DENVER, Oct 31, 2002 /PRNewswire-FirstCall via COMTEX/ --
Year over Year Revenue Grows 13 Percent; Generates Significant Free Cash Flow in the Quarter
TeleTech Holdings,
Inc. (Nasdaq: TTEC), a leading global provider of customer management solutions,
today announced third quarter 2002 results in line with company guidance.
Revenue for the third quarter 2002 was $251.9 million, compared to revenue of
$253.7 million in the second quarter 2002, and up $29.1 million, or 13.0
percent, from $222.8 million in the year ago quarter.
The company reported third quarter 2002 net income of $6.2 million and earnings
per diluted share of 8 cents, in line with the company's guidance of 7 cents to
9 cents. This compares to net income of $7.1 million or 9 cents per diluted
share in the second quarter 2002, and net income of $6.2 million or 8 cents per
diluted share in the year ago quarter. The effects of non-recurring items are
excluded from these comparisons.
"TeleTech's steady performance is the result of disciplined execution in a
challenging global environment," said Kenneth Tuchman, TeleTech's Chairman and
Chief Executive Officer. "We have continued to increase revenues and generate
significant free cash flow, while working to close new business and fill
existing capacity. As we approach 2003, we are confident in our ability to win
new business and continue to deliver high levels of client satisfaction.
"TeleTech reached an important milestone on October 22, when we celebrated our
20th anniversary," continued Tuchman. "During that period we pioneered a new
industry, and have become a global leader in customer management with revenues
approaching $1 billion and operations in thirteen countries. Clients continue to
value integrated solutions, combined with deep vertical expertise that improve
customer loyalty and increase brand awareness. As we look to the future, I am
confident TeleTech will maintain its position at the forefront of our industry,
and will further its legacy of working with the world's leading organizations
while delivering long-term, profitable growth."
Selling, general and administrative (SG&A) costs were $49.0 million or 19.4
percent of revenues in the third quarter 2002, up modestly from 19.0 percent in
the second quarter 2002, and down from 21.5 percent in the year ago quarter.
Operating margin was 4.3 percent for the third quarter 2002, down sequentially
from 5.1 percent in the second quarter 2002, and down from 7.3 percent in the
third quarter 2001. The effects of non-recurring items are excluded from these
comparisons.
TeleTech's cash and short-term investments were $107.0 million at the end of the
third quarter 2002, comparable to $102.1 million at the end of the second
quarter 2002, and up from $72.3 million at the end of the third quarter 2001.
Capital expenditures for the third quarter 2002 were $12.7 million, up $4.8
million sequentially from $7.9 million in the second quarter 2002, and up from
$8.0 million in the year ago quarter. Capital expenditures for 2002 are
estimated to be in the range of $40 million to $50 million, down from the
company's original estimate of $70 million to $75 million.
During the third quarter 2002, TeleTech generated $26.8 million in free cash
flow, and believes it will continue to generate positive free cash flow for the
remainder of 2002.
The company continued its common stock repurchase program during the third
quarter 2002, purchasing 2.5 million shares for $15.7 million. Since the
inception of the share repurchase program in late 2001, the company has
repurchased a total of 2.8 million shares for $18.0 million through September
30, 2002. The company's Board of Directors has authorized share repurchases up
to $25.0 million.
The company recently completed the renewal of its revolving credit facility. The
$85 million, four-year facility is at favorable terms and gives the company
continued flexibility to pursue growth opportunities and manage working capital
related to large project launches. As of September 30, 2002 there were no
borrowings under the previous revolving credit facility.
"We are pleased with our results this quarter as we navigate a challenging
global economic climate," said Margot O'Dell, TeleTech's Chief Financial
Officer. "Our balance sheet remains strong, and the recent renewal of our
revolving credit facility points to our sound business model, solid operational
performance, and future growth potential. As we approach year-end, we continue
to focus on tight fiscal controls and closing new client relationships to
leverage our infrastructure. We believe TeleTech will continue its history of
driving sustainable growth and will remain a leader in our industry."
BUSINESS OUTLOOK
The following statements are based on current expectations regarding TeleTech's
outlook for its future financial results.
TeleTech believes fourth quarter 2002 revenue will range between $250 million
and $255 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 third
quarter 2002 financial results today at 4:30 p.m. ET. To participate, please
dial 712-271-0561 (passcode: TeleTech). Replay of the conference call will be
available by dialing 402-530-7639 (no passcode required), starting at
approximately 8:00 p.m. ET and will play until Thursday, November 14, 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 and second quarter 2002 Forms 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)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
2002 2001 2002 2001
Revenues $251,889 $222,818 $759,605 $685,909
Operating expenses:
Costs of services 177,643 143,141 532,082 439,285
Selling, general &
administrative 48,967 48,001 145,463 154,650
Depreciation and
amortization 14,561 15,423 43,187 44,811
Non-recurring items -- 5,997(3) 5,201(1) 33,248(5)
Total operating
expenses 241,171 212,562 725,933 671,994
Operating Income 10,718 10,256 33,672 13,915
Other income (expense) (1,351) (5,432) (6,863) (9,299)
Non-recurring items -- (675)(4) -- (17,175)(6)
Income (Loss) Before
Income Taxes 9,367 4,149 26,809 (12,559)
Income tax expense
(benefit) 3,702 1,637 10,589 (4,688)
Income (Loss) before
Minority Interest and
Cumulative Effect of
Change in Accounting
Principle 5,665 2,512 16,220 (7,871)
Minority Interest 552 (386) 672 (1,237)
Income (Loss) before
Cumulative Effect of
Change in Accounting
Principle 6,217 2,126 16,892 (9,108)
Cumulative Effect of
Change in Accounting
Principle -- -- (7,502)(2) --
Net Income (Loss) $6,217 $2,126 $9,390 $(9,108)
Basic Earnings Per Share
before Cumulative Effect
of Change in Accounting
Principle $0.22
Diluted Earnings Per
Share before Cumulative
Effect of Change in
Accounting Principle $0.22
Basic Earnings (Loss) Per
Share $0.08 $0.03 $0.12 $(0.12)
Diluted Earnings (Loss)
Per Share $0.08 $0.03 $0.12 $(0.12)
Operating Margin 4.3% 4.6% 4.4% 2.0%
Net Income (Loss) Margin 2.5% 1.0% 1.2% (1.3)%
Effective Tax Rate 39.5% 39.5% 39.5% 37.3%
Weighted Average Shares
Basic 76,694 76,336 76,928 75,537
Diluted 77,195 76,863 78,329 75,537
Excluding Non-recurring
items and Cumulative
Effect of Change in
Accounting Principle:
Operating Income $10,718 $16,253 $38,873 $47,163
Operating Margin 4.3% 7.3% 5.1% 6.9%
Net Income $6,217 $6,161 $20,038 $21,400
Basic Earnings Per Share $0.08 $0.08 $0.26 $0.28
Diluted Earnings Per Share $0.08 $0.08 $0.26 $0.28
Diluted shares outstanding 77,195 76,863 78,329 76,723
Effective Tax Rate 39.5% 39.5% 39.5% 40.2%
Notes:
1. Represents $5.2 mm of non-recurring, pre-tax charges recorded in the
second quarter of 2002 related to a workforce reduction, the closure
of customer interaction centers, and the impairment of a property
lease.
2. Represents the adoption of SFAS No. 142 "Accounting for Goodwill and
Other Intangibles".
3. Represents $6.0 mm of non-recurring, pre-tax charges related to a
workforce reduction.
4. Represents $0.7 mm of non-recurring, pre-tax charges related to a
workforce reduction for a non-consolidated subsidiary.
5. Represents the $6.0 mm non-recurring, pre-tax charge described in
Note 3 above, in addition to $27.3 mm of non-recurring, pre-tax
charges recorded in the first and second quarters of 2001 related to
a workforce reduction, the closure of a customer interaction center,
and the write down of the carrying value of the company's formerly
planned headquarters building.
6. Represents the $0.7 mm non-recurring, pre-tax charge described in
Note 4 above, in addition to a $16.5 mm non-recurring, pre-tax charge
recorded in the second quarter of 2001 related to the asset
impairment of the company's investment in enhansiv.
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
September 30, December 31,
2002 2001
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $103,103 $95,430
Investment in available-for-sale
securities -- 2,281
Short-term investments 3,868 6,460
Accounts receivable, net 157,102 162,344
Other current assets 48,376 41,911
Total current assets 312,449 308,426
Property and Equipment, net 159,075 177,959
Other assets 99,887 87,554
Total assets $571,411 $573,939
LIABILITIES AND STOCKHOLDERS' EQUITY
Total current liabilities $137,467 $123,221
Total noncurrent liabilities 83,148 88,449
Minority interest 13,647 14,319
Total stockholders' equity 337,149 347,950
Total liabilities and stockholders' equity $571,411 $573,939
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED CASH FLOW INFORMATION
(In thousands)
(Unaudited)
Nine months ended Three months ended
September 30, September 30,
2002 2001 2002 2001
Cash flow from operating
activities:
Net income (loss) $9,390 $(9,108) $6,217 $2,126
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 43,187 44,811 14,561 15,423
Other (2,402) 40,666 18,649 22,860
Net cash provided by
operating activities $57,677 $76,369 $39,427 $40,409
Total Capital Expenditures -
Note 1 $29,504 $47,169 $12,672 $8,018
Notes:
1. Total capital expenditures in 2001 exclude any investments in real
estate held for sale, which related to the Company's former planned
headquarters building.
SOURCE TeleTech Holdings, Inc.
CONTACT: investors, 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.
