TeleTech Announces First Quarter 2014 Financial Results
"2014 is off to a strong start with measurable progress achieved on multiple fronts. We are pleased with the growth in revenue, profitability and bookings year-over-year," commented
FIRST QUARTER 2014 FINANCIAL HIGHLIGHTS
Revenue
-
First quarter 2014 GAAP revenue was
$302.2 million compared to$288.4 million in the first quarter of 2013. -
On a constant currency Non-GAAP basis, first quarter 2014 revenue was
$315.9 million . This represents a 10.1 percent growth rate over the prior year period, of which 83 percent was organic.
EBITDA
-
Non-GAAP EBITDA increased 24.6 percent to
$45.0 million , or 14.2 percent of adjusted revenue. This compares to$36.1 million or 12.6 percent of revenue in the year–ago quarter.
Income from Operations
-
First quarter 2014 GAAP income from operations was
$24.4 million or 8.1 percent of revenue compared to$23.0 million or 8.0 percent of revenue in the first quarter of 2013. -
On a constant currency basis and adjusted for $0.5 million in restructuring charges, income from operations increased to
$28.7 million , representing 9.1 percent of adjusted revenue versus 8.3 percent in the year-ago quarter.
Earnings Per Share
-
First quarter 2014 GAAP fully diluted earnings per share attributable to
TeleTech shareholders increased to$0.40 from$0.34 for the same period last year. -
Non-GAAP fully diluted earnings per share increased approximately 30 percent to
$0.42 from$0.32 in the prior year period.
Bookings
-
During the first quarter 2014,
TeleTech signed an estimated$105 million in annualized revenue from new and expanded client relationships. The bookings mix was well diversified across all verticals with approximately 97 percent from existing clients, 54 percent in recurring revenue, 45 percent from emerging businesses and 41 percent from international clients.
STRONG BALANCE SHEET CONTINUES TO FUND OPERATIONS, SHARE REPURCHASES,
-
As of
March 31, 2014 ,TeleTech had cash and cash equivalents of$120.4 million and$108 .4 million of total debt, resulting in a net cash position of$12.0 million . -
As of
March 31, 2014 ,TeleTech had$596.5 million of additional borrowing capacity available under its revolving credit facility. -
Cash flow from operations in the first quarter 2014 was
$13.5 million compared to$6 .5 million in the first quarter 2013. -
Capital expenditures in the first quarter 2014 were
$15.1 million compared to$4.1 million in the first quarter 2013. -
TeleTech repurchased approximately 887,400 shares of common stock during the first quarter 2014 for a cost of$20.5 million . As ofMarch 31, 2014 ,$23.4 million was authorized for future share repurchases.
SEGMENT REPORTING
Customer Management Services (CMS) – Customer Experience Delivery Solutions
-
In the first quarter 2014, the CMS segment revenue was
$227.9 million , representing an increase of 2.4 percent from$222.6 million in the year-ago quarter. On a constant currency basis, revenue increased 9.2 percent to$240.8 million . -
Operating income was
$20.8 million or 9.1 percent of revenue compared to$20.7 million or 9.3 percent in the year-ago quarter. Adjusted operating income margin was 10.4 percent reflecting$3.6 million of foreign currency translation and$0.5 million of restructuring charges. This compares to 9.5 percent in the year-ago period.
Customer Growth Services (CGS) – Technology-Enabled Revenue Generation Solutions
-
CGS first quarter 2014 revenue increased 26.5 percent to
$28.9 million compared to$22 .9 million in the year-ago quarter. Income from operations was$1.8 million or 6.1 percent versus$1 .3 million or 5.6 percent.
Customer Technology Services (CTS) – Hosted and Managed Technology Solutions
-
CTS first quarter 2014 revenue was
$32.8 million compared to$33 .6 million in the year-ago quarter. Income from operations was$0.3 million or 0.9 percent compared to$2.9 million or 8.6 percent in the year-ago quarter.
Customer Strategy Services (CSS) – Customer Experience Strategy and Analytics-driven Solutions
-
CSS first quarter 2014 revenue increased 34.5 percent to
$12.6 million from$9.4 million in the year-ago quarter. Income from operations increased to$1.5 million or 11.5 percent of revenue from a loss of$1 .9 million in the same period last year.
BUSINESS OUTLOOK
"We delivered strong results in the first quarter of 2014," commented
Revenue – Year-over-year revenue growth estimated between four and six percent from
Operating Margin – Operating margin range estimated between 8.75 and 9.0 percent (before asset impairment, restructuring or acquisition-related charges), but including an incremental
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 |
|||||
March 31, |
|||||
2014 |
2013 |
||||
Revenue |
$302,221 |
$288,383 |
|||
Operating Expenses: |
|||||
Cost of services |
213,787 |
208,232 |
|||
Selling, general and administrative |
50,367 |
45,747 |
|||
Depreciation and amortization |
13,170 |
10,555 |
|||
Restructuring charges, net |
540 |
851 |
|||
Impairment losses |
- |
- |
|||
Total operating expenses |
277,864 |
265,385 |
|||
Income From Operations |
24,357 |
22,998 |
|||
Other income (expense) |
(178) |
(2,004) |
|||
Income Before Income Taxes |
24,179 |
20,994 |
|||
(Provision for) benefit from income taxes |
(2,876) |
(2,391) |
|||
Net Income |
21,303 |
18,603 |
|||
Net income attributable to noncontrolling interest |
(1,085) |
(642) |
|||
Net Income Attributable to TeleTech Stockholders |
$ 20,218 |
$ 17,961 |
|||
Net Income Per Share Attributable to TeleTech Stockholders |
|||||
Basic |
$ 0.40 |
$ 0.34 |
|||
Diluted |
$ 0.40 |
$ 0.34 |
|||
Income From Operations Margin |
8.1% |
8.0% |
|||
Net Income Attributable to TeleTech Stockholders Margin |
6.7% |
6.2% |
|||
Effective Tax Rate |
11.9% |
11.4% |
|||
Weighted Average Shares Outstanding |
|||||
Basic |
50,045 |
52,347 |
|||
Diluted |
50,973 |
53,217 |
TeleTech HOLDINGS, INC. AND SUBSIDIARIES |
||||
SEGMENT INFORMATION |
||||
(In thousands) |
||||
(Unaudited) |
||||
Three months ended |
||||
March 31, |
||||
2014 |
2013 |
|||
Revenue: |
||||
Customer Management Services |
$227,924 |
$222,582 |
||
Customer Growth Services |
28,905 |
22,856 |
||
Customer Technology Services |
32,776 |
33,562 |
||
Customer Strategy Services |
12,616 |
9,383 |
||
Total |
$302,221 |
$288,383 |
||
Income From Operations: |
||||
Customer Management Services |
$ 20,823 |
$ 20,731 |
||
Customer Growth Services |
1,770 |
1,276 |
||
Customer Technology Services |
311 |
2,898 |
||
Customer Strategy Services |
1,453 |
(1,907) |
||
Total |
$ 24,357 |
$ 22,998 |
TeleTech HOLDINGS, INC. AND SUBSIDIARIES |
||||
CONSOLIDATED BALANCE SHEETS |
||||
(In thousands) |
||||
March 31, |
December 31, |
|||
2014 |
2013 |
|||
(Unaudited) |
||||
ASSETS |
||||
Current assets: |
||||
Cash and cash equivalents |
$ 120,377 |
$ 158,017 |
||
Accounts receivable, net |
249,351 |
236,099 |
||
Other current assets |
79,633 |
75,435 |
||
Total current assets |
449,361 |
469,551 |
||
Property and equipment, net |
132,789 |
126,719 |
||
Other assets |
249,790 |
246,072 |
||
Total assets |
$ 831,940 |
$ 842,342 |
||
LIABILITIES AND EQUITY |
||||
Total current liabilities |
$ 188,220 |
$ 190,787 |
||
Other long-term liabilities |
171,942 |
175,564 |
||
Mandatorily redeemable noncontrolling interest |
2,462 |
2,509 |
||
Total equity |
469,316 |
473,482 |
||
Total liabilities and equity |
$ 831,940 |
$ 842,342 |
TeleTech HOLDINGS, INC. AND SUBSIDIARIES |
||||
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION |
||||
(In thousands, except per share data) |
||||
Three months ended |
||||
March 31, |
||||
2014 |
2013 |
|||
Reconciliation of Revenue: |
||||
Revenue |
$302,221 |
$288,383 |
||
Changes due to foreign currency fluctuations |
13,653 |
(1,592) |
||
Non-GAAP Revenue |
$315,874 |
$286,791 |
||
Reconciliation of Gross Margin: |
||||
Non-GAAP Revenue |
$315,874 |
$286,791 |
||
Cost of services |
213,787 |
208,232 |
||
Adjustments related to Non-GAAP revenue adjustments |
9,818 |
(1,547) |
||
Non-GAAP Gross margin |
$ 92,269 |
$ 80,106 |
||
NON-GAAP Gross margin percentage |
29.2% |
27.9% |
||
Reconciliation of EBIT & EBITDA: |
||||
Net Income Attributable to TeleTech stockholders |
$ 20,218 |
$ 17,961 |
||
Interest income |
(511) |
(669) |
||
Interest expense |
1,690 |
1,865 |
||
Provision for (benefit from) income taxes |
2,876 |
2,391 |
||
EBIT |
$ 24,273 |
$ 21,548 |
||
Depreciation and amortization |
13,170 |
10,555 |
||
EBITDA |
$ 37,443 |
$ 32,103 |
||
Reconciliation of Free Cash Flow: |
||||
Cash Flow From Operating Activities: |
||||
Net income |
$ 21,303 |
$ 18,603 |
||
Adjustments to reconcile net income to net cash |
||||
provided by operating activities: |
||||
Depreciation and amortization |
13,170 |
10,555 |
||
Other |
(20,936) |
(22,664) |
||
Net cash provided by operating activities |
13,537 |
6,494 |
||
Less - Total Capital Expenditures |
15,095 |
4,105 |
||
Free Cash Flow |
$ (1,558) |
$ 2,389 |
||
Reconciliation of Non-GAAP Income from Operations: |
||||
Income from Operations |
$ 24,357 |
$ 22,998 |
||
Restructuring charges, net |
540 |
851 |
||
Net effect of foreign currency fluctuations |
3,835 |
(45) |
||
Non-GAAP Income from Operations |
$ 28,732 |
$ 23,804 |
||
Non-GAAP Income from Operations Margin |
9.1% |
8.3% |
||
Reconciliation of Non-GAAP EPS: |
||||
Net Income Attributable to TeleTech stockholders |
$ 20,218 |
$ 17,961 |
||
Add: Asset impairment and restructuring charges, net of related taxes |
347 |
589 |
||
Add: Net effect of foreign currency fluctuations, net of related taxes |
2,715 |
(39) |
||
Add: Changes in valuation allowance and returns to provision adjustments |
(1,973) |
(1,278) |
||
Non-GAAP Net Income Attributable to TeleTech stockholders |
$ 21,307 |
$ 17,233 |
||
Diluted shares outstanding |
50,973 |
53,217 |
||
Non-GAAP EPS Attributable to TeleTech stockholders |
$0.42 |
$0.32 |
||
Reconciliation of Non-GAAP EBITDA: |
||||
Net Income Attributable to TeleTech stockholders |
$ 20,218 |
$ 17,961 |
||
Interest income |
(511) |
(669) |
||
Interest expense |
1,690 |
1,865 |
||
Provision for (benefit from) income taxes |
2,876 |
2,391 |
||
Depreciation and amortization |
13,170 |
10,555 |
||
Asset impairment and restructuring charges |
540 |
851 |
||
Net effect of foreign currency fluctuations |
3,835 |
(45) |
||
Equity-based compensation expenses |
3,160 |
3,191 |
||
Non-GAAP EBITDA |
$ 44,978 |
$ 36,100 |
Investors, Paul Miller, 303.397.8641