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

Customer Technology Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31,

 

 

 

 

 

 

 

    

2018

    

2017

    

$ Change

    

% Change

 

Revenue

 

$

170,214

 

$

138,581

 

$

31,633

 

22.8

%

Operating Income

 

 

26,634

 

 

12,047

 

 

14,587

 

121.1

%

Operating Margin

 

 

15.6

%  

 

8.7

%  

 

 

 

 

 

 

The increase in revenue for the Customer Technology Services segment was driven by significant increases in the cloud platform and the systems integration practice as well as large product sales during 2018, offset by decreases in the Avaya offerings as we wound down and then sold a business unit in the second quarter of 2017.

The operating income as a percentage of revenue increased  to  15.6% in 2018 as compared to 8.7% in 2017.  This increase is primarily due to significant growth in the segment’s higher margin recurring cloud platform and the systems integration practice and consolidation and modernization of the information technology functions of the Company. In addition, 2017 included a $3.3 million impairment of a trade name intangible asset (see Part II. Item 8. Financial Statements and Supplementary Data, Note 7 to the Consolidated Financial Statements). Included in the operating income was amortization related to acquired intangibles of $1.3 million and $1.1 million for the years ended December 31, 2018 and 2017, respectively.

Customer Strategy Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31,

 

 

 

 

 

 

 

    

2018

    

2017

    

$ Change

    

% Change

 

Revenue

 

$

68,585

 

$

68,326

 

$

259

 

0.4

%

Operating Income

 

 

6,420

 

 

2,433

 

 

3,987

 

163.9

%

Operating Margin

 

 

9.4

%  

 

3.6

%  

 

 

 

 

 

 

The revenue for the Customer Strategy Services segment remained flat year over year.

The operating income as a percentage of revenue increased to 9.4% in 2018 as compared to 3.6% in 2017.  The increase is primarily related to the 2018 rationalization of certain practice areas as they were integrated together and a $2.0 million impairment of a trade name intangible asset recorded in 2017 (see Part II. Item 8. Financial Statements and Supplementary Data, Note 7 to the Consolidated Financial Statements). Included in the operating income was amortization expense related to acquired intangibles of $1.3 million and $1.8 million for the years ended December 31, 2018 and 2017, respectively.

Interest Income (Expense)

Interest income increased to $4.5 million in 2018 from $2.8 million in 2017 primarily due to increased cash balances. Interest expense increased to $28.7 million during 2018 from $13.7 million during 2017, primarily due to larger utilization of the line of credit related to acquisitions, higher interest rates, the upsizing of the credit facility completed in October 2017, and a $9.9 million charge related to the future purchase of the remaining 30% of the Motif acquisition.

Other Income (Expense), Net

Included in the year ended December 31, 2018 was a $15.6 million impairment of the full value of an equity investment and a related bridge loan, a net $1.6 million loss related to a business unit which was classified as assets held for sale but was reclassified to assets held and used at December 31, 2018, a $2.0 million gain related to royalty payments in connection with the sale of a business unit, a $0.7 million gain related to the bargain purchase for the Percepta acquisition closed on March 31, 2018, and a $0.3 million benefit related to  a fair value adjustment of the contingent consideration based on revised estimates of performance against targets for one of our acquisitions.

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