DENVER, July 19, 2005 /PRNewswire-FirstCall via COMTEX/ -- TeleTech Holdings, Inc.
(Nasdaq: TTEC), a global provider of customer management and business process
outsourcing (BPO) solutions, today provided the following business update.
(Logo: http://www.newscom.com/cgi-bin/prnh/20050404/LAM124LOGO)
As previously disclosed, management of the Company has plans to enhance
the Company's future profitability, including obtaining new clients and
further streamlining operations.
New Clients
Although TeleTech's revenue growth has been slower than anticipated in the
first half of 2005, the Company is now signing new client agreements that were
previously expected to close earlier in the year. As a result, TeleTech is
pleased to announce it recently signed a letter of intent with a large U.S.
healthcare company to perform customer management work that will fully utilize
the Stockton, California Customer Management Center ("CMC"). This new work
will replace a client agreement that was anticipated to terminate during 2005
due to the client having excess internal capacity. The termination of this
client relationship was anticipated when the Company forecasted that its 2005
client attrition rate would be less than its 2004 client attrition rate.
In addition, TeleTech continues to focus upon closing opportunities in its
new business pipeline and the Company was recently awarded a multi-year
inbound customer care contract with a major airline. Further updates
regarding additional business awards will be provided when the Company
announces its second quarter 2005 financial results.
Excess Capacity
Under our plan to reduce higher-cost excess capacity throughout the globe,
in July 2005 TeleTech announced it will exit its Glasgow, Scotland CMC in July
2006 upon termination of the lease agreement. The decision to exit the
Glasgow CMC will result in an approximate $2.5 million charge in the Company's
second quarter 2005 financial statements and will result in an annualized
pre-tax profit improvement of at least $2.5 million beginning in the third
quarter of 2006. The Company also expects to exit two North American CMCs
upon termination of their respective lease agreements during the first half of
2006 without recording a material charge as the related assets will be fully
depreciated.
Newgen
As previously announced, during the second quarter of 2005, TeleTech
accelerated the integration of Newgen into the Company's core operations by
taking the following actions: (1) completing the conversion of existing
automotive dealers to Newgen's new Guarantee Results Product ("GRP") platform,
and (2) beginning to transfer certain work to a lower-cost location. These
actions, while anticipated to improve profitability in future periods,
impacted the second quarter's operating income as follows: (1) Due to
back-office inefficiencies that existed at the beginning of the second
quarter, Newgen focused primarily on the conversion of existing automotive
dealers to the new GRP platform and not on pursuing new client agreements
during the quarter, and (2) costs increased while work was being transferred
to a lower-cost location. As a result of process improvements implemented
during the second quarter, Newgen reduced the time to on-board new clients
from approximately 35 days to 10 days. With the completion of the GRP
conversion and improved back office processes, Newgen will now begin to market
its products to new automotive dealers and manufacturers to increase revenue.
TeleTech now expects Newgen's second quarter 2005 operating loss will be
approximately $3.5 million, which is higher than previously anticipated.
TeleTech projects that as a result of executing the above initiatives, Newgen,
absent allocations of corporate overhead, will operate at a profit during the
fourth quarter of 2005.
This outlook is for Newgen only, as the Company believes consolidated
TeleTech will report positive net income for the second quarter of 2005 and
continue to operate profitably throughout the year.
Share Repurchases
During the second quarter of 2005, TeleTech continued its share repurchase
program and purchased 1.9 million shares for $15 million. Going forward,
management of the Company is committed to continuing its share repurchase
program. As a result of the shares repurchased during the second quarter,
TeleTech ended the quarter with approximately $21 million drawn on its
revolving credit facility and approximately $82 million of cash and cash
equivalents.
ABOUT TELETECH
TeleTech is a global business services company that provides a full range
of front- to back-office outsourced solutions including customer management,
BPO, and database marketing services to measurably enhance clients' core
customer management processes. TeleTech's ability to create innovative
strategies, combined with its global technology platform and delivery
infrastructure, helps clients increase revenue, lower costs, and retain their
customers around the world. TeleTech's products and services, standardized
processes, and recognized capabilities to implement complex global projects
make the Company a valued partner for clients that include Global 1000
businesses and governments. TeleTech partners with clients to offer 150
languages, through its more than 32,000 employees, in 17 countries. 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: risks associated with achieving the Company's expected profit
improvement in its United Kingdom operations; the ability to close and ramp
new business opportunities that are currently being pursued with existing
clients and potential clients; the ability for the Company to execute its
growth plans, including sales of new products (such as OnDemand and
InCulture); to increase profitability via the globalization of its North
American best operating practices; to achieve its three-year financial goals
and targeted cost reductions; the possibility of the Company's Database
Marketing and Consulting segment not increasing revenue, lowering costs,
achieving profitability in the fourth quarter of 2005, or returning to
historic levels of profitability; the possibility of lower revenue or price
pressure from clients experiencing a downturn in their business; greater than
anticipated competition in the customer care 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; 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; 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 business interruption due to
weather or terrorist-related events; 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 December 31, 2004 and Quarterly Report on Form 10-Q for the three months
ended March 31, 2005, 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.
Investor Relations
Karen Breen
+1-303-397-8592
Dan Campbell
+1-303-397-8634
Public Relations
Julie Lucas
+1-303-397-8555
All of TeleTech Holdings, Inc.
