10-K
TTEC HOLDINGS, INC. filed this Form 10-K on 03/06/2019
Entire Document
 

Other Income

The main components of other income are miscellaneous income not directly related to our operating activities, such as foreign exchange gains and reductions in our contingent consideration.

Other Expenses

The main components of other expenses are expenditures not directly related to our operating activities, such as foreign exchange losses and increases in our contingent consideration.

RESULTS OF OPERATIONS

Year Ended December 31, 2018 Compared to December 31, 2017

The tables included in the following sections are presented to facilitate an understanding of Management’s Discussion and Analysis of Financial Condition and Results of Operations and present certain information by segment for the years ended December 31, 2018 and 2017 (amounts in thousands). All inter-company transactions between the reported segments for the periods presented have been eliminated.

Customer Management Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31,

 

 

 

 

 

 

 

    

2018

    

2017

    

$ Change

    

% Change

 

Revenue

 

$

1,129,048

 

$

1,141,760

 

$

(12,712)

 

(1.1)

%

Operating Income

 

 

49,161

 

 

78,206

 

 

(29,045)

 

(37.1)

%

Operating Margin

 

 

4.4

%  

 

6.8

%  

 

 

 

 

 

 

The decrease in revenue for the Customer Management Services segment was attributable to a $101.5 million net increase in organic and inorganic client programs including the Connextions and Motif acquisitions, a $9.0 million increase related to the adoption of ASC 606 for revenue recognition, offset by a $7.5 million decrease due to foreign currency fluctuations and by program completions of $115.7 million.

The operating income as a percentage of revenue decreased to 4.4% in 2018 as compared to 6.8% in 2017.  The operating margin declined primarily due to an increase in U.S. related labor costs and increased launch costs associated with the higher new business volumes and a $3.6 million increase in amortization related to acquisitions. Investments in strategy, rebranding, product development, marketing programs and incremental sales resources also negatively affected operating income as similar expenses were not as high during 2017. These were offset by the acquisitions, a $4.4 million increase related to the adoption of ASC 606 and a $5.8 million positive benefit due to foreign currency fluctuations.  Included in the operating income was amortization related to acquired intangibles of $8.2 million and $4.6 million for the years ended December 31, 2018 and 2017, respectively.

Customer Growth Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31,

 

 

 

 

 

 

 

    

2018

    

2017

    

$ Change

    

% Change

 

Revenue

 

$

141,324

 

$

128,698

 

$

12,626

 

9.8

%

Operating Income

 

 

9,839

 

 

7,803

 

 

2,036

 

26.1

%

Operating Margin

 

 

7.0

%  

 

6.1

%  

 

 

 

 

 

 

The increase in revenue for the Customer Growth Services segment was due to several client adds in 2018 leading to  a  $21.4 million increase in client programs offset by program completions of $8.8 million.

The operating income as a percentage of revenue increased to 7.0% in 2018 as compared to 6.1% in 2017. This was attributable to the increased revenue as noted above offset by a $1.7 million cease use lease expense for a center that was exited as of March 31, 2018.

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