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TeleTech Announces First Quarter 2017 Financial Results
Revenue was $338.3 Million;
Operating Income was $26.5 Million, 7.8 Percent of Revenue;
Fully Diluted EPS of 42 Cents
Signed $101 Million in New Business
Increases Outlook for Full Year 2017 Revenue and Operating Income

DENVER, May 9, 2017 /PRNewswire/ -- TeleTech Holdings, Inc. (NASDAQ: TTEC), a leading global provider of customer experience, engagement, and growth solutions delivered through a proprietary, end-to-end Customer Engagement as a Service offering, today announced financial results for the first quarter ended March 31, 2017.

"The Company's key financial metrics increased year-over-year, including bookings, revenue, operating income, net income, cash flow from operations, and earnings per share. The sales execution and profit enhancement strategies we implemented in 2016 are paying off as evidenced by our first quarter results," commented Ken Tuchman, chairman and chief executive officer of TeleTech. "In addition, in early April 2017, we completed the strategic acquisition of the healthcare services company Connextions from OptumHealth. This acquisition continues to advance our healthcare footprint with increased diversification in our client base and offerings and expands our existing healthcare platform."

"Digital disruption is driving a seismic shift from a product economy to a service economy. In this new world, engagement – the ability to attract, acquire, nurture, retain and grow authentic, long-term customer relationships – is the currency for growth. Our Customer Engagement as a Service offering provides insight-driven consulting, technology and operations to deliver contextual, seamless experiences within and across channels. Built on a unified delivery methodology, we are helping clients consistently increase revenue, reduce costs, and build lasting customer loyalty with humanity at the core of every interaction, whether live or digital," continued Tuchman.

"We are consistently driving increased shareholder value across our business. From increasing our semi-annual dividend and continued share repurchases, to making targeted acquisitions, innovating our offerings and improving efficiencies, we are focused on growing shareholder value for today and into the future," Tuchman concluded.

FIRST QUARTER 2017 FINANCIAL HIGHLIGHTS

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) restructuring and impairment charges.

Revenue

  • First quarter 2017 GAAP revenue increased 8.3 percent to $338.3 million compared to $312.4 million in the prior year period. Organic revenue growth was 2.6 percent.
  • Non-GAAP AHFS/WD revenue increased 8.7 percent to $330.7 million over the prior year period. Organic revenue growth was 2.9 percent.

Income from Operations

  • First quarter 2017 GAAP income from operations was $26.5 million, or 7.8 percent of revenue, compared to $17.8 million, or 5.7 percent of revenue in the first quarter 2016.
  • Non-GAAP AHFS/WD income from operations was $26.8 million or 8.1 percent of adjusted revenue versus 6.7 percent in the prior year.

Earnings Per Share

  • First quarter 2017 GAAP fully diluted earnings per share attributable to TeleTech shareholders was 42 cents compared to income of 23 cents in the same period last year.

Bookings

  • During the first quarter 2017, TeleTech signed an estimated $101 million in annualized contract value revenue from new and expanded client relationships. The first quarter bookings mix was diversified across all verticals with 84 percent from existing clients and 13 percent from outside of the United States.

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

  • As of March 31, 2017, TeleTech had cash and cash equivalents of $66.5 million and $197.6 million of total debt, resulting in a net debt position of $131.1 million.
  • As of March 31, 2017, TeleTech had approximately $420 million of additional borrowing capacity available under its revolving credit facility.
  • Cash flow from operations in the first quarter 2017 was $74.9 million compared to $12.8 million in the first quarter 2016.
  • Capital expenditures in the first quarter 2017 were $12.0 million compared to $14.9 million in the first quarter 2016.
  • TeleTech's Board of Directors declared a $0.22 per share semi-annual dividend to TeleTech shareholders in the first quarter 2017, totaling $10.1 million. The dividend was paid on April 14, 2017 to shareholders of record on March 31, 2017. This dividend represents an 18.9 percent increase over the distribution in April 2016.
  • During the first quarter 2017, TeleTech repurchased approximately 386 thousand shares of common stock for a total cost of $11.7 million. As of March 31, 2017, $33.2 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

  • CMS first quarter 2017 revenue increased 10.6 percent to $252.1 million compared to $227.9 million in the year ago quarter. Organic revenue grew 2.8 percent year-over-year. Income from operations was $20.6 million or 8.2 percent of revenue compared to $15.6 million or 6.8 percent of revenue in the prior year.
  • Non-GAAP AHFS/WD revenue grew 10.6 percent over the year ago period and income from operations was $20.6 million or 8.2 percent of adjusted revenue. This compares to $15.7 million or 6.9 percent of revenue in the prior year.

Customer Growth Services (CGS) – Digitally-Enabled Revenue Growth Solutions

  • CGS first quarter 2017 revenue grew 0.4 percent to $33.7 million compared to $33.5 million in the year ago quarter. Income from operations was $2.4 million or 7.2 percent of revenue compared to $0.5 million or 1.5 percent of revenue in the prior year.
  • Non-GAAP AHFS/WD revenue increased 1.6 percent over the year ago period and income from operations was $2.6 million or 8.1 percent of adjusted revenue. This compares to $1.4 million or 4.4 percent of revenue in the prior year.

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

  • CTS first quarter 2017 revenue increased 1.2 percent to $35.7 million compared to $35.3 million in the year ago quarter. Income from operations was $3.1 million or 8.6 percent of revenue compared to $2.8 million or 7.9 percent of revenue in the prior year.
  • Non-GAAP AHFS/WD revenue increased 3.9 percent over the year ago period and income from operations was $2.8 million or 8.8 percent of adjusted revenue. This compares to $3.3 million or 10.7 percent of revenue in the prior year.

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

  • CSS first quarter 2017 revenue increased 7.3 percent to $16.8 million from $15.7 million in the year ago quarter. Income from operations was $0.4 million or 2.5 percent of revenue compared to loss from operations of $1.1 million or negative 7.1 percent of revenue in the prior year.
  • Non-GAAP AHFS/WD revenue increased 4.9 percent over the year ago period and income from operations was $0.8 million or 5.2 percent of adjusted revenue. This compares to operating income of $0.04 million or 0.3 percent of revenue in the prior year.

BUSINESS OUTLOOK

"We are pleased with our first quarter 2017 results and outlook for the year," commented Regina Paolillo, chief financial and administrative officer of TeleTech. "Undeniably, the strategic actions that we took last year are contributing to our top and bottom line results. The business environment is also favorable as the nature of our conversations with our clients and prospects are more vital and strategic. Executives across industry groups are viewing customer experience as an essential foundation for creating brand value and maximizing the customer life-cycle benefits, and they need help on many fronts. TeleTech's transformation to provide integrated, outcome-based offerings across customer strategy, technology, growth and care services could not be better positioned to execute upon our clients' customer experience goals and accelerate our market penetration."

We anticipate full year 2017 guidance as follows (which includes the contribution from Connextions, but excludes assets held for sale and wind-down):

  • Revenue – Revenue estimated to increase 12.7 to 13.5 percent between $1.400 and $1.410 billion (versus $1.315 and $1.325 billion).
  • Operating Income Margin – Operating income margin estimated to a range between 8.3 and 8.5 percent (before asset impairment, restructuring and acquisition-related charges). This compares to 8.1 and 8.3 percent.
  • Capital Expenditures – Capital expenditures are estimated at 4.6 percent of revenue, up from 4.2 percent, of which approximately 70 percent is growth oriented.

ABOUT TELETECH

TeleTech (NASDAQ: TTEC) is a leading global provider of customer experience, engagement and growth solutions delivered through a proprietary Customer Engagement as a Service offering. 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. TeleTech's 48,000 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 

Olivia Griner

303.397.8641 

303.397.8999

 

 

TELETECH HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

 (Unaudited)













Three months ended



 March 31,



2017


2016






Revenue

$338,277


$312,410






Operating Expenses:





Cost of services

253,898


231,340


Selling, general and administrative

43,220


45,500


Depreciation and amortization

14,500


17,729


Restructuring charges, net

169


88

             Total operating expenses

311,787


294,657






Income From Operations

26,490


17,753







Other income (expense)

(932)


(1,320)






Income Before Income Taxes

25,558


16,433







Provision for income taxes

(5,391)


(4,528)






Net Income

20,167


11,905







Net income attributable to noncontrolling interest

(922)


(680)






Net Income Attributable to TeleTech Stockholders

$  19,245


$  11,225






Net Income Per Share Attributable to TeleTech Stockholders










Basic

$     0.42


$     0.23







Diluted

$     0.42


$     0.23











Income From Operations Margin

7.8%


5.7%

Net Income Attributable to TeleTech Stockholders Margin

5.7%


3.6%

Effective Tax Rate

21.1%


27.6%











Weighted Average Shares Outstanding




  Basic

45,950


48,368

  Diluted

46,315


48,746

 






TELETECH HOLDINGS, INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(In thousands)

(Unaudited)













Three months ended



 March 31,



2017


2016






Revenue:





Customer Management Services


$252,079


$227,921

Customer Growth Services


33,658


33,519

Customer Technology Services


35,693


35,268

Customer Strategy Services


16,847


15,702

Total


$338,277


$312,410






Income From Operations:





Customer Management Services


$  20,596


$  15,595

Customer Growth Services


2,410


495

Customer Technology Services


3,057


2,780

Customer Strategy Services


427


(1,117)

Total


$  26,490


$  17,753

 






TELETECH HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)








 March 31,


 December 31, 



2017


2016











ASSETS





Current assets:





   Cash and cash equivalents


$   66,475


$           55,264

   Accounts receivable, net


272,827


300,808

   Other current assets


71,672


66,940

   Assets held for sale


12,967


10,715

      Total current assets


423,941


433,727






Property and equipment, net


151,841


151,037

Other assets


264,369


261,540






Total assets


$ 840,151


$         846,304






LIABILITIES AND EQUITY





Total current liabilities


$ 200,267


$         178,672

Liabilities held for sale


2,446


1,357

Other long-term liabilities


262,166


304,380

Total equity


375,272


361,895






Total liabilities and equity


$ 840,151


$         846,304

 






TELETECH HOLDINGS, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION

(In thousands, except per share data)

(Unaudited)








Three months ended



 March 31,



2017


2016






Revenue


$338,277


$312,410











Reconciliation of EBIT & EBITDA:










Net Income Attributable to TeleTech stockholders


$  19,245


$  11,225

Interest income


(426)


(166)

Interest expense


2,318


1,964

Provision for income taxes


5,391


4,528

EBIT


$  26,528


$  17,551






Depreciation and amortization


14,500


17,729






EBITDA


$  41,028


$  35,280











Reconciliation of Free Cash Flow:










Cash Flow From Operating Activities:





   Net income


$  20,167


$  11,905

      Adjustments to reconcile net income to net cash provided by operating activities:





          Depreciation and amortization


14,500


17,729

          Other


40,265


(16,848)

   Net cash provided by operating activities


74,932


12,786






Less - Total Capital Expenditures


12,035


14,949






Free Cash Flow


$  62,897


$   (2,163)











Reconciliation of Non-GAAP Income from Operations:










Income from Operations


$  26,490


$  17,753

Restructuring charges, net


169


88

Impairment losses


-


-






Non-GAAP Income from Operations


$  26,659


$  17,841






Non-GAAP Income from Operations Margin


7.9%


5.7%











Reconciliation of Non-GAAP EPS:










Net Income Attributable to TeleTech stockholders


$  19,245


$  11,225

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


117


54

Add:  Changes in valuation allowance and returns to provision adjustments


(36)


878






 Non-GAAP Net Income Attributable to TeleTech stockholders


$  19,326


$  12,157






    Diluted shares outstanding


46,315


48,746






 Non-GAAP EPS Attributable to TeleTech stockholders


$0.42


$0.25











Reconciliation of Non-GAAP EBITDA:










Net Income Attributable to TeleTech stockholders


$  19,245


$  11,225

   Interest income


(426)


(166)

   Interest expense


2,318


1,964

   Provision for income taxes


5,391


4,528

   Depreciation and amortization


14,500


17,729

   Asset impairment and restructuring charges


169


88

   Equity-based compensation expenses


2,041


2,759






 Non-GAAP EBITDA


$  43,238


$  38,127






 

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

FIRST QUARTER 

(three months end, Mar 31, 2017)








Revenue









GAAP
Revenue

Non-GAAP
Revenue
Contribution
from
AHFS/WD

Non-GAAP
Revenue
(excluding
AHFS/WD)



CMS


$     252,079

$            -

$       252,079




YoY Growth Rate:

10.6%


10.6%



CGS


$      33,658

$       1,169

$         32,489




YoY Growth Rate:

0.4%


1.6%



CTS


$      35,693

$       3,981

$         31,712




YoY Growth Rate:

1.2%


3.9%



CSS


$      16,847

$       2,377

$         14,470




YoY Growth Rate:

7.3%


4.9%










Company (Consolidated)


$     338,277

$       7,527

$       330,749




YoY Growth Rate:

8.3%


8.7%










Operating Income









GAAP
Operating
Income

Non-GAAP
Operating
Income
Adjustments

Non-GAAP
Operating
Income

Non-GAAP
Operating Income
Contribution from
AHFS/WD

Non-GAAP
Operating Income
(excluding
AHFS/WD)

CMS


$      20,596

$             6

$         20,602

$                      -

$              20,602


Operating Margin:

8.2%


8.2%


8.2%

CGS


$        2,410

$             -

$           2,410

$                (218)

$               2,627


Operating Margin:

7.2%


7.2%


8.1%

CTS


$        3,057

$         163

$           3,220

$                 443

$               2,778


Operating Margin:

8.6%


9.0%


8.8%

CSS


$           427

$            -

$             427

$                (332)

$                  759


Operating Margin:

2.5%


2.5%


5.2%








Company (Consolidated)


$      26,490

$         169

$         26,659

$                (107)

$              26,766


Operating Margin:

7.8%


7.9%


8.1%








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) restructuring and impairment charges, and ii) assets held for sale and wind-down.

 

TeleTech Logo.

 

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SOURCE TeleTech Holdings, Inc.