TTEC Announces First Quarter 2019 Financial Results
Signs Bookings of $132 Million in the First Quarter 2019, Up 32 Percent over the Prior Year
Revenue was $394.4 Million
Operating Income was $32.1 Million or 8.1 Percent of Revenue ($34.6 Million or 8.8 Percent Non-GAAP)
Adjusted EBITDA was $55.0 Million or 13.9 Percent of Revenue
Fully Diluted EPS was $0.41 ($0.51 Non-GAAP)
Maintains Outlook for Full Year 2019 Revenue, Adjusted Operating Income and Adjusted EBITDA
"We had a strong start to 2019 with our first quarter financial results exceeding our plan. Key financial metrics materially increased year-over-year, including bookings, revenue, operating income, and cash flow from operations," commented
Tuchman continued, "Digital disruption is causing a seismic shift in the service economy as consumer demand for integrated, frictionless customer experience accelerates, enabled by cloud, AI, ML, RPA and omnichannel technology. Companies around the world are increasingly realizing the importance of delivering next generation exceptional customer service for their brands and are investing heavily in their digital transformation. Our proven expertise and differentiated solutions portfolio are allowing us to capitalize on these market dynamics as evidenced by the current scale and composition of our bookings and revenue."
FIRST QUARTER 2019 FINANCIAL HIGHLIGHTS
Revenue
-
First quarter 2019 GAAP revenue increased 5.1 percent to
$394.4 million compared to$375.2 million in the prior year period. On a constant currency basis and excluding one-time ASC 606 adjustments in 2018, revenue increased 10.4 percent. -
Foreign exchange had a
$4.4 million negative impact on revenue in first quarter 2019.
Income from Operations
-
First quarter 2019 GAAP income from operations was
$32.1 million , or 8.1 percent of revenue, compared to$24.9 million , or 6.6 percent of revenue in the prior year period. -
Non-GAAP income from operations, excluding
$2.5 million in restructuring and impairments charges, was$34.6 million or 8.8 percent of revenue versus 7.2 percent for the prior year period. Adjusted for ASC 606 and on a constant currency basis, operating income increased 73.4 percent over the prior year quarter. -
Foreign exchange had a
$1.2 million positive impact on income from operations in first quarter 2019.
Adjusted EBITDA
-
First quarter 2019 Non-GAAP Adjusted EBITDA was
$55.0 million , or 13.9 percent of revenue, compared to$51.1 million , or 13.6 percent of revenue in the prior year period.
Earnings Per Share
-
First quarter 2019 GAAP fully diluted earnings per share attributable to
TTEC shareholders was$0.41 compared to$0.10 for the same period last year. -
Non-GAAP fully diluted earnings per share was
$0.51 compared to$0.42 in the prior year period. -
Foreign exchange had a
$0.02 positive impact on earnings per share in first quarter 2019.
Bookings
-
During the first quarter 2019,
TTEC signed an estimated$132 million in annualized contract value. First quarter bookings mix was diversified across segments, verticals, and geographies.
STRONG BALANCE SHEET CONTINUES TO FUND OPERATIONS, DIVIDENDS, AND INVESTMENTS
-
As of
March 31, 2019 ,TTEC had cash and cash equivalents of$89.0 million and debt of$262 .7 million, resulting in a net debt position of$173.7 million . This compares to a net debt position of$240.5 million for the same period 2018. -
As of
March 31, 2019 ,TTEC had approximately$465 million of additional borrowing capacity available under its revolving credit facility compared to$425 million for the same period 2018. -
Cash flow from operations in the first quarter 2019 was
$80.0 million compared to$67.4 million for the first quarter 2018. -
Capital expenditures in the first quarter 2019 were
$13.2 million compared to$7.5 million for the first quarter 2018. -
Paid a
30 cent per share, or$13.9 million , semi-annual dividend onApril 18, 2019 , a 7 percent increase over the distribution paid inOctober 2018 and an 11 percent increase over the distribution paid inApril 2018 .
SEGMENT REPORTING & COMMENTARY
Customer Strategy Services (CSS) – Customer Experience Digital Strategy and Data Analytics
-
CSS first quarter 2019 GAAP revenue decreased 9.6 percent to
$13.4 million from$14.9 million for the year ago quarter. Loss from operations was($1.2) million or negative 9.1 percent of revenue compared to operating income of$0.5 million or 3.4 percent of revenue for the prior year period. -
Non-GAAP loss from operations was
($0.9) million , or negative 6.6 percent of revenue compared to operating income of$0.6 million or 3.7 percent of revenue in the prior year period.
Customer Technology Services (CTS) – Cloud and Managed Technology
-
CTS first quarter 2019 GAAP revenue increased 48.9 percent to
$52.4 million compared to$35.2 million for the year ago quarter. Income from operations was$9.0 million or 17.1 percent of revenue compared to$4.8 million or 13.8 percent of revenue in the prior year period. - Non-GAAP measures are not materially different from the GAAP measures for the segment.
Customer Growth Services (CGS) – Digitally-Enabled Revenue Growth
-
CGS first quarter 2019 GAAP revenue increased 19.6 percent to
$38.9 million compared to$32.5 million for the year ago quarter. Income from operations was$4.3 million or 10.9 percent of revenue compared to$1.4 million or 4.2 percent of revenue in the prior year period. -
Non-GAAP income from operations was
$4.3 million or 10.9 percent of revenue. This compares to$2.0 million or 6.2 percent of revenue in the prior year period.
Customer Management Services (CMS) – Customer Experience Delivery
-
CMS first quarter 2019 GAAP revenue decreased 1.0 percent to
$289.6 million compared to$292.6 million for the year ago quarter. On a constant currency basis and excluding one-time ASC 606 adjustments in 2018, revenue increased 5.2 percent. Income from operations was$20.1 million or 6.9 percent of revenue compared to$18.2 million or 6.2 percent of revenue in the prior year period. -
Non-GAAP income from operations was
$22.2 million or 7.7 percent of revenue. This compares to$19.5 million or 6.7 percent of revenue in the prior year period. Adjusted for ASC 606 and on a constant currency basis, operating income increased 78.5 percent over the prior year quarter. -
Foreign exchange had a negative
$3.5 million impact on revenue and positive$1.2 million impact on income from operations.
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.
-
GAAP metrics are presented in accordance with Generally Accepted Accounting Principles, including the impact from
TTEC's January 1, 2018 adoption of Accounting Standards Codification (ASC) 606 "Revenue from Contracts with Customers" using the modified retrospective method. - Non-GAAP - As reflected in the attached reconciliation table, the definition of Non-GAAP excludes from operating income restructuring and impairment charges.
- Non-GAAP Adjusted EBITDA (Earnings Before Interest, Tax, Depreciation and Amortization) – As reflected in the attached reconciliation table.
BUSINESS OUTLOOK
"We are pleased with the momentum and overperformance in the business and are confident in our ability to deliver on our 2019 outlook," commented
Paolillo continued, "Effective in the second quarter 2019, we will change our financial reporting to align with our go-to-market platform and operational structure. We will reduce our segment reporting from four to two, combining our CSS and CTS businesses into one segment and our CMS and CGS businesses into a second segment. We believe this change will assist investors in understanding the distinct nature, financial profile and value of each of these businesses."
We maintain full year 2019 guidance, excluding restructuring and impairments charges, as follows:
-
Revenue – Revenue between
$1.614 and $1.630 billion , an increase of 7.5 to 8.6 percent over the prior year. - Operating Income Margin – Operating income margin between 7.4 and 7.6 percent.
- Adjusted EBITDA Margin – Non-GAAP adjusted EBITDA margin between 12.6 and 12.8 percent.
- Capital Expenditures – Capital expenditures between 3.8 and 4.0 percent of revenue, of which approximately 65 percent is growth oriented.
About TTEC
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 beliefs and expectations of TTEC Holding, Inc.'s management and are subject to significant risks and uncertainties. Specifically, we would like for you to focus on risks related to our strategy execution, our ability to innovate and introduce technologies that are sufficiently disruptive to allow us to maintain and grow our market share, cybersecurity risk and risks inherent to our equity structure. Actual results may differ from what is expressed in the forward-looking statements. Factors that could cause
TTEC HOLDINGS, INC. AND SUBSIDIARIES |
|||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||
(In thousands, except per share data) |
|||||
(unaudited) |
|||||
Three months ended |
|||||
March 31, |
|||||
2019 |
2018 |
||||
Revenue |
$394,356 |
$375,249 |
|||
Operating Expenses: |
|||||
Cost of services |
293,334 |
283,370 |
|||
Selling, general and administrative |
49,720 |
47,045 |
|||
Depreciation and amortization |
16,743 |
17,924 |
|||
Restructuring and integration charges, net |
961 |
849 |
|||
Impairment losses |
1,506 |
1,120 |
|||
Total operating expenses |
362,264 |
350,308 |
|||
Income From Operations |
32,092 |
24,941 |
|||
Other income (expense), net |
(4,150) |
(16,907) |
|||
Income Before Income Taxes |
27,942 |
8,034 |
|||
Provision for income taxes |
(7,466) |
(2,102) |
|||
Net Income |
20,476 |
5,932 |
|||
Net income attributable to noncontrolling interest |
(1,474) |
(1,341) |
|||
Net Income Attributable to TTEC Stockholders |
$ 19,002 |
$ 4,591 |
|||
Net Income Per Share Attributable to TTEC Stockholders |
|||||
Basic |
$ 0.41 |
$ 0.10 |
|||
Diluted |
$ 0.41 |
$ 0.10 |
|||
Income From Operations Margin |
8.1% |
6.6% |
|||
Net Income Attributable to TTEC Stockholders Margin |
4.8% |
1.2% |
|||
Effective Tax Rate |
26.7% |
26.2% |
|||
Weighted Average Shares Outstanding |
|||||
Basic |
46,203 |
45,871 |
|||
Diluted |
46,590 |
46,452 |
TTEC HOLDINGS, INC. AND SUBSIDIARIES |
||||
SEGMENT INFORMATION |
||||
(In thousands) |
||||
(unaudited) |
||||
Three months ended |
||||
March 31, |
||||
2019 |
2018 |
|||
Revenue: |
||||
Customer Strategy Services |
$ 13,430 |
$ 14,860 |
||
Customer Technology Services |
52,423 |
35,208 |
||
Customer Growth Services |
38,934 |
32,540 |
||
Customer Management Services |
289,569 |
292,641 |
||
Total |
$394,356 |
$375,249 |
||
Income (Loss) From Operations: |
||||
Customer Strategy Services |
$ (1,228) |
$ 502 |
||
Customer Technology Services |
8,987 |
4,844 |
||
Customer Growth Services |
4,250 |
1,380 |
||
Customer Management Services |
20,083 |
18,215 |
||
Total |
$ 32,092 |
$ 24,941 |
TTEC HOLDINGS, INC. AND SUBSIDIARIES |
||||
CONSOLIDATED BALANCE SHEETS |
||||
(In thousands) |
||||
(unaudited) |
||||
March 31, |
December 31, |
|||
2019 |
2018 |
|||
ASSETS |
||||
Current assets: |
||||
Cash and cash equivalents |
$ 89,046 |
$ 78,237 |
||
Accounts receivable, net |
332,867 |
350,962 |
||
Other current assets |
100,738 |
97,278 |
||
Total current assets |
522,651 |
526,477 |
||
Property and equipment, net |
165,367 |
161,523 |
||
Other assets |
500,624 |
366,508 |
||
Total assets |
$1,188,642 |
$ 1,054,508 |
||
LIABILITIES AND EQUITY |
||||
Total current liabilities |
$ 304,902 |
$ 235,418 |
||
Other long-term liabilities |
518,466 |
466,241 |
||
Total equity |
365,274 |
352,849 |
||
Total liabilities and equity |
$1,188,642 |
$ 1,054,508 |
TTEC HOLDINGS, INC. AND SUBSIDIARIES |
||||
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION |
||||
(In thousands, except per share data) |
||||
(unaudited) |
||||
Three months ended |
||||
March 31, |
||||
2019 |
2018 |
|||
Revenue |
$394,356 |
$375,249 |
||
Reconciliation of Adjusted EBITDA: |
||||
Net Income (Loss) |
$ 20,476 |
$ 5,932 |
||
Interest income |
(340) |
(1,068) |
||
Interest expense |
5,288 |
6,459 |
||
Provision for income taxes |
7,466 |
2,102 |
||
Depreciation and amortization |
16,743 |
17,924 |
||
Asset impairment, restructuring and integration charges |
2,467 |
1,969 |
||
Impairment of equity investment |
- |
15,632 |
||
Gain on sale of business unit |
(308) |
(794) |
||
Gain on bargain purchase of acquisition |
- |
(685) |
||
Equity-based compensation expenses |
3,168 |
3,609 |
||
Adjusted EBITDA |
$ 54,960 |
$ 51,080 |
||
Reconciliation of Free Cash Flow: |
||||
Cash Flow From Operating Activities: |
||||
Net income (loss) |
$ 20,476 |
$ 5,932 |
||
Adjustments to reconcile net income to net cash |
||||
provided by operating activities: |
||||
Depreciation and amortization |
16,743 |
17,924 |
||
Other |
42,744 |
43,531 |
||
Net cash provided by operating activities |
79,963 |
67,387 |
||
Less - Total Cash Capital Expenditures |
13,200 |
7,508 |
||
Free Cash Flow |
$ 66,763 |
$ 59,879 |
||
Reconciliation of Non-GAAP Income from Operations: |
||||
Income from Operations |
$ 32,092 |
$ 24,941 |
||
Restructuring and integration charges, net |
961 |
849 |
||
Impairment losses |
1,506 |
1,120 |
||
Non-GAAP Income from Operations |
$ 34,559 |
$ 26,910 |
||
Non-GAAP Income from Operations Margin |
8.8% |
7.2% |
||
Reconciliation of Non-GAAP EPS: |
||||
Net Income (Loss) |
$ 20,476 |
$ 5,932 |
||
Add: Asset impairment, restructuring and integration charges, net of related taxes |
1,799 |
1,359 |
||
Add: Interest charge related to future purchase of remaining 30% for Motif acquisition |
1,307 |
1,925 |
||
Add: Impairment of equity investment, net of related taxes |
- |
11,411 |
||
Less: Gain on sale of business unit |
(225) |
(580) |
||
Less: Gain on bargain purchase of acquisition |
- |
(500) |
||
Add: Changes in valuation allowance, returns to provision adjustments and other |
285 |
(77) |
||
Non-GAAP Net Income |
$ 23,642 |
$ 19,470 |
||
Diluted shares outstanding |
46,590 |
46,452 |
||
Non-GAAP EPS |
$0.51 |
$0.42 |
Media Contact
Olivia Griner
303.397.8999
Investor Contact
Paul Miller
303.397.8641
Address
9197 South Peoria Street
Englewood, CO 80112
Contact
ttec.com
+1.800.835.3832