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8-K - 8-K - TTEC Holdings, Inc.a12-26281_18k.htm

Exhibit 99.1

 

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TELETECH ANNOUNCES THIRD QUARTER 2012 FINANCIAL RESULTS

 

Achieves Third Quarter Revenue of $286 Million and Operating Margin of 9.6 Percent;
Diversified Businesses Reach 22 Percent of Revenue;

Third Quarter Annualized New Business Wins Total $90 Million

 

ENGLEWOOD, Colo., November 7, 2012 — TeleTech Holdings, Inc. (NASDAQ: TTEC), a leading global provider of technology-enabled customer experience solutions, today announced financial results for the third quarter ended September 30, 2012.  The Company also filed its Quarterly Report on Form 10-Q with the Securities and Exchange Commission for the quarter ended September 30, 2012.

 

“We continue to execute on our strategy of investing in both revenue diversification and innovation to position the company for top line growth,” said Ken Tuchman, TeleTech chairman and chief executive officer.  “Our diversified business segments grew to 22 percent of revenue from 18 percent in the year-ago period.  Our strong balance sheet has funded our continued investment in scalable, technology-rich offerings that keep us strategically relevant with the increasingly complex customer experience needs of our clients,” continued Tuchman. “Industry leading companies realize that creating strong emotional connections with their customers is the key differentiator in today’s dynamic global marketplace.  As we celebrate our 30th year in business, I am very excited about our future.   We have been investing in innovation for the past three decades and as a result, we are uniquely positioned to help our clients deliver on the promise of their brand by providing engaging customer experiences at every touch point.”

 

THIRD QUARTER 2012 FINANCIAL HIGHLIGHTS

 

·      Third quarter 2012 revenue was $286.3 million compared to $304.2 million in the third quarter 2011.  The lower revenue was attributable to a $27.7 million reduction from the Company’s previously announced decision to exit certain underperforming business in addition to a $4.5 million negative foreign currency impact.  Excluding the impact of the above reductions, third quarter 2012 revenue grew $14.3 million or 4.7 percent.

 

·      Income from operations for the third quarter 2012 included $2.6 million of net restructuring and impairment charges.

 

·      Third quarter 2012 income from operations was $27.4 million or 9.6 percent of revenue compared to $26.6 million or 8.7 percent of revenue in the third quarter 2011.  Excluding the restructuring and impairment charges discussed above, third quarter 2012 non-GAAP income from operations was $30.0 million or 10.5 percent of revenue.

 

·      Third quarter 2012 fully diluted earnings per share attributable to TeleTech stockholders was 52 cents compared to 44 cents in the third quarter 2011.  Excluding restructuring, impairment and

 

 

Investor Contact

Media Contact

 

Karen Breen

Jeanna Blatt

 

303.397.8592

303.397.8507

 



 

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other items, third quarter 2012 non-GAAP fully diluted earnings per share attributable to TeleTech stockholders increased 11.4 percent to 39 cents compared to 35 cents in the year-ago quarter.

 

·      During the third quarter 2012 TeleTech signed an estimated $90 million in annualized revenue from both new and expanding client relationships.  Approximately 75 percent represented recurring revenue.

 

STRONG BALANCE SHEET CONTINUES TO FUND OPERATIONS, SHARE REPURCHASES AND STRATEGIC ACQUISITIONS

 

·      As of September 30, 2012, TeleTech had cash and cash equivalents of $170.4 million, $88.0 million of borrowings on its credit facility and total other debt of $12.8 million, resulting in net cash of $69.6 million.

 

·      TeleTech had approximately $408 million of additional borrowing capacity available under its revolving credit facility as of September 30, 2012.  This provides TeleTech with the continued financial flexibility to fund organic growth, share repurchases and accretive acquisitions.

 

·      Cash flow from operations in the third quarter 2012 increased to $14.8 million from a negative ($8.5) million in the third quarter 2011. The increase was primarily due to the timing of certain working capital items.

 

·      Capital expenditures in the third quarter 2012 were $15.8 million compared to $8.8 million in the third quarter 2011. The higher capital expenditures were principally related to increased investments in the Company’s technology-based offerings.

 

·      TeleTech repurchased 0.9 million shares of common stock during the third quarter 2012 for a total cost of $14.5 million.  As of September 30, 2012, there was $26.5 million authorized for future share repurchases.

 

SEGMENT REPORTING

 

To provide clarity as to the financial profile and performance of TeleTech’s primary businesses, 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).  Corporate expenses are reported separately from the above.  Highlights of the financial performance of the primary segments are provided below.

 

Customer Management Services (CMS) — Customer Experience Delivery Solutions

 

·      CMS third quarter 2012 revenue was $224.0 million, representing approximately 78 percent of total third quarter 2012 revenue, compared to $248.7 million in the third quarter 2011.  The lower revenue was attributable to a $27.7 million reduction from the company’s previously announced decision to exit certain underperforming business in addition to a $4.1 million negative foreign

 



 

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currency impact.  Excluding the above reductions, revenue increased by $7.1 million or 2.9 percent.

·      CMS third quarter 2012 income from operations included $2.5 million of net restructuring and impairment charges.

·      CMS third quarter 2012 income from operations, before corporate expenses, was $47.2 million or 21.1 percent of revenue, compared to 17.4 percent of revenue in the third quarter 2011.  Excluding the $2.5 million of net restructuring and impairment charges, CMS third quarter 2012 non-GAAP income from operations was $49.7 million or 22.2 percent of revenue.  The higher third quarter 2012 operating margin was primarily related to TeleTech’s profit improvement initiatives including an increase in capacity utilization for its multi-client centers to 77 percent from 74 percent in the year-ago quarter.

 

Customer Growth Services (CGS) — Technology-Enabled Revenue Generation Solutions

 

·      CGS third quarter 2012 revenue was $28.2 million, representing approximately 10 percent of total third quarter 2012 revenue, compared to $25.8 million in the third quarter 2011.

·      CGS third quarter 2012 income from operations was $5.8 million or 20.6 percent of revenue, compared to 19.5 percent of revenue in the third quarter 2011.

 

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

 

·      CTS third quarter 2012 revenue was $22.3 million compared to $22.9 million in the year-ago period, representing approximately 8 percent of total third quarter 2012 revenue.

·      CTS third quarter 2012 income from operations was $3.3 million or 14.6 percent of revenue, compared to $4.3 million or 18.7 percent of revenue in the third quarter 2011.  CTS third quarter 2012 operating results reflect the combination of its cloud- and premise-based services along with an increased investment in technology and expanded offerings to support its continued growth initiatives.

·      During the third quarter, TeleTech further enhanced its cloud-based market opportunity and expertise by achieving Cisco’s Cloud Provider Certification and Contact Center as a Service Designation.

 

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

 

·      CSS third quarter 2012 revenue increased 69.9 percent to $11.7 million compared to $6.9 million in the third quarter 2011.

·      CSS third quarter 2012 income from operations was $0.8 million or 7.1 percent of revenue, compared to an operating loss of ($0.3) million in the third quarter 2011.  The higher operating margin was attributable to the increased revenue enabling greater fixed cost absorption.

 

Corporate Expenses

 

·      The third quarter 2012 income from operations for the above segments excluded $29.7 million of corporate expenses.  TeleTech expects to continue to further leverage its general and administrative expenses as a percentage of revenue across its expanding suite of services.

 



 

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BUSINESS OUTLOOK

 

·      TeleTech continues to expect 2012 revenue will range between $1.15 billion and $1.2 billion.

 

·      TeleTech continues to expect 2012 operating margin will increase from 2011 and range between 8.5 percent and 9.0 percent, before asset impairment and restructuring charges.

 

SEC FILINGS

 

The company’s filings with the Securities and Exchange Commission are available in the “Investors” section of TeleTech’s website, which can be found at www.teletech.com.

 

CONFERENCE CALL

 

A conference call and webcast with management will be held on Thursday, November 8, 2012 at 8:30 a.m. Eastern Time. You are invited to join a live webcast of the conference call by visiting the “Investors” section of the TeleTech website at www.teletech.com.  If you are unable to participate during the live webcast, a replay will be available on the TeleTech website through Thursday, November 22, 2012.

 

NON-GAAP FINANCIAL MEASURES

 

To supplement the Company’s consolidated financial statements presented in accordance with generally accepted accounting principles (GAAP) in the United States, the Company uses the following non-GAAP financial measures: Free Cash Flow, Non-GAAP Income from Operations, Non-GAAP EBITDA and Non-GAAP EPS. TeleTech believes that providing these non-GAAP financial measures provides investors with greater transparency to the information used by TeleTech’s management in its financial and operational decision making and allows investors to see TeleTech’s results “through the eyes” of management. TeleTech also believes that providing this information better enables TeleTech’s investors to understand its operating performance and information used by management to evaluate and measure such performance. These financial measures are not intended to be used in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.  A reconciliation of these non-GAAP financial measures is available in the financial tables attached to this press release. We also encourage all investors to read our Quarterly Report on Form 10-Q for the quarter ended September 30, 2012.

 

ABOUT TELETECH

 

For 30 years, TeleTech and its subsidiaries have helped the world’s most successful companies design, enable, manage and grow customer value through the delivery of superior customer experiences across the customer lifecycle. As the go-to partner for the Global 1000, the TeleTech group of companies delivers technology-enabled solutions that maximize revenue, transform customer experiences and optimize business processes. From strategic consulting to operational execution, our more than 39,000 employees drive success for clients in the communications and media, financial services, government, healthcare, technology, transportation and retail industries. Through the TeleTech Community

 



 

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Foundation, the company leverages its innovative leadership to ensure that students in underserved communities around the globe have access to the tools and support they need to maximize their educational outcomes. For additional information, please visit www.teletech.com.

 

FORWARD-LOOKING STATEMENTS

 

Statements in this press release that relate to future results and events (including statements about future financial and operating performance) are forward-looking statements based on TeleTech’s current expectations. Actual results and events in future periods could differ materially from those projected in these forward-looking statements because of a number of risks and uncertainties including: achieving estimated revenue from new, renewed and expanded client business as volumes may not materialize as forecasted, especially due to the global economic slowdown; the ability to close and ramp new business opportunities that are currently being pursued or that are in the final stages with existing and/or potential clients; our ability to execute our growth plans, including the successful integration of acquired companies and the sales of new products; the possibility of lower revenue or price pressure from our clients experiencing a business downturn or merger in their business; greater than anticipated competition in the customer management industry, causing adverse pricing and more stringent contractual terms; risks associated with losing or not renewing client relationships, particularly large client agreements, or early termination of a client agreement; the risk of losing clients due to consolidation in the industries we serve; consumers’ concerns or adverse publicity regarding our clients’ products; our ability to find cost-effective locations, obtain favorable lease terms and build or retrofit facilities in a timely and economic manner; risks associated with business interruption due to weather, fires, pandemic, or terrorist-related events; risks associated with attracting and retaining cost-effective labor at our delivery centers; the possibility of asset impairments and restructuring charges; risks associated with changes in foreign currency exchange rates; economic or political changes affecting the countries in which we operate; changes in accounting policies and practices promulgated by standard setting bodies; and new legislation or government regulation that adversely impacts our tax obligations, health care costs or the customer management industry. A detailed discussion of these and other risk factors that could affect our results is included in TeleTech’s SEC filings, including our Annual Report on Form 10-K for the year ended December 31, 2011.  The Company’s filings with the Securities and Exchange Commission are available in the “Investors” section of TeleTech’s website, which is located at www.teletech.com.  All information in this release is as of November 7, 2012. The Company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company’s expectations.

 

###

 


 


 

TELETECH 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,

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

286,268

 

$

304,235

 

$

867,720

 

$

878,850

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

Cost of services

 

201,766

 

220,795

 

622,782

 

630,274

 

Selling, general and administrative

 

43,845

 

43,445

 

137,689

 

138,529

 

Depreciation and amortization

 

10,695

 

11,807

 

31,040

 

34,828

 

Restructuring charges, net

 

2,440

 

1,616

 

20,694

 

2,298

 

Impairment losses

 

161

 

 

2,958

 

230

 

Total operating expenses

 

258,907

 

277,663

 

815,163

 

806,159

 

 

 

 

 

 

 

 

 

 

 

Income From Operations

 

27,361

 

26,572

 

52,557

 

72,691

 

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

(1,252

)

(633

)

(2,802

)

(2,179

)

 

 

 

 

 

 

 

 

 

 

Income Before Income Taxes

 

26,109

 

25,939

 

49,755

 

70,512

 

 

 

 

 

 

 

 

 

 

 

Benefit (Provision) for income taxes

 

3,611

 

496

 

3,030

 

(9,482

)

 

 

 

 

 

 

 

 

 

 

Net Income

 

29,720

 

26,435

 

52,785

 

61,030

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to noncontrolling interest

 

(1,291

)

(1,064

)

(3,152

)

(2,969

)

 

 

 

 

 

 

 

 

 

 

Net Income Attributable to TeleTech Stockholders

 

$

28,429

 

$

25,371

 

$

49,633

 

$

58,061

 

 

 

 

 

 

 

 

 

 

 

Net Income Per Share Attributable to TeleTech Stockholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.53

 

$

0.45

 

$

0.90

 

$

1.02

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

$

0.52

 

$

0.44

 

$

0.89

 

$

1.00

 

 

 

 

 

 

 

 

 

 

 

Income From Operations Margin

 

9.6

%

8.7

%

6.1

%

8.3

%

Net Income Attributable to TeleTech Stockholders Margin

 

9.9

%

8.3

%

5.7

%

6.6

%

Effective Tax Rate

 

(13.8

)%

(1.9

)%

(6.1

)%

13.4

%

 

 

 

 

 

 

 

 

 

 

Weighted Average Shares Outstanding

 

 

 

 

 

 

 

 

 

Basic

 

54,093

 

56,476

 

55,233

 

56,790

 

Diluted

 

54,905

 

57,748

 

55,991

 

58,173

 

 



 

TELETECH HOLDINGS, INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(In thousands)

(unaudited)

 

 

 

Three months ended

 

Nine months ended

 

 

 

September 30,

 

September 30,

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

Customer Management Services

 

$

224,041

 

$

248,690

 

$

688,317

 

$

742,969

 

Customer Growth Services

 

28,200

 

25,793

 

75,373

 

71,419

 

Customer Technology Services

 

22,343

 

22,876

 

72,852

 

39,193

 

Customer Strategy Services

 

11,684

 

6,876

 

31,178

 

25,269

 

Total

 

$

286,268

 

$

304,235

 

$

867,720

 

$

878,850

 

 

 

 

 

 

 

 

 

 

 

Income (Loss) From Operations:

 

 

 

 

 

 

 

 

 

Customer Management Services

 

$

47,181

 

$

43,385

 

$

120,797

 

$

141,223

 

Customer Growth Services

 

5,818

 

5,020

 

11,108

 

12,596

 

Customer Technology Services

 

3,272

 

4,289

 

11,734

 

10,158

 

Customer Strategy Services

 

824

 

(322

)

1,671

 

1,450

 

Corporate

 

(29,734

)

(25,800

)

(92,753

)

(92,736

)

Total

 

$

27,361

 

$

26,572

 

$

52,557

 

$

72,691

 

 



 

TELETECH HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

 

 

 

September 30,

 

December 31,

 

 

 

2012

 

2011

 

 

 

(unaudited)

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

170,377

 

$

156,371

 

Accounts receivable, net

 

244,175

 

243,636

 

Other current assets

 

95,830

 

78,275

 

Total current assets

 

510,382

 

478,282

 

 

 

 

 

 

 

Property and equipment, net

 

111,431

 

100,321

 

Other assets

 

183,791

 

168,375

 

 

 

 

 

 

 

Total assets

 

$

805,604

 

$

746,978

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

Total current liabilities

 

$

161,568

 

$

170,011

 

Other long-term liabilities

 

145,117

 

106,720

 

Total equity

 

498,919

 

470,247

 

 

 

 

 

 

 

Total liabilities and equity

 

$

805,604

 

$

746,978

 

 



 

TELETECH 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,

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Gross Margin:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

286,268

 

$

304,235

 

$

867,720

 

$

878,850

 

Cost of services

 

201,766

 

220,795

 

622,782

 

630,274

 

Gross margin

 

$

84,502

 

$

83,440

 

$

244,938

 

$

248,576

 

 

 

 

 

 

 

 

 

 

 

Gross margin percentage

 

29.5

%

27.4

%

28.2

%

28.3

%

 

 

 

 

 

 

 

 

 

 

Reconciliation of EBIT & EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income Attributable to TeleTech Stockholders

 

$

28,429

 

$

25,371

 

$

49,633

 

$

58,061

 

Interest income

 

(780

)

(896

)

(2,235

)

(2,282

)

Interest expense

 

2,129

 

1,143

 

4,810

 

3,814

 

(Benefit) Provision for income taxes

 

(3,611

)

(496

)

(3,030

)

9,482

 

EBIT

 

$

26,167

 

$

25,122

 

$

49,178

 

$

69,075

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

10,695

 

11,807

 

31,040

 

34,828

 

EBITDA

 

$

36,862

 

$

36,929

 

$

80,218

 

$

103,903

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Free Cash Flow:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Flow From Operating Activities:

 

 

 

 

 

 

 

 

 

Net income

 

$

29,720

 

$

26,435

 

$

52,785

 

$

61,030

 

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

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

10,695

 

11,807

 

31,040

 

34,828

 

Other

 

(25,661

)

(46,721

)

(20,414

)

(56,356

)

Net cash provided by operating activities

 

14,754

 

(8,479

)

63,411

 

39,502

 

 

 

 

 

 

 

 

 

 

 

Less - Total Capital Expenditures

 

15,781

 

8,804

 

33,149

 

21,166

 

Free Cash Flow

 

$

(1,027

)

$

(17,283

)

$

30,262

 

$

18,336

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Income from Operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from Operations

 

$

27,361

 

$

26,572

 

$

52,557

 

$

72,691

 

Restructuring charges, net

 

2,440

 

1,616

 

20,694

 

2,298

 

Impairment losses

 

161

 

 

2,958

 

230

 

Acquisition-related expenses

 

 

 

159

 

1,066

 

Non-GAAP Income from Operations

 

$

29,962

 

$

28,188

 

$

76,368

 

$

76,285

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP EPS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income Attributable to TeleTech Stockholders

 

$

28,429

 

$

25,371

 

$

49,633

 

$

58,061

 

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

 

1,835

 

1,136

 

15,097

 

1,777

 

Add: Acquisition-related expenses, net of related taxes

 

 

 

95

 

640

 

Add: Changes in judgement for uncertain tax positions recorded in prior periods

 

(8,904

)

(6,568

)

(9,441

)

(6,405

)

Non-GAAP Net Income Attributable to TeleTech Stockholders

 

$

21,360

 

$

19,939

 

$

55,384

 

$

54,073

 

 

 

 

 

 

 

 

 

 

 

Diluted shares outstanding

 

54,905

 

57,748

 

55,991

 

58,173

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP EPS Attributable to TeleTech Stockholders

 

$

0.39

 

$

0.35

 

$

0.99

 

$

0.93

 

 



 

 

 

Three months ended

 

Nine months ended

 

 

 

September 30,

 

September 30,

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income Attributable to TeleTech Stockholders

 

$

28,429

 

$

25,371

 

$

49,633

 

$

58,061

 

Interest income

 

(780

)

(896

)

(2,235

)

(2,282

)

Interest expense

 

2,129

 

1,143

 

4,810

 

3,814

 

(Benefit) Provision for income taxes

 

(3,611

)

(496

)

(3,030

)

9,482

 

Depreciation and amortization

 

10,695

 

11,807

 

31,040

 

34,828

 

Asset impairment and restructuring charges

 

2,601

 

1,616

 

23,652

 

2,528

 

Acquisition-related expenses

 

 

 

159

 

1,066

 

Equity-based compensation expenses

 

3,465

 

3,848

 

10,310

 

11,563

 

Non-GAAP EBITDA

 

$

42,928

 

$

42,393

 

$

114,339

 

$

119,060