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Record First Quarter Revenue Grows More Than 17 Percent to $333 Million EPS Grows 200 Percent to 24 Cents Operating Income Increases 185 Percent and Operating Margin Expands to 8.6 Percent
ENGLEWOOD, Colo., May 9, 2007 /PRNewswire-FirstCall via COMTEX News Network/ -- 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 first quarter 2007. The Company also filed its
Quarterly Report on Form 10-Q with the Securities and Exchange Commission for
the quarter ended March 31, 2007.
TeleTech reported record first quarter 2007 revenue of $332.5 million, a
17.3 percent increase over the year-ago quarter. Revenue in TeleTech's BPO
business grew 22.9 percent over the year-ago quarter to $326.6 million and
represented 98 percent of consolidated first quarter revenue.
Revenue from services performed for clients in offshore locations grew
approximately 47 percent to $127.1 million in the first quarter 2007 and
represented 38 percent of total revenue. TeleTech currently provides offshore
services from seven countries including Argentina, Brazil, Canada, India,
Malaysia, Mexico and the Philippines and believes it has the largest and most
geographically diverse offshore footprint of any global BPO provider.
TeleTech is expanding into two new emerging markets that will exclusively
provide offshore services. One of these new markets is Costa Rica, which
TeleTech expects will be operational during the second quarter.
Income from operations in the first quarter 2007 increased 185 percent to
$28.5 million or 8.6 percent of revenue, from $10.0 million or 3.5 percent of
revenue in the year-ago quarter. Equity compensation expense included in
income from operations for the current quarter was $2.9 million which lowered
operating margin by approximately 90 basis points.
The BPO business had an operating margin of 10.0 percent, up from a
4.1 percent combined operating margin in the year ago quarter.
Fully diluted earnings per share in the first quarter 2007 was 24 cents,
up 200 percent from 8 cents in the year ago quarter.
Earnings before interest, taxes, depreciation and amortization (EBITDA) in
the first quarter 2007 was $41.1 million or 12.3 percent of revenue, a
97 percent increase over $20.9 million of EBITDA in the year-ago quarter.
Please refer to the discussion of Non-GAAP financial measures below.
Return on invested capital, defined as earnings before interest and taxes
(EBIT) divided by average shareholders' equity, was 25.6 percent at March 31,
2007, up from 11.9 percent at the end of the year ago quarter.
EXECUTIVE COMMENTARY
"We are extremely pleased to have delivered our sixth consecutive quarter
of double-digit revenue growth while significantly increasing profitability as
income from operations increased 185 percent. This strong performance is the
direct result of our ability to convert our investments in new service
offerings, increased vertical industry expertise and growing global delivery
capabilities into meaningful new revenue opportunities," said Kenneth Tuchman,
chairman and chief executive officer. "We continue to experience strong
demand for our services, driven by our clients' increased desire for providers
that can not only enhance their strategic capabilities but who can also
provide a globally-integrated, high-quality front and back office solution.
With a strong start to the new year, we remain focused on achieving both our
2007 and 2008 financial goals through continued top line growth and increasing
profitability."
FIRST QUARTER 2007 BUSINESS HIGHLIGHTS
Strong Performance in the BPO Business
-
Revenue in TeleTech's BPO business grew 22.9 percent to $326.6 million
from $265.8 million in the year-ago quarter. The BPO business
benefited from higher than expected seasonal revenue primarily in the
healthcare and retail industries.
Solid Balance Sheet Continues to Fund Organic Growth
- As of quarter-end, TeleTech had cash and cash equivalents of
$65.3 million and total debt to equity of approximately 12 percent.
- TeleTech generated $18.3 million of free cash flow in the first quarter
compared to $2.1 million in the year-ago quarter.
- Capital expenditures were $13.5 million in the first quarter, down from
$14.6 million in the year-ago quarter. Approximately 80 percent of
this quarter's capital expenditures were related to growth in offshore
locations with the balance for maintenance.
Business Outlook
- For 2007, TeleTech estimates revenue will grow approximately 15 percent
over 2006 as it focuses on achieving its goal of reaching a
$1.5 billion revenue run-rate by the fourth quarter 2007. Furthermore,
TeleTech estimates fourth quarter 2007 operating margin will increase
to 10 percent, excluding unusual charges, if any.
- For 2008, TeleTech estimates revenue will grow between 12 and
15 percent and operating margin will improve by approximately 200 basis
points over 2007.
SEC FILINGS
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.
CONFERENCE CALL
TeleTech executive management will hold a conference call to discuss first
quarter 2007 financial results on Wednesday, May 9, 2007, at 4:30 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 23, 2007.
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: EBITDA,
EBIT and Free Cash Flow. 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 and in our SEC filings.
ABOUT TELETECH
TeleTech is one of the largest and most geographically diverse global
providers of business process outsourcing solutions. We have a 25-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. We
have developed deep domain expertise and support approximately 300 business
process outsourcing programs serving approximately 130 global clients in the
automotive, communications, financial services, government, healthcare,
retail, technology and travel and leisure industries. Our integrated global
solutions are provided by 49,000 employees utilizing 33,200 workstations
across 88 Delivery Centers in 17 countries.
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 and that sales cycles are shortening;
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 in order to achieve our Business Outlook; estimated revenue from new,
renewed, and expanded client business as volumes may not materialize as
forecasted or be sufficient to achieve our Business Outlook; 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 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 execute our growth
plans, including sales of new services (such as TeleTech OnDemand(TM)); our
ability to achieve our year-end 2007 and 2008 financial goals, including those
set forth in our Business Outlook; achieving continued profit improvement in
our International Business Process Outsourcing (BPO) operations; risks
associated with attracting and retaining cost-effective labor at our delivery
centers; the possibility of additional asset impairments and restructuring
charges; risks associated with changes in foreign currency exchange rates; the
possibility of future impairments and / or restructuring charges in our
Database Marketing and Consulting segment; our ability to find cost effective
delivery locations, obtain favorable lease terms, and build or retrofit
facilities in a timely and economic manner; risks associated with business
interruption due to weather, pandemic or terrorist-related events; 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, 2007 and the Annual Report on Form 10-K for the year
ended December 31, 2006, 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,
2007 2006
Revenue $332,532 $283,422
Operating Expenses:
Cost of services 238,305 213,302
Selling, general and
administrative 52,487 47,410
Depreciation and amortization 13,254 11,797
Restructuring charges, net -- 757
Impairment losses -- 176
Total operating expenses 304,046 273,442
Income From Operations 28,486 9,980
Other income (expense) (1,062) (1,227)
Income Before Income Taxes and
Minority Interest 27,424 8,753
Provision for income taxes 9,663 2,981
Income Before Minority Interest 17,761 5,772
Minority interest (434) (384)
Net Income $17,327 $5,388
Net Income Per Share:
Basic $0.25 $0.08
Diluted $0.24 $0.08
Income From Operations Margin 8.6% 3.5%
Net Income Margin 5.2% 1.9%
Effective Tax Rate after Minority Interest 35.8% 35.6%
Weighted Average Shares Outstanding:
Basic 70,335 68,928
Diluted 72,880 70,344
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(In thousands)
(Unaudited)
Three months ended
March 31,
2007 2006
Revenue:
North American BPO $234,237 $179,737
International BPO 92,405 86,084
Database Marketing and Consulting 5,890 17,601
Total $332,532 $283,422
Income (Loss) From Operations:
North American BPO $32,389 $13,111
International BPO 217 (2,166)
Database Marketing and Consulting (4,120) (965)
Total $28,486 $9,980
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, December 31,
2007 2006
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $65,282 $60,484
Accounts receivable, net 237,042 237,353
Other current assets 65,446 63,307
Total current assets 367,770 361,144
Property and equipment, net 158,335 156,047
Other assets 136,296 141,525
Total assets $662,401 $658,716
LIABILITIES AND STOCKHOLDERS' EQUITY
Total current liabilities $182,866 $182,015
Other noncurrent liabilities 75,008 107,417
Minority interest 5,280 5,877
Total stockholders' equity 399,247 363,407
Total liabilities and stockholders' equity $662,401 $658,716
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION
(In thousands, except per share data)
(Unaudited)
Three months ended
March 31,
2007 2006
Reconciliation of EBIT & EBITDA:
Net Income $17,327 $5,388
Interest income (393) (169)
Interest expense 1,284 887
Provision for income taxes 9,663 2,981
EBIT $27,881 $9,087
Depreciation and amortization 13,254 11,797
EBITDA $41,135 $20,884
Reconciliation of Free Cash Flow:
Cash Flow From Operating Activities:
Net income $17,327 $5,388
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 13,254 11,797
Other 1,270 (465)
Net cash provided by operating
activities $31,851 $16,720
Total Capital Expenditures 13,506 14,572
Free Cash Flow $18,345 $2,148
Investors
Karen Breen
+1-303-397-8592
Media
KC Higgins
+1-303-397-8325
Both
of TeleTech Holdings, Inc.
