First Quarter 2012 Revenue Grows 4.2 Percent to
$293 Million; Repurchases Nearly $23 Millionin Stock During the
Quarter; Introduces New Segment Reporting
ENGLEWOOD, Colo.--(BUSINESS WIRE)--May. 1, 2012-- TeleTech Holdings, Inc. (NASDAQ: TTEC), a leading
global provider of technology-enabled customer experience
solutions, today announced financial results for the first quarter
endedMarch 31, 2012. The Company also filed its Quarterly Report on
Form 10-Q with theSecurities and Exchange Commission for the
quarter endedMarch 31, 2012.
"TeleTech's first quarter results reflect our success in
delivering a differentiated experience that is helping our clients
increase the lifetime value of their customers," saidKen
Tuchman,TeleTechchairman and chief executive officer. "Our next
generation customer experience platform is enabling leading global
brands to design, build, grow and manage superior multichannel
customer experiences that are driving dramatic gains in customer
satisfaction and Net Promoter® scores."
FIRST QUARTER 2012 FINANCIAL HIGHLIGHTS
- First quarter 2012 revenue increased
4.2 percent to$292.7 millioncompared to$281.0 millionin the first
quarter 2011.
- First quarter 2012 income from
operations was$18.8 millionor 6.4 percent of revenue compared
to$21.5 millionor 7.6 percent of revenue in the first quarter
2011. Income from operations for the first quarter 2012
included$3.9 millionof restructuring, impairment and
acquisition-related charges. Excluding these charges,
first quarter 2012 non-GAAP income from operations was$22.7
millionor 7.7 percent of revenue.
- First quarter 2012 fully diluted
earnings per share attributable toTeleTechshareholders increased
55.6 percent to28 centscompared to18 centsin the first quarter
2011. First quarter 2012 non-GAAP fully diluted earnings per share
attributable toTeleTechshareholders was29 cents.
- During the first quarter
2012TeleTechsigned an estimated$85 millionin annualized revenue
from both new and expanding client relationships. Approximately 80
percent represents recurring revenue.
STRONG BALANCE SHEET CONTINUES TO FUND OPERATIONS, SHARE
REPURCHASES AND STRATEGIC ACQUISITIONS
- As ofMarch 31, 2012,TeleTechhad cash
and cash equivalents of$172.8 million,$85.0 millionof borrowings on
its credit facility and total other debt of$8.0 million, resulting
in a net positive cash position of$79.8 million.
- TeleTechhad$410.6 millionof additional
borrowing capacity available under its revolving credit facility as
ofMarch 31, 2012. During the first quarter 2012, the company
exercised the$150 millionaccordion feature under its revolving
credit facility thereby increasing the total committed capacity
to$500 million. This providesTeleTechwith the financial flexibility
to continue to fund organic growth, share repurchases and the
pursuit of accretive acquisitions.
- Cash flow from operations in the first
quarter 2012 was$14.7 millioncompared to$24.6 millionin the first
quarter 2011. The reduction is primarily due to the timing of
certain working capital items.
- Capital expenditures in the first
quarter 2012 were$6.4 millioncompared to$3.9 millionin the first
quarter 2011. The higher capital expenditures were primarily
related to the select expansion of capacity in line with TeleTech's
new business wins as well as increased investment in its
technology-based offerings.
- TeleTechrepurchased 1.4 million shares
of common stock during the first quarter 2012 for a total cost
of$22.7 million. As ofMarch 31, 2011, there was$34.0
millionauthorized for future share repurchases.
NEW SEGMENT REPORTING INTRODUCED
To provide greater clarity as to the financial profile and
performance of TeleTech's key business segments, the company
introduced new segment reporting in its Quarterly Report on Form
10-Q for the quarter endedMarch 31, 2012.TeleTechwill now report
financial results for the following four business segments:
Customer Management Services (CMS), Customer Growth Services (CGS),
Customer Technology Services (CTS) and Customer Strategy Services
(CSS). Corporate expenses will be reported separately from the
above. Highlights of the financial performance of the primary
segments are provided below.
- The Customer Management Services (CMS)
segment includes the company's customer experience delivery
solutions which integrate innovative technology with highly-trained
professionals to optimize the customer experience across all
channels and all stages of the customer lifecycle from an onshore,
offshore or work-from-home environment. CMS first quarter 2012
revenue was$234.9 million, representing 80.3 percent of total first
quarter 2012 revenue, and compared to$246.1 millionin the first
quarter 2011. CMS first quarter 2012 income from operations
was$45.4 million, or 19.3 percent of revenue, compared to 19.6
percent of revenue in the first quarter 2011.
- The Customer Growth Services (CGS)
segment includes the company's technology-enabled revenue
generation business. CGS first quarter 2012 revenue was $22.8
million, representing 7.8 percent of total first quarter 2012
revenue, and compared to $22.1 millionin the first quarter 2011.
CGS first quarter 2012 income from operations was $1.1 millionor
4.7 percent of revenue, compared to 13.5 percent of revenue in the
first quarter 2011. CGS first quarter 2012 operating income
includes a $1.8 millioncharge associated with the impairment of the
Direct Alliancetrade-name intangible asset given the renaming of
the subsidiary to RevanaTM. Excluding this charge, first
quarter 2012 operating income was$2.9 million or 12.6 percent of
revenue.
- The Customer Technology Services (CTS)
segment includes the company's hosted and managed technology
offerings. CTS first quarter 2012 revenue increased more than
five-fold from the first quarter 2011 to$25.6 million, primarily as
a result of the acquisition of eLoyalty and representing 8.7
percent of total first quarter 2012 revenue. CTS first quarter 2012
income from operations was$3.6 millionor 14.2 percent of revenue
compared to$2.7 millionor 58.2 percent of revenue in the first
quarter 2011. CTS first quarter 2012 operating results reflect the
mix shift of services from purely hosted solutions in the year-ago
quarter to both hosted and managed solutions in the first quarter
2012 along with an increased investment in sales and marketing to
support this segment's continued growth initiatives.
- The Customer Strategy Services (CSS)
segment includes the company's customer experience strategy and
data analytics businesses. CSS first quarter 2012 revenue increased
16.7 percent to$9.5 millionfrom$8.1 millionin the year-ago quarter.
CSS first quarter 2012 income from operations was$0.9 millionor 9.4
percent of revenue compared to$0.5 millionor 5.7 percent of revenue
in the first quarter 2011.
- The first quarter 2012 operating income
of the above segments excludes$32.3 millionof corporate expenses
which were lower by$0.6 millionor 2.0 percent from$32.9 millionin
the first quarter 2011.TeleTechexpects to continue to further
leverage its corporate expenses as a percentage of revenue across
its expanding suite of services.
BUSINESS OUTLOOK
- In the fourth quarter
2011,TeleTechbegan the process to exit certain unprofitable markets
and programs, which could reduce 2012 revenue up to$100 to $115
millionwhile positively impacting operating income up to$10 to $12
millionon an annualized basis when fully realized. These actions
could result in asset impairment and restructuring costs in the
range of up to$15 to $18 millionduring 2012.
- TeleTechcontinues to expect 2012
revenue will range between$1.15 billion and $1.2 billion. Growth in
both existing and new client relationships is expected to offset
any revenue reduction resulting from the decision to exit certain
unprofitable markets.
- TeleTechcontinues to expect 2012
operating margin will increase from 2011 and range between 8.5 and
9.0 percent, before any unusual charges.
SEC FILINGS
The company's filings with the Securities and Exchange
Commissionare available in the "Investors" section of TeleTech's
website, which can be found at .
CONFERENCE CALL
A conference call and webcast with management will be held on
Wednesday, May 2, 2012at 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 TeleTechwebsite at . If you are unable
to participate during the live webcast, a replay will be available
on theTeleTech website throughWednesday, May 16, 2012.
NON-GAAP FINANCIAL MEASURES
To supplement the Company's consolidated financial statements
presented in accordance with generally accepted accounting
principles (GAAP) inthe 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.TeleTechbelieves that providing these non-GAAP financial
measures provides investors with greater transparency to the
information used byTeleTech'smanagement in its financial and
operational decision making and allows investors to
seeTeleTech'sresults "through the eyes" of management.TeleTechalso
believes that providing this information better
enablesTeleTech'sinvestors to understand its operating performance
and information used by management to evaluate and measure such
performance. 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 quarter
endedMarch 31, 2012.
ABOUTTELETECH
For nearly 30 years, TeleTechand its subsidiaries have helped
the world's most successful companies design, build, grow and
manage superior customer experiences across the customer lifecycle
in order to drive shareholder value. As the go-to partner for the
Global 1000, the TeleTechgroup of companiesdelivers
technology-based solutions that maximize revenue, transform
customer experiences and optimize business processes. From
strategic consulting to operational execution, our more than 41,000
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 customer innovation, revenue generation, technology innovation,
enterprise
innovation, learning
innovation and strategic management
consulting. 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'scurrent 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; 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 customer management industry, 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, 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 customer
management industry. A detailed discussion of these and other risk
factors that could affect our results is included in
TeleTech'sSECfilings, including our Annual Report on Form 10-K for
the year ended December 31, 2011. The Company's filings with the
Securities and Exchange Commissionare available in the "Investors"
section of TeleTech's website, which is located at . All
information in this release is as ofMay 1, 2012. 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, |
| |
2012 |
|
|
2011 |
|
| |
| Revenue |
$ |
292,654 |
$ |
280,979 |
| |
| Operating
Expenses: |
| Cost of services |
211,895 |
199,121 |
| Selling, general and
administrative |
48,135 |
47,801 |
| Depreciation and
amortization |
10,116 |
11,598 |
| Restructuring charges,
net |
1,958 |
739 |
| Impairment
losses |
|
1,800 |
|
|
230 |
|
| Total
operating expenses |
|
273,904 |
|
|
259,489 |
|
| |
| Income From
Operations |
18,750 |
21,490 |
| |
| Other income
(expense) |
|
(80 |
) |
|
(270 |
) |
| |
| Income Before
Income Taxes |
18,670 |
21,220 |
| |
| Provision for
income taxes |
|
(1,853 |
) |
|
(9,849 |
) |
| |
| Net
Income |
16,817 |
11,371 |
| |
| Net income
attributable to noncontrolling interest |
|
(936 |
) |
|
(898 |
) |
| |
| Net
Income Attributable to TeleTech Shareholders |
$ |
15,881 |
|
$ |
10,473 |
|
| |
| Net Income
Per Share Attributable to TeleTech Shareholders |
| |
| Basic |
$ |
0.28 |
|
$ |
0.18 |
|
| |
| Diluted |
$ |
0.28 |
|
$ |
0.18 |
|
| |
| |
| Income From
Operations Margin |
6.4 |
% |
7.6 |
% |
| Net Income
Attributable to TeleTech Shareholders Margin |
5.4 |
% |
3.7 |
% |
| Effective Tax
Rate |
9.9 |
% |
46.4 |
% |
| |
| |
| Weighted
Average Shares Outstanding |
| Basic |
56,493 |
57,190 |
| Diluted |
57,418 |
58,797 |
| |
| |
|
|
| TELETECH
HOLDINGS, INC. AND SUBSIDIARIES |
| SEGMENT
INFORMATION |
| (In
thousands) |
|
(unaudited) |
| |
| |
| Three months
ended |
| March 31, |
| 2012 |
2011 |
| |
| Revenue: |
| Customer Management
Services |
$ |
234,876 |
$ |
246,073 |
| Customer Growth
Services |
22,764 |
22,143 |
| Customer Technology
Services |
25,553
|
4,657 |
| Customer Strategy
Services |
|
9,461
|
|
|
8,106 |
|
| Total |
$ |
292,654 |
|
$ |
280,979 |
|
| |
| Income (Loss) From
Operations: |
| Customer Management
Services |
$ |
45,422 |
$ |
48,251 |
| Customer Growth
Services |
1,079 |
2,982 |
| Customer Technology
Services |
3,635 |
2,712 |
| Customer Strategy
Services |
885 |
463
|
| Corporate |
|
(32,271 |
) |
|
(32,918
|
) |
| Total |
$ |
18,750 |
|
$ |
21,490 |
|
| |
| |
|
|
| TELETECH
HOLDINGS, INC. AND SUBSIDIARIES |
| CONSOLIDATED
BALANCE SHEETS |
| (In
thousands) |
| |
| |
| March
31, |
December 31, |
| 2012 |
2011 |
| (unaudited) |
| |
| ASSETS |
| Current assets: |
| Cash and cash
equivalents |
$ |
172,761 |
$ |
156,371 |
| Accounts receivable,
net |
244,212 |
243,636 |
| Other current
assets |
|
72,353 |
|
78,275 |
| Total current assets |
489,326 |
478,282 |
| |
| Property and equipment,
net |
98,645 |
100,321 |
| Other assets |
|
183,144 |
|
168,375 |
| |
| Total assets |
$ |
771,115 |
$ |
746,978 |
| |
| LIABILITIES AND
EQUITY |
| Total current
liabilities |
$ |
149,824 |
$ |
170,011 |
| Other long-term
liabilities |
141,063 |
106,720 |
| Total equity |
|
480,228 |
|
470,247 |
| |
| Total liabilities
and equity |
$ |
771,115 |
$ |
746,978 |
| |
| |
|
|
| TELETECH
HOLDINGS, INC. AND SUBSIDIARIES |
|
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION |
| (In
thousands, except per share data) |
|
(unaudited) |
| |
| |
| Three months
ended |
| March 31, |
| 2012 |
2011 |
| |
| Reconciliation of Gross
Margin: |
| |
| Revenue |
$ |
292,654 |
$ |
280,979 |
| Cost of
services |
|
211,895 |
|
|
199,121 |
|
| Gross margin |
$ |
80,759 |
|
$ |
81,858 |
|
| |
| Gross margin
percentage |
27.6 |
% |
29.1 |
% |
| |
| |
| Reconciliation of EBIT
& EBITDA: |
| |
| Net Income attributable
to TeleTech shareholders |
$ |
15,881 |
$ |
10,473 |
| Interest income |
(760 |
) |
(666 |
) |
| Interest expense |
1,098 |
1,380 |
| Provision for
income taxes |
|
1,853 |
|
|
9,849 |
|
| EBIT |
$ |
18,072 |
$ |
21,036 |
| |
| Depreciation and
amortization |
|
10,116 |
|
|
11,598 |
|
| |
| EBITDA |
$ |
28,188 |
$ |
32,634 |
| |
| |
| Reconciliation of Free
Cash Flow: |
| |
| Cash Flow From Operating
Activities: |
| Net income |
$ |
16,817 |
$ |
11,371 |
| Adjustments to reconcile
net income to net cash |
| provided by operating
activities: |
| Depreciation and
amortization |
10,116 |
11,598 |
| Other |
|
(12,269 |
) |
|
1,639 |
|
| Net cash provided by
operating activities |
14,664 |
24,608 |
| |
| Less - Total
Capital Expenditures |
|
6,374 |
|
|
3,870 |
|
| |
| Free Cash Flow |
$ |
8,290 |
$ |
20,738 |
| |
| |
| Reconciliation of
Non-GAAP Income from Operations: |
| |
| Income from
Operations |
$ |
18,750 |
$ |
21,490 |
| Restructuring charges,
net |
1,958 |
739 |
| Impairment losses |
1,800 |
230 |
|
Acquistion-related expenses
|
|
159 |
|
|
211 |
|
| |
| Non-GAAP Income from
Operations |
$ |
22,667 |
$ |
22,670 |
| |
| |
| Reconciliation of
Non-GAAP EPS: |
| |
| Net Income attributable
to TeleTech shareholders |
$ |
15,881 |
$ |
10,473 |
| Add: Asset impairment and
restructuring charges, net of related taxes |
2,435 |
683 |
|
Add: Acquisition-related expenses, net of
related taxes
|
95 |
127 |
| Add: Changes in
judgement for uncertain tax positions recorded in prior
periods |
|
(1,606
|
) |
|
5,850 |
|
| |
| Non-GAAP Net Income
attributable to TeleTech shareholders |
$ |
16,805 |
$ |
17,133 |
| |
| Diluted shares
outstanding |
57,418 |
58,797 |
| |
| Non-GAAP EPS attributable
to TeleTech shareholders |
$ |
0.29 |
$ |
0.29 |
| |
| |
| Reconciliation of
Non-GAAP EBITDA: |
| |
| Net Income attributable
to TeleTech shareholders |
$ |
15,881 |
$ |
10,473 |
| Interest income |
(760 |
) |
(666 |
) |
| Interest expense |
1,098 |
1,380 |
| Provision for income
taxes |
1,853 |
9,849 |
| Depreciation and
amortization |
10,116 |
11,598 |
| Asset impairment and
restructuring charges |
3,758 |
969 |
|
Acquistion-related expenses
|
159 |
211 |
| Equity-based
compensation expenses |
|
3,388 |
|
|
3,760 |
|
| |
| Non-GAAP EBITDA |
$ |
35,493 |
$ |
37,574 |
| |
| |
|
|
|
|
|
|
|
| TELETECH
HOLDINGS, INC. AND SUBSIDIARIES |
| SEGMENT
INFORMATION |
| (In
thousands) |
|
(unaudited) |
| |
| |
| Three months
ended |
| March 31, |
|
|
June 30, |
|
|
|
September 30, |
|
|
December 31, |
| |
2011 |
|
|
2011 |
|
|
2011 |
|
|
2011 |
|
| |
| Revenue: |
| Customer Management
Services |
$ |
246,073 |
$ |
248,207 |
$ |
248,690 |
$ |
240,657 |
| Customer Growth
Services |
22,143 |
23,483 |
25,793 |
24,210 |
| Customer Technology
Services |
4,657 |
11,660 |
22,876 |
27,785 |
| Customer Strategy
Services |
|
8,106 |
|
|
10,286 |
|
|
6,876 |
|
|
7,886 |
|
| Total |
$ |
280,979 |
|
$ |
293,636 |
|
$ |
304,235 |
|
$ |
300,538 |
|
| |
| Income (Loss) From
Operations: |
| Customer Management
Services |
$ |
48,251 |
$ |
49,588 |
$ |
43,385 |
$ |
43,751 |
| Customer Growth
Services |
2,982 |
4,594 |
5,020 |
5,059 |
| Customer Technology
Services |
2,712 |
3,156 |
4,289 |
4,804 |
| Customer Strategy
Services |
463
|
1,309 |
(322 |
) |
19 |
| Corporate |
|
(32,918
|
) |
|
(34,018 |
) |
|
(25,800 |
) |
|
(32,870 |
) |
| Total |
$ |
21,490 |
|
$ |
24,629 |
|
$ |
26,572 |
|
$ |
20,763 |
|
Source:TeleTech
TeleTech
Investor Contact
Karen Breen, 303-397-8592
or
Media Contact
Jeanna Blatt, 303-397-8507
