TeleTech Announces Second Quarter 2017 Financial Results
"We are pleased to report another strong quarter and solid close to the first half of 2017. For the first six months of 2017, over the same period last year, we increased revenue, operating income, net income, earnings-per-share, and cash flow from operations," commented
Tuchman continued, "The service experience has become the most important point of differentiation for many companies and the bar continues to rise. When customers experience great service from one company across one channel, they expect and feel entitled to it from every company, across every channel. Through our Humanify™ Customer Engagement as a Service offering, we are helping our clients stay ahead of the complex challenge. With our integrated platform, we are providing the strategy, insights, technology and operational excellence our clients need to orchestrate and deliver captivating experiences across every channel and interaction in the customer journey. Our integrated approach of people, process, analytics and technologies is enabling personalized experiences at scale that delight customers, drive profitable growth for our clients, and increase equity value for our shareholders."
SECOND 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) impairment, restructuring and integration charges.
Revenue
-
Second quarter 2017 GAAP revenue increased 15.8 percent to
$353.4 million compared to$305.1 million in the prior year period. Inorganic revenue growth was 13.3 percent. -
Non-GAAP AHFS/WD revenue increased 17.3 percent to
$347.4 million over the prior year period. Inorganic revenue growth was 13.7 percent.
Income from Operations
-
Second quarter 2017 GAAP income from operations was
$21.6 million , or 6.1 percent of revenue, compared to$16.2 million , or 5.3 percent of revenue in the second quarter 2016. -
Non-GAAP AHFS/WD income from operations was
$25.4 million or 7.3 percent of adjusted revenue versus 6.0 percent in the prior year.
Earnings Per Share
-
Second quarter 2017 GAAP fully diluted earnings per share attributable to
TeleTech shareholders was32 cents compared to24 cents in the same period last year. -
Non-GAAP fully diluted earnings per share attributable to
TeleTech shareholders was38 cents compared to28 cents in the same period last year.
Bookings
-
During the second quarter 2017,
TeleTech signed an estimated$107 million in annualized contract value revenue from new and existing client relationships. The second quarter bookings mix was diversified across all verticals with 80 percent from existing clients and 11 percent from outside ofthe United States .
STRONG BALANCE SHEET CONTINUES TO FUND OPERATIONS, SHARE REPURCHASES, DIVIDENDS, AND INVESTMENTS
-
As of
June 30, 2017 ,TeleTech had cash and cash equivalents of$77.9 million and$273.3 million of total debt, resulting in a net debt position of$195.4 million . -
As of
June 30, 2017 ,TeleTech had approximately$385 million of additional borrowing capacity available under its revolving credit facility. -
Cash flow from operations in the second quarter 2017 was
$50.5 million compared to$43.5 million in the second quarter 2016. -
Capital expenditures in the second quarter 2017 were
$17.6 million compared to$12.8 million in the second quarter 2016. -
On
April 14, 2017 ,TeleTech paid a$0.22 per share semi-annual dividend, totaling$10.1 million , toTeleTech shareholders of record onMarch 31, 2017 . This dividend represents an 18.9 percent increase over the distribution inApril 2016 . -
During the second quarter 2017,
TeleTech repurchased approximately 223 thousand shares of common stock for a total cost of$6.7 million . As ofJune 30, 2017 ,$26.6 million was authorized for future share repurchases.
SEGMENT REPORTING & COMMENTARY
Customer Management Services (CMS) – Customer Experience Delivery Solutions
-
CMS second quarter 2017 revenue increased 26.4 percent to
$269.1 million compared to$212.8 million in the year ago quarter. Inorganic revenue grew 19.1 percent year-over-year. Income from operations was$14.1 million or 5.2 percent of revenue compared to$8.3 million or 3.9 percent of revenue in the prior year. -
Non-GAAP income from operations was
$17.7 million or 6.6 percent of revenue. This compares to$8.4 million or 3.9 percent of revenue in the prior year.
Customer Growth Services (CGS) – Digitally-Enabled Revenue Growth Solutions
-
CGS second quarter 2017 revenue declined 12.2 percent to
$32.4 million compared to$36.9 million in the year ago quarter. Income from operations was$2.3 million or 7.2 percent of revenue compared to$3.5 million or 9.4 percent of revenue in the prior year. -
Non-GAAP AHFS/WD revenue declined 11.9 percent over the year ago period and income from operations was
$2.4 million or 7.6 percent of adjusted revenue. This compares to$4.1 million or 11.4 percent of adjusted revenue in the prior year.
Customer Technology Services (CTS) – Hosted and Managed Technology Solutions
-
CTS second quarter 2017 revenue declined 6.8 percent to
$34.8 million compared to$37.4 million in the year ago quarter. Income from operations was$3.8 million or 11.0 percent of revenue compared to$3.4 million or 9.0 percent of revenue in the prior year. -
Non-GAAP AHFS/WD revenue declined 0.7 percent over the year ago period and income from operations was
$3.7 million or 11.6 percent of adjusted revenue. This compares to$3.8 million or 11.8 percent of adjusted revenue in the prior year.
Customer Strategy Services (CSS) – Customer Experience Strategy and Data Analytics Solutions
-
CSS second quarter 2017 revenue declined 4.9 percent to
$17.2 million from$18.1 million in the year ago quarter. Income from operations was$1.4 million or 8.0 percent of revenue compared to$1.0 million or 5.7 percent of revenue in the prior year. -
Non-GAAP AHFS/WD revenue declined 3.6 percent over the year ago period and income from operations was
$1.7 million or 11.3 percent of adjusted revenue. This compares to operating income of$1.4 million or 9.3 percent of revenue in the prior year.
BUSINESS OUTLOOK
"I want to highlight the strong performance of the business. In the first half of 2017, we executed on many fronts. We grew the top-line organically and inorganically, improved our profitability and cash flow generation, increased our vertical and geographic market share, and expanded our capabilities into more integrated, outcome-based solutions," commented
Reaffirmed full-year 2017 estimated revenue and operating income guidance for
Revenue - Revenue between
Operating Income Margin - Operating income margin in the range of 8.3 and 8.5 percent before impairment, restructuring and integration charges.
Capital Expenditures - Capital expenditures of 4.6 percent of revenue.
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 |
Olivia Griner |
303.397.8641 |
303.397.8999 |
TeleTech HOLDINGS, INC. AND SUBSIDIARIES |
||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||
(In thousands, except per share data) |
||||||||
(Unaudited) |
||||||||
Three months ended |
Six months ended |
|||||||
June 30, |
June 30, |
|||||||
2017 |
2016 |
2017 |
2016 |
|||||
Revenue |
$ 353,429 |
$ 305,105 |
$ 691,706 |
$ 617,515 |
||||
Operating Expenses: |
||||||||
Cost of services |
268,004 |
226,768 |
521,902 |
458,108 |
||||
Selling, general and administrative |
43,985 |
44,774 |
87,205 |
90,274 |
||||
Depreciation and amortization |
16,258 |
17,221 |
30,758 |
34,950 |
||||
Restructuring charges, net |
3,593 |
114 |
3,762 |
202 |
||||
Total operating expenses |
331,840 |
288,877 |
643,627 |
583,534 |
||||
Income From Operations |
21,589 |
16,228 |
48,079 |
33,981 |
||||
Other income (expense) |
(4,198) |
(734) |
(5,130) |
(2,054) |
||||
Income Before Income Taxes |
17,391 |
15,494 |
42,949 |
31,927 |
||||
Benefit (Provision) for income taxes |
(1,597) |
(2,952) |
(6,988) |
(7,480) |
||||
Net Income |
15,794 |
12,542 |
35,961 |
24,447 |
||||
Net income attributable to noncontrolling interest |
(1,100) |
(926) |
(2,022) |
(1,606) |
||||
Net Income Attributable to TeleTech Stockholders |
$ 14,694 |
$ 11,616 |
$ 33,939 |
$ 22,841 |
||||
Net Income Per Share Attributable to TeleTech Stockholders |
||||||||
Basic |
$ 0.32 |
$ 0.24 |
$ 0.74 |
$ 0.47 |
||||
Diluted |
$ 0.32 |
$ 0.24 |
$ 0.73 |
$ 0.47 |
||||
Income From Operations Margin |
6.1% |
5.3% |
7.0% |
5.5% |
||||
Net Income Attributable to TeleTech Stockholders Margin |
4.2% |
3.8% |
4.9% |
3.7% |
||||
Effective Tax Rate |
9.2% |
19.1% |
16.3% |
23.4% |
||||
Weighted Average Shares Outstanding |
||||||||
Basic |
45,662 |
47,873 |
45,805 |
48,120 |
||||
Diluted |
46,150 |
48,221 |
46,224 |
48,483 |
TeleTech HOLDINGS, INC. AND SUBSIDIARIES |
|||||||
SEGMENT INFORMATION |
|||||||
(In thousands) |
|||||||
(Unaudited) |
|||||||
Three months ended |
Six months ended |
||||||
June 30, |
June 30, |
||||||
2017 |
2016 |
2017 |
2016 |
||||
Revenue: |
|||||||
Customer Management Services |
$ 269,056 |
$ 212,807 |
$ 521,135 |
$ 440,728 |
|||
Customer Growth Services |
32,403 |
36,893 |
66,061 |
70,412 |
|||
Customer Technology Services |
34,798 |
37,350 |
70,491 |
72,618 |
|||
Customer Strategy Services |
17,172 |
18,055 |
34,019 |
33,757 |
|||
Total |
$ 353,429 |
$ 305,105 |
$ 691,706 |
$ 617,515 |
|||
Income From Operations: |
|||||||
Customer Management Services |
$ 14,075 |
$ 8,339 |
$ 34,671 |
$ 23,934 |
|||
Customer Growth Services |
2,321 |
3,482 |
4,731 |
3,977 |
|||
Customer Technology Services |
3,819 |
3,376 |
6,876 |
6,156 |
|||
Customer Strategy Services |
1,374 |
1,031 |
1,801 |
(86) |
|||
Total |
$ 21,589 |
$ 16,228 |
$ 48,079 |
$ 33,981 |
TeleTech HOLDINGS, INC. AND SUBSIDIARIES |
|||
CONSOLIDATED BALANCE SHEETS |
|||
(In thousands) |
|||
(Unaudited) |
|||
June 30, |
December 31, |
||
2017 |
2016 |
||
ASSETS |
|||
Current assets: |
|||
Cash and cash equivalents |
$ 77,910 |
$ 55,264 |
|
Accounts receivable, net |
288,041 |
300,808 |
|
Other current assets |
74,783 |
66,940 |
|
Assets held for sale |
8,969 |
10,715 |
|
Total current assets |
449,703 |
433,727 |
|
Property and equipment, net |
160,321 |
151,037 |
|
Other assets |
320,099 |
261,540 |
|
Total assets |
$ 930,123 |
$ 846,304 |
|
LIABILITIES AND EQUITY |
|||
Total current liabilities |
$ 197,352 |
$ 178,672 |
|
Liabilities held for sale |
1,908 |
1,357 |
|
Other long-term liabilities |
335,605 |
304,380 |
|
Total equity |
395,258 |
361,895 |
|
Total liabilities and equity |
$ 930,123 |
$ 846,304 |
TeleTech HOLDINGS, INC. AND SUBSIDIARIES |
||||||||
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION |
||||||||
(In thousands, except per share data) |
||||||||
(Unaudited) |
||||||||
Three months ended |
Six months ended |
|||||||
June 30, |
June 30, |
|||||||
2017 |
2016 |
2017 |
2016 |
|||||
Revenue |
$ 353,429 |
$ 305,105 |
$ 691,706 |
$ 617,515 |
||||
Reconciliation of EBIT & EBITDA: |
||||||||
Net Income Attributable to TeleTech stockholders |
$ 14,694 |
$ 11,616 |
$ 33,939 |
$ 22,841 |
||||
Interest income |
(695) |
(263) |
(1,121) |
(429) |
||||
Interest expense |
2,912 |
1,753 |
5,230 |
3,717 |
||||
Provision for income taxes |
1,597 |
2,952 |
6,988 |
7,480 |
||||
EBIT |
$ 18,508 |
$ 16,058 |
$ 45,036 |
$ 33,609 |
||||
Depreciation and amortization |
16,258 |
17,221 |
30,758 |
34,950 |
||||
EBITDA |
$ 34,766 |
$ 33,279 |
$ 75,794 |
$ 68,559 |
||||
Reconciliation of Free Cash Flow: |
||||||||
Cash Flow From Operating Activities: |
||||||||
Net income |
$ 15,794 |
$ 12,542 |
$ 35,961 |
$ 24,447 |
||||
Adjustments to reconcile net income to net cash |
||||||||
provided by operating activities: |
||||||||
Depreciation and amortization |
16,258 |
17,221 |
30,758 |
34,950 |
||||
Other |
18,471 |
13,744 |
58,736 |
(4,352) |
||||
Net cash provided by operating activities |
50,523 |
43,507 |
125,455 |
55,045 |
||||
Less - Total Capital Expenditures |
17,554 |
12,794 |
29,589 |
27,743 |
||||
Free Cash Flow |
$ 32,969 |
$ 30,713 |
$ 95,866 |
$ 27,302 |
||||
Reconciliation of Non-GAAP Income from Operations: |
||||||||
Income from Operations |
$ 21,589 |
$ 16,228 |
$ 48,079 |
$ 33,981 |
||||
Restructuring charges, net |
3,593 |
114 |
3,762 |
202 |
||||
Impairment losses |
- |
- |
- |
- |
||||
Non-GAAP Income from Operations |
$ 25,182 |
$ 16,342 |
$ 51,841 |
$ 34,183 |
||||
Non-GAAP Income from Operations Margin |
7.1% |
5.4% |
7.5% |
5.5% |
||||
Reconciliation of Non-GAAP EPS: |
||||||||
Net Income Attributable to TeleTech stockholders |
$ 14,694 |
$ 11,616 |
$ 33,939 |
$ 22,841 |
||||
Add: Asset impairment and restructuring charges, net of related taxes |
2,165 |
93 |
2,282 |
148 |
||||
Add: Estimated loss on assets held for sale, net of related taxes |
1,907 |
- |
1,907 |
- |
||||
Less: Estimated gain on sale of business unit |
(18) |
- |
(18) |
- |
||||
Add: Changes in valuation allowance and returns to provision adjustments |
(1,363) |
1,558 |
(1,399) |
2,436 |
||||
Non-GAAP Net Income Attributable to TeleTech stockholders |
$ 17,385 |
$ 13,267 |
$ 36,711 |
$ 25,425 |
||||
Diluted shares outstanding |
46,150 |
48,221 |
46,224 |
48,483 |
||||
Non-GAAP EPS Attributable to TeleTech stockholders |
$0.38 |
$0.28 |
$0.79 |
$0.52 |
||||
Reconciliation of Non-GAAP EBITDA: |
||||||||
Net Income Attributable to TeleTech stockholders |
$ 14,694 |
$ 11,616 |
$ 33,939 |
$ 22,841 |
||||
Interest income |
(695) |
(263) |
(1,121) |
(429) |
||||
Interest expense |
2,912 |
1,753 |
5,230 |
3,717 |
||||
Provision for income taxes |
1,597 |
2,952 |
6,988 |
7,480 |
||||
Depreciation and amortization |
16,258 |
17,221 |
30,758 |
34,950 |
||||
Asset impairment and restructuring charges |
3,593 |
114 |
3,762 |
202 |
||||
Gain on sale of business unit |
(30) |
- |
(30) |
- |
||||
Estimated loss of assets held for sale |
3,178 |
- |
3,178 |
- |
||||
Equity-based compensation expenses |
2,795 |
1,825 |
4,836 |
4,584 |
||||
Non-GAAP EBITDA |
$ 44,302 |
$ 35,218 |
$ 87,540 |
$ 73,345 |
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 |
||||||||||||||
SECOND QUARTER |
||||||||||||||
(three months end, June 30, 2017) |
||||||||||||||
Revenue |
Operating Income |
|||||||||||||
GAAP Revenue |
Non-GAAP Revenue Contribution from AHFS/WD |
Non-GAAP Revenue (excluding AHFS/WD) |
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) |
|||||||
CMS |
$ 269,056 |
$ - |
$ 269,056 |
CMS |
$ 14,075 |
$ 3,579 |
$ 17,654 |
$ - |
$ 17,654 |
|||||
YoY Growth Rate: |
26.4% |
26.4% |
Operating Margin: |
5.2% |
6.6% |
6.6% |
||||||||
CGS |
$ 32,403 |
$ 1,110 |
$ 31,293 |
CGS |
$ 2,321 |
$ - |
$ 2,321 |
$ (43) |
$ 2,364 |
|||||
YoY Growth Rate: |
-12.2% |
-11.9% |
Operating Margin: |
7.2% |
7.2% |
7.6% |
||||||||
CTS |
$ 34,798 |
$ 2,799 |
$ 31,999 |
CTS |
$ 3,819 |
$ 14 |
$ 3,833 |
$ 117 |
$ 3,716 |
|||||
YoY Growth Rate: |
-6.8% |
-0.7% |
Operating Margin: |
11.0% |
11.0% |
11.6% |
||||||||
CSS |
$ 17,172 |
$ 2,110 |
$ 15,062 |
CSS |
$ 1,374 |
$ - |
$ 1,374 |
$ (321) |
$ 1,695 |
|||||
YoY Growth Rate: |
-4.9% |
-3.6% |
Operating Margin: |
8.0% |
8.0% |
11.3% |
||||||||
Company (Consolidated) |
$ 353,429 |
$ 6,019 |
$ 347,410 |
Company |
$ 21,589 |
$ 3,593 |
$ 25,182 |
$ (247) |
$ 25,429 |
|||||
YoY Growth Rate: |
15.8% |
17.3% |
Operating Margin: |
6.1% |
7.1% |
7.3% |
||||||||
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) restructuring and integration charges. |
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 |
||||||||||||||
SECOND QUARTER (YEAR-TO-DATE) |
||||||||||||||
(six months end, June 30, 2017) |
||||||||||||||
Revenue |
Operating Income |
|||||||||||||
GAAP Revenue |
Non-GAAP Revenue Contribution from AHFS/WD |
Non-GAAP Revenue (excluding AHFS/WD) |
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) |
|||||||
CMS |
$ 521,135 |
$ - |
$ 521,135 |
CMS |
$ 34,671 |
$ 3,585 |
$ 38,256 |
$ - |
$ 38,256 |
|||||
YoY Growth Rate: |
18.2% |
18.2% |
Operating Margin: |
6.7% |
7.3% |
7.3% |
||||||||
CGS |
$ 66,061 |
$ 2,279 |
$ 63,782 |
CGS |
$ 4,731 |
$ - |
$ 4,731 |
$ (261) |
$ 4,992 |
|||||
YoY Growth Rate: |
-6.2% |
-5.5% |
Operating Margin: |
7.2% |
7.2% |
7.8% |
||||||||
CTS |
$ 70,491 |
$ 6,780 |
$ 63,711 |
CTS |
$ 6,876 |
$ 177 |
$ 7,053 |
$ 489 |
$ 6,564 |
|||||
YoY Growth Rate: |
-2.9% |
1.5% |
Operating Margin: |
9.8% |
10.0% |
10.3% |
||||||||
CSS |
$ 34,019 |
$ 4,487 |
$ 29,532 |
CSS |
$ 1,801 |
$ - |
$ 1,801 |
$ (653) |
$ 2,454 |
|||||
YoY Growth Rate: |
0.8% |
0.4% |
Operating Margin: |
5.3% |
5.3% |
8.3% |
||||||||
Company (Consolidated) |
$ 691,706 |
$ 13,546 |
$ 678,160 |
Company |
$ 48,079 |
$ 3,762 |
$ 51,841 |
$ (425) |
$ 52,266 |
|||||
YoY Growth Rate: |
12.0% |
13.0% |
Operating Margin: |
7.0% |
7.5% |
7.7% |
||||||||
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) restructuring and integration charges. |
Media Contact
Olivia Griner
303.397.8999
Investor Contact
Paul Miller
303.397.8641