TeleTech Announces First Quarter 2017 Financial Results
"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
"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 was42 cents compared to income of23 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 ofthe 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 toTeleTech shareholders in the first quarter 2017, totaling$10.1 million . The dividend was paid onApril 14, 2017 to shareholders of record onMarch 31, 2017 . This dividend represents an 18.9 percent increase over the distribution inApril 2016 . -
During the first quarter 2017,
TeleTech repurchased approximately 386 thousand shares of common stock for a total cost of$11.7 million . As ofMarch 31, 2017 ,$33.2 million was authorized for future share repurchases.
SEGMENT REPORTING & COMMENTARY
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
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
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
Media Contact
Olivia Griner
303.397.8999
Investor Contact
Paul Miller
303.397.8641
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 |
Non-GAAP |
Non-GAAP |
||||
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 |
Non-GAAP |
Non-GAAP |
Non-GAAP |
Non-GAAP |
||
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. |