TTEC Announces First Quarter 2018 Financial Results
"This quarter we continued to advance our position as a leading global provider of end-to-end, transformational digital customer experience management," commented
FIRST QUARTER 2018 FINANCIAL HIGHLIGHTS
Revenue
-
First quarter 2018 GAAP revenue increased 10.9 percent to
$375.2 million compared to$338.3 million in the prior year period. -
Non-GAAP AHFS/WD revenue increased 13.0 percent to
$373.6 million over the prior year period. -
ASC 606 had a
$12.5 million positive impact on revenue in the quarter.
Income from Operations
-
First quarter 2018 GAAP income from operations was
$24.9 million , or 6.6 percent of revenue, compared to$26.5 million , or 7.8 percent of revenue in the first quarter 2017. -
Non-GAAP AHFS/WD income from operations, excluding
$2.0 million in restructuring and asset impairments, was$27.4 million or 7.3 percent of adjusted revenue versus 8.1 percent in the prior year. -
ASC 606 had a
$6.3 million positive impact on income from operations in the quarter.
Adjusted EBITDA
-
Non-GAAP Adjusted EBITDA was
$51.1 million , or 13.6 percent of revenue, compared to$44.2 million , or 13.1 percent of revenue in the first quarter 2017.
Earnings Per Share
-
First quarter 2018 GAAP fully diluted earnings per share attributable to
TTEC shareholders was$0.10 compared to$0.42 in the same period last year. -
Non-GAAP fully diluted earnings per share was
$0.42 compared to$0.44 in the prior year.
Bookings
-
During the first quarter 2018,
TTEC signed an estimated$100 million in annualized contract value revenue from new and expanded client relationships. The first quarter bookings mix was well diversified across segments, verticals, and geographies.
GAAP metrics are presented in accordance with Generally Accepted Accounting Principles, including the impact from
Non-GAAP AHFS/WD (excluding assets held for sale and wind-down) - As reflected 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.
Non-GAAP Adjusted EBITDA (Earnings Before Interest, Tax, Depreciation and Amortization) – As reflected in the attached reconciliation table.
STRONG BALANCE SHEET CONTINUES TO FUND OPERATIONS, DIVIDENDS, AND INVESTMENTS
-
As of
March 31, 2018 ,TTEC had cash and cash equivalents of$81.6 million and debt of$322 .1 million, resulting in a net debt position of$240.5 million . This compares to a net debt position of$131.1 million in the prior year period. -
As of
March 31, 2018 ,TTEC had approximately$425 million of additional borrowing capacity available under its revolving credit facility versus$420 million in the prior year period. -
Cash flow from operations in the first quarter 2018 was
$67.4 million compared to$74 .9 million in the first quarter 2017. -
Capital expenditures in the first quarter 2018 were
$7.5 million compared to$12.0 million in the first quarter 2017. -
Declared a
27-cent dividend per share, or$12.4 million , onFebruary 28, 2018 , which was paid on April 12, 2018 to shareholders of record onMarch 30, 2018 . The dividend represented an approximate 23 percent increase over the distribution paid in April 2017.
SEGMENT REPORTING & COMMENTARY
Customer Management Services (CMS) – Customer Experience Delivery Solutions
-
CMS first quarter 2018 GAAP revenue increased 16.1 percent to
$292.6 million compared to$252.1 million in the year ago quarter. Income from operations was$18.2 million or 6.2 percent of revenue compared to$20.6 million or 8.2 percent of revenue in the prior year. -
Non-GAAP income from operations was
$19.5 million or 6.7 percent of revenue. This compares to$20.6 million or 8.2 percent of revenue in the prior year. -
ASC 606 had a
$12.4 million and$6.3 million positive impact on revenue and income from operations, respectively.
Customer Growth Services (CGS) – Digitally-Enabled Revenue Growth Solutions
-
CGS first quarter 2018 GAAP revenue declined 3.3 percent to
$32.5 million compared to$33.7 million in the year ago quarter. Income from operations was$1.4 million or 4.2 percent of revenue compared to$2.4 million or 7.2 percent of revenue in the prior year. -
Non-GAAP AHFS/WD revenue increased 0.2 percent to
$32.5 million over the year ago period and income from operations was$2.0 million or 6.3 percent of adjusted revenue. This compares to$2.6 million or 8.1 percent of adjusted revenue in the prior year.
Customer Technology Services (CTS) – Hosted and Managed Technology Solutions
-
CTS first quarter 2018 GAAP revenue declined 1.4 percent to
$35.2 million compared to$35.7 million in the year ago quarter. Income from operations was$4.8 million or 13.8 percent of revenue compared to$3.1 million or 8.6 percent of revenue in the prior year. -
Non-GAAP AHFS/WD revenue increased 11.0 percent to
$35.2 million over the year ago period and income from operations was$4.8 million or 13.8 percent of adjusted revenue. This compares to$2.8 million or 8.8 percent of adjusted revenue in the prior year.
Customer Strategy Services (CSS) – Customer Experience Strategy and Data Analytics Solutions
-
CSS first quarter 2018 GAAP revenue declined 11.8 percent to
$14.9 million from$16.8 million in the year ago quarter. Income from operations was$0.5 million or 3.4 percent of revenue compared to$0.4 million or 2.5 percent of revenue in the prior year. -
Non-GAAP AHFS/WD revenue declined 8.4 percent to
$13.3 million over the year ago period and income from operations was$1.0 million or 7.7 percent of adjusted revenue. This compares to operating income of$0.8 million or 5.2 percent of revenue in the prior year.
BUSINESS OUTLOOK
"We are executing on multiple fronts and realizing tangible results from our strategy, differentiated solutions portfolio, and improved go-to-market platform," commented
Paolillo continued, "Our first quarter consolidated results were in line with our expectations. We are confident in our planned growth trajectory and ability to expand margins in 2018, supported by our bookings, revenue mix, increased backlog, and growing pipeline across the business."
We confirm full year 2018 guidance, which includes the adoption of ASC 606 "Revenue from Contracts with Customers" using the modified retrospective method, but excludes non-GAAP AHFS/WD (Assets Held for Sale and Wind-down), as follows:
-
Revenue – Revenue estimated to increase 3.3 to 4.7 percent between
$1.505 and $1.525 billion . - Operating Income Margin – Operating income margin estimated between 8.7 and 8.9 percent.
- Adjusted EBITDA Margin(1) – Adjusted EBITDA margin estimated between 13.9 and 14.2 percent.
- Capital Expenditures – Capital expenditures estimated at 3.8 percent of revenue, of which approximately 70 percent is growth oriented.
(1) As shown in the attached reconciliation table, transitioning to an Adjusted EBITDA calculation, which includes non-cash equity-based compensation expense.
SEC FILINGS
The Company plans to file its Quarterly Report on Form 10-Q for the period ending
About
NON-GAAP FINANCIAL MEASURES
This press release contains a discussion of certain non-GAAP financial measures that the Company includes to allow investors and analysts to measure, analyze and compare its financial condition and results of operations in a meaningful and consistent manner. A reconciliation of these non-GAAP financial measures can be found in the tables accompanying this press release.
FORWARD-LOOKING STATEMENTS
This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the current believes and expectations of
Investor Relations Contact |
Public Relations Contact |
Address |
Contact |
Paul Miller |
Olivia Griner |
9197 South Peoria Street |
ttec.com |
+1.303.397.8641 |
+1.303.397.8999 |
Englewood, CO 80112 |
+1.800.835.3832 |
TTEC HOLDINGS, INC. AND SUBSIDIARIES |
|||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||
(In thousands, except per share data) |
|||||
(unaudited) |
|||||
Three months ended |
|||||
March 31, |
|||||
2018 |
2017 |
||||
Revenue |
$375,249 |
$338,277 |
|||
Operating Expenses: |
|||||
Cost of services |
283,370 |
253,898 |
|||
Selling, general and administrative |
47,045 |
43,220 |
|||
Depreciation and amortization |
17,924 |
14,500 |
|||
Restructuring and integration charges, net |
849 |
169 |
|||
Impairment losses |
1,120 |
- |
|||
Total operating expenses |
350,308 |
311,787 |
|||
Income From Operations |
24,941 |
26,490 |
|||
Other income (expense) |
(16,907) |
(932) |
|||
Income Before Income Taxes |
8,034 |
25,558 |
|||
Provision for income taxes |
(2,102) |
(5,391) |
|||
Net Income |
5,932 |
20,167 |
|||
Net income attributable to noncontrolling interest |
(1,341) |
(922) |
|||
Net Income Attributable to TTEC Stockholders |
$ 4,591 |
$ 19,245 |
|||
Net Income Per Share Attributable to TTEC Stockholders |
|||||
Basic |
$ 0.10 |
$ 0.42 |
|||
Diluted |
$ 0.10 |
$ 0.42 |
|||
Income From Operations Margin |
6.6% |
7.8% |
|||
Net Income Attributable to TTEC Stockholders Margin |
1.2% |
5.7% |
|||
Effective Tax Rate |
26.2% |
21.1% |
|||
Weighted Average Shares Outstanding |
|||||
Basic |
45,871 |
45,950 |
|||
Diluted |
46,452 |
46,315 |
|||
TTEC HOLDINGS, INC. AND SUBSIDIARIES |
||||
SEGMENT INFORMATION |
||||
(In thousands) |
||||
(unaudited) |
||||
Three months ended |
||||
March 31, |
||||
2018 |
2017 |
|||
Revenue: |
||||
Customer Management Services |
$292,641 |
$252,079 |
||
Customer Growth Services |
32,540 |
33,658 |
||
Customer Technology Services |
35,208 |
35,693 |
||
Customer Strategy Services |
14,860 |
16,847 |
||
Total |
$375,249 |
$338,277 |
||
Income From Operations: |
||||
Customer Management Services |
$ 18,215 |
$ 20,596 |
||
Customer Growth Services |
1,380 |
2,410 |
||
Customer Technology Services |
4,844 |
3,057 |
||
Customer Strategy Services |
502 |
427 |
||
Total |
$ 24,941 |
$ 26,490 |
TTEC HOLDINGS, INC. AND SUBSIDIARIES |
||||
CONSOLIDATED BALANCE SHEETS |
||||
(In thousands) |
||||
(unaudited) |
||||
March 31, |
December 31, |
|||
2018 |
2017 |
|||
ASSETS |
||||
Current assets: |
||||
Cash and cash equivalents |
$ 81,594 |
$ 74,437 |
||
Accounts receivable, net |
344,249 |
385,751 |
||
Other current assets |
84,409 |
74,767 |
||
Assets held for sale |
7,412 |
7,835 |
||
Total current assets |
517,664 |
542,790 |
||
Property and equipment, net |
157,215 |
163,297 |
||
Other assets |
359,983 |
372,649 |
||
Total assets |
$1,034,862 |
$ 1,078,736 |
||
LIABILITIES AND EQUITY |
||||
Total current liabilities |
$ 223,446 |
$ 200,456 |
||
Liabilities held for sale |
1,481 |
1,322 |
||
Other long-term liabilities |
464,712 |
514,113 |
||
Total equity |
345,223 |
362,845 |
||
Total liabilities and equity |
$1,034,862 |
$ 1,078,736 |
||
TTEC HOLDINGS, INC. AND SUBSIDIARIES |
||||
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION |
||||
(In thousands, except per share data) |
||||
(unaudited) |
||||
Three months ended |
||||
March 31, |
||||
2018 |
2017 |
|||
Reconciliation of Adjusted EBITDA: |
||||
Net Income |
** |
$ 5,932 |
$ 20,167 |
|
Interest income |
(1,068) |
(426) |
||
Interest expense |
6,459 |
2,318 |
||
Provision for income taxes |
2,102 |
5,391 |
||
Depreciation and amortization |
17,924 |
14,500 |
||
Asset impairment, restructuring and integration charges |
1,969 |
169 |
||
Impairment of equity investment |
15,632 |
- |
||
Gain on sale of business unit |
(794) |
- |
||
Gain on bargain purchase of acquisition |
(685) |
- |
||
Equity-based compensation expenses |
3,609 |
2,041 |
||
Adjusted EBITDA |
$ 51,080 |
$ 44,160 |
||
Reconciliation of Free Cash Flow: |
||||
Cash Flow From Operating Activities: |
||||
Net income |
** |
$ 5,932 |
$ 20,167 |
|
Adjustments to reconcile net income to net cash |
||||
provided by operating activities: |
||||
Depreciation and amortization |
17,924 |
14,500 |
||
Other |
43,531 |
40,265 |
||
Net cash provided by operating activities |
67,387 |
74,932 |
||
Less - Total Capital Expenditures |
7,508 |
12,035 |
||
Free Cash Flow |
$ 59,879 |
$ 62,897 |
||
Reconciliation of Non-GAAP Income from Operations: |
||||
Income from Operations |
** |
$ 24,941 |
$ 26,490 |
|
Restructuring and integration charges, net |
849 |
169 |
||
Impairment losses |
1,120 |
- |
||
Non-GAAP Income from Operations |
$ 26,910 |
$ 26,659 |
||
Non-GAAP Income from Operations Margin |
7.2% |
7.9% |
||
Reconciliation of Non-GAAP EPS: |
||||
Net Income |
** |
$ 5,932 |
$ 20,167 |
|
Add: Asset impairment, restructuring and integration charges, net of related taxes |
1,359 |
117 |
||
Add: Interest charge related to future purchase of remaining 30% for Motif acquistion |
1,925 |
- |
||
Add: Impairment of equity investment, net of related taxes |
11,411 |
- |
||
Less: Gain on sale of business unit, net of related taxes |
(580) |
- |
||
Less: Gain on bargain purchase of acquisition, net of related taxes |
(500) |
- |
||
Add: US 2017 Tax Act |
485 |
- |
||
Add: Changes in valuation allowance and returns to provision adjustments |
(562) |
(36) |
||
Non-GAAP Net Income |
$ 19,470 |
$ 20,248 |
||
Diluted shares outstanding |
46,452 |
46,315 |
||
Non-GAAP EPS |
$0.42 |
$0.44 |
||
** The numbers above include the adoption of ASC 606 and include the following first quarter 2018 amounts : |
|||||
First Quarter 2018 Revenue : + $12.5 million |
|||||
First Quarter 2018 Operating Income : + $6.3 million |
|||||
First Quarter 2018 Net Income : + $4.5 million |
TELETECH HOLDINGS, INC. |
||||||||||||
Non-GAAP AHFS/WD Reconciliation (Excluding Assets Held For Sale and Wind-down) & Year-over-Year (YoY) Growth Rate Comparison |
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U.S. Dollars in Thousands |
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FIRST QUARTER |
||||||||||||
(three months end, March 31, 2018) |
||||||||||||
Revenue |
Operating Income |
|||||||||||
TTEC Digital |
GAAP |
Revenue |
Non-GAAP |
TTEC Digital |
GAAP |
Non-GAAP |
Non- |
Non-GAAP |
Non-GAAP |
|||
CTS |
$ 35,208 |
$ - |
$ 35,208 |
CTS |
$ 4,844 |
$ - |
$ 4,844 |
$ (1) |
$ 4,845 |
|||
YoY Growth Rate: |
-1.4% |
11.0% |
Operating Margin: |
13.8% |
13.8% |
13.8% |
||||||
CSS |
$ 14,860 |
$ 1,608 |
$ 13,252 |
CSS |
$ 502 |
$ 51 |
$ 553 |
$ (464) |
$ 1,017 |
|||
YoY Growth Rate: |
-11.8% |
-8.4% |
Operating Margin: |
3.4% |
3.7% |
7.7% |
||||||
TTEC Engage |
TTEC Engage |
|||||||||||
CMS |
$292,641 |
$ - |
$ 292,641 |
CMS |
$ 18,215 |
$ 1,273 |
$ 19,488 |
$ - |
$ 19,488 |
|||
YoY Growth Rate: |
16.1% |
16.1% |
Operating Margin: |
6.2% |
6.7% |
6.7% |
||||||
CGS |
$ 32,540 |
$ - |
$ 32,540 |
CGS |
$ 1,380 |
$ 645 |
$ 2,025 |
$ (24) |
$ 2,049 |
|||
YoY Growth Rate: |
-3.3% |
0.2% |
Operating Margin: |
4.2% |
6.2% |
6.3% |
||||||
Company (Consolidated) |
$375,249 |
$ 1,608 |
$ 373,641 |
Company (Consolidated) |
$ 24,941 |
$ 1,969 |
$ 26,910 |
$ (489) |
$ 27,399 |
|||
YoY Growth Rate: |
10.9% |
13.0% |
Operating Margin: |
6.6% |
7.2% |
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) impairment, restructuring and integration charges. |