TeleTech Announces Third Quarter 2014 Financial Results
"Our record new business signings demonstrate the growing market demand for our integrated, vertically focused customer engagement solutions," commented
Tuchman continued, "Year-to-date our constant currency growth rate was 5.7 percent versus 1.3 percent in the same period last year with organic growth of 3.1 percent versus a negative 3.5 percent in the prior period. While we are pleased with the progress we are making in delivering top line growth, we are disappointed in our third quarter operating margin. The decline is specific to our Customer Technology Services (CTS) business, wherein the operating profit declined
Tuchman concluded, "With our best-in-class client net promoter scores, record new signings, backlog and pipeline, alongside our improving revenue growth rate, we are confident our investment strategy will deliver continued value to our clients and shareholders."
THIRD QUARTER 2014 FINANCIAL HIGHLIGHTS
Revenue
-
Third quarter 2014 GAAP revenue was
$305.9 million compared to$297.0 million in the third quarter of 2013.
EBITDA
-
Non-GAAP EBITDA was
$37.3 million , or 12.2 percent of revenue. This compares to$41.2 million or 13.8 percent of revenue in the year ago quarter.
Income from Operations
-
Third quarter 2014 GAAP income from operations was
$21.3 million or 7.0 percent of revenue compared to$26.0 million or 8.7 percent of revenue in the third quarter of 2013.
Earnings Per Share
-
Third quarter 2014 GAAP fully diluted earnings per share attributable to
TeleTech shareholders were$0.27 compared to$0.34 for the same period last year.
Bookings
-
During the third quarter 2014,
TeleTech signed an estimated$125 million in annualized revenue from new and expanded client relationships. The bookings mix was well diversified across all verticals with approximately 90 percent from existing clients, 72 percent in recurring revenue, 48 percent from emerging businesses and 8 percent from international clients.
STRONG BALANCE SHEET CONTINUES TO FUND OPERATIONS, SHARE REPURCHASES,
-
As of
September 30, 2014 ,TeleTech had cash and cash equivalents of$87.6 million and$121 .1 million of total debt, resulting in a net debt position of$33.5 million . These balances were impacted by the acquisition of rogenSi, share repurchases and capital expenditures.
-
As of
September 30, 2014 ,TeleTech had$581.5 million of additional borrowing capacity available under its revolving credit facility.
-
Cash flow from operations in the third quarter 2014 was
$30.3 million compared to$36.4 million in the third quarter 2013.
-
Capital expenditures in the third quarter 2014 were
$17.8 million compared to$18.2 million in the third quarter 2013.
-
TeleTech repurchased approximately 387,500 shares of common stock during the third quarter 2014 for a cost of$10.2 million . As ofSeptember 30, 2014 ,$21.6 million was authorized for future share repurchases.
SEGMENT REPORTING
Customer Management Services (CMS) – Customer Experience Delivery Solutions
-
In the third quarter 2014, CMS revenue was
$226.8 million compared to$217.0 million in the year ago quarter. On a constant currency basis, revenue increased 4.6 percent to$227.0 million . Income from operations was$18.6 million or 8.2 percent of revenue versus 8.3 percent in the year ago quarter. Operating income margin reflects a$0.4 million benefit from foreign currency translation offset by$0.4 million of restructuring charges.
Customer Growth Services (CGS) – Technology-Enabled Revenue Generation Solutions
-
CGS third quarter 2014 revenue increased 11 percent to
$28.8 million compared to$25.9 million in the year ago quarter. Income from operations was$1.8 million or 6.3 percent of revenue versus $0.6 million or 2.3 percent last year.
Customer Technology Services (CTS) – Cloud and Premise Managed Technology Solutions
-
CTS third quarter 2014 revenue was
$35.2 million compared to$40.6 million in the year ago quarter. Income from operations was a negative$0.3 million of revenue compared to income of$5.2 million or 12.7 percent in the year ago quarter. -
The third quarter CTS income from operations was largely impacted by a combination of
$2 million in incremental cloud investment,$1 million in lower revenues and $2 million in one-time expense adjustments.
Customer Strategy Services (CSS) – Customer Experience Strategy and Analytics Solutions
-
CSS third quarter 2014 revenue increased 12.7 percent to
$15.1 million from$13.4 million in the year ago quarter. Income from operations was$1.2 million or 7.8 percent of revenue versus 16.9 percent in the same period last year.
BUSINESS OUTLOOK
"While we are realizing tangible results from our investments, as demonstrated by our record bookings and improved revenue growth, the short-term challenges in our CTS business are impacting our overall results," explained
Revenue – Revenue estimated from
Operating Margin – Operating margin range estimated between 7.75 and 8.0 percent (before asset impairment, restructuring or acquisition-related charges), but including approximately $9 million investment in sales, and research and development.
Capital Expenditures - Range between
SEC FILINGS
The Company's filings with the
CONFERENCE CALL
A conference call and webcast with management will be held on
NON-GAAP FINANCIAL MEASURES
To supplement the Company's consolidated financial statements presented in accordance with generally accepted accounting principles (GAAP) in
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
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, |
||||||||
2014 |
2013 |
2014 |
2013 |
||||||
Revenue |
$ 305,900 |
$ 296,995 |
$ 903,611 |
$ 875,070 |
|||||
Operating Expenses: |
|||||||||
Cost of services |
220,244 |
208,648 |
646,346 |
625,689 |
|||||
Selling, general and administrative |
49,847 |
50,165 |
148,016 |
142,080 |
|||||
Depreciation and amortization |
13,893 |
11,463 |
41,152 |
33,281 |
|||||
Restructuring charges, net |
593 |
758 |
1,750 |
4,181 |
|||||
Impairment losses |
- |
- |
- |
1,205 |
|||||
Total operating expenses |
284,577 |
271,034 |
837,264 |
806,436 |
|||||
Income From Operations |
21,323 |
25,961 |
66,347 |
68,634 |
|||||
Other income (expense) |
(856) |
(434) |
1,846 |
(5,537) |
|||||
Income Before Income Taxes |
20,467 |
25,527 |
68,193 |
63,097 |
|||||
Provision for income taxes |
(5,778) |
(6,358) |
(14,071) |
(12,603) |
|||||
Net Income |
14,689 |
19,169 |
54,122 |
50,494 |
|||||
Net income attributable to noncontrolling interest |
(1,442) |
(1,526) |
(3,795) |
(2,575) |
|||||
Net Income Attributable to TeleTech Stockholders |
$ 13,247 |
$ 17,643 |
$ 50,327 |
$ 47,919 |
|||||
Net Income Per Share Attributable to TeleTech Stockholders |
|||||||||
Basic |
$ 0.27 |
$ 0.35 |
$ 1.02 |
$ 0.93 |
|||||
Diluted |
$ 0.27 |
$ 0.34 |
$ 1.00 |
$ 0.91 |
|||||
Income From Operations Margin |
7.0% |
8.7% |
7.3% |
7.8% |
|||||
Net Income Attributable to TeleTech Stockholders Margin |
4.3% |
5.9% |
5.6% |
5.5% |
|||||
Effective Tax Rate |
28.2% |
24.9% |
20.6% |
20.0% |
|||||
Weighted Average Shares Outstanding |
|||||||||
Basic |
49,093 |
50,732 |
49,493 |
51,643 |
|||||
Diluted |
49,940 |
51,678 |
50,338 |
52,499 |
TeleTech HOLDINGS, INC. AND SUBSIDIARIES |
||||||||
SEGMENT INFORMATION |
||||||||
(In thousands) |
||||||||
(Unaudited) |
||||||||
Three months ended |
Nine months ended |
|||||||
September 30, |
September 30, |
|||||||
2014 |
2013 |
2014 |
2013 |
|||||
Revenue: |
||||||||
Customer Management Services |
$ 226,814 |
$ 217,035 |
$ 673,421 |
$ 660,258 |
||||
Customer Growth Services |
28,765 |
25,893 |
86,545 |
71,148 |
||||
Customer Technology Services |
35,194 |
40,649 |
103,707 |
110,855 |
||||
Customer Strategy Services |
15,127 |
13,418 |
39,938 |
32,809 |
||||
Total |
$ 305,900 |
$ 296,995 |
$ 903,611 |
$ 875,070 |
||||
Income From Operations: |
||||||||
Customer Management Services |
$ 18,625 |
$ 17,944 |
$ 55,941 |
$ 55,140 |
||||
Customer Growth Services |
1,800 |
588 |
5,401 |
1,244 |
||||
Customer Technology Services |
(286) |
5,165 |
1,641 |
13,882 |
||||
Customer Strategy Services |
1,184 |
2,264 |
3,364 |
(1,632) |
||||
Total |
$ 21,323 |
$ 25,961 |
$ 66,347 |
$ 68,634 |
TeleTech HOLDINGS, INC. AND SUBSIDIARIES |
||||
CONSOLIDATED BALANCE SHEETS |
||||
(In thousands) |
||||
September 30, |
December 31, |
|||
2014 |
2013 |
|||
(Unaudited) |
||||
ASSETS |
||||
Current assets: |
||||
Cash and cash equivalents |
$ 87,612 |
$ 158,017 |
||
Accounts receivable, net |
266,846 |
236,099 |
||
Other current assets |
85,038 |
75,435 |
||
Total current assets |
439,496 |
469,551 |
||
Property and equipment, net |
147,905 |
126,719 |
||
Other assets |
273,908 |
246,072 |
||
Total assets |
$ 861,309 |
$ 842,342 |
||
LIABILITIES AND EQUITY |
||||
Total current liabilities |
$ 188,898 |
$ 190,787 |
||
Other long-term liabilities |
201,928 |
175,564 |
||
Mandatorily redeemable noncontrolling interest |
2,790 |
2,509 |
||
Total equity |
467,693 |
473,482 |
||
Total liabilities and equity |
$ 861,309 |
$ 842,342 |
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, |
|||||||
2014 |
2013 |
2014 |
2013 |
|||||
Reconciliation of Revenue: |
||||||||
Revenue |
$ 305,900 |
$ 296,995 |
$ 903,611 |
$ 875,070 |
||||
Changes due to foreign currency fluctuations |
(97) |
21,287 |
||||||
Lost revenue from typhoon |
- |
1,216 |
- |
1,216 |
||||
Non-GAAP Revenue |
$ 305,803 |
$ 298,211 |
$ 924,898 |
$ 876,286 |
||||
Reconciliation of Gross Margin: |
||||||||
Non-GAAP Revenue |
$ 305,803 |
$ 298,211 |
$ 924,898 |
$ 876,286 |
||||
Cost of services |
220,244 |
208,648 |
646,346 |
625,689 |
||||
Adjustments related to Non-GAAP revenue adjustments |
335 |
396 |
15,754 |
396 |
||||
Non-GAAP Gross margin |
$ 85,224 |
$ 89,167 |
$ 262,798 |
$ 250,201 |
||||
NON-GAAP Gross margin percentage |
27.9% |
29.9% |
28.4% |
28.6% |
||||
Reconciliation of EBIT & EBITDA: |
||||||||
Net Income Attributable to TeleTech stockholders |
$ 13,247 |
$ 17,643 |
$ 50,327 |
$ 47,919 |
||||
Interest income |
(542) |
(938) |
(1,545) |
(2,182) |
||||
Interest expense |
1,646 |
1,799 |
5,197 |
5,567 |
||||
Provision for income taxes |
5,778 |
6,358 |
14,071 |
12,603 |
||||
EBIT |
$ 20,129 |
$ 24,862 |
$ 68,050 |
$ 63,907 |
||||
Depreciation and amortization |
13,893 |
11,463 |
41,152 |
33,281 |
||||
EBITDA |
$ 34,022 |
$ 36,325 |
$ 109,202 |
$ 97,188 |
||||
Reconciliation of Free Cash Flow: |
||||||||
Cash Flow From Operating Activities: |
||||||||
Net income |
$ 14,689 |
$ 19,169 |
$ 54,122 |
$ 50,494 |
||||
Adjustments to reconcile net income to net cash |
||||||||
provided by operating activities: |
||||||||
Depreciation and amortization |
13,893 |
11,463 |
41,152 |
33,281 |
||||
Other |
1,695 |
5,770 |
(33,367) |
(7,162) |
||||
Net cash provided by operating activities |
30,277 |
36,402 |
61,907 |
76,613 |
||||
Less - Total Capital Expenditures |
17,751 |
18,172 |
52,234 |
31,832 |
||||
Free Cash Flow |
$ 12,526 |
$ 18,230 |
$ 9,673 |
$ 44,781 |
||||
Reconciliation of Non-GAAP Income from Operations: |
||||||||
Income from Operations |
$ 21,323 |
$ 25,961 |
$ 66,347 |
$ 68,634 |
||||
Restructuring charges, net |
593 |
758 |
1,750 |
4,181 |
||||
Impairment losses |
- |
- |
- |
1,205 |
||||
Net effect of foreign currency fluctuations |
(432) |
5,533 |
||||||
Net effect of revenue lost from typhoon |
- |
820 |
- |
820 |
||||
Non-GAAP Income from Operations |
$ 21,484 |
$ 27,539 |
$ 73,630 |
$ 74,840 |
||||
Non-GAAP Income from Operations Margin |
7.0% |
9.2% |
8.0% |
8.5% |
||||
Reconciliation of Non-GAAP EPS: |
||||||||
Net Income Attributable to TeleTech stockholders |
$ 13,247 |
$ 17,643 |
$ 50,327 |
$ 47,919 |
||||
Add: Asset impairment and restructuring charges, net of related taxes |
367 |
501 |
1,111 |
3,616 |
||||
Add: Deconsolidation of subsidiary |
- |
- |
- |
3,556 |
||||
Add: Changes in acquisition contingent consideration, net of related taxes |
561 |
- |
(1,855) |
- |
||||
Add: Net effect of foreign currency fluctuations, net of related taxes |
(305) |
3,845 |
||||||
Add: Net effect of revenue lost from typhoon, net of related taxes |
- |
574 |
- |
574 |
||||
Add: Changes in valuation allowance and returns to provision adjustments |
1,379 |
1,000 |
(398) |
(509) |
||||
Non-GAAP Net Income Attributable to TeleTech stockholders |
$ 15,249 |
$ 19,718 |
$ 53,031 |
$ 55,156 |
||||
Diluted shares outstanding |
49,940 |
51,678 |
50,338 |
52,499 |
||||
Non-GAAP EPS Attributable to TeleTech stockholders |
$0.31 |
$0.38 |
$1.05 |
$1.05 |
||||
Reconciliation of Non-GAAP EBITDA: |
||||||||
Net Income Attributable to TeleTech stockholders |
$ 13,247 |
$ 17,643 |
$ 50,327 |
$ 47,919 |
||||
Interest income |
(542) |
(938) |
(1,545) |
(2,182) |
||||
Interest expense |
1,646 |
1,799 |
5,197 |
5,567 |
||||
Provision for income taxes |
5,778 |
6,358 |
14,071 |
12,603 |
||||
Depreciation and amortization |
13,893 |
11,463 |
41,152 |
33,281 |
||||
Asset impairment and restructuring charges |
593 |
758 |
1,750 |
5,386 |
||||
Net effect of foreign currency fluctuations |
(432) |
- |
5,533 |
- |
||||
Net effect of revenue lost from typhoon |
- |
820 |
- |
820 |
||||
Changes in acquisition contingent consideration |
51 |
- |
(3,910) |
- |
||||
Equity-based compensation expenses |
3,050 |
3,265 |
9,031 |
9,842 |
||||
Non-GAAP EBITDA |
$ 37,284 |
$ 41,168 |
$ 121,606 |
$ 113,236 |
||||
Note 1: Foreign currency fluctuations are calculated on a constant currency basis by translating the current year reported amounts using the prior year foreign exchange rates for each underlying currency. |
Investor Contact
Paul Miller
303.397.8641
Media Contact
Elizabeth Grice
303.397.8507