"Since the company's founding over 36 years ago our strategy has been consistent, to grow our top and bottom line, and increase shareholder value by building enduring client relationships that deliver exceptional customer experiences. To accomplish this, we are deliberately investing in continuous innovation and transformational change," said
"We are executing upon a rapidly growing pipeline across the business with another record quarter of bookings in the third quarter of 2018, increasing 34 percent to
"Each of our Customer Strategy, Customer Technology and Customer Growth segments is reaching our strategic financial targets. In addition, we have made progress with our clients in addressing frontline wages in our Customer Management Services' North American business, including several meaningful price increases. We expect improved financial performance in 2019," continued Tuchman.
THIRD QUARTER 2018 FINANCIAL HIGHLIGHTS
Revenue
- Third quarter 2018 GAAP revenue increased 1.6 percent to
$364.9 million compared to$359 .0 million in the prior year period. - Non-GAAP AHFS/WD revenue increased 2.0 percent to
$363.0 million over the prior year period. - ASC 606 and foreign exchange had a
$10.1 million and$6.1 million negative impact, respectively, on revenue in the third quarter 2018.
Income from Operations
- Third quarter 2018 GAAP income from operations was
$14.7 million , or 4.0 percent of revenue, compared to$15.8 million , or 4.4 percent of revenue in the third quarter 2017. - Non-GAAP AHFS/WD income from operations, excluding
$2.7 million in restructuring, was$17 .4 million or 4.8 percent of adjusted revenue versus 6.4 percent in the prior year. - ASC 606 and foreign exchange had a
$4.1 million negative and$1.1 million positive impact, respectively, on income from operations in the third quarter 2018.
Adjusted EBITDA
- Non-GAAP Adjusted EBITDA was
$38.2 million , or 10.5 percent of revenue, compared to$43 .0 million, or 12.0 percent of revenue in the third quarter 2017. - ASC 606 and foreign exchange had a
$4.1 million negative and$0.7 million positive impact, respectively, on Adjusted EBITDA in the third quarter 2018.
Earnings Per Share
- Third quarter 2018 GAAP fully diluted earnings per share attributable to
TTEC shareholders was$0.12 compared to$0.32 in the same period last year. - Non-GAAP fully diluted earnings per share was
$0.22 compared to$0.35 in the prior year. - ASC 606 and foreign exchange had a
$0.06 negative and$0.02 positive impact, respectively on earnings per in the third quarter 2018.
Bookings
- During the third quarter 2018,
TTEC signed an estimated$153 million in annualized contract value from new and expanded client relationships. The third quarter bookings mix was diversified across segments, verticals, and geographies.
GAAP metrics are presented in accordance with Generally Accepted Accounting Principles, including the impact from
Non-GAAP AHFS/WD (excluding assets held for sale and wind-down) - As reflected 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.
Non-GAAP Adjusted EBITDA (Earnings Before Interest, Tax, Depreciation and Amortization) – As reflected in the attached reconciliation table.
STRONG BALANCE SHEET CONTINUES TO FUND OPERATIONS, DIVIDENDS, AND INVESTMENTS
- As of
September 30, 2018 ,TTEC had cash and cash equivalents of$93.9 million and debt of$296.2 million , resulting in a net debt position of$202.3 million . This compares to a net debt position of$192.0 million in the prior year period. - As of
September 30, 2018 ,TTEC had approximately$405 million of additional borrowing capacity available under its revolving credit facility versus$390 million in the prior year period. - Cash flow from operations in the third quarter 2018 was
$61.4 million compared to$24.2 million in the third quarter 2017. - Capital expenditures in the third quarter 2018 were
$15.0 million compared to$14.3 million in the third quarter 2017. - In
September 2018 , the Board of Directors authorized a semi-annual dividend in the amount of$12.9 million , or28-cents per share. The dividend was paid onOctober 19, 2018 to shareholders of record as ofOctober 9, 2018 . The authorized and paid dividend represented a 3.7 percent increase over the most recent distribution inApril 2018 and a 12.0 percent increase over the distribution paid inOctober 2017 .
SEGMENT REPORTING & COMMENTARY
Customer Management Services (CMS) – Customer Experience Delivery Solutions
- CMS third quarter 2018 GAAP revenue decreased 5.4 percent to
$262.4 million compared to$277.4 million in the year ago quarter. Income from operations was$3.6 million or 1.4 percent of revenue compared to$9.1 million or 3.3 percent of revenue in the prior year. - Non-GAAP income from operations was
$6.2 million or 2.4 percent of revenue. This compares to$15.1 million or 5.4 percent of revenue in the prior year. - ASC 606 had a
$10.1 million and$4.1 million negative impact on revenue and income from operations, respectively.
Customer Growth Services (CGS) – Digitally-Enabled Revenue Growth Solutions
- CGS third quarter 2018 GAAP revenue increased 16.4 percent to
$35.9 million compared to$30.8 million in the year ago quarter. Income from operations was$2.5 million or 7.1 percent of revenue compared to$1.6 million or 5.1 percent of revenue in the prior year. - Non-GAAP AHFS/WD revenue increased 21.3 percent to
$35.9 million over the year ago period and income from operations was$2.7 million or 7.4 percent of adjusted revenue. This compares to$1.7 million or 5.9 percent of adjusted revenue in the prior year.
Customer Technology Services (CTS) – Hosted and Managed Technology Solutions
- CTS third quarter 2018 GAAP revenue increased 44.6 percent to
$50.0 million compared to$34.6 million in the year ago quarter. Income from operations was$6.8 million or 13.6 percent of revenue compared to$4.2 million or 12.0 percent of revenue in the prior year. - Non-GAAP AHFS/WD revenue increased 44.6 percent to
$50.0 million over the year ago period and income from operations was$6.8 million or 13.6 percent of adjusted revenue. This compares to$4.2 million or 12.1 percent of adjusted revenue in the prior year.
Customer Strategy Services (CSS) – Customer Experience Strategy and Data Analytics Solutions
- CSS third quarter 2018 GAAP revenue increased 2.7 percent to
$16.7 million from$16.3 million in the year ago quarter. Income from operations was$1.7 million or 10.1 percent of revenue compared to$0.9 million or 5.8 percent of revenue in the prior year. - Non-GAAP AHFS/WD revenue increased 2.5 percent to
$14.8 million over the year ago period and income from operations was$1.7 million or 11.7 percent of adjusted revenue. This compares to operating income of$1.8 million or 12.4 percent of revenue in the prior year.
BUSINESS OUTLOOK
"Our strategy to differentiate our solutions portfolio and improve our go-to-market platform is a catalyst for anticipated renewed organic growth in 2019," commented
"We are also pleased with the sequential improvement in our third quarter revenue and operating income, with significant overperformance in our Customer Technology Services segment. As we approach year end, we are keenly focused on delivering performance in line with the guidance provided during our second quarter earnings call, maximizing our seasonal peak fourth-quarter volumes, remediating the challenges impacting our Customer Management Services segment, and executing upon the conversion of our growing pipeline and bookings. We are setting up well for 2019 and anticipate full year higher operating income margins on renewed organic revenue growth," continued Paolillo.
About TTEC
NON-GAAP FINANCIAL MEASURES
This press release contains a discussion of certain non-GAAP financial measures that the Company includes to allow investors and analysts to measure, analyze and compare its financial condition and results of operations in a meaningful and consistent manner. A reconciliation of these non-GAAP financial measures can be found in the tables accompanying this press release.
FORWARD-LOOKING STATEMENTS
This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the current beliefs and expectations of
Investor Relations Contact Paul Miller +1.303.397.8641 |
Public Relations Contact Olivia Griner +1.303.397.8999 |
Address 9197 South Peoria Street Englewood, CO 80112 |
Contact ttec.com +1.800.835.3832 |
TTEC 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, |
||||||||
2018 |
2017 |
2018 |
2017 |
||||||
Revenue |
$364,936 |
$359,036 |
$1,090,038 |
$1,050,742 |
|||||
Operating Expenses: |
|||||||||
Cost of services |
286,925 |
275,548 |
844,555 |
797,450 |
|||||
Selling, general and administrative |
43,321 |
45,167 |
134,611 |
132,372 |
|||||
Depreciation and amortization |
17,317 |
16,515 |
52,052 |
47,273 |
|||||
Restructuring and integration charges, net |
2,716 |
6,006 |
4,599 |
9,768 |
|||||
Impairment losses |
- |
- |
1,120 |
- |
|||||
Total operating expenses |
350,279 |
343,236 |
1,036,937 |
986,863 |
|||||
Income From Operations |
14,657 |
15,800 |
53,101 |
63,879 |
|||||
Other income (expense) |
(6,020) |
1,846 |
(29,480) |
(3,284) |
|||||
Income Before Income Taxes |
8,637 |
17,646 |
23,621 |
60,595 |
|||||
Provision for income taxes |
(1,893) |
(2,071) |
(4,648) |
(9,059) |
|||||
Net Income |
6,744 |
15,575 |
18,973 |
51,536 |
|||||
Net income attributable to noncontrolling interest |
(1,369) |
(806) |
(3,489) |
(2,828) |
|||||
Net Income Attributable to TTEC Stockholders |
$ 5,375 |
$ 14,769 |
$ 15,484 |
$ 48,708 |
|||||
Net Income Per Share Attributable to TTEC Stockholders |
|||||||||
Basic |
$ 0.12 |
$ 0.32 |
$ 0.34 |
$ 1.06 |
|||||
Diluted |
$ 0.12 |
$ 0.32 |
$ 0.33 |
$ 1.05 |
|||||
Income From Operations Margin |
4.0% |
4.4% |
4.9% |
6.1% |
|||||
Net Income Attributable to TTEC Stockholders Margin |
1.5% |
4.1% |
1.4% |
4.6% |
|||||
Effective Tax Rate |
21.9% |
11.7% |
19.7% |
15.0% |
|||||
Weighted Average Shares Outstanding |
|||||||||
Basic |
46,172 |
45,838 |
46,021 |
45,816 |
|||||
Diluted |
46,316 |
46,367 |
46,390 |
46,348 |
TTEC HOLDINGS, INC. AND SUBSIDIARIES |
||||||||
SEGMENT INFORMATION |
||||||||
(In thousands) |
||||||||
(unaudited) |
||||||||
Three months ended |
Nine months ended |
|||||||
September 30, |
September 30, |
|||||||
2018 |
2017 |
2018 |
2017 |
|||||
Revenue: |
||||||||
Customer Management Services |
$262,360 |
$277,373 |
$ 817,214 |
$ 798,508 |
||||
Customer Growth Services |
35,897 |
30,829 |
103,577 |
96,890 |
||||
Customer Technology Services |
49,967 |
34,563 |
118,991 |
105,054 |
||||
Customer Strategy Services |
16,712 |
16,271 |
50,256 |
50,290 |
||||
Total |
$364,936 |
$359,036 |
$1,090,038 |
$1,050,742 |
||||
Income From Operations: |
||||||||
Customer Management Services |
$ 3,639 |
$ 9,133 |
$ 25,627 |
$ 43,804 |
||||
Customer Growth Services |
2,549 |
1,564 |
6,895 |
6,295 |
||||
Customer Technology Services |
6,778 |
4,158 |
17,188 |
11,034 |
||||
Customer Strategy Services |
1,691 |
945 |
3,391 |
2,746 |
||||
Total |
$ 14,657 |
$ 15,800 |
$ 53,101 |
$ 63,879 |
TTEC HOLDINGS, INC. AND SUBSIDIARIES |
||||
CONSOLIDATED BALANCE SHEETS |
||||
(In thousands) |
||||
(unaudited) |
||||
September 30, |
December 31, |
|||
2018 |
2017 |
|||
ASSETS |
||||
Current assets: |
||||
Cash and cash equivalents |
$ 93,879 |
$ 74,437 |
||
Accounts receivable, net |
301,770 |
385,751 |
||
Other current assets |
99,501 |
74,767 |
||
Assets held for sale |
7,822 |
7,835 |
||
Total current assets |
502,972 |
542,790 |
||
Property and equipment, net |
161,244 |
163,297 |
||
Other assets |
374,390 |
372,649 |
||
Total assets |
$ 1,038,606 |
$ 1,078,736 |
||
LIABILITIES AND EQUITY |
||||
Total current liabilities |
$ 239,424 |
$ 200,456 |
||
Liabilities held for sale |
3,546 |
1,322 |
||
Other long-term liabilities |
466,778 |
514,113 |
||
Total equity |
328,858 |
362,845 |
||
Total liabilities and equity |
$ 1,038,606 |
$ 1,078,736 |
TTEC 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, |
|||||||
2018 |
2017 |
2018 |
2017 |
|||||
Reconciliation of Adjusted EBITDA: |
||||||||
Net Income |
** |
$ 6,744 |
$ 15,575 |
$ 18,973 |
$ 51,536 |
|||
Interest income |
(1,401) |
(899) |
(3,940) |
(2,020) |
||||
Interest expense |
8,410 |
3,469 |
22,634 |
8,699 |
||||
Provision for income taxes |
1,893 |
2,071 |
4,648 |
9,059 |
||||
Depreciation and amortization |
17,317 |
16,515 |
52,052 |
47,273 |
||||
Asset impairment, restructuring and integration charges |
2,716 |
6,006 |
5,719 |
9,768 |
||||
Impairment of equity investment |
- |
- |
15,632 |
- |
||||
Gain on dissolution of a foreign subsidiary |
- |
(3,160) |
- |
(3,160) |
||||
Gain on sale of business unit |
(588) |
(141) |
(1,653) |
(171) |
||||
Estimated loss of assets held for sale |
- |
- |
2,000 |
3,178 |
||||
Gain on bargain purchase of acquisition |
- |
- |
(685) |
- |
||||
Equity-based compensation expenses |
3,109 |
3,522 |
9,292 |
8,358 |
||||
Adjusted EBITDA |
$ 38,200 |
$ 42,958 |
$ 124,672 |
$ 132,520 |
||||
Reconciliation of Free Cash Flow: |
||||||||
Cash Flow From Operating Activities: |
||||||||
Net income |
** |
$ 6,744 |
$ 15,575 |
$ 18,973 |
$ 51,536 |
|||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
17,317 |
16,515 |
52,052 |
47,273 |
||||
Other |
37,342 |
(7,902) |
95,084 |
50,834 |
||||
Net cash provided by operating activities |
61,403 |
24,188 |
166,109 |
149,643 |
||||
Less - Total Capital Expenditures |
14,958 |
14,343 |
31,841 |
43,932 |
||||
Free Cash Flow |
$ 46,445 |
$ 9,845 |
$ 134,268 |
$ 105,711 |
||||
Reconciliation of Non-GAAP Income from Operations: |
||||||||
Income from Operations |
** |
$ 14,657 |
$ 15,800 |
$ 53,101 |
$ 63,879 |
|||
Restructuring and integration charges, net |
2,716 |
6,006 |
4,599 |
9,768 |
||||
Impairment losses |
- |
- |
1,120 |
- |
||||
Non-GAAP Income from Operations |
$ 17,373 |
$ 21,806 |
$ 58,820 |
$ 73,647 |
||||
Non-GAAP Income from Operations Margin |
4.8% |
6.1% |
5.4% |
7.0% |
||||
Reconciliation of Non-GAAP EPS: |
||||||||
Net Income |
** |
$ 6,744 |
$ 15,575 |
$ 18,973 |
$ 51,536 |
|||
Add: Asset impairment, restructuring and integration charges, net of related taxes |
1,988 |
3,620 |
4,152 |
5,903 |
||||
Add: Estimated loss on assets held for sale, net of related taxes |
- |
- |
2,000 |
1,907 |
||||
Add: Interest charge related to future purchase of remaining 30% for Motif acquistiion |
3,002 |
- |
7,989 |
- |
||||
Add: Impairment of equity investment, net of related taxes |
- |
- |
11,411 |
- |
||||
Less: Gain on dissolution of foreign subsidiary, net of related taxes |
- |
(1,891) |
- |
(1,891) |
||||
Less: Gain on sale of business unit |
(429) |
(85) |
(1,207) |
(103) |
||||
Less: Gain on bargain purchase of acquisition |
- |
- |
(500) |
- |
||||
Add: Changes in valuation allowance, returns to provision adjustments and other |
(1,231) |
(801) |
(2,989) |
(2,200) |
||||
Non-GAAP Net Income |
$ 10,074 |
$ 16,418 |
$ 39,829 |
$ 55,152 |
||||
Diluted shares outstanding |
46,316 |
46,367 |
46,390 |
46,348 |
||||
Non-GAAP EPS |
$0.22 |
$0.35 |
$0.86 |
$1.19 |
||||
** The numbers above include the adoption of ASC 606 and include the following third quarter and YTD 2018 amounts : |
||||||||
Third Quarter 2018 Revenue : ( $10.1) million, YTD 2018 Revenue : + $4.8 million |
||||||||
Third Quarter 2018 Operating Income : ( $4.1) million, YTD 2018 Operating Income : + $3.8 million |
||||||||
Third Quarter 2018 Net Income : ( $2.9) million, YTD 2018 Net Income : + $2.8 million |
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, 2018) |
||||||||||||
Revenue |
Operating Income |
|||||||||||
TTEC Digital |
GAAP Revenue |
Revenue Contribution from AHFS/WD |
Non-GAAP Revenue (excluding AHFS/WD) |
TTEC Digital |
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) |
|||
CTS |
$ 49,967 |
$ - |
$ 49,967 |
CTS |
$ 6,778 |
$ - |
$ 6,778 |
$ 3 |
$ 6,775 |
|||
YoY Growth Rate: |
44.6% |
44.6% |
Operating Margin: |
13.6% |
13.6% |
13.6% |
||||||
CSS |
$ 16,712 |
$ 1,917 |
$ 14,795 |
CSS |
$ 1,691 |
$ 82 |
$ 1,773 |
$ 42 |
$ 1,731 |
|||
YoY Growth Rate: |
2.7% |
2.5% |
Operating Margin: |
10.1% |
10.6% |
11.7% |
||||||
TTEC Engage |
TTEC Engage |
|||||||||||
CMS |
$ 262,360 |
$ - |
$ 262,360 |
CMS |
$ 3,639 |
$ 2,559 |
$ 6,198 |
$ - |
$ 6,198 |
|||
YoY Growth Rate: |
-5.4% |
-5.4% |
Operating Margin: |
1.4% |
2.4% |
2.4% |
||||||
CGS |
$ 35,897 |
$ - |
$ 35,897 |
CGS |
$ 2,549 |
$ 75 |
$ 2,624 |
$ (27) |
$ 2,651 |
|||
YoY Growth Rate: |
16.4% |
21.3% |
Operating Margin: |
7.1% |
7.3% |
7.4% |
||||||
Company (Consolidated) |
$ 364,936 |
$ 1,917 |
$ 363,019 |
Company |
$ 14,657 |
$ 2,716 |
$ 17,373 |
$ 18 |
$ 17,355 |
|||
YoY Growth Rate: |
1.6% |
2.0% |
Operating Margin: |
4.0% |
4.8% |
4.8% |
||||||
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) impairment, restructuring and integration charges. |
||||||||||||
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 |
||||||||||||
NINE MONTHS |
||||||||||||
(nine months end, September 30, 2018) |
||||||||||||
Revenue |
Operating Income |
|||||||||||
TTEC Digital |
GAAP Revenue |
Revenue Contribution from AHFS/WD |
Non-GAAP Revenue (excluding AHFS/WD) |
TTEC Digital |
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) |
|||
CTS |
$ 11,991 |
$ - |
$ 118,991 |
CTS |
$ 17,188 |
$ - |
$ 17,188 |
$ (19) |
$ 17,207 |
|||
YoY Growth Rate: |
13.3% |
21.1% |
Operating Margin: |
14.4% |
14.4% |
14.5% |
||||||
CSS |
$ 50,256 |
$ 7,522 |
$ 42,734 |
CSS |
$ 3,391 |
$ 133 |
$ 3,524 |
$ (1,206) |
$ 4,730 |
|||
YoY Growth Rate: |
-0.1% |
-2.8% |
Operating Margin: |
6.7% |
7.0% |
11.1% |
||||||
TTEC Engage |
TTEC Engage |
|||||||||||
CMS |
$ 817,214 |
$ - |
$ 817,214 |
CMS |
$ 25,627 |
$ 4,870 |
$ 30,497 |
$ - |
$ 30,497 |
|||
YoY Growth Rate: |
2.3% |
2.3% |
Operating Margin: |
3.1% |
3.7% |
3.7% |
||||||
CGS |
$ 103,577 |
$ 1 |
$ 103,576 |
CGS |
$ 6,895 |
$ 716 |
$ 7,611 |
$ (37) |
$ 7,648 |
|||
YoY Growth Rate: |
6.9% |
10.9% |
Operating Margin: |
6.7% |
7.3% |
7.4% |
||||||
Company (Consolidated) |
$ 1,090,038 |
$ 7,523 |
$ 1,082,515 |
Company |
$ 53,101 |
$ 5,719 |
$ 58,820 |
$ (1,262) |
$ 60,082 |
|||
YoY Growth Rate: |
3.7% |
4.7% |
Operating Margin: |
4.9% |
5.4% |
5.6% |
||||||
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) impairment, restructuring and integration charges. |
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