Record First Quarter Revenue Grows 11.4 Percent; EPS Doubles to 8 Cents
Global Demand Driving 25 Percent Increase in Worldwide Capacity
ENGLEWOOD, Colo., May 3 /PRNewswire-FirstCall/ -- TeleTech Holdings, Inc.
(Nasdaq: TTEC), a leading global business process outsourcing (BPO) provider,
today announced first quarter 2006 financial results. The Company also filed
its Quarterly Report on Form 10-Q with the Securities and Exchange Commission
for the quarter ended March 31, 2006.
(Logo: http://www.newscom.com/cgi-bin/prnh/20050404/LAM124LOGO)
TeleTech reported record first quarter revenue of $283.4 million, an
increase of 11.4 percent year over year. Revenue in TeleTech's North American
and International Customer Management segments, which combined represents
94 percent of consolidated revenue, grew 14.2 percent year over year.
Income from operations more than doubled year over year increasing to
$9.1 million or 3.2 percent of total revenue.
Fully diluted EPS doubled year over year to 8 cents per share. This
includes $1.4 million of stock option expense, or approximately one cent per
share. It also includes $0.9 million of asset impairment and restructuring
charges, or approximately one cent per share, primarily related to costs
associated with certain international facilities.
EXECUTIVE COMMENTARY
"This is the second consecutive quarter of double-digit revenue growth
driven by continued new, renewed and expanded business wins. The increased
pace of new business wins stems from our continuing investment in sales and
marketing, a heightened interest in BPO outsourcing across all our targeted
industry verticals and a shortened sales cycle. In addition, both new and
existing clients are increasingly selecting TeleTech because of our growing
suite of diversified offerings and our ability to handle both their front and
back office outsourcing needs," said Ken Tuchman, Chairman and Chief Executive
Officer. "Our solid revenue growth has led to an unprecedented need for new
capacity deployment in near and off-shore locations. We believe our capacity
in these locations will grow to nearly 80 percent of our total capacity by
year-end."
First Quarter 2006 Business Highlights
Increased Pace of New, Renewed and Expanded Client Business
* During the first four months of 2006, TeleTech signed an estimated
$80 million of incremental annual revenue from new and existing
clients. When combined with the underlying value of the associated
existing client business, it results in an estimated total contract
value of approximately $2 billion over a multi-year period.
* As a result of high client satisfaction levels, nearly all significant
client agreements requiring renewal in 2006 have been completed.
Strong Pipeline of New Global Business Opportunities with Shortening Sales
Cycle
* TeleTech's pipeline of new global business opportunities is strong and
its revenue base continues to diversify across several targeted
industry verticals. For instance, revenue in TeleTech's healthcare
vertical is currently six percent of revenue, up from less than two
percent a year ago. Current and prospective clients are increasingly
realizing that outsourcing front and back office processes are integral
to achieving their broader business objectives.
Strong Balance Sheet Funding Organic Growth and Share Repurchase Program
* As of quarter end, TeleTech had cash and cash equivalents of
$34.5 million and total debt to equity of 13.6 percent.
* As a result of increased global demand, capital expenditures were
$14.6 million, up from $4.8 million a year ago. Accordingly, free
cash flow was $2.1 million in the first quarter 2006 compared to
$10.3 million in the prior year quarter.
* TeleTech repurchased $8.1 million of common stock through March 31,
2006, leaving approximately $58 million remaining under the repurchase
program as of quarter-end.
Business Outlook
* As previously disclosed, TeleTech expects full year 2006 organic
revenue to grow between 8 to 10 percent over 2005 and believes its
fourth quarter 2006 operating margin will approximate 6 to 7 percent.
SEC FILINGS
The Company's filings with the Securities and Exchange Commission are
available in the "Investors" section of TeleTech's website, which can be found
at www.teletech.com.
CONFERENCE CALL
TeleTech executive management will hold a conference call to discuss first
quarter 2006 financial results on Wednesday, May 3, 2006, at 5:00 p.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 Wednesday, May 17, 2006.
ABOUT TELETECH
TeleTech is a leading global business process outsourcing (BPO) company
that provides a full range of front-to-back office outsourced solutions
including customer management, transaction-based processing, and database
marketing services. TeleTech's comprehensive solutions include fully managed,
OnDemand services including infrastructure, software, and business
intelligence. TeleTech's ability to deliver innovative solutions globally
over a centralized and standardized delivery platform ensures a high quality,
consistent customer experience enabling clients to increase revenue, improve
profitability, and develop stronger customer relationships around the world.
TeleTech is a valued partner for clients that include Global 1000 businesses
and governments. Approximately 60 percent of TeleTech's revenue is generated
internationally with services offered in 150 languages from nearly every
continent on the globe. For additional information, visit www.TeleTech.com.
FORWARD-LOOKING STATEMENTS
This press release may contain certain forward-looking statements that
involve risks and uncertainties. The projections and statements contained in
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.
In accordance with the Private Securities Litigation Reform Act of 1995,
following are important factors that could cause our actual results to differ
materially from those expressed or implied by such forward-looking statements,
including but not limited to the following: our belief that we are continuing
to see strong demand for our services; estimated revenue from new, renewed,
and expanded client business as volumes may not materialize as forecasted or
be sufficient to achieve our Business Outlook; achieving expected profit
improvement in our International Customer Management operations; the ability
to close and ramp new business opportunities that are currently being pursued
with existing clients and potential clients in order to achieve our Business
Outlook; our ability to execute our growth plans, including sales of new
products (such as TeleTech On Demand(TM) and TeleTech In Culture(TM); our
ability to achieve our year-end 2006 and 2007 financial goals and targeted
cost reductions set forth in our Business Outlook; the possibility of our
Database Marketing and Consulting segment not increasing revenue, lowering
costs, or returning to profitability; the possibility of lower revenue or
price pressure from our clients experiencing a downturn or merger in their
business; greater than anticipated competition in the Business Process
Outsourcing ("BPO") and customer management 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 or terrorist-related events; risks associated with attracting and
retaining cost-effective labor at our 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 we operate; 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.
Please refer to the Company's filings with the Securities and Exchange
Commission, including the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 2006, and the Annual Report on Form 10-K for the year
ended December 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.
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
Three months ended
March 31,
2006 2005
Revenue $283,422 $254,326
Operating expenses:
Cost of services 213,545 191,010
Selling, general and administrative 48,058 43,976
Depreciation and amortization 11,801 14,308
Restructuring charges, net 757 953
Impairment losses 176 --
Total operating expenses 274,337 250,247
Operating Income 9,085 4,079
Other income (expense) (332) 874
Income Before Income Taxes and Minority Interest 8,753 4,953
Provision for income taxes 2,981 2,149
Income before Minority Interest 5,772 2,804
Minority interest (384) (63)
Net Income $5,388 $2,741
Basic Earnings Per Share $0.08 $0.04
Diluted Earnings Per Share $0.08 $0.04
Operating Income Margin 3.2% 1.6%
Net Income Margin 1.9% 1.1%
Effective Tax Rate after Minority Interest 35.6% 43.9%
Weighted Average Shares
Basic 68,928 74,179
Diluted 70,344 76,720
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(In thousands)
(unaudited)
Three months ended
March 31,
2006 2005
Revenue:
North American Customer Management $179,737 $152,252
International Customer Management 86,084 80,420
Database Marketing and Consulting 17,601 21,654
Total $283,422 $254,326
Operating Income (Loss):
North American Customer Management $12,743 $11,233
International Customer Management (2,693) (4,323)
Database Marketing and Consulting (965) (2,831)
Total $9,085 $4,079
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, December 31,
2006 2005
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $34,483 $32,505
Accounts receivable, net 198,918 207,090
Other current assets 61,033 59,558
Total current assets 294,434 299,153
Property and equipment, net 138,692 133,635
Other assets 89,497 85,443
Total assets $522,623 $518,231
LIABILITIES AND STOCKHOLDERS' EQUITY
Total current liabilities $154,940 $160,183
Other noncurrent liabilities 65,317 58,130
Minority interest 6,951 6,544
Total stockholders' equity 295,415 293,374
Total liabilities and
stockholders' equity $522,623 $518,231
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION
(In thousands)
(unaudited)
Three months ended
March 31,
Reconciliation of Free Cash Flow 2006 2005
Cash flow from operating activities:
Net income $5,388 $2,741
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 11,801 14,308
Other (469) (1,951)
Net cash provided by operating activities $16,720 $15,098
Total Capital Expenditures $14,572 $4,766
Free Cash Flow $2,148 $10,332
Three months ended
March 31,
2006 2005
Reconciliation of EBITDA
Net Income $5,388 $2,741
Interest income $(169) $(812)
Interest expense $887 $517
Provision for income taxes $2,981 $2,149
Depreciation and amortization $11,801 $14,308
EBITDA $20,888 $18,903
CONTACT: Investors, Karen Breen, +1-303-397-8592, or Media, Amy Claire
Wild, +1-303-397-8450, both of TeleTech Holdings, Inc.
