuchman, TeleTech's Chairman and Chief Executive Officer, said "This was
a strong finish to an extremely challenging year. Early in 2001 we realized the
need for change and refocused the company on a 'back to basics' strategy. This
strategy involved reinvigorating our large deal sales pipeline, reducing our
cost structure, controlling capital expenditures and focusing on free cash flow
generation. I am proud to say this focus has resulted in steady improvements in
our financial performance over the last three quarters of 2001 and creates a
strong foundation to position the company for renewed growth in 2002."
"As we begin the new year, we will continue to fortify the pipeline of new
business opportunities and further strengthen and expand relationships with new
and existing clients," said Tuchman. "Recent client wins and renewals, including
our new agreement with IBM to provide an outsourced customer care solution for
Nextel Communications, reaffirms that TeleTech is the 'trusted brand' for
companies looking to implement large, complex outsourced CRM solutions.
Companies are also increasingly looking for a provider that has the scale, scope
and sophistication to handle a majority of their customer care services and that
plays directly to TeleTech's strengths."
"Our top priorities in 2002 include closing large new business opportunities,
expanding existing client relationships, maintaining tight cost controls and
leveraging our global reach to optimize our integrated solution offering. In so
doing, we believe we can deliver a better overall value to our clients and
continue to build our market leadership," said Tuchman.
2001 HIGHLIGHTS
In 2001, TeleTech made significant progress on several fronts to strengthen the
leadership team and improve the operational and financial structure of the
business. These included:
-- Strengthening the executive leadership team. In October, the TeleTech
Board of Directors appointed James E. Barlett as Vice Chairman and
Kenneth D. Tuchman as its permanent Chief Executive Officer. Barlett
and Tuchman bring complementary strengths to the business. The
TeleTech Board believes the combination of Tuchman's entrepreneurial
spirit, long-term vision and twenty years of experience in the CRM
industry, along with Barlett's proven track record, industry
relationships, international expertise and operational know-how has
created an unparalleled leadership team.
-- Signing several new or expanded client relationships including Blue
Shield of California in North America; Qantas and Telstra's wireless
business in Australia; Hewlett Packard in Europe; Anatel and Aeromexico
in Latin America; Telecom Corporation and Tranz Rail in New Zealand and
Hyundai Motor America and Volvo Cars of North America at Newgen.
-- Reducing selling, general and administrative (SG&A) costs. SG&A costs
were $49.4 million in the fourth quarter compared to $55.8 million in
the year ago quarter. Fourth quarter 2001 SG&A fell to 21.4 percent of
revenues from a high of 24.0 percent of revenues in the first quarter
2001. SG&A costs for 2001 were $204.0 million or 22.3 percent of
revenues.
-- Improving operating margin. Operating margin was 7.5 percent for the
fourth quarter 2001 and showed steady sequential improvement from
6.6 percent in the first quarter 2001. Operating margin for 2001 was
7.0 percent and was negatively impacted by available capacity in
TeleTech's existing operations. The effects of nonrecurring items in
the first quarter and full year 2001 are excluded from the operating
margin comparisons.
-- Controlling capital expenditures. Capital expenditures for the fourth
quarter and full year 2001 were $4.9 million and $52.1 million,
respectively. Capital expenditures for 2001 declined by nearly
60 percent from 2000 capital expenditures of $118.0 million.
-- Increasing financial liquidity. TeleTech's cash and short-term
investments grew to $104.2 million, up nearly $31.9 million from
$72.3 million at the end of the third quarter, as a result of
controlling capital expenditures and managing working capital. In
October, TeleTech further strengthened its financial liquidity by
completing a $75 million private placement of senior, unsecured notes.
-- Generating free cash flow. During fourth quarter 2001 TeleTech
generated $22.3 million of free cash flow and for the full year of 2001
generated $51.5 million.
"While the economic events of 2001 were challenging, they were a catalyst for
TeleTech to implement many positive changes in the underlying financial and
operating structure of our business," said Margot O'Dell, TeleTech's Chief
Financial Officer. "We finished the year strong, and as we enter 2002 we plan to
build upon our 'back to basics' strategy and continue to manage the business for
profitable growth. We have a solid balance sheet to support our growth
initiatives and are working actively to fill our available capacity. We believe
there is meaningful operating leverage in our model when this capacity is
absorbed and are optimistic about 2002 and beyond."
BUSINESS OUTLOOK
The following statements are based on current expectations regarding TeleTech's
outlook for its future financial results.
TeleTech believes 2002 revenues will increase by 12 percent to 15 percent over
2001, while diluted earnings per share are expected to increase by 20 percent to
25 percent over 2001. Based on these expectations, TeleTech believes that
current analyst consensus earnings projections are reasonable.
Based on expected revenue growth combined with stringent spending controls,
capital expenditures for 2002 are estimated to range between $70 million and $75
million.
TeleTech believes first quarter 2002 revenues will range between $250 million
and $260 million.
The company believes first quarter 2002 earnings per diluted share will range
between $0.08 cents and $0.09 cents per share.
CONFERENCE CALL
TeleTech executive management will host a conference call to discuss fourth
quarter 2001 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 402-220-0286 (no passcode required), starting at
approximately 8:00 p.m. ET and will play until February 27, 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 South 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 the ability of its
newly appointed officers to further strengthen its industry position and achieve
continued growth in revenues and earnings; lower than anticipated customer
interaction center capacity utilization due to the weak global economic climate;
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; TeleTech's ability to predict future
revenue and associated costs, as well as 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 2000 Annual Report on Form 10-K, first, second and third quarter 2001
Form 10-Qs, 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 INCOME
(In thousands, except per share data)
Three months ended Twelve months ended
December 31, December 31,
2001 2000 2001 2000
Revenues $230,235 $243,842 $916,144 $885,349
Operating expenses:
Costs of services 148,138 145,458 587,423 557,681
Selling, general &
administrative 49,355 55,808 204,005 189,668
Depreciation and
amortization 15,497 13,888 60,308 48,001
Non-recurring items -- 13,663 (3) 33,248 (1) 17,082 (5)
Total operating
expenses 212,990 228,817 884,984 812,432
Operating Income 17,245 15,025 31,160 72,917
Other income (expense) (4,927) (854) (14,226) (1,340)
Non-recurring items -- 4,335 (4) (17,175)(2) 50,726 (4)
Income Before Income
Taxes 12,318 18,506 (241) 122,303
Income tax expense 4,862 9,329 174 46,938
Net Income before
Minority Interest 7,456 9,177 (415) 75,365
Minority Interest (273) (634) (1,510) (1,559)
Net Income $7,183 $8,543 $(1,925) $73,806
Basic Earnings Per Share $0.09 $0.11 $(0.03) $1.00
Diluted Earnings Per
Share $0.09 $0.11 $(0.03) $0.93
Operating Margin 7.5% 6.2% 3.4% 8.2%
Net Income Margin 3.1% 3.5% -0.2% 8.3%
Effective Tax Rate 39.5% 50.4% -72.2% 38.4%
Shares Outstanding:
Basic 76,607 74,605 75,804 74,171
Diluted 77,743 78,973 75,804 79,108
Excluding Non-recurring
items:
Operating Income $17,245 $28,688 $64,408 $89,999
Operating Margin 7.5% 11.8% 7.0% 10.2%
Net Income $7,183 $16,271 $28,583 $52,368
Basic Earnings Per
Share $0.09 $0.22 $0.38 $0.71
Diluted Earnings Per
Share $0.09 $0.21 $0.37 $0.66
Diluted shares
outstanding 77,743 78,973 76,978 79,108
Effective Tax Rate 39.5% 39.3% 40.0% 39.3%
Notes:
1. Represents $33.2 mm of non-recurring, pre-tax charges recorded in
the first, second and third quarters of 2001 related to two workforce
reductions, the closure of a customer interaction center, and a
write down of the company's formerly planned headquarters building.
2. Represents $17.2 mm of non-recurring, pre-tax charges recorded in
the second and third quarters of 2001 related to the asset
impairment of the company's investment in enhansiv, and a workforce
reduction for a non-consolidated subsidiary.
3. Represents non-recurring, pre-tax charges related to a writedown of
the company's formerly planned headquarters building and the closure
of a customer interaction center.
4. Represents non-recurring, pre-tax gains due to the sale of a portion
of an equity investment offset by deal costs relating to the
purchase of a subsidiary.
5. Represents the non-recurring, pre-tax charges described in Note 3
above, in addition to the loss on disposition of a subsidiary.
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, December 31,
2001 2000
ASSETS
Current assets:
Cash and cash equivalents $95,430 $58,797
Investment in available-for-sale
securities 2,281 16,774
Short-term investments 6,460 8,904
Accounts receivable, net 162,344 193,351
Other current assets 28,688 23,595
Total current assets 295,203 301,421
Property and Equipment, net 177,959 178,760
Other assets 92,367 100,718
Total assets $565,529 $580,899
LIABILITIES AND STOCKHOLDERS' EQUITY
Total current liabilities $114,810 $128,298
Total noncurrent liabilities 88,450 76,427
Minority interest 14,319 12,809
Total stockholders' equity 347,950 363,365
Total liabilities and stockholders'
equity $565,529 $580,899
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED CASH FLOW INFORMATION
(In thousands)
Three months ended Twelve months ended
December 31, December 31,
2001 2000 2001 2000
Cash flow from operating
activities:
Net income (loss) $7,183 $8,543 $(1,925) $73,806
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and
amortization 15,497 13,888 60,308 48,001
Other 4,520 13,746 45,186 (85,545)
Net cash provided by
operating activities $27,200 $36,177 $103,569 $36,262
Total Capital Expenditures
- Note 1 $4,904 $36,538 $52,073 $118,013
Notes :
1. This capital expenditure value excludes any investments in real
estate held for sale, which related to the Company's former planned
headquarters building.
SOURCE TeleTech Holdings, Inc.
CONTACT: investor relations, Karen Breen, +1-303-397-8592,
Karen.breen@teletech.com, or Dan Campbell, +1-303-397-8634,
Dan.campbell@teletech.com, both of TeleTech Holdings, Inc.
