Achieves $304 Million in First Quarter Revenue and 23 Cents in Fully Diluted Earnings per Share; Solid Operational Performance Drives a 315 Percent Increase in Free Cash Flow to $46 MillionENGLEWOOD, CO, May 11, 2009 (MARKETWIRE via COMTEX) -- 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 2009. The Company also filed its Quarterly Report
on Form 10-Q with the Securities and Exchange Commission for the
quarter ended March 31, 2009.
FIRST QUARTER 2009 FINANCIAL RESULTS
TeleTech reported first quarter 2009 revenue of $304.0 million
compared to $367.6 million in the first quarter 2008 and $326.0
million in the fourth quarter 2008. On a constant currency basis,
revenue declined 8.4 percent or $27.8 million from the first quarter
2008 and 5.7 percent or $18.4 million from the fourth quarter 2008.
These declines were primarily attributable to lower client volumes
related to the weak economic environment and increased offshore work
when compared to the prior quarters.
TeleTech's first quarter 2009 gross margin improved to 28.0 percent
from 26.5 percent in the year-ago quarter aided by a favorable shift
to higher margin offshore revenue and increased workstation
utilization across a 24-hour period.
TeleTech's first quarter 2009 income from operations was $20.3
million compared to $28.8 million in the year-ago quarter. Income from
operations for the quarter included $2.6 million of unusual charges,
primarily related to restructuring and impairment charges in
TeleTech's International BPO segment.
Excluding the $2.6 million of unusual charges mentioned above,
TeleTech's first quarter 2009 non-GAAP income from operations was
$22.9 million, or 7.5 percent of revenue. This is lower than 9.8
percent, excluding unusual charges, in the year-ago quarter. This
decrease is due in part to higher equity-based compensation expense
and an increased investment in TeleTech's global sales team.
First quarter 2009 fully diluted earnings per share were 23 cents on
net income of $15.1 million. Excluding the $2.6 million of unusual
pre-tax charges discussed above, first quarter 2009 non-GAAP earnings
per share were 26 cents.
FIRST QUARTER 2009 BUSINESS HIGHLIGHTS
Strong Balance Sheet Continues to Fund Operations
- As of March 31, 2009, TeleTech had cash and cash equivalents of $91.2
million and total debt of $56.1 million, resulting in a net positive cash
position of $35.1 million.
- First quarter 2009 cash flow from operations grew $27.8 million or 106
percent to $54.0 million from $26.2 million in the first quarter 2008.
- Free cash flow for the first quarter 2009 was $45.6 million,
representing a 315 percent increase from $11.0 million in the year ago
quarter.
- Capital expenditures in the first quarter 2009 were $8.5 million, down
from $15.2 million in the year-ago quarter.
- Return on invested capital was 28 percent as of March 31, 2009, up
from 27 percent in the year-ago quarter.
New Business
- During the first quarter 2009, TeleTech signed an estimated $60
million in new, annualized long-term revenue predominantly from expanded
existing client relationships.
Share Repurchases
- In the first quarter 2009, TeleTech's Board of Directors approved an
incremental $25 million for additional share repurchases. As of March 31,
2009, TeleTech had $33.4 million authorized for share repurchases under
this program.
- TeleTech's strong balance sheet has given the Company the flexibility
to fund organic growth while also repurchasing common stock. During the
first quarter 2009, the Company repurchased 195,000 shares of common stock
for $2.0 million and is continuing its stock repurchase program.
EXECUTIVE COMMENTARY ON TELETECH'S FINANCIAL RESULTS
"We continue to perform well in a dynamic economic environment," said
Kenneth Tuchman, chairman and chief executive officer. "The strength
of our client relationships and reputation for operational excellence
enabled us to sign $60 million of new business this quarter, primarily
with existing clients. While we are seeing sales cycles lengthen
compared to 2007 and early 2008, we continue to steadily build our
sales pipeline across multiple industry verticals. Our growing
pipeline and high client retention rate of 98 percent this quarter
gives us confidence in our ability for renewed growth in 2010 as we
believe client volumes will begin to stabilize in the latter part of
2009."
BUSINESS OUTLOOK
As previously discussed, the stronger U.S. dollar in 2009 relative to
currencies of certain foreign subsidiaries is expected to adversely
impact 2009 revenue between $90 and $110 million when compared to
2008.
In light of the challenging global economic climate, TeleTech
believes its 2009 revenue, after the foreign currency impact
described above, will decline 8 percent to 10 percent from 2008, due
to the following factors:
- The continued migration to offshore locations of certain domestic work
currently being performed in countries such as Australia, New Zealand,
Spain, and the United States is estimated to reduce 2009 revenue between
$50 and $60 million when compared to 2008.
- While TeleTech continues to sign and ramp new business, the organic
revenue growth from these programs is expected to be more than offset by
lower volumes with certain existing clients due to lower demand for their
products or services. This is expected to result in an estimated 'net'
revenue reduction in 2009 of between $60 and $70 million when compared to
2008.
TeleTech expects 2009 operating margin will range between 7 percent
and 8 percent, in line with current consensus expectations.
Despite the economic climate, TeleTech continues to maintain high
client retention rates and believes that as the economy improves,
certain existing client volumes will return to more normalized
levels. Furthermore, TeleTech continues to reduce its client
concentration along with strengthening its balance sheet via ongoing
free cash flow generation and proactive working capital management.
In addition, the Company intends to continue repurchasing its stock
under the current program authorization.
CONFERENCE CALL
A conference call and webcast with management will be held on
Tuesday, May 12, 2009 at 8:30 a.m. Eastern Time. You are invited to
join the live webcast of the conference 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 will
be available on the TeleTech website through Tuesday, May 26, 2009.
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: Free Cash Flow, Non-GAAP Income from Operations,
Non-GAAP EBITDA and Non-GAAP EPS. 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.
ABOUT TELETECH
TeleTech is one of the largest and most geographically diverse global
providers of business process outsourcing solutions. We have a
27-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 more than 250 business process outsourcing programs serving
approximately 100 global clients in the automotive, communications
and media, financial services, government, healthcare, retail,
technology and travel and leisure industries. Our integrated global
solutions are provided by approximately 52,000 employees utilizing
37,800 workstations across 80 delivery centers in 17 countries. For
additional information, visit www.teletech.com.
FORWARD-LOOKING STATEMENTS
Statements in this press release that relate to future results and
events (including statements about future financial and operating
performance) are forward-looking statements based on TeleTech's
current expectations. Actual results and events in future periods
could differ materially from those projected in these forward-looking
statements because of a number of risks and uncertainties including:
general economic, business and industry conditions; the loss of
business or lower volumes from significant clients; delivery center
utilization and labor rates; the pace at which we are able to ramp
new business; negative tax or other implications for TeleTech
resulting from any accounting adjustments or other factors;
unexpected regulatory changes, tax laws, and data privacy measures;
data privacy issues; our ability to accurately predict geographic
revenue mix and seasonal sales trends; information technology and/or
delivery center interruptions; issues or matters that may arise from
governmental and/or administrative agency investigations; shareholder
litigation and governmental investigations or proceedings arising out
of or related to accounting and financial reporting matters,
including TeleTech's restatement of previously issued financial
statements; fluctuations in foreign currency exchange rates along
with our ability to effectively hedge exposure to changes in foreign
currency exchange and/or interest rates; the ability to attract,
retain and motivate key personnel; and political instability, the
effect of armed hostilities, terrorism, contagious diseases and
natural disasters. A detailed discussion of these and other risk
factors that could affect our results is included in TeleTech's SEC
filings, including our Annual Report on Form 10-K for the year ended
December 31, 2008. 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. All
information in this release is as of May 11, 2009. The Company
undertakes no duty to update any forward-looking statement to conform
the statement to actual results or changes in the Company's expectations.
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
Three months ended
March 31,
------------------------
2009 2008
----------- -----------
Revenue $ 304,030 $ 367,636
Operating Expenses:
Cost of services 218,842 270,100
Selling, general and administrative 48,515 51,372
Depreciation and amortization 14,062 15,160
Restructuring charges, net 303 2,202
Impairment losses 1,967 -
----------- -----------
Total operating expenses 283,689 338,834
----------- -----------
Income From Operations 20,341 28,802
Other income (expense) 726 (1,048)
----------- -----------
Income Before Income Taxes 21,067 27,754
Provision for income taxes (5,180) (7,793)
----------- -----------
Net Income 15,887 19,961
Net income attributable to noncontrolling
interest (824) (836)
----------- -----------
Net Income Attributable to TeleTech Shareholders $ 15,063 $ 19,125
=========== ===========
Net Income Per Share Attributable to TeleTech
Shareholders
Basic $ 0.24 $ 0.27
=========== ===========
Diluted $ 0.23 $ 0.27
=========== ===========
Income From Operations Margin 6.7% 7.8%
Net Income Attributable to TeleTech Shareholders
Margin 5.0% 5.2%
Effective Tax Rate 24.6% 28.1%
Weighted Average Shares Outstanding
Basic 63,908 69,937
Diluted 64,300 71,508
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(In thousands)
(unaudited)
Three months ended
March 31,
------------------------
2009 2008
----------- -----------
Revenue:
North American BPO $ 228,886 $ 273,802
International BPO 75,144 93,834
Database Marketing and Consulting - -
----------- -----------
Total $ 304,030 $ 367,636
=========== ===========
Income (Loss) From Operations:
North American BPO $ 25,427 $ 32,921
International BPO (5,086) (3,750)
Database Marketing and Consulting - (369)
----------- -----------
Total $ 20,341 $ 28,802
=========== ===========
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, December 31,
2009 2008
------------ ------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 91,153 $ 87,942
Accounts receivable, net 224,786 236,997
Other current assets 78,439 79,949
------------ ------------
Total current assets 394,378 404,888
Property and equipment, net 148,358 157,747
Other assets 99,248 106,307
------------ ------------
Total assets $ 641,984 $ 668,942
============ ============
LIABILITIES AND EQUITY
Total current liabilities $ 182,274 $ 180,099
Other long-term liabilities 88,846 127,949
Total equity 370,864 360,894
------------ ------------
Total liabilities and equity $ 641,984 $ 668,942
============ ============
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION
(In thousands, except per share data)
(unaudited)
Three months ended
March 31,
------------------------
2009 2008
----------- -----------
Reconciliation of EBIT & EBITDA:
Net Income attributable to TeleTech shareholders $ 15,063 $ 19,125
Interest income (807) (1,086)
Interest expense 843 1,565
Provision for income taxes 5,180 7,793
----------- -----------
EBIT $ 20,279 $ 27,397
Depreciation and amortization 14,062 15,160
----------- -----------
EBITDA $ 34,341 $ 42,557
Reconciliation of Free Cash Flow:
Cash Flow From Operating Activities:
Net income $ 15,887 $ 19,961
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 14,062 15,160
Other 24,062 (8,946)
----------- -----------
Net cash provided by operating activities 54,011 26,175
Total Capital Expenditures 8,455 15,185
----------- -----------
Free Cash Flow $ 45,556 $ 10,990
Reconciliation of Non-GAAP Income from
Operations:
Income from Operations $ 20,341 $ 28,802
Restructuring charges, net 303 2,202
Impairment losses 1,967 -
Equity-based comp review and restatement
expenses 276 4,968
----------- -----------
Non-GAAP Income from Operations $ 22,887 $ 35,972
Reconciliation of Non-GAAP EPS:
Net Income attributable to TeleTech
shareholders $ 15,063 $ 19,125
Add: Asset impairment and restructuring
charges, net of related taxes 1,530 1,583
Add: Equity-based comp review and restatement
expenses, net of related taxes 186 3,572
----------- -----------
Non-GAAP Net Income attributable to TeleTech
shareholders $ 16,779 $ 24,280
Diluted shares outstanding 64,300 71,508
Non-GAAP EPS attributable to TeleTech
shareholders $ 0.26 $ 0.34
Reconciliation of Non-GAAP EBITDA:
Net Income attributable to TeleTech shareholders $ 15,063 $ 19,125
Interest income (807) (1,086)
Interest expense 843 1,565
Provision for income taxes 5,180 7,793
Depreciation and amortization 14,062 15,160
Asset impairment and restructuring charges 2,270 2,202
Equity-based comp review and restatement
expenses 276 4,968
Equity-based compensation expenses 3,614 2,723
----------- -----------
Non-GAAP EBITDA $ 40,501 $ 52,450
Investor Contact:
Karen Breen
303-397-8592
