Achieves Second Quarter 2011 Revenue of $294 Million,
Operating Margin of 8.4 Percent and Fully Diluted Earnings per
Share of 38 Cents;
Raises Full Year 2011 Revenue Growth to Between 9 and 10
Percent;
Signs $75 Million of New Business and Completes Acquisition of
eLoyalty
ENGLEWOOD, Colo., Aug 02, 2011 (BUSINESS WIRE) -- TeleTech Holdings, Inc. (NASDAQ: TTEC), one of the
largest global providers of strategic and technology-enabled
business process outsourcing solutions that drive commerce and
lifetime customer value, today announced financial results for the
second quarter ended June 30, 2011. The Company also filed its
Quarterly Report on Form 10-Q with the Securities and Exchange
Commission for the quarter ended June 30, 2011.
"We are pleased with our second quarter financial performance
and have raised our revenue outlook for 2011," said Ken Tuchman,
chairman and chief executive officer. "Our fully integrated,
end-to-end suite of highly scalable enterprise class solutions,
including strategic consulting, revenue generation and on demand
infrastructure and software, enables us to help our clients
seamlessly deliver a differentiated customer experience and
continues to drive year-over-year revenue growth, improved
operating performance and solid new business wins.
"Recognizing that the service experience is what defines today's
brands, well managed companies are seeking a partner to lead them
through the business evolution required to meet heightened customer
expectations," continued Tuchman. "We continue to broaden our
capabilities and are excited about our product line-up and emerging
suite of software-as-a-service and subscription-based offerings.
From strategy to execution, we are uniquely focused on delivering
an exceptional, multi-channel customer experience that enables our
clients to enjoy both industry and financial leadership."
SECOND QUARTER 2011 FINANCIAL HIGHLIGHTS
TeleTech's second quarter 2011 revenue was $293.6 million
compared to $271.9 million in the year-ago period. Revenue in the
year-ago second quarter included $35.7 million of work for the U.S.
Census program which was substantially completed in the third
quarter 2010. Excluding the Census program revenue, TeleTech's
second quarter 2011 constant currency revenue growth was 19.1
percent. Revenue from TeleTech's offshore locations in the second
quarter accounted for $131.1 million or 45 percent of total
revenue.
TeleTech's second quarter 2011 income from operations was $24.6
million, or 8.4 percent of revenue, compared to $19.1 million, or
7.0 percent of revenue in the year-ago quarter. Income from
operations for the second quarter 2011 and 2010 included ($0.1)
million and $2.0 million, respectively, of unusual charges related
to restructuring and asset impairments.
During the second quarter 2011, TeleTech incurred approximately
$0.9 million of acquisition-related costs associated with the
recent acquisition of eLoyalty. Excluding these costs as well as
the unusual charges mentioned above, TeleTech's second quarter 2011
non-GAAP income from operations was $25.4 million, or 8.7 percent
of revenue.
Second quarter 2011 fully diluted earnings per share
attributable to TeleTech shareholders was 38 cents compared to
second quarter 2010 fully diluted earnings per share of 22 cents.
Second quarter 2011 fully diluted earnings per share attributable
to TeleTech shareholders includes a one-time net tax benefit of
$5.7 million related to the settlement of a U.S. tax refund claim
and other discrete items.
Excluding the one-time net tax benefit and acquisition related
costs in the second quarter 2011 in addition to the unusual charges
for both periods, TeleTech's second quarter 2011 non-GAAP fully
diluted earnings per share attributable to TeleTech shareholders
was 29 cents compared to 24 cents in the year-ago quarter.
TeleTech's second quarter 2011 normalized effective tax rate was
24.9 percent due to the distribution of global earnings. The
normalized effective tax rate for the first six months of 2011 was
22.1 percent. As previously reported, TeleTech continues to expect
its full year 2011 normalized effective tax rate will range between
20 and 23 percent.
OTHER BUSINESS HIGHLIGHTS
New Business
During the second quarter 2011 TeleTech signed an estimated $75
million in annualized revenue from both new and expanding client
relationships.
Strong Balance Sheet Continues to Fund Operations,
Strategic Acquisitions and Share Repurchases
- As of June 30, 2011, TeleTech had cash
and cash equivalents of $194.3 million, $118.0 million of
borrowings on its credit facility and total other debt of $3.3
million, resulting in a net positive cash position of $73.0
million.
- Capital expenditures for the second
quarter 2011 were $8.5 million, compared to $5.7 million in the
second quarter 2010.
- TeleTech repurchased approximately
524,000 shares of common stock during the second quarter 2011 for a
total cost of approximately $10 million. As of June 30, 2011, there
was approximately $52 million authorized for future share
repurchases.
UPDATED 2011 BUSINESS OUTLOOK
TeleTech is raising its full year 2011 revenue guidance
primarily to reflect the completed acquisition of eLoyalty
Corporation, which will be immediately accretive to TeleTech
earnings. TeleTech estimates full year 2011 revenue will grow
approximately 9 to 10 percent over 2010, up from management's
previous expectation of 5 to 6 percent. Furthermore, TeleTech
estimates full year 2011 operating margin will range between 8.7
and 9.5 percent, excluding unusual charges, if any.
LONGER-TERM FINANCIAL GOALS
As TeleTech continues to expand its delivery of higher value,
fully integrated solutions that span the entire customer experience
continuum, TeleTech reiterates its expectation that revenue will
increase from 2010 to 2014 at a compounded annual growth rate
between 9 and 10 percent. Furthermore, it expects revenue from
consultative and technology-based solutions to increase to
approximately 25 percent of total 2014 revenue thereby driving
operating margin to increase to an estimated range between 11 and
12 percent by 2014.
CONFERENCE CALL
A conference call and webcast with management will be held on
Wednesday, August 3, 2011 at 8:30 a.m. Eastern Time. You are
invited to join a live webcast of the conference call by visiting
the "Investors" section of the TeleTech website at . If you
are unable to participate during the live webcast, a replay will be
available on the TeleTech website through Wednesday, August 17,
2011.
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.
We also encourage all investors to read our Quarterly Report on
Form 10-Q for the second quarter ended June 30, 2011.
ABOUT TELETECH
For nearly 30 years, TeleTech and its subsidiaries have helped
the world's largest companies achieve their most ambitious goals.
As the go-to partner for the Global 1000, the TeleTech group of
companies delivers technology-based solutions that maximize
revenue, transform customer experiences and optimize business
processes. From strategic consulting to operational execution,
TeleTech's approximately 44,000 employees drive success for clients
in the communications and media, financial services, government,
healthcare, technology, transportation and retail industries. Our
companies deliver award-winning integrated solutions in support of
professional services,
revenue generation,
customer innovation,
enterprise innovation,
hosted technology and
learning innovation. For additional information, please visit
.
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: achieving estimated revenue from new,
renewed and expanded client business as volumes may not materialize
as forecasted, especially due to the global economic slowdown;
achieving profit improvement in our International BPO operations;
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; our ability to execute our
growth plans, including the successful integration of acquired
companies and the sales of new products; 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 services 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; the
risk of integrating strategic acquisitions; 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, fires,
pandemic, or terrorist-related events; risks associated with
attracting and retaining cost-effective labor at our delivery
centers; the possibility of 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 adversely impacts our tax obligations,
health care costs or the BPO and customer management industry. 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,
2010. The Company's filings with the Securities and Exchange
Commission are available in the "Investors" section of TeleTech's
website, which is located at . All
information in this release is as of August 2, 2011. 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) |
|
|
|
| Three
months ended |
Six
months ended |
| June 30, |
June 30, |
| 2011 |
2010 |
2011 |
2010 |
|
|
Revenue |
$ |
293,636 |
$ |
271,927 |
$ |
574,615 |
$ |
543,453 |
|
| Operating
Expenses: |
| Cost of
services |
210,358 |
198,194 |
409,479 |
392,812 |
| Selling,
general and administrative |
47,283 |
39,741 |
95,084 |
83,149 |
| Depreciation
and amortization |
11,423 |
12,946 |
23,021 |
25,670 |
| Restructuring
charges, net |
(57 |
) |
1,304 |
682 |
2,773 |
|
Impairment losses |
- |
679 |
230 |
679 |
| Total
operating expenses |
269,007 |
252,864 |
528,496 |
505,083 |
|
|
Income From Operations |
24,629 |
19,063 |
46,119 |
38,370 |
|
| Other
income (expense) |
(1,276 |
) |
332 |
(1,546 |
) |
121 |
|
|
Income Before Income Taxes |
23,353 |
19,395 |
44,573 |
38,491 |
|
|
Provision for income taxes |
(129 |
) |
(5,071 |
) |
(9,978 |
) |
(10,125 |
) |
|
| Net
Income |
23,224 |
14,324 |
34,595 |
28,366 |
|
| Net
income attributable to noncontrolling interest |
(1,007 |
) |
(922 |
) |
(1,905 |
) |
(1,677 |
) |
|
|
Net Income Attributable to TeleTech
Shareholders |
$ |
22,217 |
$ |
13,402 |
$ |
32,690 |
$ |
26,689 |
|
| Net Income Per Share Attributable to TeleTech
Shareholders |
|
|
Basic |
$ |
0.39 |
$ |
0.22 |
$ |
0.57 |
$ |
0.43 |
|
|
Diluted |
$ |
0.38 |
$ |
0.22 |
$ |
0.56 |
$ |
0.42 |
|
|
|
Income From Operations Margin |
8.4 |
% |
7.0 |
% |
8.0 |
% |
7.1 |
% |
| Net
Income Attributable to TeleTech Shareholders Margin |
7.6 |
% |
4.9 |
% |
5.7 |
% |
4.9 |
% |
| Effective Tax
Rate |
0.6 |
% |
26.1 |
% |
22.4 |
% |
26.3 |
% |
|
|
|
Weighted Average Shares Outstanding |
|
Basic |
56,713 |
61,117 |
56,949 |
61,495 |
|
Diluted |
57,974 |
62,317 |
58,376 |
62,907 |
|
|
TELETECH HOLDINGS, INC. AND SUBSIDIARIES |
|
SEGMENT INFORMATION |
| (In
thousands) |
|
|
|
| Three
months ended |
Six
months ended |
| June 30, |
June 30, |
| 2011 |
2010 |
2011 |
2010 |
|
|
Revenue: |
| North American BPO |
$ |
200,885 |
$ |
212,506 |
$ |
392,934 |
$ |
420,448 |
| International
BPO |
92,751 |
59,421 |
181,681 |
123,005 |
| Total |
$ |
293,636 |
$ |
271,927 |
$ |
574,615 |
$ |
543,453 |
|
| Income (Loss)
From Operations: |
| North American BPO |
$ |
19,319 |
$ |
25,097 |
$ |
36,887 |
$ |
44,885 |
| International
BPO |
5,310 |
(6,034 |
) |
9,232 |
(6,515 |
) |
| Total |
$ |
24,629 |
$ |
19,063 |
$ |
46,119 |
$ |
38,370 |
|
|
TELETECH HOLDINGS, INC. AND SUBSIDIARIES |
|
CONSOLIDATED BALANCE SHEETS |
| (In
thousands) |
|
|
| June
30, |
December
31, |
| 2011 |
2010 |
|
|
|
ASSETS |
| Current
assets: |
| Cash and cash
equivalents |
$ |
194,286 |
$ |
119,385 |
| Accounts receivable,
net |
239,543 |
233,706 |
| Other current
assets |
83,834 |
71,125 |
| Total current
assets |
517,663 |
424,216 |
|
| Property and
equipment, net |
95,699 |
105,528 |
| Other
assets |
170,423 |
130,879 |
|
| Total
assets |
$ |
783,785 |
$ |
660,623 |
|
| LIABILITIES AND
EQUITY |
| Total current
liabilities |
$ |
173,694
|
$ |
172,251 |
| Other long-term
liabilities |
156,843
|
33,554 |
| Total
equity |
453,248 |
454,818 |
|
| Total
liabilities and equity |
$ |
783,785 |
$ |
660,623 |
|
|
|
TELETECH HOLDINGS, INC. AND SUBSIDIARIES |
|
RECONCILIATION OF NON-GAAP FINANCIAL
INFORMATION |
| (In
thousands, except per share data) |
|
|
|
| Three
months ended |
Six
months ended |
| June 30, |
June 30, |
|
2011 |
2010 |
2011 |
2010 |
|
| Reconciliation of
Gross Margin: |
|
|
Revenue |
$ |
293,636 |
$ |
271,927 |
$ |
574,615 |
$ |
543,453 |
| Cost of
services |
210,358 |
198,194 |
409,479 |
392,812 |
| Gross
margin |
$ |
83,278 |
$ |
73,733 |
$ |
165,136 |
$ |
150,641 |
|
| Gross margin
percentage |
28.4% |
27.1% |
28.7% |
27.7% |
|
|
| Reconciliation of
EBIT & EBITDA: |
|
| Net Income
attributable to TeleTech shareholders |
$ |
22,217 |
$ |
13,402 |
$ |
32,690 |
$ |
26,689 |
| Interest income |
(720) |
(486) |
(1,386) |
(1,060) |
| Interest expense |
1,291 |
699 |
2,671 |
1,516 |
| Provision for
income taxes |
129 |
5,071 |
9,978 |
10,125 |
|
EBIT |
$ |
22,917 |
$ |
18,686 |
$ |
43,953 |
$ |
37,270 |
|
| Depreciation and
amortization |
11,423 |
12,946 |
23,021 |
25,670 |
|
|
EBITDA |
$ |
34,340 |
$ |
31,632 |
$ |
66,974 |
$ |
62,940 |
|
|
| Reconciliation of
Free Cash Flow: |
|
| Cash Flow From
Operating Activities: |
| Net income |
$ |
23,224 |
$ |
14,324 |
$ |
34,595 |
$ |
28,366 |
| Adjustments to reconcile
net income to net cash |
| provided by operating
activities: |
| Depreciation and
amortization |
11,423 |
12,946 |
23,021 |
25,670 |
| Other |
(11,274) |
(4,067) |
(9,635) |
20,599 |
| Net cash provided by
operating activities |
23,373 |
23,203 |
47,981 |
74,635 |
|
| Less - Total
Capital Expenditures |
8,492 |
5,708 |
12,362 |
12,316 |
|
| Free Cash
Flow |
$ |
14,881 |
$ |
17,495 |
$ |
35,619 |
$ |
62,319 |
|
|
| Reconciliation of
Non-GAAP Income from Operations: |
|
| Income from
Operations |
$ |
24,629 |
$ |
19,063 |
$ |
46,119 |
$ |
38,370 |
| Restructuring charges,
net |
(57) |
1,304 |
682 |
2,773 |
| Impairment losses |
- |
679 |
230 |
679 |
| Acquisition
related expenses |
855 |
- |
855 |
- |
|
| Non-GAAP Income
from Operations |
$ |
25,427 |
$ |
21,046 |
$ |
47,886 |
$ |
41,822 |
|
|
| Reconciliation of
Non-GAAP EPS: |
|
| Net Income
attributable to TeleTech shareholders |
$ |
22,217 |
$ |
13,402 |
$ |
32,690 |
$ |
26,689 |
| Add:
Asset impairment and restructuring charges, net of related
taxes |
(42) |
1,424 |
641 |
2,544 |
| Add: Acquisition related
expenses, net of related taxes |
522 |
- |
522 |
- |
| Add: Changes in judgement
for uncertain tax positions |
| recorded in
prior periods |
(5,687) |
- |
163 |
- |
|
| Non-GAAP Net
Income attributable to TeleTech shareholders |
$ |
17,010 |
$ |
14,826 |
$ |
30,474 |
$ |
29,233 |
|
| Diluted shares
outstanding |
57,974 |
62,317 |
58,376 |
62,907 |
|
| Non-GAAP EPS
attributable to TeleTech shareholders |
$ |
0.29 |
$ |
0.24 |
$ |
0.52 |
$ |
0.46 |
|
|
| Reconciliation of
Non-GAAP EBITDA: |
|
| Net Income
attributable to TeleTech shareholders |
$ |
22,217 |
$ |
13,402 |
$ |
32,690 |
$ |
26,689 |
| Interest income |
(720) |
(486) |
(1,386) |
(1,060) |
| Interest expense |
1,291 |
699 |
2,671 |
1,516 |
| Provision for income
taxes |
129 |
5,071 |
9,978 |
10,125 |
| Depreciation and
amortization |
11,423 |
12,946 |
23,021 |
25,670 |
| Asset impairment and
restructuring charges |
(57) |
1,983 |
912 |
3,452 |
| Equity-based
compensation expenses |
3,955 |
3,407 |
7,715 |
6,595 |
|
| Non-GAAP
EBITDA |
$ |
38,238 |
$ |
37,022 |
$ |
75,601 |
$ |
72,987 |
SOURCE: TeleTech
TeleTech
Investor Contact:
Karen Breen, 303-397-8592
or
Media Contact:
Jeanne Blatt, 303-397-8507
