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TeleTech Announces First Quarter 2015 Financial Results

First Quarter 2015 Results
Revenue Increased 7.7 Percent to $325.5 Million
(10.9 Percent or $335.1 Million on a Constant Currency Basis);
Operating Income was $26.1 Million, 8.0 Percent of Revenue (8.3 Percent Non-GAAP);
Fully Diluted EPS was 38 Cents
Signed $120 Million in New Business (an increase of 14 Percent);
Reaffirms Outlook for Full Year 2015 Revenue and Operating Income

DENVER, May 11, 2015 /PRNewswire/ -- TeleTech Holdings, Inc. (NASDAQ: TTEC), a leading global provider of customer experience, engagement and growth solutions, today announced financial results for the first quarter ended March 31, 2015. The Company also filed its Quarterly Report on Form 10-Q with the U.S. Securities and Exchange Commisssion for the quarter ended March 31, 2015.

"The solid results we delivered in the first quarter demonstrate the progress we are making in advancing our client's customer engagement agenda," commented Ken Tuchman, chairman and chief executive officer of TeleTech. "In particular, the growth in bookings and revenue are evidence of the strong market demand for our customer experience platform. We are pleased with the collective performance of our four business segments and their contribution to a trend of consistent, repeatable profitable growth. By providing turn-key solutions that positively differentiate a customer's experience, we enable our clients to create relevant and satisfying customer interactions anywhere, anyplace, anytime.  As we help our clients bring more empathy to the customer experience, they are increasingly able to achieve long-term loyalty that drives profitable growth," continued Tuchman.

FIRST QUARTER 2015 FINANCIAL HIGHLIGHTS

Revenue        

  • First quarter 2015 GAAP revenue increased 7.7 percent to $325.5 million compared to $302.2 million in the year ago quarter.   
  • On a constant currency basis, revenue was $335.1 million, representing a 10.9 percent growth rate over the year ago period.

Income from Operations

  •  First quarter 2015 GAAP income from operations was $26.1 million or 8.0 percent of revenue compared to $24.4 million or 8.1 percent of revenue in the first quarter 2014.
  • Income from operations, adjusted for $0.8 million in restructuring charges, was $26.9 million or 8.3 percent of revenue. This compares to $24.9 million or 8.2 percent of revenue in the year ago quarter.

Earnings Per Share

  • First quarter 2015 GAAP fully diluted earnings per share attributable to TeleTech shareholders was 38 cents compared to 40 cents in the first quarter 2014.
  • Adjusted fully diluted earnings per share was 38 cents compared to 36 cents in the prior year.

Bookings

  • During the first quarter 2015, TeleTech signed an estimated $120 million in annualized contract value revenue from new and expanded client relationships, up 14 percent over the prior year period. The bookings mix was diversified across all verticals with 85 percent from existing clients, 64 percent from emerging businesses, and 13 percent from clients based outside of the United States.

STRONG BALANCE SHEET CONTINUES TO FUND OPERATIONS, SHARE REPURCHASES, STRATEGIC ACQUISITIONS, AND INVESTMENTS

  • As of March 31, 2015, TeleTech had cash and cash equivalents of $65.7 million and $131.2 million of total debt, resulting in a net debt position of $65.5 million. In the first quarter of 2015, $24.7 million was deployed towards share repurchases, dividends, and acquisition and technology-related investments.
  • As of March 31, 2015, TeleTech had $570.8 million of additional borrowing capacity available under its revolving credit facility.
  • Cash flow from operations in the first quarter 2015 was $3.8 million compared to $13.5 million in the first quarter 2014.
  • Capital expenditures in the first quarter 2015 were $13.0 million compared to $15.1 million in the first quarter 2014.
  • TeleTech repurchased nearly 261 thousand shares of common stock during the first quarter 2015 for a total cost of $5.9 million. As of March 31, 2015, $30.9 million was authorized for future share repurchases.

SEGMENT REPORTING & COMMENTARY

TeleTech reports 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).  Financial highlights for the segments are provided below.

Customer Management Services (CMS) – Customer Experience Delivery Solutions

  • In the first quarter 2015, the CMS segment revenue was $243.0 million, up 6.6 percent from $227.9 million in the year ago quarter. On a constant currency basis, revenue increased 10.1 percent relative to the same period last year.
  • Income from operations was $21.7 million or 8.9 percent compared to $20.8 million or 9.1 percent in the year ago quarter. Adjusted operating income margin was 9.3 percent reflecting $0.8 million of restructuring charges. This compares to 9.4 percent in the same period last year.

Customer Growth Services (CGS) – Technology-Enabled Revenue Generation Solutions

  • CGS first quarter 2015 revenue declined 10.2 percent to $26.0 million compared to $28.9 million in the year ago quarter. On a constant currency basis, revenue decreased 7.3 percent. This expected temporary decline in revenue is due to the timing of new business implementations. 
  • Income from operations was $0.03 million compared to $1.8 million in the prior year period. 

Customer Technology Services (CTS) – Hosted and Managed Technology Solutions

  • CTS first quarter 2015 revenue grew 9.0 percent to $35.7 million compared to $32.8 million in the year ago quarter.
  • Income from operations was $2.0 million or 5.6 percent compared to $0.3 million or 0.9 percent in the year ago quarter.

Customer Strategy Services (CSS) – Customer Experience Strategy and Data Analytics Solutions

  • CSS first quarter 2015 revenue increased 65.2 percent to $20.8 million from $12.6 million in the year ago quarter.
  • Income from operations was $2.4 million or 11.5 percent, unchanged over the prior year period.

BUSINESS OUTLOOK

"We are pleased with our first quarter financial results inclusive of our continued growth in bookings, a strong indication of future revenue growth," explained Regina Paolillo, chief financial and administrative officer of TeleTech. "As the nature of our conversations with clients and prospects pivots to a focus on customer experience as a strategic differentiator versus a cost of doing business, we are well positioned as a growth partner. The market adoption of our customer experience solutions is positively impacting returns on the investments we are making in sales, marketing, and research and development, resulting in improved operating income margins. We remain committed to our strategy and increasing shareholder value through innovation, competitive differentiation, and sustainable profitable growth, alongside continued returns through stock repurchases and a semi-annual cash dividend."

TeleTech reaffirms its 2015 guidance as follows:

Revenue – Year-over-year revenue growth estimated between $1.315 and $1.325 billion, reflecting an estimated four percent adverse impact from foreign exchange translation.  

Operating Margin – Operating margin estimated at 8.25 percent  (before asset impairment, restructuring and acquisition-related charges), but including an incremental $10 million investment in sales and research and development.

Capital Expenditures – Estimated to be approximately six percent of revenue. 

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

A conference call and webcast with management will be held on May 12, 2015 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 www.teletech.com. If you are unable to participate during the live webcast, a replay will be available on the TeleTech website.

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 Revenue, Non-GAAP Income from Operations, Non-GAAP EBITDA and Non-GAAP EPS. Additionally our discussion of revenue and income from operations contain references to constant currency amounts. Constant currency measures are calculated by translating the current year reported amounts using the prior year foreign exchange rates for each underlying currency. 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. 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 TeleTech's most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q.

ABOUT TELETECH

TeleTech is a leading global customer engagement company.  Founded in 1982, the Company helps its clients acquire, retain and grow profitable customer relationships. Using customer-centric  strategy, technology, processes and operations, TeleTech partners with business leadership across marketing, sales and customer care to design and deliver a simple, more human customer experience across every interaction channel. Servicing over 80 countries, TeleTech's 44,000 employees live by a set of customer focused values that guide relationships with clients, their customers, and each other. To learn more about how TeleTech is bringing humanity to the customer experience visit TeleTech.com.

FORWARD-LOOKING STATEMENTS

Statements in this press release contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995, relating to our operations, expected financial position, results of operation, and other business matters that are based on our current expectations, assumptions, and projections with respect to the future, and are not a guarantee of performance. We use words such as "may," "believe," "plan," "will," "anticipate," "estimate," "expect," "intend," "project," "would," "could," "target," or similar expressions, or when we discuss our strategy, plans, goals, initiatives, or objectives, we are making forward-looking statements.

We caution you not to rely unduly on any forward-looking statements. Actual results may differ materially from what is expressed in the forward-looking statements, and you should review and consider carefully the risks, uncertainties and other factors that affect our business and may cause such differences as outlined but are not limited to factors discussed in the sections entitled "Risk Factors" included in TeleTech's filings with the US Securities and Exchange Commission (the "SEC"), including our most recent Annual Report on Form 10-K and subsequent quarterly financial reports on Form 10-Q. TeleTech's filings with the SEC are available in the "Investors" section of TeleTech's website, www.teletech.com and at the SEC's public website at www.sec.gov.  Our forward looking statements speak only as of the date of the press release and we undertake no obligation to update them, except as may be required by applicable laws.

 

Investor Contact

Media Contact

Paul Miller 

Elizabeth Grice

303.397.8641

303.397.8507

 

           

TELETECH HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

 (Unaudited)

           
           
     

Three months ended

     

 March 31,

     

2015

 

2014

           

Revenue

 

$ 325,521

 

$ 302,221

           

Operating Expenses:

       
 

Cost of services

 

232,984

 

213,787

 

Selling, general and administrative

 

50,237

 

50,367

 

Depreciation and amortization

 

15,363

 

13,170

 

Restructuring charges, net

 

809

 

540

 

Impairment losses

 

-

 

-

         Total operating expenses

 

299,393

 

277,864

           

Income From Operations

 

26,128

 

24,357

           
 

Other income (expense)

 

(1,688)

 

(178)

           

Income Before Income Taxes

 

24,440

 

24,179

           
 

Provision for income taxes

 

(4,405)

 

(2,876)

           

Net Income

 

20,035

 

21,303

           
 

Net income attributable to noncontrolling interest

(1,263)

 

(1,085)

           

Net Income Attributable to TeleTech Stockholders

$   18,772

 

$   20,218

           

Net Income Per Share Attributable to TeleTech Stockholders

     
           
 

Basic

 

$      0.39

 

$      0.40

           
 

Diluted

 

$      0.38

 

$      0.40

           
           

Income From Operations Margin

 

8.0%

 

8.1%

Net Income Attributable to TeleTech Stockholders Margin

5.8%

 

6.7%

Effective Tax Rate

 

18.0%

 

11.9%

           
           

Weighted Average Shares Outstanding

     

  Basic

 

48,370

 

50,045

  Diluted

 

49,158

 

50,973

           

 

 

         

TELETECH HOLDINGS, INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(In thousands)

(Unaudited)

         
         
   

Three months ended

   

 March 31,

   

2015

 

2014

         

Revenue:

       

Customer Management Services

 

$     243,009

 

$     227,924

Customer Growth Services

 

25,956

 

28,905

Customer Technology Services

 

35,714

 

32,776

Customer Strategy Services

 

20,842

 

12,616

Total

 

$     325,521

 

$     302,221

         

Income From Operations:

       

Customer Management Services

 

$      21,702

 

$       20,823

Customer Growth Services

 

26

 

1,770

Customer Technology Services

 

2,009

 

311

Customer Strategy Services

 

2,391

 

1,453

Total

 

$      26,128

 

$       24,357

         
         

 

 

           

TELETECH HOLDINGS, INC. AND SUBSIDIARIES

 

CONSOLIDATED BALANCE SHEETS

 

(In thousands)

 

(Unaudited)

 
           
   

 March 31,

 

 December 31, 

 
   

2015

 

2014

 
           
           

ASSETS

         

Current assets:

         

   Cash and cash equivalents

 

$          65,714

 

$         77,316

 

   Accounts receivable, net

 

295,719

 

276,432

 

   Other current assets

 

94,030

 

91,735

 

      Total current assets

 

455,463

 

445,483

 
           

Property and equipment, net

 

150,017

 

150,212

 

Other assets

 

259,003

 

256,780

 
           

Total assets

 

$        864,483

 

$       852,475

 
           

LIABILITIES AND EQUITY

         

Total current liabilities

 

$        190,628

 

$       198,631

 

Other long-term liabilities

 

215,703

 

187,780

 

Mandatorily redeemable noncontrolling interest

 

3,411

 

2,814

 

Total equity

 

454,741

 

463,250

 
           

Total liabilities and equity

 

$        864,483

 

$       852,475

 
           

 

 

TELETECH HOLDINGS, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION

(In thousands, except per share data)

(Unaudited)

         
   

Three months ended

   

 

 March 31,

   

2015

 

2014

Reconciliation of Revenue:

       
         

Revenue

 

$  325,521

 

$  302,221

   Changes due to foreign currency fluctuations  1

 

9,530

   

Non-GAAP Revenue

 

$  335,051

 

$  302,221

         
         

Reconciliation of EBIT & EBITDA:

       
         

Net Income Attributable to TeleTech stockholders

 

$    18,772

 

$    20,218

Interest income

 

(317)

 

(511)

Interest expense

 

1,698

 

1,690

Provision for income taxes

 

4,405

 

2,876

EBIT

 

$    24,558

 

$    24,273

         

Depreciation and amortization

 

15,363

 

13,170

         

EBITDA

 

$    39,921

 

$    37,443

         
         

Reconciliation of Free Cash Flow:

       
         

Cash Flow From Operating Activities:

       

   Net income

 

$    20,035

 

$    21,303

   Adjustments to reconcile net income to net cash

       

       provided by operating activities:

       

          Depreciation and amortization

 

15,363

 

13,170

          Other

 

(31,578)

 

(20,916)

   Net cash provided by operating activities

 

3,820

 

13,557

         

Less - Total Capital Expenditures

 

13,038

 

15,095

         

Free Cash Flow

 

$     (9,218)

 

$     (1,538)

         
         

Reconciliation of Non-GAAP Income from Operations:

       
         

Income from Operations

 

$    26,128

 

$    24,357

Restructuring charges, net

 

809

 

540

Impairment losses

 

-

 

-

         

Non-GAAP Income from Operations

 

$    26,937

 

$    24,897

         

Non-GAAP Income from Operations Margin

 

8.3%

 

8.2%

         
         

Reconciliation of Non-GAAP EPS:

       
         

Net Income Attributable to TeleTech stockholders

 

$    18,772

 

$    20,218

Add:  Asset impairment and restructuring charges, net of related taxes

 

498

 

347

Add:  Changes in valuation allowance and returns to provision adjustments

 

(593)

 

(1,973)

         

 Non-GAAP Net Income Attributable to TeleTech stockholders

 

$    18,677

 

$    18,592

         

    Diluted shares outstanding

 

49,158

 

50,973

         

 Non-GAAP EPS Attributable to TeleTech stockholders

 

$0.38

 

$0.36

         
         

Reconciliation of Non-GAAP EBITDA:

       
         

Net Income Attributable to TeleTech stockholders

 

$    18,772

 

$    20,218

   Interest income

 

(317)

 

(511)

   Interest expense

 

1,698

 

1,690

   Provision for income taxes

 

4,405

 

2,876

   Depreciation and amortization

 

15,363

 

13,170

   Asset impairment and restructuring charges

 

809

 

540

   Equity-based compensation expenses

 

2,690

 

3,160

         

 Non-GAAP EBITDA

 

$    43,420

 

$    41,143

         
         

1Foreign currency fluctuations are calculated on a constant currency basis by translating the current year

              reported amounts using the prior year foreign exchange rates for each underlying currency.