TeleTech Announces Fourth Quarter And Full Year 2014 Financial Results
Revenue Increased 6.3 Percent to $338.2 Million (8.4 Percent to $344.9 Million Non-GAAP);
Operating Income was $30.1 Million, 8.9 Percent of Revenue (9.4 Percent Non-GAAP);
Fully Diluted EPS was 44 Cents (46 Cents Non-GAAP);
Signed $100 Million in New Business (an Increase of 25 Percent)
Initiates a Semi-annual Cash Dividend and Increases Share Repurchase Allowance
Provides Outlook for Full Year 2015 Revenue and Operating Income
"We had a strong finish to 2014. We won a record
Tuchman continued, "While the variability in our customer technology services segment impacted the broader performance in the business last year, we have strong momentum going into 2015 and remain steadfast in our commitment to maximize value for shareholders. We are pleased to announce our Board's decision to increase the authorization under our long standing share repurchase program and initiate a semi-annual cash dividend. This decision reflects the Board's confidence in the business and the strength of our cash flows and balance sheet, while continuing a focused investment in innovation and growth."
FULL YEAR 2014 FINANCIAL HIGHLIGHTS
Revenue
-
Full year 2014 GAAP revenue was
$1.242 billion compared to$1.193 billion in 2013. -
On a constant currency non-GAAP basis, 2014 revenue was
$1.270 billion . This represents a 6.3 percent growth rate over the prior year, of which approximately 50 percent was organic.
Income from Operations
-
Full year 2014 GAAP income from operations was
$96.5 million or 7.8 percent of revenue compared to$101.4 million or 8.5 percent of revenue in 2013. -
2014 income from operations on a constant currency basis and adjusted for
$3.7 million in restructuring charges and asset impairments was$106.2 million , representing 8.4 percent of adjusted revenue versus 9.0 percent the prior year.
Earnings Per Share
-
Full year 2014 GAAP fully diluted earnings per share attributable to
TeleTech shareholders was$1.44 from$1.29 for the full year 2013. -
Non-GAAP fully diluted earnings per share was
$1.52 compared to$1.48 in the prior year.
Bookings
-
During the full year 2014,
TeleTech signed an estimated$440 million in annualized contract value revenue from new and expanded client relationships, representing an increase of 21 percent over the prior year. The bookings mix was well diversified across all verticals with approximately 92 percent from existing clients, 48 percent from emerging businesses and 20 percent from international clients.
FOURTH QUARTER 2014 FINANCIAL HIGHLIGHTS
Revenue
-
Fourth quarter 2014 GAAP revenue increased 6.3 percent to
$338.2 million compared to$318.1 million in the year ago quarter. -
On a constant currency basis, revenue was
$344.9 million , representing a 8.4 percent growth rate over the year ago period when adjusted for$6.8 million in foreign currency impact.
Income from Operations
-
Fourth quarter 2014 GAAP income from operations was
$30.1 million or 8.9 percent of revenue compared to$32.8 million or 10.3 percent of revenue in the fourth quarter 2013. -
Income from operations on a constant currency basis and adjusted for
$2.0 million in restructuring and impairment charges was$32.5 million or 9.4 percent of adjusted revenue. This compares to$33.0 million or 10.4 percent of revenue in the year ago quarter. - The operating results reflect a favorable revenue mix from our expanded offerings, acquisition contribution, and improved retention and capacity utilization, but were offset by foreign currency fluctuations, incremental investment, additional amortization expense from acquisitions, and variability in our customer technology services segment.
Earnings Per Share
-
Fourth quarter 2014 GAAP fully diluted earnings per share attributable to
TeleTech shareholders was44 cents compared to38 cents in the fourth quarter 2013. -
Adjusted fully diluted earnings per share was
46 cents compared to43 cents in the prior year.
Bookings
-
During the fourth quarter 2014,
TeleTech signed an estimated$100 million in annualized contract value revenue from new and expanded client relationships, up 25 percent over the prior year.
STRONG BALANCE SHEET CONTINUES TO FUND OPERATIONS, SHARE REPURCHASES,
-
As of
December 31, 2014 ,TeleTech had cash and cash equivalents of$77.3 million and$105.9 million of total debt, resulting in a net debt position of$28.6 million .
-
As of
December 31, 2014 ,TeleTech had$596.8 million of additional borrowing capacity available under its revolving credit facility.
-
Cash flow from operations in the fourth quarter 2014 was
$32.2 million compared to$61.4 million in the fourth quarter 2013.
-
Capital expenditures in the fourth quarter 2014 were
$15.4 million compared to$18.5 million in the fourth quarter 2013.
-
TeleTech repurchased 414,245 shares of common stock during the fourth quarter 2014 for a total cost of$9.8 million . As ofDecember 31, 2014 ,$11.8 million was authorized for future share repurchases. For the full year 2014,TeleTech repurchased nearly 2.4 million shares of common stock for a total cost of approximately$57.1 million .
SEGMENT REPORTING
Customer Management Services (CMS) – Customer Experience Delivery Solutions
-
In the fourth quarter 2014, the CMS segment revenue was
$250.1 million , up 8.4 percent from$230.6 million in the year ago quarter. On a constant currency basis revenue increased 10.9 percent relative to the same period last year. -
Income from operations was
$20.9 million or 8.3 percent compared to$20.5 million or 8.9 percent in the year ago quarter. Adjusted operating income margin was 8.7 percent reflecting$0.3 million of foreign currency translation and$1.2 million of restructuring and impairment charges. This compares to 9.0 percent in the same period last year.
Customer Growth Services (CGS) – Technology-Enabled Revenue Generation Solutions
-
CGS fourth quarter 2014 revenue declined 3.2 percent to
$28.9 million compared to$29.8 million in the year ago quarter. Income from operations was$1.9 million or 6.4 percent versus$1 .8 million or 6.0 percent.
Customer Technology Services (CTS) – Hosted and Managed Technology Solutions
-
CTS fourth quarter 2014 revenue declined 15 percent to
$35.5 million compared to$41.6 million in the year ago quarter. Income from operations was$2.9 million or 8.1 percent compared to$6 .1 million or 14.6 percent in the year ago quarter.
Customer Strategy Services (CSS) – Customer Experience Strategy and Data Analytics Solutions
-
CSS fourth quarter 2014 revenue increased 48 percent to
$23.7 million from$16.0 million in the year ago quarter. Income from operations was$4.5 million or 19.2 percent compared to$4 .4 million or 27.2 percent in the year ago quarter.
BUSINESS OUTLOOK
"With strong growth in 2014 bookings across the segments, industries and services, we are benefiting from our planned investments in innovation, acquisitions and our verticalized sales organization," commented
Revenue – Year-over-year revenue growth estimated between
Operating Margin – Operating margin estimated at 8.25 percent (before asset impairment, restructuring and acquisition-related charges), but including an incremental
Capital Expenditures – Estimated to be approximately six percent of revenue.
DIVIDEND AND SHARE REPURCHASE
The Board of Directors has approved the initiation of a regular semi-annual cash dividend and an increase in the share repurchase program. An initial cash dividend of
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
Investor Contact |
Media Contact |
Paul Miller |
Elizabeth Grice |
303.397.8641 |
303.397.8507 |
TeleTech HOLDINGS, INC. AND SUBSIDIARIES |
|||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||||
(In thousands, except per share data) |
|||||||||
Three months ended |
Twelve months ended |
||||||||
December 31, |
December 31, |
||||||||
2014 |
2013 |
2014 |
2013 |
||||||
Revenue |
$ 338,170 |
$ 318,087 |
$1,241,781 |
$ 1,193,157 |
|||||
Operating Expenses: |
|||||||||
Cost of services |
240,146 |
220,942 |
886,492 |
846,631 |
|||||
Selling, general and administrative |
50,537 |
51,343 |
198,553 |
193,423 |
|||||
Depreciation and amortization |
15,386 |
12,783 |
56,538 |
46,064 |
|||||
Restructuring charges, net |
1,600 |
254 |
3,350 |
4,435 |
|||||
Impairment losses |
373 |
- |
373 |
1,205 |
|||||
Total operating expenses |
308,042 |
285,322 |
1,145,306 |
1,091,758 |
|||||
Income From Operations |
30,128 |
32,765 |
96,475 |
101,399 |
|||||
Other income (expense) |
2,138 |
(3,793) |
3,984 |
(9,330) |
|||||
Income Before Income Taxes |
32,266 |
28,972 |
100,459 |
92,069 |
|||||
Provision for income taxes |
(8,971) |
(7,995) |
(23,042) |
(20,598) |
|||||
Net Income |
23,295 |
20,977 |
77,417 |
71,471 |
|||||
Net income attributable to noncontrolling interest |
(1,329) |
(1,508) |
(5,124) |
(4,083) |
|||||
Net Income Attributable to TeleTech Stockholders |
$ 21,966 |
$ 19,469 |
$ 72,293 |
$ 67,388 |
|||||
Net Income Per Share Attributable to TeleTech Stockholders |
|||||||||
Basic |
$ 0.45 |
$ 0.39 |
$ 1.47 |
$ 1.31 |
|||||
Diluted |
$ 0.44 |
$ 0.38 |
$ 1.44 |
$ 1.29 |
|||||
Income From Operations Margin |
8.9% |
10.3% |
7.8% |
8.5% |
|||||
Net Income Attributable to TeleTech Stockholders Margin |
6.5% |
6.1% |
5.8% |
5.6% |
|||||
Effective Tax Rate |
27.8% |
27.6% |
22.9% |
22.4% |
|||||
Weighted Average Shares Outstanding |
|||||||||
Basic |
48,714 |
50,439 |
49,297 |
51,338 |
|||||
Diluted |
49,514 |
51,465 |
50,102 |
52,244 |
TeleTech HOLDINGS, INC. AND SUBSIDIARIES |
||||||||
SEGMENT INFORMATION |
||||||||
(In thousands) |
||||||||
Three months ended |
Twelve months ended |
|||||||
December 31, |
December 31, |
|||||||
2014 |
2013 |
2014 |
2013 |
|||||
Revenue: |
||||||||
Customer Management Services |
$ 250,076 |
$ 230,625 |
$ 923,497 |
$ 890,883 |
||||
Customer Growth Services |
28,889 |
29,848 |
115,434 |
100,996 |
||||
Customer Technology Services |
35,475 |
41,630 |
139,182 |
152,485 |
||||
Customer Strategy Services |
23,730 |
15,984 |
63,668 |
48,793 |
||||
Total |
$ 338,170 |
$ 318,087 |
$ 1,241,781 |
$ 1,193,157 |
||||
Income From Operations: |
||||||||
Customer Management Services |
$ 20,851 |
$ 20,549 |
$ 76,792 |
$ 75,689 |
||||
Customer Growth Services |
1,854 |
1,780 |
7,255 |
3,024 |
||||
Customer Technology Services |
2,878 |
6,083 |
4,519 |
19,965 |
||||
Customer Strategy Services |
4,545 |
4,353 |
7,909 |
2,721 |
||||
Total |
$ 30,128 |
$ 32,765 |
$ 96,475 |
$ 101,399 |
TeleTech HOLDINGS, INC. AND SUBSIDIARIES |
||||
CONSOLIDATED BALANCE SHEETS |
||||
(In thousands) |
||||
December 31, |
December 31, |
|||
2014 |
2013 |
|||
ASSETS |
||||
Current assets: |
||||
Cash and cash equivalents |
$ 77,316 |
$ 158,017 |
||
Accounts receivable, net |
276,432 |
236,099 |
||
Other current assets |
90,383 |
75,435 |
||
Total current assets |
444,131 |
469,551 |
||
Property and equipment, net |
150,212 |
126,719 |
||
Other assets |
257,291 |
246,072 |
||
Total assets |
$ 851,634 |
$ 842,342 |
||
LIABILITIES AND EQUITY |
||||
Total current liabilities |
$ 199,122 |
$ 190,787 |
||
Other long-term liabilities |
186,448 |
175,564 |
||
Mandatorily redeemable noncontrolling interest |
2,814 |
2,509 |
||
Total equity |
463,250 |
473,482 |
||
Total liabilities and equity |
$ 851,634 |
$ 842,342 |
TeleTech HOLDINGS, INC. AND SUBSIDIARIES |
||||||||
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION |
||||||||
(In thousands, except per share data) |
||||||||
Three months ended |
Twelve months ended |
|||||||
December 31, |
December 31, |
|||||||
2014 |
2013 |
2014 |
2013 |
|||||
Reconciliation of Revenue: |
||||||||
Revenue |
$ 338,170 |
$ 318,087 |
$1,241,781 |
$ 1,193,157 |
||||
Changes due to foreign currency fluctuations 1 |
6,762 |
28,049 |
||||||
Lost revenue from typhoon |
- |
- |
- |
1,216 |
||||
Non-GAAP Revenue |
$ 344,932 |
$ 318,087 |
$1,269,830 |
$ 1,194,373 |
||||
Reconciliation of Gross Margin: |
||||||||
Non-GAAP Revenue |
$ 344,932 |
$ 318,087 |
$1,269,830 |
$ 1,194,373 |
||||
Cost of services |
240,146 |
220,942 |
886,492 |
846,631 |
||||
Adjustments related to Non-GAAP revenue adjustments 1 |
6,334 |
- |
22,088 |
396 |
||||
Non-GAAP Gross margin |
$ 98,452 |
$ 97,145 |
$ 361,250 |
$ 347,346 |
||||
NON-GAAP Gross margin percentage |
28.5% |
30.5% |
28.4% |
29.1% |
||||
Reconciliation of EBIT & EBITDA: |
||||||||
Net Income Attributable to TeleTech stockholders |
$ 21,966 |
$ 19,469 |
$ 72,293 |
$ 67,388 |
||||
Interest income |
(224) |
(378) |
(1,769) |
(2,560) |
||||
Interest expense |
1,749 |
1,946 |
6,946 |
7,513 |
||||
Provision for income taxes |
8,971 |
7,995 |
23,042 |
20,598 |
||||
EBIT |
$ 32,462 |
$ 29,032 |
$ 100,512 |
$ 92,939 |
||||
Depreciation and amortization |
15,386 |
12,783 |
56,538 |
46,064 |
||||
EBITDA |
$ 47,848 |
$ 41,815 |
$ 157,050 |
$ 139,003 |
||||
Reconciliation of Free Cash Flow: |
||||||||
Cash Flow From Operating Activities: |
||||||||
Net income |
$ 23,295 |
$ 20,977 |
$ 77,417 |
$ 71,471 |
||||
Adjustments to reconcile net income to net cash |
||||||||
provided by operating activities: |
||||||||
Depreciation and amortization |
15,386 |
12,783 |
56,538 |
46,064 |
||||
Other |
(6,498) |
27,606 |
(39,865) |
20,444 |
||||
Net cash provided by operating activities |
32,183 |
61,366 |
94,090 |
137,979 |
||||
Less - Total Capital Expenditures |
15,407 |
18,532 |
67,641 |
50,364 |
||||
Free Cash Flow |
$ 16,776 |
$ 42,834 |
$ 26,449 |
$ 87,615 |
||||
Reconciliation of Non-GAAP Income from Operations: |
||||||||
Income from Operations |
$ 30,128 |
$ 32,765 |
$ 96,475 |
$ 101,399 |
||||
Restructuring charges, net |
1,600 |
254 |
3,350 |
4,435 |
||||
Impairment losses |
373 |
- |
373 |
1,205 |
||||
Net effect of foreign currency fluctuations 1 |
428 |
5,961 |
||||||
Net effect of revenue lost from typhoon |
- |
- |
- |
820 |
||||
Non-GAAP Income from Operations |
$ 32,529 |
$ 33,019 |
$ 106,159 |
$ 107,859 |
||||
Non-GAAP Income from Operations Margin |
9.4% |
10.4% |
8.4% |
9.0% |
||||
Reconciliation of Non-GAAP EPS: |
||||||||
Net Income Attributable to TeleTech stockholders |
$ 21,966 |
$ 19,469 |
$ 72,293 |
$ 67,388 |
||||
Add: Asset impairment and restructuring charges, net of related taxes |
1,342 |
223 |
2,456 |
3,840 |
||||
Add: Deconsolidation of subsidiary |
- |
- |
- |
3,556 |
||||
Add: Changes in acquisition contingent consideration, net of related taxes |
(949) |
1,146 |
(2,804) |
1,146 |
||||
Add: Net effect of foreign currency fluctuations, net of related taxes 1 |
325 |
4,226 |
||||||
Add: Net effect of revenue lost from typhoon, net of related taxes |
- |
- |
- |
574 |
||||
Add: Changes in valuation allowance and returns to provision adjustments |
272 |
1,488 |
(126) |
880 |
||||
Non-GAAP Net Income Attributable to TeleTech stockholders |
$ 22,956 |
$ 22,326 |
$ 76,046 |
$ 77,384 |
||||
Diluted shares outstanding |
49,514 |
51,465 |
50,102 |
52,244 |
||||
Non-GAAP EPS Attributable to TeleTech stockholders |
$0.46 |
$0.43 |
$1.52 |
$1.48 |
||||
Reconciliation of Non-GAAP EBITDA: |
||||||||
Net Income Attributable to TeleTech stockholders |
$ 21,966 |
$ 19,469 |
$ 72,293 |
$ 67,388 |
||||
Interest income |
(224) |
(378) |
(1,769) |
(2,560) |
||||
Interest expense |
1,749 |
1,946 |
6,946 |
7,513 |
||||
Provision for income taxes |
8,971 |
7,995 |
23,042 |
20,598 |
||||
Depreciation and amortization |
15,386 |
12,783 |
56,538 |
46,064 |
||||
Asset impairment and restructuring charges |
1,973 |
254 |
3,723 |
5,640 |
||||
Net effect of foreign currency fluctuations 1 |
428 |
- |
5,961 |
- |
||||
Net effect of revenue lost from typhoon |
- |
- |
- |
820 |
||||
Changes in acquisition contingent consideration |
(2,719) |
1,878 |
(6,629) |
1,878 |
||||
Equity-based compensation expenses |
2,276 |
3,392 |
11,307 |
13,234 |
||||
Non-GAAP EBITDA |
$ 49,806 |
$ 47,339 |
$ 171,412 |
$ 160,575 |
||||
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