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TeleTech Announces Second Quarter 2017 Financial Results
Revenue Increased 15.8 Percent to $353.4 Million ($347.4 Million Non-GAAP AHFS/WD);
Operating Income Increased 33 Percent to $21.6 Million, representing 6.1 Percent of Revenue ($25.4 Million, representing 7.3 Percent Non-GAAP AHFS/WD);
Fully Diluted EPS Increased 33 Percent to 32 Cents (38 Cents Non-GAAP)
Signed $107 Million in New Business
Reaffirms Outlook for Full Year 2017 Revenue and Operating Income

DENVER, Aug. 7, 2017 /PRNewswire/ -- TeleTech Holdings, Inc. (NASDAQ: TTEC), a leading global provider of customer experience, engagement, and growth solutions delivered through its proprietary end-to-end Humanify™ Customer Engagement as a Service offering, today announced financial results for the second quarter ended June 30, 2017.

"We are pleased to report another strong quarter and solid close to the first half of 2017. For the first six months of 2017, over the same period last year, we increased revenue, operating income, net income, earnings-per-share, and cash flow from operations," commented Ken Tuchman, chairman and chief executive officer of TeleTech. "Our improved performance is the result of three primary factors. First, the profit optimization improvements we began executing in the second half of 2016 are yielding favorable results. Second, our end-to-end, outcome-based customer engagement platform continues to increase in relevance in a growing market. Third, the refinement of our sales, account management, and marketing organizations are starting to generate early wins."

Tuchman continued, "The service experience has become the most important point of differentiation for many companies and the bar continues to rise. When customers experience great service from one company across one channel, they expect and feel entitled to it from every company, across every channel. Through our Humanify™ Customer Engagement as a Service offering, we are helping our clients stay ahead of the complex challenge. With our integrated platform, we are providing the strategy, insights, technology and operational excellence our clients need to orchestrate and deliver captivating experiences across every channel and interaction in the customer journey. Our integrated approach of people, process, analytics and technologies is enabling personalized experiences at scale that delight customers, drive profitable growth for our clients, and increase equity value for our shareholders."

SECOND 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) impairment, restructuring and integration charges.

Revenue

  • Second quarter 2017 GAAP revenue increased 15.8 percent to $353.4 million compared to $305.1 million in the prior year period. Inorganic revenue growth was 13.3 percent.
  • Non-GAAP AHFS/WD revenue increased 17.3 percent to $347.4 million over the prior year period. Inorganic revenue growth was 13.7 percent.

Income from Operations

  • Second quarter 2017 GAAP income from operations was $21.6 million, or 6.1 percent of revenue, compared to $16.2 million, or 5.3 percent of revenue in the second quarter 2016.
  • Non-GAAP AHFS/WD income from operations was $25.4 million or 7.3 percent of adjusted revenue versus 6.0 percent in the prior year.

Earnings Per Share

  • Second quarter 2017 GAAP fully diluted earnings per share attributable to TeleTech shareholders was 32 cents compared to 24 cents in the same period last year.
  • Non-GAAP fully diluted earnings per share attributable to TeleTech shareholders was 38 cents compared to 28 cents in the same period last year.

Bookings

  • During the second quarter 2017, TeleTech signed an estimated $107 million in annualized contract value revenue from new and existing client relationships. The second quarter bookings mix was diversified across all verticals with 80 percent from existing clients and 11 percent from outside of the United States.

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

  • As of June 30, 2017, TeleTech had cash and cash equivalents of $77.9 million and $273.3 million of total debt, resulting in a net debt position of $195.4 million.
  • As of June 30, 2017, TeleTech had approximately $385 million of additional borrowing capacity available under its revolving credit facility.
  • Cash flow from operations in the second quarter 2017 was $50.5 million compared to $43.5 million in the second quarter 2016.
  • Capital expenditures in the second quarter 2017 were $17.6 million compared to $12.8 million in the second quarter 2016.
  • On April 14, 2017, TeleTech paid a $0.22 per share semi-annual dividend, totaling $10.1 million, to TeleTech shareholders of record on March 31, 2017. This dividend represents an 18.9 percent increase over the distribution in April 2016.
  • During the second quarter 2017, TeleTech repurchased approximately 223 thousand shares of common stock for a total cost of $6.7 million. As of June 30, 2017, $26.6 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 second quarter 2017 revenue increased 26.4 percent to $269.1 million compared to $212.8 million in the year ago quarter. Inorganic revenue grew 19.1 percent year-over-year. Income from operations was $14.1 million or 5.2 percent of revenue compared to $8.3 million or 3.9 percent of revenue in the prior year.
  • Non-GAAP income from operations was $17.7 million or 6.6 percent of revenue. This compares to $8.4 million or 3.9 percent of revenue in the prior year.

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

  • CGS second quarter 2017 revenue declined 12.2 percent to $32.4 million compared to $36.9 million in the year ago quarter. Income from operations was $2.3 million or 7.2 percent of revenue compared to $3.5 million or 9.4 percent of revenue in the prior year.
  • Non-GAAP AHFS/WD revenue declined 11.9 percent over the year ago period and income from operations was $2.4 million or 7.6 percent of adjusted revenue. This compares to $4.1 million or 11.4 percent of adjusted revenue in the prior year.

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

  • CTS second quarter 2017 revenue declined 6.8 percent to $34.8 million compared to $37.4 million in the year ago quarter. Income from operations was $3.8 million or 11.0 percent of revenue compared to $3.4 million or 9.0 percent of revenue in the prior year.
  • Non-GAAP AHFS/WD revenue declined 0.7 percent over the year ago period and income from operations was $3.7 million or 11.6 percent of adjusted revenue. This compares to $3.8 million or 11.8 percent of adjusted revenue in the prior year.

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

  • CSS second quarter 2017 revenue declined 4.9 percent to $17.2 million from $18.1 million in the year ago quarter. Income from operations was $1.4 million or 8.0 percent of revenue compared to $1.0 million or 5.7 percent of revenue in the prior year.
  • Non-GAAP AHFS/WD revenue declined 3.6 percent over the year ago period and income from operations was $1.7 million or 11.3 percent of adjusted revenue. This compares to operating income of $1.4 million or 9.3 percent of revenue in the prior year.

BUSINESS OUTLOOK

"I want to highlight the strong performance of the business. In the first half of 2017, we executed on many fronts. We grew the top-line organically and inorganically, improved our profitability and cash flow generation, increased our vertical and geographic market share, and expanded our capabilities into more integrated, outcome-based solutions," commented Regina Paolillo, chief financial and administrative officer. "The overperformance at the half year provides improved visibility and confidence in our ability to execute our full-year 2017 revenue and operating income guidance. In comparison to our first half, we anticipate a significant increase in our revenue and operating income in the second half. We estimate our seasonal peak fourth quarter revenue and operating income, which includes acquired volumes from Connextions, to significantly exceed historical levels."

Reaffirmed full-year 2017 estimated revenue and operating income guidance for TeleTech which excludes i) assets held for sale and wind-down, and ii) impairment, restructuring and integration charges as follows:

Revenue - Revenue between $1.400 and $1.410 billion.

Operating Income Margin - Operating income margin in the range of 8.3 and 8.5 percent before impairment, restructuring and integration charges.

Capital Expenditures - Capital expenditures of 4.6 percent of revenue.

ABOUT TELETECH

TeleTech (NASDAQ: TTEC) is a leading global provider of customer experience, engagement and growth solutions delivered through its proprietary end-to-end Humanify™ 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


Six months ended



 June 30,


 June 30,



2017


2016


2017


2016










Revenue

$  353,429


$  305,105


$  691,706


$ 617,515










Operating Expenses:









Cost of services

268,004


226,768


521,902


458,108


Selling, general and administrative

43,985


44,774


87,205


90,274


Depreciation and amortization

16,258


17,221


30,758


34,950


Restructuring charges, net

3,593


114


3,762


202


     Total operating expenses

331,840


288,877


643,627


583,534










Income From Operations

21,589


16,228


48,079


33,981











Other income (expense)

(4,198)


(734)


(5,130)


(2,054)










Income Before Income Taxes

17,391


15,494


42,949


31,927











Benefit (Provision) for income taxes

(1,597)


(2,952)


(6,988)


(7,480)










Net Income

15,794


12,542


35,961


24,447











Net income attributable to noncontrolling interest

(1,100)


(926)


(2,022)


(1,606)










Net Income Attributable to TeleTech Stockholders

$    14,694


$    11,616


$    33,939


$   22,841










Net Income Per Share Attributable to TeleTech Stockholders


















Basic

$        0.32


$        0.24


$        0.74


$       0.47











Diluted

$        0.32


$        0.24


$        0.73


$       0.47



















Income From Operations Margin

6.1%


5.3%


7.0%


5.5%

Net Income Attributable to TeleTech Stockholders Margin

4.2%


3.8%


4.9%


3.7%

Effective Tax Rate

9.2%


19.1%


16.3%


23.4%



















Weighted Average Shares Outstanding








  Basic

45,662


47,873


45,805


48,120

  Diluted

46,150


48,221


46,224


48,483

 

TELETECH HOLDINGS, INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(In thousands)

(Unaudited)


















Three months ended


Six months ended


 June 30,


 June 30,


2017


2016


2017


2016









Revenue:








Customer Management Services

$  269,056


$  212,807


$  521,135


$  440,728

Customer Growth Services

32,403


36,893


66,061


70,412

Customer Technology Services

34,798


37,350


70,491


72,618

Customer Strategy Services

17,172


18,055


34,019


33,757

Total

$  353,429


$  305,105


$  691,706


$  617,515









Income From Operations:








Customer Management Services

$    14,075


$      8,339


$    34,671


$    23,934

Customer Growth Services

2,321


3,482


4,731


3,977

Customer Technology Services

3,819


3,376


6,876


6,156

Customer Strategy Services

1,374


1,031


1,801


(86)

Total

$    21,589


$    16,228


$    48,079


$    33,981

 

TELETECH HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)






 June 30,


 December 31, 


2017


2016









ASSETS




Current assets:




   Cash and cash equivalents

$   77,910


$          55,264

   Accounts receivable, net

288,041


300,808

   Other current assets

74,783


66,940

   Assets held for sale

8,969


10,715

      Total current assets

449,703


433,727





Property and equipment, net

160,321


151,037

Other assets

320,099


261,540





Total assets

$ 930,123


$        846,304





LIABILITIES AND EQUITY




Total current liabilities

$ 197,352


$        178,672

Liabilities held for sale

1,908


1,357

Other long-term liabilities

335,605


304,380

Total equity

395,258


361,895





Total liabilities and equity

$ 930,123


$        846,304

 

TELETECH HOLDINGS, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION

(In thousands, except per share data)

(Unaudited)












Three months ended


Six months ended



 June 30,


 June 30,



2017


2016


2017


2016










Revenue


$  353,429


$  305,105


$  691,706


$  617,515



















Reconciliation of EBIT & EBITDA:


















Net Income Attributable to TeleTech stockholders


$    14,694


$    11,616


$    33,939


$    22,841

Interest income


(695)


(263)


(1,121)


(429)

Interest expense


2,912


1,753


5,230


3,717

Provision for income taxes


1,597


2,952


6,988


7,480

EBIT


$    18,508


$    16,058


$    45,036


$    33,609










Depreciation and amortization


16,258


17,221


30,758


34,950










EBITDA


$    34,766


$    33,279


$    75,794


$    68,559



















Reconciliation of Free Cash Flow:


















Cash Flow From Operating Activities:









   Net income


$    15,794


$    12,542


$    35,961


$    24,447

   Adjustments to reconcile net income to net cash









       provided by operating activities:









          Depreciation and amortization


16,258


17,221


30,758


34,950

          Other


18,471


13,744


58,736


(4,352)

   Net cash provided by operating activities


50,523


43,507


125,455


55,045










Less - Total Capital Expenditures


17,554


12,794


29,589


27,743










Free Cash Flow


$    32,969


$    30,713


$    95,866


$    27,302



















Reconciliation of Non-GAAP Income from Operations:


















Income from Operations


$    21,589


$    16,228


$    48,079


$    33,981

Restructuring charges, net


3,593


114


3,762


202

Impairment losses


-


-


-


-










Non-GAAP Income from Operations


$    25,182


$    16,342


$    51,841


$    34,183










Non-GAAP Income from Operations Margin


7.1%


5.4%


7.5%


5.5%



















Reconciliation of Non-GAAP EPS:


















Net Income Attributable to TeleTech stockholders


$    14,694


$    11,616


$    33,939


$    22,841

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


2,165


93


2,282


148

Add:  Estimated loss on assets held for sale, net of related taxes


1,907


-


1,907


-

Less:  Estimated gain on sale of business unit


(18)


-


(18)


-

Add:  Changes in valuation allowance and returns to provision adjustments


(1,363)


1,558


(1,399)


2,436










 Non-GAAP Net Income Attributable to TeleTech stockholders


$    17,385


$    13,267


$    36,711


$    25,425










    Diluted shares outstanding


46,150


48,221


46,224


48,483










 Non-GAAP EPS Attributable to TeleTech stockholders


$0.38


$0.28


$0.79


$0.52



















Reconciliation of Non-GAAP EBITDA:


















Net Income Attributable to TeleTech stockholders


$    14,694


$    11,616


$    33,939


$    22,841

   Interest income


(695)


(263)


(1,121)


(429)

   Interest expense


2,912


1,753


5,230


3,717

   Provision for income taxes


1,597


2,952


6,988


7,480

   Depreciation and amortization


16,258


17,221


30,758


34,950

   Asset impairment and restructuring charges


3,593


114


3,762


202

   Gain on sale of business unit


(30)


-


(30)


-

   Estimated loss of assets held for sale


3,178


-


3,178


-

   Equity-based compensation expenses


2,795


1,825


4,836


4,584










 Non-GAAP EBITDA


$    44,302


$    35,218


$    87,540


$    73,345

 

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





























SECOND QUARTER













(three months end, June 30, 2017)




























Revenue







Operating Income









GAAP Revenue


Non-GAAP Revenue Contribution from AHFS/WD

Non-GAAP Revenue (excluding AHFS/WD)




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


$  269,056


$             -

$         269,056


CMS


$  14,075

$        3,579

$  17,654


$                    -

$              17,654


YoY Growth Rate:

26.4%



26.4%



Operating Margin:

5.2%


6.6%



6.6%
















CGS


$    32,403


$       1,110

$           31,293


CGS


$    2,321

$             -

$    2,321


$                  (43)

$                2,364


YoY Growth Rate:

-12.2%



-11.9%



Operating Margin:

7.2%


7.2%



7.6%

CTS


$    34,798


$       2,799

$           31,999


CTS


$    3,819

$             14

$    3,833


$                 117

$                3,716


YoY Growth Rate:

-6.8%



-0.7%



Operating Margin:

11.0%


11.0%



11.6%

CSS


$    17,172


$       2,110

$           15,062


CSS


$    1,374

$             -

$    1,374


$                (321)

$                1,695


YoY Growth Rate:

-4.9%



-3.6%



Operating Margin:

8.0%


8.0%



11.3%
















Company (Consolidated)

$  353,429


$       6,019

$         347,410


Company


$  21,589

$        3,593

$  25,182


$                (247)

$              25,429


YoY Growth Rate:

15.8%



17.3%



Operating Margin:

6.1%


7.1%



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 and integration 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





























SECOND QUARTER (YEAR-TO-DATE)













(six months end, June 30, 2017)




























Revenue







Operating Income









GAAP Revenue


Non-GAAP Revenue Contribution from AHFS/WD

Non-GAAP Revenue (excluding AHFS/WD)




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


$  521,135


$             -

$         521,135


CMS


$  34,671

$        3,585

$  38,256


$                    -

$              38,256


YoY Growth Rate:

18.2%



18.2%



Operating Margin:

6.7%


7.3%



7.3%
















CGS


$    66,061


$       2,279

$           63,782


CGS


$    4,731

$             -

$    4,731


$                (261)

$                4,992


YoY Growth Rate:

-6.2%



-5.5%



Operating Margin:

7.2%


7.2%



7.8%

CTS


$    70,491


$       6,780

$           63,711


CTS


$    6,876

$           177

$    7,053


$                 489

$                6,564


YoY Growth Rate:

-2.9%



1.5%



Operating Margin:

9.8%


10.0%



10.3%

CSS


$    34,019


$       4,487

$           29,532


CSS


$    1,801

$             -

$    1,801


$                (653)

$                2,454


YoY Growth Rate:

0.8%



0.4%



Operating Margin:

5.3%


5.3%



8.3%
















Company (Consolidated)

$  691,706


$     13,546

$         678,160


Company


$  48,079

$        3,762

$  51,841


$                (425)

$              52,266


YoY Growth Rate:

12.0%



13.0%



Operating Margin:

7.0%


7.5%



7.7%































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 and integration charges.


 

TeleTech Logo.

 

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SOURCE TeleTech Holdings, Inc.