TeleTech Announces Third Quarter 2017 Financial Results
"We are pleased to report another productive quarter with strong bookings, revenue, and operating income in line with our expectations," commented Ken Tuchman, chairman and chief executive officer of
Tuchman continued, "Through our digitally-enabled Humanify™ Customer Engagement as a Service offering, we are helping clients design and deliver captivating customer experiences at scale within or across any channel at the highest total value delivered. As services become an increasingly important differentiator for customers, our ability to weave strategy, insights, technology and operations together to deliver seamless, frictionless and personalized experiences continues to drive our growth and unique position in the market."
THIRD QUARTER 2017 FINANCIAL HIGHLIGHTS
GAAP - In accordance with Generally Accepted Accounting Principles.
Non-GAAP AHFS/WD (Excluding Assets Held for Sale and Wind-down) - As discussed below and shown in the attached reconciliation table, the definition of Non-GAAP AHFS/WD excludes from revenue and operating income i) assets held for sale and wind-down, and ii) impairment, restructuring and integration charges.
Revenue
-
Third quarter 2017 GAAP revenue increased 14.8 percent to
$359 million compared to$312.8 million in the prior year period. Inorganic revenue growth was 13.9 percent. -
Non-GAAP AHFS/WD revenue increased 16.9 percent to
$356 million over the prior year period. Inorganic revenue growth was 14.3 percent.
Income from Operations
-
Third quarter 2017 GAAP income from operations was
$15.8 million , or 4.4 percent of revenue, compared to$12.5 million , or 4.0 percent of revenue in the third quarter 2016. -
Non-GAAP AHFS/WD income from operations was
$22.8 million or 6.4 percent of adjusted revenue versus$22.7 million or 7.5 percent in the prior year.
Earnings Per Share
-
Third quarter 2017 GAAP fully diluted earnings per share attributable to
TeleTech shareholders was32 cents compared to24 cents in the same period last year. -
Non-GAAP fully diluted earnings per share attributable to
TeleTech shareholders was34 cents versus39 cents in the prior year.
Bookings
-
During the third quarter 2017,
TeleTech signed an estimated$114 million in annualized contract value revenue from new and existing client relationships. The third quarter bookings mix was diversified across all verticals with 91 percent from existing clients and 17 percent from outside ofthe United States .
STRONG BALANCE SHEET CONTINUES TO FUND OPERATIONS, DIVIDENDS, AND INVESTMENTS
-
As of
September 30, 2017 ,TeleTech had cash and cash equivalents of$79 million and$271 million of total debt, resulting in a net debt position of$192 million . -
As of
September 30, 2017 ,TeleTech had approximately$390 million of additional borrowing capacity available under its revolving credit facility. -
Cash flow from operations in the third quarter 2017 was
$24.2 million compared to$55.8 million in the third quarter 2016. -
Capital expenditures in the third quarter 2017 were
$14.3 million compared to$11.1 million in the third quarter 2016. -
Declared a
25-cent dividend per share, or$11.5 million , onSeptember 21, 2017 , which was paid onOctober 17, 2017 to shareholders of record onOctober 5, 2017 . The dividend represented a 25 percent increase over the distribution paid inOctober 2016 .
SEGMENT REPORTING & COMMENTARY
Customer Management Services (CMS) – Customer Experience Delivery Solutions
-
CMS third quarter 2017 revenue increased 24.0 percent to
$277.4 million compared to$223.7 million in the year ago quarter. Inorganic revenue growth was 19.5 percent. Income from operations was$9.1 million or 3.3 percent of revenue compared to$12.3 million or 5.5 percent of revenue in the prior year. -
Non-GAAP income from operations was
$15.1 million or 5.4 percent of revenue. This compares to$15.8 million or 7.1 percent of revenue in the prior year.
Customer Growth Services (CGS) – Digitally-Enabled Revenue Growth Solutions
-
CGS third quarter 2017 revenue declined 12.7 percent to
$30.8 million compared to$35.3 million in the year ago quarter. Income from operations was$1.6 million or 5.1 percent of revenue compared to$0.2 million or 0.5 percent of revenue in the prior year. -
Non-GAAP AHFS/WD revenue declined 12.4 percent over the year ago period and income from operations was
$1.7 million or 5.9 percent of adjusted revenue. This compares to$0.8 million or 2.5 percent of adjusted revenue in the prior year.
Customer Technology Services (CTS) – Hosted and Managed Technology Solutions
-
CTS third quarter 2017 revenue declined 5.5 percent to
$34.6 million compared to$36.6 million in the year ago quarter. Income from operations was$4.2 million or 12.0 percent of revenue compared to$3.8 million or 10.3 percent of revenue in the prior year. -
Non-GAAP AHFS/WD revenue increased 10.7 percent over the year ago period and income from operations was
$4.2 million or 12.1 percent of adjusted revenue. This compares to$4.4 million or 14.1 percent of adjusted revenue in the prior year.
Customer Strategy Services (CSS) – Customer Experience Strategy and Data Analytics Solutions
-
CSS third quarter 2017 revenue declined 5.7 percent to
$16.3 million from$17.3 million in the year ago quarter. Income from operations was$0.9 million or 5.8 percent of revenue compared to an operating loss of$3.7 million or negative 21.3 percent of revenue in the prior year. -
Non-GAAP AHFS/WD revenue declined 8.1 percent over the year ago period and income from operations was
$1.8 million or 12.4 percent of adjusted revenue. This compares to operating income of$1.7 million or 10.6 percent of revenue in the prior year.
BUSINESS OUTLOOK
"We delivered on many fronts in the third quarter," commented Regina Paolillo, chief financial and administrative officer of
Increased full year 2017 estimated revenue and operating income guidance for
Revenue - Revenue between
Operating Income Margin - Operating income margin remains unchanged in the range of 8.3 and 8.5 percent.
Capital Expenditures - Capital expenditures of 4.4 percent of revenue, down from 4.6 percent.
ABOUT
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
Media Contact
Olivia Griner
303.397.8999
Investor Contact
Paul Miller
303.397.8641
TeleTech HOLDINGS, INC. AND SUBSIDIARIES |
|||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||||
(In thousands, except per share data) |
|||||||||
(Unaudited) |
|||||||||
Three months ended |
Nine months ended |
||||||||
September 30, |
September 30, |
||||||||
2017 |
2016 |
2017 |
2016 |
||||||
Revenue |
$ 359,036 |
$ 312,796 |
$ 1,050,742 |
$ 930,311 |
|||||
Operating Expenses: |
|||||||||
Cost of services |
275,548 |
233,541 |
797,450 |
691,649 |
|||||
Selling, general and administrative |
45,167 |
40,628 |
132,372 |
130,902 |
|||||
Depreciation and amortization |
16,515 |
16,811 |
47,273 |
51,761 |
|||||
Restructuring and integration charges, net |
6,006 |
3,688 |
9,768 |
3,890 |
|||||
Impairment losses |
- |
5,602 |
- |
5,602 |
|||||
Total operating expenses |
343,236 |
300,270 |
986,863 |
883,804 |
|||||
Income From Operations |
15,800 |
12,526 |
63,879 |
46,507 |
|||||
Other income (expense) |
1,846 |
(690) |
(3,284) |
(2,744) |
|||||
Income Before Income Taxes |
17,646 |
11,836 |
60,595 |
43,763 |
|||||
(Provision) Benefit for income taxes |
(2,071) |
813 |
(9,059) |
(6,667) |
|||||
Net Income |
15,575 |
12,649 |
51,536 |
37,096 |
|||||
Net income attributable to noncontrolling interest |
(806) |
(1,198) |
(2,828) |
(2,804) |
|||||
Net Income Attributable to TeleTech Stockholders |
$ 14,769 |
$ 11,451 |
$ 48,708 |
$ 34,292 |
|||||
Net Income Per Share Attributable to TeleTech Stockholders |
|||||||||
Basic |
$ 0.32 |
$ 0.24 |
$ 1.06 |
$ 0.72 |
|||||
Diluted |
$ 0.32 |
$ 0.24 |
$ 1.05 |
$ 0.71 |
|||||
Income From Operations Margin |
4.4% |
4.0% |
6.1% |
5.0% |
|||||
Net Income Attributable to TeleTech Stockholders Margin |
4.1% |
3.7% |
4.6% |
3.7% |
|||||
Effective Tax Rate |
11.7% |
(6.9)% |
15.0% |
15.2% |
|||||
Weighted Average Shares Outstanding |
|||||||||
Basic |
45,838 |
47,081 |
45,816 |
47,771 |
|||||
Diluted |
46,367 |
47,315 |
46,348 |
48,089 |
TeleTech HOLDINGS, INC. AND SUBSIDIARIES |
||||||||
SEGMENT INFORMATION |
||||||||
(In thousands) |
||||||||
(Unaudited) |
||||||||
Three months ended |
Nine months ended |
|||||||
September 30, |
September 30, |
|||||||
2017 |
2016 |
2017 |
2016 |
|||||
Revenue: |
||||||||
Customer Management Services |
$277,373 |
$223,664 |
$ 798,508 |
$664,392 |
||||
Customer Growth Services |
30,829 |
35,301 |
96,890 |
105,713 |
||||
Customer Technology Services |
34,563 |
36,580 |
105,054 |
109,198 |
||||
Customer Strategy Services |
16,271 |
17,251 |
50,290 |
51,008 |
||||
Total |
$359,036 |
$312,796 |
$1,050,742 |
$930,311 |
||||
Income From Operations: |
||||||||
Customer Management Services |
$ 9,133 |
$ 12,255 |
$ 43,804 |
$ 36,189 |
||||
Customer Growth Services |
1,564 |
161 |
6,295 |
4,138 |
||||
Customer Technology Services |
4,158 |
3,776 |
11,034 |
9,932 |
||||
Customer Strategy Services |
945 |
(3,666) |
2,746 |
(3,752) |
||||
Total |
$ 15,800 |
$ 12,526 |
$ 63,879 |
$ 46,507 |
TeleTech HOLDINGS, INC. AND SUBSIDIARIES |
||||
CONSOLIDATED BALANCE SHEETS |
||||
(In thousands) |
||||
(Unaudited) |
||||
September 30, |
December 31, |
|||
2017 |
2016 |
|||
ASSETS |
||||
Current assets: |
||||
Cash and cash equivalents |
$ 78,842 |
$ 55,264 |
||
Accounts receivable, net |
304,493 |
300,808 |
||
Other current assets |
75,594 |
66,940 |
||
Assets held for sale |
9,279 |
10,715 |
||
Total current assets |
468,208 |
433,727 |
||
Property and equipment, net |
162,361 |
151,037 |
||
Other assets |
318,949 |
261,540 |
||
Total assets |
$ 949,518 |
$ 846,304 |
||
LIABILITIES AND EQUITY |
||||
Total current liabilities |
$ 217,487 |
$ 178,672 |
||
Liabilities held for sale |
2,491 |
1,357 |
||
Other long-term liabilities |
329,746 |
304,380 |
||
Total equity |
399,794 |
361,895 |
||
Total liabilities and equity |
$ 949,518 |
$ 846,304 |
TeleTech HOLDINGS, INC. AND SUBSIDIARIES |
||||||||
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION |
||||||||
(In thousands, except per share data) |
||||||||
(Unaudited) |
||||||||
Three months ended |
Nine months ended |
|||||||
September 30, |
September 30, |
|||||||
2017 |
2016 |
2017 |
2016 |
|||||
Revenue |
$ 359,036 |
$ 312,796 |
$ 1,050,742 |
$ 930,311 |
||||
Reconciliation of EBIT & EBITDA: |
||||||||
Net Income Attributable to TeleTech stockholders |
$ 14,769 |
$ 11,451 |
$ 48,708 |
$ 34,292 |
||||
Interest income |
(899) |
(397) |
(2,020) |
(826) |
||||
Interest expense |
3,469 |
2,041 |
8,699 |
5,758 |
||||
Provision (benefit) for income taxes |
2,071 |
(813) |
9,059 |
6,667 |
||||
EBIT |
$ 19,410 |
$ 12,282 |
$ 64,446 |
$ 45,891 |
||||
Depreciation and amortization |
16,515 |
16,811 |
47,273 |
51,761 |
||||
EBITDA |
$ 35,925 |
$ 29,093 |
$ 111,719 |
$ 97,652 |
||||
Reconciliation of Free Cash Flow: |
||||||||
Cash Flow From Operating Activities: |
||||||||
Net income |
$ 15,575 |
$ 12,649 |
$ 51,536 |
$ 37,096 |
||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
16,515 |
16,811 |
47,273 |
51,761 |
||||
Other |
(7,902) |
26,333 |
50,834 |
21,981 |
||||
Net cash provided by operating activities |
24,188 |
55,793 |
149,643 |
110,838 |
||||
Less - Total Capital Expenditures |
14,343 |
11,120 |
43,932 |
38,863 |
||||
Free Cash Flow |
$ 9,845 |
$ 44,673 |
$ 105,711 |
$ 71,975 |
||||
Reconciliation of Non-GAAP Income from Operations: |
||||||||
Income from Operations |
$ 15,800 |
$ 12,526 |
$ 63,879 |
$ 46,507 |
||||
Restructuring and integration charges, net |
6,006 |
3,688 |
9,768 |
3,890 |
||||
Impairment losses |
- |
5,602 |
- |
5,602 |
||||
Non-GAAP Income from Operations |
$ 21,806 |
$ 21,816 |
$ 73,647 |
$ 55,999 |
||||
Non-GAAP Income from Operations Margin |
6.1% |
7.0% |
7.0% |
6.0% |
||||
Reconciliation of Non-GAAP EPS: |
||||||||
Net Income Attributable to TeleTech stockholders |
$ 14,769 |
$ 11,451 |
$ 48,708 |
$ 34,292 |
||||
Add: Asset impairment, restructuring and integration charges, net of related taxes |
3,620 |
7,563 |
5,903 |
7,711 |
||||
Add: Gain on dissolution of foreign subsidiary, net of related taxes |
(1,891) |
- |
(1,891) |
- |
||||
Add: Estimated loss on assets held for sale, net of related taxes |
- |
4,208 |
1,907 |
4,208 |
||||
Add: Changes in acquisition contingent consideration, net of related taxes |
- |
(4,435) |
- |
(4,435) |
||||
Less: Estimated gain on sale of business unit |
(85) |
- |
(103) |
- |
||||
Add: Changes in valuation allowance and returns to provision adjustments |
(801) |
(530) |
(2,200) |
1,903 |
||||
Non-GAAP Net Income Attributable to TeleTech stockholders |
$ 15,612 |
$ 18,257 |
$ 52,324 |
$ 43,679 |
||||
Diluted shares outstanding |
46,367 |
47,315 |
46,348 |
48,089 |
||||
Non-GAAP EPS Attributable to TeleTech stockholders |
$0.34 |
$0.39 |
$1.13 |
$0.91 |
||||
Reconciliation of Non-GAAP EBITDA: |
||||||||
Net Income Attributable to TeleTech stockholders |
$ 14,769 |
$ 11,451 |
$ 48,708 |
$ 34,292 |
||||
Interest income |
(899) |
(397) |
(2,020) |
(826) |
||||
Interest expense |
3,469 |
2,041 |
8,699 |
5,758 |
||||
Provision (benefit) for income taxes |
2,071 |
(813) |
9,059 |
6,667 |
||||
Depreciation and amortization |
16,515 |
16,811 |
47,273 |
51,761 |
||||
Asset impairment, restructuring and integration charges |
6,006 |
9,290 |
9,768 |
9,492 |
||||
Gain on dissolution of a foreign subsidiary |
(3,160) |
- |
(3,160) |
- |
||||
Gain on sale of business unit |
(141) |
- |
(171) |
- |
||||
Changes in acquisition contingent consideration |
- |
(4,567) |
- |
(4,567) |
||||
Estimated loss of assets held for sale |
- |
5,300 |
3,178 |
5,300 |
||||
Equity-based compensation expenses |
3,522 |
2,694 |
8,358 |
7,278 |
||||
Non-GAAP EBITDA |
$ 42,152 |
$ 41,810 |
$ 129,692 |
$ 115,155 |
TeleTech HOLDINGS, INC. |
||||||||||||||
Non-GAAP AHFS/WD Reconciliation (Excluding Assets Held For Sale and Wind-down) & Year-over-Year (YoY) Growth Rate Comparison |
||||||||||||||
U.S. Dollars in Thousands |
||||||||||||||
THIRD QUARTER |
||||||||||||||
(three months end, September 30, 2017) |
||||||||||||||
Revenue |
Operating Income |
|||||||||||||
GAAP |
Non-GAAP |
Non-GAAP |
GAAP |
Non-GAAP |
Non- |
Non-GAAP |
Non-GAAP |
|||||||
CMS |
$ 277,373 |
$ - |
$ 277,373 |
CMS |
$ 9,133 |
$ 5,972 |
$ 15,105 |
$ - |
$ 15,105 |
|||||
YoY Growth Rate: |
24.0% |
24.0% |
Operating Margin: |
3.3% |
5.4% |
5.4% |
||||||||
CGS |
$ 30,829 |
$ 1,236 |
$ 29,593 |
CGS |
$ 1,564 |
$ - |
$ 1,564 |
$ (181) |
$ 1,745 |
|||||
YoY Growth Rate: |
-12.7% |
-12.4% |
Operating Margin: |
5.1% |
5.1% |
5.9% |
||||||||
CTS |
$ 34,563 |
$ - |
$ 34,563 |
CTS |
$ 4,158 |
$ - |
$ 4,158 |
$ (34) |
$ 4,192 |
|||||
YoY Growth Rate: |
-5.5% |
10.7% |
Operating Margin: |
12.0% |
12.0% |
12.1% |
||||||||
CSS |
$ 16,271 |
$ 1,830 |
$ 14,441 |
CSS |
$ 945 |
$ 34 |
$ 979 |
$ (807) |
$ 1,786 |
|||||
YoY Growth Rate: |
-5.7% |
-8.1% |
Operating Margin: |
5.8% |
6.0% |
12.4% |
||||||||
Company (Consolidated) |
$ 359,036 |
$ 3,066 |
$ 355,970 |
Company (Consolidated) |
$ 15,800 |
$ 6,006 |
$ 21,806 |
$ (1,022) |
$ 22,828 |
|||||
YoY Growth Rate: |
14.8% |
16.9% |
Operating Margin: |
4.4% |
6.1% |
6.4% |
||||||||
Segments Defined: |
CMS (Customer Management Services), CGS (Customer Growth Services), |
|||||||||||||
CTS (Customer Technology Services), CSS (Customer Strategy Services) |
||||||||||||||
Non-GAAP AHFS/WD Defined: |
Excludes from revenue and operating income i) assets held for sale and wind-down, and ii) restructuring charges. |
|||||||||||||
TeleTech HOLDINGS, INC. |
||||||||||||||
Non-GAAP AHFS/WD Reconciliation (Excluding Assets Held For Sale and Wind-down) & Year-over-Year (YoY) Growth Rate Comparison |
||||||||||||||
U.S. Dollars in Thousands |
||||||||||||||
THIRD QUARTER |
||||||||||||||
(nine months end, September 30, 2017) |
||||||||||||||
Revenue |
Operating Income |
|||||||||||||
GAAP |
Non-GAAP |
Non-GAAP |
GAAP |
Non-GAAP |
Non- |
Non-GAAP |
Non-GAAP |
|||||||
CMS |
$ 798,508 |
$ - |
$ 798,508 |
CMS |
$ 43,804 |
$ 9,557 |
$ 53,361 |
$ - |
$ 53,361 |
|||||
YoY Growth Rate: |
20.2% |
20.2% |
Operating Margin: |
5.5% |
6.7% |
6.7% |
||||||||
CGS |
$ 96,890 |
$ 3,515 |
$ 93,375 |
CGS |
$ 6,295 |
$ - |
$ 6,295 |
$ (442) |
$ 6,737 |
|||||
YoY Growth Rate: |
-8.3% |
-7.8% |
Operating Margin: |
6.5% |
6.5% |
7.2% |
||||||||
CTS |
$ 105,054 |
$ 6,780 |
$ 98,274 |
CTS |
$ 11,034 |
$ 177 |
$ 11,211 |
$ 528 |
$ 10,683 |
|||||
YoY Growth Rate: |
-3.8% |
4.6% |
Operating Margin: |
10.5% |
10.7% |
10.9% |
||||||||
CSS |
$ 50,290 |
$ 6,317 |
$ 43,973 |
CSS |
$ 2,746 |
$ 34 |
$ 2,780 |
$ (1,460) |
$ 4,240 |
|||||
YoY Growth Rate: |
-1.4% |
-2.6% |
Operating Margin: |
5.5% |
5.5% |
9.6% |
||||||||
Company (Consolidated) |
$ 1,050,742 |
$ 16,612 |
$ 1,034,130 |
Company (Consolidated) |
$ 63,879 |
$ 9,768 |
$ 73,647 |
$ (1,374) |
$ 75,021 |
|||||
YoY Growth Rate: |
12.9% |
14.3% |
Operating Margin: |
6.1% |
7.0% |
7.3% |
||||||||
Segments Defined: |
CMS (Customer Management Services), CGS (Customer Growth Services), |
|||||||||||||
CTS (Customer Technology Services), CSS (Customer Strategy Services) |
||||||||||||||
Non-GAAP AHFS/WD Defined: |
Excludes from revenue and operating income i) assets held for sale and wind-down, and ii) restructuring charges. |